BILL ANALYSIS


                                                    C.S.H.B. 2128
                                            By: Seidlits (Sibley)
                                             Economic Development
                                                         05-10-95
                            Senate Committee Report (Substituted)
BACKGROUND

The Public Utility Commission of Texas (PUC) was created in 1975
and is responsible for regulating electric and telephone utilities
in Texas.  The key functions of the PUC include certifying a
utility's initial operation, reviewing any new construction or
changes to existing facilities, setting rates, and monitoring and
auditing the operations of utilities under its jurisdiction. 
Currently, the PUC has oversight of investor-owned utilities,
electric cooperatives, river authorities, and local telephone
companies.  Cities have retained original ratemaking authority for
electric utilities and cooperatives operating within their
boundaries, but the commission reviews these rates on an appellate
basis.  The commission also reviews on appeal the rates of city
utilities serving customers outside of city limits.

The Office of Public Utility Counsel (OPUC) was created in 1983 to
represent residential and small business consumers before PUC. 
OPUC participates in many proceedings before PUC but concentrates
its efforts on telephone and electric utility rate cases having the
greatest impact on residential and small business consumers.  OPUC
has participated in major rate cases, but only a percentage of all
cases before PUC since 1983.

The PUC and OPUC are subject to the sunset act and will be
abolished September 1, 1995, unless continued by the legislature.

S.B. 319, Acts of the 74th Legislature, Regular Session, 1995,
nonsubstantively recodifies the Public Utility Regulatory Act of
1995.  This bill makes substantive changes to that recodification.

PURPOSE

As proposed, C.S.H.B. 2128 continues the Public Utility Commission
of Texas and the Office of Public Utility Counsel for a six-year
period.  Among other statutory modifications, H.B. 2128 grants more
rate flexibility to small telephone companies; partially
deregulates telephone cooperatives; creates a certificate of
operating authority and a service provider certificate of operating
authority for new entrants to the telecommunications market to
provide more flexibility in regulation; establishes an incentive
regulatory structure for electing local exchange companies that
regulates price net cost of telecommunications services in three
baskets of competitive regulation in return for $1.4 billion in
infrastructure commitments to benefit schools, libraries, and
hospitals; requires the Public Utility Commission of Texas to
establish competitive safeguards to ensure fair competition and to
accelerate improvement of telecommunications; establishes
requirements for the use of specific customer proprietary network
information; establishes requirements for audio and video
programming, and for audio and video carriage; limits the
involvement of local exchange companies in electronic publishing;
creates the Telecommunications Infrastructure Fund Board to
administer the Telecommunications Infrastructure Fund to award
grants and loans for the purchase of equipment for educational
programs; and requires the delivery of certain exchange company
monies to rural and urban scholarship funds.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Public Utility Commission of Texas under SECTIONS 6, 20, 24,
38, 43, 45, 48 (Sections 3.001, 3.213(j), 3.2135(i), 3.2531(c) and
(j), 3.2625(f) and (h), 3.304(a), 3.309(c), 3.354(a), 3.452(c),
3.454(a), 3.455(a), 3.456(a), 3.457(a), 3.458(f), 3.460(b), 3.461,
3.463, 3.501(c), 3.601, 3.605, 3.608(b), and 3.658, Public Utility
Regulatory Act of 1995), and to the Texas Higher Education
Coordinating Board, the Central Education Agency, and the Texas
State Library Archives Commission under SECTION 48 (Section
3.606(r), Public Utility Regulatory Act of 1995) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 1.002, Public Utility Regulatory Act of
1995 (PURA), to provide that the legislature finds that
traditionally public utilities are by definition monopolies in the
areas they serve.

SECTION 2. Amends Section 1.003(14), PURA, to make a nonsubstantive
change.

SECTION 3. Amends Section 1.004, PURA, to make a nonsubstantive
change.

SECTION 4. Amends Section 1.022, PURA, to declare that, unless
continued in existence by Chapter 325, Government Code, this Act
expires September 1, 2001.

SECTION 5. Amends Section 1.353, PURA, as follows:

     (a)-(c) Make no change.
     
     (d) Requires 50 percent of the assessment due August 15, 1997,
     to be paid by August 15, 1996, and 50 percent to be paid by
     February 15, 1997, rather than August 15, 1997.
     
     (e) Requires 50 percent of the assessment due August 15, 1998,
     to be paid by August 15, 1997, and the remainder to be paid by
     August 15, 1998.
     
     (f) Makes a conforming change.
     
     (g) Redesignates existing Subsection (f).  Declares that this
     subsection expires September 1, 1998, rather than 1997.
     
SECTION 6. Amends Title IIIA, PURA, as follows:

                 SUBTITLE A.  GENERAL PROVISIONS

     Sec. 3.001.  POLICY.  Sets forth the findings of the
     legislature concerning the telecommunications industry.
     
     Sec. 3.002.  DEFINITIONS.  Defines "basic local
     telecommunications service," "incumbent local exchange
     company," "least cost technology," "local exchange telephone
     service," "long run incremental cost" or "LRIC," "pricing
     flexibility," "telecommunications provider," "and Tier 1 local
     exchange company."  Redefines "dominant carrier," "local
     exchange company," "public utility" or "utility," and
     "separation."
     
     SECTION 7.     Amends Section 3.051, PURA, by amending Subsections (a),
(c)-(f), (j), and (l)-(q), and adding Subsections (r) and (s), as
follows:

     (a) Declares that the legislature finds that the
     telecommunications industry through legislative actions, among
     others, does not lend itself to traditional public regulatory
     rules.
     
     (c) Grants the commission the jurisdiction to conduct
     investigations necessary to identify dominant carriers in the
     local telecommunications, rather than exchange, industry; to
     require that every local exchange area have access to local
     and interexchange telecommunications service, except that a
     telecommunications utility, rather than an interexchange
     carrier, must be allowed to discontinue service to a local
     exchange area under certain circumstances; and to require
     adequate quality of telecommunications service in each
     exchange if the commission determines that service, rather
     than long distance service, is not reliable.  Makes conforming
     and nonsubstantive changes.
     
     (d) Makes conforming and nonsubstantive changes.
     
     (e) Grants the commission all necessary power and authority to
     promulgate rules and procedures applicable to incumbent local
     exchange companies, rather than local exchange companies, for
     determining the level of competition in specific
     telecommunications markets.  Makes conforming changes.
     
     (f) and (j) Make conforming changes.
     
     (l) Authorizes the commission to enter into such orders as
     necessary to protect the public interest, including the
     imposition of services of its full regulatory authority under
     this subtitle, Subtitles C-F of this Title and Subtitles D-I
     of Title I, but not Subtitles H and I of this title, if the
     commission finds that an interexchange telecommunications
     utility has engaged in, or attempted to engage in, predatory
     pricing.
     
     (m) and (n) Make conforming changes.
     
     (o) Authorizes the commission to require information from
     local exchange companies, rather than local exchange carriers,
     as necessary to enforce the provision under this subsection. 
     Makes conforming changes.
     
     (p)  Makes conforming changes.
     
     (q)  Deletes reference to Subsection (l) of this section. 
     Makes a conforming change.
     
     (r) Authorizes the commission, only as necessary to enforce
     its limited jurisdiction, to prescribe forms of books,
     accounts, records, and memoranda to be kept by a company that
     has a certificate of operating authority (COA) or service
     provider certificate of operating authority (SPC) under
     Subtitle F of this title that in the judgment of the
     commission may be necessary to carry out the limited
     jurisdiction over those companies that this Act provides to
     the commission.
     
     (s) Grants the commission, except as otherwise specifically
     provided by this Act, only the following authority over a
     holder of a COA or SPC: to enforce the applicable provisions
     of this Act as provided by Subtitle I, Title I, of this Act;
     to assert jurisdiction over a specific service in accordance
     with Section 3.2572 of this Act; to require co-carriage
     reciprocity; and to regulate condemnation and building access. 
     Prohibits the commission from imposing on a telecommunications
     utility that has a COA or SPC a rule or regulatory practice
     under this section that imposes a greater regulatory burden on
     that telecommunications utility than is imposed on a
     certificate of convenience and necessity (CCN) holder serving
     the same area.
     
     SECTION 8.     Amends Title IIIB, PURA, by adding Section 3.053, as
follows:

     Sec. 3.053.  SALE OF PROPERTY.  (a) Requires the commission to
     complete an investigation under Section 1.251 of this Act that
     relates to a public utility and enter a final order within 180
     days after the date of notification by the utility.  Considers
     the utility's action consistent with the public interest if an
     order is not entered.
     
     (b) Declares that Section 1.251 of this Act does not apply
       to an incumbent local exchange company (LEC) electing under
       Subtitle H or I of this title or to a company that receives
       a COA or SPC under Subtitle F of this title.
       
       SECTION 9.   Amends Title IIIC, PURA, by adding Section 3.1015, as
follows:

     Sec. 3.1015.  MUNICIPAL FEES.  Prohibits anything in this Act
     from being construed as in any way limiting the right of a
     public utility to pass through municipal fees.  Requires a
     public utility that traditionally passes through municipal
     fees to promptly pass through any reductions.
     
     SECTION 10.    Amends Section 3.151(a), PURA, to require the
commission, on application of a utility, to fix depreciation rates
that promote deployment of new technology and infrastructure, and
to consider depreciation practices of nonregulated
telecommunications providers in setting those rates.  Authorizes a
company electing under Subtitle H of this title to determine its
own depreciation rates and amortizations, but shall notify the
commission of any changes.

SECTION 11.    Amends Title IIID, PURA, by adding Section 3.1545,
as follows:

     Sec. 3.1545.  RECORDS.  Authorizes books, accounts, records,
     or memoranda of a public utility, notwithstanding Section
     1.204 of this Act, to be removed from the state so long as
     those books, accounts, records, or memoranda are returned to
     the state for any inspection by the commission that is
     authorized by this Act.
     
     SECTION 12.    Amends Title IIID, PURA, by adding Section 3.1555,
as follows:

     Sec. 3.1555.  MINIMUM SERVICES.  (a) Requires the commission
     to require all holders of CCNs and COAs to provide at the
     applicable tariff rate to all customers not later than
     December 31, 2000, single party service, tone-dialing service,
     basic custom calling features, equal access for interLATA
     interexchange carriers upon bona fide request, and certain
     digital switching capability on customer request.
     
     (b) Requires an electing incumbent LEC serving as of January
       1, 1995, more than 175,00 but fewer than 1,500,000 access
       lines to install digital switches in its central offices
       serving exchanges of less than 20,000 access lines before
       December 31, 1998, notwithstanding Subsection (a) of this
       section.
       
       (c) Authorizes the commission to temporarily waive these
       requirements on a showing of good cause.  Prohibits the
       commission from considering the cost of implementing this
       section in determining whether an electing company is
       entitled to a rate increase under Subtitle H or I of this
       title or increased universal service funds under Section
       3.608 of this Act.
       
       (d) Declares that this section does not affect the
       requirement prescribed by 16 T.A.C. Section 23.69 that, not
       later than July 1, 1996, each LEC shall make Integrated
       Services Digital Network (ISDN) available to all customers
       in exchange areas of the company that have at least 50,000
       access lines.
       
       SECTION 13.  Amends Title IIID, PURA, by adding Section 3.1556,
as follows:

     Sec. 3.1556.  RECONNECTION FEE.  Requires the commission to
     establish a reasonable limit on the amount that a LEC may
     charge a customer for changing the location at which the
     customer receives service.
     
     SECTION 14.    Amends Sections 3.201 and 3.202, PURA, to make
nonsubstantive and conforming changes.

SECTION 15.    Amends Section 3.204, PURA, to place the burden of
proof that an incumbent LEC's, rather than a LEC's, rates are just
and reasonable on the incumbent LEC.

SECTION 16.    Amends Section 3.208(b), PURA, to require a finding
under this subsection to include, among others, a finding that the
price to the utility is no higher than prices charged by the
supplying affiliate to its other affiliates or divisions for the
same item or class of items, or to unaffiliated persons or
corporations within the same market areas or having the same market
conditions.  Declares that, if the supplying affiliate has
calculated its charges to the utility in a manner consistent with
the rules of the Federal Communications Commission (FCC), no
finding shall be required as to the price charged by the supplying
affiliate to its other affiliates or divisions.  Requires the
commission, in any case in which the commission finds that the test
period affiliate expense is unreasonable, to determine the
reasonable level of the expense and to include such expense in
determining the utility's cost of service.

SECTION 17.    Amends Section 3.210, PURA, by adding Subsection
(c), to declare that this section, except as provided by Subtitles
H and I of this title, does not apply to a company electing under
Subtitle H or I of this title.  Requires the commission to retain
jurisdiction to hear and resolve complaints regarding an electing
company's compliance with obligations imposed by this Act.

SECTION 18.    Amends Section 3.211, PURA, by amending Subsections
(f) and (h), and adding Subsection (j), as follows:

     (f) Declares that this subsection, except as provided by
     Subtitles H, I, and J of this title, does not apply to a
     company electing into Subtitle H or I of this title.  Requires
     rates established under this section after a company's
     election to comply with Subtitle H or I of this title.
     
     (h) Requires the schedule of rates finally approved by the
     commission, if the commission does not make a final
     determination concerning an incumbent LEC's, rather than a
     LEC's, schedule of rates prior to the 150-day suspension
     period, to become effective from the date the suspension
     period expired.  Makes a conforming change.
     
     (j) Authorizes an incumbent LEC to file with the commission
     tariffs for switched access service that have been approved by
     the FCC, provided that the tariffs include all rate elements
     in the company's interstate access tariff other than end user
     charges.  Requires the commission, if on review the filed
     tariffs contain the same rates, terms, and conditions,
     excluding any end user charges, as approved by the FCC, to
     order the rates to be the intrastate switched access rates,
     terms, and conditions for the incumbent LEC within 60 days of
     filing.
     
     SECTION 19.    Amends Sections 3.212(a) and (c), PURA, to authorize
an incumbent LEC, rather than a LEC, to make changes in certain
tariffed rules, regulations or practices by filing the proposed
changes at least 35 days prior to the effective date of the
changes.  Makes a conforming change.

SECTION 20.    Amends Title IIIE, PURA, by amending Section 3.213
and adding Section 3.2135, as follows:

     Sec. 3.213.  New heading:  SMALL INCUMBENT LOCAL EXCHANGE
     COMPANIES.  (a) Sets forth the findings of the legislature
     concerning regulatory policy.
     
     (b) Authorizes an incumbent LEC that is a cooperative
       corporation, or that, together with all affiliated incumbent
       LECs, has fewer than 31,000 state access lines in service in
       this state, to offer extended local calling or new services
       on an optional basis or make minor changes in rates or
       tariffs if the company files a prescribed statement of
       intent with the commission and the office before a specified
       time, provides prescribed notice, and files with the
       commission affidavits verifying the provision of notice
       prescribed.
       
       (c) Requires the statement of intent to include specific
       information.
       
       (d) Requires the incumbent LEC to provide notice to affected
       customers not later than the 61st day before the effective
       date of the proposed change.  Sets forth the required
       contents of the notice.
       
       (e) Requires the commission to review a proposed change
       filed under this section if the commission receives
       complaints relating to the proposed change signed by a
       certain number of the affected local service customers; the
       commission receives a complaint from an affected intrastate
       access customer, or group of such customers, that in the
       preceding 12 months accounted for more than 10 percent of
       the company's total intrastate gross access revenues; the
       proposed change is not a minor change; the company does not
       comply with the procedural requirements of this section; or
       the proposed change is inconsistent with the commission's
       substantive policies as expressed in its rules.
       
       (f) Authorizes the commission, on review, to suspend the
       proposed tariff during the pendency of review.
       
       (g) Provides that this section does not prohibit a incumbent
       local exchange company from filing for new service or rate
       change under another applicable section of this Act, or the
       commission from conducting a review under Section 3.210 of
       this Act.
       
       (h) Defines "minor change."  Deletes existing Subsections
       (a)-(f).
       
       (i) Authorizes companies under this section to provide to
       their board members, officers, employees, and agents free or
       reduced rates for services.
       
       (j) Requires the commission, within 120 days of the
       effective date of this section, to review its policies,
       rules, and requirements relating to rural and small
       incumbent LECs and cooperatives to eliminate or revise those
       that place unnecessary burdens on those companies.  Sets
       forth required considerations of the commission.
       
       (k) Redesignates existing Subsection (h) and makes
       conforming changes.  
       
       (l) Provides that this section may not apply to an incumbent
       LEC that is a cooperative corporation partially deregulated
       under Section 3.2135 of this Act, except as provided in
       Subsection (j).
     Sec. 3.2135.  COOPERATIVE CORPORATIONS.  (a) Authorizes an
     incumbent LEC that is a cooperative corporation to vote to
     partially deregulate the cooperative by sending a ballot to
     each cooperative member providing for voting for or against
     the proposition.
     
     (b) Considers the cooperative to be partially deregulated if
       a majority of the ballots, returned before a specific time,
       favor deregulation.
       
       (c) Authorizes the cooperative, after balloting, to offer
       extended local calling services, new services on an optional
       basis, or changes in its rates or tariffs if the cooperative
       provides notice, files with the department affidavits
       verifying the provision of notice, and files a statement of
       intent.
       
       (d) Sets forth requirements for the statement of intent.
       
       (e) Requires the cooperative to provide to all affected
       customers and parties at least two notices of the proposed
       action.  Sets forth requirements for the notice.
       
       (f) Requires the cooperative to file, before a specific
       time, with the commission affidavits verifying that the
       cooperative provided each notice under Subsection (e).
       
       (g) Requires the commission to review a proposed action if
       the commission receives by a certain date, complaints
       relating to the proposed action signed by at least five
       percent of the affected local service customers or from an
       affected intrastate access customer, or group of such
       customers, that in the preceding 12 months accounted for
       more than 10 percent of the company's total intrastate gross
       access revenues; the cooperative does not comply with the
       procedural requirements of this section; or the proposed
       change is inconsistent with the commission's substantive
       policies as expressed in its rules.
       
       (h) Authorizes a cooperative that is partially deregulated
       under this section to vote to reverse the deregulation by
       sending a ballot to each cooperative member.  Sets forth
       provisions for a reballot.
       
       (i) Requires the commission, by rule, to prescribe the
       voting procedures required for a cooperative.
       
       (j) Provides that this section does not prohibit a
       cooperative from filing for a new service or rate change
       under another applicable section of this Act or affect the
       application of other provisions of this Act.
       
       (k) Authorizes the commission to conduct a review in
       accordance with Section 3.210 of this Act.
SECTION 21.    Amends Title IIIE, PURA, by adding Section 3.219, as
follows:

     Sec. 3.219.  INTRALATA CALLS.  (a) Requires LECs in this state
     designated or de facto authorized to receive "0+" and "1+"
     dialed intraLATA calls to be exclusively designated or
     authorized to receive those calls, except as provided by
     Subsection (b) and while federal law prohibits any company in
     this state from providing interLATA services.  
     (b) Provides that a telecommunications utility operating under
     a COA or SPC to the extent not restricted by Section
     3.2532(f), is de facto authorized to receive "0+" and "1+"
     dialed intraLATA calls on the date on which the utility
     receives its certificate.
     
     (c) Requires the commission, effective as of the time the LEC
     is allowed by federal law to provide interLATA
     telecommunications services, to ensure that customers may
     designate a provider of their choice to carry their "0+" and
     "1+" dialed intraLATA calls and that equal access in the
     public network is implemented such that the provider may carry
     such calls.
SECTION 22.    Amends Section 3.251, PURA, by adding Subsections
(c) and (d), as follows:

     (c) Prohibits a person from providing local exchange telephone
     service, basic local telecommunications service, or switched
     access service without a CCN, COA, or SPC.
     (d) Prohibits a municipality from receiving a CCN, COA, or SPC
     under this Act, and from providing a service for which a
     certificate is required.
SECTION 23.    Amends Section 3.252, PURA, as follows:

     Sec. 3.252.  New heading: EXCEPTIONS.  Provides that a
     telecommunications utility, rather than a public utility, is
     not required to secure a CCN, COA, or SPC for an extension
     into territory contiguous to that already served by it and not
     receiving similar service from another telecommunications
     utility and not within the certificated area of another
     telecommunications utility; an extension within territory
     already served by it under a COA or SPC; or interexchange
     telecommunications service, non-switched private line service,
     shared tenant service, specialized communications common
     carrier service, commercial mobile service, or operator
     service as defined by Section 3.052(a) of this Act.  Makes a
     conforming change.
     
SECTION 24.    Amends Title IIIF, PURA, by adding Section 3.2531,
as follows:

     Sec. 2.2531.  CERTIFICATE OF OPERATING AUTHORITY.  (a)
     Authorizes an applicant, in lieu of a CCN, to apply for a COA.
     
     (b) Requires an application for a COA to specify whether the
       applicant is seeking a facilities based COA under this
       section or an SPC under Section 3.2532.  Requires the
       commission, when an application for a COA or SPC is filed,
       to give notice of the application to interested parties and,
       if requested, fix a time and place for a hearing and give
       notice of the hearing.  Authorizes any person interested in
       the application to intervene at the hearing.
       
       (c) Requires an applicant, if seeking a facilities based
       COA, to include in the application a proposed build-out plan
       demonstrating how the applicant will deploy its facilities
       throughout the geographic area of its certificated service
       area over a six-year period.  Authorizes the commission to
       issue rules for a holder of a COA with respect to the time
       within which the holder must be able to serve customers,
       except that a holder must serve customers within a build-out
       area within 30 days of the date of a customer request for
       service.  Prohibits the commission from requiring a holder
       to place "drop" facilities on every customer's premises or
       to activate fiber optic facilities in advance of customer
       request as part of the build-out requirements.  Requires the
       plan required by this subsection to meet certain conditions.
       
       (d) Authorizes the build-out plan to permit not more than 40
       percent of the applicant's service area to be served by
       resale of the incumbent LEC's facilities under the tariff
       required to be approved in Section 3.453.  Provides a
       specific exception.  Declares that the 40-percent resale
       limitation applies to incumbent local exchange facilities
       resold by a holder of a COA as part of the provision of
       local exchange telephone service.  Prohibits an applicant
       from using commercial mobile service to meet the build-out
       requirement imposed by this section.  Authorizes an
       applicant to use personal communications services wireless
       technology licensed by the FCC after January 1, 1995, to
       meet the build-out requirement.
       
       (e) Requires COAs to be granted within 60 days after the
       date of application on a nondiscriminatory basis after
       commission consideration of certain factors.  Authorizes the
       commission to extend the 60-day period on good cause shown. 
       Requires the commission to make additional considerations in
       an exchange of an incumbent LEC serving fewer than 31,000
       access lines.
       
       (f) Requires the commission to consider the adequacy of the
       applicant's build-out plan in determining whether to grant
       the application.  Authorizes the commission to
       administratively and temporarily waive compliance with the
       six-year build-out plan on a showing of good cause. 
       Requires the holder of a certificate to file periodic
       reports with the commission demonstrating compliance with
       the plan.
       
       (g) Authorizes an application for a COA to be granted only
       for an area or areas that are contiguous and reasonably
       compact and cover at least 27 square miles.  Makes certain
       exceptions.
       
       (h) Prohibits the commission, before September 1, 1998, from
       granting a COA in an exchange of an incumbent LEC serving
       fewer than 31,000 access lines.  Requires the commission to
       require that the applicant meet the other appropriate
       certification provisions of this Act.
       
       (i) Authorizes the commission, six years after an
       application for a COA has been granted for a particular area
       or when the new applicant has completed its build-out plan
       required by this section, to waive the build-out
       requirements of this section for additional applicants. 
       Requires the build-out requirements of this section, in
       service areas served by an incumbent LEC having more than
       five million access lines which, as of September 1, 1995, is
       subject to any prohibition under federal law on the
       provision of interLATA service, to be eliminated in any
       service where all prohibitions on that company's provision
       of interLATA services are removed such that the company can
       offer interLATA service together with its local and
       intraLATA toll service.
       
       (j) Authorizes the commission, on an application filed after
       September 1, 1997, to conduct a hearing to make certain
       determinations concerning the build-out requirements.  Sets
       forth requirements for the commission, including rulemaking
       authority, if the commission determines that the existing
       build-out requirements have created barriers to facilities
       based local exchange competition.
       
       (k) Authorizes the commission, if the holder of a COA fails
       to comply with any requirement of this Act, to revoke the
       certificate, or impose administrative penalties or take
       other action under Subtitle I, Title I, of this Act.
       
       SECTION 25.  Amends Title IIIF, PURA, by adding Section 3.2532,
as follows:

     Sec. 3.2532.  SERVICE PROVIDER CERTIFICATE OF OPERATING
     AUTHORITY.  (a) Authorizes the commission, in order to
     encourage innovative and entrepreneurial businesses to provide
     telecommunications services, to grant SPCs.  Requires an
     applicant to demonstrate that it has the financial and
     technical ability to provide its services and show that the
     services will meet the requirements of this section.
     
     (b) Declares that a company is eligible for an SPC under
       this section unless the company, together with affiliates,
       had in excess of six percent of the total intrastate
       switched access minutes of use as measured by the most
       recent 12-month period preceding the filing of the
       application for which data is available.  Requires the
       commission to obtain from the incumbent LECs such
       information as is necessary to determine eligibility, and to
       certify such eligibility within 10 days after the
       application is filed.  Requires an SPC to be granted within
       60 days after the date of the application on a
       nondiscriminatory basis after consideration by the
       commission of certain factors.  Authorizes the commission to
       extend the 60-day period on good cause shown.
       
       (c) Requires an applicant for an SPC to file with its
       application a description of the services it will provide
       and to show the areas in which it will provide those
       services.
       
       (d) Authorizes a holder of an SPC to obtain services under
       the resale tariffs ordered by the commission as specified by
       Section 3.453 of this Act; obtain for resale the monthly
       recurring flat rate local exchange telephone service and
       associated nonrecurring charges of an incumbent LEC as a
       five percent discount to the tariffed rate; sell the flat
       rate local exchange telephone service only to the same class
       of customers to which the incumbent LEC sells that service;
       obtain services offered by or negotiated with a holder of a
       CCN or COA; and obtain for resale single or multiple line
       flat rate intraLATA calling service when provided by the LEC
       at the tariffed rate for online digital communications. 
       Prohibits a holder of an SPC from using a resold flat rate
       local exchange telephone service to avoid the rates, terms,
       and conditions of an incumbent LEC's tariffs; terminate both
       flat rate local exchange telephone service and services
       obtained under the resale tariff on the same end user
       customer's premises; use the resold flat rate local exchange
       telephone services to provide access services to other
       interexchange carriers, cellular carriers, competitive
       access providers, or other retail telecommunications
       providers.
       
       (e) Prohibits the holder of a COA or CCN from being granted
       an SPC as to the same territory.  Requires a holder of an
       SPC who applies for a COA or CCN as to the same territory to
       include a plan to relinquish its SPC.
       
       (f) Authorizes an incumbent LEC that sells flat rate local
       exchange telephone service to a holder of an SPC to retain
       all access service and "1+" intraLATA toll service
       originated over the resold flat rate local exchange
       telephone service.
       
       (g) Prohibits an incumbent LEC from delaying provisioning or
       maintenance of services provided under this section;
       degrading the quality of access provided to another
       provider; impairing the speed, quality, or efficiency of
       lines used by another provider; failing to fully disclose in
       a timely manner upon request all available information
       necessary for the holder of an SPC to provision resale
       services; or refusing to take any reasonable action to allow
       efficient access by a holder of an SPC to ordering, billing,
       or repair management systems of the LEC.
       
       (h) Defines "affiliate" and "control."
       
       SECTION 26.  Amends Sections 3.255(a) and (b), PURA, as follows:

     (a) Grants all telecommunications utilities, rather than
     public utilities, certified under this Act to provide service
     or operate facilities in an area to be included in certain
     boundaries prior to the inclusion to continue service in its
     area of certification within the annexed or incorporated area.
     
     (b) Grants a certificated telecommunications utility, rather
     than a public utility, the right to continue service within
     its area of certification  under certain circumstances.  Makes
     conforming changes.
     
     SECTION 27.    Amends Sections 3.256 and 3.257, PURA, to make
conforming changes.

SECTION 28.    Amends Title IIIF, PURA, by adding Section 3.2555,
as follows:

     Sec. 3.2555.  DISCRIMINATION.  (a) Requires an applicant for
     a COA or SPC to file with its application a sworn statement
     that it has applied for any necessary municipal consent,
     franchise, or permit required for the types of services and
     facilities for which it has applied.  Prohibits a
     municipality, notwithstanding Section 1.103 of this Act, from
     discriminating against a telecommunications utility in
     relation to the authorization or placement of
     telecommunications facilities within public right-of-way,
     access to buildings, or municipal utility pole attachment
     rates, terms, and conditions to the extent not addressed by
     federal law.
     
     (b) Prohibits a municipality, in the granting of consent,
       franchises, and permits for the use of public streets,
       alleys, or rights-of-way within its corporate municipal
       limits, from discriminating in favor of or against a
       telecommunications utility that holds or has applied for a
       CCN, COA, or SPC all in relation to certain factors.
       
       (c) Prohibits a public or private property owner from taking
       certain actions whenever a telecommunications utility holds
       a consent, franchise, or permit as determined to be the
       appropriate grants of authority by the municipality, and
       holds a certificate, where required by this Act.
       
       (d) Authorizes a public or private property owner to take
       certain actions whenever a telecommunications utility holds
       a municipal consent, franchise, or permit as determined to
       be the appropriate grants of authority by the municipality,
       and holds a certificate, where required by this Act.
       
       (e) Grants the commission the jurisdiction necessary to
       enforce this section.
       
       (f) Prohibits anything in this Act from restricting or
       limiting a municipality's historical right to control and
       receive reasonable compensation for access to its public
       streets, alleys, or rights-of-way or other public property.
       
       (g) Provides that Subsection (c) of this section does not
       apply to an institution of higher education.  Defines
       "institution of higher education."
       
       (h) Grants the holder of a CCN, COA, or SPC the right to
       collect the fee imposed by a municipality under this section
       through a pro rata charge to customers within the boundaries
       of the municipality imposing the fee, which may be shown as
       a separate line item on the customer bill.
       
       SECTION 29.  Amends Title IIIF, PURA, by adding Section 3.2571,
as follows:

     Sec. 3.2571.  FLEXIBILITY PLAN.  Requires the commission,
     after an application for a CCN, COA, or SPC is granted or the
     commission determines that a certificate is not needed for the
     services to be provided by the applicant, to conduct the
     proceedings it determines appropriate to establish a
     transitional flexibility plan for the incumbent LEC in the
     same area as the new certificate holder.  Prohibits a basic
     local telecommunications service price of the incumbent LEC
     from being increased until four years following the grant of
     the certificate to the applicant, except as provided by this
     Act or when the new applicant has completed its build-out plan
     under Section 3.2531 or when the build-out requirements have
     been eliminated.
     
     SECTION 30.    Amends Title IIIF, PURA, by adding Section 3.2572,
as follows:

     Sec. 3.2572.  MARKET POWER TEST.  (a) Authorizes the
     commission, on notice and hearing, to grant price deregulation
     of a specific service in a particular geographic market if the
     commission determines that the incumbent LEC or COA holder
     that is a dominant provider is no longer dominant as to that
     specific service in that particular geographic market. 
     Authorizes the incumbent LEC or COA holder that is a dominant
     provider, once a service is price-deregulated under this
     section, to set the rate for the deregulated service at any
     level above the service's long-run incremental cost (LRIC).
     
     (b) Requires the commission, in order to determine that an
       incumbent LEC or COA holder that is a dominant provider is
       no longer dominant as to a particular service in a
       particular geographic market, to find that an effective
       competitive alternative exists and that the incumbent LEC or
       COA holder that is a dominant provider does not have
       sufficient market power to control the price of the service
       within a specified geographic area in a manner that is
       adverse to the public interest.
       
       (c) Sets forth the factors for the commission to consider in
       determining whether the incumbent LEC or COA holder is
       dominant as to a specific service in a particular geographic
       area.
       
       (d) Grants the commission all necessary power to assert or
       reassert regulation over a specific service in a particular
       geographic market if the incumbent LEC or COA holder that is
       a dominant carrier is found to again be dominant, or the
       provider of services under a COA or SPC is found to be
       dominant as to that specific service in that particular
       geographic market.
       
       (e) Requires the commission, on request of an incumbent LEC
       or COA holder that is a dominant carrier in conjunction with
       an application under this section, to conduct investigations
       to determine the existence, impact, and scope of competition
       in the particular geographic and service markets at issue. 
       Authorizes the commission to call and hold hearings and
       issue subpoenas.  Grants the commission all powers necessary
       and convenient to the investigation, and authorizes the
       commission to make findings of fact and decisions with
       respect to those markets.
       
       (f) Entitles the parties to the proceeding to use the
       results of the investigation under Subsection (e) in an
       application for pricing flexibility.
       
       (g) Authorizes the commission to collect reports from a
       holder of a COA or SPC.  Requires the information to be
       confidential.  Requires the commission to aggregate the
       information to the maximum extent possible considering the
       purpose of the proceeding to protect the confidential nature
       of the information.
       
       SECTION 31.  Amends Section 3.258(a), PURA, to require, except as
provided by this Section, Section 3.259, or Section 3.2595, a
telecommunications utility that is granted a CCN or COA to be
required to offer to any customer in its certificated area all
basic local telecommunications services.  Places provider of last
resort obligations on the holder of a CCN or COA.

SECTION 32.    Amends Section 3.259, PURA, to require the holder of
a COA or SPC to refuse to serve a customer within its certified
area if the certificate holder is prohibited from providing the
service under Section 212.012 or 232.0047, Local Government Code.

SECTION 33.    Amends Title IIIF, PURA, by adding Section 3.2595,
as follows:

     Sec. 3.2595.  DISCONTINUATION OF SERVICE.  (a) Authorizes a
     telecommunications utility that holds a COA or SPC,
     notwithstanding Section 3.258 of this Act, to discontinue an
     optional service that is not essential to the provision of
     basic local telecommunications service or cease operations
     within its certificated area.
     
     (b) Requires such telecommunications utility, before it
       discontinues an optional service or ceases operations, to
       provide notice of the intended action to the commission and
       each affected customer in the manner required by the
       commission.
       
       (c) Entitles such telecommunications utility to discontinue
       an optional service on or after the 61st day after the date
       on which the utility provides the notice required by
       Subsection (b) of this section.
       
       (d) Prohibits such telecommunications utility from ceasing
       operations within its certificated area unless another
       provider of basic local telecommunications services has
       adequate facilities and capacity to serve the customers of
       the certificated area and the commission authorizes the
       utility to cease operations.
       
       (e) Prohibits the commission from authorizing such
       telecommunications utility from ceasing operations under
       Subsection (d) of this section before the 61st day after the
       date on which the utility provides notice under Subsection
       (b).  Authorizes the commission to enter an order
       administratively unless the commission receives a complaint
       from an affected person.
       
       SECTION 34.  Amends Section 3.260, PURA, to authorize, under
certain conditions, a telecommunications utility to sell a COA.

SECTION 35.    Amends Section 3.261, PURA, to make conforming
changes.

SECTION 36.    Amends Title IIIF, PURA, by adding Section 3.2615,
as follows:

     Sec. 3.2615.  DIRECTORY LISTINGS AND ASSISTANCE.  (a) Requires
     companies providing local exchange telephone service to
     negotiate the terms and conditions of printed directory
     listings and directory assistance within overlapping
     certificated areas.
     
     (b) Authorizes the commission, on complaint by the incumbent
       LEC or holder of the CCN, COA, or SPC, to resolve disputes
       between the parties and issue an order setting the terms and
       conditions of the directory listings or assistance.
       
       (c) Declares that this section does not affect the authority
       of an incumbent LEC to voluntarily conduct negotiations with
       an applicant for a CCN, COA, or SPC.
       
       SECTION 37.  Amends Section 3.262, PURA, as follows:

     (a) Authorizes the commission, after notice and hearing, to
     order one or more telephone companies to provide optional
     extended area service within a specified calling area if
     provision of the service is jointly agreed to by the
     representatives of each affected telephone company and the
     representatives of a political subdivision within the proposed
     common calling area, provided that the proposed common calling
     area has a single, continuous boundary.
     
     (b) Declares that the agreement of each political subdivision
     is not required if more than one political subdivision is
     affected by a proposed optional calling plan.  Prohibits the
     commission from adopting rules that diminish the ability of a
     political subdivision or affected telephone company to enter
     into joint agreements for optional extended area calling
     service.  Defines "political subdivision."
     
     SECTION 38.    Amends Title IIIF, PURA, by adding Section 3.2625,
as follows:

     Sec. 3.2625.  PAY TELEPHONES.  (a) Limits by this section the
     right of a provider of pay telephone service to set the
     provider's rates and charges and the commission's authority
     over the pay telephone services rates of an incumbent LEC.
     
     (b) Prohibits a provider of pay telephone service from
       imposing on pay phone end users any charge for local
       directory assistance or calls made under Chapter 771 or 772,
       Health and Safety Code.
       
       (c) Requires the commission to establish a limit on the
       charge that may be imposed for a pay telephone coin sent-paid call within the LEC's toll-free local calling area. 
       Authorizes the commission to establish a statewide ceiling
       on the charge that may be imposed by a provider of pay
       telephone service for local calls which are collect or
       operator-assisted or paid by credit card or calling card,
       provided that the commission shall not establish the ceiling
       at less than the applicable local rates for such calls of
       any of the four largest interexchange carriers operating in
       Texas.
       
       (d) Authorizes a provider of pay telephone service, under
       certain conditions, to impose a set use fee not exceeding 25
       cents at the point at which the call is initiated for each
       "1-800" type call made from a pay telephone.
       
       (e) Prohibits a pay telephone service provider, other than
       an incumbent LEC, from charging for credit card, calling
       card, or live or automated operator-handled calls at a rate
       or charge that is an amount greater than the authorized
       rates and charges published in the eight newspapers having
       the largest circulation in this state on March 18, 1995,
       provided that the pay phone rates of an incumbent LEC
       subject to Subtitle H are governed by that subtitle. 
       Declares that the published rates remain in effect until
       changed by the legislature.
       
       (f) Requires the commission to adopt rules within 180 days
       from the effective date of this section that require every
       pay telephone service provider not holding a CCN to register
       with the commission.  Requires a provider of pay telephone
       service to be registered in order to do business in this
       state.
       
       (g) Authorizes the commission to order disconnection of
       service for up to one year for repeat violations of
       commission rules.
       
       (h) Authorizes the commission to adopt rules regarding
       information to be posted on pay telephone instruments, but
       those rules may not require a provider of pay telephone
       service or an affiliate of a provider to police the
       compliance with those rules by another provider of pay
       telephone service.
       
       (i) Defines "provider of pay telephone service."
       
SECTION 39.    Amends Section 3.263(a), PURA, to authorize the
commission, at any time after notice and hearing, to revoke or
amend any COA or SPC if it finds that the certificate holder has
never provided or is no longer providing service in the area
covered by the certificate.

SECTION 40.    Amends Section 3.302, PURA, by adding Subsection
(i), to authorize a commercial mobile service provider to offer
caller identification services under the same terms and conditions
provided by Subsections (c)-(f) of this section.

SECTION 41.    Amends Title IIIG, PURA, by adding Section 3.3025,
as follows:

     Sec. 3.3025.  CALLER ID SERVICES: CONSUMER INFORMATION.  (a)
     Requires the telecommunications provider, when a customer
     requests per-line blocking through the commission, to notify
     the customer by mail of the effective date that per-line
     blocking will be instituted.  Requires a telecommunications
     provider providing Caller ID service to a customer originating
     a call, when the provider becomes aware of a failure to block
     the delivery of the calling party's identification information
     from a line equipped with per-call blocking or per-line
     blocking of Caller ID information, to report such failure to
     the panel, the commission, and the affected customer if that
     customer did not report the failure.  Requires a reasonable
     effort to be made to notify the affected customer within 24
     hours after the provider becomes aware of such failure.
     
     (b) Requires the commission to form the Caller ID Consumer
       Education Panel (panel).  Sets forth the composition of the
       panel.  Requires the panel to meet at least quarterly and to
       file an annual report with the commission regarding the
       level of effort and effectiveness of consumer education
       materials and its recommendations for increasing the safe
       use and privacy of the calling customer and decreasing the
       likelihood of harm resulting from Caller ID services. 
       Authorizes the commission to implement the recommendations
       of the panel and interested parties to the extent consistent
       with the public interest.  Requires the panel to disband on
       September 1, 1999, unless reauthorized by statute.
       
       (c) Requires all providers offering Caller ID services to
       file with panel, no later than the effective date of this
       Act, all existing Caller ID materials used on or before
       September 1, 1995.  Requires all future materials to be
       provided when they become available.  Requires the panel to
       investigate whether educational materials are distributed in
       as effective a manner as marketing materials.
       
       (d) Defines "Caller ID services."
       
       (e) Defines "Caller ID materials."
       
SECTION 42.    Amends Section 3.303, PURA, as follows:

     Sec. 3.303.  New heading: INTEREXCHANGE SERVICES; INCUMBENT
     LOCAL EXCHANGE COMPANIES' RATES.  Requires an incumbent LEC's
     rates for interexchange telecommunications services to be
     statewide average rates.
     
     SECTION 43.    Amends Sections 3.304(a) and (b), PURA, as follows:

     (a)(1) Requires the commission, if a petition for the
     expansion of toll-free calling boundaries is filed with the
     commission, to order the incumbent LEC, rather than the LEC,
     to provide for the balloting of its subscribers.  
     
     (2) Requires the commission to provide for such expansion
       for each incumbent LEC customer in the petitioning exchange
       if, in addition to other requirements, the central switching
       office of the exchange is located within 22 miles utilizing
       vertical and horizontal geographic coordinates of the
       central switching office of the exchange requested for toll-free calling service, or the petitioning exchange shall
       demonstrate in its petition that it shares a community of
       interest with the exchange requested for toll-free calling
       service.  Redefines "community of interest."
       
       (3) Requires an incumbent LEC to recover all of its costs
       incurred through a request other than a revenue requirement
       showing by a monthly fee for toll-free calling of not
       greater than a certain amount for up to five exchanges,
       together with an additional monthly fee of $1.50 per line
       for each exchange in excess of five, whether obtained in one
       or more petitions.  Makes conforming changes.
     (b) Makes conforming changes.
SECTION 44.    Amends Title IIIG, PURA, by adding Section 3.308, as
follows:

     Sec. 3.308.  CHARGE FOR EXTENDED AREA SERVICE.  (a) Requires
     an incumbent LEC serving more than one million access lines in
     this state, that provides mandatory two-way extended area
     service to customers for a separately stated monthly charge of
     more than $3.50 per line for residential customers and $7 per
     line for business customers, to file with the commission to
     reduce its monthly rates for that extended area service to
     $3.50 per line for residential customers and $7 per line for
     business customers.  Requires the incumbent LEC to recover all
     of its costs incurred and all loss of revenue that results
     from implementation of those rates in the manner prescribed by
     Section 3.304(a)(3)(A)(ii).
     
     (b) Declares that the commission and an incumbent LEC are
       not required to comply with this section with regard to the
       separately stated monthly charges for the provision of
       mandatory two-way extended area service, if the charge is
       for extended area service in or into a metropolitan exchange
       or for extended metropolitan service.
       
       SECTION 45.  (a) Amends Title IIIG, PURA, by adding Section
3.309, as follows:

            Sec. 3.309.  (a) Requires a private for-profit publisher of
       a residential telephone directory that is distributed to the
       public at minimal or no cost to include in the directory a
       listing of any toll-free and local telephone numbers of
       state agencies and state public services and of each state
       elected official who represents all or part of the
       geographical area for which the directory contains listings.
       
       (b) Requires the listing required by this section to be
         clearly identified and located or clearly referenced at
         the front of the directory before the main listing of
         residential and business telephone numbers.  Declares that
         the listing is not required to exceed two 8-1/2 by 11-inch
         pages, single-spaced in eight-point type.
         
         (c) Authorizes the commission to adopt rules to implement
         this section.  Requires the commission to compile relevant
         information to ensure accuracy of information in the
         listing, and to provide the information to a
         telecommunications utility or telephone directory
         publisher within a reasonable time after a request by the
         utility or publisher.
     (b) Effective date of this section: September 1, 1995.
         Makes application of this section prospective beginning
     September 1, 1996.
     
SECTION 46.    Amends Title IIIG, PURA, by adding Section 3.310, to
require a telecommunications utility or an affiliate of that
utility that publishes a residential or business telephone
directory that is distributed to the public to publish the name of
each state senator or representative who represents all or part of
the geographical area for which the directory contains listings.

SECTION 47.    Amends Title IIIG, PURA, by adding Section 3.311, as
follows:

     Sec. 3.311.  HUNTING SERVICE.  Requires LECs to make
     available, at a reasonable tariffed rate, hunting service from
     local exchange lines to extended metropolitan service lines. 
     Prohibits the customer from being required to purchase
     additional extended metropolitan service in order to purchase
     hunting service from local exchange service to extended
     metropolitan service.
     
     SECTION 48.    Amends the PURA, by amending Subtitles H and I, and
adding Subtitles J-O, as follows:

     SUBTITLE H.  INCENTIVE REGULATION OF TELECOMMUNICATIONS

     Sec. 3.351.  POLICY.  Sets forth the policy of the
     legislature, given the current status of competition in the
     telecommunications industry.
     
     Sec. 3.352.  ELECTION AND BASKETS OF SERVICES.  (a) Authorizes
     an incumbent LEC to notify the commission in writing of the
     company's election to be regulated under this subtitle. 
     Requires the notice to state the company's commitment to limit
     any increase in rates charged for a four-year period under
     Section 3.353 and its infrastructure commitment under Section
     3.358.
     
     (b) Requires the services of an incumbent LEC electing
       incentive regulation (electing company) to be classified
       initially into three categories or "baskets": "Basket I:
       basic network services," "Basket II: discretionary
       services," and "Basket III: competitive services."  Grants
       the commission the authority to reclassify a service from
       Basket I to Basket II or III, or from Basket II to Basket
       III, as consistent with Section 3.357.
       
       (c) Requires an electing company's telecommunications
       services to be regulated under this subtitle regardless of
       whether that company is a "dominant carrier," as defined by
       Section 3.002.
       
       (d) Prohibits the commission, if an incumbent LEC notifies
       the commission in writing of its election to incentive
       regulation under this subtitle, from subjecting to any
       complaint, hearing, or determination as to the
       reasonableness of its rates, its overall revenues, its
       return on invested capital, or its net income.  Declares
       that nothing herein restricts any consumer's right to
       complain to the commission regarding quality of service, the
       commission's right to enforce quality of service standards,
       or the consumer's right to complain regarding the
       application of an ambiguous tariff, and the commission's
       right, if the commission finds an ambiguity, to determine
       the proper application of the tariff or to determine the
       proper rate if the tariff is found to not apply.  Declares
       that the aforementioned does not permit the commission to
       lower a tariff rate except as provided by this Act, to
       change its interpretation of a tariff, or to change a tariff
       so as to extend its application to new classes of customers.
     Sec. 3.353.  BASKET I: BASIC NETWORK SERVICES.  (a) Sets forth
     the services to be classified initially as basic network
     services in Basket I as of September 1, 1995.
     
     (b) Permits increases in rates for basic network services
       only upon commission approval and only within the parameters
       of Subsection (c) and for four years following the election
       of an incumbent LEC under Section 3.352.  Authorizes
       decreases in rates at any time on the initiative of the
       electing company to a floor above long run incremental cost
       for switched access service or the appropriate cost for any
       basic local telecommunications service, which shall be long
       run incremental cost as to any incumbent LEC required by the
       commission to perform long run incremental cost studies or
       electing to perform those studies.  Provides that this
       section does not affect the charges permitted under Section
       3.304, 3.308, or 3.608.  Prohibits the commission from
       increasing service standards applicable to the provision of
       local exchange telephone service by an electing company if
       the increased investment required for compliance with
       increased standards exceeds in any one year 10 percent of
       the incumbent LEC's average annual intrastate additions in
       capital investment for the most recent five-year period. 
       Requires the incumbent LEC to exclude extraordinary
       investments made during that five-year period in calculating
       the average.
       
       (c)(1) Authorizes rates for basic network services to be
       changed only with commission approval that the proposed
       change is included in this subsection.
       
       (2) Requires the commission, on motion of an incumbent LEC
         or its own motion, to proportionally adjust prices for
         services to reflect changes in FCC separations affecting
         intrastate net income by 10 percent or more.
         
         (3) Authorizes the commission, if, after 42 months after
         the date of the incumbent LEC's election, an electing
         company in this state with less than five million access
         lines is in compliance with its infrastructure commitment,
         all quality of services requirements, and all commission
         rules under Subtitle J, undertake a proceeding to review
         the need for changes in the rates of services upon
         application of an incumbent LEC.  Authorizes the
         application to request that the commission adjust rates,
         implement new pricing plans, restructure rates, or
         rebalance revenues between services.  Authorizes the
         commission to use an index and a productivity offset in
         determining these changes.  Prohibits the commission from
         ordering an increase in residential local exchange
         telephone service that would cause those rates to increase
         by more than the United States Consumer Price Index in any
         12-month period.  Prohibits the new monthly rate from
         exceeding the nationwide average of local exchange
         telephone service rates for like services.
         
         (4) Requires a rate group reclassification occurring as a
         result of access lines growth to be allowed by the
         commission on request of an electing company.
         
         (d)(1) Requires the regulation of basic network services of
       an electing company to be governed by specific provisions of
       this Act.
       
       (2) Declares that changes to the terms and conditions of
         the tariff offering of a basic network service, other than
         price changes, continue to require commission approval.
       (e) Sets the rates capped in Subsection (b) as the rates
       charged by the company on June 1, 1995.
       
       Sec. 3.354.  RATE ADJUSTMENT PROCEDURES.  (a) Authorizes an
     electing company to adjust its rates for basic network
     services under Section 3.353(c), upon notice to the commission
     accompanied by certain documents demonstrating that the rate
     adjustment meets the criteria in Section 3.353(c).  Requires
     the commission to establish by rule or order the documentation
     to be required under this subsection.
     
     (b) Requires the notice to be published in a certain
       newspaper and included in or on the bill of each affected
       consumer in the next billing subsequent to the filing of the
       notice.  Sets forth the title and information to be included
       in the notice.
       
       (c) Requires the commission to review the adjusted rates to
       ensure that they conform to the requirements of Section
       3.353(c), and makes an adjustment effective 90 days from the
       date of completion of notice.
       
       (d) Authorizes an incumbent LEC having five percent or fewer
       of the total access lines in this state to adopt the cost,
       based on a long run incremental cost study, for the same or
       very similar services offered by a larger incumbent LEC,
       without needing to present long run incremental cost studies
       of its own.
       
       (e) Authorizes the commission to suspend the effective date
       of the rate adjustment and hold a hearing to review a rate
       set under Sections 3.353(c)(2)-(5).  Requires the
       commission, after the review, to issue an order approving,
       modifying, or rejecting the adjustment if it does not comply
       with the applicable provisions.  Requires orders modifying
       or rejecting an adjustment to specify each reason why the
       adjustment does not comply and the means for attaining
       compliance.
       
       (f) Requires any rate restructure under Section 3.353(c) to
       follow the notice and hearing procedures under Sections
       3.211(a)-(c).
       
       Sec. 3.355.  BASKET II: DISCRETIONARY SERVICES.  (a) Declares
     that Basket II services include all services or functions
     provided by the electing company that have not been granted
     pricing flexibility in a particular geographic market, and
     which have not been listed under Baskets I or III.
     
     (b) Sets forth the services classified initially as Basket
       II as of September 1, 1995.  Makes a conforming change.
       
       (c) Authorizes the commission to reclassify a service from
       Basket I to Basket II or III, or from Basket II to III,
       consistent with certain criteria.
       
       (d) Requires the prices for each Basket II service or
       function to be set above long run incremental cost (LRIC)
       cost.  Requires the commission to set the price ceiling over
       and above LRIC cost, but not below or above the rate in
       effect on September 1, 1995.  Authorizes the ceiling to be
       raised only after proceedings required under Subtitle J, and
       prohibits the commission from raising the ceiling more than
       10 percent annually.  Authorizes the incumbent LEC, within
       the LRIC floor and ceiling, to change the price of each
       service, and requires the incumbent LEC to notify the
       commission of each change.  Provides that the placement of
       a service in Basket II does not preclude an incumbent LEC
       from using regulatory treatments under Section 3.051. 
       Prohibits discounts and other forms of pricing flexibility
       from being preferential, prejudicial, or discriminatory.
       
       Sec. 3.356.  BASKET III: COMPETITIVE SERVICES.  (a) Sets forth
     the Basket III competitive services, and subjects them to
     pricing flexibility as of September 1, 1995.  Makes a
     conforming change.
     
     (b) Authorizes the commission to reclassify a service from
       Basket I to Basket II or III, or from Basket II to III,
       consistent with certain criteria.
       
       (c) Authorizes the electing company to set the service price
       at a level above the service's LRIC in compliance with
       Subtitle J.  Prohibits discounts and other forms of pricing
       flexibility from being preferential, prejudicial, or
       discriminatory.  Prohibits an electing incumbent LEC from
       increasing the price of a service in a geographic area in
       which that service or a functionally equivalent service is
       not readily available from another provider.
       
       (d) Requires the commission, not later than January 1, 2000,
       to initiate a review and evaluation of any incumbent LEC
       electing treatment under Subtitle H or I to review and
       evaluate the effects of the election.  Requires the
       commission to file a report and recommendations to the
       legislature not later than January 1, 2001, as to whether
       the incentive regulation plan should be extended, modified,
       eliminated, or replaced.  Authorizes the legislature to
       authorize the commission to take action on the plan.
       
       Sec. 3.357.  TRANSFERRING SERVICES.  (a) Requires the
     commission, in determining whether to transfer services from
     Basket I to Baskets II or III, or from Basket II to Basket
     III, to establish standards which include such considerations
     as the availability of the service from other providers, the
     proportion of the market currently receiving service, the
     effect of the transfer on subscribers of the service, and the
     nature of the service.  
     
     (b) Prohibits transfer until the full implementation of all
       competitive safeguards under Sections 3.452-3.458.
     Sec. 3.358.  INFRASTRUCTURE.  (a) Declares that it is the goal
     of this state to facilitate and promote the deployment of an
     advanced telecommunications infrastructure in order to spur
     economic development through Texas.
     
     (b) Requires the commission to consider certain policy goals
       of the state in implementing this section.
       
       (c) Requires the commission to act, recognizing that it will
       take time for competition to develop in the local exchange
       market, in the absence of competition, to ensure that
       certain infrastructure goals are achieved by electing
       companies.
       
       (d)(1) Requires an electing company of greater than five
       million access lines to install Common Channel Signaling 7
       capability in all central office by January 1, 2000.
       
       (2) Requires an electing company of greater than five
         million access lines to connect all of its serving central
         offices to their respective LATA tandem control offices
         with optical fiber or equivalent facilities by January 1,
         2000.
         
         (3) Requires an electing company serving more than one
         million access lines and fewer than five million access
         lines to provide digital switching central offices in all
         exchanges by December 31, 1998.
         
         (e) Authorizes the commission to consider waivers of
       Subsections (c)(1)-(4) for electing LECs serving fewer than
       one million lines, if the LEC demonstrates that such
       investment is not viable economically; and to consider a
       temporary extension of any period with respect to
       Subsections (c)(1)-(4) for electing LECs serving fewer than
       two million but more than one million lines, if the LEC
       demonstrates that such extension is in the public interest.
       
       (f) Prohibits the commission from considering the cost of
       implementing Subsection (c) or (d) of this section in
       determining whether an electing company is entitled to a
       rate increase under this subtitle or increased universal
       service funds under Section 3.608 of this Act.
       
     Sec. 3.359.  INFRASTRUCTURE COMMITMENT TO CERTAIN ENTITIES. 
     (a)(1) States that it is the intent of this section to
     establish a telecommunications infrastructure that
     interconnects public entities described in this section.
     
     (2) States that the goal of this section is to
         interconnect and aggregate the connections to every entity
         described in this section, within the local serving area;
         and that the implementation of the infrastructure will
         connect all the entities requesting the services offered
         under this section.
       (b)(1) Requires the electing company, on customer request,
       to provide broadband digital service that is capable of
       providing transmission speeds of up to 45 megabits per
       second or better for customer applications and other
       customized or packaged network services to certain entities
       for their private and sole use except as provided in
       Subsection (d) of this section.
       
       (2) Prohibits an entity receiving the services provided
         under this section from being assessed special
         construction or installation charges.
         
         (3) Authorizes an educational institution or library to
         elect the rate treatment provided in this section or the
         discount provided by Section 3.605 of this Act.
         
         (4) Prohibits an electing company's rates for the services
         provided under this section from being increased for six
         years from the date of election except as otherwise
         provided in customer specific contracts.
         
         (5) Requires a LEC, on customer request by an educational
         institution or library in exchanges of an electing company
         serving more than five million access lines in which toll-free access to the Internet is not available, to make
         available a toll-free connection or toll-free dialing
         arrangement for use by educational institutions or
         libraries in accessing the Internet in an exchange in
         which Internet access is available on a toll-free basis. 
         Sets forth guidelines and requirements for the provision
         of such service.
         
         (6) Requires an electing company to give priority to
         serving rural areas, areas designated as critically
         underserved, medically or educationally, and educational
         institutions with high percentages of economically
         disadvantaged students.
       (c) Authorizes the private network services provided
       pursuant to this section to be interconnected with other
       similar networks for distance learning, telemedicine, and
       information sharing purposes.
       
       (d) Prohibits the private network services provided pursuant
       to this section from being shared or resold to other
       customers, with a specific exception.  Prohibits the
       services provided pursuant to this section from being
       required to be resold to other customers at the rates
       provided in this section.
       
       (e) Defines "telemedicine center."
       
       (f) Declares that Article 601b, V.T.C.S. (State Purchasing
       and General Services Act), does not apply to contracts
       entered under this section.
       
  SUBTITLE I.  INFRASTRUCTURE PLAN FOR RATE OF RETURN COMPANIES

     Sec. 3.401.  POLICY.  Sets forth the policy of the legislature
     concerning incumbent LECs that do not elect to be regulated
     under Subtitle H.
     
     Sec. 3.402.  ELECTION.  (a) Authorizes an incumbent LEC
     serving less than five percent of the state's access lines and
     that has not elected incentive regulation under Section
     Subtitle H to elect for an infrastructure plan under this
     subtitle by notifying the commission in writing of its
     election under this section.
     
     (b) Prohibits an electing incumbent LEC, for a six-year
       period after the election date, from seeking an increase in
       a rate previously established for that company under this
       Act, except for charges permitted under Sections 3.304,
       3.308, 3.608, and 3.610 of this Act, and upon commission
       approval that the proposed change is included in this
       subsection.  Requires the commission, on motion of an
       electing incumbent LEC or its own motion, to adjust prices
       for services to reflect changes in FCC separations affecting
       intrastate net income by 10 percent or more.  Requires a
       rate group classification resulting from access lines growth
       to be allowed by the commission on request of the electing
       company.
       
       (c) Declares that Section 3.354 of this Act applies to a
       rate change under Subsection (b) of this section.
       
       (d) Prohibits an electing company, if an incumbent LEC
       notifies the commission of its election to an alternative
       infrastructure plan under this subtitle, from being subject
       for the six-year period after election to any complaint or
       hearing as to the reasonableness of its rates, overall
       revenues, return on invested capital, or net income, if the
       electing incumbent LEC complies with its infrastructure
       commitment under Section 3.403, and from being subject to a
       complaint that any particular rate is excessive.  Declares
       that nothing herein restricts any consumer's right to
       complain to the commission regarding quality of service, the
       commission's right to enforce quality of service standards,
       or the consumer's right to complain regarding the
       application of the tariff or to determine the proposed rate
       if the tariff is found to not apply.  Prohibits the
       commission from lowering a tariff rate except as
       specifically provided by this Act, to change its
       interpretation of a tariff, or to change a tariff so as to
       extend its application to new classes of customers. 
       Prohibits the commission from increasing service standards
       applicable to the provision of local exchange telephone
       service by an electing company if the increased investment
       required to comply with the increased standards exceeds in
       any one year 10 percent of the incumbent LEC's average
       annual intrastate additions in capital investment for the
       most recent five-year period.   Requires the incumbent LEC,
       in calculating the average, to exclude extraordinary
       investments made during the five-year period.
       
       (e) Authorizes the commission, on application of an
       incumbent LEC, to allow a company to withdraw its election
       under this section with good cause.  Provides that good
       cause includes only matters that were beyond the control of
       the incumbent LEC.
       
       (f) Declares that this section does not prohibit an
       incumbent LEC from making an election under Section 3.352. 
       Provides that the infrastructure agreement under Section
       3.403, if the company so elects, offsets any infrastructure
       commitment required in connection with the Section 3.352
       election.
       
       (g) Requires the rates capped by Subsection (b) to be the
       rates charged by the company at the date of its election.
       
       (h) Defines "election date."
     Sec. 3.403.  INFRASTRUCTURE COMMITMENT.  (a) Requires a
     company electing under Section 3.402 to make an infrastructure
     commitment in writing to the governor and commission,
     committing to make telecommunications infrastructure
     investment in the state over a six-year period following the
     company's election.  
     
     (b) Requires the commission to act to ensure that certain
       infrastructure goals are achieved by electing companies.
       
       (c) Requires the electing company, on customer request, to
       provide private broadband services and other customized or
       packaged network services for the private and sole use of
       certain entities.  Sets forth guidelines and requirements
       for the provision of such services.
       
       (d) Authorizes the commission to consider waivers of
       requirements listed under Subsections (b)(1)-(5) of this
       section for electing LECs serving fewer than one million
       lines if the LEC demonstrates that such investment is not
       viable economically.
       
       (e) Prohibits the commission from considering the cost of
       implementing Subsection (b) or (c) f this section in
       determining whether an electing company is entitled to a
       rate increase under this subtitle or increased universal
       service funds under Section 3.608 of this Act.
       
       (f) Defines "private network services" and "telemedicine
       center."
       
       (g) Requires each electing company to file an annual report
       with the commission on the anniversary date of its election
       that sets forth the progress on the company's infrastructure
       commitment and includes specific information.
       
               SUBTITLE J.  COMPETITIVE SAFEGUARDS

     Sec. 3.451.  COMPETITIVE SAFEGUARDS.  (a)  Requires the
     commission, to the extent necessary to ensure fair competition
     and accelerate the improvement of telecommunications in this
     state, to ensure that the rates and regulations of an
     incumbent LEC are not unreasonably preferential, prejudicial,
     or discriminatory but are equitable and consistent in
     application.  Grants the commission exclusive jurisdiction to
     implement competitive safeguards.
     
     (b) Declares that Section 3.352(d) does not prevent the
       commission from enforcing this subtitle.
       
       (c) Grants the commission exclusive jurisdiction to
       implement competitive safeguards.
     Sec. 3.452.  UNBUNDLING.  (a) Requires an incumbent LEC to
     unbundle its network as ordered by the FCC.
            (b) Requires the commission, before the adoption of the
       pricing rules required by Section 3.457, to hold a hearing
       and adopt an order on the issue of requiring further
       unbundling of LEC services.
       
       (c) Authorizes the commission to order further unbundling
       only after considering the public interest and competitive
       merits of further unbundling.  Authorizes the commission to
       proceed by rulemaking or evidentiary hearing.
       
       (d) Authorizes the commission, following the unbundling, to
       assign the unbundled components to the appropriate Basket
       according to the purposes and intents of those Baskets.
       
     Sec. 3.453.  RESALE.  (a) Requires an incumbent LEC, serving
     one million or more access lines or electing the incentive
     regulation plan under Subtitle H, to file a usage sensitive
     loop resale tariff.  
     
     (b) Defines "loop" resale.
       
       (c) Requires the commission to conduct any proceeding it
       determines appropriate to determine the rates, terms, and
       conditions for this tariff within 180 days of filing. 
       Authorizes the commission to approve only a usage sensitive
       rate that recovers the total long run incremental cost of
       the loop on an unseparated basis, plus an appropriate
       contribution to joint and common costs; and only permit a
       holder of a CCN, COA, or SPC to purchase from the resale
       tariff, except under Subsection (f)(1) of this section.
       
       (d) Prohibits a provider of telecommunications service, on
       September 1, 1995, from imposing any restriction on the
       resale or sharing of any service for which it is not a
       dominant provider, or, as to any incumbent LEC electing
       alternative regulation under Subtitle H of this title, for
       any service entitled to regulatory treatment under Basket
       III.
       
       (e) Places on a holder of a COA or SPC the reciprocal
       obligation to permit LECs to resell its existing loop
       facilities at its regularly published rates, if the LEC has
       no loop facilities and has a request for service.
       
       (f) Requires the commission to eliminate all resale
       prohibitions in an electing incumbent LEC's tariffs on
       completion of the commission's costing and pricing
       rulemaking, completion of rate rebalancing of the incumbent
       LEC rates under Section 3.457, and removal of all
       prohibitions on incumbent LECs providing interLATA service. 
       Requires the commission to eliminate all resale prohibitions
       in the tariffs of an electing company of five million or
       more access lines on removal of all prohibitions and
       restrictions on such company's provision of interLATA
       service.  Requires the commission, when it eliminates the
       resale prohibitions, to continue to prohibit the resale of
       local exchange or directory assistance flat rate services as
       a substitute for usage sensitive services.
       
       (g) Declares that nothing herein alters resale or sharing
       arrangements presently permitted in incumbent LEC tariffs
       existing on September 1, 1995, or tariffs proposed by an
       incumbent LEC serving more than five million access lines in
       this state that are filed on or before May 1, 1995.
       
     Sec. 3.454.  IMPUTATION.  Requires the commission, not later
     than December 1, 1996, to adopt rules governing imputation of
     the service price.
     
     (b) Declares that imputation is a regulatory policy the
       commission shall apply to prevent an incumbent LEC from
       selling a service or function to another telecommunications
       utility at a price that is higher than the rate the
       incumbent LEC implicitly includes in services it provides to
       its retail customers.
       
       (c) Authorizes the commission to require imputation only if
       the price of a service is not generally available from a
       source other than the incumbent LEC and is necessary for the
       competitor to provide its competing services.
       
       (d) Prohibits the commission from requiring the imputation
       of the price to a local exchange telephone service while the
       price is capped under Subtitle H or I.
       
       (e) Require the price of switched access service to be
       imputed to the price of each service for which switched
       access service is a component until switched access service
       is competitively available.
       
       (f) Prohibits the commission from requiring imputation on a
       rate-element-by-element basis but only on a service-by-service basis.
       
       (g) Prohibits the commission, for a service provided under
       a customer specific contract for which imputation may be
       required under Subsection (c), from requiring imputation on
       a rate-element-by-element basis but only on a service-by-service basis within the contract.
       
       (h) Requires the incumbent LEC to demonstrate that the price
       it charges for its retail service recovers the costs of
       providing the service.  Defines the costs of providing the
       service.
       
       (i) Authorizes the commission to waive an imputation
       requirement for any public interest service if the
       commission determines that the waiver is in the public
       interest.
       
     Sec. 3.455.  TELECOMMUNICATIONS NUMBER PORTABILITY.  Requires
     the commission, by rule, to adopt guidelines governing
     telecommunications number portability and the assignment of
     telephone numbers in a competitively neutral manner.  
     (b) Defines "telecommunications number portability."
       
       (c) Requires the commission, as an interim measure, to adopt
       reasonable mechanisms to allow consumers to retain their
       telephone numbers.  Requires these mechanisms to include
       call forwarding functions and direct inward dialing. 
       Requires the commission and incumbent LEC to determine
       reasonable rates for call forwarding functions, direct
       inward dialing, and other interim measures.
       
     Sec. 3.456.  EXPANDED INTERCONNECTION.  (a) Requires the
     commission, not later than September 1, 1996, to adopt certain
     rules for expanded interconnection.
     
     (b) Declares that this section does not prohibit the
       commission from completing a proceeding pending on April 1,
       1995, that addresses expanded interconnection.
       
       Sec. 3.457.  COSTING AND PRICING.  (a) Requires the commission
     to complete a pricing rulemaking and adopt a pricing rule by
     April 1, 1997.  Requires companies subject to that rule to
     file cost studies and necessary supporting data not later than
     November 1, 1996.  Requires the commission to approve a cost
     study or order changes to be made, within 85 days after the
     date a cost study is submitted.  Authorizes any party to
     appeal to the commission an administrative determination by an
     administrative law judge or hearings examiner.  Requires the
     parties to be permitted expedited discovery after a cost study
     is submitted.
     
     (b) Requires the commission, in adopting the pricing rule,
       to ensure that prices for monopoly services remain
       affordable; ensure that prices for competitive services may
       not be unreasonably preferential, prejudicial, or
       discriminatory, subsidized by noncompetitive services, or
       predatory or anticompetitive; and require that each service
       recover the appropriate cost of any and all facilities and
       functions used to provide that service.
       
       (c) Requires the commission to allow an incumbent LEC that
       is not a Tier I LEC as of September 1, 1995, to adopt the
       cost studies prices approved for a Tier I LEC.
     Sec. 3.458.  INTERCONNECTION.  (a) Defines "interconnection."
     
     (b) Requires the commission to require all providers of
       telecommunications services to maintain interoperable
       networks.  Requires telecommunications services to negotiate
       network interconnectivity, charges, terms, and conditions. 
       Authorizes the commission to resolve disputes filed by a
       party to those negotiations.
       
       (c) Requires each carrier, in the absence of a mutually
       agreed compensation rate under Subsection (b), to
       reciprocally terminate the other carrier's traffic at no
       charge for the first nine months after the date on which the
       first call is terminated between the carriers.
       
       (d) Requires the commission, within the nine-month period
       prescribed by Subsection (c), to complete a proceeding to
       establish reciprocal interconnection rates, terms, and
       conditions based solely on the commission proceeding.  Sets
       forth guidelines for the requirement of cost studies by a
       new entrant.
       
       (e) Authorizes the incumbent LEC to adopt the
       interconnection rates approved for a larger incumbent LEC
       without the commission requirement of additional cost
       justification.
       
       (f) Authorizes the commission to make generic rules and set
       policies governing interconnection arrangements that are
       responsive to changes in federal law or developments in the
       local exchange market.
       
       (g) Prohibits the commission from using interconnection
       rates under this section as a basis to alter interconnection
       rates for other services.
       
       (h) Grants the commission exclusive jurisdiction over any
       holder of a CCN, COA, or SPC for the determination of rates,
       terms, and conditions for interconnection.
       
       Sec. 3.459.  INCUMBENT LOCAL EXCHANGE COMPANY REQUIREMENTS. 
     (a) Prohibits an incumbent LEC from taking certain
     unreasonable actions.
     
     (b) Prohibits this section from being construed to require
       an incumbent LEC to provide expanded interconnection.
       
       (c) Declares that nothing in this Act shall require the
       commission to change the rate treatment for Bulletin Board
       Systems in residences established by the commission in
       Docket No. 8387, and that nothing in this Act is intended to
       regulate or tax Bulletin Board Systems or Internet Service
       Providers or to require any changes in the rates charged to
       these entities under existing tariff, provided they only
       provide enhanced or information services and not
       telecommunications services.
       
       Sec. 3.460.  COMMISSION AUTHORITY.  (a) Grants the commission
     all authority necessary to establish procedures for the
     policies under Subsections 3.451-3.458 and to resolve any
     disputes under such policies.
     
     (b) Requires the commission to adopt procedures for the
       processing of proceedings under Section 3.452 and 3.453 of
       this Act by considering the impact on consumers,
       competitors, and the incumbent LEC.  Prohibits the
       commission from implementing any requirement that is
       contrary to any applicable federal rule or law.
       
       Sec. 3.461.  APPLICATIONS AND RULES.  Sets forth limitations
     to the applicability of certain subsections of this section.
     
     Sec. 3.462.  REVIEW OF IMPLEMENTATION.  Declares that the
     provisions of Sections 3.452, 3.454, and 3.457 do not
     initially apply to incumbent LECs that as of September 1,
     1995, have 31,000 or more, but fewer than one million, access
     lines in this state, and apply only on a bona fide request
     from a holder of a COA or SPC.  Authorizes the commission to
     modify the rules in the public interest.
     
     Sec. 3.463.  INFRASTRUCTURE SHARING.  Requires the commission
     to prescribe rules that require a LEC to share public switched
     network infrastructure and technology with a requesting LEC
     that lacks economies of scale or scope, in order to enable
     that requesting company to provide telecommunications services
     in the geographic areas to which the requesting company is
     designated as the sole carrier of last resort.
     
               SUBTITLE K.  BROADCASTER SAFEGUARDS

     Sec. 3.501.  CUSTOMER PROPRIETARY NETWORK INFORMATION (CPNI). 
     (a) Defines "specific customer proprietary network
     information" and "subscriber list information."
     
     (b) Prohibits telecommunications utilities from using
       specific customer proprietary network information (CPNI) for
       commercial purposes other than the sale, provision, or
       billing and collection of telecommunications or enhanced
       services.
       
       (c) Requires the commission, not later than September 1,
       1996, to adopt rules consistent with FCC rules.  Sets forth
       requirements for the rules.
       
       (d) Prohibits the commission from implementing any rules,
       regarding CPNI applicable to an incumbent LEC having 100,000
       or fewer access lines in service in this state, that are
       more burdensome than FCC CPNI rules, with an exception.
     Sec. 3.502.  AUDIO VIDEO.  (a) Defines "video programming" and
     "audio programming."
     
     (b) Prohibits an incumbent LEC from providing audio or video
       programming in this state, but prohibits this section from
       prohibiting a separate corporate affiliate of an incumbent
       LEC from providing such programming.
       
       (c) Sets forth requirements for a separate corporate
       affiliate which provides audio or video programming.
       
       (d) Sets forth requirements for an incumbent LEC when a
       separate affiliate provides programming.
       
       (e) Requires an incumbent LEC, if it offers billing and
       collection services to nonaffiliated audio and video
       programming providers, to provide those services under
       nondiscriminatory terms and conditions.  Provides that this
       section does not require an incumbent LEC to offer such
       services to nonaffiliated programmers, and authorizes an
       incumbent LEC to exclude certain classes of programmers from
       its billing and collection services.
       
       (f) Requires an incumbent LEC to have a compliance audit
       performed every three years by an independent accounting
       firm to determine compliance with requirements of this
       section.  Requires the firm to file the report, considered
       confidential commercial or financial information, with the
       commission.  Requires the commission to institute action
       against the incumbent LEC, if it does not comply with this
       section.
       
       (g) Limits the commission's jurisdiction over affiliates
       that are audio or video programmers to the requirements of
       this section.
       
       (h) Declares that this section does not apply to an
       incumbent LEC having 100,000 or fewer in-service total
       access lines in this state.
       
       (i) Authorizes a company under this section to petition the
       commission for waiver from any requirements of this section,
       and requires the commission to grant a waiver if it serves
       the public interest to do so.  Authorizes the commission to
       revoke a waiver under certain conditions.
     Sec. 3.503.  ADVERTISING.  (a) Declares that advertising
     agency services include the functions generally performed by
     a general advertising agency.
     
     (b) Prohibits an incumbent LEC from selling advertising
       agency services to nonaffiliates in this state.  Declares
       that this section does not prohibit a LEC from promoting or
       selling telecommunications services and equipment and from
       enhancing or promoting the use of the telecommunications
       network.
       
       (c) Authorizes a separate corporate affiliate of an LEC to
       engage in advertising agency activities, and sets forth
       requirements for the conduct of such business.
       
       (d) Prohibits an incumbent LEC with an affiliate providing
       advertising agency services on behalf of nonaffiliates in
       this state from jointly marketing that affiliate's services
       as they relate to telecommunications services and equipment
       provided by the incumbent LEC.
       
       (e) Declares that nothing in this section prohibits the
       incumbent LEC from providing telephone solicitation services
       for charitable organizations.
       
       (f) Declares that this section does not apply to an
       incumbent LEC having 100,000 or fewer in-service access
       lines in this state.
       
       (g) Authorizes a company under this section to petition the
       commission for a waiver from any requirement under this
       section, and authorizes the commission to grant a waiver if
       it serves the public interest.  Authorizes the commission to
       revoke a waiver.
       
       Sec. 3.504.  VIDEO CARRIAGE.  (a) Requires each incumbent LEC,
     which provides telecommunications services used in the
     transmission of video programming directly to subscribers or
     which enables customers to access video programming, to permit
     local full-power, FCC licensed broadcast stations access to
     these services at tariffed rates.  Requires the incumbent LEC
     to transmit signals from the local broadcast station without
     material degradation and in a quality at least on par with
     that of other video programmers.
     
     (b) Sets forth requirements for each incumbent LEC under
       Subsection (a).
       
       (c) Requires any programmer, that operates as a common
       channel manager and purchases for commercial purposes at
       least 50 analog channels on a local exchange video dial tone
       level one platform over which video programming is made
       available to subscribers, to make local full-power, FCC-licensed televisions stations available to subscribers,
       provided retransmission is granted under Subsection (d). 
       Requires a programmer under this section to make available
       up to six television stations, and makes specific provisions
       for markets serving populations of more than one million.
       
       (d) Requires a FCC-licensed television station seeking
       carriage to grant retransmission consent to the programmer
       and incumbent LEC.  Declares that this requires a programmer
       or incumbent LEC to provide any valuable consideration in
       exchange for that carriage.
       
       (e) Provides that this section does not apply to an
       incumbent LEC having 100,000 or fewer in-service access
       lines in this state or to a programmer on the video dial
       tone platform of that LEC.
       
       (f) Authorizes a company under this section to petition the
       commission for a waiver from any requirement under this
       section, and authorizes the commission to grant a waiver if
       it serves the public interest.  Authorizes the commission to
       revoke a waiver.
       
       (g) Limits the commission's jurisdiction over affiliates
       that are video programmers to the requirements of this
       section.
       
       (h) Provides that this section expires August 31, 1999.
     Sec. 3.505.  AUDIO CARRIAGE.  (a) Requires a programmer,
     operating as a common channel manager and making available for
     commercial purposes to subscribers at least 12 channels of
     audio programming similar to broadcasts of FCC-licensed radio
     stations on an incumbent LEC's level one video dial tone
     platform, to make local FCC-licensed radio stations available
     to subscribers, provided that retransmission is granted under
     Subsection (b).  Prohibits a programmer under this subsection
     from being required to make available more than one-third of
     its analog audio channels to radio stations.
     
     (b) Requires a local FCC-licensed radio station seeking
       carriage under Subsection (a) of this section to grant
       retransmission consent to the programmer and incumbent LEC. 
       Declares that nothing in this Act requires a programmer or
       incumbent LEC to provide any valuable consideration in
       exchange for that carriage.
       
       (c) Provides that this section does not apply to an
       incumbent LEC having 100,000 or fewer in-service access
       lines in this state or to any programmer on the video dial
       tone platform of that LEC.
       
       (d) Authorizes a company under this section to petition the
       commission for a waiver from any requirement under this
       section, and authorizes the commission to grant a waiver if
       it serves the public interest.  Authorizes the commission to
       revoke a waiver.
       
       (e) Limits the commission's jurisdiction over affiliates
       which are video programmers to the requirements of this
       section.
       
       (f) Provides that this section expires August 31, 1999.
       
       Sec. 3.506.  APPLICATION OF SUBTITLE.  Provides that this
     subtitle does not apply to a cable company.
                SUBTITLE L.  ELECTRONIC PUBLISHING

     Sec. 3.551.  DEFINITIONS.  Defines "affiliate," "basic
     telephone service," "basic telephone service information,"
     "control," "electronic publishing," "electronic publishing
     joint venture," "entity," "inbound telemarketing," "own,"
     "separated affiliate," and "incumbent local exchange company."
     
     Sec. 3.3552.  ELECTRONIC PUBLISHING.  (a) Prohibits an
     incumbent LEC or an affiliate from engaging in the provision
     of electronic publishing disseminated through telephone
     service.  
       (b) Declares that nothing in this subtitle prohibits a
       separated affiliate or electronic publishing joint venture
       from engaging in publishing or any other lawful service in
       any area.
       
       (c) Declares that nothing in this subtitle prohibits an
       incumbent LEC or affiliate from engaging in the provision of
       any lawful service other than electronic publishing in any
       area or from engaging in the provision of electronic
       publishing that is not disseminated by means of the
       incumbent LEC's or any of its affiliate's basic telephone
       service.
     Sec. 3.553.  SEPARATED AFFILIATE OR ELECTRONIC PUBLISHING
     JOINT VENTURE REQUIREMENTS.  Sets forth requirements for a
     separated affiliate or electronic publishing joint venture.
     
     Sec. 3.554.  INCUMBENT LOCAL EXCHANGE COMPANY REQUIREMENTS. 
     (a) Sets forth requirements for an incumbent LEC under common
     ownership or control with a separated affiliate or electronic
     publishing joint venture.
     
     (b) Requires an incumbent LEC, if it provides certain
       services to any electronic publisher for use with or in
       connection with the provisions of electronic publishing that
       is disseminated by means of the incumbent LEC's or any of
       its affiliate's basic telephone service, to provide all
       other electronic publishers the same type of facilities and
       services on request and unbundled and individually tariffed
       to the smallest extent that is technically feasible and
       economically reasonable to provide.
       
       (c) Requires the incumbent LEC to provide network access and
       interconnections for basic telephone service to electronic
       publishers at any technically feasible and economically
       reasonable point within the incumbent LEC's network, and at
       just and reasonable rates that are tariffed and are not
       higher on a per unit basis than those charged for those
       services to any other electronic publisher or any separated
       affiliate engaged in electronic publishing.
       
       (d) Requires the incumbent LEC, if prices for network access
       and interconnection for basic telephone service are no
       longer subject to regulation, to provide electronic
       publishers those services on the same terms and conditions
       as a separated affiliate receives those services.
       
       (e) Requires an incumbent LEC, if any basic telephone
       service used by electronic publishers ceases to require a
       tariff, to provide electronic publishers with that service
       on the same terms and conditions as a separated affiliate
       receives that service.
       
       (f) Requires the incumbent LEC to provide reasonable advance
       notification at the same time and on the same terms to all
       affected electronic publishers of information if the
       information is of a certain type.
       
       (g) Prohibits the incumbent LEC from providing anything of
       monetary value to a separated affiliate under a certain
       condition.
       
       (h) Prohibits the incumbent LEC from taking specific action.
     Sec. 3.555.  CUSTOMER PROPRIETARY NETWORK INFORMATION. 
     Prohibits an incumbent LEC or an affiliate from providing to
     an electronic publisher customer proprietary network
     information for use or in connection with electronic
     publishing disseminated through local basic telephone service
     that is not made available by the LEC or affiliate to all
     electronic publishers on the same terms and conditions.
     
     Sec. 3.556.  COMPLIANCE WITH SAFEGUARDS.  Prohibits an
     incumbent LEC or affiliate from acting in concert with another
     entity to knowingly and willfully violate or evade the
     requirements of this subtitle.
     
     Sec. 3.557.  INCUMBENT LOCAL EXCHANGE COMPANY DIVIDENDS. 
     Declares that nothing in this subtitle prohibits an affiliate
     from investing dividends derived from an incumbent LEC in its
     separated affiliate, and that Section 3.560 and 3.561 do not
     apply to that investment.
     
     Sec. 3.558.  JOINT MARKETING.  Prohibits an incumbent LEC from
     carrying out any promotion, marketing, sales, or advertising
     for or in conjunction with a separated affiliate or an
     affiliate related to the provision of electronic publishing,
     except as provided by Section 3.559 of this Act.
     
     Sec. 3.559.  PERMISSIBLE JOINT ACTIVITIES.  Sets forth
     permissible joint activities for an incumbent LEC related to
     joint telemarketing, teaming arrangements, and electronic
     publishing joint ventures.
     
     Sec. 3.560.  TRANSACTIONS RELATED TO THE PROVISION OF
     ELECTRONIC PUBLISHING BETWEEN AN INCUMBENT LOCAL EXCHANGE
     COMPANY AND ANY AFFILIATE.  (a) Requires any transaction from
     an incumbent LEC to any affiliate related to the provision of
     electronic publishing to be recorded in a specific manner. 
     Requires any transfer of assets from the incumbent LEC to an
     affiliate to be valued at the greater of net book cost or fair
     market value, and any asset transfer from an affiliate to a
     company to be valued at the lesser of net book cost. 
     Prohibits an incumbent LEC from providing to a separated
     affiliate any facilities, services, or basic telephone service
     information related to the provision of electronic publishing
     that are not made available to unaffiliated companies on the
     same terms and conditions.
     
     Sec. 3.561.  TRANSACTIONS RELATED TO THE PROVISION OF
     ELECTRONIC PUBLISHING BETWEEN AN AFFILIATE AND A SEPARATED
     AFFILIATE.  Requires any transaction from an incumbent LEC to
     an affiliate, and then from the affiliate to a separated
     affiliate, to be recorded in a specific manner.  Requires any
     transfer of assets from the incumbent LEC to an affiliate, and
     then from the affiliate to a separated affiliate, to be valued
     at the greater of net book cost or fair market value, and any
     asset transfer from a separated affiliate to an affiliate, and
     then from the affiliate to the company to be valued at the
     lesser of net book cost or fair market value.  Prohibits an
     affiliate from providing to a separated affiliate any
     facilities, services, or basic telephone service information
     related to the provision of electronic publishing that are not
     made available to unaffiliated companies on the same terms and
     conditions.
     
     Sec. 3.562.  OTHER ELECTRONIC PUBLISHERS.  (a) Limits the
     involvement of an incumbent LEC and an entity whose principal
     business is publishing of which a part is electronic
     publishing.
     
     (b) Prohibits an incumbent LEC or an affiliate that owns an
       electronic publishing joint venture from being deemed to be
       engaged in the electronic publishing business solely because
       of that ownership.
       
       (c) Prohibits an incumbent LEC from carrying out any
       marketing or sales of an entity that engages in electronic
       publishing or any hiring of personnel, purchasing, or
       production for an entity that engages in electronic
       publishing.  Provides an exception.
       
       (d) Prohibits the incumbent LEC from providing any
       facilities, services, or basic telephone service information
       to an entity that engages in electronic publishing for use
       with or in connection with the provision if electronic
       publishing that is disseminated by means of the incumbent
       LEC's or affiliates' basic telephone service.  Provides
       exceptions.
       
       Sec. 3.563.  PRIVATE RIGHT OF ACTION.  Sets forth requirements
     governing private rights of action regarding complaints
     against an incumbent LEC, affiliate, or separated affiliate.
     
     Sec. 3.564.  ANTITRUST LAWS.  Prohibits anything in this
     section from being construed to modify, impair, or supersede
     the applicability of any of the antitrust laws.
     
     Sec. 3.565.  TRANSITION.  Requires any electronic publishing
     service being offered to the public by an incumbent LEC or
     affiliate on the date of enactment of this section to comply
     with the requirements of this section within one year from the
     date of enactment.
     
     Sec. 3.566.  SUNSET.  Sunset date: June 30, 2001.
           SUBTITLE M.  INFORMATION TECHNOLOGY SERVICES

     Sec. 3.581.  DEFINITIONS.  Defines "management consulting,"
     "systems development," "systems integration," "systems
     management," and "process management."
     
     Sec. 3.582.  PROVISION OF INFORMATION TECHNOLOGY SERVICES
     THROUGH SEPARATE AFFILIATE.  (a) Prohibits a LEC serving more
     than five million access lines in this state from providing
     certain customized business products or services to customers
     with 50 or more access lines in this state.
     
     (b) Declares that this section does not prohibit an
       affiliate of the LEC from providing any of the products or
       services under Subsection (a) in accordance with Sections
       3.583 and 3.584 of this Act, or prohibit a LEC from
       providing those products or services to itself.  Authorizes
       the LEC to provide those services to an affiliate if neither
       the LEC nor any of its affiliates are engaged in providing
       those products or services to unaffiliated third parties.
       
       (c) Declares that the prohibitions under Subsection (b) do
       not prohibit a LEC from providing mass market and consumer
       market products and services to certain customers, or
       selling or leasing billing and collection services, local
       area networks, wide area networks, or any other
       telecommunications service.
       
       Sec. 3.583.  SEPARATE AFFILIATE REQUIREMENTS.  (a) Requires an
     affiliate of the LEC providing a service under Section
     3.582(a) to operate independently from the LEC in the
     provision of its services, maintain its own books of accounts,
     and, with exception, have separate officers, directors, and
     employees who may not also serve as officers, directors, and
     employees of the LEC.
     
     (b) Requires all transactions between the LEC and the
       affiliate providing a service under Section 3.582(a) of this
       Act to be conducted on an "arms length" basis with respect
       to the acquisition of that service from the affiliate.
       
       (c) Requires the LEC to maintain and keep available for
       commission inspection copies of all contracts and
       arrangements between the company and an affiliate relating
       to the LEC's acquisition of a service described by Section
       3.582(a) from the affiliate.  Requires the LEC's records to
       show each cash or noncash transaction with the affiliate for
       that service.
       
       (d) Prohibits the LEC and an affiliate engaged in a service
       under Section 3.582(a) of this Act from jointly owning or
       sharing in the use of any property.
       
       Sec. 3.584.  ADDITIONAL COMPETITIVE SAFEGUARDS.  (a) Prohibits
     a LEC from discriminating between an affiliate providing a
     service under Section 3.582(a) and any other person in the
     provision or procurement of goods, services, facilities, or
     information, or in the establishment of standards.
     
     (b) Prohibits a LEC or affiliate from using revenues from
       local exchange telephone service or from local-exchange-company-provided access services to subsidize the provision
       of a service described by Section 3.582(a).
       
       (c) Declares that this section does not prohibit the
       investment by an affiliate of dividends or profits derived
       from a LEC, or the development of a product or service
       described by Section 3.582(a) by an affiliate of a LEC for
       the LEC if the investment or development complies with
       Section 3.583.
       
       SUBTITLE N.  TELECOMMUNICATIONS SERVICE ASSISTANCE PROGRAM; UNIVERSAL SERVICE FUND

     Sec. 3.601.  Redesignates existing Section 3.351.
     
     Sec. 3.602.  Redesignates existing Section 3.352.
     
     Sec. 3.603.  Redesignates existing Section 3.353.
     
     Sec. 3.604.  Redesignates existing Section 3.354.
     
     Sec. 3.605.  New heading: DISTANCE LEARNING ACTIVITIES BY
     EDUCATIONAL INSTITUTIONS AND INFORMATION SHARING PROGRAMS BY
     LIBRARIES; REDUCED RATES.  (a) Requires the commission, by
     rule, to require a dominant carrier to file an information
     sharing program that is or could be conducted by a library in
     this state.
     
     (b) Requires the commission rules to specify the process by
       which a library qualifies for a reduced rate.
       
       (d) Requires the services and reduced rates to be designed,
       among other goals, to encourage the development and offering
       of information sharing programs of libraries, meet the
       information sharing needs identified by libraries, and
       recover certain costs so as to avoid subsidizing libraries.
       
       (f) Authorizes an educational institution, library, or
       dominant carrier to provide for a reduced rate for a service
       directly related to an information sharing program that is
       not covered by commission rules.
       
       (h) Defines "library."
     Sec. 3.606.  TELECOMMUNICATIONS INFRASTRUCTURE FUND.  (a)
     Defines "board," "fund," "institution of higher education,"
     "public library," "school district," "private network
     services," "public, not-for-profit hospital" or "public not-for-profit health care facility," and "telemedicine."
     
     (b)-(c) Requires the Telecommunications Infrastructure Fund
       Board (board) to administer the Telecommunications
       Infrastructure Fund (fund).  Requires the board to consist
       of nine members, and sets forth the guidelines for
       appointment and membership.
       
       (d) Requires board members to serve without pay, but to be
       reimbursed for expenses.
       
       (e) Subjects the board to Chapters 325, 551, and 2001,
       Government Code.  Makes the board and this article expire
       September 1, 2001, unless continued by Chapter 325,
       Government Code.
       
       (f) Authorizes the board to employ any personnel necessary
       to perform duties delegated by the board, and to enter into
       contracts with state or private entities as necessary to
       perform its duties.
       
       (g) Authorizes the board to appoint committees to assist in
       performing its duties.
       
       (h) Declares that the fund is financed by an assessment on
       all telecommunications providers doing business in the
       state.  Sets forth guidelines for the assessment.
       
       (i) Requires the comptroller to assess and collect from
       telecommunications providers 
       a total annual amount of $150 million for the fiscal year
       beginning September 1, 1995, and for the next ten fiscal
       years.
       
       (j) Authorizes the comptroller to require providers to
       provide information and reports, exempt from disclosure,
       which are necessary to fulfill duties under this section.
       
       (k) Requires all amounts collected by the comptroller to be
       deposited in the fund and designated solely for board use.
       
       (l) Requires the comptroller, from funds appropriated to the
       board, to issue warrants as requested by the board.
       
       (m) Authorizes the board to accept gifts, grants, and
       donations.
       
       (n) Requires the board to use the fund to award grants and
       loans competitively to rural and urban school districts,
       institutions of higher education, and libraries recommended
       to it by the Central Education Agency (CEA), the Texas
       Higher Education Coordinating Board (coordinating board), or
       the Texas State Library and Archives Commission (TSLAC).
       
       (o) Sets forth the requirements for awarding grants.
       
       (p) Authorizes the board to award loans to projects and
       proposals to acquire equipment needed for distance learning
       and telemedicine projects.
       
       (q) Requires the board to give priority to certain projects
       and proposals.
       
       (r) Requires CEA, the coordinating board, and TSLAC to adopt
       policies and procedures designed to aid the board.
       
       (s) Requires the board, in distributing funds to public
       schools, to consider the relative property wealth per
       student of recipient school districts and to recognize the
       unique needs of rural communities.
     Sec. 3.607.  Redesignates existing Section 3.356.
     
     Sec. 3.608.  Redesignates existing Section 3.357.  (a) Makes
     conforming changes.
     
     (b) Authorizes the commission to adopt mechanisms
         necessary to maintain reasonable rates for local exchange
         telephone service and to establish rules that would expand
         the universal service fund (USF) for LECs serving fewer
         than 1 million access lines in circumstances prescribed by
         this subsection.  Makes other provisions.
         
         (c) Makes conforming changes.
         
         (d) Requires the commission to establish review procedure,
         including administrative review procedure, necessary for
         funding of and distribution from the USF, and to determine
         which LECs meet eligibility criteria including
         requirements to offer service to every consumer in a
         certificated area and render continuous, adequate service
         within that area.
         
         (e) Redesignates existing Subsection (d).
         
         (f) Redesignates existing Subsection (e).  Authorizes the
         commission to require LECs and other telecommunications
         providers to provide reports and information, not to be
         disclosed, which are necessary to assess fund
         contributions.
         
     Sec. 3.609.  Redesignates existing Section 3.358.
     
     Sec. 3.610.  Redesignates existing Section 3.359. 
     Severability clause.
          SUBTITLE O.  AUTOMATIC DIAL ANNOUNCING DEVICES

     Sec. 3.651.  Redesignates existing Section 3.401.  Makes a
     conforming change.
     
     Sec. 3.652.  Redesignates existing Section 3.402.
     
     Sec. 3.653.  Redesignates existing Section 3.403.  Provides
     that, if an automated dial announcing device (ADAD) is used
     for debt collection purposes and the use complies with
     applicable federal law and regulations, and the ADAD is used
     by a live operator for automatic dialing or hold announcement
     purposes, the use complies with this subdivision.  Permits a
     person to operate an ADAD that plays a recorded message when
     the connection is completed to a telephone number if the
     device, when used for solicitation purposes, has a message
     shorter than one minute or has the technical capacity to
     recognize a telephone answering device on the called person's
     line and terminates the call within one minute.
     
     Sec. 3.654.  Redesignates existing Section 3.404.
     
     Sec. 3.655.  Redesignates existing Section 3.405.
     
     Sec. 3.656.  Redesignates existing Section 3.406.
     
     Sec. 3.657.  Redesignates existing Section 3.407.
     
     Sec. 3.658.  Redesignates existing Section 4.408.
     
     Sec. 3.659.  Redesignates existing Section 3.409.
     
     Sec. 3.660.  New heading: NOTICE TO CONSUMER OF PROVISIONS OF
     CHAPTER 37 OF THE BUSINESS & COMMERCE CODE AND SECTION 3.659. 
     Redesignates existing Section 3.410.  Makes a conforming
     change.
     
     SECTION 49.    (a) Amends Chapter 74D, Property Code, by adding
Section 74.3011, as follows:

            Sec. 74.3011.  DELIVERY OF MONEY TO RURAL SCHOLARSHIP FUND. 
       (a) Authorizes a local telephone exchange company to deliver
       reported money to a scholarship fund for rural students
       instead of delivering the money to the state treasurer under
       Section 74.301.
       
       (b) Authorizes a local telephone exchange company to
         deliver money under this section only to a scholarship
         fund established by one or more local telephone exchange
         companies in this state to enable needy students from
         rural areas to attend college, technical school, or
         another postsecondary educational institution.
         
         (c) Requires a local telephone exchange company to file
         with the state treasurer a verification of money delivered
         under this section.
         
         (d) Requires a claim for money delivered to a scholarship
         fund under this section to be filed with the local
         telephone exchange company that delivered the money. 
         Requires the LEC to forward the claim to the scholarship
         fund administrator, and requires the fund to pay the claim
         if it determines in good faith that the claim is valid. 
         Authorizes an aggrieved person to file a suit against the
         fund in the district court.
         
         (e) Requires the state treasurer to prescribe forms and
         procedures governing this section.
         
         (f) Defines "local telephone exchange company."
         
         (g) Prohibits the total amount of money transferred by all
         local telephone exchange companies from exceeding $400,000
         during a state fiscal year.  Requires the state treasury
         to keep a record of the total amount transferred annually. 
         Requires the treasury, when the total amount transferred
         during a state fiscal year equals the amount allowed by
         this subsection, to notify each local telephone exchange
         company that the company may not transfer any additional
         money to the company's scholarship fund during the
         remainder of that state fiscal year.
     (b) Makes application of Section 74.3011, Property Code,
     prospective.
     
SECTION 50.    (a) Amends Chapter 74D, Property Code, by adding
Section 74.3012, as follows:

            Sec. 74.3012.  DELIVERY OF MONEY TO URBAN SCHOLARSHIP FUND. 
       (a) Authorizes a LEC to deliver reported money to a
       scholarship fund for urban students instead of delivering
       the money to the state treasurer under Section 74.301.
       
       (b) Authorizes a LEC to deliver money under this section
         only to a scholarship fund established by one or more LECs
         in this state to enable needy students from urban areas to
         attend college, technical school, or another postsecondary
         educational institution.
         
         (c) Requires a LEC to file with the state treasurer a
         verification of money delivered under this section.
         
         (d) Requires a claim for money delivered to a scholarship
         fund under this section to be filed with the LEC that
         delivered the money.  Requires the LEC to forward the
         claim to the scholarship fund administrator, and requires
         the fund to pay the claim if it determines in good faith
         that the claim is valid.  Authorizes an aggrieved person
         to file a suit against the fund in the district court.
         
         (e) Requires the state treasurer to prescribe forms and
         procedures governing this section.
         
         (f) Defines "local exchange company."
         
         (g) Prohibits the total amount of money transferred by all
         LECs from exceeding $400,000 during the 1995-1996 fiscal
         year.  Prohibits the total amount of money that may be
         transferred by all LECs during each subsequent fiscal year
         from exceeding the total amount of money transferred to
         rural scholarship funds under Section 74.3011 during the
         previous state fiscal year.  Requires the state treasury
         to keep a record of the total amount transferred annually. 
         Requires the treasury, if the total amount transferred
         during a state fiscal year equals the amount allowed by
         this subsection, to notify each LEC that the company may
         not transfer any additional money to the company's
         scholarship fund during the remainder of that state fiscal
         year.
     (b) Makes application of Section 74.3012, Property Code,
     prospective.
     
SECTION 51.    Requires the governor and lieutenant governor, as
soon as possible after the effective date of this Act, to appoint
the members of the Telecommunications Infrastructure Fund Board,
and sets forth guidelines and term limits for those appointments.

SECTION 52.    Repeals all laws and parts of laws in conflict with
this Act effective September 1, 1995.

SECTION 53.    (a) Effective date: September 1, 1995.

     (b) Makes application of Section 3.2555, PURA, applicable only
     to a franchise or contract entered into or amended on or after
     September 1, 1995.
     
     (c) Makes application of Section 3.304(a)(3)(A)(i), PURA,
     applicable only to a petition filed on or after April 15,
     1995.
SECTION 54.    Emergency clause.