H.B. No. 2128
    1-1                                AN ACT
    1-2  relating to the regulation of telecommunications utilities, to the
    1-3  provision of telecommunications and related services, and to the
    1-4  continuation of the Public Utility Commission of Texas.
    1-5        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-6        SECTION 1.  Section 1.002, Public Utility Regulatory Act of
    1-7  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
    1-8  Session, 1995, is amended to read as follows:
    1-9        Sec. 1.002.  LEGISLATIVE POLICY AND PURPOSE.  This Act is
   1-10  enacted to protect the public interest inherent in the rates and
   1-11  services of public utilities.  The legislature finds that
   1-12  traditionally public utilities are by definition monopolies in the
   1-13  areas they serve; that therefore the normal forces of competition
   1-14  which operate to regulate prices in a free enterprise society do
   1-15  not operate; and that therefore utility rates, operations, and
   1-16  services are regulated by public agencies with the objective that
   1-17  this regulation shall operate as a substitute for competition.  The
   1-18  purpose of this Act is to establish a comprehensive regulatory
   1-19  system which is adequate to the task of regulating public utilities
   1-20  as defined by this Act, to assure rates, operations, and services
   1-21  which are just and reasonable to the consumers and to the
   1-22  utilities.
   1-23        SECTION 2.  Section 1.003(14), Public Utility Regulatory Act
   1-24  of 1995, as enacted by S.B.  319, Acts of the 74th Legislature,
    2-1  Regular Session, 1995, is amended to read as follows:
    2-2              (14)  "Rate" means and includes every compensation,
    2-3  tariff, charge, fare, toll, rental, and classification, or any of
    2-4  them demanded, observed, charged, or collected whether directly or
    2-5  indirectly by any public utility for any service, product, or
    2-6  commodity described in the definition of "utility" in Section 2.001
    2-7  or 3.002 <3.001> of this Act and any rules, regulations, practices,
    2-8  or contracts affecting any such compensation, tariff, charge, fare,
    2-9  toll, rental, or classification.
   2-10        SECTION 3.  Section 1.004, Public Utility Regulatory Act of
   2-11  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   2-12  Session, 1995, is amended to read as follows:
   2-13        Sec. 1.004.  DEFINITIONS IN TITLE.  In this title, "public
   2-14  utility" or "utility" has the meaning assigned by Section 2.001 or
   2-15  3.002 <3.001> of this Act.
   2-16        SECTION 4.  Section 1.022, Public Utility Regulatory Act of
   2-17  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   2-18  Session, 1995, is amended to read as follows:
   2-19        Sec. 1.022.  SUNSET PROVISION.  The Public Utility Commission
   2-20  of Texas and the Office of Public Utility Counsel are subject to
   2-21  Chapter 325, Government Code (Texas Sunset Act).  Unless continued
   2-22  in existence as provided by that chapter, the commission and the
   2-23  office are abolished and this Act expires September 1, 2001 <1995>.
   2-24        SECTION 5.  Section 1.353, Public Utility Regulatory Act of
   2-25  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   2-26  Session, 1995, is amended to read as follows:
   2-27        Sec. 1.353.  PAYMENT OF ASSESSMENTS.  (a)  For the
    3-1  assessments covered by this section, assessments are due as
    3-2  provided by this section notwithstanding Section 1.352 of this Act,
    3-3  based on a public utility's estimate of its gross receipts.
    3-4        (b)  For the assessment due August 15, 1995, 50 percent of
    3-5  the assessment must be paid by August 15, 1994, and 50 percent must
    3-6  be paid by February 15, 1995.
    3-7        (c)  For the assessment due August 15, 1996, 50 percent of
    3-8  the assessment must be paid by August 15, 1995, and 50 percent must
    3-9  be paid by February 15, 1996.
   3-10        (d)  For the assessment due August 15, 1997, 50 percent of
   3-11  the assessment must be paid by August 15, 1996, and 50 percent must
   3-12  be paid by February <the remainder must be paid by August> 15,
   3-13  1997.
   3-14        (e)  For the assessment due August 15, 1998, 50 percent of
   3-15  the assessment must be paid by August 15, 1997, and the remainder
   3-16  must be paid by August 15, 1998.
   3-17        (f)  Any assessment amounts underpaid on assessments due on
   3-18  August 15, 1995, <or> August 15, 1996, or August 15, 1997, must be
   3-19  paid by those respective dates.  Any assessment amounts overpaid
   3-20  shall be credited against following assessments.
   3-21        (g) <(f)>  This section expires September 1, 1998 <1997>.
   3-22        SECTION 6.  Subtitle K, Title I, Public Utility Regulatory
   3-23  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   3-24  Regular Session, 1995, is amended by adding Section 1.407 to read
   3-25  as follows:
   3-26        Sec. 1.407.  HISTORICALLY UNDERUTILIZED BUSINESSES.  (a)  The
   3-27  commission, upon notice and hearing, has the authority to require
    4-1  each utility subject to regulation under the Public Utility
    4-2  Regulatory Act to make an effort to overcome the underuse of
    4-3  historically underutilized businesses.
    4-4        (b)  The commission shall require each utility subject to
    4-5  regulation under the Public Utility Regulatory Act to prepare and
    4-6  submit to the commission a comprehensive annual report detailing
    4-7  its use of historically underutilized businesses.
    4-8        (c)  In this section "historically underutilized business"
    4-9  has the same meaning as in Section 481.101, Government Code.
   4-10        (d)  The rules adopted under this section may not be used to
   4-11  discriminate against any citizen on the basis of sex, race, color,
   4-12  creed, or national origin.
   4-13        (e)  This section does not create a new cause of action,
   4-14  either public or private.
   4-15        SECTION 7.  Subtitle A, Title III, Public Utility Regulatory
   4-16  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   4-17  Regular Session, 1995, is amended to read as follows:
   4-18                    SUBTITLE A.  GENERAL PROVISIONS
   4-19        Sec. 3.001.  POLICY.  The legislature finds that significant
   4-20  changes have occurred in telecommunications since this Act was
   4-21  initially adopted.  The legislature hereby finds that it is the
   4-22  policy of this state to promote diversity of providers and
   4-23  interconnectivity and to encourage a fully competitive
   4-24  telecommunications marketplace while protecting and maintaining the
   4-25  wide availability of high quality, interoperable, standards-based
   4-26  telecommunications services at affordable rates.  These goals are
   4-27  best achieved by legislation that brings telecommunications
    5-1  regulation into the modern era by guaranteeing the affordability of
    5-2  basic telephone service in a competitively neutral manner, while
    5-3  fostering free market competition within the telecommunications
    5-4  industry.  The legislature further finds that the technological
    5-5  advancements, advanced telecommunications infrastructure, and
    5-6  increased customer choices for telecommunications services
    5-7  generated by a truly competitive market will raise the living
    5-8  standards of all Texans by enhancing economic development and
    5-9  improving the delivery of education, health, and other public and
   5-10  private services and therefore play a critical role in Texas'
   5-11  economic future.  It is the policy of this state to require the
   5-12  commission to do those things necessary to enhance the development
   5-13  of competition by adjusting regulation to match the degree of
   5-14  competition in the marketplace, thereby reducing the cost and
   5-15  burden of regulation and maintaining protection of markets that are
   5-16  not competitive.  It is further the policy of this state to ensure
   5-17  that high quality telecommunications services are available,
   5-18  accessible, and usable by individuals with disabilities, unless
   5-19  making the services available, accessible, or usable would result
   5-20  in an undue burden, including unreasonable cost or technical
   5-21  feasibility, or would have an adverse competitive effect.  However,
   5-22  the legislature recognizes that the strength of competitive forces
   5-23  vary widely between markets and products and services.  Therefore,
   5-24  to foster, encourage, and accelerate the continuing development and
   5-25  emergence of a competitive and advanced  telecommunications
   5-26  environment and infrastructure, the legislature declares that new
   5-27  rules, policies, and principles be formulated and applied to
    6-1  protect the public interest.
    6-2        Sec. 3.002.  DEFINITIONS.  In this title:
    6-3              (1)  "Basic local telecommunications service" means:
    6-4                    (A)  flat rate residential and business local
    6-5  exchange telephone service, including primary directory listings;
    6-6                    (B)  tone dialing service;
    6-7                    (C)  access to operator services;
    6-8                    (D)  access to directory assistance services;
    6-9                    (E)  access to 911 service where provided by a
   6-10  local authority or dual party relay service;
   6-11                    (F)  the ability to report service problems seven
   6-12  days a week;
   6-13                    (G)  lifeline and tel-assistance services; and
   6-14                    (H)  any other service the commission, after a
   6-15  hearing, determines should be included in basic local
   6-16  telecommunications service.
   6-17              (2)  "Dominant carrier" means:
   6-18                    (A)  a provider of any particular communication
   6-19  service which is provided in whole or in part over a telephone
   6-20  system who as to such service has sufficient market power in a
   6-21  telecommunications market as determined by the commission to enable
   6-22  such provider to control prices in a manner adverse to the public
   6-23  interest for such service in such market; <and>
   6-24                    (B)  any provider who provided <of> local
   6-25  exchange telephone service within a certificated exchange area on
   6-26  September 1, 1995, as to such service and as to any other service
   6-27  for which a competitive alternative is not available in a
    7-1  particular geographic market; and
    7-2                    (C)  any provider of local exchange telephone
    7-3  service within a certificated exchange area as to intraLATA long
    7-4  distance message telecommunications service originated by dialing
    7-5  the access code "1+" so long as the use of that code for the
    7-6  origination of "1+" intraLATA calls within its certificated
    7-7  exchange area is exclusive to that provider.  A telecommunications
    7-8  market shall be statewide until January 1, 1985.  After this date
    7-9  the commission may, if it determines that the public interest will
   7-10  be served, establish separate markets within the state.  The <Prior
   7-11  to January 1, 1985, the> commission shall hold such hearings and
   7-12  require such evidence as is necessary to carry out the public
   7-13  purpose of this Act and to determine the need and effect of
   7-14  establishing separate markets.  Any such provider determined to be
   7-15  a dominant carrier as to a particular telecommunications service in
   7-16  a market may not be presumed to be a dominant carrier of a
   7-17  different telecommunications service in that market.  The term does
   7-18  not include an interexchange carrier that is not a certificated
   7-19  local exchange company, with respect to interexchange services.
   7-20              (3)  "Incumbent local exchange company" means a local
   7-21  exchange company that has a certificate of convenience and
   7-22  necessity on September 1, 1995.
   7-23              (4)  "Least cost technology" means the technology, or
   7-24  mix of technologies, that would be chosen in the long run as the
   7-25  most economically efficient choice, provided that the choice of
   7-26  least cost technologies is:
   7-27                    (A)  restricted to technologies that are
    8-1  currently available on the market and for which vendor prices can
    8-2  be obtained;
    8-3                    (B)  consistent with the level of output
    8-4  necessary to satisfy current demand levels for all services using
    8-5  the basic network function in question; and
    8-6                    (C)  consistent with overall network design and
    8-7  topology requirements.
    8-8              (5) <(2)>  "Local exchange company" means a
    8-9  telecommunications utility that has been granted either a
   8-10  certificate of convenience and necessity or a certificate of
   8-11  operating authority <certificated> to provide local exchange
   8-12  telephone service, basic local telecommunications service, or
   8-13  switched access service within the state.
   8-14              (6)  "Local exchange telephone service" means
   8-15  telecommunications service provided within an exchange to establish
   8-16  connections between customer premises within the exchange,
   8-17  including connections between a customer premises and a long
   8-18  distance provider serving the exchange.  The term includes tone
   8-19  dialing, service connection charges, and directory assistance
   8-20  services when offered in connection with basic local
   8-21  telecommunications service and interconnection with other service
   8-22  providers.  The term does not include the following services,
   8-23  whether offered on an intraexchange or interexchange basis:
   8-24                    (A)  central office based PBX-type services for
   8-25  systems of 75 stations or more;
   8-26                    (B)  billing and collection services;
   8-27                    (C)  high-speed private line services of 1.544
    9-1  megabits or greater;
    9-2                    (D)  customized services;
    9-3                    (E)  private line and virtual private line
    9-4  services;
    9-5                    (F)  resold or shared local exchange telephone
    9-6  services if permitted by tariff;
    9-7                    (G)  dark fiber services;
    9-8                    (H)  non-voice data transmission service when
    9-9  offered as a separate service and not as a component of basic local
   9-10  telecommunications service;
   9-11                    (I)  dedicated or virtually dedicated access
   9-12  services; and
   9-13                    (J)  any other service the commission declares is
   9-14  not a "local exchange telephone service."
   9-15              (7)  "Long run incremental cost" or "LRIC" has the
   9-16  meaning assigned by the commission in 16 T.A.C. Section 23.91.
   9-17              (8)  "Pricing flexibility" includes customer specific
   9-18  contracts, volume, term, and discount pricing, zone density
   9-19  pricing, packaging of services, and other promotional pricing
   9-20  flexibility.  Discounts and other forms of pricing flexibility may
   9-21  not be preferential, prejudicial, or discriminatory.
   9-22              (9) <(3)>  "Public utility" or "utility" means any
   9-23  person, corporation, river authority, cooperative corporation, or
   9-24  any combination thereof, other than a municipal corporation, or
   9-25  their lessees, trustees, and receivers, now or hereafter owning or
   9-26  operating for compensation in this state equipment or facilities
   9-27  for the conveyance, transmission, or reception of communications
   10-1  over a telephone system as a dominant carrier (hereinafter
   10-2  "telecommunications utility").   A person or  corporation not
   10-3  otherwise a public utility within the meaning of this Act may not
   10-4  be deemed such solely because of the furnishing or furnishing and
   10-5  maintenance of a private system or the manufacture, distribution,
   10-6  installation, or maintenance of customer premise communications
   10-7  equipment and accessories.  Except as provided by Sections 3.606
   10-8  and 3.608 of this Act, nothing <Nothing> in this Act shall be
   10-9  construed to apply to companies whose only form of business is
  10-10  being telecommunications managers, companies that administer
  10-11  central office based or customer based PBX-type sharing/resale
  10-12  arrangements as their only form of business, telegraph services,
  10-13  television stations, radio stations, community antenna television
  10-14  services, <or> radio-telephone services that may be authorized
  10-15  under the Public Mobile Radio Services rules of the Federal
  10-16  Communications Commission, or commercial mobile service providers,
  10-17  under Sections 153(n) and 332(d), Communications Act of 1934 (47
  10-18  U.S.C. Section 151 et seq.), Federal Communications Commission
  10-19  rules, and the Omnibus Budget Reconciliation Act of 1993, other
  10-20  than such radio-telephone services provided by wire-line telephone
  10-21  companies under the Domestic Public Land Mobile Radio Service and
  10-22  Rural Radio Service rules of the Federal Communications Commission.
  10-23  Interexchange telecommunications carriers (including resellers of
  10-24  interexchange telecommunications services), specialized
  10-25  communications common carriers, other resellers of communications,
  10-26  other communications carriers who convey, transmit, or receive
  10-27  communications in whole or in part over a telephone system, <and>
   11-1  providers of operator services as defined in Section 3.052(a) of
   11-2  this Act (except that subscribers to customer-owned pay telephone
   11-3  service may not be deemed to be telecommunications utilities), and
   11-4  separated affiliate and electronic publishing joint ventures as
   11-5  defined by Subtitle L of this title are also telecommunications
   11-6  utilities, but the commission's regulatory authority as to them is
   11-7  only as hereinafter defined.  The term "public utility" or
   11-8  "utility" does not include any person or corporation not otherwise
   11-9  a public utility that furnishes the services or commodity described
  11-10  in this section only to itself, its employees, or its tenants as an
  11-11  incident of such employee service or tenancy, when such service or
  11-12  commodity is not resold to or used by others.
  11-13              (10) <(4)>  "Separation" means the division of plant,
  11-14  revenues, expenses, taxes, and reserves, applicable to exchange or
  11-15  local service where such items are used in common for providing
  11-16  public utility service to both local exchange telephone service and
  11-17  other service, such as interstate or intrastate toll service.
  11-18              (11)  "Telecommunications provider" means a
  11-19  certificated telecommunications utility, a shared tenant service
  11-20  provider, a nondominant carrier of telecommunications services,
  11-21  provider of radio-telephone service authorized under the Commercial
  11-22  Mobile Service under Sections 153(n) and 332(d), Communications Act
  11-23  of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications
  11-24  Commission rules, and the Omnibus Budget Reconciliation Act of
  11-25  1993, a telecommunications entity that provides central office
  11-26  based PBX-type sharing or resale arrangements, an interexchange
  11-27  telecommunications carrier, a specialized common carrier, a
   12-1  reseller of communications, a provider of operator services, a
   12-2  provider of customer-owned pay telephone service, and other persons
   12-3  or entities that the commission may from time to time find provide
   12-4  telecommunications services to customers in this state.  The term
   12-5  does not include a provider of enhanced or information services, or
   12-6  another user of telecommunications services, who does not also
   12-7  provide telecommunications services or any state agency or state
   12-8  institution of higher education, or any service provided by any
   12-9  state agency or state institution of higher education.
  12-10              (12)  "Tier 1 local exchange company" means a Tier 1
  12-11  local exchange company as defined by the Federal Communications
  12-12  Commission.
  12-13        SECTION 8.  Section 3.051, Public Utility Regulatory Act of
  12-14  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  12-15  Session, 1995, is amended by amending Subsections (a), (c)-(f),
  12-16  (j), and (l)-(q) and adding Subsections (r) and (s) to read as
  12-17  follows:
  12-18        (a)  It is the policy of this state to protect the public
  12-19  interest in having adequate and efficient telecommunications
  12-20  service available to all citizens of the state at just, fair, and
  12-21  reasonable rates.  The legislature finds that the
  12-22  telecommunications industry through technical advancements, federal
  12-23  legislative, judicial, and administrative actions, and the
  12-24  formulation of new telecommunications enterprises has become and
  12-25  will continue to be in many and growing areas a competitive
  12-26  industry which does not lend itself to traditional public utility
  12-27  regulatory rules, policies, and principles and that, therefore, the
   13-1  public interest requires that new rules, policies, and principles
   13-2  be formulated and applied to protect the public interest and to
   13-3  provide equal opportunity to all telecommunications utilities in a
   13-4  competitive marketplace.  It is the purpose of this section to
   13-5  grant to the commission the authority and the power under this Act
   13-6  to carry out the public policy herein stated.
   13-7        (c)  Except as provided by Subsections (l), <and> (m), and
   13-8  (s) of this section and Section 3.052 of this Act, the commission
   13-9  shall only have the following jurisdiction over all
  13-10  telecommunications utilities who are not dominant carriers:
  13-11              (1)  to require registration as provided in Subsection
  13-12  (d) of this section;
  13-13              (2)  to conduct such investigations as are necessary to
  13-14  determine the existence, impact, and scope of competition in the
  13-15  telecommunications industry, including identifying dominant
  13-16  carriers in the local telecommunications <exchange> and intralata
  13-17  interexchange telecommunications industry and defining the
  13-18  telecommunications market or markets, and in connection therewith
  13-19  may call and hold hearings, issue subpoenas to compel the
  13-20  attendance of witnesses and the production of papers and documents,
  13-21  and make findings of fact and decisions with respect to
  13-22  administering the provisions of this Act or the rules, orders, and
  13-23  other actions of the commission;
  13-24              (3)  to require the filing of such reports as the
  13-25  commission may direct from time to time;
  13-26              (4)  to require the maintenance of statewide average
  13-27  rates or prices of telecommunications service;
   14-1              (5)  to require that every local exchange area have
   14-2  access to local and interexchange telecommunications service,
   14-3  except that a <an interexchange> telecommunications utility
   14-4  <carrier> must be allowed to discontinue service to a local
   14-5  exchange area if comparable service is available in the area and
   14-6  the discontinuance is not contrary to the public interest; this
   14-7  section does not authorize the commission to require a <an
   14-8  interexchange> telecommunications utility <carrier> that has not
   14-9  provided services to a local exchange area during the previous 12
  14-10  months and that has never provided services to that same local
  14-11  exchange area for a cumulative period of one year at any time in
  14-12  the past to initiate services to that local exchange area; and
  14-13              (6)  to require the quality of <interexchange>
  14-14  telecommunications service provided in each exchange to be adequate
  14-15  to protect the public interest and the interests of customers of
  14-16  that exchange if the commission determines that service to a local
  14-17  exchange has deteriorated to the point that <long distance> service
  14-18  is not reliable.
  14-19        (d)  All providers of communications service described in
  14-20  Subsection (c) of this section who commence such service to the
  14-21  public shall register with the commission within 30 days of
  14-22  commencing service.  Such registration shall be accomplished by
  14-23  filing with the commission a description of the location and type
  14-24  of service provided, the price <cost> to the public of such
  14-25  service, and such other registration information as the commission
  14-26  may direct.  Notwithstanding any other provision of this Act, an
  14-27  interexchange telecommunications utility <carrier> doing business
   15-1  in this state shall continue to maintain on file with the
   15-2  commission tariffs or lists governing the terms of providing its
   15-3  services.
   15-4        (e)(1)  For the purpose of carrying out the public policy
   15-5  stated in Subsection (a) of this section and any other section of
   15-6  this Act notwithstanding, the commission is granted all necessary
   15-7  power and authority under this Act to promulgate rules and
   15-8  establish procedures applicable to incumbent local exchange
   15-9  companies for determining the level of competition in specific
  15-10  telecommunications markets and submarkets and providing appropriate
  15-11  regulatory treatment to allow incumbent local exchange companies to
  15-12  respond to significant competitive challenges.  Nothing in this
  15-13  section is intended to change the burden of proof of the incumbent
  15-14  local exchange company under Sections 3.202, 3.203, 3.204, 3.205,
  15-15  3.206, 3.207, and 3.208 of this Act.
  15-16              (2)  In determining the level of competition in a
  15-17  specific market or submarket, the commission shall hold an
  15-18  evidentiary hearing to consider the following:
  15-19                    (A)  the number and size of telecommunications
  15-20  utilities or other persons providing the same, equivalent, or
  15-21  substitutable service;
  15-22                    (B)  the extent to which the same, equivalent, or
  15-23  substitutable service is available;
  15-24                    (C)  the ability of customers to obtain the same,
  15-25  equivalent, or substitutable services at comparable rates, terms,
  15-26  and conditions;
  15-27                    (D)  the ability of telecommunications utilities
   16-1  or other persons to make the same, equivalent, or substitutable
   16-2  service readily available at comparable rates, terms, and
   16-3  conditions;
   16-4                    (E)  the existence of any significant barrier to
   16-5  the entry or exit of a provider of the service; and
   16-6                    (F)  other relevant information deemed
   16-7  appropriate.
   16-8              (3)  The regulatory treatments which the commission may
   16-9  implement include but are not limited to:
  16-10                    (A)  approval of a range of rates for a specific
  16-11  service;
  16-12                    (B)  approval of customer-specific contracts for
  16-13  a specific service; provided, however, that the commission shall
  16-14  approve a contract to provide central office based PBX-type
  16-15  services for systems of 200 stations or more, billing and
  16-16  collection services, high-speed private line services of 1.544
  16-17  megabits or greater, and customized services, provided that the
  16-18  contract is filed at least 30 days before initiation of the service
  16-19  contracted for; that the contract is accompanied with an affidavit
  16-20  from the person or entity contracting for the telecommunications
  16-21  service stating that he considered the acquisition of the same,
  16-22  equivalent, or substitutable services by bid or quotation from a
  16-23  source other than the incumbent local exchange company; that the
  16-24  incumbent local exchange company is recovering the appropriate
  16-25  costs of providing the services; and that approval of the contract
  16-26  is in the public interest; the contract shall be approved or denied
  16-27  within 30 days after filing, unless the commission for good cause
   17-1  extends the effective date for an additional 35 days; and
   17-2                    (C)  the detariffing of rates.
   17-3        (f)  Moreover, in order to encourage the rapid introduction
   17-4  of new or experimental services or promotional rates, the
   17-5  commission shall promulgate rules and establish procedures which
   17-6  allow the expedited introduction of, the establishment and
   17-7  adjustment of rates for, and the withdrawal of such services,
   17-8  including requests for such services made to the commission by the
   17-9  governing body of a municipality served by an incumbent <a> local
  17-10  exchange company having more than 500,000 access lines throughout
  17-11  the state.  Rates established or adjusted at the request of a
  17-12  municipality may not result in higher rates for ratepayers outside
  17-13  the boundaries of the municipality and may not include any rates
  17-14  for incumbent local exchange company interexchange services or
  17-15  interexchange carrier access service.
  17-16        (j)  Subsections (e) and (f) of this section are not
  17-17  applicable to basic local telecommunications <exchange> service,
  17-18  including local measured service.  Paragraph (B) of Subdivision (3)
  17-19  of Subsection (e) of this section is not applicable to message
  17-20  telecommunications services, switched access services for
  17-21  interexchange carriers, or wide area telecommunications service.
  17-22  An incumbent <A> local exchange company may not price similar
  17-23  services provided pursuant to contracts under Paragraph (B) of
  17-24  Subdivision (3) of Subsection (e) of this section in an
  17-25  unreasonably discriminatory manner.  For purposes of this section,
  17-26  similar services shall be defined as those services which are
  17-27  provided at or near the same point in time, which have the same
   18-1  characteristics, and which are provided under the same or similar
   18-2  circumstances.
   18-3        (l)  Notwithstanding any other provision of this Act, the
   18-4  commission may enter such orders as may be necessary to protect the
   18-5  public interest, including the imposition on any specific service
   18-6  or services of its full regulatory authority under this subtitle,
   18-7  Subtitles C through F of this title, and Subtitles D through I of
   18-8  Title I of this Act, but not Subtitles H and I of this title, if
   18-9  the commission upon complaint from another interexchange
  18-10  telecommunications utility <carrier> finds by a preponderance of
  18-11  the evidence upon notice and hearing that an interexchange
  18-12  telecommunications utility <carrier> has engaged in predatory
  18-13  pricing or attempted to engage in predatory pricing.
  18-14        (m)  Notwithstanding any other provision of this Act, the
  18-15  commission may enter such orders as may be necessary to protect the
  18-16  public interest if the commission finds upon notice and hearing
  18-17  that an interexchange telecommunications utility <carrier> has:
  18-18              (1)  failed to maintain statewide average rates;
  18-19              (2)  abandoned interexchange message telecommunications
  18-20  service to a local exchange area in a manner contrary to the public
  18-21  interest; or
  18-22              (3)  engaged in a pattern of preferential or
  18-23  discriminatory activities prohibited by Sections <3.213 and> 3.215
  18-24  and 3.217 of this Act, except that nothing in this Act shall
  18-25  prohibit volume discounts or other discounts based on reasonable
  18-26  business purposes.
  18-27        (n)  In any proceeding before the commission alleging conduct
   19-1  or activities by an interexchange telecommunications utility
   19-2  <carrier> against another interexchange telecommunications utility
   19-3  <carrier> in contravention of Subsections (l), (m), and (o) of this
   19-4  section, the burden of proof shall be upon the complaining
   19-5  interexchange telecommunications utility <carrier>; however, in
   19-6  such proceedings brought by customers or their representatives who
   19-7  are not themselves interexchange telecommunications utilities
   19-8  <carriers> or in such proceedings initiated by the commission, the
   19-9  burden of proof shall be upon the respondent interexchange
  19-10  telecommunications utility <carrier>.  However, if the commission
  19-11  finds it to be in the public interest, the commission may impose
  19-12  the burden of proof in such proceedings on the complaining party.
  19-13        (o)  The commission shall have the authority to require that
  19-14  a service provided by an interexchange telecommunications utility
  19-15  <carrier described in Subsection (c) of this section> be made
  19-16  available in an exchange served by the utility <carrier> within a
  19-17  reasonable time after receipt of a bona fide request for such
  19-18  service in that exchange, subject to the ability of the local
  19-19  exchange company to provide the required access or other service.
  19-20  A utility <carrier> may not be required to extend a service to an
  19-21  area if provision of that service would impose, after consideration
  19-22  of the public interest to be served, unreasonable costs upon or
  19-23  require unreasonable investments by the interexchange
  19-24  telecommunications utility <carrier>.  The commission may require
  19-25  such information from interexchange utilities <carriers> and local
  19-26  exchange companies <carriers> as may be necessary to enforce this
  19-27  provision.
   20-1        (p)  The commission may exempt from any requirement of this
   20-2  section an interexchange telecommunications utility <carrier> that
   20-3  the commission determines does not have a significant effect on the
   20-4  public interest, and it may exempt any interexchange
   20-5  telecommunications utility <carrier> which solely relies on the
   20-6  facilities of others to complete long distance calls if the
   20-7  commission deems this action to be in the public interest.
   20-8        (q)  Requirements imposed by Subsections (c), (d), (k),
   20-9  <(l),> (m), (n), (o), and (p) of this section on an interexchange
  20-10  telecommunications utility <carrier> shall apply to nondominant
  20-11  carriers and shall constitute the minimum requirements to be
  20-12  imposed by the commission for any dominant carrier.
  20-13        (r)  The commission may, only as necessary to enforce its
  20-14  limited jurisdiction, prescribe forms of books, accounts, records,
  20-15  and memoranda to be kept by a company that has a certificate of
  20-16  operating authority or service provider certificate of operating
  20-17  authority under Subtitle F of this title that in the judgment of
  20-18  the commission may be necessary to carry out the limited
  20-19  jurisdiction over those companies that this Act provides to the
  20-20  commission.
  20-21        (s)(1)  Except as otherwise specifically provided by this
  20-22  Act, the commission shall have only the following authority over a
  20-23  holder of a certificate of operating authority or service provider
  20-24  certificate of operating authority:
  20-25                    (A)  to enforce the applicable provisions of this
  20-26  Act as provided by Subtitle I, Title I, of this Act;
  20-27                    (B)  to assert jurisdiction over a specific
   21-1  service in accordance with Section 3.2572 of this Act;
   21-2                    (C)  to require co-carriage reciprocity; and
   21-3                    (D)  to regulate condemnation and building
   21-4  access.
   21-5              (2)  The commission may not impose on a
   21-6  telecommunications utility that has a certificate of operating
   21-7  authority or service provider certificate of operating authority a
   21-8  rule or regulatory practice under this section that imposes a
   21-9  greater regulatory burden on that telecommunications utility than
  21-10  is imposed on a certificate of convenience and necessity holder
  21-11  serving the same area.
  21-12        SECTION 9.  Subtitle B, Title III, Public Utility Regulatory
  21-13  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  21-14  Regular Session, 1995, is amended by adding Section 3.053 to read
  21-15  as follows:
  21-16        Sec. 3.053.  SALE OF PROPERTY.  (a)  The commission shall
  21-17  complete an investigation under Section 1.251 of this Act that
  21-18  relates to a public utility and enter a final order within 180 days
  21-19  after the date of notification by the utility.  If an order is not
  21-20  entered, the utility's action is considered consistent with the
  21-21  public interest.
  21-22        (b)  Section 1.251 of this Act does not apply to an incumbent
  21-23  local exchange company electing under Subtitle H of this title or
  21-24  to a company that receives a certificate of operating authority or
  21-25  a service provider certificate of operating authority under
  21-26  Subtitle F of this title.
  21-27        SECTION 10.  Subtitle C, Title III, Public Utility Regulatory
   22-1  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   22-2  Regular Session, 1995, is amended by adding Section 3.1015 to read
   22-3  as follows:
   22-4        Sec. 3.1015.  MUNICIPAL FEES.  Nothing in this Act may be
   22-5  construed as in any way limiting the right of a public utility to
   22-6  pass through municipal fees, including any increase in municipal
   22-7  fees.  A public utility that traditionally passes through municipal
   22-8  fees shall promptly pass through any reductions.
   22-9        SECTION 11.  Section 3.151(a), Public Utility Regulatory Act
  22-10  of 1995, as enacted by S.B.  319, Acts of the 74th Legislature,
  22-11  Regular Session, 1995, is amended to read as follows:
  22-12        (a)  The commission shall fix proper and adequate rates and
  22-13  methods of depreciation, amortization, or depletion of the several
  22-14  classes of property of each public utility and shall require every
  22-15  public utility to carry a proper and adequate depreciation account
  22-16  in accordance with such rates and methods and with such other rules
  22-17  and regulations as the commission prescribes.  On application of a
  22-18  utility, the commission shall fix depreciation rates that promote
  22-19  deployment of new technology and infrastructure.  In setting those
  22-20  rates, the commission shall consider depreciation practices of
  22-21  nonregulated telecommunications providers.  Such rates, methods,
  22-22  and accounts shall be utilized uniformly and consistently
  22-23  throughout the ratesetting and appeal proceedings.  A company
  22-24  electing under Subtitle H of this title may determine its own
  22-25  depreciation rates and amortizations, but shall notify the
  22-26  commission of any changes.
  22-27        SECTION 12.  Subtitle D, Title III, Public Utility Regulatory
   23-1  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   23-2  Regular Session, 1995, is amended by adding Section 3.1545 to read
   23-3  as follows:
   23-4        Sec. 3.1545.  RECORDS.  Notwithstanding Section 1.204 of this
   23-5  Act, books, accounts, records, or memoranda of a public utility may
   23-6  be removed from the state so long as those books, accounts,
   23-7  records, or memoranda are returned to the state for any inspection
   23-8  by the commission that is authorized by this Act.
   23-9        SECTION 13.  Subtitle D, Title III, Public Utility Regulatory
  23-10  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  23-11  Regular Session, 1995, is amended by adding Section 3.1555 to read
  23-12  as follows:
  23-13        Sec. 3.1555.  MINIMUM SERVICES.  (a)  Except as provided by
  23-14  Subsection (d) of this section, the commission shall require each
  23-15  holder of a certificate of convenience and necessity or certificate
  23-16  of operating authority in this state to provide at the applicable
  23-17  tariff rate, if any, to all customers, irrespective of race,
  23-18  national origin, income, or residence in an urban or rural area,
  23-19  not later than December 31, 2000:
  23-20              (1)  single party service;
  23-21              (2)  tone-dialing service;
  23-22              (3)  basic custom calling features;
  23-23              (4)  equal access for interLATA interexchange carriers
  23-24  on a bona fide request; and
  23-25              (5)  digital switching capability in all exchanges on
  23-26  customer request, provided by a digital switch in the exchange or
  23-27  by connection to a digital switch in another exchange.
   24-1        (b)  Notwithstanding Subsection (a) of this section, an
   24-2  electing incumbent local exchange company serving as of January 1,
   24-3  1995, more than 175,000 but fewer than 1,500,000 access lines shall
   24-4  install digital switches in its central offices serving exchanges
   24-5  of less than 20,000 access lines before December 31, 1998.
   24-6        (c)  The commission may temporarily waive these requirements
   24-7  on a showing of good cause.  The commission may not consider the
   24-8  cost of implementing this section in determining whether an
   24-9  electing company is entitled to a rate increase under Subtitle H or
  24-10  I of this title or increased universal service funds under Section
  24-11  3.608 of this Act.
  24-12        (d)  This section does not affect the requirement prescribed
  24-13  by 16 T.A.C. Section 23.69 that, not later than July 1, 1996,  each
  24-14  local exchange company shall make ISDN available to all customers
  24-15  in exchange areas of the company that have at least 50,000 access
  24-16  lines.
  24-17        SECTION 14.  Subtitle D, Title III, Public Utility Regulatory
  24-18  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  24-19  Regular Session, 1995, is amended by adding Section 3.1556 to read
  24-20  as follows:
  24-21        Sec. 3.1556.  RECONNECTION FEE.  The commission shall
  24-22  establish a reasonable limit on the amount that a local exchange
  24-23  company may charge a customer for changing the location at which
  24-24  the customer receives service.
  24-25        SECTION 15.  Sections 3.201 and 3.202, Public Utility
  24-26  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
  24-27  Legislature, Regular Session, 1995, are amended to read as follows:
   25-1        Sec. 3.201.  POWER TO INSURE COMPLIANCE; RATE REGULATION.
   25-2  Subject to the provisions of this Act, the commission is hereby
   25-3  vested with all authority and power of the State of Texas to insure
   25-4  compliance with the obligations of public utilities in this Act.
   25-5  Except as <To the extent> otherwise provided by this Act, the
   25-6  commission is empowered to fix and regulate rates of public
   25-7  utilities, including rules and regulations for determining the
   25-8  classification of customers and services and for determining the
   25-9  applicability of rates.  A rule or order of the commission may not
  25-10  conflict with the rulings of any federal regulatory body.
  25-11        Sec. 3.202.  JUST AND REASONABLE RATES.  It shall be the duty
  25-12  of the commission to insure that every rate made, demanded, or
  25-13  received by any public utility or by any two or more utilities
  25-14  jointly shall be just and reasonable.  Rates may not be
  25-15  unreasonably preferential, prejudicial, or discriminatory, but
  25-16  shall be sufficient, equitable, and consistent in application to
  25-17  each class of consumers.  For ratemaking purposes, the commission
  25-18  may treat two or more municipalities served by a public utility as
  25-19  a single class wherever it deems such treatment to be appropriate.
  25-20  Approval by the commission of a reduced rate for service for a
  25-21  class of consumers eligible under Section 3.602 <3.352> of this Act
  25-22  for tel-assistance service does not constitute a violation of this
  25-23  section.
  25-24        SECTION 16.  Section 3.204, Public Utility Regulatory Act of
  25-25  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  25-26  Session, 1995, is amended to read as follows:
  25-27        Sec. 3.204.  BURDEN OF PROOF.  Except as hereafter provided,
   26-1  in any proceeding involving any proposed change of rates, the
   26-2  burden of proof to show that the proposed change, if proposed by
   26-3  the utility, or that the existing rate, if it is proposed to reduce
   26-4  the rate, is just and reasonable shall be on the public utility.
   26-5  In any proceeding involving an incumbent <a> local exchange company
   26-6  in which the incumbent local exchange company's rate or rates are
   26-7  in issue, the burden of proof that such rate or rates are just and
   26-8  reasonable shall be on the incumbent local exchange company.
   26-9        SECTION 17.  Section 3.208(b), Public Utility Regulatory Act
  26-10  of 1995, as enacted by S.B.  319, Acts of the 74th Legislature,
  26-11  Regular Session, 1995, is amended to read as follows:
  26-12        (b)  Transactions with Affiliated Interests.  Payment to
  26-13  affiliated interests for costs of any services or any property,
  26-14  right, or thing or for interest expense may not be allowed either
  26-15  as capital cost or as expense except to the extent that the
  26-16  commission shall find such payment to be reasonable and necessary
  26-17  for each item or class of items as determined by the commission.
  26-18  Any such finding shall include specific findings of the
  26-19  reasonableness and necessity of each item or class of items allowed
  26-20  and a finding that the price to the utility is no higher than
  26-21  prices charged by the supplying affiliate to its other affiliates
  26-22  or divisions for the same item or class of items, or to
  26-23  unaffiliated persons or corporations within the same market areas
  26-24  or having the same market conditions.  If the supplying affiliate
  26-25  has calculated its charges to the utility in a manner consistent
  26-26  with the rules of the Federal Communications Commission, no finding
  26-27  shall be required as to the price charged by the supplying
   27-1  affiliate to its other affiliates or divisions.  In any case in
   27-2  which the commission finds that the test period affiliate expense
   27-3  is unreasonable, the commission shall determine the reasonable
   27-4  level of the expense and shall include such expense in determining
   27-5  the utility's cost of service.
   27-6        SECTION 18.  Section 3.210, Public Utility Regulatory Act of
   27-7  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   27-8  Session, 1995, is amended by adding Subsection (c) to read as
   27-9  follows:
  27-10        (c)  Except as provided by Subtitles H and I of this title,
  27-11  this section does not apply to a company electing into Subtitle H
  27-12  or I of this title.  However, the commission shall retain
  27-13  jurisdiction to hear and resolve complaints regarding an electing
  27-14  company's compliance with obligations imposed by this Act.
  27-15        SECTION 19.  Section 3.211, Public Utility Regulatory Act of
  27-16  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  27-17  Session, 1995, is amended by amending Subsections (f) and (h) and
  27-18  adding Subsection (j) to read as follows:
  27-19        (f)  If, after hearing, the commission finds the rates to be
  27-20  unreasonable or in any way in violation of any provision of law,
  27-21  the commission shall determine the level of rates to be charged or
  27-22  applied by the utility for the service in question and shall fix
  27-23  the same by order to be served upon the utility; these rates are
  27-24  thereafter to be observed until changed, as provided by this Act.
  27-25  Except as provided by Subtitles H, I, and J of this title, this
  27-26  subsection does not apply to a company electing into Subtitle H or
  27-27  I of this title.  Rates established under this section after a
   28-1  company's election must comply with Subtitle H or I of this title.
   28-2        (h)  If the commission does not make a final determination
   28-3  concerning an incumbent <a> local exchange company's schedule of
   28-4  rates prior to the expiration of the 150-day suspension period, the
   28-5  schedule of rates finally approved by the commission shall become
   28-6  effective and the incumbent local exchange company shall be
   28-7  entitled to collect such rates from the date the 150-day suspension
   28-8  period expired.  Any surcharges or other charges necessary to
   28-9  effectuate this subsection may not be recovered over a period of
  28-10  less than 90 days from the date of the commission's final order.
  28-11        (j)  An incumbent local exchange company may file with the
  28-12  commission tariffs for switched access service that have been
  28-13  approved by the Federal Communications Commission, provided that
  28-14  the tariffs include all rate elements in the company's interstate
  28-15  access tariff other than end user charges.  If on review the filed
  28-16  tariffs contain the same rates, terms, and conditions, excluding
  28-17  any end user charges, as approved by the Federal Communications
  28-18  Commission, the commission shall order the rates to be the
  28-19  intrastate switched access rates, terms, and conditions for the
  28-20  incumbent local exchange company within 60 days of filing.
  28-21        SECTION 20.  Sections 3.212(a) and (c), Public Utility
  28-22  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
  28-23  Legislature, Regular Session, 1995, are amended to read as follows:
  28-24        (a)  An incumbent <A> local exchange company may make changes
  28-25  in its tariffed rules, regulations, or practices that do not affect
  28-26  its charges or rates by filing the proposed changes with the
  28-27  commission at least 35 days prior to the effective date of the
   29-1  changes.  The commission may require such notice to ratepayers as
   29-2  it considers appropriate.
   29-3        (c)  The commission shall approve, deny, or modify the
   29-4  proposed changes before expiration of the suspension period.  In
   29-5  any proceeding under this section, the burden of proving that the
   29-6  requested relief is in the public interest and complies with this
   29-7  Act shall be borne by the incumbent local exchange company.
   29-8        SECTION 21.  Subtitle E, Title III, Public Utility Regulatory
   29-9  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  29-10  Regular Session, 1995, is amended by amending Section 3.213 and
  29-11  adding Section 3.2135 to read as follows:
  29-12        Sec. 3.213.  <COOPERATIVE OR> SMALL INCUMBENT LOCAL EXCHANGE
  29-13  COMPANIES<; STATEMENT OF INTENT TO CHANGE RATES; NOTICE OF INTENT;
  29-14  SUSPENSION OF RATE SCHEDULE; REVIEW>.  (a)  The legislature finds
  29-15  that regulatory policy should recognize differences between the
  29-16  small and large incumbent local exchange companies, that there are
  29-17  a large number of customer-owned telephone cooperatives and small,
  29-18  locally owned investor companies, and that it is appropriate to
  29-19  provide incentives and flexibility to allow incumbent local
  29-20  exchange companies that serve the rural areas to provide existing
  29-21  services and to introduce new technology and new services in a
  29-22  prompt, efficient, and economical manner.
  29-23        (b)  Except as otherwise provided by this section, an
  29-24  incumbent local exchange company that is a cooperative corporation,
  29-25  or that, together with all affiliated incumbent local exchange
  29-26  companies, has fewer than 31,000 access lines in service in this
  29-27  state may offer extended local calling services or new services on
   30-1  an optional basis or make minor changes in its rates or tariffs if
   30-2  the company:
   30-3              (1)  files with the commission and the office a
   30-4  statement of intent, as prescribed by Subsection (c) of this
   30-5  section, not later than the 91st day before the date on which the
   30-6  proposed change will take effect;
   30-7              (2)  provides notice as prescribed by Subsection (d) of
   30-8  this section; and
   30-9              (3)  files with the commission affidavits verifying the
  30-10  provision of notice as prescribed by Subsection (d) of this
  30-11  section.
  30-12        (c)  The statement of intent required by Subsection (b)(1) of
  30-13  this section must include:
  30-14              (1)  a copy of a resolution approving the proposed
  30-15  change by the incumbent local exchange telephone company's board of
  30-16  directors;
  30-17              (2)  a description of the services affected by the
  30-18  proposed change;
  30-19              (3)  a copy of the proposed tariff for the affected
  30-20  service;
  30-21              (4)  a copy of the customer notice required by
  30-22  Subsection (b)(2) of this section;
  30-23              (5)  the number of access lines the company and each
  30-24  affiliate has in service in this state; and
  30-25              (6)  the amount by which the company's total regulated
  30-26  intrastate gross annual revenues will increase or decrease as a
  30-27  result of the proposed change.
   31-1        (d)  The incumbent local exchange company shall provide
   31-2  notice to affected customers in the manner prescribed by the
   31-3  commission not later than the 61st day before the date on which the
   31-4  proposed change will take effect.  Each notice prescribed by the
   31-5  commission must include:
   31-6              (1)  a description of the services affected by the
   31-7  proposed change;
   31-8              (2)  the effective date of the proposed change;
   31-9              (3)  an explanation of the customer's right to petition
  31-10  the commission for a review under Subsection (e) of this section,
  31-11  including the number of persons required to petition before a
  31-12  commission review will occur;
  31-13              (4)  an explanation of the customer's right to obtain
  31-14  information concerning how to obtain a copy of the proposed tariff
  31-15  from the company;
  31-16              (5)  the amount by which the company's total regulated
  31-17  intrastate gross annual revenues will increase or decrease as a
  31-18  result of the proposed change; and
  31-19              (6)  a list of rates that are affected by the proposed
  31-20  rate change.
  31-21        (e)  The commission shall review a proposed change filed
  31-22  under this section if:
  31-23              (1)  the commission receives complaints relating to the
  31-24  proposed change signed by the lesser of five percent or 1,500 of
  31-25  the affected local service customers;
  31-26              (2)  the commission receives a complaint relating to
  31-27  the proposed change from an affected intrastate access customer, or
   32-1  a group of affected intrastate access customers, that in the
   32-2  preceding 12 months accounted for more than 10 percent of the
   32-3  company's total intrastate gross access revenues;
   32-4              (3)  the proposed change is not a minor change;
   32-5              (4)  the company does not comply with the procedural
   32-6  requirements of this section; or
   32-7              (5)  the proposed change is inconsistent with the
   32-8  commission's substantive policies as expressed in its rules.
   32-9        (f)  On review, the commission may suspend the proposed
  32-10  tariff during the pendency of review.
  32-11        (g)  This section does not prohibit an incumbent local
  32-12  exchange company from filing for a new service or rate change under
  32-13  another applicable section of this Act or the commission from
  32-14  conducting a review in accordance with Section 3.210 of this Act.
  32-15        (h)  In this section, "minor change" means a change,
  32-16  including the restructuring of rates of existing services, that
  32-17  decreases the rates or revenues of the incumbent local exchange
  32-18  company or that, together with any other rate or proposed or
  32-19  approved tariff changes in the 12 months preceding the date on
  32-20  which the proposed change will take effect, results in an increase
  32-21  of the company's total regulated intrastate gross annual revenues
  32-22  by not more than five percent.  Further, with regard to a change to
  32-23  a basic local access line rate, a minor change may not, together
  32-24  with any other change to that rate that went into effect during the
  32-25  12 months preceding the proposed effective date of the requested
  32-26  change, result in an increase of more than 10 percent.  <Except as
  32-27  otherwise provided by this section, a local exchange company that
   33-1  is a cooperative corporation or that has fewer than 5,000 access
   33-2  lines in service in this state may change rates by publishing
   33-3  notice of the change at least 60 days before the date of the change
   33-4  in the place and form as prescribed by the commission.  The notice
   33-5  must include:>
   33-6              <(1)  the reasons for the rate change;>
   33-7              <(2)  a description of the affected service;>
   33-8              <(3)  an explanation of the right of the subscriber to
   33-9  petition the commission for a hearing on the rate change; and>
  33-10              <(4)  a list of rates that are affected by the proposed
  33-11  rate change.>
  33-12        <(b)  At least 60 days before the date of the change, the
  33-13  local exchange company shall file with the commission a statement
  33-14  of intent to change rates containing:>
  33-15              <(1)  a copy of the notice required by Subsection (a)
  33-16  of this section;>
  33-17              <(2)  the number of access lines the company has in
  33-18  service in this state;>
  33-19              <(3)  the date of the most recent commission order
  33-20  setting rates of the company;>
  33-21              <(4)  the increase in total gross annual local revenues
  33-22  that will be produced by the proposed rates;>
  33-23              <(5)  the increase in total gross annual local revenues
  33-24  that will be produced by the proposed rates together with any local
  33-25  rate changes which went into effect during the 12 months preceding
  33-26  the proposed effective date of the requested rate change and any
  33-27  other proposed local rate changes then pending before the
   34-1  commission;>
   34-2              <(6)  the increase in rates for each service category;
   34-3  and>
   34-4              <(7)  other information the commission by rule
   34-5  requires.>
   34-6        <(c)  The commission shall review a proposed change in the
   34-7  rates set by a local exchange company under this section upon the
   34-8  receipt of complaints signed by at least five percent of all
   34-9  affected subscribers or upon its own motion.  The commission may
  34-10  require notice to ratepayers as it considers appropriate.  If
  34-11  sufficient complaints are presented to the commission within 60
  34-12  days after the date notice of the rate change was sent to
  34-13  subscribers, the commission shall review the proposed change.
  34-14  After notice to the local exchange company, the commission may
  34-15  suspend the rates during the pendency of the review and reinstate
  34-16  the rates previously in effect.  Review under this subsection shall
  34-17  be as provided by Section 3.211 of this Act.  The period for review
  34-18  by the commission does not begin until the local exchange company
  34-19  files a complete rate-filing package.>
  34-20        <(d)  If the commission has entered an order setting a rate,
  34-21  the affected local exchange company may not change that rate under
  34-22  this section before 365 days after the date of the commission's
  34-23  order setting the rate.>
  34-24        <(e)  This section does not prohibit a local exchange company
  34-25  from filing for a rate change under any other applicable section of
  34-26  this Act.>
  34-27        <(f)  The commission shall review a proposed change in the
   35-1  rates of a local exchange company under this section if the
   35-2  proposed rates, together with any local rate changes which went
   35-3  into effect during the 12 months preceding the proposed effective
   35-4  date of the requested rate change as well as any other proposed
   35-5  local rate changes then pending before the commission, will
   35-6  increase its total gross annual local revenues by more than 2-1/2
   35-7  percent or if the proposed change would increase the rate of any
   35-8  service category by more than 25 percent, except for basic local
   35-9  service, which shall be limited to a maximum of 2-1/2  percent of
  35-10  the total gross annual local revenue.  Review under this subsection
  35-11  shall be as provided by Section 3.211 of this Act.  Each local
  35-12  exchange company may receive a change in its local rates or in any
  35-13  service category pursuant to this section only one time in any
  35-14  12-month period.>
  35-15        (i) <(g)>  Rates established under this section must be in
  35-16  accordance with the rate-setting principles of this subtitle.
  35-17  However, companies may provide to their board members, officers,
  35-18  employees, and agents free or reduced rates for services.
  35-19        (j)(1)  The commission shall, within 120 days of the
  35-20  effective date of this section, examine its policies, its reporting
  35-21  requirements, and its procedural and substantive rules as they
  35-22  relate to rural and small incumbent local exchange companies and
  35-23  cooperatives to eliminate or revise those that place unnecessary
  35-24  burdens and expenses on those companies.  Notwithstanding any other
  35-25  provisions of this Act, the commission shall consider and may adopt
  35-26  policies that include the following:
  35-27                    (A)  policies to allow those companies to provide
   36-1  required information by report or otherwise as necessary, including
   36-2  a rate filing package when required, in substantially less
   36-3  burdensome and complex form than required of larger incumbent local
   36-4  exchange companies;
   36-5                    (B)  policies that permit consideration of the
   36-6  company's future construction plans and operational changes in
   36-7  evaluating the reasonableness of current rates;
   36-8                    (C)  policies that provide for evaluation of the
   36-9  overall reasonableness of current rates no more frequently than
  36-10  once every three years;
  36-11                    (D)  policies that permit companies to change
  36-12  depreciation and amortization rates when customer rates are not
  36-13  affected by notice to the commission, subject to review by the
  36-14  commission in a proceeding under Section 3.210 or 3.211 of this
  36-15  Act;
  36-16                    (E)  policies to allow the incumbent local
  36-17  exchange companies to adopt for new services the rates for the same
  36-18  or substantially similar services offered by a larger incumbent
  36-19  local exchange company, without commission requirement of
  36-20  additional cost justification; and
  36-21                    (F)  policies that allow an incumbent local
  36-22  exchange company, instead of any management audit that would
  36-23  otherwise be required by law, policy, or rule, to submit to the
  36-24  commission financial audits of the company regularly performed by
  36-25  independent auditors or required and performed as a result of the
  36-26  company's participation in federal or state financing or
  36-27  revenue-sharing programs.
   37-1              (2)  Notwithstanding any other relevant provision of
   37-2  this Act, the commission may adopt policies under this subsection
   37-3  that the commission considers appropriate.
   37-4        (k) <(h)>  The commission is granted all necessary power and
   37-5  authority to prescribe and collect fees and assessments from
   37-6  incumbent local exchange companies necessary to recover the
   37-7  commission's and the office's costs of activities carried out and
   37-8  services provided under this section, Subsection (h) of Section
   37-9  3.211, and Sections <Section> 3.212 and 3.2135 of this Act.
  37-10        (l)  Except as provided in Subsection (j), this section may
  37-11  not apply to any incumbent local exchange company that is a
  37-12  cooperative corporation partially deregulated under the provisions
  37-13  of Section 3.2135 of this Act.
  37-14        Sec. 3.2135.  COOPERATIVE CORPORATIONS.  (a)  An incumbent
  37-15  local exchange company that is a cooperative corporation may vote
  37-16  to partially deregulate the cooperative by sending a ballot to each
  37-17  cooperative member.  The ballot may be included in a bill or sent
  37-18  separately.  The ballot shall provide for voting for or against the
  37-19  proposition:  "Authorizing the partial deregulation of the (name of
  37-20  the cooperative)."
  37-21        (b)  The cooperative is deemed to be partially deregulated if
  37-22  a majority of the ballots returned to the cooperative not later
  37-23  than the 45th day after the date on which the ballots are mailed
  37-24  favor deregulation.
  37-25        (c)  After the initial balloting, the cooperative may offer
  37-26  extended local calling services, offer new services on an optional
  37-27  basis, or make changes in its rates or tariffs if the cooperative:
   38-1              (1)  provides notice of the proposed action under this
   38-2  section to all customers and municipalities as prescribed by
   38-3  Subsection (e) of this section;
   38-4              (2)  files with the commission affidavits verifying the
   38-5  provision of notice as prescribed by Subsection (f) of this
   38-6  section; and
   38-7              (3)  files a statement of intent under Subsection (d)
   38-8  of this section.
   38-9        (d)  A statement of intent to use this section must be filed
  38-10  with the commission and the office not later than the 61st day
  38-11  before the date on which a proposed change will take effect and
  38-12  must include:
  38-13              (1)  a copy of a resolution approving the proposed
  38-14  action and authorizing the filing of the statement of intent signed
  38-15  by a majority of the members of the cooperative's board of
  38-16  directors;
  38-17              (2)  a description of the services affected by the
  38-18  proposed action;
  38-19              (3)  a copy of the proposed tariff for the affected
  38-20  service; and
  38-21              (4)  a copy of the customer notice required by this
  38-22  section.
  38-23        (e)  The cooperative shall provide to all affected customers
  38-24  and parties, including municipalities, at least two notices of the
  38-25  proposed action by bill insert or by individual notice.  The
  38-26  cooperative shall provide the first notice not later than the 61st
  38-27  day before the date on which the proposed action will take effect.
   39-1  The cooperative shall provide the last notice not later than the
   39-2  31st day before the date on which the proposed action will take
   39-3  effect.  Each notice prescribed by this subsection must include:
   39-4              (1)  a description of the services affected by the
   39-5  proposed action;
   39-6              (2)  the effective date of the proposed action;
   39-7              (3)  an explanation of the customer's right to petition
   39-8  the commission for a review under Subsection (g) of this section;
   39-9              (4)  an explanation of the customer's right to obtain a
  39-10  copy of the proposed tariff from the cooperative;
  39-11              (5)  the amount by which the cooperative's total gross
  39-12  annual revenues will increase or decrease and a statement
  39-13  explaining the effect on the cooperative revenues as a result of
  39-14  the proposed action; and
  39-15              (6)  a list of rates that are affected by the proposed
  39-16  rate action, showing the effect of the proposed action on each such
  39-17  rate.
  39-18        (f)  Not later than the 15th day before the date on which the
  39-19  proposed action will take effect, the cooperative shall file with
  39-20  the commission affidavits that verify that the cooperative provided
  39-21  each notice prescribed under Subsection (e) of this section.
  39-22        (g)(1)  The commission shall review a proposed action filed
  39-23  under this section if:
  39-24                    (A)  the commission receives, not later than the
  39-25  45th day after the first notice is provided under Subsection (e) of
  39-26  this section, complaints relating to the proposed action:
  39-27                          (i)  signed by at least five percent of the
   40-1  affected local service customers; or
   40-2                          (ii)  from an affected intrastate access
   40-3  customer, or group of affected intrastate access customers, that in
   40-4  the preceding 12 months accounted for more than 10 percent of the
   40-5  cooperative's total intrastate access revenues;
   40-6                    (B)  the cooperative does not comply with the
   40-7  procedural requirements of this section; or
   40-8                    (C)  the proposed action is inconsistent with the
   40-9  commission's substantive policies as expressed in its rules.
  40-10              (2)  If the commission conducts a review of the
  40-11  proposed action under this subsection before the effective date,
  40-12  the commission may suspend  the proposed actions of the cooperative
  40-13  during the pendency of the review.
  40-14        (h)  A cooperative that is partially deregulated under this
  40-15  section may vote to reverse the deregulation by sending  a ballot
  40-16  to each cooperative member.  Upon its own motion or within 60 days
  40-17  upon receipt of a written request of 10 percent of its members, the
  40-18  cooperative's board of directors shall reballot.  The ballot may be
  40-19  included in a bill or sent separately.  The ballot shall provide
  40-20  for voting for or against the proposition:  "Reversing the partial
  40-21  deregulation of the (name of the cooperative)."  The partial
  40-22  deregulation is reversed if a majority of the ballots returned to
  40-23  the cooperative not later than the 45th day after the date on which
  40-24  the ballots are mailed favor reversal.
  40-25        (i)  The commission by rule shall prescribe the voting
  40-26  procedures a cooperative is required to use under this section.
  40-27        (j)  This section does not:
   41-1              (1)  prohibit a cooperative from filing for a new
   41-2  service or rate change under another applicable section of this
   41-3  Act; or
   41-4              (2)  affect the application of other provisions of this
   41-5  Act not directly related to ratemaking or the authority of the
   41-6  commission to require the cooperative to file reports as required
   41-7  under this  Act, Section 3.213(j) of this Act, or under the rules
   41-8  adopted by the commission.
   41-9        (k)  Notwithstanding any other provision of this section, the
  41-10  commission may conduct a review in accordance with Section 3.210 of
  41-11  this Act.
  41-12        SECTION 22.  Subtitle E, Title III, Public Utility Regulatory
  41-13  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  41-14  Regular Session, 1995, is amended by adding Section 3.219 to read
  41-15  as follows:
  41-16        Sec. 3.219.  INTRALATA CALLS.  (a)  Except as provided by
  41-17  Subsection (b) of this section, while any local exchange company in
  41-18  this state is prohibited by federal law from providing interLATA
  41-19  telecommunications services, the local exchange companies in this
  41-20  state designated or de facto authorized to receive "0+" and "1+"
  41-21  dialed intraLATA calls shall be exclusively designated or
  41-22  authorized to receive those calls.
  41-23        (b)  A telecommunications utility operating under a
  41-24  certificate of operating authority or service provider certificate
  41-25  of operating authority to the extent not restricted by Section
  41-26  3.2532(f) of this Act is de facto authorized to receive "0+" and
  41-27  "1+" dialed intraLATA calls on the date on which the utility
   42-1  receives its certificate.
   42-2        (c)  Effective as of the time all local exchange companies
   42-3  are allowed by federal law to provide interLATA telecommunications
   42-4  services, the commission shall ensure that customers may designate
   42-5  a provider of their choice to carry their "0+" and "1+" dialed
   42-6  intraLATA calls and that equal access in the public network is
   42-7  implemented such that the provider may carry such calls.
   42-8        SECTION 23.  Section 3.251, Public Utility Regulatory Act of
   42-9  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  42-10  Session, 1995, is amended by adding Subsections (c) and (d) to read
  42-11  as follows:
  42-12        (c)  A person may not provide local exchange telephone
  42-13  service, basic local telecommunications service, or switched access
  42-14  service without a certificate of convenience and necessity, a
  42-15  certificate of operating authority, or a service provider
  42-16  certificate of operating authority.
  42-17        (d)  A municipality may not receive a certificate of
  42-18  convenience and necessity, certificate of operating authority, or
  42-19  service provider certificate of operating authority under this Act.
  42-20  In addition, a municipality or municipal electric system may not
  42-21  offer for sale to the public, either directly or indirectly through
  42-22  a telecommunications provider, a service for which a certificate is
  42-23  required or any non-switched telecommunications service to be used
  42-24  to provide connections between customers' premises within the
  42-25  exchange or between a customer's premises and a long distance
  42-26  provider serving the exchange.
  42-27        SECTION 24.  Section 3.252, Public Utility Regulatory Act of
   43-1  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   43-2  Session, 1995, is amended to read as follows:
   43-3        Sec. 3.252.  EXCEPTIONS <FOR EXTENSION OF SERVICE>.  (a)  A
   43-4  telecommunications <public> utility is not required to secure a
   43-5  certificate of public convenience and necessity, certificate of
   43-6  operating authority, or service provider certificate of operating
   43-7  authority for:
   43-8              (1)  an extension into territory contiguous to that
   43-9  already served by it and not receiving similar service from another
  43-10  telecommunications <public> utility and not within the certificated
  43-11  area <of public convenience and necessity> of another
  43-12  telecommunications utility <of the same kind>;
  43-13              (2)  an extension within or to territory already served
  43-14  by it or to be served by it under a certificate of public
  43-15  convenience and necessity, certificate of operating authority, or
  43-16  service provider certificate of operating authority; <or>
  43-17              (3)  operation, extension, or service in progress on
  43-18  September 1, 1975; or
  43-19              (4)  interexchange telecommunications service,
  43-20  non-switched private line service, shared tenant service,
  43-21  specialized communications common carrier service, commercial
  43-22  mobile service, or operator service as defined by Section 3.052(a)
  43-23  of this Act.
  43-24        (b)  Any extensions allowed by Subsection (a) of this section
  43-25  shall be limited to devices for interconnection of existing
  43-26  facilities or devices used solely for transmitting
  43-27  telecommunications <public> utility services from existing
   44-1  facilities to customers of retail utility service.
   44-2        SECTION 25.  Subtitle F, Title III, Public Utility Regulatory
   44-3  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   44-4  Regular Session, 1995, is amended by adding Section 3.2531 to read
   44-5  as follows:
   44-6        Sec. 3.2531.  CERTIFICATE OF OPERATING AUTHORITY.  (a)  In
   44-7  lieu of applying for a certificate of convenience and necessity, an
   44-8  applicant may apply for a certificate of operating authority.
   44-9        (b)  An application for a certificate of operating authority
  44-10  shall specify whether the applicant is seeking a facilities based
  44-11  certificate of operating authority under this section or a service
  44-12  provider certificate of operating authority under Section 3.2532.
  44-13  When an application for a certificate of operating authority or
  44-14  service provider certificate of operating authority is filed, the
  44-15  commission shall give notice of the application to interested
  44-16  parties and, if requested, shall fix a time and place for a hearing
  44-17  and give notice of the hearing.  Any person interested in the
  44-18  application may intervene at the hearing.
  44-19        (c)  If seeking a facilities based certificate of operating
  44-20  authority, the applicant must include in the application a proposed
  44-21  build-out plan demonstrating how the applicant will deploy its
  44-22  facilities throughout the geographic area of its certificated
  44-23  service area over a six-year period.  The commission may issue
  44-24  rules for a holder of a certificate of operating authority with
  44-25  respect to the time within which the holder must be able to serve
  44-26  customers, except that a holder must serve customers within a
  44-27  build-out area within 30 days of the date of a customer request for
   45-1  service.  The commission may not require a holder to place "drop"
   45-2  facilities on every customer's premises or to activate fiber optic
   45-3  facilities in advance of customer request as part of the build-out
   45-4  requirements.  The plan required by this subsection must meet the
   45-5  following conditions:
   45-6              (1)  10 percent of the area to be served must be served
   45-7  with facilities other than the facilities of the incumbent local
   45-8  exchange company by the end of the first year;
   45-9              (2)  50 percent of the area to be served must be served
  45-10  with facilities other than the facilities of the incumbent local
  45-11  exchange company by the end of the third year; and
  45-12              (3)  all of the area to be served must be served with
  45-13  facilities other than the facilities of the incumbent local
  45-14  exchange company by the end of the sixth year.
  45-15        (d)  The build-out plan may permit not more than 40 percent
  45-16  of the applicant's service area to be served by resale of the
  45-17  incumbent local exchange company's facilities under the tariff
  45-18  required to be approved in Section 3.453 of this Act, except that
  45-19  during the six years immediately following the grant, a holder of a
  45-20  certificate of operating authority may extend its service by resale
  45-21  only within the area it is obligated to serve under the build-out
  45-22  plan approved by the commission and to the distant premises of one
  45-23  of its multi-premises customers beyond that build-out area but
  45-24  within its certificated service area.  The 40-percent resale
  45-25  limitation applies to incumbent local exchange facilities resold by
  45-26  a holder of a certificate of operating authority as part of the
  45-27  provision of local exchange telephone service, regardless of
   46-1  whether the facilities are purchased directly by the certificate of
   46-2  operating authority holder from the incumbent local exchange
   46-3  company or purchased by an intermediary carrier from the incumbent
   46-4  local exchange company and then provided to the certificate of
   46-5  operating authority holder for resale.  In no event may an
   46-6  applicant use commercial mobile service to meet the build-out
   46-7  requirement imposed by this section, but an applicant may use PCS
   46-8  or other wireless technology licensed or allocated by the Federal
   46-9  Communications Commission after January 1, 1995, to meet the
  46-10  build-out requirement.
  46-11        (e)  A certificate of operating authority shall be granted
  46-12  within 60 days after the date of the application on a
  46-13  nondiscriminatory basis after consideration by the commission of
  46-14  factors such as the technical and financial qualifications of the
  46-15  applicant and the applicant's ability to meet the commission's
  46-16  quality of service requirements.  The commission may extend the
  46-17  60-day period on good cause shown.  In an exchange of an incumbent
  46-18  local exchange company serving fewer than 31,000 access lines, the
  46-19  commission shall also consider:
  46-20              (1)  the effect of granting the certificate on any
  46-21  public utility already serving the area and on the utility's
  46-22  customers;
  46-23              (2)  the existing utility's ability to provide adequate
  46-24  service at reasonable rates;
  46-25              (3)  the impact of the existing utility's ability as
  46-26  the provider of last resort; and
  46-27              (4)  the ability of the exchange, not the company, to
   47-1  support more than one provider of service.
   47-2        (f)  In addition to the factors prescribed by Subsection (e)
   47-3  of this section, the commission shall consider the adequacy of the
   47-4  applicant's build-out plan in determining whether to grant the
   47-5  application.  The commission may administratively and temporarily
   47-6  waive compliance with the six-year build-out plan on a showing of
   47-7  good cause.  The holder of a certificate shall file periodic
   47-8  reports with the commission demonstrating compliance with the plan
   47-9  approved by the commission, including the requirement that not more
  47-10  than 40 percent of the service area of a new certificate may be
  47-11  served by resale of the facilities of the incumbent local exchange
  47-12  company.
  47-13        (g)  An application for a certificate of operating authority
  47-14  may be granted only for an area or areas that are contiguous and
  47-15  reasonably compact and cover an area of at least 27 square miles,
  47-16  except that:
  47-17              (1)  in an exchange in a county having a population of
  47-18  less than 500,000 that is served by an incumbent local exchange
  47-19  company having more than 31,000 access lines, an area covering less
  47-20  than 27 square miles may be approved if the area is contiguous and
  47-21  reasonably compact and has at least 20,000 access lines; and
  47-22              (2)  in an exchange of a company serving fewer than
  47-23  31,000 access lines in this state, an application may be granted
  47-24  only for an area that has boundaries similar to the boundaries of
  47-25  the serving central office served by the incumbent local exchange
  47-26  company holding the certificate of convenience and necessity for
  47-27  that area.
   48-1        (h)  The commission may not, before September 1, 1998, grant
   48-2  a certificate of operating authority in an exchange of an incumbent
   48-3  local exchange company serving fewer than 31,000 access lines.  The
   48-4  commission shall require that the applicant meet the other
   48-5  appropriate certification provisions of this Act.
   48-6        (i)  Six years after an application for a certificate of
   48-7  operating authority has been granted for a particular area or areas
   48-8  or when the new applicant has completed its build-out plan required
   48-9  by this section, the commission may waive the build-out
  48-10  requirements of this section for additional applicants.  In
  48-11  addition, in service areas served by an incumbent local exchange
  48-12  company having more than one million access lines which, as of
  48-13  September 1, 1995, is subject to any prohibition under federal law
  48-14  on the provision of interLATA service, the build-out requirements
  48-15  of this section shall be eliminated in any service area where all
  48-16  prohibitions on that company's provision of interLATA services are
  48-17  removed such that the company can offer interLATA service together
  48-18  with its local and intraLATA toll service.
  48-19        (j)(1)  On an application filed after September 1, 1997, the
  48-20  commission may conduct a hearing to determine:
  48-21                    (A)  if the build-out requirements of Subsections
  48-22  (c), (d), and (g) of this section have created barriers to the
  48-23  entry of facilities based local exchange telephone service
  48-24  competition in exchanges in counties with a population of more than
  48-25  500,000 served by companies having more than 31,000 access lines;
  48-26  and
  48-27                    (B)  the effect of the resale provisions on the
   49-1  development of competition except in certificated areas of
   49-2  companies serving fewer than 31,000 access lines as provided by
   49-3  Section 3.2532(d)(1) of this Act.
   49-4              (2)  In making the determination under Subdivision (1)
   49-5  of this subsection, the commission shall consider:
   49-6                    (A)  the policy of this Act to encourage
   49-7  construction of local exchange networks;
   49-8                    (B)  the number and type of competitors that have
   49-9  sought to provide local exchange competition under the existing
  49-10  rules prescribed by this Act; and
  49-11                    (C)  whether, if new build-out and resale rules
  49-12  were adopted, innovative and competitive local exchange telephone
  49-13  services are more likely to be provided.
  49-14              (3)  If the commission determines that the existing
  49-15  build-out requirements have created barriers to facilities based
  49-16  local exchange competition in exchanges described by Subdivision
  49-17  (1)(A) of this subsection, the requirements of Subsections (c),
  49-18  (d), and (g) of this section and of Section 3.2532 may be changed
  49-19  if the changes will encourage additional facilities based
  49-20  competition.  However, in no event may exchange sizes be reduced
  49-21  below 12 square miles, or the permitted resale percentage of
  49-22  Subsection (d) of this section be increased to more than 50
  49-23  percent.  If new rules are adopted, the rules may apply only to
  49-24  applicants for certificates filed after the date of adoption of
  49-25  those rules.
  49-26        (k)  If the holder of a certificate of authority fails to
  49-27  comply with any requirement imposed by this Act, the commission
   50-1  may:
   50-2              (1)  revoke the certificate; or
   50-3              (2)  impose administrative penalties or take other
   50-4  action under Subtitle I, Title I, of this Act.
   50-5        SECTION 26.  Subtitle F, Title III, Public Utility Regulatory
   50-6  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   50-7  Regular Session, 1995, is amended by adding Section 3.2532 to read
   50-8  as follows:
   50-9        Sec. 3.2532.  SERVICE PROVIDER CERTIFICATE OF OPERATING
  50-10  AUTHORITY.  (a)  To encourage innovative, competitive, and
  50-11  entrepreneurial businesses to provide telecommunications services,
  50-12  the commission may grant service provider certificates of operating
  50-13  authority.  An applicant must demonstrate that it has the financial
  50-14  and technical ability to provide its services and show that the
  50-15  services will meet the requirements of this section.
  50-16        (b)  A company is eligible to obtain a service provider
  50-17  certificate of operating authority under this section unless the
  50-18  company, together with affiliates, had in excess of six percent of
  50-19  the total intrastate switched access minutes of use as measured by
  50-20  the most recent 12-month period preceding the filing of the
  50-21  application for which data is available.  The commission shall
  50-22  obtain from the incumbent local exchange telephone companies and
  50-23  from the applicant such information as is necessary to determine
  50-24  eligibility and shall certify such eligibility within 10 days of
  50-25  the filing of the application.  A service provider certificate of
  50-26  operating authority shall be granted within 60 days after the date
  50-27  of the application on a nondiscriminatory basis after consideration
   51-1  by the commission of factors such as the technical and financial
   51-2  qualifications of the applicant and the applicant's ability to meet
   51-3  the commission's quality of service requirements.  The commission
   51-4  may extend the 60-day period on good cause shown.
   51-5        (c)  An applicant for a service provider certificate of
   51-6  operating authority shall file with its application a description
   51-7  of the services it will provide and show the areas in which it will
   51-8  provide those services.
   51-9        (d)  A service provider certificate of operating authority
  51-10  holder:
  51-11              (1)  may obtain services under the resale tariffs
  51-12  ordered by the commission as specified by Section 3.453 of this
  51-13  Act, except in certificated areas of companies serving fewer than
  51-14  31,000 access lines;
  51-15              (2)  may obtain for resale the monthly recurring flat
  51-16  rate local exchange telephone service and associated nonrecurring
  51-17  charges, including any mandatory extended area service, of an
  51-18  incumbent local exchange company at a five percent discount to the
  51-19  tariffed rate, and:
  51-20                    (A)  the incumbent local exchange company shall
  51-21  also sell any feature service that may be provided to customers in
  51-22  conjunction with local exchange service, including toll
  51-23  restriction, call control options, tone dialing, custom calling
  51-24  services, and caller ID at a five percent discount to the tariffed
  51-25  rate, including any associated nonrecurring charge for those
  51-26  services, provided that the incumbent local exchange company shall
  51-27  make available to a holder of a service provider certificate of
   52-1  operating authority at an additional five percent discount any
   52-2  discounts made available to the customers of the incumbent local
   52-3  exchange company who are similarly situated to the customers of the
   52-4  holder of the service provider certificate of operating authority;
   52-5                    (B)  service providers and incumbent local
   52-6  exchange companies may agree to rates lower than the tariffed rates
   52-7  or discounted rates;
   52-8                    (C)  the five percent discounts provided by this
   52-9  subdivision do not apply in exchanges of companies having fewer
  52-10  than 31,000 access lines in this state;
  52-11                    (D)  if the tariffed rates for the services being
  52-12  resold change, the changed rate is applicable to the resold
  52-13  service, but the commission may not, for holders of service
  52-14  provider certificates of operating authority, create a special
  52-15  class for purposes of resold services, and the discount provided to
  52-16  holders of service provider certificates of operating authority
  52-17  shall remain at five percent of the tariffed rate or discounted
  52-18  rate; and
  52-19                    (E)  the holder of a service provider certificate
  52-20  of operating authority may purchase for resale optional extended
  52-21  area service and expanded local calling service but those services
  52-22  may not be discounted;
  52-23              (3)  may sell the flat rate local exchange telephone
  52-24  service only to the same class of customers to which the incumbent
  52-25  local exchange company sells that service;
  52-26              (4)  may not use a resold flat rate local exchange
  52-27  telephone service to avoid the rates, terms, and conditions of an
   53-1  incumbent local exchange company's tariffs;
   53-2              (5)  may not terminate both flat rate local exchange
   53-3  telephone service and services obtained under the resale tariff
   53-4  approved as prescribed by Sections 3.453(a)-(c) of this Act on the
   53-5  same end user customer's premises;
   53-6              (6)  may not use resold flat rate local exchange
   53-7  telephone services to provide access services to other
   53-8  interexchange carriers, cellular carriers, competitive access
   53-9  providers, or other retail telecommunications providers, but may
  53-10  permit customers to use resold local exchange telephone services to
  53-11  access interexchange carriers, cellular carriers, competitive
  53-12  access providers, or other retail telecommunications providers;
  53-13              (7)  may obtain services offered by or negotiated with
  53-14  a holder of a certificate of convenience and necessity or
  53-15  certificate of operating authority; and
  53-16              (8)  may obtain for resale single or multiple line flat
  53-17  rate intraLATA calling service when provided by the local exchange
  53-18  company at the tariffed rate for online digital communications.
  53-19        (e)  The holder of a certificate of operating authority or
  53-20  certificate of convenience and necessity shall not be granted a
  53-21  service provider certificate of operating authority as to the same
  53-22  territory.  A holder of a service provider certificate of operating
  53-23  authority who applies for either a certificate of operating
  53-24  authority or a certificate of convenience and necessity as to the
  53-25  same territory must include a plan to relinquish its service
  53-26  provider certificate of operating authority.
  53-27        (f)  An incumbent local exchange company that sells flat rate
   54-1  local exchange telephone service to a holder of a service provider
   54-2  certificate of operating authority may retain all access service
   54-3  and "1+" intraLATA toll service originated over the resold flat
   54-4  rate local exchange telephone service.
   54-5        (g)  An incumbent local exchange company may not:
   54-6              (1)  delay provisioning or maintenance of services
   54-7  provided under this section;
   54-8              (2)  degrade the quality of access provided to another
   54-9  provider;
  54-10              (3)  impair the speed, quality, or efficiency of lines
  54-11  used by another provider;
  54-12              (4)  fail to fully disclose in a timely manner after a
  54-13  request for the disclosure all available information necessary for
  54-14  the holder of the service provider certificate of operating
  54-15  authority to provision resale services; or
  54-16              (5)  refuse to take any reasonable action to allow
  54-17  efficient access by a holder of a service provider certificate of
  54-18  operating authority to ordering, billing, or repair management
  54-19  systems of the local exchange company.
  54-20        (h)  In this section:
  54-21              (1)  "Affiliate" means any entity that, directly or
  54-22  indirectly, owns or controls, is owned or controlled by, or is
  54-23  under common ownership or control with a company that applies for a
  54-24  service provider certificate of operating authority under this
  54-25  section.
  54-26              (2)  "Control" means to exercise substantial influence
  54-27  over the policies and actions of another.
   55-1        SECTION 27.  Sections 3.255(a) and (b), Public Utility
   55-2  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
   55-3  Legislature, Regular Session, 1995, are amended to read as follows:
   55-4        (a)  If an area has been or shall be included within the
   55-5  boundaries of a city, town, or village as the result of annexation,
   55-6  incorporation, or otherwise, all telecommunications <public>
   55-7  utilities certified or entitled to certification under this Act to
   55-8  provide service or operate facilities in such area prior to the
   55-9  inclusion shall have the right to continue and extend service in
  55-10  its area of certification <public convenience and necessity> within
  55-11  the annexed or incorporated area, pursuant to the rights granted by
  55-12  its certificate and this Act.
  55-13        (b)  Notwithstanding any other provision of law, a
  55-14  certificated telecommunications <public> utility shall have the
  55-15  right to continue and extend service within its area of
  55-16  certification <public convenience and necessity> and to utilize the
  55-17  roads, streets, highways, alleys, and public property for the
  55-18  purpose of furnishing such retail utility service, subject to the
  55-19  authority of the governing body of a municipality to require any
  55-20  certificated telecommunications <public> utility, at its own
  55-21  expense, to relocate its facilities to permit the widening or
  55-22  straightening of streets by giving to the certificated
  55-23  telecommunications <public> utility 30 days' notice and specifying
  55-24  the new location for the facilities along the right-of-way of the
  55-25  street or streets.
  55-26        SECTION 28.  Sections 3.256 and 3.257, Public Utility
  55-27  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
   56-1  Legislature, Regular Session, 1995, are amended to read as follows:
   56-2        Sec. 3.256.  CONTRACTS VALID AND ENFORCEABLE.  Contracts
   56-3  between telecommunications <public> utilities designating areas to
   56-4  be served and customers to be served by those utilities, when
   56-5  approved by the commission, shall be valid and enforceable and
   56-6  shall be incorporated into the appropriate areas of certification
   56-7  <public convenience and necessity>.
   56-8        Sec. 3.257.  PRELIMINARY ORDER FOR CERTIFICATE.  If a
   56-9  telecommunications <public> utility desires to exercise a right or
  56-10  privilege under a franchise or permit which it contemplates
  56-11  securing but which has not as yet been granted to it, such
  56-12  telecommunications <public> utility may apply to the commission for
  56-13  an order preliminary to the issuance of the certificate.  The
  56-14  commission may thereupon make an order declaring that it will, on
  56-15  application, under such rules as it prescribes, issue the desired
  56-16  certificate on such terms and conditions as it designates, after
  56-17  the telecommunications <public> utility has obtained the
  56-18  contemplated franchise or permit.  On presentation to the
  56-19  commission of evidence satisfactory to it that the franchise or
  56-20  permit has been secured by the telecommunications <public> utility,
  56-21  the commission shall issue the certificate.
  56-22        SECTION 29.  Subtitle F, Title III, Public Utility Regulatory
  56-23  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  56-24  Regular Session, 1995, is amended by adding Section 3.2555 to read
  56-25  as follows:
  56-26        Sec. 3.2555.  DISCRIMINATION.  (a)  An applicant for a
  56-27  certificate of operating authority or service provider certificate
   57-1  of operating authority shall file with its application a sworn
   57-2  statement that it has applied for any necessary municipal consent,
   57-3  franchise, or permit required for the type of services and
   57-4  facilities for which it has applied.  Notwithstanding Section 1.103
   57-5  of this Act, a municipality may not discriminate against a
   57-6  telecommunications utility in relation to:
   57-7              (1)  the authorization or placement of
   57-8  telecommunications facilities within public right-of-way;
   57-9              (2)  access to buildings; or
  57-10              (3)  municipal utility pole attachment rates, terms,
  57-11  and conditions, to the extent not addressed by federal law.
  57-12        (b)  In the granting of consent, franchises, and permits for
  57-13  the use of public streets, alleys, or rights-of-way within its
  57-14  corporate municipal limits, a municipality may not discriminate in
  57-15  favor of or against a telecommunications utility that holds or has
  57-16  applied for a certificate of convenience and necessity, certificate
  57-17  of operating authority, or service provider certificate of
  57-18  operating authority all in relation to:
  57-19              (1)  the authorizing, placement, replacement, or
  57-20  removal of telecommunications facilities within public
  57-21  rights-of-way and the reasonable compensation therefor of whatever
  57-22  kind, whether money, services, use of facilities, or any other
  57-23  consideration; or
  57-24              (2)  municipal utility pole attachment or underground
  57-25  conduit rates, terms, and conditions, to the extent not addressed
  57-26  by federal law, provided that a municipal utility may not charge
  57-27  pole attachment rates or underground conduit rates that exceed the
   58-1  fee the utility would be permitted to charge if its rates were
   58-2  regulated under federal law and the rules of the Federal
   58-3  Communications Commission.
   58-4        (c)  Whenever a telecommunications utility holds a consent,
   58-5  franchise, or permit as determined to be the appropriate grants of
   58-6  authority by the municipality, and where required by this Act, a
   58-7  certificate, a public or private property owner may not:
   58-8              (1)  interfere with or prevent such a
   58-9  telecommunications utility from installing on the owner's property
  58-10  telecommunications service facilities requested by a tenant;
  58-11              (2)  discriminate against one or more such
  58-12  telecommunications utilities in relation to the installation,
  58-13  terms, conditions, and compensation of telecommunications services
  58-14  facilities to a tenant on the owner's property;
  58-15              (3)  demand or accept an unreasonable payment in any
  58-16  form from a tenant or such a telecommunications utility for
  58-17  allowing the utility on or within the owner's property; or
  58-18              (4)  discriminate in favor or against a tenant in any
  58-19  manner, including rental charges, because of the telecommunications
  58-20  utility from which the tenant receives telecommunications services.
  58-21        (d)  Notwithstanding Subsection (c) of this section, whenever
  58-22  a telecommunications utility holds a municipal consent, franchise,
  58-23  or permit as determined to be the appropriate grant of authority by
  58-24  the municipality, and where required by this Act, a certificate, a
  58-25  public or private property owner may:
  58-26              (1)  impose conditions on such telecommunications
  58-27  utility that are reasonably necessary to protect the safety,
   59-1  security, appearance, and condition of the property and the safety
   59-2  and convenience of other persons;
   59-3              (2)  impose reasonable limitations on the times at
   59-4  which such telecommunications utility may have access to the
   59-5  property for the installation of telecommunications services
   59-6  facilities;
   59-7              (3)  require such telecommunications utility to agree
   59-8  to indemnify the owner of any damage caused by the installation,
   59-9  operation, or removal of the facilities;
  59-10              (4)  require the tenant or the telecommunications
  59-11  utility to bear the entire cost of the installation, operation, or
  59-12  removal of the facilities;
  59-13              (5)  impose reasonable limitations on the number of
  59-14  such telecommunications utilities having access to the owner's
  59-15  property if the owner can demonstrate space constraints that
  59-16  require such limitations; and
  59-17              (6)  require such telecommunications utility to pay
  59-18  compensation that is reasonable and nondiscriminatory among such
  59-19  telecommunications utilities.
  59-20        (e)  Notwithstanding any other provision of law, the
  59-21  commission has the jurisdiction necessary to enforce this section.
  59-22        (f)  Nothing in this Act shall restrict or limit a
  59-23  municipality's historical right to control and receive reasonable
  59-24  compensation for access to its public streets, alleys, or
  59-25  rights-of-way or other public property.
  59-26        (g)  Subsection (c) of this section does not apply to an
  59-27  institution of higher education.  In this subsection, "institution
   60-1  of higher education" has the meaning assigned by Section 61.003,
   60-2  Education Code, and also includes a "private or independent
   60-3  institution of higher education" as that term is defined by Section
   60-4  61.003, Education Code.
   60-5        (h)  The holder of a certificate of convenience and
   60-6  necessity, certificate of operating authority, or service provider
   60-7  certificate of operating authority shall have the right to collect
   60-8  the fee imposed by a municipality under this section through a pro
   60-9  rata charge to customers within the boundaries of the municipality
  60-10  imposing the fee, which may be shown as a separate line item on the
  60-11  customer bill.
  60-12        (i)  This section does not require a public or private
  60-13  property owner to enter into a contract with one or more
  60-14  telecommunications utilities for the provision of shared tenant
  60-15  services on a property.
  60-16        SECTION 30.  Subtitle F, Title III, Public Utility Regulatory
  60-17  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  60-18  Regular Session, 1995, is amended by adding Section 3.2571 to read
  60-19  as follows:
  60-20        Sec. 3.2571.  FLEXIBILITY PLAN.  After an application for a
  60-21  certificate of convenience and necessity, certificate of operating
  60-22  authority, or service provider certificate of operating authority
  60-23  is granted or the commission determines that a certificate is not
  60-24  needed for the services to be provided by the applicant, the
  60-25  commission shall conduct proceedings it determines appropriate to
  60-26  establish a transitional flexibility plan for the incumbent local
  60-27  exchange company in the same area or areas as the new certificate
   61-1  holder.  However, a basic local telecommunications service price of
   61-2  the incumbent local exchange company may not be increased until
   61-3  four years following the grant of the certificate to the applicant,
   61-4  except:
   61-5              (1)  as provided by this Act; or
   61-6              (2)  when the new applicant has completed its build-out
   61-7  plan required by Section 3.2531 or when a competitor for basic
   61-8  local telecommunications service provides such service in an area
   61-9  where the build-out requirements have been eliminated.
  61-10        SECTION 31.  Subtitle F, Title III, Public Utility Regulatory
  61-11  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  61-12  Regular Session, 1995, is amended by adding Section 3.2572 to read
  61-13  as follows:
  61-14        Sec. 3.2572.  MARKET POWER TEST.  (a)  Notwithstanding any
  61-15  other provision of this Act, on notice and hearing, the commission
  61-16  may grant price deregulation of a specific service in a particular
  61-17  geographic market if the commission determines that the incumbent
  61-18  local exchange company or certificate of operating authority holder
  61-19  that is a dominant provider is no longer dominant as to that
  61-20  specific service in that particular geographic market.  For
  61-21  purposes of this section only, in determining a particular
  61-22  geographic market, the commission shall consider economic and
  61-23  technical conditions of the market.  Once a service in a particular
  61-24  market is price-deregulated under this section, the incumbent local
  61-25  exchange company or certificate of operating authority holder that
  61-26  is a dominant provider may set the rate for the deregulated service
  61-27  at any level above the service's LRIC.
   62-1        (b)  To determine that an incumbent local exchange company or
   62-2  certificate of operating authority holder that is a dominant
   62-3  provider is no longer dominant as to a specific service in a
   62-4  particular geographic market, the commission must find that an
   62-5  effective competitive alternative exists and that the incumbent
   62-6  local exchange company or certificate of operating authority holder
   62-7  that is a dominant provider does not have sufficient market power
   62-8  to control the price of the service within a specified geographic
   62-9  area in a manner that is adverse to the public interest.
  62-10        (c)  The commission shall consider the following factors in
  62-11  determining whether the incumbent local exchange company or
  62-12  certificate of operating authority holder that is a dominant
  62-13  provider is dominant as to a specific service in a particular
  62-14  geographic area:
  62-15              (1)  number and size of telecommunications utilities or
  62-16  other persons providing the same, equivalent, or substitutable
  62-17  service in the relevant market and the extent to which the service
  62-18  is available in the relevant market;
  62-19              (2)  ability of customers in the relevant market to
  62-20  obtain the same, equivalent, or substitutable service at comparable
  62-21  rates, terms, and conditions;
  62-22              (3)  ability of telecommunications utilities or other
  62-23  persons to make the same, equivalent, or substitutable service
  62-24  readily available in the relevant market at comparable rates,
  62-25  terms, and conditions;
  62-26              (4)  proportion of the relevant market that is
  62-27  currently being provided the service by a telecommunications
   63-1  utility other than the incumbent local exchange company or
   63-2  certificate of operating authority holder that is a dominant
   63-3  carrier; and
   63-4              (5)  other relevant information deemed necessary by the
   63-5  commission.
   63-6        (d)  The commission, on its own motion, or on a complaint
   63-7  that the commission deems has merit, is granted all necessary power
   63-8  and authority to assert or reassert regulation over a specific
   63-9  service in a particular geographic market if the incumbent local
  63-10  exchange company or certificate of operating authority holder that
  63-11  is a dominant carrier is found to again be dominant or the provider
  63-12  of services under a certificate of operating authority or service
  63-13  provider certificate of operating authority is found to be dominant
  63-14  as to that specific service in that particular geographic market.
  63-15        (e)  On request of an incumbent local exchange company or
  63-16  certificate of operating authority holder that is a dominant
  63-17  carrier in conjunction with an application under this section, the
  63-18  commission shall conduct investigations to determine the existence,
  63-19  impact, and scope of competition in the particular geographic and
  63-20  service markets at issue and in connection therewith may call and
  63-21  hold hearings, may issue subpoenas to compel the attendance of
  63-22  witnesses and the production of papers and documents, has any other
  63-23  powers, whether specifically designated or implied, necessary and
  63-24  convenient to the investigation, and may make findings of fact and
  63-25  decisions with respect to those markets.
  63-26        (f)  The parties to the proceeding shall be entitled to use
  63-27  the results of the investigation required to be conducted under
   64-1  Subsection (e) of this section in an application for pricing
   64-2  flexibility.
   64-3        (g)  In conjunction with its authority to collect and compile
   64-4  information, the commission may collect reports from a holder of a
   64-5  certificate of operating authority or service provider certificate
   64-6  of operating authority.  Any information contained in the reports
   64-7  claimed to be confidential for competitive purposes shall be
   64-8  maintained as confidential by the commission, and the information
   64-9  is exempt from disclosure under Chapter 552, Government Code.  The
  64-10  commission shall aggregate the information to the maximum extent
  64-11  possible considering the purpose of the proceeding to protect the
  64-12  confidential nature of the information.
  64-13        SECTION 32.  Section 3.258(a), Public Utility Regulatory Act
  64-14  of 1995, as enacted by S.B.  319, Acts of the 74th Legislature,
  64-15  Regular Session, 1995, is amended to read as follows:
  64-16        (a)  Except as provided by this section, <or> Section 3.259,
  64-17  or Section 3.2595 of this Act, a telecommunications utility that is
  64-18  granted a certificate of convenience and necessity or certificate
  64-19  of operating authority shall be required to offer to any customer
  64-20  in its certificated area all basic local telecommunications
  64-21  services <the holder of any certificate of public convenience and
  64-22  necessity shall serve every consumer within its certified area> and
  64-23  shall render continuous and adequate service within the area or
  64-24  areas.  In any event, as between a holder of a certificate of
  64-25  convenience and necessity and a holder of a certificate of
  64-26  operating authority, the holder of the certificate of convenience
  64-27  and necessity has provider of last resort obligations.
   65-1        SECTION 33.  Section 3.259, Public Utility Regulatory Act of
   65-2  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   65-3  Session, 1995, is amended to read as follows:
   65-4        Sec. 3.259.  CONDITIONS REQUIRING REFUSAL OF SERVICE.  The
   65-5  holder of a certificate of public convenience and necessity,
   65-6  certificate of operating authority, or service provider certificate
   65-7  of operating authority shall refuse to serve a customer within its
   65-8  certified area if the holder of the certificate is prohibited from
   65-9  providing the service under Section 212.012 or 232.0047, Local
  65-10  Government Code.
  65-11        SECTION 34.  Subtitle F, Title III, Public Utility Regulatory
  65-12  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  65-13  Regular Session, 1995, is amended by adding Section 3.2595 to read
  65-14  as follows:
  65-15        Sec. 3.2595.  DISCONTINUATION OF SERVICE.  (a)
  65-16  Notwithstanding Section 3.258 of this Act, a telecommunications
  65-17  utility that holds a certificate of operating authority or service
  65-18  provider certificate of operating authority may:
  65-19              (1)  discontinue an optional service that is not
  65-20  essential to the provision of basic local telecommunications
  65-21  service; or
  65-22              (2)  cease operations within its certificated area.
  65-23        (b)  Before such telecommunications utility discontinues an
  65-24  optional service or ceases operations, the utility must provide
  65-25  notice of the intended action to the commission and each affected
  65-26  customer in the manner required by the commission.
  65-27        (c)  Such telecommunications utility is entitled to
   66-1  discontinue an optional service on or after the 61st day after the
   66-2  date on which the utility provides the notice required by
   66-3  Subsection (b) of this section.
   66-4        (d)  Such telecommunications utility may not cease operations
   66-5  within its certificated area unless:
   66-6              (1)  another provider of basic local telecommunications
   66-7  services has adequate facilities and capacity to serve the
   66-8  customers in the certificated area; and
   66-9              (2)  the commission authorizes the utility to cease
  66-10  operations.
  66-11        (e)  The commission may not authorize such telecommunications
  66-12  utility to cease operations under Subsection (d) of this section
  66-13  before the 61st day after the date on which the utility provides
  66-14  the notice required by Subsection (b) of this section.  The
  66-15  commission may enter an order under this subsection
  66-16  administratively unless the commission receives a complaint from an
  66-17  affected person.
  66-18        SECTION 35.  Section 3.260, Public Utility Regulatory Act of
  66-19  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  66-20  Session, 1995, is amended to read as follows:
  66-21        Sec. 3.260.  SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.  If
  66-22  the commission determines that a purchaser, assignee, or lessee is
  66-23  capable of rendering adequate service, a telecommunications
  66-24  <public> utility may sell, assign, or lease a certificate of public
  66-25  convenience and necessity or certificate of operating authority or
  66-26  any rights obtained under the certificate.  The sale, assignment,
  66-27  or lease shall be on the conditions prescribed by the commission.
   67-1        SECTION 36.  Section 3.261, Public Utility Regulatory Act of
   67-2  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   67-3  Session, 1995, is amended to read as follows:
   67-4        Sec. 3.261.  INTERFERENCE WITH OTHER TELECOMMUNICATIONS
   67-5  <PUBLIC> UTILITY.  If a telecommunications <public> utility in
   67-6  constructing or extending its lines, plant, or system interferes or
   67-7  attempts to interfere with the operation of a line, plant, or
   67-8  system of any other utility, the commission may issue an order
   67-9  prohibiting the construction or extension or prescribing terms and
  67-10  conditions for locating the lines, plants, or systems affected.
  67-11        SECTION 37.  Subtitle F, Title III, Public Utility Regulatory
  67-12  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  67-13  Regular Session, 1995, is amended by adding Section 3.2615 to read
  67-14  as follows:
  67-15        Sec. 3.2615.  DIRECTORY LISTINGS AND ASSISTANCE.  (a)
  67-16  Companies providing local exchange telephone service shall
  67-17  negotiate the terms and conditions of printed directory listings
  67-18  and directory assistance within overlapping certificated areas.
  67-19        (b)  On complaint by the incumbent local exchange company or
  67-20  the holder of the certificate of convenience and necessity,
  67-21  certificate of operating authority, or service provider certificate
  67-22  of operating authority, the commission may resolve disputes between
  67-23  the parties and, if necessary, issue an order setting the terms and
  67-24  conditions of the directory listings or directory assistance.
  67-25        (c)  This section does not affect the authority of an
  67-26  incumbent local exchange company to voluntarily conduct
  67-27  negotiations with an applicant for a certificate of convenience and
   68-1  necessity, certificate of operating authority, or service provider
   68-2  certificate of operating authority.
   68-3        SECTION 38.  Section 3.262, Public Utility Regulatory Act of
   68-4  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
   68-5  Session, 1995, is amended to read as follows:
   68-6        Sec. 3.262.  IMPROVEMENTS IN SERVICE; INTERCONNECTING
   68-7  SERVICE; EXTENDED AREA TOLL-FREE TELEPHONE SERVICE.  (a)  After
   68-8  notice and hearing, the commission may:
   68-9              (1)  order a public utility to provide specified
  68-10  improvements in its service in a defined area, if service in such
  68-11  area is inadequate or is substantially inferior to service in a
  68-12  comparable area and it is reasonable to require the company to
  68-13  provide such improved service;
  68-14              (2)  order two or more utilities to establish specified
  68-15  facilities for the interconnecting service; <and>
  68-16              (3)  order a telephone company or telephone companies
  68-17  to provide extended area toll-free service within a specified
  68-18  metropolitan area where there is a sufficient community of interest
  68-19  within the area and such service can reasonably be provided; and
  68-20              (4)  order one or more telephone companies to provide
  68-21  optional extended area service within a specified calling area if
  68-22  provision of the service is jointly agreed to by the
  68-23  representatives of each affected telephone company and the
  68-24  representatives of a political subdivision or subdivisions within
  68-25  the proposed common calling area, provided that the proposed common
  68-26  calling area has a single, continuous boundary.
  68-27        (b)  If more than one political subdivision is affected by a
   69-1  proposed optional calling plan under Subsection (a)(4) of this
   69-2  section, the agreement of each political subdivision is not
   69-3  required.  The commission may not adopt rules that diminish in any
   69-4  manner the ability of a political subdivision or affected telephone
   69-5  company to enter into joint agreements for optional extended area
   69-6  calling service.  In this subsection and in Subsection (a)(4) of
   69-7  this section, "political subdivision" means a county or
   69-8  municipality or an unincorporated town or village that has 275 or
   69-9  more access lines.
  69-10        SECTION 39.  Subtitle F, Title III, Public Utility Regulatory
  69-11  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  69-12  Regular Session, 1995, is amended by adding Section 3.2625 to read
  69-13  as follows:
  69-14        Sec. 3.2625.  PAY TELEPHONES.  (a)  The right of a provider
  69-15  of pay telephone service to set the provider's rates and charges
  69-16  and the commission's authority over the pay telephone service rates
  69-17  of incumbent local exchange companies is expressly limited by this
  69-18  section.
  69-19        (b)  A provider of pay telephone service may not impose on
  69-20  pay phone end users any charge for local directory assistance or
  69-21  calls made under Chapter 771 or 772, Health and Safety Code.
  69-22        (c)  The commission shall establish a limit on the charge
  69-23  that may be imposed for a pay telephone coin sent-paid call within
  69-24  the local exchange company's toll-free calling area.  The
  69-25  commission may also establish a statewide ceiling on the charge
  69-26  that may be imposed by a provider of pay telephone service for
  69-27  local calls which are collect or operator-assisted or paid by
   70-1  credit card or calling card, provided that the commission shall not
   70-2  establish the ceiling at less than the applicable local rates for
   70-3  such calls of any of the four largest interexchange carriers
   70-4  operating in Texas.
   70-5        (d)  A provider of pay telephone service may impose a set use
   70-6  fee not exceeding 25 cents at the point at which the call is
   70-7  initiated for each "1-800" type call made from a pay telephone,
   70-8  provided that:
   70-9              (1)  except for pay telephones of local exchange
  70-10  companies, the pay telephone is registered with the commission and
  70-11  the provider certifies that the pay telephone is in compliance with
  70-12  commission rules regarding the provision of pay telephone service;
  70-13              (2)  the imposition of the set use fee is not
  70-14  inconsistent with federal law;
  70-15              (3)  the fee is not imposed for any local call, 9-1-1
  70-16  call, or local directory assistance call;
  70-17              (4)  the fee is not imposed for a call that is covered
  70-18  by the Telephone Operator Consumer Services Improvement Act of 1990
  70-19  (47 U.S.C. Section 226);
  70-20              (5)  the pay telephone service provider causes to be
  70-21  posted on each pay telephone instrument, in plain sight of the user
  70-22  and in a manner consistent with existing commission requirements
  70-23  for posting information, the fact that the surcharge will apply to
  70-24  those calls; and
  70-25              (6)  the commission may not impose on a local exchange
  70-26  company the duty or obligation to record the use of pay telephone
  70-27  service, bill or collect for the use, or remit the fee provided by
   71-1  this subsection to the provider of the service.
   71-2        (e)  A provider of pay telephone service, other than an
   71-3  incumbent local exchange company, may not charge for credit card,
   71-4  calling card, or live or automated operator-handled calls a rate or
   71-5  charge that is an amount greater than the authorized rates and
   71-6  charges published, in the eight newspapers having the largest
   71-7  circulation in this state, on March 18, 1995, provided that the pay
   71-8  phone rates of an incumbent local exchange company subject to
   71-9  Subtitle H of this title are governed by that subtitle.  The
  71-10  published rates remain in effect until changed by the legislature.
  71-11        (f)  The commission shall adopt rules within 180 days from
  71-12  the effective date of this section that require every provider of
  71-13  pay telephone service not holding a certificate of convenience and
  71-14  necessity to register with the commission.  A provider of pay
  71-15  telephone service must be registered  with  the commission in order
  71-16  to do business in this state.
  71-17        (g)  The commission may order disconnection of service for up
  71-18  to one year for repeat violations of commission rules.
  71-19        (h)  The commission may adopt rules regarding information to
  71-20  be posted on pay telephone instruments, but those rules may not
  71-21  require a provider of pay telephone service or an affiliate of a
  71-22  provider to police the compliance  with those rules by another
  71-23  provider of pay telephone service.
  71-24        (i)  In this section, "provider of pay telephone service"
  71-25  means a subscriber to customer-owned pay telephone service, an
  71-26  incumbent local exchange company providing pay telephone service,
  71-27  and any other entity providing pay telephone service.
   72-1        SECTION 40.  Section 3.263(a), Public Utility Regulatory Act
   72-2  of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   72-3  Regular Session, 1995, is amended to read as follows:
   72-4        (a)  The commission at any time after notice and hearing may
   72-5  revoke or amend any certificate of convenience and necessity,
   72-6  certificate of operating authority, or service provider certificate
   72-7  of operating authority if it finds that the certificate holder has
   72-8  never provided or is no longer providing service in the area or
   72-9  part of the area covered by the certificate.
  72-10        SECTION 41.  Section 3.302, Public Utility Regulatory Act of
  72-11  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  72-12  Session, 1995, is amended by adding Subsection (i) to read as
  72-13  follows:
  72-14        (i)  A commercial mobile service provider may offer caller
  72-15  identification services under the same terms and conditions
  72-16  provided by Subsections (c)-(f) of this section.
  72-17        SECTION 42.  Subtitle G, Title III, Public Utility Regulatory
  72-18  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  72-19  Regular Session, 1995, is amended by adding Section 3.3025 to read
  72-20  as follows:
  72-21        Sec. 3.3025.  CALLER ID SERVICES:  CONSUMER INFORMATION.  (a)
  72-22  When a customer requests per-line blocking through the commission,
  72-23  the telecommunications provider shall notify the customer by mail
  72-24  of the effective date that per-line blocking will be instituted.
  72-25  When a telecommunications provider providing Caller ID service to a
  72-26  customer originating a call becomes aware of a failure to block the
  72-27  delivery of the calling party's identification information from a
   73-1  line equipped with per-call blocking or per-line blocking of Caller
   73-2  ID information, it shall report such failure to the panel, the
   73-3  commission, and the affected customer if that customer did not
   73-4  report the failure.  A reasonable effort shall be made to notify
   73-5  the affected customer within 24 hours after the provider becomes
   73-6  aware of such failure.
   73-7        (b)  The commission shall form the Caller ID Consumer
   73-8  Education Panel.  The panel shall consist of one person appointed
   73-9  by the governor, one person appointed by the chair of the
  73-10  commission, after consultation with the Texas Council on Family
  73-11  Violence, and one person appointed by the public counsel of the
  73-12  Office of Public Utility Counsel.  The panel shall meet at least
  73-13  quarterly and shall file an annual report with the commission
  73-14  regarding the level of effort and effectiveness of consumer
  73-15  education materials and its recommendations for increasing the safe
  73-16  use and privacy of the calling customer and decreasing the
  73-17  likelihood of harm resulting from Caller ID services.  The
  73-18  commission may implement the recommendations of the panel and
  73-19  interested parties to the extent consistent with the public
  73-20  interest.  The panel shall disband on September 1, 1999, unless
  73-21  reauthorized by statute.
  73-22        (c)  All providers offering Caller ID services shall file
  73-23  with the Caller ID Consumer Educational Panel, no later than the
  73-24  effective date of this Act, all existing Caller ID materials used
  73-25  on or before September 1, 1995.  All future materials shall be
  73-26  provided when they become available.  The panel shall also
  73-27  investigate whether educational materials are distributed in as
   74-1  effective a manner as marketing materials.
   74-2        (d)  For purposes of this section, "Caller ID services"
   74-3  include Caller ID and any other service which permits the called
   74-4  party to determine the identity, telephone number, or address of
   74-5  the calling party, except Caller ID services do not include 911
   74-6  services.
   74-7        (e)  For purposes of this section, "Caller ID materials"
   74-8  shall include any advertisements, educational material, training
   74-9  materials, audio and video marketing devices, and any information
  74-10  disseminated about Caller ID services.
  74-11        SECTION 43.  Section 3.303, Public Utility Regulatory Act of
  74-12  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
  74-13  Session, 1995, is amended to read as follows:
  74-14        Sec. 3.303.  INTEREXCHANGE SERVICES; INCUMBENT LOCAL EXCHANGE
  74-15  COMPANIES' RATES.  Incumbent local <Local> exchange companies'
  74-16  rates for interexchange telecommunications services must be
  74-17  statewide average rates unless the commission on application and
  74-18  hearing orders otherwise.  Nothing in this section limits an
  74-19  incumbent <a> local exchange company's ability to enter into
  74-20  contracts for high speed private line services of 1.544 megabits or
  74-21  greater under the provisions of Section 3.051 of this Act.
  74-22        SECTION 44.  Sections 3.304(a) and (b), Public Utility
  74-23  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
  74-24  Legislature, Regular Session, 1995, are amended to read as follows:
  74-25        (a)  To address telephone calling needs between nearby
  74-26  telephone exchanges, the commission shall initiate a rulemaking
  74-27  proceeding to approve rules to provide for an expedited hearing to
   75-1  allow the expanding of toll-free calling areas according to the
   75-2  following criteria:
   75-3              (1)  Toll-free calling boundaries may only be expanded
   75-4  under this section after the filing of a petition signed by the
   75-5  lesser of five percent of the subscribers or 100 subscribers within
   75-6  an exchange.  If such a petition is filed with the commission, the
   75-7  commission shall order the incumbent local exchange company to
   75-8  provide for the balloting of its subscribers within the petitioning
   75-9  exchange and, if there is an affirmative vote of at least 70
  75-10  percent of those responding, the commission shall consider the
  75-11  request.
  75-12              (2)  The commission shall provide for the expansion of
  75-13  toll-free calling areas for each incumbent local exchange customer
  75-14  in the petitioning exchange if the petitioning exchange serves not
  75-15  more than 10,000 lines and if:
  75-16                    (A)  the central switching office of the
  75-17  petitioning exchange is located within 22 miles utilizing vertical
  75-18  and horizontal geographic coordinates of the central switching
  75-19  office of the exchange requested for toll-free calling service; or
  75-20                    (B)  the petitioning exchange shall demonstrate
  75-21  in its petition that it shares a community of interest with the
  75-22  exchange requested for toll-free calling service.  For purposes of
  75-23  this paragraph, "community of interest" includes areas that have a
  75-24  relationship because of schools, hospitals, local governments,
  75-25  business centers, and other relationships the unavailability of
  75-26  which would cause a hardship to the residents of the area but shall
  75-27  <need> not include an area where the affected central offices are
   76-1  more than 50 miles apart.
   76-2              (3)(A)  The incumbent local exchange company shall
   76-3  recover all of its costs incurred and all loss of revenue from any
   76-4  expansion of toll-free calling areas under this section through a
   76-5  request other than a revenue requirement showing by:
   76-6                          (i)  a monthly fee for toll-free calling
   76-7  service of not more than $3.50 per line for residential customers
   76-8  nor more than $7 per line for business customers for up to five
   76-9  exchanges, together with an additional monthly fee of $1.50 per
  76-10  line for each exchange in excess of five, whether obtained in one
  76-11  or more petitions, to be collected from all such residential or
  76-12  business customers in the petitioning exchange and only until the
  76-13  incumbent local exchange company's next general rate case;
  76-14                          (ii)  a monthly fee for toll-free calling
  76-15  service for all of the incumbent local exchange company's local
  76-16  exchange service customers in the state in addition to the
  76-17  company's current local exchange rates; or
  76-18                          (iii)  both (i) and (ii).
  76-19                    (B)  An incumbent <A> local exchange company may
  76-20  not recover regulatory case expenses under this section by
  76-21  surcharging petitioning exchange subscribers.
  76-22        (b)(1)  The commission and an incumbent <a> local exchange
  76-23  company are not required to comply with this section with regard to
  76-24  a petitioning exchange or petitioned exchange if:
  76-25                    (A)  the commission determines that there has
  76-26  been a good and sufficient showing of a geographic or technological
  76-27  infeasibility to serve the area;
   77-1                    (B)  the incumbent local exchange company has
   77-2  less than 10,000 lines;
   77-3                    (C)  the petitioning or petitioned exchange is
   77-4  served by a cooperative;
   77-5                    (D)  extended area service or extended
   77-6  metropolitan service is currently available between the petitioning
   77-7  and petitioned exchanges; or
   77-8                    (E)  the petitioning or petitioned exchange is a
   77-9  metropolitan exchange.
  77-10              (2)  The commission may expand the toll-free calling
  77-11  area into an exchange not within a metropolitan exchange but within
  77-12  the local calling area contiguous to a metropolitan exchange that
  77-13  the commission determines to have a community of interest
  77-14  relationship with the petitioning exchange.  For the purposes of
  77-15  this section, metropolitan exchange, local calling area of a
  77-16  metropolitan exchange, and exchange have the meanings and
  77-17  boundaries as defined and approved by the commission on September
  77-18  1, 1993.  However, under no circumstances shall a petitioning or
  77-19  petitioned exchange be split in the provision of a toll-free
  77-20  calling area.
  77-21        SECTION 45.  Subtitle G, Title III, Public Utility Regulatory
  77-22  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  77-23  Regular Session, 1995, is amended by adding Section 3.308 to read
  77-24  as follows:
  77-25        Sec. 3.308.  CHARGE FOR EXTENDED AREA SERVICE.  (a)  An
  77-26  incumbent local exchange company serving more than one million
  77-27  access lines in this state that provides mandatory two-way extended
   78-1  area service to customers for a separately stated monthly charge of
   78-2  more than $3.50 per line for residential customers and $7 per line
   78-3  for business customers shall file with the commission to reduce its
   78-4  monthly rates for that extended area service to $3.50 per line for
   78-5  residential customers and $7 per line for business customers.  The
   78-6  incumbent local exchange company shall recover all of its costs
   78-7  incurred and all loss of revenue that results from implementation
   78-8  of those rates in the manner prescribed by Section
   78-9  3.304(a)(3)(A)(ii) of this Act.
  78-10        (b)  The commission and an incumbent local exchange company
  78-11  are not required to comply with this section with regard to the
  78-12  separately stated monthly charges for the provision of mandatory
  78-13  two-way extended area service if the charge is for extended area
  78-14  service in or into a metropolitan exchange or the charge is for
  78-15  extended metropolitan service.
  78-16        SECTION 46.  (a)  Subtitle G, Title III, Public Utility
  78-17  Regulatory Act of 1995, as enacted by S.B. 319, Acts of the 74th
  78-18  Legislature, Regular Session, 1995, is amended by adding Section
  78-19  3.309 to read as follows:
  78-20        Sec. 3.309.  (a)  A private for-profit publisher of a
  78-21  residential telephone directory that is distributed to the public
  78-22  at minimal or no cost shall include in the directory a listing of
  78-23  any toll-free and local telephone numbers of state agencies and
  78-24  state public services and of each state elected official who
  78-25  represents all or part of the geographical area for which the
  78-26  directory contains listings.
  78-27        (b)  The listing required by this section must be clearly
   79-1  identified and must be located or clearly referenced at the front
   79-2  of the directory before the main listing of residential and
   79-3  business telephone numbers.  The listing is not required to exceed
   79-4  a length equivalent to two 8-1/2-inch by 11-inch pages,
   79-5  single-spaced in eight-point type.
   79-6        (c)  The commission may adopt rules to implement this
   79-7  section, including rules specifying the format of the listing and
   79-8  criteria for inclusion of agencies, services, and officials.  The
   79-9  commission, with the cooperation of other state agencies, shall
  79-10  compile relevant information to ensure accuracy of information in
  79-11  the listing and shall provide the information to a
  79-12  telecommunications utility or telephone directory publisher within
  79-13  a reasonable time after a request by the utility or publisher.
  79-14        (b)  This section takes effect September 1, 1995, and applies
  79-15  only to a telephone directory published on or after September 1,
  79-16  1996.
  79-17        SECTION 47.  Subtitle G, Title III, Public Utility Regulatory
  79-18  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  79-19  Regular Session, 1995, is amended by adding Section 3.310 to read
  79-20  as follows:
  79-21        Sec. 3.310.   A telecommunications utility or an affiliate of
  79-22  that utility that publishes a residential or business telephone
  79-23  directory that is distributed to the public shall publish the name
  79-24  of each state senator or representative who represents all or part
  79-25  of the geographical area for which the directory contains listings.
  79-26        SECTION 48.  Subtitle G, Title III, Public Utility Regulatory
  79-27  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
   80-1  Regular Session, 1995, is amended by adding Section 3.311 to read
   80-2  as follows:
   80-3        Sec. 3.311.  HUNTING SERVICE.  Local exchange companies shall
   80-4  make available, at a reasonable tariffed rate, hunting service from
   80-5  local exchange lines to extended metropolitan service lines.  The
   80-6  customer may not be required to purchase additional extended
   80-7  metropolitan service in order to purchase hunting service from
   80-8  local exchange service to extended metropolitan service.
   80-9        SECTION 49.  The Public Utility Regulatory Act of 1995, as
  80-10  enacted by S.B. 319, Acts of the 74th Legislature, Regular Session,
  80-11  1995, is amended by amending Subtitles H and I and adding Subtitles
  80-12  J-O to read as follows:
  80-13        SUBTITLE H.  INCENTIVE REGULATION OF TELECOMMUNICATIONS
  80-14        Sec. 3.351.  POLICY.  Given the current status of competition
  80-15  in the telecommunications industry, it is the policy of the
  80-16  legislature to:
  80-17              (1)  provide a framework for an orderly transition from
  80-18  traditional return on invested capital regulation to a fully
  80-19  competitive telecommunications marketplace where all
  80-20  telecommunications providers compete on fair terms;
  80-21              (2)  preserve and enhance universal telecommunications
  80-22  service at affordable rates;
  80-23              (3)  upgrade the telecommunications infrastructure of
  80-24  this state;
  80-25              (4)  promote network interconnectivity; and
  80-26              (5)  promote diversity in the supply of
  80-27  telecommunications services and innovative products and services
   81-1  throughout the entire state, both urban and rural.
   81-2        Sec. 3.352.  ELECTION AND BASKETS OF SERVICES.  (a)  After
   81-3  the enactment of this subtitle, an incumbent local exchange company
   81-4  may notify the commission in writing of the company's election to
   81-5  be regulated under this subtitle.  The notice must state the
   81-6  company's commitment to limit any increase in the rates charged for
   81-7  a four-year period for the services included in Section 3.353 of
   81-8  this Act and its infrastructure commitment as described by Section
   81-9  3.358 of this Act.
  81-10        (b)(1)  The services provided by an incumbent local exchange
  81-11  company electing incentive regulation under this subtitle
  81-12  ("electing company") shall be initially classified into three
  81-13  categories or "baskets":
  81-14                    (A)  "Basket I: basic network services";
  81-15                    (B)  "Basket II: discretionary services"; and
  81-16                    (C)  "Basket III: competitive services."
  81-17              (2)  The commission shall have the authority to
  81-18  reclassify a service from Basket I to Basket II or Basket III, or
  81-19  from Basket II to Basket III, consistent with the criteria
  81-20  prescribed by Section 3.357 of this Act.
  81-21        (c)  An electing company's telecommunications services shall
  81-22  be regulated under this subtitle regardless of whether that company
  81-23  is a "dominant carrier" as that term is defined by Section 3.002 of
  81-24  this Act.
  81-25        (d)  If, subsequent to the enactment of this subtitle, an
  81-26  incumbent local exchange company notifies the commission in writing
  81-27  of its election to incentive regulation under this subtitle, the
   82-1  company may not under any  circumstances be subject to any
   82-2  complaint, hearing, or determination as to the reasonableness of
   82-3  its rates, its overall revenues, its return on invested capital, or
   82-4  its net income.  However, the company's implementation and
   82-5  enforcement of the competitive safeguards required by Subtitle J of
   82-6  this title are not excluded from a complaint, hearing, or
   82-7  determination.  Nothing herein restricts any consumer's right to
   82-8  complain to the commission regarding quality of service, the
   82-9  commission's right to enforce quality of service standards, or the
  82-10  consumer's right to complain regarding the application of an
  82-11  ambiguous tariff, and if the commission finds an ambiguity, the
  82-12  commission's right to determine the proper application of the
  82-13  tariff or to determine the proper rate if the tariff is found to
  82-14  not apply, but this does not permit the commission to lower a
  82-15  tariff rate except as specifically provided by this Act, to change
  82-16  its interpretation of a tariff, or to change a tariff so as to
  82-17  extend its application to new classes of customers.
  82-18  Notwithstanding any other provision of this Act, the commission may
  82-19  not reduce the rates for switched access services for any company
  82-20  electing under this subtitle before the expiration of the cap on
  82-21  basic network services.
  82-22        Sec. 3.353.  BASKET I:  BASIC NETWORK SERVICES.  (a)  The
  82-23  following services shall initially be classified as basic network
  82-24  services in Basket I as of September 1, 1995:
  82-25              (1)  flat rate residential and business local exchange
  82-26  telephone service, including primary directory listings and the
  82-27  receipt of a directory and any applicable mileage or zone charges;
   83-1              (2)  tone dialing service;
   83-2              (3)  lifeline and tel-assistance services;
   83-3              (4)  service connection charges for basic services;
   83-4              (5)  direct inward dialing service for basic services;
   83-5              (6)  private pay telephone access service;
   83-6              (7)  call trap and trace service;
   83-7              (8)  access to 911 service where provided by a local
   83-8  authority and access to dual party relay service;
   83-9              (9)  switched access service;
  83-10              (10)  interconnection to competitive providers;
  83-11              (11)  mandatory extended area service arrangements;
  83-12              (12)  mandatory extended metropolitan service or other
  83-13  mandatory toll-free calling arrangements;
  83-14              (13)  interconnection for commercial mobile service
  83-15  providers;
  83-16              (14)  directory assistance; and
  83-17              (15)  1+ intraLATA message toll service.
  83-18        (b)  On an incumbent local exchange company's election under
  83-19  Section 3.352 of this Act, increases in rates for basic network
  83-20  services are permitted only with commission approval and only
  83-21  within the parameters specified by Subsection (c) of this section
  83-22  for four years following the election.  Notwithstanding the
  83-23  requirements prescribed by Section 3.457 of this Act, rates for
  83-24  basic network services may be decreased at any time on the
  83-25  initiative of the electing company to a floor above long run
  83-26  incremental cost for switched access service or the appropriate
  83-27  cost for any basic local telecommunications service, which shall be
   84-1  long run incremental cost as to any incumbent local exchange
   84-2  company that is required by the commission to perform long run
   84-3  incremental cost studies or elects to perform those studies.  This
   84-4  section does not affect the charges permitted under Section 3.304,
   84-5  3.308, or 3.608 of this Act.  The commission may not increase
   84-6  service standards applicable to the provision of local exchange
   84-7  telephone service by an electing company if the increased
   84-8  investment required to comply with the increased standard exceeds
   84-9  in any one year 10 percent of the incumbent local exchange
  84-10  company's average annual intrastate additions in capital investment
  84-11  for the most recent five-year period.  In calculating the average,
  84-12  the incumbent local exchange company shall exclude extraordinary
  84-13  investments made during that five-year period.
  84-14        (c)(1)  Rates for basic network services may be changed in
  84-15  the following circumstances and only with commission approval that
  84-16  the proposed change is included in this subsection.
  84-17              (2)  On motion of an electing incumbent local exchange
  84-18  company or on its own motion, the commission shall proportionally
  84-19  adjust prices for services to reflect changes in Federal
  84-20  Communications Commission separations affecting intrastate net
  84-21  income by 10 percent or more.
  84-22              (3)  If, after 42 months after the date of the
  84-23  incumbent local exchange company's election, an electing company in
  84-24  this state with less than five million access lines is in
  84-25  compliance with its infrastructure commitment, all quality of
  84-26  services requirements, and all commission rules enacted under
  84-27  Subtitle J of this title, on application of the incumbent local
   85-1  exchange company, the commission may undertake a proceeding to
   85-2  review the need for changes in the rates of services.  The
   85-3  application may request that the commission adjust rates, implement
   85-4  new pricing plans, restructure rates, or rebalance revenues between
   85-5  services to recognize changed market conditions and the effects of
   85-6  competitive entry.  The commission may use an index and a
   85-7  productivity offset in determining these changes.  The commission
   85-8  may not order an increase in residential local exchange telephone
   85-9  service that would cause those rates to increase by more than the
  85-10  United States Consumer Price Index in any 12-month period.  In no
  85-11  case may the new monthly rate exceed the nationwide average of
  85-12  local exchange telephone service rates for like services.
  85-13              (4)  Notwithstanding the commitments made under Section
  85-14  3.352 of this Act, a rate group reclassification occurring as a
  85-15  result of access lines growth shall be allowed by the commission on
  85-16  request of the electing company.
  85-17        (d)(1)  Except as provided by Section 3.2572 of this Act, the
  85-18  regulation of basic network services of an electing company shall,
  85-19  to the extent not inconsistent with this subtitle, be governed by:
  85-20                    (A)  Title I of this Act;
  85-21                    (B)  this subtitle;
  85-22                    (C)  Subtitles A, B, C, F, G, J, K, and L of this
  85-23  title;
  85-24                    (D)  Sections 3.201, 3.202, 3.204, 3.210, 3.211,
  85-25  3.215, 3.216, 3.217, 3.218, and 3.219 of this Act; and
  85-26                    (E)  all commission procedures and rules not
  85-27  inconsistent with this subtitle.
   86-1              (2)  Changes to the terms and conditions of the tariff
   86-2  offering of a basic network service continue to require commission
   86-3  approval.
   86-4        (e)  The rates capped in Subsection (b) of this section as a
   86-5  result of a company's election shall be the rates charged by the
   86-6  company on June 1, 1995, without regard to proceedings pending
   86-7  under Section 1.301 or 3.210 of this Act or under Subchapter G,
   86-8  Chapter 2001, Government Code.  Following the four-year cap, rate
   86-9  increases to basic network services may only be made with
  86-10  commission approval subject to the provisions of this Act, and to
  86-11  the extent consistent with achieving universal affordable service.
  86-12        Sec. 3.354.  RATE ADJUSTMENT PROCEDURES.  (a)  An electing
  86-13  company may adjust its rates for basic network services under
  86-14  Section 3.353(c) of this Act on notice to the commission.  The
  86-15  notice to the commission of a rate adjustment must be accompanied
  86-16  with sufficient documentary support to demonstrate that the rate
  86-17  adjustment meets the criteria prescribed by Section 3.353(c) of
  86-18  this Act.  The commission shall establish by rule or order the
  86-19  documentation to be required under this subsection.
  86-20        (b)  Notice to customers shall be published once in a
  86-21  newspaper of general circulation in the service area to be affected
  86-22  within a reasonable time period after the notice for a rate
  86-23  adjustment is provided to the commission, and shall be included in
  86-24  or on the bill of each affected consumer in the next billing
  86-25  subsequent to the filing with the commission.  The notice shall
  86-26  contain a title that includes the name of the company and the words
  86-27  "NOTICE OF POSSIBLE RATE CHANGE."  The notice shall contain the
   87-1  following information:
   87-2              (1)  a statement that the consumer's rate may change;
   87-3              (2)  an estimate of the amount of the annual change for
   87-4  the typical residential, business, or access consumers that would
   87-5  result if the rate adjustment is approved by the commission, which
   87-6  estimate shall be printed in a type style and size that are
   87-7  distinct from and larger than the type style and size of the body
   87-8  of the notice; and
   87-9              (3)  a statement that a consumer who wants to comment
  87-10  on the rate adjustment or who wants additional details regarding
  87-11  the rate adjustment may call or write the commission, which
  87-12  statement must include  the telephone number and address of the
  87-13  commission and a statement that additional details will be provided
  87-14  free of charge to the consumer at the expense of the company.
  87-15        (c)  The commission shall review the adjusted rates to ensure
  87-16  that the proposed adjustment conforms to the requirements of
  87-17  Section 3.353(c) of this Act.  A rate adjustment under Section
  87-18  3.353(c)(2), (3), (4), or (5) of this Act takes effect 90 days
  87-19  after the date of completion of notice.
  87-20        (d)  An incumbent local exchange company that has five
  87-21  percent or fewer of the total access lines in this state may adopt
  87-22  the cost, if determined based on a long run incremental cost study,
  87-23  for the same or substantially similar services offered by a larger
  87-24  incumbent local exchange company without the requirement of
  87-25  presenting long run incremental cost studies of its own.
  87-26        (e)  Either by complaint filed by an affected party or on the
  87-27  commission's own motion at any time before the rate adjustment
   88-1  takes effect, the commission may suspend the effective date of the
   88-2  rate adjustment and hold a hearing to review a rate set under
   88-3  Section 3.353(c)(2), (3), (4), or (5) of this Act and after the
   88-4  review issue an order approving, modifying, or rejecting the rate
   88-5  adjustment if it is not in compliance with the applicable
   88-6  provisions.  Any order modifying or rejecting the proposed rate
   88-7  adjustment shall specify each reason why the proposed adjustment is
   88-8  not in compliance with the applicable provisions of Section
   88-9  3.353(c)(2), (3), (4), or (5) of this Act and the means by which
  88-10  the proposed adjustment may be brought into compliance.
  88-11        (f)  Any rate restructure under Section 3.353(c) of this Act
  88-12  shall follow the notice and hearing procedures prescribed by
  88-13  Sections 3.211(a)-(c) of this Act, except as otherwise provided in
  88-14  this section.
  88-15        Sec. 3.355.  BASKET II:  DISCRETIONARY SERVICES.  (a)  Basket
  88-16  II services include all services or functions provided by the
  88-17  electing company that have not been granted pricing flexibility in
  88-18  a particular geographic market and that have not been listed under
  88-19  Basket I or III.
  88-20        (b)  The following services are initially classified as
  88-21  discretionary services in Basket II as of September 1, 1995:
  88-22              (1)  1+ intraLATA message toll services, where
  88-23  intraLATA equal access is available;
  88-24              (2)  0+, 0- operator services;
  88-25              (3)  call waiting, call forwarding, and custom calling
  88-26  features not listed in Basket III;
  88-27              (4)  call return, caller ID, and call control options
   89-1  not listed in Basket III;
   89-2              (5)  central office based PBX-type services;
   89-3              (6)  billing and collection services;
   89-4              (7)  integrated services digital network (ISDN)
   89-5  services; and
   89-6              (8)  new services.
   89-7        (c)  The commission may reclassify a service from Basket I to
   89-8  Basket II or Basket III, or from Basket II to Basket III,
   89-9  consistent with the criteria prescribed by Section 3.357 of this
  89-10  Act.
  89-11        (d)  The prices for each Basket II service or function
  89-12  provided by the electing company shall be set above the LRIC cost.
  89-13  The commission shall set the reasonable price ceiling over and
  89-14  above LRIC cost, but the ceiling may not be set below or above the
  89-15  rate in effect on September 1, 1995, without regard to proceedings
  89-16  pending under Section 1.301 or 3.210 of this Act or under
  89-17  Subchapter G, Chapter 2001, Government Code.  The ceiling may be
  89-18  raised only after the proceedings required under Subtitle J of this
  89-19  title.  Thereafter, on application by the electing company or on
  89-20  the commission's own motion, the commission may change the price
  89-21  ceiling but may not increase the ceiling more than 10 percent
  89-22  annually.  Within the range of the LRIC floor and the price
  89-23  ceiling, the incumbent local exchange company may change the price
  89-24  of each service, including using volume and term discounts, zone
  89-25  density pricing, packaging of services, customer specific pricing,
  89-26  and other promotional pricing flexibility, but shall notify the
  89-27  commission of each change.  The placement of a service in Basket II
   90-1  does not preclude an incumbent local exchange company from using
   90-2  any of the regulatory treatments authorized by or under Section
   90-3  3.051 of this Act.  Discounts and other forms of pricing
   90-4  flexibility may not be preferential, prejudicial, or
   90-5  discriminatory.
   90-6        Sec. 3.356.  BASKET III:  COMPETITIVE SERVICES.  (a)  The
   90-7  following services are Basket III competitive services and shall be
   90-8  subject to pricing flexibility as of September 1, 1995:
   90-9              (1)  services described in the WATS tariff as of
  90-10  January 1, 1995;
  90-11              (2)  800 and foreign exchange services;
  90-12              (3)  private line service;
  90-13              (4)  special access service;
  90-14              (5)  services from public pay telephones;
  90-15              (6)  paging services and mobile services (IMTS);
  90-16              (7)  911 premises equipment;
  90-17              (8)  speed dialing; and
  90-18              (9)  three-way calling.
  90-19        (b)  The commission may reclassify a service from Basket I to
  90-20  Basket II or Basket III or from Basket II to Basket III, consistent
  90-21  with the criteria prescribed by Section 3.357 of this Act.
  90-22        (c)  The electing company may set the price for the service
  90-23  at any level above the service's LRIC, in compliance with the
  90-24  imputation rules established under Subtitle J of this title.
  90-25  Permissible pricing flexibility includes volume and term discounts,
  90-26  zone density pricing, packaging of services, customer specific
  90-27  contracts, and other promotional pricing flexibility, subject to
   91-1  the requirements of Section 3.451 of this Act.  Discounts and other
   91-2  forms of pricing flexibility may not be preferential, prejudicial,
   91-3  or discriminatory.  However, an electing incumbent local exchange
   91-4  company may not increase the price of a service in a geographic
   91-5  area in which that service or a functionally equivalent service is
   91-6  not readily available from another provider.
   91-7        (d)  Not later than January 1, 2000, the commission shall
   91-8  initiate a review and evaluation of any incumbent local exchange
   91-9  company electing treatment under this subtitle or Subtitle I of
  91-10  this title to review and evaluate the effects of the election,
  91-11  including consumer benefits, impact of competition, infrastructure
  91-12  investments, and quality of service.  The commission shall file a
  91-13  report and its recommendations to the legislature by January 1,
  91-14  2001, as to whether the incentive regulation plan should be
  91-15  extended, modified, eliminated, or replaced with some other form of
  91-16  regulation.  The legislature, based on the commission's report, may
  91-17  authorize the commission to take action to extend, modify,
  91-18  eliminate, or replace the incentive plan provided by this subtitle
  91-19  and Subtitle I of this title.
  91-20        Sec. 3.357.  TRANSFERRING SERVICES.  (a)  In determining
  91-21  whether to transfer services from Basket I to Basket II or Basket
  91-22  III, or from Basket II to Basket III, the commission shall
  91-23  establish standards that consider factors including:
  91-24              (1)  availability of the service from other providers;
  91-25              (2)  the proportion of the market that currently
  91-26  receives the service;
  91-27              (3)  the effect of the transfer on subscribers of the
   92-1  service; and
   92-2              (4)  the nature of the service.
   92-3        (b)  The commission may not transfer a service from one
   92-4  basket to another until full implementation of all competitive
   92-5  safeguards required by Sections 3.452, 3.453, 3.454, 3.455, 3.456,
   92-6  3.457, and 3.458 of this Act.
   92-7        Sec. 3.358.  INFRASTRUCTURE.  (a)  It is the goal of this
   92-8  State to facilitate and promote the deployment of an advanced
   92-9  telecommunications infrastructure in order to spur economic
  92-10  development throughout Texas.  Texas should be among the leaders in
  92-11  achieving this objective.  The primary means of achieving this goal
  92-12  shall be through encouraging private investment in the state's
  92-13  telecommunications infrastructure by creating incentives for such
  92-14  investment and promoting the development of competition.  The best
  92-15  way to bring the benefits of an advanced telecommunications network
  92-16  infrastructure to Texas communities is through innovation and
  92-17  competition among all the state's communications providers.
  92-18  Competition will provide Texans a choice of telecommunications
  92-19  providers and will drive technology deployment, innovation, service
  92-20  quality, and cost-based prices as competing firms seek to satisfy
  92-21  customer needs.
  92-22        (b)  In implementing this section, the commission shall
  92-23  consider the following policy goals of this State:
  92-24              (1)  ensure the availability of the widest possible
  92-25  range of competitive choices in the provision of telecommunications
  92-26  services and facilities;
  92-27              (2)  foster competition and rely on market forces where
   93-1  competition exists to determine the price, terms, availability, and
   93-2  conditions of service in markets in which competition exists;
   93-3              (3)  ensure the universal availability of basic local
   93-4  telecommunications services at reasonable rates;
   93-5              (4)  encourage the continued development and deployment
   93-6  of advanced, reliable capabilities and services in
   93-7  telecommunications networks;
   93-8              (5)  assure interconnection and interoperability, based
   93-9  on uniform technical standards, among telecommunications carriers;
  93-10              (6)  eliminate existing unnecessary administrative
  93-11  procedures which impose regulatory barriers to competition and
  93-12  assure that competitive entry is fostered on an economically
  93-13  rational basis;
  93-14              (7)  assure consumer protection and protection against
  93-15  anticompetitive conduct;
  93-16              (8)  regulate providers of services only to the extent
  93-17  they have market power to control the price of services to
  93-18  customers;
  93-19              (9)  encourage cost-based pricing of telecommunications
  93-20  services so that consumers pay a fair price for services that they
  93-21  use; and
  93-22              (10)  subject to Section 3.353 of this Act, develop
  93-23  quality of service standards for local exchange companies as it
  93-24  deems appropriate to place Texas among the leaders in deployment of
  93-25  an advanced telecommunications infrastructure except that the 10
  93-26  percent limitation specified in Section 3.353 of this Act shall not
  93-27  include the requirements of Subsections (c)(1)-(4) of this section.
   94-1        (c)  Recognizing that it will take time for competition to
   94-2  develop in the local exchange market, the commission shall act, in
   94-3  the absence of competition, to ensure that the following
   94-4  infrastructure goals are achieved by electing companies:
   94-5              (1)  Electing incumbent local exchange companies shall
   94-6  make access to end-to-end digital connectivity available to all
   94-7  customers in their territories by December 31, 1996.
   94-8              (2)  Fifty percent of the local exchange access lines
   94-9  in each electing local exchange company's territory must be served
  94-10  by a digital central office switch by January 1, 2000.
  94-11              (3)  All electing company new central office switches
  94-12  installed in Texas must be digital, or technologically equal to or
  94-13  superior to digital, after September 1, 1995.  At a minimum, each
  94-14  new central office switch installed after September 1, 1997, must
  94-15  be capable of providing Integrated Services Digital Network (ISDN)
  94-16  services in a manner consistent with generally accepted national
  94-17  standards.
  94-18              (4)  Electing incumbent local exchange companies'
  94-19  public switched network backbone inter-office facilities must
  94-20  employ broadband facilities capable of at least 45 megabits per
  94-21  second, or at lower bandwidths if evolving technology permits the
  94-22  delivery of video signal at quality levels comparable to a
  94-23  television broadcast signal, by January 1, 2000.  This requirement
  94-24  shall not extend to local loop facilities.
  94-25        (d)(1)  An electing company of greater than five million
  94-26  access lines shall also install Common Channel Signaling 7
  94-27  capability in all central offices by January 1, 2000.
   95-1              (2)  An electing company of greater than five million
   95-2  access lines shall connect all of its serving central offices to
   95-3  their respective LATA tandem central offices with optical fiber or
   95-4  equivalent facilities by January 1, 2000.
   95-5              (3)  An electing company serving more than one million
   95-6  access lines and fewer than five million access lines shall provide
   95-7  digital switching central offices in all exchanges by December 31,
   95-8  1998.
   95-9        (e)  The commission may consider waivers of Subsections
  95-10  (c)(1)-(4) of this section for electing local exchange companies
  95-11  serving fewer than one million lines, if the local exchange company
  95-12  demonstrates that such investment is not viable economically, after
  95-13  due consideration is given to the public benefits which would
  95-14  result from compliance with such requirements; and, in addition,
  95-15  may consider a temporary extension of any period with respect to
  95-16  Subsections (c)(1)-(4) of this section for electing local exchange
  95-17  companies serving fewer than two million but more than one million
  95-18  lines, if the local exchange company demonstrates that such
  95-19  extension is in the public interest.
  95-20        (f)  The commission may not consider the cost of implementing
  95-21  Subsection (c) or (d) of this section in determining whether an
  95-22  electing company is entitled to a rate increase under this subtitle
  95-23  or increased universal service funds under Section 3.608 of this
  95-24  Act.
  95-25        Sec. 3.359.  INFRASTRUCTURE COMMITMENT TO CERTAIN ENTITIES.
  95-26  (a)(1)  It is the intent of this section to establish a
  95-27  telecommunications infrastructure that interconnects public
   96-1  entities described in this section.  The interconnection of these
   96-2  entities requires ubiquitous, broadband, digital services for
   96-3  voice, video, and data within the local serving area.  The
   96-4  ubiquitous nature of these connections must also allow individual
   96-5  networks of these entities to interconnect and interoperate across
   96-6  the broadband digital service infrastructure.  The delivery of
   96-7  these advanced telecommunications services also will require
   96-8  collaborations and partnerships of public, private, and commercial
   96-9  telecommunications service network providers.
  96-10              (2)  The goal of this section is to interconnect and
  96-11  aggregate the connections to every entity described in this
  96-12  section, within the local serving area.  It is further intended
  96-13  that the implementation of the infrastructure as defined within
  96-14  this section connect all the entities requesting the services
  96-15  offered under this section.
  96-16        (b)(1)(A)  On customer request, the electing company shall
  96-17  provide broadband digital service that is capable of providing
  96-18  transmission speeds of up to 45 megabits per second or better for
  96-19  customer applications and other customized or packaged network
  96-20  services (private network services) to an entity described in this
  96-21  section for their private and sole use except as provided in
  96-22  Subsection (d) of this section:
  96-23                          (i)  educational institutions, as that term
  96-24  is defined in Section 3.605 of this Act;
  96-25                          (ii)  libraries, as that term is defined in
  96-26  Section 3.606 of this Act;
  96-27                          (iii)  nonprofit telemedicine centers of
   97-1  academic health centers, public or not-for-profit hospitals, or
   97-2  state-licensed health care practitioners;
   97-3                          (iv)  public or not-for-profit hospitals;
   97-4                          (v)  projects funded by the
   97-5  Telecommunications Infrastructure Fund described in this Act; or
   97-6                          (vi)  any legally constituted consortium or
   97-7  group of entities listed in Subparagraphs (i)-(v) of this
   97-8  paragraph.
   97-9                    (B)  Such private network services shall be
  97-10  provided pursuant to customer specific contracts at a rate that is
  97-11  105 percent of the long run incremental cost, including
  97-12  installation, of the services.
  97-13                    (C)  Each such contract shall be filed with the
  97-14  commission but not require the approval of the commission.
  97-15                    (D)  An electing company shall file a flat
  97-16  monthly tariff rate for point-to-point intraLATA 1.544 megabits per
  97-17  second service for the entities specified in Subsection (b)(1)(A)
  97-18  of this section which shall be distance insensitive and be no
  97-19  higher than 105 percent of the statewide average long run
  97-20  incremental costs, including installation, of the service.
  97-21                    (E)  An electing company shall provide
  97-22  point-to-point 45 megabits per second intraLATA services when
  97-23  requested by an entity specified in Subsection (b)(1)(A) of this
  97-24  section pursuant to customer specific contracts except that the
  97-25  interoffice portion of the service, if any, will be recovered on a
  97-26  statewide average distance insensitive basis.  The rate for this
  97-27  service shall be no higher than 105 percent of long run incremental
   98-1  cost, including installation, of the service.
   98-2                    (F)  An electing local exchange company shall
   98-3  provide an entity described in this section with broadband digital
   98-4  special access service to interexchange carriers at no higher than
   98-5  105 percent of the long run incremental cost, including
   98-6  installation, of such service.
   98-7                    (G)  On customer request, the electing company
   98-8  shall provide expanded interconnection (virtual colocation)
   98-9  consistent with the rules adopted by the commission pursuant to
  98-10  Section 3.456 of this Act to an entity specified in Subsection
  98-11  (b)(1)(A) of this section at 105 percent of long run incremental
  98-12  cost, including installation.  Such entities shall not have to
  98-13  qualify for such expanded interconnection if it is ordered by the
  98-14  commission.
  98-15                    (H)  The legislature finds that an entity
  98-16  described in this section warrants preferred rate treatment
  98-17  provided that any such rates cover the long run incremental cost of
  98-18  the services provided.
  98-19                    (I)  Notwithstanding any other provision of this
  98-20  Act, an electing local exchange company shall not be subject to a
  98-21  complaint under this section except by an entity specified in this
  98-22  section complaining that the provision of private network services
  98-23  under this section was provided preferentially to a similarly
  98-24  situated customer.
  98-25              (2)  An entity receiving the services provided under
  98-26  this section may not be assessed special construction or
  98-27  installation charges.
   99-1              (3)  An educational institution or a library may elect
   99-2  the rate treatment provided in this section or the discount
   99-3  provided by Section 3.605 of this Act.
   99-4              (4)  Notwithstanding the pricing flexibility authorized
   99-5  by this Act, an electing company's rates for the services provided
   99-6  under this section may not be increased for six years from the date
   99-7  of election except as otherwise provided in customer specific
   99-8  contracts.
   99-9              (5)  On customer request by an educational institution
  99-10  or library in exchanges of an electing company serving more than
  99-11  five million access lines in which toll-free access to the Internet
  99-12  is not available, the local exchange company shall make available a
  99-13  toll-free connection or toll-free dialing arrangement for use by
  99-14  educational institutions or libraries in accessing the Internet in
  99-15  an exchange in which Internet access is available on a toll-free
  99-16  basis.  The connection or dialing arrangement shall be provided at
  99-17  no charge to the educational institution or library until Internet
  99-18  access becomes available in the exchange of the requesting
  99-19  educational institution or library.  The local exchange company is
  99-20  not required to arrange for Internet access or to pay Internet
  99-21  charges for the requesting educational institution or library.
  99-22              (6)  An electing company shall give priority to serving
  99-23  rural areas, areas designated as critically underserved, medically
  99-24  or educationally, and educational institutions with high
  99-25  percentages of economically disadvantaged students.
  99-26        (c)  The private network services provided pursuant to this
  99-27  section may be interconnected with other similar networks for
  100-1  distance learning, telemedicine, and information sharing purposes.
  100-2        (d)  The private network services provided pursuant to this
  100-3  section may not be shared or resold to other customers except that
  100-4  such services may be used by and shared among the entities
  100-5  described in Subsection (b)(1)(A) of this section.  The services
  100-6  provided pursuant to this section may not be required to be resold
  100-7  to other customers at the rates provided in this section; however,
  100-8  the prohibition contained in this subsection is not intended to
  100-9  preclude the otherwise permitted resale of other services which may
 100-10  be offered by an electing company using the same facilities or a
 100-11  portion thereof, which are used to provide the private network
 100-12  services offered under this section.
 100-13        (e)  For purposes of this section, the term "telemedicine
 100-14  center" means a facility equipped to transmit by video, data, or
 100-15  voice service medical information for the purpose of diagnosis or
 100-16  treatment of illness or disease, owned or operated by a public or
 100-17  not-for-profit hospital including an academic health center or such
 100-18  a facility owned by any state-licensed health care practitioner or
 100-19  group of practitioners and operated on a nonprofit basis.
 100-20        (f)  The State Purchasing and General Services Act (Article
 100-21  601b, Vernon's Texas Civil Statutes) does not apply to contracts
 100-22  entered into under this section.
 100-23        (g)  The commission may not consider the cost of implementing
 100-24  Subsection (b), (c), or (d) of this section in determining whether
 100-25  an electing company is entitled to a rate increase under this
 100-26  subtitle or increased universal service funds under Section 3.608
 100-27  of this Act.
  101-1     SUBTITLE I.  INFRASTRUCTURE PLAN FOR RATE OF RETURN COMPANIES
  101-2        Sec. 3.401.  POLICY.  It is the policy of the legislature
  101-3  that those incumbent local exchange companies that do not elect to
  101-4  be regulated under Subtitle H of this title should nevertheless
  101-5  have incentives to deploy infrastructure that will benefit the
  101-6  citizens of this state, while maintaining reasonable local rates
  101-7  and universal service.
  101-8        Sec. 3.402.  ELECTION.  (a)  An incumbent local exchange
  101-9  company serving less than five percent of the access lines in this
 101-10  state that has not elected incentive regulation under Subtitle H of
 101-11  this title may elect for an infrastructure plan under this subtitle
 101-12  by notifying the commission in writing of its election under this
 101-13  section.
 101-14        (b)(1)  For a period of six years after the election date, an
 101-15  electing incumbent local exchange company may not seek an increase
 101-16  in any rate previously established for that company under this Act,
 101-17  except for the charges permitted under Sections 3.304, 3.308, and
 101-18  3.608 of this Act, and in the following circumstances and only with
 101-19  commission approval that the proposed change is included in this
 101-20  subsection.
 101-21              (2)  On motion of an electing incumbent local exchange
 101-22  company or on its own motion, the commission shall adjust prices
 101-23  for services to reflect changes in Federal Communications
 101-24  Commission separations affecting intrastate net income by 10
 101-25  percent or more.
 101-26              (3)  A rate group classification occurring as a result
 101-27  of access lines growth shall be allowed by the commission on
  102-1  request of the electing company.
  102-2        (c)  Section 3.354 of this Act applies to a rate change under
  102-3  Subsection (b) of this section.
  102-4        (d)  If, subsequent to the enactment of this subtitle, an
  102-5  incumbent local exchange company notifies the commission in writing
  102-6  of its election to the alternative infrastructure plan under this
  102-7  subtitle, the electing company may not for a period of six years
  102-8  after the election date under any circumstances be subject to any
  102-9  complaint or hearing as to the reasonableness of its rates, its
 102-10  overall revenues, its return on invested capital, or its net income
 102-11  if the electing incumbent local exchange company is complying with
 102-12  its infrastructure commitment under Section 3.403 of this Act, nor
 102-13  may an electing company be subject to a complaint that any
 102-14  particular rate is excessive.  However, the company's
 102-15  implementation of the competitive safeguards required by Subtitle J
 102-16  of this title are not excluded from a complaint, hearing, or
 102-17  determination.  Nothing herein restricts any consumer's right to
 102-18  complain to the commission regarding quality of service, the
 102-19  commission's right to enforce quality of service standards, or the
 102-20  consumer's right to complain regarding the application of an
 102-21  ambiguous tariff, and if the commission finds an ambiguity, the
 102-22  commission's right to determine the proper application of the
 102-23  tariff or to determine the proper rate if the tariff is found to
 102-24  not apply, but this does not permit the commission to lower a
 102-25  tariff rate except as specifically provided by this Act, to change
 102-26  its interpretation of a tariff, or to change a tariff so as to
 102-27  extend its application to new classes of customers.  The commission
  103-1  may not increase service standards applicable to the provision of
  103-2  local exchange telephone service by an electing company if the
  103-3  increased investment required to comply with the increased standard
  103-4  exceeds in any one year 10 percent of the incumbent local exchange
  103-5  company's average annual intrastate additions in capital investment
  103-6  for the most recent five-year period.  In calculating the average,
  103-7  the incumbent local exchange company shall exclude extraordinary
  103-8  investments made during the five-year period.
  103-9        (e)  On application by an electing incumbent local exchange
 103-10  company, the commission may allow a company to withdraw its
 103-11  election under this section but only for good cause.  For the
 103-12  purpose of this section, good cause includes only matters that were
 103-13  beyond the control of the incumbent local exchange company.
 103-14        (f)  This section does not prohibit an incumbent local
 103-15  exchange company from making an election under Section 3.352 of
 103-16  this Act at any time, and if the company so elects, the
 103-17  infrastructure commitment made under Section 3.403 of this Act
 103-18  offsets any infrastructure commitment required in connection with
 103-19  the Section 3.352 election.
 103-20        (g)  The rates capped by Subsection (b) of this section as a
 103-21  result of a company's election shall be the rates charged by the
 103-22  company at the date of its election without regard to proceedings
 103-23  pending under Section 1.301 or 3.210 of this Act or under
 103-24  Subchapter G, Chapter 2001, Government Code.  Notwithstanding any
 103-25  other provision of this Act, the commission may not reduce the
 103-26  rates for switched access services for any company electing under
 103-27  this subtitle before the expiration of the cap under Subsection (b)
  104-1  of this section.
  104-2        (h)  In this section, "election date" means the date on which
  104-3  the commission receives notice of election under this section.
  104-4        Sec. 3.403.  INFRASTRUCTURE COMMITMENT.  (a)  A company
  104-5  electing under Section 3.402 of this Act shall make an
  104-6  infrastructure commitment in writing to the governor and
  104-7  commission, committing to make the following telecommunications
  104-8  infrastructure investment in this state over a six-year period
  104-9  following the company's election.
 104-10        (b)  The commission shall act to ensure that the following
 104-11  infrastructure goals are achieved by electing companies:
 104-12              (1)  Electing incumbent local exchange companies shall
 104-13  make access to end-to-end digital connectivity available to all
 104-14  customers in their territories by January 1, 2000.  "Make
 104-15  available" as used in this subsection shall have the definition
 104-16  contained in 16 T.A.C. Section 23.69.
 104-17              (2)  Fifty percent of the local exchange access lines
 104-18  in each electing local exchange company's territory must be served
 104-19  by a digital central office switch by January 1, 2000.
 104-20              (3)  All electing company new central office switches
 104-21  installed in Texas after September 1, 1995, must be digital.
 104-22              (4)  Electing incumbent local exchange companies'
 104-23  public switched network back-bone inter-office facilities must
 104-24  employ broadband facilities capable of at least 45 megabits per
 104-25  second, or at lower bandwidths if evolving technology permits the
 104-26  delivery of video signal at quality levels comparable to a
 104-27  television broadcast signal, that serve at least 50 percent of the
  105-1  local exchange access lines by January 1, 2000.  This requirement
  105-2  shall not extend to local loop facilities.
  105-3              (5)  Electing incumbent local exchange companies shall
  105-4  install Common Channel Signaling 7 capability in all access tandem
  105-5  offices by January 1, 2000.
  105-6              (6)  The 10 percent limitation specified in Section
  105-7  3.402 shall not include requirements of Subdivisions (1)-(5) of
  105-8  this subsection.
  105-9        (c)(1)  On customer request, the electing company shall
 105-10  provide private broadband services and other customized or packaged
 105-11  network services (private network services) for the private and
 105-12  sole use of the following entities:
 105-13                    (A)  educational institutions, as that term is
 105-14  defined in Section 3.605 of this Act;
 105-15                    (B)  libraries, as that term is defined in
 105-16  Section 3.606 of this Act;
 105-17                    (C)  telemedicine centers of public or
 105-18  not-for-profit hospitals;
 105-19                    (D)  nonprofit telemedicine centers of state
 105-20  licensed health care practitioners; or
 105-21                    (E)  any legally constituted consortium or group
 105-22  of entities listed in Paragraphs (A)-(D) of this subdivision.
 105-23              (2)  An electing company shall give investment priority
 105-24  to serving rural areas, areas designated as critically underserved,
 105-25  medically or educationally, and educational institutions with high
 105-26  percentages of economically disadvantaged students.
 105-27              (3)  Such private network services shall be provided
  106-1  pursuant to customer specific contracts.
  106-2              (4)  Such contracts shall be offered at 110 percent of
  106-3  the long run incremental cost including installation costs of
  106-4  providing the private network service.
  106-5              (5)  Each such contract shall be filed with the
  106-6  commission but not require the approval of the commission.
  106-7              (6)  The legislature finds that the classes of
  106-8  customers listed in Subdivisions (1)(A)-(D) of this subsection
  106-9  warrant preferred rate treatment provided that any such rates cover
 106-10  the long run incremental cost of the services provided.
 106-11              (7)  Notwithstanding any other provision of this Act,
 106-12  an electing local exchange company shall not be subject to a
 106-13  complaint under this section except by:
 106-14                    (A)  educational institutions, as that term is
 106-15  defined in Section 3.605 of this Act;
 106-16                    (B)  libraries, as that term is defined in
 106-17  Section 3.606 of this Act;
 106-18                    (C)  telemedicine centers of public or
 106-19  not-for-profit hospitals;
 106-20                    (D)  nonprofit telemedicine centers of
 106-21  state-licensed health care practioners; or
 106-22                    (E)  any legally constituted consortium or group
 106-23  of entities listed in Paragraphs (A)-(D) of this subdivision.
 106-24              (8)  Educational institutions, libraries, telemedicine
 106-25  centers of public or not-for-profit hospitals, and nonprofit
 106-26  telemedicine centers of state-licensed health care practitioners
 106-27  receiving the services provided under this section may not be
  107-1  assessed tariffed special construction or installation charges
  107-2  unless agreed upon by the local exchange company and entities
  107-3  specified in Subdivision (1) of this subsection.
  107-4              (9)  An educational institution or a library may elect
  107-5  this rate treatment or the discount provided by Section 3.605 of
  107-6  this Act.
  107-7              (10)  Notwithstanding the pricing flexibility
  107-8  authorized by this Act, the electing company's rates for this
  107-9  service may not be increased for six years from the date of
 107-10  election.
 107-11              (11)  On request, for 1.544 megabits per second private
 107-12  line or special access service by educational institutions and
 107-13  libraries, that service shall be offered at 110 percent of the long
 107-14  run incremental cost including installation costs.  This rate is in
 107-15  lieu of the discount provided by Section 3.605 of this Act.
 107-16              (12)  The customers specified in this section
 107-17  constitute a special class of customer for purposes of the private
 107-18  network for distance learning, telemedicine, and information
 107-19  sharing purposes.
 107-20              (13)  The private network services provided pursuant to
 107-21  this section may be interconnected with other similar networks for
 107-22  distance learning, telemedicine, and information sharing purposes.
 107-23              (14)  The private network services provided pursuant to
 107-24  this section may not be shared or resold to other customers except
 107-25  that they may be used and shared among the entities specified in
 107-26  Subdivision (1) of this subsection.  The services provided pursuant
 107-27  to this section may not be required to be resold to other customers
  108-1  at the rates provided in this section; provided, however, the
  108-2  prohibition contained in this subsection is not intended to
  108-3  preclude the otherwise permitted resale of other services which may
  108-4  be offered by an electing company using the same facilities or a
  108-5  portion thereof, which are used to provide the private network
  108-6  services offered under this section.
  108-7        (d)  The commission may consider waivers of requirements
  108-8  listed in Subsections (b)(1)-(5) of this section for electing local
  108-9  exchange companies serving fewer than one million lines if the
 108-10  local exchange company demonstrates that such investment is not
 108-11  viable economically, after due consideration is given to the public
 108-12  benefits which would result from compliance with such requirements.
 108-13        (e)  The commission may not consider the cost of implementing
 108-14  Subsection (b) or (c) of this section in determining whether an
 108-15  electing company is entitled to a rate increase under this subtitle
 108-16  or increased universal service funds under Section 3.608 of this
 108-17  Act.
 108-18        (f)  For purposes of this section:
 108-19              (1)  "Private network services" means the
 108-20  telecommunications services provided to an entity described in
 108-21  Subsection (c)(1)(A) of this section and includes broadband
 108-22  services, customized, and packaged network services and does not
 108-23  limit the local exchange company from providing these services with
 108-24  facilities which are also used to provide other services to other
 108-25  customers.
 108-26              (2)  "Telemedicine center" means a facility equipped to
 108-27  transmit, by video or data service, medical information for the
  109-1  purpose of diagnosis or treatment of illness or disease, owned or
  109-2  operated by a public or not-for-profit hospital, or such a facility
  109-3  owned by any state-licensed health care practioner and operated on
  109-4  a nonprofit basis.
  109-5        (g)  Each electing company shall file a report with the
  109-6  commission each year on the anniversary date of its election that
  109-7  sets forth its progress on its infrastructure commitment.  The
  109-8  report shall include:
  109-9              (1)  the institutions requesting service under this
 109-10  section;
 109-11              (2)  the institutions served under this section;
 109-12              (3)  investment and expense in the previous period and
 109-13  cumulative for all periods; and
 109-14              (4)  any other information the commission considers
 109-15  necessary.
 109-16                  SUBTITLE J.  COMPETITIVE SAFEGUARDS
 109-17        Sec. 3.451.  COMPETITIVE SAFEGUARDS.  (a)  To the extent
 109-18  necessary to ensure that competition in telecommunications is fair
 109-19  to all participants and to accelerate the improvement of
 109-20  telecommunications in the state, the commission shall ensure that
 109-21  the rates and regulations of an incumbent local exchange company
 109-22  are not unreasonably preferential, prejudicial, or discriminatory
 109-23  but are equitable and consistent in application.
 109-24        (b)  Section 3.352(d) of this Act does not prevent the
 109-25  commission from enforcing this subtitle.
 109-26        (c)  The commission has exclusive jurisdiction to implement
 109-27  competitive safeguards.
  110-1        Sec. 3.452.  UNBUNDLING.  (a)  An incumbent local exchange
  110-2  company shall, at a minimum, unbundle its network to the extent
  110-3  ordered by the Federal Communications Commission.
  110-4        (b)  Before the adoption of the pricing rules required by
  110-5  Section 3.457 of this Act, the commission shall hold a hearing and
  110-6  adopt an order on the issue of requiring further unbundling of
  110-7  local exchange company services.
  110-8        (c)  The commission may order further unbundling only after
  110-9  considering the public interest and competitive merits of further
 110-10  unbundling.  The commission may proceed by rulemaking or, if
 110-11  requested by a party, shall proceed by evidentiary hearing.
 110-12        (d)  Following unbundling, the commission may assign the
 110-13  unbundled components to the appropriate Basket according to the
 110-14  purposes and intents of those Baskets.
 110-15        Sec. 3.453.  RESALE.  (a)  An incumbent local exchange
 110-16  company serving one million or more access lines or electing the
 110-17  incentive regulation plan under Subtitle H of this title shall file
 110-18  a usage sensitive loop resale tariff by September 1, 1995.  An
 110-19  incumbent local exchange company serving fewer than one million
 110-20  access lines or not electing under Subtitle H of this title shall
 110-21  file a resale tariff within 60 days of the date on which a
 110-22  certificate of operating authority or service provider certificate
 110-23  of operating authority is granted under Subtitle F of this title.
 110-24        (b)  "Loop" resale as used in this section means the purchase
 110-25  of the local distribution channel or "loop" facility from the
 110-26  incumbent local exchange company for the purpose of resale to end
 110-27  user customers.
  111-1        (c)  The commission shall conduct any proceeding it
  111-2  determines appropriate to determine the rates, terms, and
  111-3  conditions for this tariff within 180 days of filing.  The
  111-4  commission may:
  111-5              (1)  only approve a usage sensitive rate that recovers
  111-6  the total long run incremental cost of the loop on an unseparated
  111-7  basis, plus an appropriate contribution to joint and common costs;
  111-8  and
  111-9              (2)  only permit a holder of a certificate of
 111-10  convenience or necessity, certificate of operating authority, or
 111-11  service provider certificate of operating authority to purchase
 111-12  from the resale tariff, except as provided by Subsection (f)(1) or
 111-13  (f)(2) of this section.
 111-14        (d)  On September 1, 1995, a provider of telecommunications
 111-15  service may not impose any restriction on the resale or sharing of
 111-16  any service for which it is not a dominant provider nor, as to any
 111-17  incumbent local exchange company electing alternative regulation
 111-18  under Subtitle H of this title, for any service entitled to
 111-19  regulatory treatment under Basket III as described by Section 3.356
 111-20  of this Act.
 111-21        (e)  A holder of a certificate of operating authority or
 111-22  service provider certificate of operating authority has the
 111-23  reciprocal obligation to permit local exchange companies to resell
 111-24  its existing loop facilities at its regularly published rates if
 111-25  the local exchange company has no loop facilities and has a request
 111-26  for service.
 111-27        (f)(1)  The commission shall eliminate all resale
  112-1  prohibitions in an electing incumbent local exchange company's
  112-2  tariffs on:
  112-3                    (A)  completion of the commission's costing and
  112-4  pricing rulemaking;
  112-5                    (B)  completion of rate rebalancing of the
  112-6  incumbent local exchange company rates required by Section 3.457 of
  112-7  this Act; and
  112-8                    (C)  removal of all prohibitions on incumbent
  112-9  local exchange companies providing interLATA service.
 112-10              (2)  The commission shall eliminate all resale
 112-11  prohibitions in the tariffs of an electing company of one million
 112-12  access lines or more on removal of all prohibitions on such
 112-13  company's provision of interLATA service.
 112-14              (3)  When the commission eliminates the resale
 112-15  prohibitions under this subsection, it shall continue to prohibit
 112-16  the resale of local exchange or directory assistance flat rate
 112-17  services as a substitute for usage sensitive services.  If the
 112-18  commission finds that the rate for a particular service or function
 112-19  will, as a result of the costing and pricing proceeding, be less
 112-20  than the cost of providing the service or function and that the
 112-21  difference in rate and cost will not be recovered from the
 112-22  universal service fund, the service may be offered for resale only
 112-23  to the same class of customer as sold to by the incumbent local
 112-24  exchange company.  In any event, after resale prohibitions are
 112-25  removed, residence service may not be resold to business customers.
 112-26        (g)  Nothing herein alters resale or sharing arrangements
 112-27  presently permitted in incumbent local exchange company tariffs
  113-1  existing on September 1, 1995, or tariffs proposed by an incumbent
  113-2  local exchange company serving more than five million access lines
  113-3  in this state that are filed on or before May 1, 1995.
  113-4        Sec. 3.454.  IMPUTATION.  (a)  Not later than December 1,
  113-5  1996, the commission shall adopt rules governing imputation of the
  113-6  price of a service.
  113-7        (b)  Imputation is a regulatory policy the commission shall
  113-8  apply to prevent an incumbent local exchange company from selling a
  113-9  service or function to another telecommunications utility at a
 113-10  price that is higher than the rate the incumbent local exchange
 113-11  company implicitly includes in services it provides to its retail
 113-12  customers.
 113-13        (c)  The commission may require imputation only of the price
 113-14  of a service that is:
 113-15              (1)  not generally available from a source other than
 113-16  the incumbent local exchange company; and
 113-17              (2)  necessary for the competitor to provide its
 113-18  competing services.
 113-19        (d)  The commission may not require imputation of the price
 113-20  to a local exchange telephone service while the price is capped
 113-21  under Subtitle H or I of this title.
 113-22        (e)  The price of switched access service shall be imputed to
 113-23  the price of each service for which switched access service is a
 113-24  component until switched access service is competitively available.
 113-25        (f)  The commission may not require imputation on a
 113-26  rate-element-by-element basis but only on a service-by-service
 113-27  basis.
  114-1        (g)  For a service provided under a customer specific
  114-2  contract for which imputation may be required under Subsection (c)
  114-3  of this section, the commission may not require imputation on a
  114-4  rate-element-by-element basis but only on a service-by-service
  114-5  basis within the contract.
  114-6        (h)  The incumbent local exchange company shall demonstrate
  114-7  that the price it charges for its retail service recovers the costs
  114-8  of providing the service.  For purposes of this subsection, the
  114-9  costs of providing the service is defined as the sum of:
 114-10              (1)  specifically tariffed premium rates for the
 114-11  noncompetitive services or service functions, or elements of these
 114-12  noncompetitive services or service functions (or their functional
 114-13  equivalent) that are used to provide the service;
 114-14              (2)  the total service long run incremental costs of
 114-15  the competitive services or service functions that are used;
 114-16              (3)  any costs, not otherwise reflected in Subdivision
 114-17  (1) or (2) of this subsection, that are specifically associated
 114-18  with the provision of the service or group of services; and
 114-19              (4)  any cost or surcharge associated with an explicit
 114-20  subsidy that is applied to all providers of the service for the
 114-21  purpose of promoting universal service.
 114-22        (i)  The commission may waive an imputation requirement for
 114-23  any public interest service such as 9-1-1 service and dual party
 114-24  relay service if the commission determines that the waiver is in
 114-25  the public interest.
 114-26        Sec. 3.455.  Telecommunications Number Portability.  (a)
 114-27  Because a uniform national number plan is valuable and necessary to
  115-1  the state, the commission by rule shall adopt guidelines governing
  115-2  telecommunications number portability and the assignment of
  115-3  telephone numbers in a competitively neutral manner.  The
  115-4  commission rules may not be inconsistent with the rules and
  115-5  regulations of the Federal Communications Commission regarding
  115-6  telecommunications number portability.
  115-7        (b)  In this Act, "telecommunications number portability"
  115-8  means the ability of a user of telecommunications services, to the
  115-9  extent technically feasible, to retain an existing telephone number
 115-10  without impairing the quality, reliability, or convenience of
 115-11  service when changing from one provider of telecommunications
 115-12  service to another provider.
 115-13        (c)  As an interim measure, the commission shall adopt
 115-14  reasonable mechanisms to allow consumers to retain their telephone
 115-15  numbers.  At a minimum, these mechanisms shall include the use of
 115-16  call forwarding functions and direct inward dialing for those
 115-17  purposes.  An incumbent local exchange company with one million
 115-18  access lines or more shall file tariffs before November 1, 1995,
 115-19  and the commission, before March 1, 1996, shall determine
 115-20  reasonable rates to be charged for call forwarding functions,
 115-21  direct inward dialing, and any other mechanism the commission
 115-22  determines should be used as an interim number portability measure
 115-23  by a new entrant.  An incumbent local exchange company with fewer
 115-24  than one million access lines where a certificate of operating
 115-25  authority or a service provider certificate of operating authority
 115-26  has been granted shall file tariffs within 60 days after the date
 115-27  of a bona fide request, and the commission, within 60 days after
  116-1  the date the tariffs are filed, shall determine reasonable rates to
  116-2  be charged for call forwarding functions, direct inward dialing,
  116-3  and any other mechanism the commission determines should be used as
  116-4  an interim number portability measure by a new entrant.
  116-5        Sec. 3.456.  Expanded Interconnection.  (a)  Not later than
  116-6  September 1, 1996, the commission shall adopt rules for expanded
  116-7  interconnection that:
  116-8              (1)  are consistent with the rules and regulations of
  116-9  the Federal Communications Commission relating to expanded
 116-10  interconnection;
 116-11              (2)  treat intrastate private line services as special
 116-12  access service; and
 116-13              (3)  provide that if an incumbent local exchange
 116-14  company is required to provide expanded interconnection to another
 116-15  local exchange company, the second local exchange company shall, in
 116-16  a like manner, provide expanded interconnection to the first
 116-17  company.
 116-18        (b)  This section does not prohibit the commission from
 116-19  completing a proceeding pending on April 1, 1995, that addresses
 116-20  expanded interconnection.
 116-21        Sec. 3.457.  COSTING AND PRICING.  (a)(1)  The commission
 116-22  shall complete a pricing rulemaking and adopt a pricing rule by
 116-23  April 1, 1997.  Companies subject to that rule shall file cost
 116-24  studies and necessary supporting data not later than November 1,
 116-25  1996, unless specific waivers are authorized.
 116-26              (2)  The commission has 85 days after the date a cost
 116-27  study is submitted to administratively approve it or to order that
  117-1  changes be made, except that the review process may be suspended
  117-2  for 30 days upon motion of the presiding examiner or for good cause
  117-3  shown by any party that demonstrates a justiciable interest.  Such
  117-4  request must be made within the first 45 days of the review
  117-5  process.  If the commission delegates approval of the cost study to
  117-6  an administrative law judge or hearings examiner, the judge or
  117-7  examiner has 85 days, or 115 days if suspended, to administratively
  117-8  approve it or to order that changes be made.  The commission may
  117-9  not conduct a contested case to approve a cost study submitted
 117-10  under this section.
 117-11              (3)  Any party may appeal to the commission an
 117-12  administrative determination by an administrative law judge or
 117-13  hearings examiner under Subdivision (2) of this subsection within
 117-14  five days after the date of notification of the determination.  The
 117-15  commission shall rule on the appeal within 30 days after the date
 117-16  it receives the appeal.
 117-17              (4)  If the commission or an administrative law judge
 117-18  or hearings examiner orders a cost study to be changed, the judge
 117-19  or examiner shall order the company to make those changes within a
 117-20  period that is commensurate with the complexity of the study and
 117-21  the need to complete the cost studies in a timely manner.
 117-22              (5)  The parties shall be permitted expedited discovery
 117-23  after a cost study is submitted.  The commission shall fairly
 117-24  evaluate the comments or pleadings filed by any party regarding the
 117-25  cost study.
 117-26        (b)  In adopting the pricing rule, the commission shall:
 117-27              (1)  ensure that prices for monopoly services remain
  118-1  affordable;
  118-2              (2)  ensure that prices for competitive services may
  118-3  not be:
  118-4                    (A)  unreasonably preferential, prejudicial, or
  118-5  discriminatory;
  118-6                    (B)  subsidized either directly or indirectly by
  118-7  noncompetitive services; or
  118-8                    (C)  predatory or anticompetitive; and
  118-9              (3)  require that each service recover the appropriate
 118-10  cost, including appropriate joint and common costs, of any and all
 118-11  facilities and functions used to provide that service.
 118-12        (c)  The commission shall allow an incumbent local exchange
 118-13  company that is not a Tier 1 local exchange company as of September
 118-14  1, 1995, at that company's option, to adopt the cost studies
 118-15  approved by the commission for a Tier 1 local exchange company.
 118-16        Sec. 3.458.  INTERCONNECTION.  (a)  "Interconnection" for the
 118-17  purposes of this section means the termination of local
 118-18  intraexchange traffic of another local exchange company or holder
 118-19  of a service provider certificate of operating authority within the
 118-20  local calling area of the terminating local exchange company or
 118-21  certificate holder for calls that originate and terminate in this
 118-22  state.  The provisions of this section do not govern rates for the
 118-23  existing termination of cellular or interexchange traffic.
 118-24        (b)  The commission shall require all providers of
 118-25  telecommunications services to maintain interoperable networks.
 118-26  Telecommunications providers shall negotiate network
 118-27  interconnectivity, charges, terms, and conditions, and in that
  119-1  event the commission shall approve the interconnection rates.  The
  119-2  commission may resolve disputes filed by a party to those
  119-3  negotiations.
  119-4        (c)  In the absence of a mutually agreed compensation rate
  119-5  negotiated under Subsection (b) of this section, each carrier shall
  119-6  reciprocally terminate the other carrier's traffic at no charge for
  119-7  the first nine months after the date on which the first call is
  119-8  terminated between the carriers.
  119-9        (d)  The commission shall, within the nine-month period
 119-10  prescribed by Subsection (c) of this section, complete a proceeding
 119-11  to establish reciprocal interconnection rates, terms, and
 119-12  conditions.  The commission shall establish reciprocal
 119-13  interconnection rates, terms, and conditions based solely on the
 119-14  commission proceeding.  In establishing the initial interconnection
 119-15  rate, the commission may not require cost studies from the new
 119-16  entrant.  Not earlier than three years after the date on which the
 119-17  first call is terminated between the carriers, the commission may,
 119-18  if the commission receives a complaint, require cost studies by a
 119-19  new entrant for the purpose of establishing interconnection rates.
 119-20        (e)  The incumbent local exchange company may adopt the
 119-21  interconnection rates approved for a larger incumbent local
 119-22  exchange company without the commission requirement of additional
 119-23  cost justification.  If an incumbent local exchange company does
 119-24  not adopt the interconnection rates of a larger company, or
 119-25  negotiates under Subsection (b) of this section, the company is
 119-26  governed by Subsections (c) and (d) of this section.  If the
 119-27  incumbent local exchange company adopts the interconnection rates
  120-1  of another incumbent local exchange company, the new entrant may
  120-2  adopt those rates as the new entrant's interconnection rates.  If
  120-3  the incumbent local exchange company elects to file its own tariff,
  120-4  the new entrant must also file its own interconnection tariff.
  120-5        (f)  The commission may make generic rules and set policies
  120-6  governing interconnection arrangements.  The commission may
  120-7  establish rules that are responsive to changes in federal law or
  120-8  developments in the local exchange market.
  120-9        (g)  The commission may not use interconnection rates under
 120-10  this section as a basis to alter interconnection rates for other
 120-11  services.
 120-12        (h)  The commission has exclusive jurisdiction over any
 120-13  holder of a certificate of convenience and necessity, certificate
 120-14  of operating authority, or service provider certificate of
 120-15  operating authority for the determination of rates, terms, and
 120-16  conditions for interconnection.
 120-17        Sec. 3.459.  INCUMBENT LOCAL EXCHANGE COMPANY REQUIREMENTS.
 120-18  (a)  An incumbent local exchange company may not unreasonably:
 120-19              (1)  discriminate against another provider by refusing
 120-20  access to the local exchange;
 120-21              (2)  refuse or delay interconnections to another
 120-22  provider;
 120-23              (3)  degrade the quality of access provided to another
 120-24  provider;
 120-25              (4)  impair the speed, quality, or efficiency of lines
 120-26  used by another provider;
 120-27              (5)  fail to fully disclose in a timely manner on
  121-1  request all available information necessary for the design of
  121-2  equipment that will meet the specifications of the local exchange
  121-3  network; or
  121-4              (6)  refuse or delay access by any person to another
  121-5  provider.
  121-6        (b)  This section may not be construed to require an
  121-7  incumbent local exchange company to provide expanded
  121-8  interconnection as that term is defined by the Federal
  121-9  Communications Commission.
 121-10        (c)  Nothing in this Act shall require the commission to
 121-11  change the rate treatment for Bulletin Board Systems in residences
 121-12  established by the commission in Docket No. 8387 nor is anything in
 121-13  this Act intended to regulate or tax Bulletin Board Systems or
 121-14  Internet Service Providers or to require any changes in the rates
 121-15  charged to these entities under existing tariffs, provided they
 121-16  only provide enhanced or information services and not
 121-17  telecommunications services.
 121-18        Sec. 3.460.  COMMISSION AUTHORITY.  (a)  The commission has
 121-19  all authority necessary to establish procedures with respect to the
 121-20  policies stated in Sections 3.451, 3.452, 3.453, 3.454, 3.455,
 121-21  3.456, 3.457, and 3.458 of this Act and to resolve any disputes
 121-22  arising under those policies.
 121-23        (b)  The commission has the authority to and shall adopt
 121-24  procedures for the processing of proceedings under Sections 3.452
 121-25  and 3.453 of this Act, including the authority to limit discovery
 121-26  and, except for the office, align parties having similar positions
 121-27  for purposes of cross-examination.  In adopting procedures under
  122-1  this section and in resolving disputes, the commission shall
  122-2  consider the impact on consumers, competitors, and the incumbent
  122-3  local exchange company.  The commission may not implement, by order
  122-4  or rule, any requirement that is contrary to any applicable federal
  122-5  rule or law.
  122-6        Sec. 3.461.  APPLICATIONS AND RULES.  The obligations
  122-7  prescribed by Sections 3.452, 3.453, 3.455, 3.456, and 3.458 of
  122-8  this Act may not, until September 1, 1998, be applied to incumbent
  122-9  local exchange companies serving fewer than 31,000 access lines.
 122-10  After September 1, 1998, the obligations prescribed by Sections
 122-11  3.452, 3.453, and 3.456 of this Act may be applied only on a bona
 122-12  fide request from a certified telecommunications utility.  In
 122-13  applying these rules to these incumbent local exchange companies,
 122-14  the commission may modify the rules as it finds in the public
 122-15  interest.
 122-16        Sec. 3.462.  REVIEW OF IMPLEMENTATION.  The provisions of
 122-17  Sections 3.452, 3.454, and 3.457 of this Act do not initially apply
 122-18  to incumbent local exchange companies that as of September 1, 1995,
 122-19  have 31,000 or more access lines in this state but fewer than one
 122-20  million access lines in this state. The obligations prescribed by
 122-21  those sections may be applied to such companies only on a bona fide
 122-22  request from a holder of a certificate of operating authority or
 122-23  service provider certificate of operating authority. In applying
 122-24  these rules to these incumbent local exchange companies, the
 122-25  commission may modify the rules as it finds in the public interest.
 122-26        Sec. 3.463.  INFRASTRUCTURE SHARING.  (a)  The commission
 122-27  shall prescribe rules that require a local exchange company to
  123-1  share public switched network infrastructure and technology with a
  123-2  requesting local exchange company that lacks economies of scale or
  123-3  scope, for the purpose of enabling that requesting company to
  123-4  provide telecommunications services in the geographic areas to
  123-5  which the requesting company is designated as the sole carrier of
  123-6  last resort.
  123-7        (b)  The rules governing the sharing:
  123-8              (1)  may not require a local exchange company to make a
  123-9  decision that is uneconomic or adverse to the public;
 123-10              (2)  shall permit, but not require, joint ownership and
 123-11  operation of public switched network infrastructure and services by
 123-12  or among the local exchange companies sharing infrastructure; and
 123-13              (3)  shall establish conditions that promote
 123-14  cooperation between local exchange companies.
 123-15                  SUBTITLE K.  BROADCASTER SAFEGUARDS
 123-16        Sec. 3.501.  CUSTOMER PROPRIETARY NETWORK INFORMATION (CPNI).
 123-17  (a)  In this section:
 123-18              (1)  "Specific customer proprietary network
 123-19  information" (specific CPNI) means:
 123-20                    (A)  information that relates to the quantity,
 123-21  technical configuration, type, destination, or amount of use of
 123-22  voice or data telecommunications services subscribed to by any
 123-23  customer of a telecommunications utility, but excluding wireless
 123-24  telecommunications providers, and is made available to the utility
 123-25  by the customer solely by virtue of the utility-customer
 123-26  relationship;
 123-27                    (B)  information contained in the bills relating
  124-1  to telecommunications services received by a customer of a
  124-2  telecommunications utility; and
  124-3                    (C)  any other information concerning the
  124-4  customer as is available to the telecommunications utility by
  124-5  virtue of the customer's use of the telecommunications utility
  124-6  service.  The term does not include subscriber list information.
  124-7              (2)  "Subscriber list information" means any
  124-8  information that:
  124-9                    (A)  identifies the listed names of subscribers
 124-10  of a telecommunications utility or those subscribers' telephone
 124-11  numbers, addresses, or primary advertising classifications, or any
 124-12  combination of those listed names, numbers, addresses, or
 124-13  classifications; and
 124-14                    (B)  the telecommunications utility or an
 124-15  affiliate has published or accepted for future publication.
 124-16        (b)  Except as preempted by the Federal Communications
 124-17  Commission, a telecommunications utility may not use specific CPNI
 124-18  for commercial purposes other than the sale, provision, or billing
 124-19  and collection of telecommunications or enhanced services.  Nothing
 124-20  herein prohibits the use of specific CPNI with the customer's
 124-21  consent or the provision of specific CPNI to an affiliate
 124-22  telecommunications provider.
 124-23        (c)  Not later than September 1, 1996, the commission shall
 124-24  adopt rules that are consistent with rules on this subject adopted
 124-25  by the Federal Communications Commission.  Rules adopted under this
 124-26  section shall:
 124-27              (1)  require each telecommunications utility to notify
  125-1  each subscriber annually, through means approved by the commission,
  125-2  of the subscriber's right to reject the utility's use of specific
  125-3  CPNI for purposes of marketing other services;
  125-4              (2)  in the event the Federal Communications Commission
  125-5  adopts new CPNI rules that no longer preempt a state's authority to
  125-6  adopt inconsistent rules, the commission shall institute a
  125-7  proceeding regarding the appropriate use of CPNI by all
  125-8  telecommunications utilities, provided that any rule, policy, or
  125-9  order adopted by the commission may not be discriminatory in its
 125-10  application to telecommunications utilities; and
 125-11              (3)  require each telecommunications utility, if the
 125-12  utility makes nonproprietary aggregate CPNI available to its
 125-13  affiliates, to make that information available on the same terms
 125-14  and conditions to unaffiliated entities.
 125-15        (d)  The commission may not implement any rules regarding
 125-16  CPNI applicable to an incumbent local exchange company having
 125-17  100,000 or fewer access lines in service in this state that are
 125-18  more burdensome to the company than the CPNI rules of the Federal
 125-19  Communications Commission, except that this prohibition does not
 125-20  apply to uses of CPNI that are unrelated to telecommunications
 125-21  services or products.
 125-22        Sec. 3.502.  AUDIO VIDEO.  (a)  In this Act:
 125-23              (1)  "Video programming" means programming provided by
 125-24  or generally considered comparable to programming provided by a
 125-25  television broadcast station as defined by the Federal
 125-26  Communications Commission under Section 602, Communications Act of
 125-27  1934 (47 U.S.C. Section 522).
  126-1              (2)  "Audio programming" means programming provided by
  126-2  or generally considered comparable to programming provided by an AM
  126-3  or FM broadcast station.  However, the term does not include any
  126-4  audio-related services of the type offered by the incumbent local
  126-5  exchange company as of September 1, 1995.
  126-6        (b)  An incumbent local exchange company may not provide
  126-7  audio or video programming in this state.  However, nothing herein
  126-8  prohibits a separate corporate affiliate of an incumbent local
  126-9  exchange company from providing audio or video programming.
 126-10        (c)  A separate corporate affiliate of an incumbent local
 126-11  exchange company providing audio or video programming:
 126-12              (1)  shall obtain telecommunications services from its
 126-13  affiliate incumbent local exchange company at tariffed rates, or if
 126-14  those services are not provided under a tariff, at the fair market
 126-15  value or, in the event there is no fair market value or that value
 126-16  is less than long run incremental cost (LRIC), then the rate is
 126-17  equal to the service's LRIC;
 126-18              (2)  shall purchase, use, rent, or access information,
 126-19  services, space, or devices that are not telecommunications
 126-20  services from its affiliate incumbent local exchange company
 126-21  consistent with the affiliate transaction rules promulgated by the
 126-22  Federal Communications Commission then in effect, provided that in
 126-23  no case shall those transactions be valued at less than the greater
 126-24  of net book value or fair market value, whichever is applicable;
 126-25              (3)  shall maintain books, records, and accounts that
 126-26  are separate from those of an incumbent local exchange company,
 126-27  which books, records, and accounts shall be kept in accordance with
  127-1  generally accepted accounting principles;
  127-2              (4)  shall prepare financial statements that are not
  127-3  consolidated with those of an incumbent local exchange company,
  127-4  provided, however, that financial statements and  consolidated tax
  127-5  returns may be prepared that consolidate the operation of the
  127-6  separate corporate affiliate with a parent company and its other
  127-7  subsidiaries;
  127-8              (5)  may not incur debt in a manner that would permit a
  127-9  creditor on default to have recourse to the assets of the incumbent
 127-10  local exchange company;
 127-11              (6)  may not use the names, trademarks, or service
 127-12  marks of the incumbent local exchange company, but this does not
 127-13  prohibit the use of those names or marks if they are used in common
 127-14  with the parent, affiliate, or owner of the incumbent local
 127-15  exchange company;
 127-16              (7)  shall perform its marketing and sales functions
 127-17  and operation in compliance with Open Network Architecture and the
 127-18  affiliate transaction rules promulgated by the Federal
 127-19  Communications Commission then in effect;
 127-20              (8)  may not have any directors, officers, or employees
 127-21  in common with the incumbent local exchange company; and
 127-22              (9)  shall maintain a separate corporate entity from
 127-23  the incumbent local exchange company.
 127-24        (d)  As to its separate affiliate providing video or audio
 127-25  programming, an incumbent local exchange company:
 127-26              (1)  may not develop a rate for a telecommunications
 127-27  service or deploy a telecommunications service to primarily benefit
  128-1  its separate affiliate for the affiliate's video or audio
  128-2  programming unless  that rate or service is available on a
  128-3  nondiscriminatory basis to all purchasers;
  128-4              (2)  may not be unreasonably preferential in the
  128-5  deployment of telecommunications services for its separate
  128-6  affiliates' audio or video programming;
  128-7              (3)  may not enter into customer specific contracts for
  128-8  the provision of tariffed telecommunications services with its
  128-9  separate affiliate unless substantially the same terms and
 128-10  conditions of the contract are generally available to nonaffiliated
 128-11  interests;
 128-12              (4)  shall maintain and file with the commission copies
 128-13  of all contracts or arrangements between the incumbent local
 128-14  exchange company and the separate affiliate and report the contract
 128-15  amount for each cash and noncash transaction with the separate
 128-16  affiliate, including payments for costs of any goods and services
 128-17  or any property right or thing or for interest expense;
 128-18              (5)  may not transfer assets to the separate affiliate
 128-19  unless those assets are priced no lower than assets that are
 128-20  available in an arm's-length transaction to third parties;
 128-21              (6)  shall value any assets that are transferred to a
 128-22  separate affiliate at the greater of net book or fair market value;
 128-23              (7)  shall value any assets that are transferred to it
 128-24  by its separate affiliate at the lesser of net book value or fair
 128-25  market value except instances where Federal Communications
 128-26  Commission or commission rules or regulations permit in-arrears
 128-27  payment for tariffed telecommunications services or the investment
  129-1  by an affiliate of dividends or profits derived from the incumbent
  129-2  local exchange company;
  129-3              (8)  shall comply with all applicable Federal
  129-4  Communications Commission cost and other accounting rules;
  129-5              (9)  may not have any directors, officers, or employees
  129-6  in common with the separate affiliate;
  129-7              (10)  may not own any property in common with the
  129-8  separate affiliate; and
  129-9              (11)  shall provide, if it offers telecommunications
 129-10  equipment or services to audio and video programming providers,
 129-11  those services:
 129-12                    (A)  at just and reasonable rates that are
 129-13  tariffed, so long as the commission rules require those tariffs,
 129-14  under nondiscriminatory terms and conditions; and
 129-15                    (B)  if the equipment and services are not
 129-16  subject to regulation, on similar terms and conditions to all video
 129-17  or audio programming providers.
 129-18        (e)  In addition to the requirements and prohibitions
 129-19  prescribed by Subsection (d) of this section, an incumbent local
 129-20  exchange company shall, if it offers billing and collection
 129-21  services to nonaffiliated audio and video programming providers,
 129-22  provide those services under nondiscriminatory terms and
 129-23  conditions.  Nothing herein requires an incumbent local exchange
 129-24  company to offer billing and collection service to nonaffiliated
 129-25  programmers, and an incumbent local exchange company may exclude
 129-26  certain classes of programmers from its billing and collection
 129-27  services.
  130-1        (f)  An incumbent local exchange company shall have a
  130-2  compliance audit performed every three years by an independent
  130-3  accounting firm.  The audit shall be conducted for the purpose of
  130-4  determining whether the incumbent local exchange company, during
  130-5  the preceding three years, is in compliance with all of the
  130-6  requirements imposed by this section regarding the  incumbent local
  130-7  exchange company.  The independent accounting firm shall file the
  130-8  report with the commission.  If the report concludes that the
  130-9  incumbent local exchange company is not in compliance with any
 130-10  portion of this section, the commission shall institute appropriate
 130-11  action against the incumbent local exchange company.  The report
 130-12  shall be considered commercial or financial information that is
 130-13  confidential by statute under Chapter 552, Government Code.
 130-14        (g)  Except as otherwise specifically provided by this Act,
 130-15  the commission's jurisdiction over affiliates of incumbent local
 130-16  exchange companies that are audio and video programmers is limited
 130-17  to the requirements of this section and does not extend to subjects
 130-18  not specifically provided herein.
 130-19        (h)  This section does not apply to an incumbent local
 130-20  exchange company having 100,000 or fewer total access lines in
 130-21  service in this state.
 130-22        (i)  A company to which this section applies may petition the
 130-23  commission for a waiver from any of the requirements imposed
 130-24  herein.  The commission shall grant the waiver if it is in the
 130-25  public interest to do so, taking into account whether the need for
 130-26  the restriction still exists in the market involved.  The
 130-27  commission may revoke any waiver granted if it is shown that
  131-1  conditions under which the waiver was granted have materially
  131-2  changed and it is in the public interest to do so.
  131-3        Sec. 3.503.  ADVERTISING.  (a)  Advertising agency services
  131-4  include the functions generally performed by a general advertising
  131-5  agency, including advertising development, advertising purchase,
  131-6  advertising consultation, advertising copywriting, and advertising
  131-7  research.
  131-8        (b)  An incumbent local exchange company may not sell
  131-9  advertising agency services to nonaffiliates in this state.
 131-10  Nothing herein prohibits a local exchange company from:
 131-11              (1)  any activities to promote or sell
 131-12  telecommunications services and equipment, including voice, data,
 131-13  video dial tone, video programming, audio programming, cellular,
 131-14  interactive media, software, and other related services and
 131-15  equipment; or
 131-16              (2)  any activities that seek to enhance or promote the
 131-17  use of the telecommunications network.
 131-18        (c)  A separate corporate affiliate of an  incumbent local
 131-19  exchange company may engage in advertising agency activities, but
 131-20  in the conduct of that business a separate corporate affiliate:
 131-21              (1)  shall maintain books, records, and accounts that
 131-22  are separate from those of  an incumbent  local exchange company,
 131-23  which books, records, and accounts shall be kept in accordance with
 131-24  generally accepted accounting principles;
 131-25              (2)  shall prepare financial statements that are not
 131-26  consolidated with those of an incumbent  local exchange company
 131-27  provided, however, that financial statements and consolidated tax
  132-1  returns may be prepared that consolidate the operation of the
  132-2  separate corporate affiliate with a parent company and its other
  132-3  subsidiaries;
  132-4              (3)  may not incur debt in a manner that would permit a
  132-5  creditor on default to have recourse to the assets of the incumbent
  132-6  local exchange company;
  132-7              (4)  may not have any directors, officers, or employees
  132-8  in common with the incumbent local exchange company;
  132-9              (5)  shall maintain a separate corporate entity from
 132-10  the incumbent local exchange company; and
 132-11              (6)  may not use the names, trademarks, or service
 132-12  marks of the  incumbent local exchange company, but this does not
 132-13  prohibit the use of those names or marks where they are used in
 132-14  common with the parent, affiliate, or owner of the incumbent local
 132-15  exchange company.
 132-16        (d)  Except as provided by Subsection (b) of this section,
 132-17  an incumbent local exchange company that has an affiliate that
 132-18  provides advertising agency services on behalf of nonaffiliates in
 132-19  this state may not jointly market that affiliate's advertising
 132-20  agency services in connection with telecommunications services and
 132-21  equipment provided by the incumbent local exchange company.  This
 132-22  prohibition does not apply to advertising in telephone directories
 132-23  in whatever form disseminated.
 132-24        (e)  Nothing herein prevents the incumbent local exchange
 132-25  company from providing telephone solicitation services for
 132-26  charitable organizations.
 132-27        (f)  This section does not apply to an incumbent local
  133-1  exchange company having 100,000 or fewer total access lines in
  133-2  service in this state.
  133-3        (g)  A company to which this section applies may petition the
  133-4  commission for a waiver from any of the requirements imposed
  133-5  herein.  The commission shall grant the waiver if it is in the
  133-6  public interest to do so, taking into account whether the need for
  133-7  the restriction still exists in the market involved.  The
  133-8  commission may revoke any waiver granted if it is shown that
  133-9  conditions under which the waiver was granted have materially
 133-10  changed and it is in the public interest to do so.
 133-11        Sec. 3.504.  VIDEO CARRIAGE.  (a)  Subject to a programmer
 133-12  operating as a common channel manager under the provisions of
 133-13  Subsection (c) of this section, each incumbent local exchange
 133-14  company that provides telecommunications services that are used in
 133-15  the transmission of video programming directly to subscribers or
 133-16  that enables customers to access video programming shall permit
 133-17  local full-power, FCC-licensed broadcast stations, to the extent
 133-18  capacity permits, access to these telecommunications services at
 133-19  tariffed rates or, if those services are not provided under a
 133-20  tariff, on similar terms and conditions as other video programmers
 133-21  that provide similar programming.  The incumbent local exchange
 133-22  company shall transmit the signals delivered to it by the local
 133-23  broadcast station without material degradation, and the quality
 133-24  offered may not be less than that made available to other video
 133-25  programmers.
 133-26        (b)  Each incumbent local exchange company that provides
 133-27  telecommunications services that are used in the transmission of
  134-1  video programming directly to subscribers or to enable customers to
  134-2  access video programming:
  134-3              (1)  may not unreasonably discriminate among
  134-4  programming providers with respect to transmission of their
  134-5  signals;
  134-6              (2)  may not delete, change, or alter any copyright
  134-7  identification transmitted as part of the programming signal; and
  134-8              (3)  shall, if it provides a "video dial tone service"
  134-9  with a level one gateway, as that term is defined by the Federal
 134-10  Communications Commission, make available to programmers a menu or
 134-11  programming guide on which programmers may display a listing of the
 134-12  stations required to be carried by the programmer under Subsection
 134-13  (c) of this section.
 134-14        (c)  To the extent that federal law and Federal
 134-15  Communications Commission rules and orders permit, a programmer
 134-16  operating as a common channel manager that purchases for commercial
 134-17  purposes 50 or more analog channels on a local exchange video dial
 134-18  tone level one platform over which video programming is made
 134-19  available to subscribers, shall make available to subscribers local
 134-20  full-power, Federal Communications Commission-licensed television
 134-21  stations, provided that retransmission is granted under Subsection
 134-22  (d) of this section.  A programmer subject to this section shall be
 134-23  required to make available up to six television stations, except
 134-24  that in markets that contain a county having a population of more
 134-25  than one million, the programmer shall be required to make
 134-26  available up to nine full-power, Federal Communications
 134-27  Commission-licensed local broadcast stations.  The programmer shall
  135-1  make the selection of the broadcast channels to be carried under
  135-2  this section.
  135-3        (d)  A Federal Communications Commission-licensed television
  135-4  station seeking carriage under Subsection (c) of this section shall
  135-5  grant retransmission consent to the programmer and to the incumbent
  135-6  local exchange company.  However, nothing in this Act requires a
  135-7  programmer or incumbent local exchange company to provide monetary
  135-8  payment or other valuable consideration in exchange for that
  135-9  carriage.
 135-10        (e)  This section does not apply to  an incumbent local
 135-11  exchange company having 100,000 or fewer total access lines in
 135-12  service in this state or to a programmer on the video dial tone
 135-13  platform of that  incumbent local exchange company.
 135-14        (f)  A company to which this section applies may petition the
 135-15  commission for a waiver from any of the requirements imposed
 135-16  herein.  The commission shall grant the waiver if it is in the
 135-17  public interest to do so, taking into account whether the need for
 135-18  the restriction still exists in the market involved.  The
 135-19  commission may revoke any waiver granted if it is shown that
 135-20  conditions under which the waiver was granted have materially
 135-21  changed and it is in the public interest to do so.
 135-22        (g)  Except as otherwise specifically provided by this Act,
 135-23  the commission's jurisdiction over affiliates of incumbent local
 135-24  exchange companies that are video programmers is limited to the
 135-25  requirements of this section and does not extend to subjects not
 135-26  specifically provided herein.
 135-27        (h)  This section expires August 31, 1999.
  136-1        Sec. 3.505.  AUDIO CARRIAGE.  (a)  To the extent that federal
  136-2  law and Federal Communications Commission rules and orders permit,
  136-3  and consistent with technical specifications, a programmer
  136-4  operating as a common channel manager that makes available for
  136-5  commercial purposes to subscribers 12 or more channels of audio
  136-6  programming similar to broadcasts of Federal Communications
  136-7  Commission-licensed radio stations on an incumbent local exchange
  136-8  company's level one video dial tone platform shall make available
  136-9  to subscribers local Federal Communications Commission-licensed
 136-10  radio stations, provided that retransmission is granted under
 136-11  Subsection (b) of this section.  A programmer subject to this
 136-12  subsection may not be required to make available more than
 136-13  one-third of its analog audio channels to radio stations.  The
 136-14  programmer shall make the selection of the radio stations to be
 136-15  carried under this section.
 136-16        (b)  A local Federal Communications Commission-licensed radio
 136-17  station seeking carriage under Subsection (a) of this section shall
 136-18  grant retransmission consent to the programmer and the incumbent
 136-19  local exchange company.  However, nothing in this Act requires a
 136-20  programmer or incumbent local exchange company to provide monetary
 136-21  payment or other valuable consideration in exchange for that
 136-22  carriage.
 136-23        (c)  This section does not apply to  an incumbent  local
 136-24  exchange company having 100,000 or fewer total access lines in
 136-25  service in this state or to a programmer on the video dial tone
 136-26  platform of that incumbent local exchange company.
 136-27        (d)  A company to which this section applies may petition the
  137-1  commission for a waiver from any of the requirements imposed
  137-2  herein.  The commission shall grant the waiver if it is in the
  137-3  public interest to do so, taking into account whether the need for
  137-4  the restriction still exists in the market involved.  The
  137-5  commission may revoke any waiver granted if it is shown that
  137-6  conditions under which the waiver was granted have materially
  137-7  changed and it is in the public interest to do so.
  137-8        (e)  Except as otherwise specifically provided by this Act,
  137-9  the commission's jurisdiction over affiliates of incumbent local
 137-10  exchange companies that are video programmers is limited to the
 137-11  requirements of this section and does not extend to subjects not
 137-12  specifically provided herein.
 137-13        (f)  This section expires August 31, 1999.
 137-14        Sec. 3.506.  APPLICATION OF SUBTITLE.  This subtitle does not
 137-15  apply to a cable company.
 137-16                  SUBTITLE L.  ELECTRONIC PUBLISHING
 137-17        Sec. 3.551.  DEFINITIONS.  In this subtitle:
 137-18              (1)  "Affiliate" means any entity that, directly or
 137-19  indirectly, owns or controls, is owned or controlled by, or is
 137-20  under common ownership or control with an incumbent  local exchange
 137-21  company.  The term does not include a separated affiliate.
 137-22              (2)  "Basic telephone service" means any wireline
 137-23  telephone exchange service, or wireline telephone exchange
 137-24  facility, provided by an incumbent local exchange company in a
 137-25  telephone exchange area, other than a competitive wireline
 137-26  telephone exchange service provided in a telephone exchange area
 137-27  where another entity provides a wireline telephone exchange service
  138-1  that was provided on January 1, 1984, and a commercial mobile
  138-2  service provided by an affiliate that is required by the Federal
  138-3  Communications Commission to be a corporate entity separate from
  138-4  the local exchange company.
  138-5              (3)  "Basic telephone service information" means
  138-6  network and customer information of  an incumbent  local exchange
  138-7  company and other information acquired by an incumbent  local
  138-8  exchange company as a result of its engaging in the provision of
  138-9  basic telephone service.
 138-10              (4)  "Control" has the meaning provided by 17 C.F.R.
 138-11  Section 240.12b--2, the regulations promulgated by the Securities
 138-12  and Exchange Commission under the Securities Exchange Act of 1934
 138-13  (15 U.S.C. Section 78a et seq.) or any successor provision to that
 138-14  section.
 138-15              (5)(A)  "Electronic publishing" means the
 138-16  dissemination, provision, publication, or sale to an unaffiliated
 138-17  entity or person, using an incumbent local exchange company's basic
 138-18  telephone service, of:
 138-19                          (i)  news;
 138-20                          (ii)  entertainment (other than interactive
 138-21  games);
 138-22                          (iii)  business, financial, legal,
 138-23  consumer, or credit material;
 138-24                          (iv)  editorials;
 138-25                          (v)  columns;
 138-26                          (vi)  sports reporting;
 138-27                          (vii)  features;
  139-1                          (viii)  advertising;
  139-2                          (ix)  photos or images;
  139-3                          (x)  archival or research material;
  139-4                          (xi)  legal notices or public records;
  139-5                          (xii)  scientific, educational,
  139-6  instructional, technical, professional, trade, or other literary
  139-7  materials; or
  139-8                          (xiii)  other like or similar information.
  139-9                    (B)  "Electronic publishing" does not include the
 139-10  following network services:
 139-11                          (i)  information access, as that term is
 139-12  defined by the modification of final judgment;
 139-13                          (ii)  the transmission of information as a
 139-14  common carrier;
 139-15                          (iii)  the transmission of information as
 139-16  part of a gateway to an information service that does not involve
 139-17  the generation or alteration of the content of information,
 139-18  including data transmission, address translation, protocol
 139-19  conversion, billing management, introductory information content,
 139-20  and navigational systems that enable users to access electronic
 139-21  publishing services, that do not affect the presentation of those
 139-22  electronic publishing services to users;
 139-23                          (iv)  voice storage and retrieval services,
 139-24  including voice messaging and electronic mail services;
 139-25                          (v)  level 2 gateway services as those
 139-26  services are defined by the Federal Communications Commission's
 139-27  Second Report and Order, Recommendation to Congress and Second
  140-1  Further Notice of Proposed Rulemaking in CC Docket No.  87-266
  140-2  dated August 14, 1992;
  140-3                          (vi)  data processing services that do not
  140-4  involve the generation or alteration of the content of information;
  140-5                          (vii)  transaction processing systems that
  140-6  do not involve the generation or alteration of the content of
  140-7  information;
  140-8                          (viii)  electronic billing or advertising
  140-9  of an incumbent  local exchange company's regulated
 140-10  telecommunications services;
 140-11                          (ix)  language translation;
 140-12                          (x)  conversion of data from one format to
 140-13  another;
 140-14                          (xi)  the provision of information
 140-15  necessary for the management, control, or operation of a telephone
 140-16  company telecommunications system;
 140-17                          (xii)  the provision of directory
 140-18  assistance that provides names, addresses, and telephone numbers
 140-19  and does not include advertising;
 140-20                          (xiii)  caller identification services;
 140-21                          (xiv)  repair and provisioning databases
 140-22  for telephone company operations;
 140-23                          (xv)  credit card and billing validation
 140-24  for telephone company operations;
 140-25                          (xvi)  911-E and other emergency assistance
 140-26  databases;
 140-27                          (xvii)  any other network service of a type
  141-1  that is like or similar to these network services and that does not
  141-2  involve the generation or alteration of the content of information;
  141-3                          (xviii)  any upgrades to these network
  141-4  services that do not involve the generation or alteration of the
  141-5  content of information;
  141-6                          (xix)  full motion video entertainment on
  141-7  demand; and
  141-8                          (xx)  video programming as defined by
  141-9  Section 602, Communications Act of 1934 (47 U.S.C. Section 522).
 141-10              (6)  "Electronic publishing joint venture" means a
 141-11  joint venture owned by an incumbent  local exchange company or
 141-12  affiliate that engages in the provision of electronic publishing
 141-13  that is disseminated by means of that  incumbent local exchange
 141-14  company's or any of its affiliates' basic telephone service.
 141-15              (7)  "Entity" means any organization, and includes a
 141-16  corporation, partnership, sole proprietorship, association, and
 141-17  joint venture.
 141-18              (8)  "Inbound telemarketing" means the marketing of
 141-19  property, goods, or services by telephone to a customer or
 141-20  potential customer who initiated the call.
 141-21              (9)  "Own," with respect to an entity, means to have a
 141-22  direct or indirect equity interest, or the equivalent, of more than
 141-23  10 percent of an entity, or the right to more than 10 percent of
 141-24  the gross revenues of an entity under a revenue sharing or royalty
 141-25  agreement.
 141-26              (10)  "Separated affiliate" means a corporation under
 141-27  common ownership or control with an incumbent  local exchange
  142-1  company that does not own or control an incumbent  local exchange
  142-2  company and is not owned or controlled by an incumbent  local
  142-3  exchange company and that engages in the provision of electronic
  142-4  publishing that is disseminated by means of the incumbent local
  142-5  exchange company's or any of its affiliates' basic telephone
  142-6  service.
  142-7              (11)  "Incumbent local exchange company" means, for
  142-8  purposes of this subtitle only,  a company serving more than five
  142-9  million access lines in this state and subject to the modification
 142-10  of final judgment or any entity owned or controlled by that
 142-11  corporation, or any successor or assign of that corporation. The
 142-12  term does not include an electronic publishing joint venture owned
 142-13  by that corporation or entity and permitted by Section 3.559.
 142-14        Sec. 3.552.  Electronic Publishing.  (a)  An incumbent local
 142-15  exchange company or an affiliate may not engage in the provision of
 142-16  electronic publishing that is disseminated by means of the
 142-17  incumbent local exchange company's or any of its affiliates' basic
 142-18  telephone service.
 142-19        (b)  Nothing in this subtitle prohibits a separated affiliate
 142-20  or electronic publishing joint venture from engaging in the
 142-21  provision of electronic publishing or any other lawful service in
 142-22  any area.
 142-23        (c)  Nothing in this subtitle prohibits an incumbent local
 142-24  exchange company or affiliate from engaging in the provision of any
 142-25  lawful service other than electronic publishing in any area or from
 142-26  engaging in the provision of electronic publishing that is not
 142-27  disseminated by means of the incumbent local exchange company's or
  143-1  any of its affiliates' basic telephone service.
  143-2        Sec. 3.553.  SEPARATED AFFILIATE OR ELECTRONIC PUBLISHING
  143-3  JOINT VENTURE REQUIREMENTS.  A separated affiliate or electronic
  143-4  publishing joint venture:
  143-5              (1)  shall maintain books, records, and accounts that
  143-6  are separate from those of the incumbent local exchange company and
  143-7  from any affiliate and that record in accordance with generally
  143-8  accepted accounting principles all transactions, whether direct or
  143-9  indirect, with the incumbent local exchange company;
 143-10              (2)  may not incur debt in a manner that would permit a
 143-11  creditor on default to have recourse to the assets of the incumbent
 143-12  local exchange company;
 143-13              (3)  shall prepare financial statements that are not
 143-14  consolidated with those of the incumbent local exchange company or
 143-15  an affiliate, provided that consolidated statements may also be
 143-16  prepared;
 143-17              (4)  shall file with the commission annual reports in a
 143-18  form substantially equivalent to the Form 10-K required by
 143-19  regulations of the Securities and Exchange Commission;
 143-20              (5)  after September 1, 1996, may not hire:
 143-21                    (A)  as corporate officers, sales and marketing
 143-22  management personnel whose responsibilities at the separated
 143-23  affiliate or electronic publishing joint venture will include the
 143-24  geographic areas where the incumbent local exchange company
 143-25  provides basic telephone service;
 143-26                    (B)  network operations personnel whose
 143-27  responsibilities at the separated affiliate or electronic
  144-1  publishing joint venture would require dealing directly with the
  144-2  incumbent local exchange company; or
  144-3                    (C)  any person who was employed by the incumbent
  144-4  local exchange company during the year preceding the date of hire,
  144-5  except that the requirements of this paragraph do not apply to
  144-6  persons subject to a collective bargaining agreement that gives
  144-7  those persons rights to be employed by a separated affiliate or
  144-8  electronic publishing joint venture of the local exchange company;
  144-9              (6)  may not provide any wireline telephone exchange
 144-10  service in any telephone exchange area in which an incumbent local
 144-11  exchange company with which it is under common ownership or control
 144-12  provides basic telephone exchange service except on a resale basis;
 144-13              (7)  may not use the name, trademarks, or service marks
 144-14  of an existing incumbent local exchange company except for names,
 144-15  trademarks, or service marks that were used in common with the
 144-16  entity that owns or controls the incumbent local exchange company;
 144-17              (8)  shall have performed annually by March 31, or any
 144-18  other date prescribed by the commission, a compliance review:
 144-19                    (A)  that is conducted by an independent entity
 144-20  that is subject to professional, legal, and ethical obligations for
 144-21  the purpose of determining compliance during the preceding calendar
 144-22  year with any provision of this subtitle that imposes a requirement
 144-23  on the separated affiliate or electronic publishing joint venture;
 144-24  and
 144-25                    (B)  the results of which are maintained by the
 144-26  separated affiliate for a period of five years subject to review by
 144-27  any lawful authority; and
  145-1              (9)  shall within 90 days after the date of receiving a
  145-2  review described by Subdivision (8) of this subsection, file a
  145-3  report of any exceptions and corrective action with the commission
  145-4  and allow any person to inspect and copy the report subject to
  145-5  reasonable safeguards to protect any proprietary information
  145-6  contained in the report from being used for purposes other than to
  145-7  enforce or pursue remedies under this subtitle.
  145-8        Sec. 3.554.  INCUMBENT LOCAL EXCHANGE COMPANY REQUIREMENTS.
  145-9  (a)  An incumbent local exchange company under common ownership or
 145-10  control with a separated affiliate or electronic publishing joint
 145-11  venture:
 145-12              (1)  may not provide a separated affiliate any
 145-13  facilities, services, or basic telephone service information unless
 145-14  it makes those facilities, services, or information available to
 145-15  unaffiliated entities on request and on the same terms and
 145-16  conditions;
 145-17              (2)  shall carry out transactions with a separated
 145-18  affiliate in a manner equivalent to the manner that unrelated
 145-19  parties would carry out independent transactions and not based on
 145-20  the affiliation;
 145-21              (3)  shall carry out transactions with a separated
 145-22  affiliate, that involve the transfer of personnel, assets, or
 145-23  anything of value, in accordance with written contracts or tariffs
 145-24  that are filed with the commission and made publicly available;
 145-25              (4)  shall carry out transactions with a separated
 145-26  affiliate in a manner that is auditable in accordance with
 145-27  generally accepted auditing standards;
  146-1              (5)  shall value any assets that are transferred to a
  146-2  separated affiliate at the greater of net book cost or fair market
  146-3  value;
  146-4              (6)  shall value any assets that are transferred to the
  146-5  incumbent local exchange company by its separated affiliate at the
  146-6  lesser of net book cost or fair market value;
  146-7              (7)  may not, except for instances where Federal
  146-8  Communications Commission or commission rules or regulations permit
  146-9  in-arrears payment for tariffed telecommunications services or the
 146-10  investment by an affiliate of dividends or profits derived from an
 146-11  incumbent  local exchange company, provide debt or equity financing
 146-12  directly or indirectly to a separated affiliate;
 146-13              (8)  shall comply fully with all applicable Federal
 146-14  Communications Commission and commission cost allocation and other
 146-15  accounting rules;
 146-16              (9)  shall have performed annually by March 31, or any
 146-17  other date prescribed by the commission, a compliance review:
 146-18                    (A)  that is conducted by an independent entity
 146-19  that is subject to professional, legal, and ethical obligations for
 146-20  the purpose of determining compliance during the preceding calendar
 146-21  year with any provision of this subtitle that imposes a requirement
 146-22  on the incumbent local exchange company; and
 146-23                    (B)  the results of which are maintained by the
 146-24  incumbent local exchange company for a period of five years subject
 146-25  to review by any lawful authority; and
 146-26              (10)  shall within 90 days after the date of receiving
 146-27  a review described by Subdivision (9) of this subsection, file a
  147-1  report of any exceptions and corrective action with the commission
  147-2  and allow any person to inspect and copy the report subject to
  147-3  reasonable safeguards to protect any proprietary information
  147-4  contained in the report from being used for purposes other than to
  147-5  enforce or pursue remedies under this subtitle.
  147-6        (b)  If the incumbent local exchange company provides
  147-7  facilities or services for telecommunication, transmission, billing
  147-8  and collection, or expanded interconnection to any electronic
  147-9  publisher, including a separated affiliate, for use with or in
 147-10  connection with the provision of electronic publishing that is
 147-11  disseminated by means of the incumbent local exchange company's or
 147-12  any of its affiliates' basic telephone service, the incumbent local
 147-13  exchange company shall provide to all other electronic publishers
 147-14  the same type of facilities and services on request, on the same
 147-15  terms and conditions or as required by the Federal Communications
 147-16  Commission or the commission, and unbundled and individually
 147-17  tariffed to the smallest extent that is technically feasible and
 147-18  economically reasonable to provide.
 147-19        (c)  The incumbent local exchange company shall provide
 147-20  network access and interconnections for basic telephone service to
 147-21  electronic publishers at any technically feasible and economically
 147-22  reasonable point within the incumbent local exchange company's
 147-23  network and at just and reasonable rates that are tariffed, so long
 147-24  as rates for those services are subject to regulation, and that are
 147-25  not higher on a per unit basis than those charged for those
 147-26  services to any other electronic publisher or any separated
 147-27  affiliate engaged in electronic publishing.
  148-1        (d)  If prices for network access and interconnection for
  148-2  basic telephone service are no longer subject to regulation, the
  148-3  incumbent local exchange company shall provide electronic
  148-4  publishers those services on the same terms and conditions as a
  148-5  separated affiliate receives those services.
  148-6        (e)  If any basic telephone service used by electronic
  148-7  publishers ceases to require a tariff, the incumbent local exchange
  148-8  company shall  provide electronic publishers with that service on
  148-9  the same terms and conditions as a separated affiliate receives
 148-10  that service.
 148-11        (f)  The incumbent local exchange company shall provide
 148-12  reasonable advance notification at the same time and on the same
 148-13  terms to all affected electronic publishers of information if the
 148-14  information is within any one or more of the following categories:
 148-15              (1)  information necessary for the transmission or
 148-16  routing of information by an interconnected electronic publisher;
 148-17              (2)  information necessary to ensure the
 148-18  interoperability of an electronic publisher's and the incumbent
 148-19  local exchange company's networks; or
 148-20              (3)  information that relates to changes in basic
 148-21  telephone service network design and technical standards that may
 148-22  affect the provision of electronic publishing.
 148-23        (g)  The incumbent local exchange company may not directly or
 148-24  indirectly provide anything of monetary value to a separated
 148-25  affiliate unless in exchange for consideration at least equal to
 148-26  the greater of its net book cost or fair market value, except the
 148-27  investment by an affiliate of dividends or profits derived from an
  149-1  incumbent local exchange company.
  149-2        (h)  The incumbent local exchange company may not:
  149-3              (1)  discriminate in the presentation or provision of
  149-4  any gateway for electronic publishing services or any electronic
  149-5  directory of information services that is provided over the
  149-6  incumbent local exchange company's basic telephone service;
  149-7              (2)  have any directors, officers, or employees in
  149-8  common with a separated affiliate;
  149-9              (3)  own any property in common with a separated
 149-10  affiliate;
 149-11              (4)  perform hiring or training of personnel on behalf
 149-12  of a separated affiliate;
 149-13              (5)  perform the purchasing, installation, or
 149-14  maintenance of equipment on behalf of a separated affiliate, except
 149-15  for telephone service that the company provides under tariff or
 149-16  contract subject to the provisions of this subtitle; or
 149-17              (6)  perform research and development on behalf of a
 149-18  separated affiliate.
 149-19        Sec. 3.555.  CUSTOMER PROPRIETARY NETWORK INFORMATION.
 149-20  Consistent with Section 232, Communications Act of 1934, as
 149-21  amended, and Section 3.501 of this Act, an incumbent local exchange
 149-22  company or an affiliate may not provide to an electronic publisher,
 149-23  including a separated affiliate or electronic publishing joint
 149-24  venture, customer proprietary network information for use with or
 149-25  in connection with the provision of electronic publishing that is
 149-26  disseminated by means of the incumbent local exchange company's or
 149-27  any of its affiliates' basic telephone service that is not made
  150-1  available by the incumbent local exchange company or affiliate to
  150-2  all electronic publishers on the same terms and conditions.
  150-3        Sec. 3.556.  COMPLIANCE WITH SAFEGUARDS.  An incumbent local
  150-4  exchange company or affiliate, including a separated affiliate, may
  150-5  not act in concert with another incumbent local exchange company or
  150-6  any other entity to knowingly and wilfully violate or evade the
  150-7  requirements of this subtitle.
  150-8        Sec. 3.557.  INCUMBENT LOCAL EXCHANGE COMPANY DIVIDENDS.
  150-9  Nothing in this subtitle prohibits an affiliate from investing
 150-10  dividends derived from an incumbent local exchange company in its
 150-11  separated affiliate, and Sections 3.560 and 3.561 of this Act do
 150-12  not apply to that investment.
 150-13        Sec. 3.558.  JOINT MARKETING.  Except as provided by Section
 150-14  3.559 of this Act, an incumbent local exchange company may not
 150-15  carry out:
 150-16              (1)  any promotion, marketing, sales, or advertising
 150-17  for or in conjunction with a separated affiliate; or
 150-18              (2)  any promotion, marketing, sales, or advertising
 150-19  for or in conjunction with an affiliate that is related to the
 150-20  provision of electronic publishing.
 150-21        Sec. 3.559.  PERMISSIBLE JOINT ACTIVITIES.  (a)  An incumbent
 150-22  local exchange company may provide inbound telemarketing or
 150-23  referral services related to the provision of electronic publishing
 150-24  for a separated affiliate, electronic publishing joint venture,
 150-25  affiliate, or unaffiliated electronic publisher, provided that if
 150-26  those services are provided to a separated affiliate, electronic
 150-27  publishing joint venture, or affiliate, those services shall be
  151-1  made available to all electronic publishers on request, on
  151-2  nondiscriminatory terms, at compensatory prices, and subject to
  151-3  regulations of the commission to ensure that the incumbent local
  151-4  exchange company's method of providing telemarketing or referral
  151-5  and its price structure do not competitively disadvantage any
  151-6  electronic publishers regardless of size, including those that do
  151-7  not use the incumbent local exchange company's telemarketing
  151-8  services.
  151-9        (b)  An incumbent local exchange company may engage in
 151-10  nondiscriminatory teaming or business arrangements to engage in
 151-11  electronic publishing with any separated affiliate or with any
 151-12  other electronic publisher, provided that the incumbent local
 151-13  exchange company provides only facilities, services, and basic
 151-14  telephone service information as authorized by this subtitle, and
 151-15  provided that the incumbent local exchange company does not own
 151-16  that teaming or business arrangement.
 151-17        (c)  An incumbent local exchange company or affiliate may
 151-18  participate on a nonexclusive basis in electronic publishing joint
 151-19  ventures with an entity that is not an incumbent  local exchange
 151-20  company, affiliate, or separated affiliate to provide electronic
 151-21  publishing services, provided that the incumbent local exchange
 151-22  company or affiliate has not more than a 50 percent direct or
 151-23  indirect equity interest, or the equivalent, or the right to more
 151-24  than 50 percent of the gross revenues under a revenue sharing or
 151-25  royalty agreement in any electronic publishing joint venture.
 151-26  Officers and employees of an incumbent local exchange company or
 151-27  affiliate participating in an electronic publishing joint venture
  152-1  may not have more than 50 percent of the voting control over the
  152-2  electronic publishing joint venture.  In the case of joint ventures
  152-3  with a small, local electronic publisher, the commission for good
  152-4  cause shown may authorize the incumbent local exchange company or
  152-5  affiliate to have a larger equity interest, revenue share, or
  152-6  voting control, but not to exceed 80 percent.  An incumbent local
  152-7  exchange company participating in an electronic publishing joint
  152-8  venture may provide promotion, marketing, sales, or advertising
  152-9  personnel and services to the joint venture.
 152-10        Sec. 3.560.  TRANSACTIONS RELATED TO THE PROVISION OF
 152-11  ELECTRONIC PUBLISHING BETWEEN AN INCUMBENT LOCAL EXCHANGE COMPANY
 152-12  AND ANY AFFILIATE.  (a)  Any provision of facilities, services, or
 152-13  basic telephone service information, or any transfer of assets,
 152-14  personnel, or anything of commercial or competitive value, from an
 152-15  incumbent local exchange company to an affiliate related to the
 152-16  provision of electronic publishing shall be:
 152-17              (1)  recorded in the books and records of each entity;
 152-18              (2)  auditable in accordance with generally accepted
 152-19  auditing standards; and
 152-20              (3)  done in accordance with written contracts or
 152-21  tariffs filed with the commission.
 152-22        (b)  A transfer of assets directly related to the provision
 152-23  of electronic publishing from an incumbent local exchange company
 152-24  to an affiliate shall be valued at the greater of net book cost or
 152-25  fair market value.  A transfer of assets related to the provision
 152-26  of electronic publishing from an affiliate to the incumbent local
 152-27  exchange company shall be valued at the lesser of net book cost or
  153-1  fair market value.
  153-2        (c)  An incumbent local exchange company may not provide
  153-3  directly or indirectly to a separated affiliate any facilities,
  153-4  services, or basic telephone service information related to the
  153-5  provision of electronic publishing that are not made available to
  153-6  unaffiliated companies on the same terms and conditions.
  153-7        Sec. 3.561.  TRANSACTIONS RELATED TO THE PROVISION OF
  153-8  ELECTRONIC PUBLISHING BETWEEN AN AFFILIATE AND A SEPARATED
  153-9  AFFILIATE.  (a)  Any facilities, services, or basic telephone
 153-10  service information provided, or any assets, personnel, or anything
 153-11  of commercial or competitive value transferred, from an incumbent
 153-12  local exchange company to an affiliate as described by Section
 153-13  3.560 of this Act and then provided or transferred to a separated
 153-14  affiliate shall be:
 153-15              (1)  recorded in the books and records of each entity;
 153-16              (2)  auditable in accordance with generally accepted
 153-17  auditing standards; and
 153-18              (3)  done in accordance with written contracts or
 153-19  tariffs filed with the commission.
 153-20        (b)  A transfer of assets directly related to the provision
 153-21  of electronic publishing from an incumbent local exchange company
 153-22  to an affiliate as described by Section 3.560 of this Act and then
 153-23  transferred to a separated affiliate shall be valued at the greater
 153-24  of net book cost or fair market value.  A transfer of assets
 153-25  related to the provision of electronic publishing from a separated
 153-26  affiliate to an affiliate and then transferred to the incumbent
 153-27  local exchange company as described by Section 3.560 of this Act
  154-1  shall be valued at the lesser of net book cost or fair market
  154-2  value.
  154-3        (c)  An affiliate may not provide directly or indirectly to a
  154-4  separated affiliate any facilities, services, or basic telephone
  154-5  service information related to the provision of electronic
  154-6  publishing that are not made available to unaffiliated companies on
  154-7  the same terms and conditions.
  154-8        Sec. 3.562.  OTHER ELECTRONIC PUBLISHERS.  (a)  Except as
  154-9  provided by Section 3.559(c) of this Act:
 154-10              (1)  an incumbent local exchange company may not have
 154-11  any officers, employees, property, or facilities in common with an
 154-12  entity whose principal business is publishing of which a part is
 154-13  electronic publishing; and
 154-14              (2)  an officer or employee of an incumbent local
 154-15  exchange company may not serve as a director of an entity whose
 154-16  principal business is publishing of which a part is electronic
 154-17  publishing.
 154-18        (b)  For the purposes of Subsection (a) of this section, an
 154-19  incumbent local exchange company or an affiliate that owns an
 154-20  electronic publishing joint venture may not be deemed to be engaged
 154-21  in the electronic publishing business solely because of that
 154-22  ownership.
 154-23        (c)  Except as provided by Section 3.559(c) of this Act, an
 154-24  incumbent local exchange company may not carry out:
 154-25              (1)  any marketing or sales for an entity that engages
 154-26  in electronic publishing; or
 154-27              (2)  any hiring of personnel, purchasing, or
  155-1  production, for an entity that engages in electronic publishing.
  155-2        (d)  Except as provided by Section 3.559(c) of this Act, the
  155-3  incumbent local exchange company may not provide any facilities,
  155-4  services, or basic telephone service information to an entity that
  155-5  engages in electronic publishing, for use with or in connection
  155-6  with the provision of electronic publishing that is disseminated by
  155-7  means of the incumbent local exchange company's or any of its
  155-8  affiliates' basic telephone service, unless equivalent facilities,
  155-9  services, or information are made available on equivalent terms and
 155-10  conditions to all.
 155-11        Sec. 3.563.  PRIVATE RIGHT OF ACTION.  (a)  A person claiming
 155-12  that an act or practice of an incumbent local exchange company,
 155-13  affiliate, or separated affiliate constitutes a violation of this
 155-14  subtitle may file a complaint with the commission or bring suit for
 155-15  the recovery of damages, and the incumbent local exchange company,
 155-16  affiliate, or separated affiliate shall be liable if the incumbent
 155-17  local exchange company does, or causes to be done, any act, matter,
 155-18  or thing in violation of this subtitle.  The incumbent local
 155-19  exchange company shall be liable to the person or persons injured
 155-20  thereby for the full amount of damages sustained in consequence of
 155-21  any violation of the provisions of this subtitle, together with a
 155-22  reasonable counsel or attorney's fees to be fixed by the court in
 155-23  every case of recovery, which attorney's fees shall be taxed and
 155-24  collected as part of the costs of the case.  Damages may not be
 155-25  awarded for a violation that is discovered by a compliance review
 155-26  as required by Section 3.553(8) or 3.554(a)(9) of this Act and
 155-27  corrected within 90 days.
  156-1        (b)  In addition to the provisions of Subsection (a) of this
  156-2  section, a person claiming that any act or practice of an incumbent
  156-3  local exchange company, affiliate, or separated affiliate
  156-4  constitutes a violation of this subtitle may make application to
  156-5  the commission for an order to cease and desist that violation or
  156-6  may make application in any state district court for an order
  156-7  enjoining those acts or practices or for an order compelling
  156-8  compliance with that requirement.
  156-9        Sec. 3.564.  ANTITRUST LAWS.  Nothing in this subtitle may be
 156-10  construed to modify, impair, or supersede the applicability of any
 156-11  of the antitrust laws.
 156-12        Sec. 3.565.  TRANSITION.  An electronic publishing service
 156-13  being offered to the public by an incumbent local exchange company
 156-14  or affiliate on the date of enactment of this subtitle shall have
 156-15  one year from that date of enactment to comply with the
 156-16  requirements of this subtitle.
 156-17        Sec. 3.566.  SUNSET.  The provisions of this subtitle do not
 156-18  apply to conduct occurring after June 30, 2001.
 156-19             SUBTITLE M.  INFORMATION TECHNOLOGY SERVICES
 156-20        Sec. 3.581.  DEFINITIONS.  In this subtitle:
 156-21              (1)  "Management consulting" means the development,
 156-22  refinement, and coordination of strategies to support a client's
 156-23  business direction, positively impact business performance, and
 156-24  improve operating results, in areas such as business planning,
 156-25  operations, information technology, marketing, finance, and human
 156-26  resources.
 156-27              (2)  "Systems development" means the creation,
  157-1  migration, or improvement of computer systems, including hardware
  157-2  and software, to meet specific business needs or to take advantage
  157-3  of changes in information technology.
  157-4              (3)  "Systems integration" means the acquisition,
  157-5  installation, and integration of hardware, software,
  157-6  communications, and related support components and services.
  157-7              (4)  "Systems management" means the ongoing management
  157-8  and operation of information technology components and may range
  157-9  from specialized systems applications to an enterprise's entire
 157-10  information technology function, including facilities and
 157-11  personnel.
 157-12              (5)  "Process management" means the ongoing
 157-13  responsibility for direction and operation of one or more business
 157-14  processes within an enterprise in areas such as administration,
 157-15  finance, human resources, operations, and sales and marketing.
 157-16        Sec. 3.582.  PROVISION OF INFORMATION TECHNOLOGY SERVICES
 157-17  THROUGH SEPARATE AFFILIATE.  (a)  Except for services and products
 157-18  provided on September 1, 1995, a local exchange company serving
 157-19  more than five million access lines in this state may not provide
 157-20  the following customized business products or services to customers
 157-21  with 50 or more access lines in this state:
 157-22              (1)  management consulting, except for consulting
 157-23  relating exclusively to telecommunications;
 157-24              (2)  information technology process or systems
 157-25  development;
 157-26              (3)  information technology process or systems
 157-27  integration; or
  158-1              (4)  information technology process or systems
  158-2  management.
  158-3        (b)  This section does not prohibit an affiliate of the local
  158-4  exchange company from providing any of the products or services
  158-5  described by Subsection (a) of this section in accordance with
  158-6  Sections 3.583 and 3.584 of this Act or prohibit a local exchange
  158-7  company from providing those products or services to itself.  The
  158-8  local exchange company may also provide those services to an
  158-9  affiliate if neither the local exchange company nor any of its
 158-10  affiliates are engaged in providing those products or services to
 158-11  unaffiliated third parties.
 158-12        (c)  The prohibitions prescribed by Subsection (b) of this
 158-13  section do not prohibit a local exchange company from:
 158-14              (1)  providing mass market and consumer market products
 158-15  and services directly to customers with fewer than 50 access lines
 158-16  in this state that use or rely on the use of information services,
 158-17  information systems, or information technology or processes; or
 158-18              (2)  selling or leasing billing and collection
 158-19  services, local area networks, wide area networks, or any other
 158-20  telecommunications service.
 158-21        Sec. 3.583.  SEPARATE AFFILIATE REQUIREMENTS.  (a)  An
 158-22  affiliate of the local exchange company providing a service
 158-23  described by Section 3.582(a) of this Act shall:
 158-24              (1)  operate independently from the local exchange
 158-25  company in the provision of its services;
 158-26              (2)  maintain its own books of accounts; and
 158-27              (3)  have separate officers, directors, and employees
  159-1  who may not also serve as officers, directors, or employees of the
  159-2  local exchange company, except that an officer of a corporate
  159-3  parent or holding company may serve as a director of the local
  159-4  exchange company and as a director of any other of the parent's
  159-5  subsidiaries that are in existence on September 1, 1995, or of any
  159-6  new subsidiary or affiliate established after September 1, 1995,
  159-7  that does not engage in the provision of a service described by
  159-8  Section 3.582(a) of this Act.
  159-9        (b)  All transactions between the local exchange company and
 159-10  the affiliate providing a service described by Section 3.582(a) of
 159-11  this Act shall be conducted on an "arms length" basis with respect
 159-12  to the acquisition of that service from the affiliate.
 159-13        (c)  The local exchange company shall maintain and keep
 159-14  available for inspection by the commission copies of all contracts
 159-15  or arrangements between the company and an affiliate relating to
 159-16  the local exchange company's acquisition of a service described by
 159-17  Section 3.582(a) of this Act from the affiliate.  The local
 159-18  exchange company's records must show each cash or noncash
 159-19  transaction with the affiliate for that service, including the
 159-20  payments for goods and services or any property right.
 159-21        (d)  The local exchange company and an affiliate engaged in a
 159-22  service described by Section 3.582(a) of this Act may not jointly
 159-23  own or share in the use of any property.
 159-24        Sec. 3.584.  ADDITIONAL COMPETITIVE SAFEGUARDS.  (a)  A local
 159-25  exchange company may not discriminate between an affiliate
 159-26  providing a service described by Section 3.582(a) of this Act and
 159-27  any other person in the provision or procurement of goods,
  160-1  services, facilities, or information or in the establishment of
  160-2  standards.
  160-3        (b)  A local exchange company or its affiliate may not use
  160-4  revenues from local exchange telephone service or from
  160-5  local-exchange-company-provided access services to subsidize the
  160-6  provision of a service described by Section 3.582(a) of this Act.
  160-7        (c)  This section does not prohibit the investment by an
  160-8  affiliate of dividends or profits derived from a local exchange
  160-9  company or the development of a product or service described by
 160-10  Section 3.582(a) of this Act by an affiliate of a local exchange
 160-11  company for the local exchange company if the investment or
 160-12  development complies with Section 3.583 of this Act.
 160-13      SUBTITLE N.  TELECOMMUNICATIONS SERVICE ASSISTANCE PROGRAM;
 160-14                        UNIVERSAL SERVICE FUND
 160-15        Sec. 3.601 <3.351>.  TEL-ASSISTANCE SERVICE.  The commission
 160-16  shall adopt and enforce rules requiring each local exchange company
 160-17  to establish a telecommunications service assistance program to be
 160-18  called "tel-assistance service."  This service is established to
 160-19  provide eligible consumers with a reduction in costs of
 160-20  telecommunications services.
 160-21        Sec. 3.602 <3.352>.  ELIGIBILITY FOR TEL-ASSISTANCE SERVICE;
 160-22  BURDEN OF PROOF; BILLING.  (a)  To be eligible for tel-assistance
 160-23  service, an applicant must be a head of household<, 65 years of age
 160-24  or older,> and disabled as determined by the Texas Department of
 160-25  Human Services and must have a household income at or below the
 160-26  poverty level as determined by the United States Office of
 160-27  Management and Budget and reported annually in the Federal
  161-1  Register.  The department, in accordance with this subtitle and
  161-2  rules adopted by the department for the program, shall develop
  161-3  procedures for taking applications for certification of eligibility
  161-4  and for determining program eligibility.  The burden of proving
  161-5  eligibility for tel-assistance service is on the consumer applying
  161-6  for the service.
  161-7        (b)  Each six months the department shall provide a list or
  161-8  lists of the names, addresses, and, if applicable, telephone
  161-9  numbers of all persons eligible for tel-assistance service to each
 161-10  local exchange company.  The local exchange company shall determine
 161-11  from the list those consumers to whom the company provides service
 161-12  and within 60 days after receiving the list shall begin
 161-13  tel-assistance billing for eligible consumers.  This billing shall
 161-14  continue until the local exchange company is notified by the
 161-15  department that a consumer is no longer eligible to receive
 161-16  tel-assistance service.
 161-17        Sec. 3.603 <3.353>.  TEL-ASSISTANCE SERVICES; BILLING; RATES.
 161-18  (a)  The local exchange company shall provide tel-assistance
 161-19  service to all eligible consumers within its certificated area in
 161-20  the form of a reduction on each eligible consumer's telephone bill.
 161-21  The reduction shall apply only to the following types of service:
 161-22              (1)  residential flat rate basic local exchange
 161-23  service;
 161-24              (2)  residential local exchange access service; and
 161-25              (3)  residential local area calling usage, except that
 161-26  the reduction for local area calling usage shall be limited to an
 161-27  amount such that together with the reduction for local exchange
  162-1  access service the rate does not exceed the comparable reduced flat
  162-2  rate for the service.
  162-3        (b)  No other local voice service may be provided to the
  162-4  dwelling place of a tel-assistance consumer, nor may single or
  162-5  party line optional extended area service, optional extended area
  162-6  calling service, foreign zone, or foreign exchange service be
  162-7  provided to a tel-assistance consumer.  Nothing in this section
  162-8  shall prohibit a person otherwise eligible to receive
  162-9  tel-assistance service from obtaining and using telecommunications
 162-10  equipment designed to aid such person in utilizing
 162-11  telecommunications services.
 162-12        (c)  The reduction allowed by the telecommunications service
 162-13  assistance program shall be 65 percent of the applicable tariff
 162-14  rate for the service provided.
 162-15        Sec. 3.604 <3.354>.  STATEWIDE TELECOMMUNICATIONS RELAY
 162-16  ACCESS SERVICE FOR HEARING-IMPAIRED AND SPEECH-IMPAIRED.  (a)  The
 162-17  commission shall adopt and enforce rules establishing a statewide
 162-18  telecommunications relay access service for the hearing-impaired
 162-19  and speech-impaired using specialized communications equipment such
 162-20  as telecommunications devices for the deaf (TDD) and operator
 162-21  translations.  The purpose of this section is to provide for the
 162-22  uniform and coordinated provision of the service on a statewide
 162-23  basis by one telecommunications carrier.
 162-24        (b)  Commission rules relating to a statewide
 162-25  telecommunications relay access service for the hearing-impaired
 162-26  and speech-impaired shall provide that:
 162-27              (1)  the service shall provide the hearing-impaired and
  163-1  speech-impaired with access to the telecommunications network in
  163-2  Texas equal to that provided other customers;
  163-3              (2)  the service shall consist of the following:
  163-4                    (A)  switching and transmission of the call;
  163-5                    (B)  verbal and print translations by either live
  163-6  or automated means between hearing-impaired and speech-impaired
  163-7  individuals who use TDD equipment or similar automated devices and
  163-8  others who do not have such equipment; and
  163-9                    (C)  other service enhancements proposed by the
 163-10  carrier and approved by the commission;
 163-11              (3)  the calling or called party shall bear no charge
 163-12  for calls originating and terminating within the same local calling
 163-13  area;
 163-14              (4)  the calling or called party shall bear one-half of
 163-15  the total charges established by contract with the commission for
 163-16  intrastate interexchange calls;
 163-17              (5)  as specified in its contract with the commission,
 163-18  charges related to providing the service which are not borne by a
 163-19  calling or called party pursuant to Subdivisions (3) and (4) of
 163-20  this subsection shall be funded from the universal service fund;
 163-21              (6)  local exchange companies may not impose
 163-22  interexchange carrier access charges on calls which make use of
 163-23  this service and which originate and terminate in the same local
 163-24  calling area;
 163-25              (7)  local exchange companies shall provide billing and
 163-26  collection services in support of this service at just and
 163-27  reasonable rates; and
  164-1              (8)  if the commission orders a local exchange company
  164-2  to provide for a trial telecommunications relay access service for
  164-3  the hearing-impaired or speech-impaired, all pertinent costs and
  164-4  design information from this trial shall be available to the
  164-5  general public.
  164-6        (c)  The commission shall allow telecommunications utilities
  164-7  to recover their universal service fund assessment related to this
  164-8  service through a surcharge which the utility may add to its
  164-9  customers' bills.  The commission shall specify how the amount of
 164-10  the surcharge is to be determined by each utility.  If a utility
 164-11  chooses to impose the surcharge, the bill shall list the surcharge
 164-12  as the "universal service fund surcharge."
 164-13        (d)  The commission shall set the appropriate assessments for
 164-14  the funding of the service by all telecommunications utilities.  In
 164-15  setting the appropriate assessments, the commission shall consider
 164-16  the aggregate calling pattern of the users of the service and all
 164-17  other factors found appropriate and in the public interest by the
 164-18  commission.  The commission shall review the assessments annually
 164-19  and adjust the assessments as found appropriate hereunder.
 164-20        (e)  The commission shall select the telecommunications
 164-21  carrier which will provide the statewide telecommunications relay
 164-22  access service for the hearing-impaired and speech-impaired.  In
 164-23  awarding the contract for this service, the commission shall make a
 164-24  written award of the contract to the offerer whose proposal is the
 164-25  most advantageous to the state, considering price, the interests of
 164-26  the hearing-impaired and speech-impaired community in having access
 164-27  to a high quality and technologically advanced telecommunications
  165-1  system, and all other factors listed in the commission's request
  165-2  for proposals.  The commission shall consider each proposal in a
  165-3  manner that does not disclose the contents of the proposal to
  165-4  competing offerers.  The commission's evaluation of the proposals
  165-5  shall include:
  165-6              (1)  charges for the service;
  165-7              (2)  service enhancements proposed by the offerers;
  165-8              (3)  technological sophistication of the network
  165-9  proposed by the offerers; and
 165-10              (4)  the proposed commencement date for the service.
 165-11        (f)  The telecommunications carrier providing the service
 165-12  shall be compensated for providing such service at rates, terms,
 165-13  and conditions established in its contract with the commission.
 165-14  This compensation may include a return on the investment required
 165-15  to provide the service and compensation for unbillable and
 165-16  uncollectible calls placed through the service, provided that
 165-17  compensation for unbillable and uncollectible calls shall be
 165-18  subject to a reasonable limitation as determined by the commission.
 165-19        (g)  The advisory committee to assist the commission in
 165-20  administering this section is composed of the following persons
 165-21  appointed by the commission:
 165-22              (1)  two deaf persons recommended by the Texas
 165-23  Association of the Deaf;
 165-24              (2)  one hearing-impaired person recommended by
 165-25  Self-Help for the Hard of Hearing;
 165-26              (3)  one hearing-impaired person recommended by the
 165-27  American Association of Retired Persons;
  166-1              (4)  one deaf and blind person recommended by the Texas
  166-2  Deaf/Blind Association;
  166-3              (5)  one speech-impaired person and one speech-impaired
  166-4  and hearing-impaired person recommended by the Coalition of Texans
  166-5  with Disabilities;
  166-6              (6)  two representatives of telecommunications
  166-7  utilities, one representing a nonlocal exchange utility and one
  166-8  representing a local exchange company, chosen from a list of
  166-9  candidates provided by the Texas Telephone Association;
 166-10              (7)  two persons, at least one of whom is deaf, with
 166-11  experience in providing relay services recommended by the Texas
 166-12  Commission for the Deaf and Hearing-Impaired; and
 166-13              (8)  two public members recommended by organizations
 166-14  representing consumers of telecommunications services.
 166-15        (h)  The commission shall appoint advisory committee members
 166-16  based on recommended lists of candidates submitted in accordance
 166-17  with Subdivision (6) of Subsection (g) of this section.  The
 166-18  advisory committee shall monitor the establishment, administration,
 166-19  and promotion of the statewide telecommunications relay access
 166-20  service and advise the commission in pursuing a service which meets
 166-21  the needs of the hearing-impaired and speech-impaired in
 166-22  communicating with other users of telecommunications services.  The
 166-23  terms of office of each member of the advisory committee shall be
 166-24  two years.  A member whose term has expired shall continue to serve
 166-25  until a qualified replacement is appointed.  The members of the
 166-26  advisory committee shall serve without compensation but shall be
 166-27  entitled to reimbursement at rates established for state employees
  167-1  for travel and per diem incurred in the performance of their
  167-2  official duties.  The commission shall reimburse members of the
  167-3  advisory committee in accordance with this subsection and shall
  167-4  provide clerical and staff support to the advisory committee,
  167-5  including a secretary to record the committee meetings.  The
  167-6  commission's costs associated with the advisory committee shall be
  167-7  reimbursed from the universal service fund.
  167-8        Sec. 3.605 <3.355>.  DISTANCE LEARNING ACTIVITIES BY
  167-9  EDUCATIONAL INSTITUTIONS AND INFORMATION SHARING PROGRAMS BY
 167-10  LIBRARIES; REDUCED RATES.   (a)  The commission by rule shall
 167-11  require a dominant carrier to file a tariff containing a reduced
 167-12  rate for a telecommunications service the commission finds is
 167-13  directly related to a distance learning activity that is or could
 167-14  be conducted by an educational institution in this state or an
 167-15  information sharing program that is or could be conducted by a
 167-16  library in this state.
 167-17        (b)  The commission rules shall specify:
 167-18              (1)  the telecommunications services that qualify under
 167-19  this section;
 167-20              (2)  the process by which an educational institution or
 167-21  library qualifies for a reduced rate;
 167-22              (3)  the date by which a dominant carrier shall file a
 167-23  tariff;
 167-24              (4)  guidelines and criteria by which the services and
 167-25  reduced rates shall further the goals stated in Subsection (d) of
 167-26  this section; and
 167-27              (5)  any other requirements, terms, and conditions that
  168-1  the commission determines to be in the public interest.
  168-2        (c)  A tariff filing by a dominant carrier under this
  168-3  section:
  168-4              (1)  shall concern only the implementation of this
  168-5  section;
  168-6              (2)  is not a rate change under Section 3.211 of this
  168-7  Act; and
  168-8              (3)  does not affect any of the carrier's other rates
  168-9  or services.
 168-10        (d)  The services and reduced rates shall be designed to:
 168-11              (1)  encourage the development and offering of distance
 168-12  learning activities by educational institutions or information
 168-13  sharing programs of libraries;
 168-14              (2)  meet the distance learning needs identified by the
 168-15  educational community and the information sharing needs identified
 168-16  by libraries; and
 168-17              (3)  recover the long-run incremental costs of
 168-18  providing the services, to the extent those costs can be
 168-19  identified, so as to avoid subsidizing educational institutions or
 168-20  libraries.
 168-21        (e)  The commission is not required to determine the long-run
 168-22  incremental cost of providing a service before approving a reduced
 168-23  rate for the service.  Until cost determination rules are developed
 168-24  and the rates established under this section are changed as
 168-25  necessary to ensure proper cost recovery, the reduced rates
 168-26  established by the commission shall be equal to 75 percent of the
 168-27  otherwise applicable rate.  After the commission develops cost
  169-1  determination rules for telecommunications services generally, it
  169-2  shall ensure that a reduced rate approved under this section
  169-3  recovers service-specific long-run incremental costs and avoids
  169-4  subsidization.
  169-5        (f)  An educational institution, library, or dominant carrier
  169-6  may at any time request the commission to:
  169-7              (1)  provide for a reduced rate for a service directly
  169-8  related to a distance learning activity or an information sharing
  169-9  program that is not covered by commission rules;
 169-10              (2)  change a rate;
 169-11              (3)  amend a tariff; or
 169-12              (4)  amend a commission rule.
 169-13        (g)  If the commission determines that a change requested
 169-14  under Subsection (f) is appropriate, it shall make the requested
 169-15  change.
 169-16        (h)  In this section:
 169-17              (1)  "Distance learning" means instruction, learning,
 169-18  and training that is transmitted from one site to one or more sites
 169-19  by telecommunications services that are used by an educational
 169-20  institution predominantly for such instruction, learning, or
 169-21  training, including video, data, voice, and electronic information.
 169-22              (2)  "Educational institution" means and includes:
 169-23                    (A)  accredited primary or secondary schools
 169-24  owned or operated by state and local governmental entities or
 169-25  private entities;
 169-26                    (B)  institutions of higher education as defined
 169-27  by Section 61.003, Education Code;
  170-1                    (C)  private institutions of higher education
  170-2  accredited by a recognized accrediting agency as defined by Section
  170-3  61.003(13), Education Code;
  170-4                    (D)  the Central Education Agency, its successors
  170-5  and assigns;
  170-6                    (E)  regional education service centers
  170-7  established and operated pursuant to Sections 11.32 and 11.33,
  170-8  Education Code; and
  170-9                    (F)  the Texas Higher Education Coordinating
 170-10  Board, its successors and assigns.
 170-11              (3)  "Library" means a "public library" or "regional
 170-12  library system" as those terms are defined by Section 441.122,
 170-13  Government Code, or a library operated by an institution of higher
 170-14  education or a school district.
 170-15        Sec. 3.606.  TELECOMMUNICATIONS INFRASTRUCTURE FUND.  (a)  In
 170-16  this section:
 170-17              (1)  "Board" means the Telecommunications
 170-18  Infrastructure Fund Board.
 170-19              (2)  "Fund" means the telecommunications infrastructure
 170-20  fund.
 170-21              (3)  "Institution of higher education" has the meaning
 170-22  assigned by Section 61.003, Education Code, and also includes a
 170-23  "private or independent institution of higher education" as defined
 170-24  by Section 61.003, Education Code.
 170-25              (4)  "Library" means a "public library," or "regional
 170-26  library system" as those terms are defined by Section 441.122,
 170-27  Government Code, or a library operated by an institution of higher
  171-1  education or a school district.
  171-2              (5)  "School district" has the meaning assigned by
  171-3  Section 19.001, Education Code.
  171-4              (6)  "Private network services" means the
  171-5  telecommunications services provided to an entity described in
  171-6  Section 3.359(b)(1)(A) of this Act and includes broadband services,
  171-7  customized, and packaged network services and does not limit the
  171-8  local exchange company from providing these services with
  171-9  facilities which are also used to provide other services to other
 171-10  customers.
 171-11              (7)  "Public, not-for-profit hospital" or "public
 171-12  not-for-profit health care facility" means a rural or regional
 171-13  hospital or entity such as a rural health clinic which is supported
 171-14  by local or regional tax levies or is, under federal definition, a
 171-15  certified not-for-profit health corporation.
 171-16              (8)  "Telemedicine" means consultive, diagnostic, or
 171-17  other medical services delivered via telecommunications
 171-18  technologies to rural or underserved public, not-for-profit
 171-19  hospitals and primary health care facilities in collaboration with
 171-20  an academic health center and associated teaching hospitals or
 171-21  tertiary centers.  Telemedicine includes, but is not limited to,
 171-22  interactive video consultation, teleradiology, telepathology, and
 171-23  distance education for working health care professionals.
 171-24              (9)  "Commercial mobile service provider" means a
 171-25  provider of commercial mobile service under Sections 153(n) and
 171-26  332(d), Communications Act of 1934 (47 U.S.C. Section 151 et seq.),
 171-27  Federal Communications Commission rules, and the Omnibus Budget
  172-1  Reconciliation Act of 1993.
  172-2        (b)  The legislature finds that commercial mobile service
  172-3  providers benefit from the public telecommunications network by the
  172-4  ability to originate and terminate calls that transverse mobile and
  172-5  cellular network and that they will benefit by virtue of the
  172-6  advancement of the public telecommunications network through
  172-7  projects funded under this section.  Therefore, it is the policy of
  172-8  this state that commercial mobile service providers contribute an
  172-9  appropriate amount to the telecommunications infrastructure fund.
 172-10        (c)  The board shall administer the fund, including the two
 172-11  accounts in the fund.  The board consists of nine members.  Three
 172-12  members are appointed by the governor, three members are appointed
 172-13  by the lieutenant governor, and three members are appointed by the
 172-14  governor from a list of individuals submitted by the speaker of the
 172-15  house of representatives.  Members of the board serve for
 172-16  staggered, six-year terms, with three members' terms expiring on
 172-17  August 31 of each odd-numbered year.  The governor shall designate
 172-18  the presiding officer of the board.
 172-19        (d)  The governor and the lieutenant governor, in making
 172-20  their appointments to the board, and the speaker of the house of
 172-21  representatives, in compiling the list of recommended persons,
 172-22  shall attempt to select members who are representative of, but not
 172-23  limited to, urban and rural school districts, institutions of
 172-24  higher education, libraries, and the public.  A person may not
 172-25  serve on the board if the person is required to register as a
 172-26  lobbyist under Chapter 305, Government Code, because of the
 172-27  person's activities for compensation on behalf of a profession
  173-1  related to the operation of the board.
  173-2        (e)  Members of the board serve without pay but are entitled
  173-3  to reimbursement for their actual expenses incurred in attending
  173-4  meetings of the board or in  attending to other work of the board
  173-5  if approved by the chairman of the board.
  173-6        (f)  The board is subject to Chapters 551 and 2001,
  173-7  Government Code.  The board is subject to Chapter 325, Government
  173-8  Code (Texas Sunset Act).  Unless continued in existence as provided
  173-9  by that chapter, the advisory board and this section expire
 173-10  September 1, 2006.
 173-11        (g)  The board is authorized to employ any personnel as
 173-12  reasonably necessary to perform duties delegated by the board, and
 173-13  the board may also enter into contracts as are necessary with state
 173-14  agencies or private entities to perform its duties.
 173-15        (h)  The board may appoint any committees as it determines
 173-16  may assist it in performing its duties under this section.
 173-17        (i)  The board shall prepare an annual report detailing the
 173-18  revenues deposited to the credit of the fund, including each
 173-19  account, and summarizing the grants and loans made from each
 173-20  account.  Not later than January 15 of each year, the board shall
 173-21  submit the report for the preceding year to the governor and to
 173-22  each standing committee in the senate and house of representatives
 173-23  that has jurisdiction over public or higher education.
 173-24        (j)  The fund is composed of the telecommunications utilities
 173-25  account and the commercial mobile service providers account.  The
 173-26  telecommunications utilities account is financed by an annual
 173-27  assessment on all telecommunications utilities doing business in
  174-1  this state.  Each telecommunications utility shall pay the annual
  174-2  assessment in accordance with the ratio that the annual taxable
  174-3  telecommunications receipts reported by that telecommunications
  174-4  utility under Chapter 151, Tax Code, bears to the total annual
  174-5  taxable telecommunications receipts reported by all
  174-6  telecommunications utilities under Chapter 151, Tax Code.
  174-7        (k)  The commercial mobile service providers account is
  174-8  financed by an annual assessment on all commercial mobile service
  174-9  providers doing business in this state.  Each commercial mobile
 174-10  service provider shall pay the annual assessment in accordance with
 174-11  the ratio that the annual taxable telecommunications receipts
 174-12  reported by that provider under Chapter 151, Tax Code, bears to the
 174-13  total annual taxable telecommunications receipts reported by all
 174-14  commercial mobile service providers under Chapter 151, Tax Code.
 174-15        (l)  For the fiscal year beginning September 1, 1995, and for
 174-16  the nine fiscal years immediately following that year, for a total
 174-17  of 10 years, the comptroller shall assess and collect a total
 174-18  annual amount of $75 million from telecommunications utilities and
 174-19  a total annual amount of $75 million from commercial mobile service
 174-20  providers.  The amounts assessed against both the
 174-21  telecommunications utilities and the commercial mobile service
 174-22  providers shall be assessed and collected in each year without
 174-23  respect to whether all of the funds previously collected and
 174-24  deposited in either or both accounts have been disbursed or spent
 174-25  due to lack of demand or otherwise.
 174-26        (m)  The comptroller may require telecommunications utilities
 174-27  and commercial mobile service providers to provide any reports and
  175-1  information as are needed to fulfill the duties of the comptroller
  175-2  provided by this section.  Any information provided to the
  175-3  comptroller by a telecommunications utility or commercial mobile
  175-4  service provider under this section is confidential and exempt from
  175-5  disclosure under Chapter 552, Government Code.
  175-6        (n)  All amounts collected by the comptroller from
  175-7  telecommunications utilities under Subsection (l) of this section
  175-8  shall be deposited to the credit of the telecommunications
  175-9  utilities account in the telecommunications infrastructure fund in
 175-10  the state treasury.  All amounts collected by the comptroller from
 175-11  commercial mobile service providers under Subsection (l) of this
 175-12  section shall be deposited to the credit of the commercial mobile
 175-13  service providers account in the telecommunications infrastructure
 175-14  fund in the state treasury.  Money in the fund may be appropriated
 175-15  only for a use consistent with the purposes of this section.
 175-16  Sections 403.094 and 403.095, Government Code, do not apply to the
 175-17  fund or either account.
 175-18        (o)  From funds appropriated to the board, the comptroller
 175-19  shall issue warrants as requested by the board in accordance with
 175-20  the purposes of this section, including warrants to grantees of the
 175-21  board in amounts  certified by the board to the comptroller.
 175-22        (p)  In addition to any appropriated funds, the board may
 175-23  accept gifts, grants, and donations and use them for the purposes
 175-24  of this section.
 175-25        (q)  The board shall use money in the telecommunications
 175-26  utilities account to award grants and loans in accordance with this
 175-27  section to fund equipment purchases, including computers, printers,
  176-1  computer labs, and video equipment, for public schools and for
  176-2  intracampus and intercampus wiring to enable those public schools
  176-3  to use the equipment.  The board shall use money in the commercial
  176-4  mobile service providers account for any purpose authorized by this
  176-5  section, including equipment purchases, wiring, material, program
  176-6  development, training, installation costs, or any statewide
  176-7  telecommunications network.
  176-8        (r)  Subject to the limitations prescribed by Subsection (q)
  176-9  of this section, the board may award grants to projects and
 176-10  proposals that:
 176-11              (1)  provide equipment and infrastructure needed for
 176-12  distance learning, information sharing programs of libraries, and
 176-13  telemedicine services;
 176-14              (2)  develop and implement the initial or prototypical
 176-15  delivery of courses and other distance learning material;
 176-16              (3)  train teachers, faculty, librarians, or
 176-17  technicians in the use of distance learning or information sharing
 176-18  materials and equipment;
 176-19              (4)  develop curricula and instructional material
 176-20  especially suited for delivery by telecommunications;
 176-21              (5)  provide electronic information; or
 176-22              (6)  establish or carry out information sharing
 176-23  programs.
 176-24        (s)  Subject to the limitations prescribed by Subsection (q)
 176-25  of this section, the board may award loans to projects and
 176-26  proposals to acquire equipment needed for distance learning and
 176-27  telemedicine projects.
  177-1        (t)  In awarding grants and loans in accordance with this
  177-2  section, the board shall give priority to projects and proposals
  177-3  that:
  177-4              (1)  represent collaborative efforts involving multiple
  177-5  schools, universities, or libraries;
  177-6              (2)  contribute matching funds from other sources;
  177-7              (3)  show promise of becoming self-sustaining;
  177-8              (4)  help users of information learn new ways to
  177-9  acquire and use information through telecommunications;
 177-10              (5)  extend specific educational information and
 177-11  knowledge services to groups not previously served, especially
 177-12  those in rural and remote areas;
 177-13              (6)  result in more efficient or effective learning
 177-14  than through conventional teaching;
 177-15              (7)  improve the effectiveness and efficiency of health
 177-16  care delivery; or
 177-17              (8)  take advantage of distance learning opportunities
 177-18  in rural and urban school districts with disproportionate numbers
 177-19  of at-risk youths or with high dropout rates.
 177-20        (u)  The Texas Higher Education Coordinating Board, the
 177-21  Central Education Agency, and the Texas State Library and Archives
 177-22  Commission shall adopt policies and procedures in consultation with
 177-23  the board that are designed to aid the board in achieving the
 177-24  purposes of this section.
 177-25        (v)  In distributing funds to public schools, the board
 177-26  shall take into account the relative property wealth per student of
 177-27  the recipient school districts and recognize the unique needs of
  178-1  rural communities.
  178-2        Sec. 3.607 <3.356>.  RECOVERY OF LOST REVENUES.  A local
  178-3  exchange company is entitled to recover the lost revenue, if any,
  178-4  resulting solely from the provision of tel-assistance service from
  178-5  the universal service fund, the establishment of which is provided
  178-6  for by this Act.
  178-7        Sec. 3.608 <3.357>.  UNIVERSAL SERVICE FUND.  (a)  The
  178-8  commission shall adopt and enforce rules requiring local exchange
  178-9  companies to establish a universal service fund to assist local
 178-10  exchange companies in providing basic local telecommunications
 178-11  service <exchange service> at reasonable rates in high cost rural
 178-12  areas, to reimburse local exchange companies for revenues lost as a
 178-13  result of providing tel-assistance service under this Act, to
 178-14  reimburse the telecommunications carrier providing the statewide
 178-15  telecommunications relay access service for the hearing-impaired
 178-16  and speech-impaired as authorized in Section 3.604 <3.354> of this
 178-17  Act, and to reimburse the Texas Department of Human Services and
 178-18  the commission for costs incurred in implementing the provisions of
 178-19  this subtitle.
 178-20        (b)(1)  For local exchange companies serving fewer than five
 178-21  million access lines, in addition to the authority described by
 178-22  Subsection (a) of this section, the commission may adopt any
 178-23  mechanisms necessary to maintain reasonable rates for local
 178-24  exchange telephone service and shall establish rules that would
 178-25  expand the universal service fund in the circumstances prescribed
 178-26  by this subsection.
 178-27              (2)  In the event of a commission order, rule, or
  179-1  policy, the effect of which is to reduce the amount of the high
  179-2  cost assistance fund, except an order entered in an individual
  179-3  company revenue requirements proceeding, the commission shall
  179-4  implement a mechanism through the universal service fund to replace
  179-5  the reasonably projected reduction in revenues caused by that
  179-6  regulatory action.
  179-7              (3)  In the event of a Federal Communications
  179-8  Commission order, rule, or policy, the effect of which is to change
  179-9  the federal universal service fund revenues of a local exchange
 179-10  company or change costs or revenues assigned to the intrastate
 179-11  jurisdiction, the commission shall implement a mechanism, through
 179-12  either the universal service fund or an increase to rates if that
 179-13  increase would not adversely impact universal service, to replace
 179-14  the reasonably projected change in revenues caused by the
 179-15  regulatory action.
 179-16              (4)  In the event of a commission change in its policy
 179-17  with respect to intraLATA "1+" dialing access, the commission shall
 179-18  implement a mechanism, through either the universal service fund or
 179-19  an increase to rates if that increase would not adversely impact
 179-20  universal service, to replace the reasonably projected reduction in
 179-21  contribution caused by the action.  Contribution for purposes of
 179-22  this subdivision equals average intraLATA long distance message
 179-23  telecommunications service (MTS) revenue, including intraLATA toll
 179-24  pooling and associated impacts, per minute less average MTS cost
 179-25  per minute less the average contribution from switched access times
 179-26  the projected change in intraLATA "1+" minutes of use.
 179-27              (5)  In the event of any other governmental agency
  180-1  issuing an order, rule, or policy, the effect of which is to
  180-2  increase costs or decrease revenues of the intrastate jurisdiction,
  180-3  the commission shall implement a mechanism through either the
  180-4  universal service fund or an increase to rates if that increase
  180-5  would not adversely impact universal service, to replace the
  180-6  reasonably projected increase in costs or decrease in revenues
  180-7  caused by that regulatory action.
  180-8              (6)  A revenue requirement showing is not required with
  180-9  respect to disbursements from the universal service fund under
 180-10  Subsection (a) or (b) of this section.  Those disbursements shall
 180-11  be implemented promptly and efficiently so that telecommunications
 180-12  providers and local exchange companies do not experience
 180-13  unnecessary cash flow changes as a result of these changes in
 180-14  governmental policy.
 180-15        (c)  The universal service fund shall be funded by a
 180-16  statewide uniform charge, at rates and on services determined by
 180-17  the commission, payable by all telecommunications providers
 180-18  <utilities> that have access to the customer base.  In establishing
 180-19  the uniform level of the charge and the services to which it will
 180-20  apply, the commission may not make or grant an unreasonable
 180-21  preference or advantage to a telecommunications provider <utility>
 180-22  or subject a telecommunications provider <utility> to unreasonable
 180-23  prejudice or disadvantage.  The charge shall be paid in accordance
 180-24  with procedures approved by the commission.
 180-25        (d) <(c)>  The commission shall:
 180-26              (1)  establish, in a manner that assures reasonable
 180-27  rates for basic local telecommunications <exchange> service,
  181-1  eligibility criteria and review procedures, including a method for
  181-2  administrative review, it finds necessary for funding of and
  181-3  distribution from <participation in> the universal service fund;
  181-4              (2)  determine which local exchange companies meet the
  181-5  eligibility criteria, which, at a minimum, include the requirement
  181-6  to offer service to every consumer within its certificated area and
  181-7  render continuous and adequate service within the area or areas, in
  181-8  compliance with the commission's quality of service requirements;
  181-9              (3)  determine the amount of and approve a procedure
 181-10  for reimbursement to local exchange companies of revenue lost in
 181-11  providing tel-assistance service under this Act;
 181-12              (4)  prescribe and collect fees from the universal
 181-13  service fund necessary to recover the costs the Texas Department of
 181-14  Human Services and the commission incurred in implementing and
 181-15  administrating the provisions of this subtitle; and
 181-16              (5)  approve procedures for the collection and
 181-17  disbursal of the revenues of the universal service fund.
 181-18        (e) <(d)>  The commission shall adopt rules for the
 181-19  implementation and administration of the universal service fund.
 181-20        (f) <(e)>  The commission may do all things necessary and
 181-21  convenient to implement and administer the universal service fund,
 181-22  including require local exchange companies and other
 181-23  telecommunications providers to provide any reports and information
 181-24  needed to assess contributions to the fund.  All reports and
 181-25  information are confidential and not subject to disclosure under
 181-26  Chapter 552, Government Code.
 181-27        Sec. 3.609 <3.358>.  INTERACTIVE MULTIMEDIA COMMUNICATIONS.
  182-1  (a)  The commission shall permit a local exchange company that
  182-2  provides interactive multimedia communications services to
  182-3  establish rates at levels necessary, using sound ratemaking
  182-4  principles, to recover costs associated with providing the
  182-5  services.  Unless determined by the commission to be in the public
  182-6  interest, a local exchange company may not establish rates under
  182-7  this subsection that are less than the local exchange company's
  182-8  long-run incremental costs of providing the interactive multimedia
  182-9  communications services.
 182-10        (b)  In this section, "interactive multimedia communications"
 182-11  has the meaning assigned by Section 14.0451(a), Education Code, as
 182-12  added by Chapter 868, Acts of the 73rd Legislature, Regular
 182-13  Session, 1993.
 182-14        Sec. 3.610 <3.359>.  SEVERABILITY.  If this subtitle
 182-15  conflicts with another provision of this Act, this subtitle
 182-16  prevails.
 182-17          SUBTITLE O <I>.  AUTOMATIC DIAL ANNOUNCING DEVICES
 182-18        Sec. 3.651 <3.401>.  DEFINITIONS.  In this subtitle:
 182-19              (1)  "Automated dial announcing device" or "ADAD" means
 182-20  automated equipment used for telephone solicitation or collection
 182-21  that is capable:
 182-22                    (A)  of storing telephone numbers to be called or
 182-23  that has a random or sequential number generator capable of
 182-24  producing numbers to be called; and
 182-25                    (B)  alone or in conjunction with other
 182-26  equipment, of conveying a prerecorded or synthesized voice message
 182-27  to the number called without the use of a live operator.
  183-1              (2)  "LEC" means a local exchange company, as that term
  183-2  is defined by Section 3.002 <3.001> of this Act.
  183-3        Sec. 3.652 <3.402>.  EXEMPTIONS.  This subtitle does not
  183-4  apply to the use of an ADAD to make a telephone call:
  183-5              (1)  relating to an emergency or a public service under
  183-6  a program developed or approved by the emergency management
  183-7  coordinator of the county in which the call was received; or
  183-8              (2)  made by a public or private primary or secondary
  183-9  school system to locate or account for a truant student.
 183-10        Sec. 3.653 <3.403>.  REQUIREMENTS FOR OPERATION OF ADAD.
 183-11  (a)  A person may not operate an ADAD to make a telephone call if
 183-12  the device plays a recorded message when a connection is completed
 183-13  to a telephone number unless:
 183-14              (1)  the person has obtained a permit from the
 183-15  commission and given written notice specifying the type of device
 183-16  to each telecommunications utility over whose system the device is
 183-17  to be used;
 183-18              (2)  the device is not used for random number dialing
 183-19  or to dial numbers determined by successively increasing or
 183-20  decreasing integers;
 183-21              (3)  the message states during the first 30 seconds of
 183-22  the call the nature of the call, the identity of the person,
 183-23  company, or organization making the call, and the telephone number
 183-24  from which the call was made, provided, however, that if an ADAD is
 183-25  used for debt collection purposes and the use complies with
 183-26  applicable federal law and regulations, and the ADAD is used by a
 183-27  live operator for automatic dialing or hold announcement purposes,
  184-1  the use complies with this subdivision;
  184-2              (4)  the device disconnects from the called person's
  184-3  line not later than 30 seconds after the call is terminated by
  184-4  either party or, if the device cannot disconnect within that
  184-5  period, a live operator introduces the call and receives the oral
  184-6  consent of the called person before beginning a prerecorded or
  184-7  synthesized voice message; <and>
  184-8              (5)  the device, when used for solicitation purposes,
  184-9  has a message shorter than one minute or has the technical capacity
 184-10  to recognize a telephone answering device on the called person's
 184-11  line and terminates the call within one minute; and
 184-12              (6)  for calls terminating in this state, the device is
 184-13  not used to make a call:
 184-14                    (A)  before noon or after 9 p.m. on a Sunday or
 184-15  before 9 a.m. or after 9 p.m. on a weekday or a Saturday, if the
 184-16  device is used for solicitation; or
 184-17                    (B)  at an hour at which collection calls would
 184-18  be prohibited under the federal Fair Debt Collection Practices Act
 184-19  (15 U.S.C. Section 1692 et seq.), if the device is used for
 184-20  collection purposes.
 184-21        (b)  In addition to the requirements prescribed by Subsection
 184-22  (a) of this section, if during the call a cross-promotion or
 184-23  reference to a pay-per-call information service is made, the call
 184-24  shall include:
 184-25              (1)  a statement that a charge will be incurred by a
 184-26  caller who makes a call to a pay-per-call information services
 184-27  telephone number;
  185-1              (2)  the amount of the flat-rate or cost-per-minute
  185-2  charge that will be incurred or the amount of both if both charges
  185-3  will be incurred; and
  185-4              (3)  the estimated amount of time required to receive
  185-5  the entire information offered by the service during a call.
  185-6        (c)  In this section, "pay-per-call information service"
  185-7  means a service that allows a caller to dial a specified "900" or
  185-8  "976" number to call a service that routinely delivers, for a
  185-9  predetermined and sometimes time-sensitive fee, a prerecorded or
 185-10  live message or interactive program.
 185-11        Sec. 3.654 <3.404>.  INVESTIGATION OF COMPLAINTS; VIOLATIONS;
 185-12  DISCONNECTION OF SERVICE.  (a)  The commission shall investigate
 185-13  complaints relating to the use of an ADAD and enforce this
 185-14  subtitle.
 185-15        (b)  If the commission or a court determines that a person
 185-16  has violated this subtitle, the commission or court shall require a
 185-17  telecommunications utility to disconnect service to the person.
 185-18  The telecommunications utility may reconnect service to the person
 185-19  only on a determination by the commission that the person will
 185-20  comply with this subtitle.  The utility shall give notice to the
 185-21  person using the device of its intent to disconnect service not
 185-22  later than the third day before the date of the disconnection,
 185-23  except that if the device is causing network congestion or
 185-24  blockage, the notice may be given on the day before the date of
 185-25  disconnection.
 185-26        (c)  A telecommunications utility may, without an order by
 185-27  the commission or a court, disconnect or refuse to connect service
  186-1  to a person using or intending to use an ADAD if the utility
  186-2  determines that the device would cause or is causing network harm.
  186-3        Sec. 3.655 <3.405>.  APPLICATION FOR PERMIT TO OPERATE ADAD.
  186-4  (a)  An application for a permit to use one or more ADADs must be
  186-5  made using the form prescribed by the commission and must be
  186-6  accompanied by a fee in a reasonable amount computed to cover the
  186-7  enforcement cost to the commission, but not to exceed $500, as
  186-8  determined by the commission.  A permit is valid for one year after
  186-9  its effective date.  Subject to Subsection (c) of this section, a
 186-10  permit may be renewed annually by making the filing required by
 186-11  this section and paying a filing fee of not more than $100, as
 186-12  determined by the commission.  The proceeds of the fees shall be
 186-13  deposited to the credit of the general revenue fund.
 186-14        (b)  Each application for the issuance or renewal of a permit
 186-15  under this section must contain the telephone number of each ADAD
 186-16  that will be used and the physical address from which the ADAD will
 186-17  operate.  If the telephone number of an ADAD or the physical
 186-18  address from which the ADAD operates changes, the owner or operator
 186-19  of the ADAD shall notify the commission by certified mail of each
 186-20  new number or address not later than the 48th hour before the hour
 186-21  at which the ADAD will begin operating with the new telephone
 186-22  number or at the new address.  If the owner or operator of an ADAD
 186-23  fails to notify the commission as required by this subsection
 186-24  within the period prescribed by this subsection, the permit is
 186-25  automatically invalid.
 186-26        (c)  In determining if a permit should be issued or renewed,
 186-27  the commission shall consider the compliance record of the owner or
  187-1  operator of the ADAD.  The commission may deny an application for
  187-2  the issuance or renewal of a permit because of the applicant's
  187-3  compliance record.
  187-4        (d)  The commission shall provide to an LEC on request a copy
  187-5  of a permit issued under this section and of any changes relating
  187-6  to the permit.
  187-7        (e)  An LEC that receives a complaint relating to the use of
  187-8  an ADAD shall send the complaint to the commission.  The commission
  187-9  by rule shall prescribe the procedures and requirements for sending
 187-10  a complaint to the commission.
 187-11        Sec. 3.656 <3.406>.  VIOLATIONS; PENALTIES.  (a)  A person
 187-12  who owns or operates an ADAD and who operates the ADAD without a
 187-13  valid permit or with an expired permit or who operates the ADAD in
 187-14  violation of this subtitle or a commission rule or order is subject
 187-15  to an administrative penalty of not more than $1,000 for each day
 187-16  or portion of a day during which the ADAD was operating in
 187-17  violation of this section.
 187-18        (b)  The administrative penalty authorized by this section is
 187-19  civil in nature and is cumulative of any other penalty provided by
 187-20  law.
 187-21        (c)  The commission by rule shall prescribe the procedures
 187-22  for assessing an administrative penalty under this section.  The
 187-23  procedures shall require proper notice and hearing in accordance
 187-24  with Chapter 2001, Government Code.
 187-25        (d)  A person may appeal the final order of the commission
 187-26  under Chapter 2001, Government Code, using the substantial evidence
 187-27  rule on appeal.
  188-1        (e)  The proceeds of administrative penalties collected under
  188-2  this section shall be deposited to the credit of the general
  188-3  revenue fund.
  188-4        Sec. 3.657 <3.407>.  REVOCATION OF PERMIT; OFFENSES.
  188-5  (a)  The commission may revoke a permit issued under this subtitle
  188-6  for failure to comply with this subtitle.
  188-7        (b)  A person commits an offense if the person owns or
  188-8  operates an ADAD that the person knows is operating in violation of
  188-9  this subtitle.  An offense under this subsection is a Class A
 188-10  misdemeanor.
 188-11        Sec. 3.658 <3.408>.  RULEMAKING AUTHORITY.  The commission
 188-12  may adopt any rules necessary to carry out its powers and duties
 188-13  under this subtitle.
 188-14        Sec. 3.659 <3.409>.  COMPLIANCE WITH CONSUMERS' REQUESTS NOT
 188-15  TO BE CALLED.  Every telephone solicitor operating in this state
 188-16  who makes consumer telephone calls subject to Section 37.02 of the
 188-17  Business & Commerce Code shall implement in-house systems and
 188-18  procedures so that every effort is made not to call consumers who
 188-19  ask not to be called again.  The commission is granted all
 188-20  necessary power and authority to enforce the provisions of this
 188-21  section.
 188-22        Sec. 3.660 <3.410>.  NOTICE TO CONSUMER OF PROVISIONS OF
 188-23  CHAPTER 37 OF THE BUSINESS & COMMERCE CODE AND SECTION 3.659
 188-24  <3.409>.  The commission by rule shall require that a local
 188-25  exchange company or telephone cooperative inform its customers of
 188-26  the provisions of Chapter 37 of the Business & Commerce Code and
 188-27  Section 3.659 <3.409> of this Act by:
  189-1              (1)  inserting the notice annually in the billing
  189-2  statement mailed to a customer; or
  189-3              (2)  publishing the notice in the consumer information
  189-4  pages of its local telephone directory.
  189-5        SECTION 50.  (a)  Subchapter D, Chapter 74, Property Code, is
  189-6  amended by adding Section 74.3011 to read as follows:
  189-7        Sec. 74.3011.  DELIVERY OF MONEY TO RURAL SCHOLARSHIP FUND.
  189-8  (a)  Notwithstanding and in addition to any other provision of this
  189-9  chapter or other law, a local telephone exchange company may
 189-10  deliver reported money to a scholarship fund for rural students
 189-11  instead of delivering the money to the state treasurer as
 189-12  prescribed by Section 74.301.
 189-13        (b)  A local telephone exchange company may deliver the money
 189-14  under this section only to a scholarship fund established by one or
 189-15  more local telephone exchange companies in this state to enable
 189-16  needy students from rural areas to attend college, technical
 189-17  school, or another postsecondary educational institution.
 189-18        (c)  A local telephone exchange company shall file with the
 189-19  state treasurer a verification of money delivered under this
 189-20  section that complies with Section 74.302.
 189-21        (d)  A claim for money delivered to a scholarship fund under
 189-22  this section must be filed with the local telephone exchange
 189-23  company that delivered the money.  The local telephone exchange
 189-24  company shall forward the claim to the administrator of the
 189-25  scholarship fund to which the money was delivered.  The scholarship
 189-26  fund shall pay the claim if the fund determines in good faith that
 189-27  the claim is valid.  A person aggrieved by a claim decision may
  190-1  file a suit against the fund in a district court in the county in
  190-2  which the administrator of the scholarship fund is located in
  190-3  accordance with Section 74.506.
  190-4        (e)  The state treasurer shall prescribe forms and procedures
  190-5  governing this section, including forms and procedures relating to:
  190-6              (1)  notice of presumed abandoned property;
  190-7              (2)  delivery of reported money to a scholarship fund;
  190-8  and
  190-9              (3)  filing of a claim.
 190-10        (f)  In this section, "local telephone exchange company"
 190-11  means a telecommunications utility certificated to provide local
 190-12  exchange service within the state and that is a telephone
 190-13  cooperative or has fewer than 50,000 access lines in service in
 190-14  this state.
 190-15        (g)  During a state fiscal year, the total amount of money
 190-16  that may be transferred by all local telephone exchange companies
 190-17  under this section may not exceed $400,000. The state treasury
 190-18  shall keep a record of the total amount of money transferred
 190-19  annually. When the total amount of money transferred during a state
 190-20  fiscal year equals the amount allowed by this subsection, the
 190-21  treasury shall notify each local telephone exchange company that
 190-22  the company may not transfer any additional money to the company's
 190-23  scholarship fund during the remainder of that state fiscal year.
 190-24        (b)  Section 74.3011, Property Code, as added by this Act,
 190-25  applies only to money that a local telephone exchange company would
 190-26  otherwise be required to deliver to the state treasurer on or after
 190-27  the effective date of this Act.  Money that was required to be
  191-1  delivered to the state treasurer before the effective date of this
  191-2  Act is governed by the law in effect when the money was required to
  191-3  be delivered, and that law is continued in effect for that purpose.
  191-4        SECTION 51.  (a)  Subchapter D, Chapter 74, Property Code, is
  191-5  amended by adding Section 74.3012 to read as follows:
  191-6        Sec. 74.3012. DELIVERY OF MONEY TO URBAN SCHOLARSHIP FUND.
  191-7  (a)  Notwithstanding and in addition to any other provision of this
  191-8  chapter or other law, a local exchange company may deliver reported
  191-9  money to a scholarship fund for urban students instead of
 191-10  delivering the money to the state treasurer as prescribed by
 191-11  Section 74.301.
 191-12        (b)  A local exchange company may deliver the money under
 191-13  this section only to a scholarship fund established by one or more
 191-14  local exchange companies in this state to enable needy students
 191-15  from urban areas to attend college, technical school, or another
 191-16  postsecondary educational institution.
 191-17        (c)  A local exchange company shall file with the state
 191-18  treasurer a verification of money delivered under this section that
 191-19  complies with Section 74.302.
 191-20        (d)  A claim for money delivered to a scholarship fund under
 191-21  this section must be filed with the local exchange company that
 191-22  delivered the money. The local exchange company shall forward the
 191-23  claim to the administrator of the scholarship fund to which the
 191-24  money was delivered. The scholarship fund shall pay the claim if
 191-25  the fund determines in good faith that the claim is valid. A person
 191-26  aggrieved by a claim decision may file a suit against the fund in a
 191-27  district court in the county in which the administrator of the
  192-1  scholarship fund is located in accordance with Section 74.506.
  192-2        (e)  The state treasurer shall prescribe forms and procedures
  192-3  governing this section, including forms and procedures relating to:
  192-4              (1)  notice of presumed abandoned property;
  192-5              (2)  delivery of reported money to a scholarship fund;
  192-6  and
  192-7              (3)  filing of a claim.
  192-8        (f)  In this section, "local exchange company" means a
  192-9  telecommunications utility certificated to provide local exchange
 192-10  telephone service within the state and that has 50,000 or more
 192-11  access lines in service in this state and is not a telephone
 192-12  cooperative.
 192-13        (g)  During the 1995-1996 fiscal year, the total amount of
 192-14  money that may be transferred by all local exchange companies under
 192-15  this section may not exceed $400,000. During each subsequent state
 192-16  fiscal year, the total amount of money that may be transferred by
 192-17  all local exchange companies under this section may not exceed the
 192-18  total amount of money transferred to rural scholarship funds under
 192-19  Section 74.3011 during the previous state fiscal year. The state
 192-20  treasury shall keep a record of the total amount of money
 192-21  transferred annually. If the total amount of money transferred
 192-22  during a state fiscal year equals the amount allowed by this
 192-23  subsection, the treasury shall notify each local exchange company
 192-24  that the company may not transfer any additional money to the
 192-25  company's scholarship fund during the remainder of that state
 192-26  fiscal year.
 192-27        (b)  Section 74.3012, Property Code, as added by this Act,
  193-1  applies only to money that a local exchange company would otherwise
  193-2  be required to deliver to the state treasurer on or after the
  193-3  effective date of this Act. Money that was required to be delivered
  193-4  to the state treasurer before the effective date of this Act is
  193-5  governed by the law in effect when the money was required to be
  193-6  delivered, and that law is continued in effect for that purpose.
  193-7        SECTION 52.  As soon as possible after the effective date of
  193-8  this Act, the governor and lieutenant governor shall appoint the
  193-9  members of the Telecommunications Infrastructure Fund Board created
 193-10  by Section 3.606, Public Utility Regulatory Act of 1995, as enacted
 193-11  by S.B. 319, Acts of the 74th Legislature, Regular Session, 1995,
 193-12  as added by this Act.  The governor shall appoint two members with
 193-13  terms expiring on August 31, 1997, two members with terms expiring
 193-14  on August 31, 1999, and two members with terms expiring on August
 193-15  31, 2001.  The terms of the members appointed from the list
 193-16  provided by the speaker of the house of representatives must be
 193-17  staggered so that the terms of one-third of those appointees expire
 193-18  every odd-numbered year.  The lieutenant governor shall appoint one
 193-19  member with a term expiring on August 31, 1997, one member with a
 193-20  term expiring on August 31, 1999, and one member with a term
 193-21  expiring on August 31, 2001.
 193-22        SECTION 53.  All laws or parts of laws in conflict with this
 193-23  Act are repealed effective September 1, 1995.
 193-24        SECTION 54.  (a)  This Act takes effect September 1, 1995.
 193-25        (b)  Section 3.2555, Public Utility Regulatory Act of 1995,
 193-26  as enacted by S.B. 319, Acts of the 74th Legislature, Regular
 193-27  Session, 1995, as added by this Act, applies only to a franchise or
  194-1  contract entered into or amended on or after September 1, 1995.  A
  194-2  franchise or contract entered into before September 1, 1995, and
  194-3  not amended on or after that date is governed by the law in effect
  194-4  when the contract was entered into or last amended, and that law is
  194-5  continued in effect for that purpose.
  194-6        (c)  Sections 3.304(a)(2) and (3), Public Utility Regulatory
  194-7  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  194-8  Regular Session, 1995, as amended by this Act, apply only to a
  194-9  petition filed on or after April 15, 1995. A petition filed before
 194-10  April 15, 1995, is governed by the law in effect when the petition
 194-11  was filed, and that law is continued in effect for that purpose.
 194-12        SECTION 55.  The importance of this legislation and the
 194-13  crowded condition of the calendars in both houses create an
 194-14  emergency and an imperative public necessity that the
 194-15  constitutional rule requiring bills to be read on three several
 194-16  days in each house be suspended, and this rule is hereby suspended.