Download Telecommunications Association of Maine

TELECOMMUNICATIONS ASSOCIATION OF MAINE
Benjamin M. Sanborn
P.O. Box 5347 Augusta ME 04330 TEL: 314-2609
E-MAIL: [email protected]
April 1, 2015
Senator David Woodsome, Senate Chair
Representative Mark Dion, House Chair
Members of the Committee on Energy, Utilities and Technology
127th Maine Legislature
100 State House Station
Augusta, ME 04333
Re: LD 882, "An Act To Ensure That Telephone Utility Reorganizations Advance
the Economic Development and Information Access Goals of the State "
The Telecommunications Association of Maine (TAM) offers the following testimony in
OPPOSITION to LD 882, "An Act To Ensure That Telephone Utility Reorganizations Advance
the Economic Development and Information Access Goals of the State".
TAM opposes LD 882 because of the unintended consequences that would occur if the
bill becomes law. As written, the bill would inhibit the ability of telephone utilities to structure
their businesses to address competitive issues and issues regarding enhanced efficiencies to keep
rates for customers affordable.
The substantive changes in LD 882 relate to Section 708, which deals with restructuring
affiliated interests. It is important to note that this is not necessarily when the utility itself is
being acquired, it could well be the creation or dissolution of an affiliated interest.1 For example,
a telephone utility may wish to create an affiliate that deals with inside wire maintenance to
allow the company to sell customers a service to provide 24/7 assistance for issues that may
occur with increasingly complex telecommunications wiring and wi-fi networking facilities
within both businesses and homes. The current law requires that such a reorganization is
consistent with the interests of the utility's ratepayers and investors. Under LD 882, if the
telephone utility has intra-state revenues in excess of $50 million, then prior to being able to
form this affiliate, the company would have to demonstrate that the business transaction
advanced the economic development goals and advanced infrastructure goals of the State. In
such a situation it would be difficult if not impossible to prove that economic development goals
of the State are being “advanced”, as the goal of the affiliated interest would not be to affect the
overall economic development of the State one way or another. Moreover, is an inside wire
maintenance division that may work on doing the electrical work necessary to establish a wi-fi
network within a small business location advancing the information access goals of the State?
Utilities, especially those operating in competitive markets, must have the flexibility to seek new
business opportunities and address them in the most economically appropriate manner possible.
This legislation would impose a significant barrier to such economic growth in the State.
“"Reorganization" means any creation, organization, extension, consolidation, merger, transfer
of ownership or control, liquidation, dissolution or termination, direct or indirect, in whole or in
part, of an affiliated interest as defined in section 707 accomplished by the issue, sale,
acquisition, lease, exchange, distribution or transfer of voting securities or property.” 35-A MRSA
§ 708(1)(A)
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The bill also would require that the Commission must ensure that any reorganization by a
telephone utility with gross revenues of $50 million or more does not change the “location and
accessibility of the telephone utility's management and operations, or the proportion and number
of the telephone utility's employees who reside in the State, that would adversely affect safety,
reliability or quality of service.” It is not clear how such a determination could ever be made on
a forward-looking basis. For example, if a telephone utility had an affiliate designed to address
network outages that contracted with 15 independent contractors who would be on call in the
event of an emergency, and the company wished to dissolve the affiliated interest and instead
bring in 10 individuals who would be dedicated company employees to address service outages,
would this adversely affect “safety, reliability or quality of service”? What facts could be
presented to argue for and against the forward-looking reliability aspects that would provide
definitive proof to the Commission one way or the other? The reality is that the Commission
currently has the authority to require that all telephone utilities provide “safe and reliable”
service, and failure to do so can result in a Commission proceeding to determine how to address
any shortcomings a company may be experiencing in these regards. It is not clear how a
precondition of proof that a reorganization will not adversely affect safety, reliability or quality
of service, would be applied in the context of an adjudicatory proceeding, much less how such as
precondition would do anything other than discourage reorganizations by telephone utilities.
Finally, while the bill currently only addresses telephone utilities that have intrastate
revenues of $50 million, rather than making the bill more targeted it simply creates a penalty for
companies who actually find economic success and growth and are able to increase their revenue
up to the $50 million level. The last thing this State needs is a tool for penalizing success for
businesses that operate in Maine.
Accordingly, for the reasons set forth above, TAM respectfully urges the members of the
Joint Standing Committee on Energy, Utilities and Technology to vote OUGHT NOT TO
PASS on LD 882, " An Act To Ensure That Telephone Utility Reorganizations Advance the
Economic Development and Information Access Goals of the State".
Sincerely,
Benjamin M. Sanborn, Esq.
Telecommunications Association of Maine
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