PAK S.B. 1937 75(R)    BILL ANALYSIS


STATE AFFAIRS
S.B. 1937
By: Lucio (Carter)
5-13-97
Committee Report (Unamended)


BACKGROUND 

Currently, municipalities charge franchise fees to any telecommunications
company providing telecommunications services in the municipality.  In
general, the purpose of franchise fees is to charge telecommunications
utilities for using public right-of-ways to place land lines, telephone
poles, and control boxes.  However, there is no consistent pattern or
structure to franchise fees between municipalities.  Some cities require
in-kind services in the form of public access channels of phone lines in
addition to or in lieu of monetary payment. 

Telephone utilities contend that the current system impedes competition
among providers since municipalities can charge any franchise fee they
choose to new entrants to the market. Telecommunication companies who
purchase time or rent facilities from telecommunications utilities at a
reduced cost and then resell those services to customers are also unhappy
with the current arrangement.  These resellers are often forced to pay
franchise fees when they are not directly using the municipalities'
rights-of-way.  Resellers are not able to provide services in cities
without paying the franchise fees. 

Many municipalities use franchise fees as a way of garnering needed funds
for municipal development and maintaining rights-of-way.  Municipalities
also argue that they cannot and should not be expected to "give away"
public property to private companies without their paying for the service. 

PURPOSE

As proposed, S.B. 1937 requires a joint interim committee to be appointed
to investigate, report and make legislative recommendations regarding the
state franchise policy for municipalities with respect to
telecommunications services provided wholly within municipalities by
telecommunications utilities.  

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title IIIF, Article 1446c-0, V.T.C.S. (Public Utility
Regulatory Act of 1995), by adding Section 3.270, as follows: 

Section 3.270(a)  Provides that it is the policy of the State of Texas to
encourage competition among telecommunication utilities providing
telecommunications services wholly within municipalities in a
competitively neutral, non-discriminatory manner, to reduce the barriers
to entry for such telecommunications utilities by eliminating any
conditions which prohibit or have the effect of prohibiting the ability of
any telecommunications utility to provide telecommunications services
wholly within municipalities, to ensure that any compensation to
municipalities for the telecommunications utilities' use of municipal
rights-of-way or other public property to provide telecommunications
services wholly within municipalities is fair and reasonable to
telecommunications utilities and municipal residents who own the public
property or  right-of-way; and to ensure that consumers benefit from such
competition. 

Section 3.270(b)  Requires a joint interim committee to be appointed to
investigate, report and make legislative recommendations regarding the
state franchise policy for municipalities with respect to
telecommunications services provided wholly within municipalities by
telecommunications utilities.  

Section 3.270(c)  Sets forth the composition of the committee. 

Section 3.270(d)(1) Requires the joint committee to investigate:

(A) the need for consistency in terms and conditions to be included in
municipal franchise agreements across the state;  
(B) the impact of existing municipal fee agreements, ordinances, charters
or other municipal requirements on the provision of competitive
telecommunications services wholly within municipalities by
telecommunications utilities and the authority of the legislature to
establish a basis for and require modification of those agreements,
ordinances, charters or other municipal requirements;  
(C) the type and amount of cost incurred by municipalities by virtue of
the use of municipalities' rights of way and public property by
telecommunications utilities providing telecommunications services wholly
within the municipalities;  
(D) the type, basis for, and amount of revenue received by municipalities
from telecommunications utilities providing telecommunications services
wholly within the municipalities;  
(E) the authority of municipalities to impose conditions on or require
compensation from telecommunications utilities providing
telecommunications services wholly within the municipalities by resale of
telecommunications services or the use of facilities of other
telecommunications utilities;  
(F) such other issues as are necessary to promote the public interest and
effectuate the policies in support of competition by telecommunications
utilities in the provision of telecommunications services wholly within
municipalities as set forth in Subsection (a) above.  

Section 3.270(d)(2) Adds cable television issues to the discussions of the
committee.  

Section 3.270(e)  Requires the joint committee to develop a report that
analyzes the state's policies with respect to issues described above and
that includes recommended rule or statutory changes to implement the
policy options.  Authorizes the joint committee to make preliminary
reports, but shall make a final report no later than November 1, 1998.
Provides that the affected parties are placed on notice that any terms and
conditions of municipal fee agreements, ordinances, charters or other
municipal requirements, now or hereinafter in existence, may be superseded
or subject to amendment, to the extent inconsistent with the terms of
legislation hereinafter enacted.  

Section 3.270(f)  Requires the Public Utility Commission of Texas
(commission), the Texas Legislative Council, the governor's office, the
senate, and the house of representatives, on request of the committee, to
provide staff as necessary to carry out the duties of the joint committee.
Requires the commission to conduct such investigations and provide such
information and reports as are necessary for the committee to make the
determinations required by Subsections (d)(3) and (d)(4) above.  Requires
the commission to provide the information and final reports to the
committee no later than June 1, 1998.  

Section 3.270(g)  Provides that the committee is given such authority as
is necessary to carry out the duties assigned by this section, and in
connection therewith may call and hold hearings and compel the attendance
of witnesses and the production of information and documents. 

Section 3.270(h)  Authorizes the committee, if necessary to the discharge
of its duties,  to request the assistance of additional state agencies,
departments, or offices.  Requires the agencies, departments, or offices
to provide the requested assistance.  

Section 3.270(i)  Provides that the committee is abolished on the date it
issues its final report under Subsection (e) of this section.  

SECTION 2. Effective date:  September 1, 1997.

SECTION 3. Provides that this Act expires on September 1, 1999. 

SECTION 4. Emergency clause.