Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 2172 entitled:

begs leave to report as follows:

The purpose of this bill is to reduce unnecessary regulatory burdens on the competitive telecommunications industry by allowing local exchange carriers to elect to be covered by an alternate form of regulation.

Your Committee received testimony in support of this bill from Verizon Hawaii. Testimony in opposition came from the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs (DCCA) and the Public Utilities Commission (PUC).

Your Committee finds that there is a growing perception in the telecommunications industry, as well as among regulators, that regulation of the telecommunications industry is unnecessary because a competitive market determines the rates that are charged to consumers. Your Committee finds that removing regulation rendered unnecessary by the competitive market, would reduce the workloads of regulators as well as industry costs, resulting in savings that would be passed along to consumers.

Your Committee decided to remove the substance of this bill, which was opposed by both DCCA and PUC, and instead use this bill as a vehicle for the substance of H.B. 2435, H.D. 1, which exempted non-facilities based resellers of telecommunications services from the requirement of obtaining PUC approval before issuing securities.

As amended, this bill provides an exemption for all telecommunications carriers from the requirement of obtaining PUC approval before issuing securities.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2172, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2172, H.D. 1, and be referred to the Committee on Finance.