SRC-DBM C.S.S.B. 560 76(R)    BILL ANALYSIS


Senate Research CenterC.S.S.B. 560
By: Sibley
Economic Development
4/13/1999
Committee Report (Substituted)


DIGEST 

In 1995, H.B. 2128 was enacted by the 74th Legislature 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 H.B. 2128, the regulatory framework now requires some adjustment.
C.S.S.B. 560 would regulate the telecommunications utilities and the
provision of telecommunication services. 

PURPOSE

As proposed, C.S.S.B. 560 regulates the telecommunications utilities and
the provision of telecommunications services. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Public Utility Commission in SECTION
4 (Section 52.112(b), Chapter 52C, Utilities Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 12.005, Utilities Code, to provide that the
Public Utility Commission of Texas (commission) is abolished and this
chapter expires on September 1, 2005, rather than September 1, 2001, unless
continued as provided by Chapter 325, Government Code. 

SECTION 2.  Amends Section 52.102, Utilities Code, to provide that a
telecommunications utility subject to this subchapter has jurisdiction to
require a telecommunications utility that, together with affiliates, 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 to customers as required under Section 52.112.
Requires this authority to expire on the date specified in Section 52.112.
Makes a conforming change.  

SECTION 3.  Amends Section 52.108, Utilities Code, to authorize the
commission to enter any order necessary to protect the public interest if
the commission finds after notice and hearing that a telecommunications
utility has failed to pass switched access rate reductions to customers
under Chapter 56 or other law, as required under Section 52.112. 

SECTION 4.  Amends Section 52.110, Utilities Code, to provide that in a
proceeding before the commission in which it is alleged that a
telecommunications utility engaged in conduct in violation of Section
52.107, 52.108, 52.109, or 52.112, the burden of proof is on a
telecommunications utility complaining of conduct committed against it in
violation of this subchapter, or except as provided by Subsection (b), the
responding telecommunications utility if the proceedings are brought by a
customer or initiated by the commission. 

SECTION 5.  Amends Chapter 52C, Utilities Code, by adding Section 52.112,
as follows: 

Sec. 52.112.  REDUCTION PASS-THROUGH REQUIRED.   Requires each
telecommunications utility that, together with affiliates, 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.  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 the commission
demonstrating its compliance on an average revenue per minute basis with
subsection (a). Requires this subsection to expire two years after 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. 

SECTION 6.  Amends Section 54.007, Utilities Code, to delete existing
Subdivisions (b)(2) and (3) regarding certain instances in which a basic
telecommunications service price may be increased.  Makes a conforming
change.  

SECTION 7.  Amends Chapter 54C, Utilities Code, as follows:

SUBCHAPTER C.  CERTIFICATE OF OPERATING AUTHORITY

 Sec.  54.101.  DEFINITION.  Makes no change. 

Sec. 54.102.  APPLICATION FOR CERTIFICATE. 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 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.  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. 

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.  New heading:  TIME OF SERVICE REQUIREMENTS.  Requires a
certificate holder, notwithstanding Subsection (a), to serve a customer,
rather than 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.  New heading:  PENALTY FOR VIOLATION OF TITLE.  Redesignated
from existing Section 54.111. 

SECTION 8.  Amends Section 56.021, Utilities Code, to require the
commission to adopt and enforce rules requiring local exchange companies to
establish a universal service fund to assist telecommunications providers,
rather than local exchange companies, in providing basic local
telecommunications service at reasonable rates in high cost or rural areas.
Makes a conforming change. 

SECTION 9.  Amends Sections 56.023 and 56.024, Utilities Code, as follows:

Sec. 56.023.  COMMISSION POWERS AND DUTIES.  Requires the commission to
establish and implement the universal service fund provisions required by
Section 56.021(1) for all eligible telecommunications providers not later
than August 1, 1999.  Makes conforming changes. 

Sec. 56.024.  REPORTS; CONFIDENTIALITY.  Authorizes the commission to
require a telecommunications provider to provide a report or information
necessary to assess contributions  and disbursements to the universal
service fund.  

SECTION 10.  Amends Section 56.026, Utilities Code, to require the
commission, 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.  Makes a conforming change. 

SECTION 11.  Amends Chapter 56B, Utilities Code, by adding Section 56.028,
as follows: 

Sec.  56.028.  UNIVERSAL SERVICE FUND REIMBURSEMENT FOR CERTAIN INTRALATA
SERVICE. Requires the commission 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)
upon request of a local exchange company that is not an electing company
under Chapters 58 and 59.  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 12.  Amends Section 56.071, Utilities Code, to provide that in
addition to local exchange companies, this subchapter applies to
telecommunications providers that receive universal service fund support
pursuant to the commission's universal service fund rules, and any
reference to or requirement imposed on local exchange companies in this
subchapter shall also apply to such telecommunications providers.  Makes
conforming changes. 

SECTION 13.  Amends Section 58.002, Utilities Code, as follows:

Sec. 58.002.  New heading:  DEFINITIONS.  Defines "electing period" and
"urban."  Makes conforming changes. 

SECTION 14.  Amends Section 58.021, Utilities Code, to require notice to
include a statement that the company agrees to limit until September 1,
2005, any increase in a rate the company charges for basic network
services.  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.  Authorizes
the commission to allow an electing company serving fewer than five million
access lines to withdraw the company's election under this chapter under
certain circumstances.  Defines "good cause."         
 
SECTION 15. Amends Section 58.024, Utilities Code, to prohibit the
commission from reclassifying a service until, for a company that serves
more than five million access lines in this state, the date on which the
FCC determines in accordance with 47 U.S.C. Section 271 that the company
may enter the interLATA telecommunications market in this state.
Authorizes the commission, for an electing company having greater than five
million lines, to reclassify a service subject to certain conditions. Makes
conforming changes.  

SECTION 16.  Amends Section 58.028, Utilities Code, to require the
commission 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 the commission 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, 2003, rather than
September 1, 2001. 

SECTION 17.  Amends Chapter 58C, Utilities Code, by adding Section 58.051A,
as follows: 

Sec.  58.051A.  SERVICES INCLUDED FOR CERTAIN ELECTING COMPANIES. Provides
that from September 1, 1999, until such time as an affected company offers
interLATA long distance service, and notwithstanding Section 58.051, for an
electing company with more than five million access lines , the services in
Subsection (b) of this section are basic network services, unless
reclassified under Section 58.024.  Sets forth what is included in basic
network services.  Provides that rates for the service listed in Subsection
(b) and (e) of this section are capped until September 1, 2005.  Provides
that at such time as an electing company servicing more than five million
access lines offers interLATA long distance, the services listed in
Subsection (e) of this section are basic network services for that company
except that the commission may permit an electing company, on application,
to establish rates, terms, and conditions of service for residential and
business installment billing and late payment charges. Sets forth what
basic network services include. 

SECTION 18.  Amends Sections 58.054 and 58.055, Utilities Code, as follows:

Sec. 58.054. RATES CAPPED. Requires an electing company to commit to not
increasing a rate for a basic network service on or before the fourth
anniversary of its election date.  Provides that the rates an electing
company may charge on or before that 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, notwithstanding Subsections (a) and (b), the cap on
the rates for basic network services for a company electing under this
subchapter from expiring before September 1, 2005. 

Sec.  58.055.  RATE ADJUSTMENT BY COMPANY.  Authorizes an electing company
notwithstanding Chapter 60F, on its own initiative, to decrease a rate for
a basic network service during the electing period, rather than four-year
period.  Authorizes a company to decrease the rate for a basic local
telecommunications service to an amount above the service's appropriate
cost.  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 19.  Amends Section 58.060, Utilities Code, to authorize an
electing company to increase a rate for a basic network service only with
the commission'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, rather than after the electing
period expires.  

SECTION 20.  Amends Chapter 58C, Utilities Code, by adding Sections 58.063
and 58.064, as follows: 

Sec. 58.063.  FLEXIBLE PACKAGING ACROSS SERVICE CLASSIFICATIONS. Authorizes
an electing company, notwithstanding any other provisions of this title,
serving less 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. Authorizes an
electing company, notwithstanding any other provisions of this title,
serving less than five million access lines to package basic network
services with discretionary services or competitive services if the company
notifies the commission of its binding commitment to make certain
infrastructure improvements by September 1, 2001.  Prohibits 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.  Requires 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. Requires the price for a package of services containing basic
network and discretionary or competitive services to be no higher than the
sum of the tariffed rates of the basic network services and the competitive
services and the price ceilings of the discretionary services.  Requires
the price for a package of services containing basic network services and
discretionary or competitive services to be set at a level above the sum of
certain costs.   Authorizes an electing company to flexibly price a package
that includes a basic network service in any manner listed in Section
51.002(7), except that such a package is prohibited from being offered in a
manner that results in a customerspecific contract. 

Sec. 58.064.  ZONE-DENSITY PRICING OF BASIC LOCAL TELECOMMUNICATIONS
SERVICE.  Provides that the only form of pricing flexibility allowed for
basic local telecommunications service is zone-density pricing until an
electing company is authorized to engage in pricing flexibility pursuant to
Section 58.063. 

SECTION 21.  Amends Chapter 58D, Utilities Code, by adding Section 58.101A,
as follows: 

Sec. 58.101A.  SERVICES INCLUDED FOR CERTAIN ELECTING COMPANIES.  Provides
that from September 1, 1999 until such time as an affected company offers
interLATA long distance service, and notwithstanding Section 58.101, for an
electing company with more than five million access lines, the services in
Subsection (b) of this section are discretionary services, unless
reclassified under Section 58.024.  Sets forth what is included in
discretionary services. 

SECTION 22. Amends Section 58.102, Utilities Code, to require the
commissioner to set the maximum price an electing company may charge for
discretionary service until certain dates.  Provides that the initial
market price for a service is the price in effect on the date of the
electing company's election, rather than September 1, 1995.  Authorizes the
electing company, after the dates prescribed in Section 58.102(a), to file
annually a revised maximum price list for the services classified as
discretionary services.  Prohibits 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.  Requires the
electing company to file the new maximum price list in an informational
tariff filed with the commission five days prior to the date on which the
new maximum prices will become effective. Deletes text prohibiting the
commission from increasing the initial maximum price.  Deletes text
authorizing the commission to change the initial maximum price. 

SECTION 23.  Amends Chapter 58E, Utilities Code, by adding Section 58.151A,
as follows: 

Sec. 58.151A.  SERVICES INCLUDED FOR CERTAIN ELECTING COMPANIES. Provides
that from September 1, 1999 until such time as an affected company offers
interLATA long distance service, and notwithstanding Section 58.151, for an
electing company with more than five million access lines, the services in
Subsection (b) of this section are competitive services.  Sets forth what
is include in competitive services.  Provides 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) of this
section are competitive services for that company. Sets forth what is
included in competitive services.  Provides that rates for the services
listed in Subsection(d) (1)-(3) are capped until September 1, 2005. 

SECTION 24.  Amends Chapter 58E, Utilities Code, by adding Section 51.151B,
as follows: 

Sec. 515.151B.  SERVICES INCLUDED FOR CERTAIN ELECTING COMPANIES.  Sets
forth certain required services to be offered by an electing company to be
classified as discretionary services and may not be 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 notwithstanding Sections 58.101 and 58.151A.
Requires the services listed in Subsection (a)(1)-(4), at the expiration of
the 12- month period described in Subsection (a), to be classified as
competitive services.  Prohibits an electing company, notwithstanding any
other provision in this title, with more than five million access lines
from providing the services in Subsection (a)(1)-(4) 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.
Prohibits an electing company from offering a package of services,
including a service listed in Subsection (a)(1)-(4), that results in a
customer specific contract until the 18-month period has expired. 

SECTION 25.  Amends Chapter 58E, Utilities Code, by adding Section 58.155,
as follows: 

Sec. 58.155.  INTERCONNECTION SERVICES.  Provides that because
interconnection to competitive providers and interconnection for commercial
mobile service providers are subject to the requirements of Sections 251
and 252, Communications Act of 1934, as amended (47 U.S.C. Section 151 et
seq.) and FCC rules, they are not addressed in Sections 58.051A, 58.101A,
and 58.151A. 

SECTION 26.  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
reduces its switched access rates on a combined operating 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 above the lesser of the rates for
switched access services charged by that electing company on September 1,
1999, as may be further reduced upon implementation of the universal
service fund pursuant to Chapter 56; and the applicable rate described by
Section 58.301 as may be further reduced upon implementation of the
universal service fund pursuant to Chapter 56. 

Sec. 58.303.  SWITCHED ACCESS CHARGE STUDY.  Requires the commission, 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 the commission to file a report with the
legislature no later than January 1, 2001.  Requires the report to include
the commission's recommendations as to the issues reviewed and evaluated.
Provides that this section expires on September 1, 2001.  

SECTION 27.  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 dates. 

SECTION 28.  Amends Section 59.024(a), Utilities Code, to prohibit an
electing company, before the end of the company's election period under
this chapter, rather than during the election period, from increasing a
rate previously established for that company.  Requires the commission, on
motion of the electing company or on its own motion to adjust prices for
services to reflect changes in FCC separations that affect the intrastate
net income by at least 10 percent.  Requires the commission,
notwithstanding Subsection (a), on request of the electing company, to
allow a rate group reclassification that results from access line growth. 

SECTION 29.  Amends Section 59.025, Utilities Code, to prohibit the
commission, notwithstanding any other provision of this title, on the
commission's own motion, to reduce an electing company's rate for switched
access services before the expiration of the election period prescribed by
Section 59.024, but may approve a reduction proposed by the electing
company. 

SECTION 30.  Amends Section 59.026(a), Utilities Code, to provide that on
or before the end of the company's election period, an electing company is
not, under any circumstances, subject to certain complaints.  Deletes text
regarding the sixth anniversary of the company's election date. 

SECTION 31.  Amends Chapter 59B, Utilities Code, by adding Sections 59.030
through 59.032, as follows: 

Sec. 59.030.  NEW SERVICES. Prohibits an electing company from introducing
a new service 10 days after providing an informational notice to the
commission 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.  Requires an
electing company to price each new service at or above the service's long
run incremental cost.  Requires the commission 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 the commission.
Authorizes only an affected person to file a complaint with the commission
challenging whether the pricing by an electing company of a new service is
in compliance with Subsection (b).  Provides that if an affected person
files a complaint 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.  Requires the company
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 authorizes the company, at the company's option, to
discontinue the service, if a complaint is finally resolved in the favor of
the complainant.   

Sec. 59.031.  PRICING AND PACKAGING FLEXIBILITY.  Authorizes a company,
notwithstanding Section 59.027(b) or Chapter 60F, to exercise pricing
flexibility in accordance with this section.  Authorizes a company to
exercise pricing flexibility 10 days after providing an informational
notice to the commission and to any person who holds a certificate of
operating authority in the electing company's certificated area or areas or
who has an affective  interconnection agreement with the electing company.
Provides that pricing flexibility includes all pricing arrangements
included in the definition of "pricing flexibility" and includes packaging
of regulated services with non-regulated services or services of an
affiliate, except that such a package may not be offered in a manner that
results in a customer-specific contract. 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 the commissioner 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 the commission.  Authorizes only an
affected person 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 12-month period. Sets forth the required information to be
included in a company's promotional offering to be submitted to the
commission.  Provides that an electing company is not required to obtain
commission approval to make a promotional offering described by Subsection
(b).  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 32.  Amends Section 60.124, Utilities Code, to require the
commission to require each telecommunications provider to maintain
interoperable networks and to require that interconnection agreements
between incumbent local exchange companies and competitive local exchange
companies contain self-executing performance penalties for incumbent
noncompliance with contract provisions that impair a competitor's ability
to provide service to its customers. 

SECTION 33.  Amends Chapter 60I, Utilities Code, by adding Sections 60.164
and 60.165, as follows:     
Sec. 60.164.  PERMISSIBLE JOINT MARKETING.  Prohibits the commission 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 of the FCC, except as prescribed in
Chapters 61 and 63. 

Sec.  60.165.  AFFILIATE RULE.  Prohibits the commission from adopting any
rule or order that would prescribe for any local exchange company any
affiliate rule, including any accounting rule, that is more burdensome than
federal law or applicable rules of the FCC, except as prescribed in
Chapters 61 and 63.  Prohibits the commission, 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 the commission to consider a complaint brought under
Chapter 52A, Section 53.003, or Chapter 60 of this title. 

SECTION 34. Emergency clause.
  Effective date: upon passage.



SUMMARY OF COMMITTEE CHANGES

SECTION 1.

 Amends Section 12.005, Utilities Code, regarding the application of the
Sunset Act. 

SECTION 2.

Redesignated from proposed SECTION 1.  Amends Section 52.102, Utilities
Code, to provide that a telecommunications utility subject to this
subchapter has jurisdiction to require a  telecommunications utility that,
together with affiliates, had more than six percent of the total intrastate
access minute of use as measured for the most recent 12-month period, to
pass switched access rate reductions under this title to customers as
required under Section 52.112. Requires this authority to expire on the
date specified in Section 52.112.  Deletes text regarding a
telecommunications utility having jurisdiction to require a
telecommunications utility to pass switched access rate reductions to
customers. 

SECTION 3.

 Redesignated from proposed SECTION 2.

SECTION 4.

 Redesignated from proposed SECTION 3.

SECTION 5.

Redesignated from proposed SECTION 4.  Replaces proposed Section 52.112
regarding passthrough required. 

SECTION 6.

 Redesignated from proposed SECTION 5.

SECTION 7.

Redesignated from proposed SECTION 6.  Amends Section 54.102, Chapter 54C,
Utilities Code, to add Subsections (c) and (d) regarding a certificate of
convenience and necessity. 

SECTION 8.

 Redesignated from proposed SECTION 7. 


SECTION 9.

Redesignated from proposed SECTION 8.  Amends Sections 56.023, Utilities
Code, to require the commission to establish and implement the universal
service fund provisions required by Section 56.021(1) for all eligible
telecommunications providers not later than August 1, 1999. Makes
conforming changes. 

SECTION 10.

Redesignated from proposed SECTION 9.  Amends Section 56.026, Utilities
Code, to require the commission, 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. 

SECTION 11.

Redesignated from proposed SECTION 10.  Amends Section 56.028, Chapter 56B,
Utilities Code, to require the commission 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) upon request of a local exchange company that is not an electing
company under Chapters 58 and 59.  Requires the amount of reimbursement to
be the difference between the company's tariffed rate for such service as
of January 1, 1998, rather than January 1, 1999, and the lowest rate
offered for such service by any local exchange company electing incentive
regulation under Chapter 58. 

SECTION 12.
 
  Redesignated from proposed SECTION 11.

SECTION 13.

 Redesignated from proposed SECTION 12. Deletes proposed Subsection (2).
Amends Section 58.002, Utilities Code, to define "urban." 

SECTION 14.

Redesignated from proposed SECTION 13.  Amends Section 58.021, Utilities
Code, to require notice to include a statement that the company agrees to
limit until September 1, 2005, any increase in a rate the company charges
for basic network services.  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.  Authorizes the commission to allow an electing company serving fewer
than five million access lines to withdraw the company's election under
this chapter under certain circumstances.  Defines "good cause."  Deletes
proposed Subsection (c).   

SECTION 15.

 Amends Section 58.024, Utilities Code, regarding service reclassification.

SECTION 16.

 Redesignated from proposed SECTION 14.  Amends Section 58.028, Utilities
Code, to require the commission 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, 2002.  Requires the commission to file a
report with the legislature no later than January 1, 2005, rather than
January 1, 2003.  

SECTION 17.

Amends Chapter 58C, Utilities Code, by adding Section 58.051A, regarding
services included for certain electing companies. 

SECTION 18.

Redesignated from proposed SECTION 15.  Deletes proposed SECTION 18.
Deletes proposed Section 58.054(e) and proposed Section 58.055(b).
Redesignates proposed Section 58.055(d) as Subsection (c).  Amends Sections
58.054 and 58.055, Utilities Code, to require an electing company to commit
to not increasing a rate for a basic network service on or before the
fourth anniversary of its election date, rather than, during the electing
period,  as a condition of election under this chapter.  Provides that the
rates an electing company may charge on or before that 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, notwithstanding Subsections (a) and (b),
the cap on the rates for basic network services for a company electing
under this subchapter from expiring before September 1, 2005. Authorizes an
electing company notwithstanding Chapter 60F, to on its own initiative,
decrease a rate for a basic network service during the electing period,
rather than four-year period. Authorizes a company to decrease the rate for
a basic local telecommunications service to an amount above the service's
appropriate cost.  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 19.  

Redesignated from proposed SECTION 16.  Amends Section 58.060, Utilities
Code, to authorize an electing company to increase a rate for a basic
network service only with the commission'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, rather than after the
electing period  expires. 

SECTION 20.

Redesignated from proposed SECTION 17.  Deletes proposed amended Section
58.062. Amends Chapter 58C, Utilities Code, by adding Section 58.063 to
authorize an electing company, notwithstanding any other provisions of this
title, serving less 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, rather than as
of  the date the company complies with the requirements of Section
58.062(e) (2).  Prohibits 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.  Requires 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.  

SECTION 21.

Amends Chapter 58D, Utilities Code, by adding Section 58.101A, regarding
services included for certain electing companies. 

SECTION 22.

 Amends Section 58.102, Utilities Code, regarding maximum price.

SECTION 23.

Amends Chapter 58E, Utilities Code, by adding Section 58.151A, regarding
service included for certain electing companies. 

SECTION 24.

Amends Chapter 58E, Utilities Code, by adding Section 58.151B, regarding
service included for certain electing companies. 

SECTION 25.

Amends Chapter 58E, Utilities Code, by adding Section 58.155, regarding
interconnection services. 

SECTION 26.

 Amends Chapter 58, Utilities Code, by adding Chapter H, regarding switched
access services. 

SECTION 27.

Redesignated from proposed SECTION 19.  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 dates. 

SECTION 28.  

Redesignated from proposed SECTION 20. Amends Section 59.024(a), Utilities
Code, to prohibit an electing company, before the end of the company's
election period under this chapter, rather than, during the election
period, from increasing a rate previously established for that company.
Requires the commission, notwithstanding Subsection (a), on request of the
electing company, to allow a rate group reclassification that results from
access line growth. 

SECTION 29.

 Redesignated from proposed SECTION 21.  Amends Section 59.025, Utilities
Code, regarding switched access rates. 

SECTION 30.

Redesignated from proposed SECTION 22.  Amends Section 59.026(a), Utilities
Code, to provide that on or before the end of the company's election
period, an electing company is not, under any circumstances, subject to
certain complaints.  

SECTION 31.  

Amends Chapter 59B, Utilities Code, by adding Sections 59.030 through
59.032, regarding new services and customer promotional offerings. 

SECTION 32.

 Redesignated from proposed SECTION 23.

SECTION 33.  

Redesignated from proposed SECTION 24.  Amends Chapter 60I, Utilities Code,
by adding Section 60.165, to provide that this section does not limit the
authority of the commission to consider a complaint brought under Chapter
52A, Section 53.003, or Chapter 60 of this title. 

SECTION 34.

 Redesignated from proposed SECTION 25.