Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 785
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 785 entitled: 


begs leave to report as follows:

     The purpose of this measure is to require the Public
Utilities Commission (PUC) to replace an existing
telecommunications provider with an alternative provider when the
PUC determines that an area of the State has less than adequate
service and the existing provider fails to satisfy its burden in
response to an order to show cause why the PUC should not
authorize an alternative provider for that area.  The measure
also allows the alternative provider to acquire the former
provider's property by eminent domain as may be necessary for the
provision of basic legal exchange service in the area.

     The Department of Commerce and Consumer Affairs, the
Department of Business, Economic Development, and Tourism,
Oceanic Communications, AT&T, TelHawaii, Inc., and GST Telecom
Hawaii presented testimony in support of the measure.  Four
individuals not present at the hearing submitted written
testimony in support of the measure.  GTE Hawaiian Tel and the
International Brotherhood of Electrical Workers Local Union 1357
presented testimony in opposition to the measure.

     Your Committee finds that under current law the PUC is
mandated, upon finding that any area of the State has less than
adequate telecommunications service, to require the existing

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telecommunications provider to show cause why the PUC should not
authorize an alternative telecommunications provider for the

     Implicit in the law's mandate is the PUC's authority, upon
the failure of the existing provider to justify its continued
operation in an inadequately served area, to decertify the
existing provider and to select an alternative provider to serve
the area.  Your Committee finds that this measure is necessary to
clarify and make explicit the law's intent to empower the PUC to
replace an existing carrier with an alternative carrier.  It is
not your Committee's intent in passing this measure to interfere
with the PUC's existing powers and authority. 

     Your Committee has amended the measure by:

     (1)  Deleting the purpose section of the measure;

     (2)  Deleting the amendment to the eminent domain law that
          establishes a public utility's right to exercise the
          power of eminent domain upon written notification of a
          proposed condemnation to the PUC, and after the PUC has
          determined that the proposed condemnation is necessary
          and in the public interest, and that the public utility
          will use the property for its utility operations;

     (3)  Making optional the PUC's decertification of a
          telecommunications provider and the selection of an
          alternative telecommunications provider upon the
          existing provider's failure to show cause to the PUC
          why it should not be decertified for providing less
          than adequate service in a particular area;

     (4)  Deleting the provision establishing a replacement
          telecommunications provider's right to acquire under
          power of eminent domain the existing telecommunications
          provider's property and requiring the payment of just
          compensation for property taken by eminent domain;     

     (5)  Deleting the provision repealing section 101-43, Hawaii
          Revised Statutes, relating to requirements prior to the
          exercise of the power of eminent domain;

     (6)  Deleting the measure's retroactivity provision; and

     (7)  Making technical, nonsubstantive amendments.
     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to

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this report, your Committee is in accord with the intent and
purpose of S.B. No. 785, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 785, S.D. 1, and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,

                                   BRIAN KANNO, Co-Chair

                                   BRIAN T. TANIGUCHI, Co-Chair

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