KRS 278.512: Legislative findings -- Exemption of telecommunications product or service

from regulation.

(1) The legislature finds and determines that:

(a) Competition and innovation have become commonplace in the provision of

certain telecommunications services in Kentucky and the United States;

(b) Flexibility in the regulation of the rates of providers of telecommunications

service is essential to the well-being of this state, its economy, and its citizens;

and

(c) The public interest requires that the Public Se rvice Commission be authorized

and encouraged to formulate and adopt rules and policies that will permit the

commission, in the exercise of its expertise, to regulate and control the

provision of telecommunications services to the public in a changing

environment, giving due regard to the interests of consumers, the public, the

providers of the telecommunications services, and the continued availability

of good telecommunications service.

(2) Notwithstanding any other statute to the contrary, the commission may, on its own

motion or upon motion of a telecommunications utility, after notice and opportunity

for comment, and hearing if requested, exempt to the extent it deems reasonable,

services or products related to telecommunications utilities or persons wh o provide

telecommunications services or products from any or all of the provisions of this

chapter, or may adopt alternative requirements for establishing rates and charges for

any service by a method other than that which is specified in this chapter, if the

commission finds by clear and satisfactory evidence that it is in the public interest.

No exemption shall be granted under this statute which preempts, without notice

and without hearing, if requested, the existing rights and obligations of a local

exchange company to serve a territory under a tariff approved by the Public Service

Commission. Any party which seeks an exemption shall certify to the commission

at the time of the filing that he has notified the affected local exchange company by

registered mail of the filing of a petition for exemption, and of the right of the local

exchange company to request a hearing within thirty (30) days of the notification.

(3) In determining public interest, the commission shall consider the following:

(a) The exte nt to which competing telecommunications services are available

from competitive providers in the relevant market;

(b) The existing ability and willingness of competitive providers to make

functionally equivalent or substitute services readily available;

(c) The number and size of competitive providers of service;

(d) The overall impact of the proposed regulatory change on the continued

availability of existing services at just and reasonable rates;

(e) The existence of adequate safeguards to assure that rates for services regulated

pursuant to this chapter do not subsidize exempted services;

(f) The impact of the proposed regulatory change upon efforts to promote

universal availability of basic telecommunications services at affordable rates

and upon the ne ed of telecommunications companies subject to the

jurisdiction of the commission to respond to competition;

(g) Whether the exercise of commission jurisdiction inhibits a regulated utility

from competing with unregulated providers of functionally similar

telecommunications services or products;

(h) The overall impact on customers of a proposed change to streamline

regulatory treatment of small or nonprofit carriers; and

(i) Any other factors the commission may determine are in the public interest.

(4) When the commission exempts a telecommunications product or service from all of

the provisions of this chapter, the investment, revenues, and expenses associated

with the service or product shall not be considered by the commission in setting

rates for the telecommunications company's regulated services. This provision shall

only apply to telecommunication products or services which the commission

exempts after July 14, 1992. Nothing herein shall prohibit the commission from

having access to and from examin ing the books and records of the exempted

product or service in order to determine compliance with the commission's rules

respecting allocation of cost when setting rates for the telecommunications

company's regulated services.

(5) The Public Service Commi ssion shall retain jurisdiction over persons and services

which are exempted from regulation under this section, or for which alternative

regulatory requirements have been established pursuant to this section. The

commission, on its own motion, or upon the motion of any person, after notice and

hearing, if requested, may vacate or modify any orders granting an exemption or

establishing alternative requirements if it determines by clear and satisfactory

evidence that the findings upon which the order was bas ed are no longer valid, or

that the exemption or modifications are no longer in the public interest.

(6) In granting or vacating exemptions, the Public Service Commission shall not be

discriminatory or preferential but may treat services and utilities diff erently if

reasonable and not detrimental to the public interest.

(7) The provisions of KRS 367.150(8) and 367.160, concerning the role of the Attorney

General, shall apply to all proceedings under this section.