HBA-JRA, TYH C.S.S.B. 560 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 560 By: Sibley State Affairs 5/20/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE In 1995, the 74th Texas Legislature enacted legislation to change the telecommunications market from a highly regulated industry to a less regulated industry, and eventually to a competitive industry. Since 1995, the telecommunications industry market has changed considerably. With the development of alternative telecommunications providers, the growing marketplace for telecommunications, and the end of certain commitments made under the legislation enacted in 1995, the regulatory framework now requires some adjustment. C.S.S.B. 560 sets forth regulations for telecommunications utilities and provisions regarding telecommunication services. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Public Utility Commission of Texas in SECTION 17 (Section 55.013, Utilities Code), SECTION 19 (Section 55.015, Utilities Code), SECTION 26 (Section 56.072, Utilities Code), SECTION 27 (Section 56.079, Utilities Code), SECTION 28 (Section 58.003, Utilities Code), and SECTION 50 (Sections 64.003, 64.004, 64.051, 64.052, and 64.102, Utilities Code) of this bill. It is the opinion of the Office of House Bill Analysis that rulemaking authority previously delegated to the Public Utility Commission of Texas is modified in SECTION 20 (Section 55.302, Utilities Code) and SECTION 21 (Section 56.021, Utilities Code) of this bill. It is also the opinion of the Office of House Bill Analysis that conditions are placed on rulemaking in SECTION 20 (Section 55.308, Utilities Code), SECTION 46 (Section 60.164, Utilities Code), and SECTION 50 (Section 64.158, Utilities Code). It is the opinion of the Office of House Bill Analysis that SECTION 4 (Section 51.001, Utilities Code) and SECTION 50 (Subtitle C, Title 2, Chapter 64, Section 64.001, Utilities Code) state the purpose for rulemaking authority granted to the Public Utility Commission of Texas. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 12.005, Utilities Code, to provide that the Public Utility Commission of Texas (PUC) is abolished and this title (Public Utility Regulatory Act) expires on September 1, 2005, rather than September 1, 2001, unless continued as provided by Chapter 325 (Texas Sunset Act), Government Code. SECTION 2. Amends Section 13.002, Utilities Code, to provide that the Office of Public Utility Counsel is abolished and this chapter (Office of Public Utility Counsel) expires on September 1, 2005, rather than September 1, 2001, unless continued as provided by Chapter 325 (Texas Sunset Act), Government Code. SECTION 3. Amends Section 15.024(c), Utilities Code, to provide that this subsection does not apply to a violation of Chapter 55 (Regulation of Telecommunications Services) or 64 (Customer Protection). SECTION 4. Amends Section 51.001, Utilities Code, by amending Subsection (a) and adding Subsection (g), as follows: (a) Provides that changes in technology and market structure have increased the need for minimum standards of service quality, customer service, and fair business practices to ensure high-quality service to customers and a healthy marketplace where competition is permitted by law. Sets forth the purpose for rulemaking authority granted to PUC. (g) Sets forth the policy of this state regarding access to telecommunications and information services. Requires PUC to begin a review and evaluation of the availability and pricing of telecommunications and information services in rural and high cost areas, as well as the convergence of telecommunications services, by November 1, 1999. Requires PUC to file a report, including its recommendations on the issues reviewed and evaluated, with the legislature by January 1, 2001. SECTION 5. Amends Sections 51.002(6) and (10), Utilities Code, as follows: (6) Redefines "long run incremental cost." (10) Redefines "telecommunications provider" to exclude the listed entities for the purposes of Chapter 55 or 64. SECTION 6. Amends Section 51.004, Utilities Code, to prohibit a discount or other form of pricing flexibility from being predatory or anticompetitive. Provides that a price that is set at or above the long run incremental cost of a service is presumed to comply with this section. SECTION 7. Amends the heading to Section 52.058, Utilities Code, to read as follows: Sec. 52.058. GENERAL PROVISIONS RELATING TO NEW OR EXPERIMENTAL SERVICES OR PROMOTIONAL RATES. SECTION 8. Amends Subchapter B, Chapter 52, Utilities Code, by adding Sections 52.0583, 52.0584, and 52.0585, as follows: Sec. 52.0583. NEW SERVICES. (a) Authorizes an incumbent local exchange company to introduce a new service 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the incumbent local exchange company's certificated area or areas or who has an effective interconnection agreement with the incumbent local exchange company. (b) Requires an incumbent local exchange company to price each new service at or above the service's long run incremental cost. Requires PUC to allow a company serving fewer than one million access lines in this state to establish a service's long run incremental cost by adopting, at that company's option, the cost of studies of a larger company for that service that have been accepted by PUC. (c) Authorizes an affected person, the office on behalf of residential or small commercial customers, or PUC to file a complaint challenging whether the pricing by an incumbent local exchange company of a new service is in compliance with Subsection (b). (d) Provides that, if such a complaint is filed, the incumbent local exchange company has the burden of proving that the company set the price for the new service in accordance with the applicable provisions of this subchapter. Requires the company, if the complaint is resolved in favor of the complainant, to amend the price of the service by the 10th day after the complaint is finally resolved or, at the company's option, discontinue the service. (e) Authorizes a company electing incentive regulation under Chapter 58 (Incentive Regulation) or 59 (Infrastructure Plan) to introduce new services only in accordance with the applicable provisions of Chapter 58 or 59. Sec. 52.0584. PRICING AND PACKAGING FLEXIBILITY; CUSTOMER PROMOTIONAL OFFERINGS. (a) Authorizes an incumbent local exchange company to exercise pricing flexibility in accordance with this section, notwithstanding any other provision of this title. Authorizes the company to exercise pricing flexibility 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the incumbent local exchange company's certificated area or areas or who has an effective interconnection agreement with the incumbent local exchange company. Defines "pricing flexibility." (b) Requires an incumbent local exchange company, at the company's option, to price each regulated service offered separately or as part of a package under Subsection (a) at either the service's tariffed rate or at a rate not lower than the service's long run incremental cost. Requires PUC to allow a company serving fewer than one million access lines in this state to establish a service's long run incremental cost by adopting, at that company's option, the cost studies of a larger company for that service that have been accepted by PUC. (c) Authorizes an affected person, the office on behalf of residential or small commercial customers, or PUC to file a complaint by the 31st day after the date the company implements the rate alleging that an incumbent local exchange company has priced a regulated service in a manner that does not meet the pricing standards of this subchapter. (d) Authorizes a company electing incentive regulation under Chapter 58 or 59 to use pricing and packaging flexibility and introduce customer promotional offering only in accordance with the applicable provisions of Chapter 58 or 59. Sec. 52.0585. CUSTOMER PROMOTIONAL OFFERINGS. (a) Authorizes an incumbent local exchange company to offer a promotion for regulated service for not more than 90 days in any 12-month period. (b) Requires the company to file with PUC a promotional offering that consists of a waiver of installation charges or service order charges, or both, for not more than 90 days in a 12-month period or a temporary discount of not more than 25 percent from the tariffed rate for not more than 60 days in a 12-month period. (c) Provides that an incumbent local exchange company is not required to obtain commission approval to make a promotional offering described by Subsection (b). (d) Authorizes an incumbent local exchange company to offer a promotion of any regulated service as part of a package of services consisting of any regulated service with any other regulated or unregulated service or any service of an affiliate. SECTION 9. Amends Section 52.102, Utilities Code, as amended by Section 18.04, S.B. No. 1368, Acts of the 76th Legislature, Regular Session, 1999, to provide that PUC has jurisdiction to require a telecommunications utility subject to this subchapter (Telecommunications Utilities That Are Not Dominant Carriers) that had more than six percent of the total intrastate access minutes of use as measured for the most recent 12-month period, to pass switched access rate reductions under this title (Public Utility Regulatory Act) to customers as required under Section 52.112. Provides that this authority expires on the date on which Section 52.112 expires. Makes conforming changes. SECTION 10. Amends Section 52.108, Utilities Code, to authorize PUC to enter any order necessary to protect the public interest if PUC finds after notice and hearing that a telecommunications utility has failed to pass switched access rate reductions to customers under Chapter 56 (Telecommunications Assistance and Universal Service Fund) or other law, as required under Section 52.112. SECTION 11. Amends Section 52.110(a), Utilities Code, to include Section 52.112 among the sections in the Utility Code of which an alleged violation by a telecommunications utility in a proceeding before PUC places the burden of proof is on a telecommunications utility complaining of conduct committed against it in violation of this subchapter, or on the responding telecommunications utility if the proceedings are brought by a customer or customer representative who is not a telecommunications utility or initiated by PUC. SECTION 12. Amends Subchapter C, Chapter 52, Utilities Code, by adding Section 52.112, as follows: Sec. 52.112. REDUCTION PASS-THROUGH REQUIRED. (a) Requires each telecommunications utility that had more than six percent of the total intrastate access minutes of use as measured for the most recent 12-month period, to pass through to customers switched access rate reductions under this title. Requires the residential customer class to receive no less than a proportionate share of the reductions. (b) Requires each telecommunications utility subject to this section, within six months following each reduction in intrastate switched access charges under this title, to file a report with PUC demonstrating its compliance on an average revenue per minute basis with Subsection (a). (c) Establishes the second anniversary of the date incumbent local exchange companies doing business in the state are no longer prohibited by federal law from offering interLATA and interstate long distance service as the expiration date for this section. SECTION 13. Amends Subchapter D, Chapter 52, Utilities Code, by adding Section 52.155, as follows: Sec. 52.155. PROHIBITION OF EXCESSIVE ACCESS CHARGES. (a) Prohibits a telecommunications utility that holds a certificate of operating authority or a service provider certificate of operating authority from charging a higher amount for originating or terminating intrastate switched access than the prevailing rates charged by the holder of the certificate of convenience and necessity in whose territory the call originated or terminated unless PUC specifically approves the higher rate or a telecommunications utility establishes, subject to PUC review, statewide average composite originating and terminating intrastate switched access rates based on a reasonable approximating of traffic originating and terminating between all holders of certificates of convenience and necessity in this state. (b) Provides that PUC has all jurisdiction necessary to enforce this section, notwithstanding any other provision of this title. SECTION 14. Amends Section 54.007, Utilities Code, to delete provisions regarding certain instances in which a basic telecommunications service price may be increased. Makes a conforming change. SECTION 15. Amends Subchapter C, Chapter 54, Utilities Code, as follows: SUBCHAPTER C. CERTIFICATE OF OPERATING AUTHORITY Sec. 54.101. DEFINITION. Makes no change. Sec. 54.102. APPLICATION FOR CERTIFICATE. (a) Deletes the authorization for a person to apply for a certificate of operating authority in lieu of applying for a certificate of convenience and necessity. (b) Deletes certain application provisions for an applicant for a facilities-based certificate of operating authority. (c) Authorizes an affiliate of a person holding a certificate of convenience and necessity to hold a certificate of operating authority if the holder of the certificate of convenience and necessity is in compliance with federal law and Federal Communications Commission (FCC) rules governing affiliates and structural separation. Prohibits an affiliate of a person holding a certificate of convenience and necessity from directly or indirectly selling to a non-affiliate any regulated product or service purchased from the person holding a certificate of convenience and necessity at any rate or price less than the price paid to the person holding a certificate of convenience and necessity. (d) Authorizes a person to hold a certificate for all or any portion of a service area for which one or more affiliates of the person holds a certificate of operating authority, a service provider certificate of operating authority, or a certificate of convenience and necessity. (e) Authorizes an affiliate of a company that holds a certificate of convenience and necessity and that serves more than five million access lines in this state to hold a certificate of operating authority or service provider certificate of operating authority to provide service in an area of this state in which its affiliated company is the incumbent local exchange company. Prohibits the affiliate holding the certificate of operating authority or service provider certificate of operating authority from providing in that area customer-specific contracts so long as the affiliated company that is the incumbent local exchange company is prohibited from providing customer-specific contracts under Section 58.003 in that area. Provides that this subsection does not preclude an affiliate of a company holding a certificate of convenience and necessity from holding a certificate of operating authority in any area of this state to provide advanced services as defined by rules or orders of the FCC. Sec. 54.103. GRANT OR DENIAL OF CERTIFICATE. Deletes text regarding the adequacy of an applicant's build-out plan as one of the commissioner's required consideration factors in granting a certificate on a nondiscriminatory basis. Deletes existing Section 54.104 regarding build-out plan requirements and existing Section 54.105 regarding six-year limitation on resale of services. Makes conforming changes. Sec. 54.104. TIME OF SERVICE REQUIREMENTS. Requires a certificate holder, notwithstanding Subsection (a), to serve a customer, rather than a customer in the build out area, not later than the 30th day after the date the customer requests service. Redesignated from existing Section 54.106. Deletes existing Section 54.107 regarding requirements to certain facilities; Section 54.108 regarding build-out compliance; Section 54.109 regarding elimination of build-out requirements for certain providers; and Section 54.110 regarding hearing on build out and resale requirements. Sec. 54.105. PENALTY FOR VIOLATION OF TITLE. Redesignated from existing Section 54.111. SECTION 16. Amends Subchapter A, Chapter 55, Utilities Code, by adding Section 55.012, as follows: Sec. 55.012. TELECOMMUNICATIONS BILLING. States that the proliferation of charges for separate services, products, surcharges, fees, and taxes on a bill for telecommunications products or services has increased the complexity of those bills to such an extent that in some cases the bills have become difficult for customers to understand. States that a bill from a local exchange company for telecommunications products or services should be simplified into general categories to the extent that simplification is consistent with providing customers sufficient information about the charges included in the bill to understand the basis and source of the charges. Requires a monthly bill from a local exchange company for local exchange telephone service to include an aggregate charge for basic local service charges and fees, optional services, and taxes, to the extent provided by law. SECTION 17. Amends Subchapter A, Chapter 55, Utilities Code, by adding Section 55.013, as follows: Sec. 55.013. LIMITATIONS ON DISCONTINUANCE OF BASIC LOCAL TELECOMMUNICATIONS SERVICE. (a) Prohibits a provider of basic local telecommunications service from discontinuing that service because of nonpayment by a residential customer of charges for long distance service. Requires payment to first be allocated to basic local telecommunications service. (b) Requires the rate of local service to be the rate that the provider charges for standalone basic local telecommunications service if the provider provides a discounted rate for basic local service and bundles the rates of basic local and long distance service together. (c) Requires PUC to adopt and implement rules by January 1, 2000, to prevent customer abuse of the protections afforded by this section. Provides that the rules must contain provisions requiring a provider to offer and implement toll blocking capability to limit a customer's ability to incur additional long distance charges and regarding fraudulent activity in response to which a provider is authorized to discontinue basic local service. (d) Provides that PUC has jurisdiction to establish a maximum price that an incumbent local exchange company may charge a long distance provider to initiate the toll blocking capability required to be offered under commission rules, notwithstanding any other provisions of this title. Requires the maximum price established under this subsection to be observed by all providers of basic local telecommunications service in the incumbent local exchange company's certificated service area. Provides that PUC has all jurisdiction necessary to enforce this section, notwithstanding Sections 52.102 and 52.152. SECTION 18. Amends Subchapter A, Chapter 55, Utilities Code, by adding Section 55.014, as follows: Sec. 55.014. PROVISION OF ADVANCED TELECOMMUNICATIONS SERVICES. Defines "advanced service." Sets forth the companies to which this section applies. Requires a company to which this section applies that provides advanced telecommunications services within the company's urban service areas, on a bona fide retail request for those service, to provide in rural areas of this state served by the company advanced telecommunications services that are reasonably comparable to the advanced services provided in urban areas, beginning September 1, 2001. Requires the company to offer these services and caller identification and custom calling features at prices, terms, and conditions that are reasonably comparable to the advanced services provided by the company in urban areas within 15 months after the bona fide request for those advanced services. Prohibits a construction of this section which requires a company to provide services in a rural area in which the company does not provide local exchange service or provide services in a rural area of this state unless the company provides the service in an urban area of the state. Provides that providing service in a municipality with a population of more than 190,000 is providing services in an urban area of this state. Provides that PUC has all jurisdiction necessary to enforce this section. SECTION 19. Amends Subchapter A, Chapter 55, Utilities Code, by adding Section 55.015, as follows: Sec. 55.015. LIFELINE SERVICES. (a) Requires PUC to adopt rules prohibiting a telecommunications provider from discontinuing local exchange telephone service to a consumer who receives lifeline service because of nonpayment by the consumer of charges for other services billed by the provider including long distance service. (b) Requires PUC to adopt rules providing for automatic enrollment to receive lifeline service for eligible consumers. Requires the Texas Department of Human Services, on request of PUC, to assist in the adoption and implementation of those rules. Requires PUC and the Texas Department of Human Services to enter into a memorandum of understanding establishing the respective duties of PUC and the department in relation to the automatic enrollment. (c) Authorizes a telecommunications provider to block a lifeline service participant's access to all long distance service except toll-free numbers when the participant owes an outstanding amount for that service. Requires the telecommunications provider to remove the block without additional cost to the participant on payment of the outstanding amount. (d) Requires a telecommunications provider to offer a consumer who applies for or receives lifeline services the option of blocking all toll calls or placing a limit on the amount of toll calls. Prohibits the provider from charging the consumer an administrative charge or other additional amount for the blocking service. (e) Defines "lifeline service." SECTION 20. Amends Section 3.312, Article 1446c-0, V.T.C.S. (Public Utility Regulatory Act of 1995), as added by Section 1, Chapter 919, Acts of the 75th Legislature, Regular Session, 1997, and codifies it as Subchapter K, Chapter 55, Utilities Code, as follows: SUBCHAPTER K. SELECTION OF TELECOMMUNICATIONS UTILITIES Sec. 55.301. STATE POLICY. Makes no change. Sec. 55.302. COMMISSION RULES. Deletes reference to carrier initiated change. Makes conforming changes. Makes modification to rulemaking authority. Sec. 55.303. New title: VERIFICATION OF CHANGE. Deletes provisions regarding carrier initiated changes. Deletes Section 55.304 relating to authorization of customer initiated changes. Sec. 55.304. UNAUTHORIZED CHANGE. Redesignated from Section 55.305. Provides that a customer is not liable for charges incurred during the first 30 days after the date of an unauthorized carrier change. Sec. 55.305. CORRECTIVE ACTION AND PENALTIES. Redesignated from Section 55.306. Sec. 55.306. REPEATED AND RECKLESS VIOLATION. Redesignated from Section 55.307. Adds denial to the list of actions PUC is authorized to take for repeated and reckless violations of commission rules. Sec. 55.307. DECEPTIVE OR FRAUDULENT PRACTICE. Authorizes PUC to prohibit a utility from engaging in a deceptive or fraudulent practice, including a marketing practice, involving the selection of a customer's telecommunications utility. Authorizes PUC to define deceptive and fraudulent practices to which this section applies. Sec. 55.308. CONSISTENCY WITH FEDERAL LAW. Requires the rules adopted by PUC to be consistent with federal law. SECTION 21. Amends Section 56.021, Utilities Code, as amended by Section 18.08, S.B. No. 1368, Acts of the 76th Legislature, Regular Session, 1999, to make this section (Universal Service Fund Established) applicable to telecommunications providers, rather than local exchange companies. Modifies rulemaking authority previously granted to include using the universal service fund to reimburse a telecommunications carrier providing lifeline service as provided by federal regulations. Makes a conforming change. SECTION 22. Amends Sections 56.023 and 56.024, Utilities Code, to require PUC to determine which telecommunications providers, rather than local exchange companies, meet the eligibility criteria and to determine the amount of and approve a procedure for reimbursement to telecommunications providers, rather than to local exchange companies, of revenue lost in providing tel-assistance service under Subchapter C. Makes a conforming change. Authorizes PUC to require a telecommunications provider, and not a local exchange company, to provide a report or information necessary to assess contributions and disbursements to the universal service fund. SECTION 23. Amends Section 56.026, Utilities Code, to prohibit PUC from reducing the amount of disbursements from the universal service fund if an electing company reduces rates in conjunction with receiving disbursements from the universal service fund, except that if a local end user customer of the electing company switches to another local service provider, in specified circumstances, the disbursement may be reduced. Requires any reductions in switched access service rates for local exchange companies with more than 125,000 access lines in service in this state on December 31, 1998, that are made in accordance with this section, to be proportional, based on equivalent minutes of use, to reductions in intraLATA toll rates, and requires those reductions to be offset by equal disbursements from the universal service fund. Requires the decrease in disbursements to be made in a competitively neutral manner to the extent that the disbursements from the universal service fund for small and rural local exchange companies are used to decrease the implicit support in intraLATA toll and switched access rates. Makes a conforming change. SECTION 24. Amends Subchapter B, Chapter 56, Utilities Code, by adding Section 56.028, as follows: Sec. 56.028. UNIVERSAL SERVICE FUND REIMBURSEMENT FOR CERTAIN INTRALATA SERVICE. Requires PUC to provide reimbursement through the universal service fund for reduced rates for intraLATA interexchange high capacity (1.544 Mps) service for entities described in Section 58.253(a) (Private Network Services for Certain Entities) upon request of a local exchange company that is not an electing company under Chapters 58 (Incentive Regulation) and 59 (Infrastructure Plan). Requires the amount of reimbursement to be the difference between the company's tariffed rate for such service as of January 1, 1998, and the lowest rate offered for such service by any local exchange company electing incentive regulation under Chapter 58. SECTION 25. Amends Section 56.071, Utilities Code, to provide that in addition to local exchange companies, this subchapter (Tel-Assistance Service Program) applies to telecommunications providers that receive universal service fund support pursuant to PUC's universal service fund rules. Requires any reference to or requirement imposed on local exchange companies in this subchapter to also apply to such telecommunications providers. Makes conforming changes. SECTION 26. Amends Section 56.072, Utilities Code, by adding Subsection (d), as follows: (d) Requires PUC to adopt rules providing for automatic enrollment to receive telassistance service for eligible consumers. Requires the department, on request of PUC, to assist in the adoption and implementation of those rules. Requires PUC and the department to enter into a memorandum of understanding establishing the respective duties of PUC and the department in relation to the automatic enrollment. SECTION 27. Amends Subchapter C, Chapter 56, Utilities Code, by adding Section 56.079, as follows: Sec. 56.079. RELATIONSHIP TO OTHER SERVICES. Requires PUC to adopt rules prohibiting a telecommunications provider from discontinuing local exchange telephone service to a consumer who receives tel-assistance service because of nonpayment by the consumer of charges for other services billed by the provider, including long distance services. Authorizes a telecommunications provider to block a tel-assistance service participant's access to all long distance service except toll-free numbers when the participant owes an outstanding amount for that service. Requires the telecommunications provider to remove the block without additional cost to the participant on payment of the outstanding amount. Requires a telecommunications provider to offer a consumer who applies for or receives tel-assistance services the option of blocking all toll calls or placing a limit on the amount of toll calls. Prohibits the provider from charging the consumer an administrative charge or other additional amount for the blocking service. SECTION 28. Amends Subchapter A, Chapter 58, Utilities Code, by adding Section 58.003, as follows: Sec. 58.003. CUSTOMER-SPECIFIC CONTRACTS. (a) Prohibits an electing company from offering in an exchange a service or an appropriate subset of a service listed in Sections 58.0151(a)(1)-(4) or Sections 58.151(1)-(4) in a manner that results in a customer-specific contract, unless the other party to the contract is a federal, state, or local governmental entity, until the earlier of September 1, 2005, or the date on which PUC finds that at least 40 percent of the total access lines for that service or appropriate subset of that service in that exchange are served by competitive alternative providers that are not affiliated with the electing company, notwithstanding any other provision of this chapter. (b) Provides that an electing company that serves fewer than five million access lines must also notify PUC of the company's binding commitment to install Common Channel Signaling 7 capability in each central office and connect all of the company's serving central offices to their respective LATA tandem central offices with optical fiber or equivalent facilities, by September 1, 2001. (c) Requires PUC, by rule, to prescribe appropriate subsets of services. (d) Authorizes an electing company to file with PUC a request for a finding under this section. Provides that the filing must include information sufficient for PUC to perform a review and evaluation in relation to the particular exchange and the particular service or appropriate subset of a service for which the electing company wants to offer customerspecific contracts. Provides that PUC must grant or deny the request within 60 days after the electing company files the request. (e) Provides that the commitments described by Subsection (b) do not apply to exchanges of the company sold or transferred before, or for which contracts for sale or transfer are pending on, September 1, 2001. Requires the company to have one year from the date of withdrawal or default to comply with the commitments in the case of exchanges for which contracts for sale or transfer are pending as of March 1, 2001, where the purchaser withdrew or defaulted before September 1, 2001. (f) Provides that this section does not preclude an electing company from offering a customer-specific contract to the extent allowed by this title as of August 31, 1999. SECTION 29. Amends Section 58.021, Utilities Code, as follows: (a) No change. (b) Provides that notice of election must include a statement that the company agrees to limit any increase in a rate the company charges for basic network services until September 1, 2005. (c) Provides that except as provided in Subsection (d), an election under this chapter remains in effect until the legislature eliminates the incentive regulation authorized by this chapter and Chapter 59. (d) Authorizes PUC to allow an electing company serving fewer than five million access lines to withdraw the company's election under this chapter under certain circumstances. (e) Defines "good cause." SECTION 30. Amends Section 58.023, Utilities Code, to classify certain services provided by an electing company as nonbasic services governed by Subchapter E, rather than discretionary services governed by Subchapter D and competitive services. Makes a conforming change. SECTION 31. Amends Section 58.024, Utilities Code, to prohibit PUC from reclassifying a service until, for a company that serves more than five million access lines in this state, the date on which the Federal Communications Commission determines in accordance with 47 U.S.C. Section 271 (Bell Operating Company Entry into InterLATA Services) that the company may enter the interLATA telecommunications market in this state. Authorizes PUC to reclassify a service subject to certain conditions. Makes conforming changes. SECTION 32. Amends Section 58.028, Utilities Code, to require PUC to begin a review and evaluation of each company that elects under this chapter or Chapter 59 no later than January 1, 2004, rather than January 1, 2000. Requires PUC to file a report with the legislature no later than January 1, 2005, rather than January 1, 2001. Provides that this section expires on September 1, 2005, rather than September 1, 2001. SECTION 33. Amends Section 58.051, Utilities Code, to delete business local exchange telephone service, switched access service, interconnection to competitive providers, interconnection for commercial mobile service providers, directory assistance, and "1-plus" intraLATA message toll service, from the list of services which are considered basic network services, unless reclassified under Section 58.024. Adds residential tone dialing services, service connection for basic residential services, direct inward dialing service for residential services, access for all residential and business end users to 911 service provided by a local authority and access to dual party relay services, mandatory residential extended area service agreements, mandatory residential extended metropolitan or other mandatory residential toll-free calling arrangements, and residential call waiting service, to the list of services which are considered basic network services, unless reclassified under Section 58.024. Requires electing companies to offer each basic network service as a separately tariffed service in addition to any packages or other pricing flexibility offerings that include those basic network services. SECTION 34. Amends Sections 58.054 and 58.055, Utilities Code, as follows: Sec. 58.054. RATES CAPPED. Provides that the rates an electing company may charge on or before the fourth anniversary are the rates charged by the company on June 1, 1995, or for a company that elects under this chapter after September 1, 1999, the rates charged on the date of its election. Prohibits the cap on the rates for basic network services for a company electing under this subchapter from expiring before September 1, 2005, notwithstanding Subsections (a) and (b). Sec. 58.055. RATE ADJUSTMENT BY COMPANY. Replaces reference to four-year period with election period. Deletes text regarding a company's ability to decrease the rate for switched access service to an amount above the service's long run incremental cost. Makes a conforming change. SECTION 35. Amends Section 58.060, Utilities Code, to authorize an electing company to increase a rate for a basic network service only with PUC's approval subject to this title and to the extent consistent with achieving universal affordable service, after the expiration of the period during which the rates for basic network services are capped as prescribed by Section 58.054 (Rates Capped), rather than after the four-year period expires. SECTION 36. Amends Subchapter C, Chapter 58, Utilities Code, by adding Section 58.063, as follows: Sec. 58.063. PRICING AND PACKAGING FLEXIBILITY. (a) Authorizes an electing company, notwithstanding Section 58.052(b) or Subchapter F, Chapter 60, to exercise pricing flexibility for basic network services, including the packaging of basic network services with any other regulated or unregulated service or any service of an affiliate. Authorizes the company to exercise pricing flexibility in accordance with this section 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the electing company's certificated area or areas or who has an effective interconnection agreement with the electing company. (b) Requires an electing company to set the price for a package of services containing basic network and nonbasic services at any level at or above the lesser of the sum of the long run incremental costs of any basic network services and nonbasic services contained in the package or the sum of the tariffed rates of any basic network services and the long run incremental costs of nonbasic services contained in the package. (c) Authorizes an electing company to flexibly price a package that includes a basic network service in any manner listed in Section 51.002(7) (Definitions), except as provided by Section 58.003. SECTION 37. Amends Subchapter E, Chapter 58, Utilities Code, as follows: SUBCHAPTER E. New title: NONBASIC SERVICES Sec. 58.151. SERVICES INCLUDED. Classifies as nonbasic services, with provisions related to caps on prices, flat rate business local exchange telephone service; business tone dialing service; service connection for all business services; direct inward dialing for basic business services; "1-plus" intraLATA message toll services; 0+ and 0- operator services; call forwarding, custom calling, and non-residential call waiting; call return, caller identification, and call control options, central office based PBX-type services; billing and collection services; integrated services digital network services; new services; directory assistance services; 911 services provided to a local authority that are available from another provider; and all other services subject to PUC's jurisdiction that are not specifically classified as basic network services in Section 58.051, except that nothing in this section precludes a customer from subscribing to a local flat rate residential or business line for a computer modem or a facsimile machine. Sec. 58.152. PRICES. Authorizes an electing company to set the price for any nonbasic service at any level above the lesser of the service's long run incremental cost in accordance with the imputation rules prescribed by or under Subchapter D (Imputation), Chapter 60, or price for the service in effect on September 1, 1999. Authorizes an electing company to use pricing flexibility for a nonbasic service, subject to Section 51.004, rather than the requirements of Sections 60.001 and 60.002. Makes conforming changes. Deletes Subsection (c), which prohibited an electing company from increasing the price of a competitive service in a geographic area in which that service or a functionally equivalent service is not readily available from another provider. Sec. 58.153. NEW SERVICES. (a) Authorizes an electing company to introduce a new service 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the electing company's certificated area or areas or who has an effective interconnection agreement with the electing company, subject to the pricing conditions prescribed by Section 58.152(a). (b) Requires an electing company serving more than five million access lines in this state to provide notice to any person who holds a certificate of operating authority in the electing company's certificated area or areas or who has an effective interconnection agreement with the electing company of any changes in the generally available prices and terms under which the electing company offers basic or nonbasic telecommunications services regulated by PUC at retail rates to subscribers that are not telecommunications providers. Sets forth the changes which require notice under this subsection. Requires the electing company to provide the notice if the electing company is required to give notice to PUC, at the same time the company provides that notice or if the electing company is not required to give notice to PUC, at least 45 days before the effective date of a price change or 90 days before the effective date of a change other than a price change, unless PUC determines that the notice should not be given. (c) Authorizes an affected person, the office on behalf of residential or small commercial customers, or PUC to file a complaint at PUC challenging whether the pricing by an incumbent local exchange company of a new service is in compliance with Section 58.152(a). Requires PUC to allow the company to continue to provide the service while the complaint is pending. (d) Provides that, if such a complaint is filed, the electing company has the burden of proving that the company set the price for the new service in accordance with Section 58.152(a). Requires the company, if the complaint is resolved in favor of the complainant, to amend the price of the service by the 10th day after the complaint is finally resolved or, at the company's option, discontinue the service. (e) Provides that the notice requirement prescribed by Subsection (b) expires September 1, 2003. SECTION 38. Amends Subchapter E, Chapter 58, Utilities Code, by adding Section 58.155, as follows: Sec. 58.155. INTERCONNECTION. Provides that because interconnection to competitive providers and interconnection for commercial mobile service providers are subject to the requirements of Sections 251 (Interconnection) and 252 (Procedures for Negotiation, Arbitration, and Approval of Agreements), Title 47, U.S.C. (Communications Act of 1934), and FCC rules, including PUC's authority to arbitrate issues, interconnection is not addressed in this subchapter or Subchapter B. SECTION 39. Amends Chapter 58, Utilities Code, by adding Subchapter H, as follows: SUBCHAPTER H. SWITCHED ACCESS SERVICES Sec. 58.301. SWITCHED ACCESS RATE REDUCTION. Sets forth the required methods in which an electing company with greater than five million lines is required to reduce its switched access rates on a combined originating and terminating basis. Sec. 58.302. SWITCHED ACCESS RATE CAP. Prohibits an electing company from increasing the per minute rates for switched access services on a combined originating and terminating basis as specifically provided. Authorizes an electing company to, on its own initiative, decrease a rate charged for switched access service to any amount above the long run incremental cost of the service, notwithstanding Subchapter F, Chapter 60, but subject to Section 60.001. Sec. 58.303. SWITCHED ACCESS CHARGE STUDY. Requires PUC, not later than November 1, 1999, to begin a review and evaluation of the rates for intrastate switched access service. Sets forth the required issues to be evaluated. Requires PUC to file a report with the legislature no later than January 1, 2001. Requires the report to include PUC's recommendations as to the issues reviewed and evaluated. Provides that this section expires on September 1, 2001. SECTION 40. Amends Section 59.021, Utilities Code, by adding Subsection (c), to authorize a company electing under this chapter to renew the election for successive two-year periods. Provides that an election that is renewed under this subsection remains in effect until the earlier of certain specified events. SECTION 41. Amends Section 59.024, Utilities Code, to prohibit an electing company, before the end of the company's election period under this chapter, rather than before the sixth anniversary of its election date, from increasing a rate previously established for that company, except for the charges permitted under Subchapter C, Chapter 55, Subchapter B, Chapter 56, and Section 55.024. Requires PUC, notwithstanding Subsection (a), on request of the electing company, to allow a rate group reclassification that results from access line growth. SECTION 42. Amends Section 59.025, Utilities Code, to prohibit PUC, notwithstanding any other provision of this title, on PUC's own motion, to reduce an electing company's rate for switched access services before the expiration of the election period, rather than the six-year period, prescribed by Section 59.024, but PUC is authorized to approve a reduction proposed by the electing company. SECTION 43. Amends Section 59.026(a), Utilities Code, to make conforming changes. SECTION 44. Amends Subchapter B, Chapter 59, Utilities Code, by adding Sections 59.030, 59.031, 59.032, as follows: Sec. 59.030. NEW SERVICES. (a) Authorizes an electing company to introduce a new service 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the electing company's certificated area or areas or who has an effective interconnection agreement with the electing company. (b) Requires an electing company to price each new service at or above the service's long run incremental cost. Requires PUC to allow a company serving fewer than one million access lines to establish a service's long run incremental cost by adopting, at the company's option, the cost studies of a large company for that service that has been accepted by PUC. (c) Authorizes an affected person, the office on behalf of residential or small commercial customers, or PUC to file a complaint at the PUC challenging whether the pricing by an electing company of a new service is in compliance with Subsection (b). (d) Provides that if a complaint is filed under Subsection (c), the electing company has the burden of proving that the company set the price for the new service in accordance with the applicable provisions of this subchapter (Infrastructure Incentives). Provides if a complaint is finally resolved in the favor of the complainant, the electing company: _is required, not later than the 10th day after the date the complaint is finally resolved, to amend the price of the service as necessary to comply with a final resolution; or _the company is authorized, at the company's option, to discontinue the service. Sec. 59.031. PRICING AND PACKAGING FLEXIBILITY. (a) Authorizes an electing company, notwithstanding Section 59.027(b) (Consumer Complaints Regarding Tariffs) or Subchapter F (Pricing), Chapter 60 (Competitive Safeguards), to exercise pricing flexibility in accordance with this section. Authorizes a company to exercise pricing flexibility 10 days after providing an informational notice to PUC, to the office, and to any person who holds a certificate of operating authority in the electing company's certificated area or areas or who has an effective interconnection agreement with the electing company. Provides that pricing flexibility includes all pricing arrangements included in the definition of "pricing flexibility" prescribed by Section 51.002(7) and includes packaging of regulated services with nonregulated services or services of an affiliate. (b) Requires an electing company, at the company's option, to price each regulated service offered separately or as part of a package under Subsection (a) at either the service's tariffed rate or at a rate not lower than the service's long run incremental cost. Requires PUC to allow a company serving fewer than one million access lines to establish a service's long run incremental cost by adopting, at the company's option, the cost studies of a larger company for that service that have been accepted by PUC. (c) Authorizes an affected person, the office on behalf of residential or small commercial customers, or PUC to file a complaint alleging that an electing company has priced a regulated service in a manner that does not meet the pricing standards of this subchapter. Requires the complaint to be filed before the 31st day after the company implements the rate. Sec. 59.032. CUSTOMER PROMOTIONAL OFFERINGS. Authorizes an electing company to offer a promotion for a regulated service for not more than 90 days in any 12month period. Sets forth the required information to be included in a company's promotional offering to be submitted to PUC. Provides that an electing company is not required to obtain commission approval to make a promotional offering. Authorizes an electing company to offer a promotion of any regulated service as part of a package of services consisting of any regulated service with any other regulated or unregulated service or any service or affiliate. SECTION 45. Amends Section 60.042, Utilities Code, as follows: Sec. 60.042. PROHIBITED RESALE OR SHARING. (a) Prohibits a provider of telecommunications service from imposing a restriction on the resale or sharing of a service entitled to regulatory treatment as a nonbasic, rather than competitive service, if the provider is a company electing regulation under Chapter 58. (b) Adds this subsection to provide that an incumbent local exchange must comply with the resale provisions of applicable federal law, unless exempted by federal law. (c) Adds this subsection to require an electing company under Chapter 58 that offers basic or nonbasic services regulated by PUC to its retail customers as a promotional offering to make those services available for resale by a certificated telecommunications utility (CTU) on terms no less favorable than those terms for the services that are made available to retail customers. Requires the electing company's basic or nonbasic service, for a promotion of 90 days or less, to be made available to the CTU at the electing company's promotional rate, without an avoided-cost discount. Requires the electing company's basic or nonbasic service, for a promotion of more than 90 days, to be made available to the CTU at a rate that reflects the avoided-cost discount, if any, for the promotional rate. SECTION 46. Amends Subchapter I, Chapter 60, Utilities Code, by adding Sections 60.164 and 60.165, as follows: Sec. 60.164. PERMISSIBLE JOINT MARKETING. Prohibits PUC from adopting any rule or order that would prohibit a local exchange company from jointly marketing or selling its products and services with the products and services of any of its affiliates in any manner permitted by federal law or applicable rules or orders of the FCC, except as prescribed in Chapters 61 (Information Technology Service), 62 (Broadcaster Safeguards), and 63 (Electronic Publishing). Sec. 60.165. AFFILIATE RULE. Prohibits PUC from adopting any rule or order that would prescribe for any local exchange company any affiliate rule that is more burdensome than federal law or applicable rules or orders of the FCC, except as prescribed in Chapters 61, 62, and 63. Prohibits PUC, notwithstanding any other provision in this title, from attributing or imputing to a local exchange company a price discount offered by an affiliate of the local exchange company to the affiliate's customers. Provides that this section does not limit the authority of PUC to consider a complaint brought under Subchapter A (General Powers and Duties of Commission), Chapter 52, Section 53.003 (Just and Reasonable Rates), or Chapter 60. SECTION 47. Amends Section 62.074(b), Utilities Code, to provide an exception to the prohibition against an incumbent local exchange from developing a rate that primarily benefits its separate affiliate. That exception is that an incumbent local exchange is authorized to market or sell audio or video programming or services of its separate affiliate without marketing or selling the programming of a nonaffiliated provider. SECTION 48. Amends Section 62.108, Utilities Code, to change the expiration date for Subchapter E (Video Carriage) from August 31, 1999, to August 31, 2005. SECTION 49. Amends Section 62.136, Utilities Code, to change the expiration date for Subchapter F (Audio Carriage) from August 31, 1999, to August 31, 2005. SECTION 50. Amends Subtitle C, Title 2, Utilities Code, by adding Chapter 64, as follows: CHAPTER 64. CUSTOMER PROTECTION SUBCHAPTER A. GENERAL PROVISIONS Sec. 64.001. CUSTOMER PROTECTION POLICY. Sets forth legislative findings. Sets forth the purpose of rulemaking authority granted to PUC. Prohibits the construction of this section from abridging customer rights set forth in commission rules effective at the time this chapter is enacted. Provides that this chapter does not limit legal authority of the attorney general. Sec. 64.002. DEFINITIONS. Defines "billing agent," "billing utility," "certificated telecommunications utility," "customer," "service provider," and "telecommunications utility." Sec. 64.003. CUSTOMER AWARENESS. (a) Requires PUC to promote public awareness of changes in telecommunications markets, provide customers with information necessary to make informed choices about available options, and ensure that customers have an adequate understanding of their rights. (b) Requires PUC to compile a report on customer service at least annually. (c) Requires PUC to adopt and enforce rules to require a CTU to give clear, uniform, and understandable information to customers about rates, terms, services, customer rights, and other necessary information as determined by PUC. (d) Requires PUC's customer awareness efforts to be provided in English and Spanish and any other language as necessary. Sec. 64.004. CUSTOMER PROTECTION STANDARDS. (a) Enumerates the 11 standards to which all buyers of telecommunications services are entitled. (b) Authorizes PUC to adopt and enforce rules as necessary or appropriate to carry out this section. Authorizes PUC to waive language requirements for good cause. (c) Requires PUC to request the attorney general's comments to develop the necessary or appropriate rules. (d) Requires PUC to coordinate its enforcement efforts regarding the prosecution of fraudulent, misleading, deceptive, and anticompetitive business practices with the attorney general to ensure consistent treatment of specific alleged violations. (e) Prohibits the construction of this section from abridging customer rights set forth in commission rules effective at the time this chapter is enacted. SUBCHAPTER B. CERTIFICATION, REGISTRATION, AND REPORTING REQUIREMENTS Sec. 64.051. ADOPTION OF RULES. (a) Requires PUC to adopt rules relating to certification, registration, and reporting requirements for a CTU, all telecommunications utilities that are not dominant carriers, and pay telephone providers. (b) Requires the rules adopted under Subsection (a) to be consistent with and no less effective than federal law, and prohibits them from requiring the disclosure of highly sensitive competitive or trade secret information. Sec. 64.052. SCOPE OF RULES. Enumerates the scope of the rules PUC may adopt and enforce under this section, including certification or registration requirements, customer service and protection, and suspension or revocation of certificates or registrations for repeated violations. Sec. 64.053. REPORTS. Authorizes PUC to require a telecommunications service provider to submit reports to PUC concerning any matter over which it has authority under this chapter. SUBCHAPTER C. CUSTOMER'S RIGHT TO CHOICE Sec. 64.101. POLICY. Sets forth the policy of this state as it relates to the unauthorized switching of a telecommunications service provider. Sec. 64.102. RULES RELATING TO CHOICE. Enumerates the scope of the customer protection rules PUC is required to adopt and enforce relating to this section. Provides for penalties for violations by CTUs. SUBCHAPTER D. PROTECTION AGAINST UNAUTHORIZED CHARGES Sec. 64.151. REQUIREMENTS FOR SUBMITTING CHARGES. (a) Enumerates the conditions under which a service provider or billing agent is authorized to submit charges for a new product or service to be billed on a customer's telephone bill on after the effective date of this section. (b) Provides that the customer consent required by Subsection (a)(2) must be verified by the service provider offering the product or service by authorization from the customer. Provides that a record of the customer consent including verification must be maintained by the service provider offering the product or service for at least 24 months immediately after the consent and verification have been obtained. Enumerates the four methods by which a customer consent and verification are to be obtained. (c) Provides that the contract required by Subsection (a)(3)(B) must include the service provider's name, business address, and business telephone number. Requires the contract to be maintained by the billing utility for as long as the billing for the products and services continues and for the 24 months immediately following the permanent discontinuation of the billing. (d) Prohibits a service provider and any billing agent from using fraudulent, misleading, deceptive, and anticompetitive marketing practices to obtain customers, including the use of negative option marketing, sweepstakes, and contests. (e) Provides that Subsection (b) does not apply to customer-initiated transactions with a certificated telecommunications provider for which the service provider has the appropriate documentation, unless verification is required by federal law or rules implementing federal law. (f) Requires the service provider, if it has been notified by a billing utility that a customer has reported to the billing utility that a charge made by the service provider is unauthorized, to cease to charge the customer for the unauthorized product or service. (g) Provides that this section does not apply to message telecommunications services charges for 1+, 0+, 0-, 1010XXX calls, or collect calls and charges for video services if the service provider has the necessary call detail record to establish the billing for the call or service. Sec. 64.152. RESPONSIBILITIES OF BILLING UTILITY. (a) Enumerates the five actions required to be taken by a billing utility, if a customer's telephone bill is charged for any product or service without proper customer consent or verification, not later than 45 days after the billing utility on its knowledge or notification of any unauthorized charge. (b) Enumerates information required in the record required under Subsection (a)(5) of every customer who has experienced any unauthorized charge on the customer's telephone bill and who has notified the billing utility of the unauthorized charge. (c) Enumerates actions a billing utility is prohibited from taking. Sec. 64.153. RECORDS OF DISPUTED CHARGES. (a) Requires every service provider to maintain a record of every disputed charge for a product or service placed on a customer's bill. (b) Enumerates the information required to be contained in the record required under Subsection (a) for every disputed charge. (c) Requires the record required under Subsection (a) to be maintained for at least 24 months following the completion of all steps required by Section 64.152(a). Sec. 64.154. NOTICE. (a) Requires a billing utility to provide notice of a customer's rights under this section in the manner prescribed by PUC. (b) Provides that notice of a customer's rights must be given by mail to each customer within 60 days of the effective date of this section or by inclusion in the telephone directory published after the effective date of this section. Requires each billing utility to send the notice to new customers at the time the service is initiated or to any customer at that customer's request. Sec. 64.155. PROVIDING COPY OF RECORDS. Requires a billing utility to provide a copy of records maintained under Sections 64.151(c), 64.152, and 64.154 to PUC staff on request. Requires a service provider to provide a copy of records maintained under Sections 64.151(b) and 64.153 to PUC on request. Sec. 64.156. VIOLATIONS. (a) Authorizes PUC, if it finds that a billing utility violated this subchapter, to implement penalties and other enforcement actions under Chapter 15 (Judicial Review, Enforcement, and Penalties). (b) Authorizes PUC, if it finds that any other service provider or billing agent subject to this subchapter has violated this subchapter or has knowingly provided false information to PUC on matters subject to this subchapter, to enforce the provisions of Chapter 15 against the service provider or billing agent as if it were regulated by PUC. (c) Prohibits the authority granted under this section or any other provision of this subchapter from being construed to grant PUC jurisdiction to regulate service providers or billing agents who are not otherwise subject to commission regulation other than as specifically provided by this chapter. (d) Authorizes PUC, if it finds that a billing utility or service provider repeatedly violates this subchapter, to suspend, restrict, or revoke the registration or certificate of the telecommunications service provider, if the action is consistent with the public interest. Provides that suspending, restricting, or revoking the registration or certificate of the telecommunications service provider denies the telecommunications service provider the right to provide service in this state. Prohibits PUC from revoking a certificate of convenience and necessity of a telecommunications utility except as provided by Section 54.008. (e) Authorizes PUC, if it finds that a billing agent or service provider has repeatedly violated this subchapter, to order the billing utility to terminate billing and collection services for that service provider or billing agent. (f) Prohibits this subchapter from being construed to preclude a billing utility from taking action on its own to terminate or restrict its billing and collection services. Sec. 64.157. DISPUTES. (a) Authorizes PUC to resolve disputes between a retail customer and a billing utility, service provider, or telecommunications utility. (b) Enumerates actions in which PUC is authorized to engage in exercising its authority to resolve disputes between a retail customer and a billing utility, service provider, or telecommunications utility, including requirements for the production of records or information, for the display of toll-free telephone numbers for complaints, for the refund or credits for improper changes, and for customer protection. (c) Requires PUC to adopt procedures for the resolution of disputes in a timely manner, which is prohibited from exceeding 60 days. Sec. 64.158. CONSISTENCY WITH FEDERAL LAW. Requires rules adopted by PUC under this subchapter to be consistent with and not more burdensome than applicable federal laws and rules. SECTION 51. Effective date for Section 55.012 (Telecommunications Billing), Utilities Code: March 1, 2000. SECTION 52. Repealer: Section 58.062 (Switched Access Rates), Utilities Code, and Subchapter D (Discretionary Services), Chapter 58 (Incentive Regulation), Utilities Code. SECTION 53.Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute adds a new SECTION 2, which amends Section 13.002, Utilities Code, to provide that the Office of Public Utility Counsel is abolished and this chapter (Office of Public Utility Counsel) expires on September 1, 2005, rather than September 1, 2001, unless continued as provided by Chapter 325 (Texas Sunset Act), Government Code. The substitute adds a new SECTION 3, which amends Section 15.024(c), Utilities Code, to provide that this subsection does not apply to a violation of Chapter 55 (Regulation of Telecommunication Services) or 64 (Customer Protection). The substitute adds a new SECTION 4 which amends Section 51.001, Utilities Code, by amending Subsection (a) and adding Subsection (g), to provide an additional purpose of this subtitle, to set forth the policy of this state regarding access to telecommunications and information services, and to require the Public Utility Commission (PUC) to begin a review and evaluation of the availability and pricing of telecommunications and information services in rural and high cost areas, as well as the convergence of telecommunications services. For more information, please see the Section-bySection Analysis portion of this document. The substitute adds a new SECTION 5, which amends Sections 51.002(6) and (10), Utilities Code, to redefine "long run incremental cost" and "telecommunications provider." The substitute adds a new SECTION 6, which amends Section 51.004, Utilities Code, to prohibit a discount or other form of pricing flexibility from being predatory or anticompetitive and to provide that a price that is set at or above the long run incremental cost of a service is presumed to comply with this section. The substitute adds a new SECTION 7, which amends the section title of Section 52.058, Utilities Code, to read "General Provisions Relating to New or Experimental Services or Promotional Rates." The substitute adds a new SECTION 8, which amends Subchapter B, Chapter 52, Utilities Code, by adding Sections 52.0583, 52.0584, and 52.0585. Section 52.0583 authorizes an incumbent local exchange company to introduce a new service and sets forth the notice and pricing requirements and procedures for complaint. Section 52.0584 authorizes an incumbent local exchange company to exercise pricing flexibility in accordance with this section, notwithstanding any other provision of this title, and sets forth the notice and pricing requirements and procedures for complaint. Section 52.0585 authorizes an incumbent local exchange company to offer a promotion for regulated service for not more than 90 days in any 12-month period and sets forth the requirements for such a promotion. For more information, please see the Section-by-Section Analysis portion of this document. The substitute redesignates SECTION 2 (Section 52.102, Utilities Code) of the original to SECTION 9 and modifies it as amended by Section 18.04, S.B. No. 1368, Acts of the 76th Legislature, Regular Session, 1999, and to provide that the PUC has jurisdiction to requires a telecommunications utility subject to this subchapter (Telecommunications Utilities That Are Not Dominant Carriers), rather than a telecommunications utility together with affiliates, that had more than six percent of the total intrastate access minutes of use as measured for the most recent 12-month period, to pass switched access rate reductions under this title (Public Utility Regulatory Act) to customers as required under Section 52.112. The substitute also makes conforming changes. The substitute redesignates SECTION 5 (proposed Section 52.112, Utilities Code) of the original to SECTION 12 and strikes the reference to a "telecommunications utility together with affiliates" and substitutes "a telecommunications utility." The substitute adds a new SECTION 13, which amends Subchapter D, Chapter 52, Utilities Code, by adding Section 52.155, to prohibit a telecommunications utility that holds a certificate of operating authority or a service provider certificate of operating authority from charging a higher amount for originating or terminating intrastate switched access than the prevailing rates charged by the holder of the certificate of convenience and necessity in whose territory the call originated or terminated, except under certain conditions. Notwithstanding any other provision, the PUC is granted all jurisdiction necessary to enforce this section. The substitute redesignates SECTION 7 of the original to SECTION 15 and further modifies Section 54.102, Utilities Code, by adding a new Subsection (e), to authorize an affiliate of a company that holds a certificate of convenience and necessity and that serves more than five million access lines in this state to hold a certificate of operating authority or service provider certificate of operating authority to provide service in an area of this state in which its affiliated company is the incumbent local exchange company. The proposed subsection also prohibits the affiliate holding the certificate of operating authority or service provider certificate of operating authority from providing in that area customer-specific contracts so long as the affiliated company that is the incumbent local exchange company is prohibited from providing customer-specific contracts under Section 58.003 in that area. In addition, the proposed subsection provides that this subsection does not preclude an affiliate of a company holding a certificate of convenience and necessity from holding a certificate of operating authority in any area of this state to provide advanced services as defined by rules or orders of the Federal Communications Commission. The substitute adds new SECTIONS 16-20. For a complete analysis of these SECTIONS please see the Section-by-Section Analysis portion of this document. The substitute redesignates SECTION 8 (Section 56.021, Utilities Code) of the original to SECTION 21 of the substitute, modifies it as amended by Section 18.04, S.B. No. 1368, Acts of the 76th Legislature, Regular Session, 1999, and further amends it as detailed in the Section-by-Section Analysis portion of this document. The substitute redesignates SECTION 9 (Sections 56.023 and 56.024, Utilities Code) of the original to SECTION 22 of the substitute and further modifies Section 56.023 by deleting a provision which would have required PUC to establish and implement the universal service fund provisions by a certain date. The substitute redesignates SECTION 10 (Section 56.026, Utilities Code) of the original to SECTION 23 of the substitute and further amends it by deleting proposed Subsection (c), which would have required PUC, in establishing and implementing the universal service fund described in Section 56.021(1), to size the fund to provide for disbursements to a company serving more than five million access lines in this state sufficient to offset a reduction of at least 2.35 cents per minute in switched access rates on a combined originating and terminating basis. The substitute adds new Subsections (c) and (d), as detailed in the Section-by-Section Analysis portion of this document. The substitute redesignates SECTIONS 11 and 12 of the original to SECTIONS 24 and 25 and makes nonsubstantive changes. The substitute differs from the original by deleting SECTION 13 of the original, which would have amended Section 58.002, Utilities Code, to define "electing company" and "urban," and made conforming changes. The substitute add a new SECTION 26, which amends Section 56.072, Utilities Code, by adding Subsection (d), to require PUC to adopt rules providing for automatic enrollment to receive telassistance service for eligible consumers. The substitute also requires the department, on request of PUC, to assist in the adoption and implementation of those rules and requires PUC and the department to enter into a memorandum of understanding establishing the respective duties of PUC and the department in relation to the automatic enrollment. The substitute adds a new SECTION 27, which amends Subchapter C, Chapter 56, Utilities Code, by adding Section 56.079, to require PUC to adopt rules prohibiting a telecommunications provider from discontinuing local exchange telephone service to a consumer who receives tel-assistance service because of nonpayment by the consumer of charges for other services billed by the provider, including long distance services. The substitute authorizes a telecommunications provider to block a tel-assistance service participant's access to all long distance service except toll-free numbers when the participant owes an outstanding amount for that service. The substitute requires the telecommunications provider to remove the block without additional cost to the participant on payment of the outstanding amount and requires a telecommunications provider to offer a consumer who applies for or receives tel-assistance services the option of blocking all toll calls if technically capable or placing a limit on the amount of toll calls. The substitute also prohibits the provider from charging the consumer an administrative charge or other additional amount for the blocking service. The substitute adds a new SECTION 28, which amends Subchapter A, Chapter 58, Utilities Code, by adding Section 58.003, Utilities Code. Please see the Section-by-Section Analysis portion of this document for a complete analysis. The substitute adds a new SECTION 30, which amends Section 58.023, Utilities Code, to classify certain services provided by an electing company as nonbasic services governed by Subchapter E, rather than discretionary services governed by Subchapter D and competitive services. The substitute redesignates SECTION 15 (Section 58.024, Utilities Code) of the original as SECTION 31 of the substitute and further amends it to conform to other sections by amending PUC's authorization to reclassify a discretionary service as a competitive service to reclassification of a basic service as a nonbasic service and deleting a provision which would have made reclassification under this section applicable only to a company that had five million access lines. The substitute differs from the original by requiring the PUC to grant or deny a request for reclassification no later than 60 days after filing the request, rather than 30 days as in the original. The substitute redesignates SECTION 16 (Section 58.028, Utilities Code) of the original as SECTION 32 of the substitute and further amends it by providing that this section expires in 2005, rather than 2003, and PUC shall file a report with the legislature in 2005, rather than 2003. The substitute differs from the original by deleting SECTION 17 of the original which would have amended Subchapter C, Chapter 58, Utilities Code, by adding Section 58.0511, relating to basic network services for certain electing companies. The substitute adds a new SECTION 33, which amends Section 58.051, Utilities Code, to delete certain services from and add other services to the services which are considered basic network services and require electing companies to offer each basic network service as a separately tariffed service in addition to any packages or other pricing flexibility offerings that include those basic network services. The substitute redesignates SECTION 20 (adding Section 58.063 and 58.064, Utilities Code) of the original to SECTION 36 (adding only Section 58.063) by changing the section title to "Pricing And Packaging Flexibility" and further modifies it to authorize an electing company to exercise pricing flexibility for basic network services, rather than to authorize an electing company serving more than five million access lines to package basic network services with discretionary services or competitive services as of the date the company enters into the interLATA long distance market. The substitute deletes proposed Subsection (b), which would have authorized an electing company serving less than five million access lines to package basic network services with discretionary services or competitive services if the company notifies PUC of its binding commitment to make certain infrastructure improvements by September 1, 2001, and prohibited these commitments from applying to exchanges of the company sold or transferred before, or for which contracts for which for sale or transfer were pending on, September 1, 2001. Proposed Subsection (b) also would have required the company, in the case of exchanges for which contracts for sale or transfer were pending as of March 1, 2001, where the purchaser withdrew or defaulted prior to September 1, 2001, to have one year from the date of withdrawal or default to comply with the commitments. The substitute redesignates proposed Subsections (e) of the original to Subsection (c) and deletes the prohibition against the package being offered in manner that results in a customer-specific contract except as provided by Section 58.003. The substitute combines provisions from Subsections (c) and (d) of the original in new Subsection (b). The substitute also deletes proposed Section 58.064 (Zone-Density Pricing of Basic Local Telecommunications Service), which would have provided that until an electing company is authorized to engage in pricing flexibility pursuant to Section 58.063, the only form of pricing flexibility allowed for basic local telecommunications service is zone-density pricing. The substitute adds a new SECTION 37, which amends Subchapter E, Chapter 58, Utilities Code. The substitute amends Section 58.151 to additionally classify certain services as nonbasic services. The substitute also amends Section 58.152 to authorize an electing company to set the price for any nonbasic service at any level above the lesser of the service's long run incremental cost in accordance with the imputation rules prescribed by or under Subchapter D, Chapter 60, or price for the service in effect on September 1, 1999, and to use pricing flexibility for a nonbasic service, subject to Section 51.004, rather than the requirements of Sections 60.001 and 60.002. In addition, the substitute adds a new Section 58.153 to authorize an electing company to introduce a new service, subject to Section 58.152(a). The proposed section sets forth the notice and pricing requirements and procedures for complaint. The substitute deletes SECTION 21 of the original, which would have amended Subchapter D, Chapter 58, Utilities Code, by adding Section 58.1011. The proposed section would have provided that from September 1, 1999, until such time as an affected company offers interLATA long distance service, and notwithstanding Section 58.101 (Services Included), for an electing company with more than five million access lines, that certain services are discretionary services, unless reclassified under Section 58.024; sets forth what is included as discretionary services; and would have provided that at such time as an electing company serving more than five million access lines offers interLATA long distance, the services are discretionary services of that company. Sets forth what is included as discretionary services. The substitute deletes SECTION 22 of the original, which would have amended Section 58.102, Utilities Code, to require the Commission to set the maximum price an electing company may charge for discretionary service until one of the specified dates and provided that the initial maximum price for a service is the price in effect on the date of the electing company's election, rather than September 1, 1995. The section would also have authorized the electing company, after the dates prescribed in Section 58.102(a) (Maximum Price), to file annually a revised maximum price list for the services classified as discretionary services. The section would have prohibited the new maximum prices for the services classified as discretionary services from exceeding, in the aggregate, 112 percent of the previous maximum prices for those services and required the electing company to file the new maximum price list in an informational tariff filed with PUC five days prior to the date on which the new maximum prices will become effective. In addition, the section would have deleted text prohibiting PUC from increasing the initial maximum price and text authorizing PUC to change the initial maximum price. The substitute deletes SECTION 23 of the original, which would have amended Subchapter E, Chapter 58, Utilities Code, by adding Section 58.1511. The proposed section would have provided that from September 1, 1999, until such time as an affected company offers interLATA long distance service, and notwithstanding Section 58.151 (Services Included), for an electing company with more than five million access lines, the services in this section are competitive services and set forth what is included in competitive services. The proposed section also would have provided that at such time as an electing company serving more than five million access lines offers interLATA long distance, the services listed in Subsection (d) are competitive services for that company, set forth what is included in competitive services, and provided that rates for the listed services are capped until September 1, 2005. The substitute deletes SECTION 24, which would have amended Subchapter E, Chapter 58, Utilities Code, by adding Section 58.1512. The proposed section would have set forth certain required services to be offered by an electing company to be classified as discretionary services and prohibit it from being reclassified under Section 58.024, for the 12-month period following the date an electing company with more than five million access lines begins offering interLATA long distance service, and require the services listed in this section, at the expiration of the 12-month period, to be classified as competitive services. The proposed section also would have prohibited an electing company, notwithstanding any other provision in this title, with more than five million access lines from providing the services in this section pursuant to a customer specific contract until 18 months have expired following the date that such an electing company begins offering interLATA long distance service and from offering a package of services, including a service listed in this section, that results in a customer specific contract until the 18-month period has expired. The substitute redesignates SECTION 25 (Subchapter E, Chapter 58, Utilities Code) of the original to SECTION 38 and changes the section title to "Interconnection," rather than "Interconnection Services." The substitute also corrects a cross-reference and corrects the reference to the arbitration authority of the commission rather than the FCC. The substitute redesignates SECTION 26 (Chapter 58, Utilities Code) of the original to SECTION 39 and modifies proposed Section 58.301(2) to reflect that the additional two cent reduction in switched access rates occurs on the earlier of July 1, 2000 or interLATA entry. The substitute further differs from the original by deleting the half cent reduction required on the first anniversary of interLATA entry. It also modifies proposed Section 58.302 to authorize an electing company to, on its own initiative, decrease a rate charged for switched access service to any amount above the long run incremental cost of the service, notwithstanding Subchapter F, Chapter 60, but subject to Section 60.001. The substitute redesignates SECTION 31 (proposed Sections 59.030, 59.031, and 59.032, Utilities Code) of the original to SECTION 44 and further modifies Section 59.030(a) by including the Office of Public Utility Counsel (office) and the PUC among the entities to whom an electing company that wishes to introduce a new service must first provide an informational notice. In proposed Section 59.030(c), the substitute differs from the original by including the office and PUC, in addition to an affected person, as entities authorized to file a complaint with PUC that challenges the pricing of a new service. The substitute also makes a conforming change. In proposed Section 59.030(d), the substitute differs from the original by making a conforming change. In proposed Section 59.031(a), the substitute differs from the original by including the office among the entities to whom an electing company that wishes to exercise pricing flexibility must first provide an informational notice. The substitute also removes an exception that prohibited a package of regulated services with non-regulated services from being offered in a manner that resulted in a customer-specific contract. In proposed Section 59.031(c), the substitute differs from the original by including the office and PUC, in addition to an affected person, as entities authorized to file a complaint at PUC that alleges that the price of a regulated service does not comply with the applicable pricing standards. The substitute also makes a conforming change. The substitute adds a new SECTION 45, which amends Section 60.042, Utilities Code, as follows: Sec. 60.042. PROHIBITED RESALE OR SHARING. (a) Prohibits a provider of telecommunications service from imposing a restriction on the resale or sharing of a service entitled to regulatory treatment as a nonbasic, rather than competitive service, if the provider is a company electing regulation under Chapter 58. (b) Adds this subsection to provide that an incumbent local exchange must comply with the resale provisions of applicable federal law, unless exempted by federal law. (c) Adds this subsection to require an electing company that offers basic or nonbasic services regulated by PUC to its retail customers as a promotional offering to make those services available for resale by a certificated telecommunications utility (CTU) on terms that are no less favorable than those terms for the services for the services that are made available to retail customers. Requires the electing company's basic or nonbasic service, for a promotion of 90 days or less, to be made available to the CTU at the electing company's promotional rate, without an avoided-cost discount. Requires the electing company's basic or nonbasic service, for a promotion of more than 90 days, to be made available to the CTU at a rate that reflects the avoided-cost discount, if any, from the promotional rate. The substitute deletes SECTION 32 of the original, which would have amended Section 60.124, Utilities Code, to set forth a requirement of interconnection agreements between incumbent local exchanges and competitive local exchanges. The substitute redesignates SECTION 33 of the original to SECTION 46. In proposed Sections 60.164 and 60.165, the substitute modifies the original by including Chapter 62 (Broadcaster Safeguards) as a chapter of the Utilities Code that is an exception to the prohibition against PUC adopting certain rules or orders for a local exchange that are more burdensome than federal law, rules, or orders. The substitute also makes nonsubstantive changes in proposed Section 60.165. The substitute authorizes the commission not to adopt rules, the original required the commission not to adopt rule. The substitute adds a new SECTION 47, which amends Section 62.074(b), Utilities Code, to provide an exception to the prohibition against an incumbent local exchange company from developing a rate that primarily benefits its separate affiliate. That exception is that an incumbent local exchange is authorized to market or sell audio and video programming of its separate affiliate without marketing or selling the programming of a nonaffiliated provider. The substitute adds a new SECTION 48, which amends Section 62.108, Utilities Code, to change the expiration date for Subchapter E (Video Carriage) from August 31, 1999, to August 31, 2005. The substitute adds a new SECTION 49, which amends Section 62.136, Utilities Code, to change the expiration date for Subchapter F (Audio Carriage) from August 31, 1999, to August 31, 2005. The substitute adds a new SECTION 50, which amends Subtitle C, Title 2, Utilities Code, by adding Chapter 64. Please see the Section-by-Section Analysis portion of this document for a complete analysis of Chapter 64. The substitute adds a new SECTION 51, to provide that Section 55.012, Utilities Code, takes effect March 1, 2000. The substitute adds a new SECTION 52 to repeal Section 58.062 (Switched Access Rates), Utilities Code, and Subchapter D (Discretionary Services), Chapter 58 (Incentive Regulation), Utilities Code. The substitute redesignates SECTION 34 (emergency clause) of the original to SECTION 53.HBA-JRA, TYH C.S.S.B. 560 76(R) The substitute also redesignates SECTIONS 3, 4, 6, 14, 18, 19, 27, 28, 29, and 30 of the original to SECTIONS 10, 11, 14, 29, 34, 35, 40, 41, 42, 43.