AN ACT
 1-1     relating to the regulation of telecommunications utilities by the
 1-2     Public Utility Commission of Texas and the provision of
 1-3     telecommunications services.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 12.005, Utilities Code, is amended to
 1-6     read as follows:
 1-7           Sec. 12.005.  APPLICATION OF SUNSET ACT.  The Public Utility
 1-8     Commission of Texas is subject to Chapter 325, Government Code
 1-9     (Texas Sunset Act).  Unless continued in existence as provided by
1-10     that chapter, the commission is abolished and this title expires
1-11     September 1, 2005 [2001].
1-12           SECTION 2.  Section 13.002, Utilities Code, is amended to
1-13     read as follows:
1-14           Sec. 13.002.  APPLICATION OF SUNSET ACT.  The Office of
1-15     Public Utility Counsel is subject to Chapter 325, Government Code
1-16     (Texas Sunset Act).  Unless continued in existence as provided by
1-17     that chapter, the office is abolished and this chapter expires
1-18     September 1, 2005 [2001].
1-19           SECTION 3.  Subsection (c), Section 15.024, Utilities Code,
1-20     is amended to read as follows:
1-21           (c)  A penalty may not be assessed under this section if the
1-22     person against whom the penalty may be assessed remedies the
1-23     violation before the 31st day after the date the person receives
1-24     the notice under Subsection (b).  A person who claims to have
 2-1     remedied an alleged violation has the burden of proving to the
 2-2     commission that the alleged violation was remedied and was
 2-3     accidental or inadvertent.  This subsection does not apply to a
 2-4     violation of Chapter 55 or 64.
 2-5           SECTION 4.  Section 51.001, Utilities Code, is amended  by
 2-6     amending Subsection (a) and adding Subsection (g) to read as
 2-7     follows:
 2-8           (a)  Significant changes have occurred in telecommunications
 2-9     since the law from which this title is derived was originally
2-10     adopted.  To encourage and accelerate the development of a
2-11     competitive and advanced telecommunications environment and
2-12     infrastructure, new rules, policies, and principles must be
2-13     formulated and applied to protect the public interest.  Changes in
2-14     technology and market structure have increased the need for minimum
2-15     standards of service quality, customer service, and fair business
2-16     practices to ensure high-quality service to customers and a healthy
2-17     marketplace where competition is permitted by law.  It is the
2-18     purpose of this subtitle to grant the commission authority to make
2-19     and enforce rules necessary to protect customers of
2-20     telecommunications services consistent with the public interest.
2-21           (g)  It is the policy of this state to ensure that customers
2-22     in all regions of this state, including low-income customers and
2-23     customers in rural and high cost areas, have access to
2-24     telecommunications and information services, including
2-25     interexchange services, cable services, wireless services, and
2-26     advanced telecommunications and information services, that are
 3-1     reasonably comparable to those services provided in urban areas and
 3-2     that are available at prices that are reasonably comparable to
 3-3     prices charged for similar services in urban areas.  Not later than
 3-4     November 1, 1999, the commission shall begin a review and
 3-5     evaluation of the availability and the pricing of
 3-6     telecommunications and information services, including
 3-7     interexchange services, cable services, wireless services, and
 3-8     advanced telecommunications and information services, in rural and
 3-9     high cost areas, as well as the convergence of telecommunications
3-10     services.  The commission shall file a report with the legislature
3-11     not later than January 1, 2001.  The report must include the
3-12     commission's recommendations on the issues reviewed and evaluated.
3-13           SECTION 5.  Subdivisions (6), (7), and (10), Section 51.002,
3-14     Utilities Code, are amended to read as follows:
3-15                 (6)  "Long run incremental cost" has the meaning
3-16     assigned by 16 T.A.C. Section 23.91 or its successor.
3-17                 (7)  "Pricing flexibility" includes:
3-18                       (A)  customer specific contracts;
3-19                       (B)  packaging of services;
3-20                       (C)  volume, term, and discount pricing;
3-21                       (D)  zone density pricing, with a zone to be
3-22     defined as an exchange; and
3-23                       (E)  other promotional pricing.
3-24                 (10)  "Telecommunications provider":
3-25                       (A)  means:
3-26                             (i)  a certificated telecommunications
 4-1     utility;
 4-2                             (ii)  a shared tenant service provider;
 4-3                             (iii)  a nondominant carrier of
 4-4     telecommunications services;
 4-5                             (iv)  a provider of commercial mobile
 4-6     service as defined by Section 332(d), Communications Act of 1934
 4-7     (47 U.S.C. Section 151 et seq.), Federal Communications Commission
 4-8     rules, and the Omnibus Budget Reconciliation Act of 1993 (Public
 4-9     Law 103-66), except that the term does not include these entities
4-10     for the purposes of Chapter 55 or 64;
4-11                             (v)  a telecommunications entity that
4-12     provides central office based PBX-type sharing or resale
4-13     arrangements;
4-14                             (vi)  an interexchange telecommunications
4-15     carrier;
4-16                             (vii)  a specialized common carrier;
4-17                             (viii)  a reseller of communications;
4-18                             (ix)  a provider of operator services;
4-19                             (x)  a provider of customer-owned pay
4-20     telephone service; or
4-21                             (xi)  another person or entity determined
4-22     by the commission to provide telecommunications services to
4-23     customers in this state; and
4-24                       (B)  does not mean:
4-25                             (i)  a provider of enhanced or information
4-26     services, or another user of telecommunications services, who does
 5-1     not also provide telecommunications services; or
 5-2                             (ii)  a state agency or state institution
 5-3     of higher education, or a service provided by a state agency or
 5-4     state institution of higher education.
 5-5           SECTION 6.  Section 51.004, Utilities Code, is amended to
 5-6     read as follows:
 5-7           Sec. 51.004.  PRICING FLEXIBILITY.  (a)  A discount or other
 5-8     form of pricing flexibility may not be preferential, prejudicial,
 5-9     [or] discriminatory, predatory, or anticompetitive.
5-10           (b)  This title does not prohibit a volume discount or other
5-11     discount based on a reasonable business purpose.  A price that is
5-12     set at or above the long run incremental cost of a service is
5-13     presumed not to be a predatory price.
5-14           SECTION 7.  The section heading to Section 52.058, Utilities
5-15     Code, is amended to read as follows:
5-16           Sec. 52.058.  GENERAL PROVISIONS RELATING TO NEW OR
5-17     EXPERIMENTAL SERVICES OR PROMOTIONAL RATES.
5-18           SECTION 8.  Subchapter B, Chapter 52, Utilities Code, is
5-19     amended by adding Sections 52.0583, 52.0584, and 52.0585 to read as
5-20     follows:
5-21           Sec. 52.0583.  NEW SERVICES.  (a)  An incumbent local
5-22     exchange company may introduce a new service 10 days after
5-23     providing an informational notice to the commission, to the office,
5-24     and to any person who holds a certificate of operating authority in
5-25     the incumbent local exchange company's certificated area or areas
5-26     or who has an effective interconnection agreement with the
 6-1     incumbent local exchange company.
 6-2           (b)  An incumbent local exchange company shall price each new
 6-3     service at or above the service's long run incremental cost.  The
 6-4     commission shall allow a company serving fewer than one million
 6-5     access lines in this state to establish a service's long run
 6-6     incremental cost by adopting, at that company's option, the cost
 6-7     studies of a larger company for that service that have been
 6-8     accepted by the commission.
 6-9           (c)  An affected person, the office on behalf of residential
6-10     or small commercial customers, or the commission may file a
6-11     complaint at the commission challenging whether the pricing by an
6-12     incumbent local exchange company of a new service is in compliance
6-13     with Subsection (b).
6-14           (d)  If a complaint is filed under Subsection (c), the
6-15     incumbent local exchange company has the burden of proving that the
6-16     company set the price for the new service in accordance with the
6-17     applicable provisions of this subchapter.  If the complaint is
6-18     finally resolved in favor of the complainant, the company:
6-19                 (1)  shall, not later than the 10th day after the date
6-20     the complaint is finally resolved, amend the price of the service
6-21     as necessary to comply with the final resolution; or
6-22                 (2)  may, at the company's option, discontinue the
6-23     service.
6-24           (e)  A company electing incentive regulation under Chapter 58
6-25     or 59 may introduce new services only in accordance with the
6-26     applicable provisions of Chapter 58 or 59.
 7-1           Sec. 52.0584.  PRICING AND PACKAGING FLEXIBILITY; CUSTOMER
 7-2     PROMOTIONAL OFFERINGS.  (a)  Notwithstanding any other provision of
 7-3     this title, an incumbent local exchange company may exercise
 7-4     pricing flexibility in accordance with this section, including the
 7-5     packaging of any regulated service such as basic local
 7-6     telecommunications service with any other regulated or unregulated
 7-7     service or any service of an affiliate.  The company may exercise
 7-8     pricing flexibility 10 days after providing an informational notice
 7-9     to the commission, to the office, and to any person who holds a
7-10     certificate of operating authority in the incumbent local exchange
7-11     company's certificated area or areas or who has an effective
7-12     interconnection agreement with the incumbent local exchange
7-13     company.  Pricing flexibility includes all pricing arrangements
7-14     included in the definition of "pricing flexibility" prescribed by
7-15     Section 51.002 and includes packaging of any regulated service with
7-16     any unregulated service or any service of an affiliate.
7-17           (b)  An incumbent local exchange company, at the company's
7-18     option, shall price each regulated service offered separately or as
7-19     part of a package under Subsection (a) at either the service's
7-20     tariffed rate or at a rate not lower than the service's long run
7-21     incremental cost.  The commission shall allow a company serving
7-22     fewer than one million access lines in this state to establish a
7-23     service's long run incremental cost by adopting, at that company's
7-24     option, the cost studies of a larger company for that service that
7-25     have been accepted by the commission.
7-26           (c)  An affected person, the office on behalf of residential
 8-1     or small commercial customers, or the commission may file a
 8-2     complaint alleging that an incumbent local exchange company has
 8-3     priced a regulated service in a manner that does not meet the
 8-4     pricing standards of this subchapter.  The complaint must be filed
 8-5     before the 31st day after the date the company implements the rate.
 8-6           (d)  A company electing incentive regulation under Chapter 58
 8-7     or 59 may use pricing and packaging flexibility and introduce
 8-8     customer promotional offerings only in accordance with the
 8-9     applicable provisions of Chapter 58 or 59.
8-10           Sec. 52.0585.  CUSTOMER PROMOTIONAL OFFERINGS.  (a) An
8-11     incumbent local exchange company may offer a promotion for a
8-12     regulated service for not more than 90 days in any 12-month period.
8-13           (b)  The company shall file with the commission a promotional
8-14     offering that consists of:
8-15                 (1)  waiver of installation charges or service order
8-16     charges, or both, for not more than 90 days in a 12-month period;
8-17     or
8-18                 (2)  a temporary discount of not more than 25 percent
8-19     from the tariffed rate for not more than 60 days in a 12-month
8-20     period.
8-21           (c)  An incumbent local exchange company is not required to
8-22     obtain commission approval to make a promotional offering described
8-23     by Subsection (b).
8-24           (d)  An incumbent local exchange company may offer a
8-25     promotion of any regulated service as part of a package of services
8-26     consisting of any regulated service with any other regulated or
 9-1     unregulated service or any service of an affiliate.
 9-2           SECTION 9.  Section 52.102, Utilities Code, as amended by
 9-3     Section 18.04, S.B. No. 1368, Acts of the 76th Legislature, Regular
 9-4     Session, 1999, is amended to read as follows:
 9-5           Sec. 52.102.  LIMITED REGULATORY AUTHORITY.  (a)  Except as
 9-6     otherwise provided by this subchapter, Subchapters D and K, Chapter
 9-7     55, and Section 55.011, the commission has only the following
 9-8     jurisdiction over a telecommunications utility subject to this
 9-9     subchapter:
9-10                 (1)  to require registration under Section 52.103;
9-11                 (2)  to conduct an investigation under Section 52.104;
9-12                 (3)  to require the filing of reports as the commission
9-13     periodically directs;
9-14                 (4)  to require the maintenance of statewide average
9-15     rates or prices of telecommunications service;
9-16                 (5)  to require a telecommunications utility that had
9-17     more than six percent of the total intrastate access minutes of use
9-18     as measured for the most recent 12-month period to pass switched
9-19     access rate reductions under this title to customers as required by
9-20     Section 52.112;
9-21                 (6)  to require access to telecommunications service
9-22     under Section 52.105; and
9-23                 (7) [(6)]  to require the quality of telecommunications
9-24     service provided to be adequate under Section 52.106.
9-25           (b)  The authority provided by Subsection (a)(5) expires on
9-26     the date on which Section 52.112 expires.
 10-1          SECTION 10.  Section 52.108, Utilities Code, is amended to
 10-2    read as follows:
 10-3          Sec. 52.108.  OTHER PROHIBITED PRACTICES.  The commission may
 10-4    enter any order necessary to protect the public interest if the
 10-5    commission finds after notice and hearing that a telecommunications
 10-6    utility has:
 10-7                (1)  failed to maintain statewide average rates;
 10-8                (2)  abandoned interexchange message telecommunications
 10-9    service to a local exchange area in a manner contrary to the public
10-10    interest; [or]
10-11                (3)  engaged in a pattern of preferential or
10-12    discriminatory activities prohibited by Section 53.003, 55.005, or
10-13    55.006; or
10-14                (4)  failed to pass switched access rate reductions to
10-15    customers under Chapter 56 or other law, as required by Section
10-16    52.112.
10-17          SECTION 11.  Subsection (a), Section 52.110, Utilities Code,
10-18    is amended to read as follows:
10-19          (a)  In a proceeding before the commission in which it is
10-20    alleged that a telecommunications utility engaged in conduct in
10-21    violation of Section 52.107, 52.108, [or] 52.109, or 52.112, the
10-22    burden of proof is on:
10-23                (1)  a telecommunications utility complaining of
10-24    conduct committed against it in violation of this subchapter; or
10-25                (2)  except as provided by Subsection (b), the
10-26    responding telecommunications utility if the proceedings are:
 11-1                      (A)  brought by a customer or customer
 11-2    representative who is not a telecommunications utility; or
 11-3                      (B)  initiated by the commission.
 11-4          SECTION 12.  Subchapter C, Chapter 52, Utilities Code, is
 11-5    amended by adding Section 52.112 to read as follows:
 11-6          Sec. 52.112.  REDUCTION PASS-THROUGH REQUIRED.  (a)  Each
 11-7    telecommunications utility that had more than six percent of the
 11-8    total intrastate access minutes of use as measured for the most
 11-9    recent 12-month period shall pass through to customers switched
11-10    access rate reductions under this title.  The residential customer
11-11    class shall receive not less than a proportionate share of the
11-12    reductions.
11-13          (b)  Within six months following each reduction in intrastate
11-14    switched access rates under this title, each telecommunications
11-15    utility subject to this section shall file with the commission a
11-16    sworn affidavit confirming that the utility has reduced the per
11-17    minute rates it charges under its basic rate schedule to reflect
11-18    the per minute reduction in intrastate switched access rates.
11-19          (c)  This section expires on the second anniversary of the
11-20    date incumbent local exchange companies doing business in the state
11-21    are no longer prohibited by federal law from offering interLATA and
11-22    interstate long distance service.
11-23          SECTION 13.  Subchapter D, Chapter 52, Utilities Code, is
11-24    amended by adding Section 52.155 to read as follows:
11-25          Sec. 52.155.  PROHIBITION OF EXCESSIVE ACCESS CHARGES.
11-26    (a)  A telecommunications utility that holds a certificate of
 12-1    operating authority or a service provider certificate of operating
 12-2    authority may not charge a higher amount for originating or
 12-3    terminating intrastate switched access than the prevailing rates
 12-4    charged by the holder of the certificate of convenience and
 12-5    necessity in whose territory the call originated or terminated
 12-6    unless:
 12-7                (1)  the commission specifically approves the higher
 12-8    rate; or
 12-9                (2)  subject to commission review, the
12-10    telecommunications utility establishes statewide average composite
12-11    originating and terminating intrastate switched access rates based
12-12    on a reasonable approximation of traffic originating and
12-13    terminating between all holders of certificates of convenience and
12-14    necessity in this state.
12-15          (b)  Notwithstanding any other provision of this title, the
12-16    commission has all jurisdiction necessary to enforce this section.
12-17          SECTION 14.  Subchapter F, Chapter 52, Utilities Code, is
12-18    amended by adding Section 52.256 to read as follows:
12-19          Sec. 52.256.  PLAN AND REPORT OF WORKFORCE DIVERSITY AND
12-20    OTHER BUSINESS PRACTICES.  (a)  In this section, "small business"
12-21    and "historically underutilized business" have the meanings
12-22    assigned by Section 481.191, Government Code.
12-23          (b)  Before January 1, 2000, each telecommunications utility
12-24    shall develop and submit to the commission a comprehensive
12-25    five-year plan to enhance diversity of its workforce in all
12-26    occupational categories and for increasing opportunities for small
 13-1    and historically underutilized businesses.  The plan must consist
 13-2    of:
 13-3                (1)  the telecommunications utility's performance with
 13-4    regard to workforce diversity and contracting with small and
 13-5    historically underutilized businesses;
 13-6                (2)  initiatives that the telecommunications utility
 13-7    will pursue in these areas over the period of the plan;
 13-8                (3)  a listing of programs and activities the
 13-9    telecommunications utility  will undertake to achieve each of these
13-10    initiatives; and
13-11                (4)  a listing of the business partnership initiatives
13-12    the telecommunications utility  will undertake to facilitate small
13-13    and historically underutilized business entry into the
13-14    telecommunications market, taking into account opportunities for
13-15    contracting and joint ventures.
13-16          (c)  Each telecommunications utility  shall submit an annual
13-17    report to the commission and the legislature relating to its
13-18    efforts to improve workforce diversity and contracting
13-19    opportunities for small and historically underutilized businesses.
13-20    The report must include:
13-21                (1)  the diversity of the telecommunications utility's
13-22    workforce as of the time of the report;
13-23                (2)  the telecommunications utility's  level of
13-24    contracting with small and historically underutilized businesses;
13-25                (3)  the specific progress made under the plan under
13-26    Subsection (b);
 14-1                (4)  the specific initiatives, programs, and activities
 14-2    undertaken under the plan during the preceding year;
 14-3                (5)  an assessment of the success of each of those
 14-4    initiatives, programs, and activities;
 14-5                (6)  the extent to which the telecommunications utility
 14-6    has carried out its initiatives to facilitate opportunities for
 14-7    contracts or joint ventures with small and historically
 14-8    underutilized businesses; and
 14-9                (7)  the initiatives, programs, and activities the
14-10    telecommunications utility  will pursue during the next year to
14-11    increase the diversity of its workforce and contracting
14-12    opportunities for small and historically underutilized businesses.
14-13          SECTION 15.  Section 54.007, Utilities Code, is amended to
14-14    read as follows:
14-15          Sec. 54.007.  FLEXIBILITY PLAN.  (a)  After the commission
14-16    grants an application for a certificate of convenience and
14-17    necessity, a certificate of operating authority, or a service
14-18    provider certificate of operating authority or determines that a
14-19    certificate is not needed for the applicant to provide the relevant
14-20    services, the commission shall conduct appropriate proceedings to
14-21    establish a transitional flexibility plan for the incumbent local
14-22    exchange company in the same area or areas as the new certificate
14-23    holder.
14-24          (b)  A basic local telecommunications service price of the
14-25    incumbent local exchange company may not be increased before the
14-26    fourth anniversary of the date the certificate is granted to the
 15-1    applicant except that the price may be increased[:]
 15-2                [(1)]  as provided by this title[;]
 15-3                [(2)  when the new certificate holder has completed the
 15-4    build-out plan required by Subchapter C, if applicable; or]
 15-5                [(3)  when a competitor for basic local
 15-6    telecommunications service provides the service in an area in which
 15-7    the build-out requirements have been eliminated].
 15-8          SECTION 16.  Subchapter C, Chapter 54, Utilities Code, is
 15-9    amended to read as follows:
15-10             SUBCHAPTER C.  CERTIFICATE OF OPERATING AUTHORITY
15-11          Sec. 54.101.  DEFINITION.  In this subchapter, "certificate"
15-12    means a certificate of operating authority.
15-13          Sec. 54.102.  APPLICATION FOR CERTIFICATE.  (a)  A [In lieu
15-14    of applying for a certificate of convenience and necessity, a]
15-15    person may apply for a certificate of operating authority.
15-16          (b)  [An applicant for a facilities-based certificate of
15-17    operating authority must include with the application a proposed
15-18    build-out plan in compliance with this subchapter that demonstrates
15-19    how the applicant will, over a six-year period, deploy facilities
15-20    throughout the geographic area of the certificated service area.]
15-21          [(c)]  The applicant must file with the application a sworn
15-22    statement that the applicant has applied for each municipal
15-23    consent, franchise, or permit required for the type of services and
15-24    facilities for which the applicant has applied.
15-25          (c)  An affiliate of a person holding a certificate of
15-26    convenience and necessity may hold a certificate of operating
 16-1    authority if the holder of the certificate of convenience and
 16-2    necessity is in compliance with federal law and Federal
 16-3    Communications Commission rules governing affiliates and structural
 16-4    separation.  An affiliate of a person holding a certificate of
 16-5    convenience and necessity may not directly or indirectly sell to a
 16-6    non-affiliate any regulated product or service purchased from the
 16-7    person holding a certificate of convenience and necessity at any
 16-8    rate or price less than the price paid to the person holding a
 16-9    certificate of convenience and necessity.
16-10          (d)  A person may hold a certificate for all or any portion
16-11    of a service area for which one or more affiliates of the person
16-12    holds a certificate of operating authority, a service provider
16-13    certificate of operating authority, or a certificate of convenience
16-14    and necessity.
16-15          (e)  An affiliate of a company that holds a certificate of
16-16    convenience and necessity and that serves more than five million
16-17    access lines in this state may hold a certificate of operating
16-18    authority or service provider certificate of operating authority to
16-19    provide service in an area of this state in which its affiliated
16-20    company is the incumbent local exchange company.  However, the
16-21    affiliate holding the certificate of operating authority or service
16-22    provider certificate of operating authority may not provide in that
16-23    area any service listed in Sections 58.051(a)(1)-(4) or Sections
16-24    58.151(1)-(4), or any subset of those services, in a manner that
16-25    results in a customer-specific contract so long as the affiliated
16-26    company that is the incumbent local exchange company may not
 17-1    provide those services or subsets of services in a manner that
 17-2    results in a customer-specific contract under Section 58.003 in
 17-3    that area.  This subsection does not preclude an affiliate of a
 17-4    company holding a certificate of convenience and necessity from
 17-5    holding a certificate of operating authority in any area of this
 17-6    state to provide advanced services as defined by rules or orders of
 17-7    the Federal Communications Commission, or preclude such an advanced
 17-8    services affiliate from using any form of pricing flexibility, with
 17-9    regard to services other than those subject to the restrictions
17-10    provided by this subsection.  This subsection does not preclude a
17-11    long distance affiliate from using any form of pricing flexibility
17-12    with regard to services other than those services subject to the
17-13    restrictions provided by this subsection.  In addition, the
17-14    affiliate holding the certificate of operating authority or service
17-15    provider certificate of operating authority may not offer, in an
17-16    area for which the affiliated incumbent local exchange company
17-17    holds a certificate of convenience and necessity, a service listed
17-18    in Sections 58.151(1)-(4) as a component of a package of services,
17-19    as a promotional offering, or with a volume or term discount until
17-20    the affiliated incumbent local exchange company may offer those
17-21    services in pricing flexibility offerings in accordance with
17-22    Section 58.004, unless the customer of one of these pricing
17-23    flexibility offerings is a federal, state, or local governmental
17-24    entity.
17-25          (f)  The commission has the authority to enforce this
17-26    section.
 18-1          Sec. 54.103.  GRANT OR DENIAL OF CERTIFICATE.  (a)  The
 18-2    commission must grant or deny a certificate not later than the 60th
 18-3    day after the date the application for the certificate is filed.
 18-4    The commission may extend the deadline on good cause shown.
 18-5          (b)  The commission shall grant each certificate on a
 18-6    nondiscriminatory basis after considering factors such as:
 18-7                (1)  [the adequacy of the applicant's build-out plan;]
 18-8                [(2)]  the technical and financial qualifications of
 18-9    the applicant; and
18-10                (2) [(3)]  the applicant's ability to meet the
18-11    commission's quality of service requirements.
18-12          (c)  In an exchange of an incumbent local exchange company
18-13    that serves fewer than 31,000 access lines, in addition to the
18-14    factors described by Subsection (b), the commission shall consider:
18-15                (1)  the effect of granting the certificate on a public
18-16    utility serving the area and on that utility's customers;
18-17                (2)  the ability of that public utility to provide
18-18    adequate service at reasonable rates;
18-19                (3)  the effect of granting the certificate on the
18-20    ability of that public utility to act as the provider of last
18-21    resort; and
18-22                (4)  the ability of the exchange, not the company, to
18-23    support more than one provider of service.
18-24          (d)  Except as provided by Subsections (e) and (f), the
18-25    commission may grant an application for a certificate only for an
18-26    area or areas that are contiguous and reasonably compact and cover
 19-1    an area of at least 27 square miles.
 19-2          (e)  In an exchange in a county that has a population of less
 19-3    than 500,000 and that is served by an incumbent local exchange
 19-4    company that has more than 31,000 access lines, an area covering
 19-5    less than 27 square miles may be approved if the area is contiguous
 19-6    and reasonably compact and has at least 20,000 access lines.
 19-7          (f)  In an exchange of a company that serves fewer than
 19-8    31,000 access lines in this state, the commission may grant an
 19-9    application only for an area that has boundaries similar to the
19-10    boundaries of the serving central office that is served by the
19-11    incumbent local exchange company that holds the certificate of
19-12    convenience and necessity for the area.
19-13          [Sec. 54.104.  BUILD-OUT PLAN REQUIREMENTS.  (a)  The
19-14    build-out plan required by Section 54.102 must provide that, by the
19-15    end of the:]
19-16                [(1)  first year, 10 percent of the area to be served
19-17    must be served with facilities that are not facilities of the
19-18    incumbent local exchange company;]
19-19                [(2)  third year, 50 percent of the area to be served
19-20    must be served with facilities that are not facilities of the
19-21    incumbent local exchange company; and]
19-22                [(3)  sixth year, 100 percent of the area to be served
19-23    must be served with facilities that are not facilities of the
19-24    incumbent local exchange company.]
19-25          [(b)  The build-out plan may permit the certificate holder to
19-26    serve not more than 40 percent of the certificate holder's service
 20-1    area by reselling the incumbent local exchange company's
 20-2    facilities.  The resale must be in accordance with:]
 20-3                [(1)  Section 54.105; and]
 20-4                [(2)  the resale tariff approved by the commission
 20-5    under Subchapter C, Chapter 60.]
 20-6          [(c)  The resale limitation applies to an incumbent local
 20-7    exchange facility that a certificate holder resells in providing
 20-8    local exchange telephone service, regardless of whether:]
 20-9                [(1)  the certificate holder purchases the facility
20-10    directly from the incumbent local exchange company; or]
20-11                [(2)  an intermediary carrier purchases the facility
20-12    from the incumbent local exchange company and then provides the
20-13    facility to the certificate holder for resale.]
20-14          [(d)  To meet the build-out requirement prescribed by this
20-15    subchapter, a certificate holder:]
20-16                [(1)  may not use commercial mobile service; and]
20-17                [(2)  may use personal communication services (PCS) or
20-18    other wireless technology licensed or allocated by the Federal
20-19    Communications Commission after January 1, 1995.]
20-20          [Sec. 54.105.  SIX-YEAR LIMITATION ON RESALE OF SERVICES.
20-21    Before the sixth anniversary of the date a certificate is granted,
20-22    the certificate holder may extend service by resale only:]
20-23                [(1)  in the area it is obligated to serve under the
20-24    approved build-out plan; and]
20-25                [(2)  to the distant premises of one of its
20-26    multi-premises customers beyond the approved build-out area but in
 21-1    its certificated service area.]
 21-2          Sec. 54.104 [54.106].  TIME OF SERVICE REQUIREMENTS.
 21-3    (a)  The commission by rule may prescribe the period within which a
 21-4    certificate holder must be able to serve customers.
 21-5          (b)  Notwithstanding Subsection (a), a certificate holder
 21-6    must serve a customer [in the build-out area] not later than the
 21-7    30th day after the date the customer requests service.
 21-8          [Sec. 54.107.  REQUIREMENTS RELATING TO CERTAIN FACILITIES.
 21-9    As part of the build-out requirements, the commission may not
21-10    require a certificate holder to:]
21-11                [(1)  place a drop facility on each customer's
21-12    premises; or]
21-13                [(2)  activate a fiber optic facility in advance of a
21-14    customer request.]
21-15          [Sec. 54.108.  BUILD-OUT PLAN COMPLIANCE.  (a)  A certificate
21-16    holder shall file periodic reports with the commission
21-17    demonstrating compliance with:]
21-18                [(1)  the plan approved by the commission; and]
21-19                [(2)  the resale limitation prescribed by Section
21-20    54.104(b).]
21-21          [(b)  The commission may administratively and temporarily
21-22    waive compliance with the six-year build-out plan on a showing of
21-23    good cause.]
21-24          [Sec. 54.109.  ELIMINATION OF BUILD-OUT REQUIREMENTS FOR
21-25    CERTAIN PROVIDERS.  (a)  The commission may waive the build-out
21-26    requirements of this subchapter for an additional applicant in a
 22-1    particular area:]
 22-2                [(1)  on or after the sixth anniversary of the date a
 22-3    certificate is granted for that area; or]
 22-4                [(2)  on or after the date a certificate holder
 22-5    completes the holder's build-out plan in that area.]
 22-6          [(b)  The build-out requirements of this subchapter do not
 22-7    apply to a service area:]
 22-8                [(1)  that is served by an incumbent local exchange
 22-9    company that:]
22-10                      [(A)  has more than one million access lines; and]
22-11                      [(B)  on September 1, 1995, was subject to a
22-12    prohibition under federal law on the provision of interLATA
22-13    service; and]
22-14                [(2)  for which all prohibitions on the incumbent local
22-15    exchange company's provision of interLATA services are removed so
22-16    the company can  offer interLATA service together with local and
22-17    intraLATA toll service.]
22-18          [Sec. 54.110.  HEARING ON BUILD-OUT AND RESALE REQUIREMENTS.
22-19    (a)  The commission on application may conduct a hearing to
22-20    determine:]
22-21                [(1)  whether the build-out requirements of Sections
22-22    54.102(b), 54.103(e) and (f), 54.104, 54.105, 54.106, and 54.107
22-23    have created a barrier to the entry of facilities-based local
22-24    exchange telephone service competition in an exchange in a county
22-25    that has a population of more than 500,000 and that is served by a
22-26    company that has more than 31,000 access lines; and]
 23-1                [(2)  the effect of the resale provisions on the
 23-2    development of competition, other than the development of
 23-3    competition in the certificated areas of companies that serve fewer
 23-4    than 31,000 access lines as provided by Section 54.156(a).]
 23-5          [(b)  In making a determination under Subsection (a), the
 23-6    commission shall consider:]
 23-7                [(1)  this title's policy to encourage construction of
 23-8    local exchange networks;]
 23-9                [(2)  the number and type of competitors that have
23-10    sought to provide local exchange competition under the existing
23-11    rules prescribed by this title; and]
23-12                [(3)  whether adopting new build-out and resale rules
23-13    would make innovative and competitive local exchange telephone
23-14    services more likely to be provided.]
23-15          [(c)  The commission may change a requirement described by
23-16    Subsection (a)(1) or prescribed by Subchapter D if:]
23-17                [(1)  the commission determines that the build-out
23-18    requirements have created a barrier to facilities-based local
23-19    exchange competition in an exchange described by Subsection (a)(1);
23-20    and]
23-21                [(2)  the changes will encourage additional
23-22    facilities-based competition.]
23-23          [(d)  Notwithstanding Subsection (c), the commission may not
23-24    reduce an exchange size to below 12 square miles or increase the
23-25    resale percentage prescribed by Section 54.104(b) to more than 50
23-26    percent.]
 24-1          [(e)  A rule adopted under Subsection (c) may apply only to a
 24-2    person who files an application for a certificate after the date
 24-3    the rule is adopted.]
 24-4          Sec. 54.105 [54.111].  PENALTY FOR VIOLATION OF TITLE.  If a
 24-5    certificate holder fails to comply with a requirement of this
 24-6    title, the commission may:
 24-7                (1)  revoke the holder's certificate;
 24-8                (2)  impose against the holder administrative penalties
 24-9    under Subchapter B, Chapter 15; or
24-10                (3)  take another action under Subchapter B, Chapter
24-11    15.
24-12          SECTION 17.  Subchapter E, Chapter 54, Utilities Code, is
24-13    amended by adding Section 54.2025 to read as follows:
24-14          Sec. 54.2025.  LEASE OF FIBER OPTIC CABLE FACILITIES.
24-15    Nothing in this subchapter shall prevent a municipality, or a
24-16    municipal electric system that is a member of a municipal power
24-17    agency formed under Chapter 163 by adoption of a concurrent
24-18    resolution by the participating municipalities on or before August
24-19    1, 1975, from leasing any of the excess capacity of its fiber optic
24-20    cable facilities (dark fiber), so long as the rental of the fiber
24-21    facilities is done on a nondiscriminatory, nonpreferential basis.
24-22          SECTION 18.  Subchapter A, Chapter 55, Utilities Code, is
24-23    amended by adding Section 55.012 to read as follows:
24-24          Sec. 55.012.  TELECOMMUNICATIONS BILLING.  (a)  The
24-25    proliferation of charges for separate services, products,
24-26    surcharges, fees, and taxes on a bill for telecommunications
 25-1    products or services has increased the complexity of those bills to
 25-2    such an extent that in some cases the bills have become difficult
 25-3    for customers to understand.
 25-4          (b)  A bill from a local exchange company for
 25-5    telecommunications products or services should be simplified into
 25-6    general categories to the extent that simplification is consistent
 25-7    with providing customers sufficient information about the charges
 25-8    included in the bill to understand the basis and source of the
 25-9    charges.
25-10          (c)  To the extent permitted by law, a monthly bill from a
25-11    local exchange company for local exchange telephone service shall
25-12    include an aggregate charge for each of the following categories:
25-13                (1)  basic local service charges and fees,  which
25-14    includes carrier's charges for basic local telecommunications
25-15    service and related fees, assessments, and surcharges;
25-16                (2)  optional services; and
25-17                (3)  taxes, which includes any taxes applicable to the
25-18    charges described by Subdivisions (1) and (2).
25-19          SECTION 19.  Subchapter A, Chapter 55, Utilities Code, is
25-20    amended by adding Section 55.013 to read as follows:
25-21          Sec. 55.013.  LIMITATIONS ON DISCONTINUANCE OF BASIC LOCAL
25-22    TELECOMMUNICATIONS SERVICE.  (a)  A provider of basic local
25-23    telecommunications service may not discontinue that service because
25-24    of nonpayment by a residential customer of charges for long
25-25    distance service.  Payment shall first be allocated to basic local
25-26    telecommunications service.
 26-1          (b)  For purposes of allocating payment in this section, if
 26-2    the provider of basic local telecommunications service bundles its
 26-3    basic local telecommunications service with long distance service
 26-4    or any other service and provides a discount for the basic local
 26-5    telecommunications service because of that bundling, the rate of
 26-6    basic local telecommunications service shall be the rate the
 26-7    provider charges for stand-alone basic local telecommunications
 26-8    service.
 26-9          (c)  Notwithstanding Subsection (a), the commission shall
26-10    adopt and implement rules, not later than January 1, 2000, to
26-11    prevent customer abuse of the protections afforded by this section.
26-12    The rules must include:
26-13                (1)  provisions requiring a provider of basic local
26-14    telecommunications service to offer and implement toll blocking
26-15    capability to limit a customer's ability to incur additional
26-16    charges for long distance services after nonpayment for long
26-17    distance services; and
26-18                (2)  provisions regarding fraudulent activity in
26-19    response to which a provider may discontinue a residential
26-20    customer's basic local telecommunications service.
26-21          (d)  Notwithstanding any other provision of this title, the
26-22    commission has all jurisdiction necessary to establish a maximum
26-23    price that an incumbent local exchange company may charge a long
26-24    distance service provider to initiate the toll blocking capability
26-25    required to be offered under the rules adopted under Subsection
26-26    (c).  The maximum price established under this subsection shall be
 27-1    observed by all providers of basic local telecommunications service
 27-2    in the incumbent local exchange company's certificated service
 27-3    area.  Notwithstanding Sections 52.102 and 52.152, the commission
 27-4    has all jurisdiction necessary to enforce this section.
 27-5          (e)  A provider of basic local exchange telecommunications
 27-6    service shall comply with the requirements of this section not
 27-7    later than March 1, 2000.
 27-8          SECTION 20.  Subchapter A, Chapter 55, Utilities Code, is
 27-9    amended by adding Section 55.014 to read as follows:
27-10          Sec. 55.014.  PROVISION OF ADVANCED TELECOMMUNICATIONS
27-11    SERVICES.  (a)  In this section, "advanced service" means any
27-12    telecommunications service other than residential or business basic
27-13    local exchange telephone service, caller identification service,
27-14    and customer calling features.
27-15          (b)  This section applies to a company electing under Chapter
27-16    58 or a company that holds a certificate of operating authority or
27-17    service provider certificate of operating authority.
27-18          (c)  Notwithstanding any other provision of this title,
27-19    beginning September 1, 2001, a company to which this section
27-20    applies that provides advanced telecommunications services within
27-21    the company's urban service areas, shall, on a bona fide retail
27-22    request for those services,  provide in rural areas of this state
27-23    served by the company  advanced telecommunications services that
27-24    are reasonably comparable to the advanced services provided in
27-25    urban areas.  The company shall offer the advanced
27-26    telecommunications services:
 28-1                (1)  at prices, terms, and conditions that are
 28-2    reasonably comparable to the prices, terms, and conditions for
 28-3    similar advanced services provided by the company in urban areas;
 28-4    and
 28-5                (2)  within 15 months after the bona fide request for
 28-6    those advanced services.
 28-7          (d)  Notwithstanding any other provision of this title, a
 28-8    company to which this section applies shall, on a bona fide retail
 28-9    request for those services, offer caller identification service and
28-10    custom calling features in rural areas served by the company.  The
28-11    company shall offer the services:
28-12                (1)  at prices, terms, and conditions reasonably
28-13    comparable to the company's prices, terms, and conditions for
28-14    similar services in urban areas; and
28-15                (2)  within 15 months after the bona fide request for
28-16    those services.
28-17          (e)  This section may not be construed to require a company
28-18    to:
28-19                (1)  begin providing services in a rural area in which
28-20    the company does not provide local exchange telephone service; or
28-21                (2)  provide a service in a rural area of this state
28-22    unless the company provides the service in urban areas of this
28-23    state.
28-24          (f)  For purposes of this section, a company to which this
28-25    section applies is considered to provide services in urban areas of
28-26    this state if the company provides services in a municipality with
 29-1    a population of more than 190,000.
 29-2          (g)  Notwithstanding any other provision of this title, the
 29-3    commission has all jurisdiction necessary to enforce this section.
 29-4          SECTION 21.  Subchapter A, Chapter 55, Utilities Code, is
 29-5    amended by adding Section 55.015 to read as follows:
 29-6          Sec. 55.015.  LIFELINE SERVICE.  (a)  The commission shall
 29-7    adopt rules prohibiting a telecommunications provider from
 29-8    discontinuing basic local exchange telephone service to a consumer
 29-9    who receives lifeline service because of nonpayment by the consumer
29-10    of charges for other services billed by the provider, including
29-11    long distance service.
29-12          (b)  The commission shall adopt rules providing for automatic
29-13    enrollment to receive lifeline service for eligible consumers.  The
29-14    Texas Department of Human Services, on request of the commission,
29-15    shall assist in the adoption and implementation of those rules.
29-16    The commission and the Texas Department of Human Services shall
29-17    enter into a memorandum of understanding establishing the
29-18    respective duties of the commission and department in relation to
29-19    the automatic enrollment.
29-20          (c)  A telecommunications provider may block a lifeline
29-21    service participant's access to all long distance service except
29-22    toll-free numbers when the participant owes an outstanding amount
29-23    for that service.  The telecommunications provider shall remove the
29-24    block without additional cost to the participant on payment of the
29-25    outstanding amount.
29-26          (d)  A telecommunications provider shall offer a consumer who
 30-1    applies for or receives lifeline service the option of blocking all
 30-2    toll calls or, if technically capable, placing a limit on the
 30-3    amount of toll calls.  The provider may not charge the consumer an
 30-4    administrative charge or other additional amount for the blocking
 30-5    service.
 30-6          (e)  In this section, "lifeline service" means a retail local
 30-7    service offering described by 47 C.F.R. Section 54.401(a), as
 30-8    amended.
 30-9          SECTION 22.  Section 3.312, Public Utility Regulatory Act of
30-10    1995 (Article 1446c-0, Vernon's Texas Civil Statutes), as added by
30-11    Section 1, Chapter 919, Acts of the 75th Legislature, Regular
30-12    Session, 1997, is codified as Subchapter K, Chapter 55, Utilities
30-13    Code, and amended to read as follows:
30-14         SUBCHAPTER K.  SELECTION OF TELECOMMUNICATIONS UTILITIES
30-15          Sec. 55.301.  STATE POLICY.  It is the policy of this state
30-16    to ensure that all customers are protected from the unauthorized
30-17    switching of a telecommunications utility selected by the customer
30-18    to provide telecommunications service.
30-19          Sec. 55.302.  COMMISSION RULES.  (a)  The commission shall
30-20    adopt nondiscriminatory and competitively neutral rules to
30-21    implement this subchapter, including rules that:
30-22                (1)  ensure that customers are protected from deceptive
30-23    practices in the obtaining of authorizations and verifications
30-24    required by this subchapter;
30-25                (2)  are applicable to all local exchange telephone
30-26    services, interexchange telecommunications service, and other
 31-1    telecommunications service provided by telecommunications utilities
 31-2    in this state;
 31-3                (3)  are consistent with the rules and regulations
 31-4    prescribed by the Federal Communications Commission for the
 31-5    selection of telecommunications utilities;
 31-6                (4)  permit telecommunications utilities to select any
 31-7    method of verification of a [carrier-initiated] change order
 31-8    authorized by Section 55.303;
 31-9                (5)  [require telecommunications utilities to maintain
31-10    records relating to a customer-initiated change in accordance with
31-11    Section 55.304;]
31-12                [(6)]  require the reversal of  certain changes in the
31-13    selection of a customer's telecommunications utility in accordance
31-14    with Section 55.304(a) [55.305(a)];
31-15                (6) [(7)]  prescribe, in accordance with Section
31-16    55.304(b) [55.305(b)], the duties of a telecommunications utility
31-17    that initiates an unauthorized customer change; and
31-18                (7) [(8)]  provide for corrective action and the
31-19    imposition of penalties in accordance with Sections 55.305 [55.306]
31-20    and 55.306 [55.307].
31-21          (b)  The commission is granted all necessary jurisdiction to
31-22    adopt rules required by this subchapter and to enforce those rules
31-23    and this subchapter.
31-24          (c)  The commission may notify customers of their rights
31-25    under the rules.
31-26          Sec. 55.303.  VERIFICATION OF [CARRIER-INITIATED] CHANGE.
 32-1    [(a)]  A telecommunications utility may verify a
 32-2    [carrier-initiated] change order by:
 32-3                (1)  obtaining written authorization from the customer;
 32-4                (2)  obtaining a toll-free electronic authorization
 32-5    placed from the telephone number that is the subject of the change
 32-6    order; or
 32-7                (3)  an oral authorization obtained by an independent
 32-8    third party.
 32-9          [(b)  In addition to the methods provided by Subsection (a),
32-10    a telecommunications utility may verify a carrier-initiated change
32-11    order by mailing to the customer an information package that is
32-12    consistent with the requirements of 47 C.F.R.  Section 64.1100(d)
32-13    and that contains a postage-prepaid postcard or mailer.  The change
32-14    is considered verified if the telecommunications utility does not
32-15    receive a cancellation of the change order from the customer within
32-16    14 days after the date of the mailing.]
32-17          [Sec. 55.304.  CUSTOMER-INITIATED CHANGE.  (a)  A
32-18    telecommunications utility to whom a customer has changed its
32-19    service on the initiative of the customer shall maintain a record
32-20    of nonpublic customer-specific information that could be used to
32-21    establish that the customer authorized the change.]
32-22          [(b)  Notwithstanding Subsection (a), if the Federal
32-23    Communications Commission requires verification, the
32-24    telecommunications utility shall use the verification methods
32-25    required by the Federal Communications Commission.]
32-26          Sec. 55.304 [55.305].  UNAUTHORIZED CHANGE.  (a)  If a change
 33-1    in the selection of a customer's telecommunications utility is not
 33-2    made or verified in accordance with this subchapter, the change, on
 33-3    request by the customer, shall be reversed within a period
 33-4    established by commission ruling.
 33-5          (b)  A telecommunications utility that initiates an
 33-6    unauthorized customer change shall:
 33-7                (1)  pay all usual and customary charges associated
 33-8    with returning the customer to its original telecommunications
 33-9    utility;
33-10                (2)  pay the telecommunications utility from which the
33-11    customer was changed any amount paid by the customer that would
33-12    have been paid to that telecommunications utility if the
33-13    unauthorized change had not been made;
33-14                (3)  return to the customer any amount paid by the
33-15    customer that exceeds the charges that would have been imposed for
33-16    identical services by the telecommunications utility from which the
33-17    customer was changed if the unauthorized change had not been made;
33-18    and
33-19                (4)  provide to the original telecommunications utility
33-20    from which the customer was changed all billing records to enable
33-21    that telecommunications utility to comply with this subchapter.
33-22          (c)  The telecommunications utility from which the customer
33-23    was changed shall provide to the customer all benefits associated
33-24    with the service on receipt of payment for service provided during
33-25    the unauthorized change.
33-26          (d)  A customer is not liable for charges incurred during the
 34-1    first 30 days after the date of an unauthorized carrier change.
 34-2          Sec. 55.305 [55.306].  CORRECTIVE ACTION AND PENALTIES.
 34-3    (a)  If the commission finds that a telecommunications utility has
 34-4    repeatedly violated the commission's telecommunications utility
 34-5    selection rules, the commission shall order the utility to take
 34-6    corrective action as necessary.  In addition, the utility may be
 34-7    subject to administrative penalties under Sections 15.023-15.027.
 34-8          (b)  An administrative penalty collected under this section
 34-9    shall be used to enforce this subchapter.
34-10          Sec. 55.306 [55.307].  REPEATED AND RECKLESS VIOLATION.  If
34-11    the commission finds that a telecommunications utility has
34-12    repeatedly and recklessly violated the commission's
34-13    telecommunications utility selection rules, the commission may, if
34-14    consistent with the public interest, suspend, restrict, deny, or
34-15    revoke the registration or certificate, including an amended
34-16    certificate, of the telecommunications utility and, by taking that
34-17    action, deny the telecommunications utility the right to provide
34-18    service in this state.
34-19          Sec. 55.307.  DECEPTIVE OR FRAUDULENT PRACTICE.  The
34-20    commission may prohibit a utility from engaging in a deceptive or
34-21    fraudulent practice, including a marketing practice, involving the
34-22    selection of a customer's telecommunications utility.  The
34-23    commission may define deceptive and fraudulent practices to which
34-24    this section applies.
34-25          Sec. 55.308.  CONSISTENCY WITH FEDERAL LAW.  Notwithstanding
34-26    any other provision of this subchapter, rules adopted by the
 35-1    commission under this subchapter shall be consistent with
 35-2    applicable federal laws and rules.
 35-3          SECTION 23.  Section 56.021, Utilities Code, as amended by
 35-4    Section 18.08, S.B. No. 1368, Acts of the 76th Legislature, Regular
 35-5    Session, 1999, is amended to read as follows:
 35-6          Sec. 56.021.  UNIVERSAL SERVICE FUND ESTABLISHED.  The
 35-7    commission shall adopt and enforce rules requiring local exchange
 35-8    companies to establish a universal service fund to:
 35-9                (1)  assist telecommunications providers [local
35-10    exchange companies] in providing basic local telecommunications
35-11    service at reasonable rates in high cost rural areas;
35-12                (2)  reimburse telecommunications providers [local
35-13    exchange companies] for revenue lost by providing tel-assistance
35-14    service under Subchapter C;
35-15                (3)  reimburse the telecommunications carrier that
35-16    provides the statewide telecommunications relay access service
35-17    under Subchapter D;
35-18                (4)  finance the specialized telecommunications device
35-19    assistance program established under Subchapter E; [and]
35-20                (5)  reimburse the department, the Texas Commission for
35-21    the Deaf and Hard of Hearing, and the commission for costs incurred
35-22    in implementing this chapter and Chapter 57; and
35-23                (6)  reimburse a telecommunications carrier providing
35-24    lifeline service as provided by 47 C.F.R. Part 54, Subpart E, as
35-25    amended.
35-26          SECTION 24.  Sections 56.023 and 56.024, Utilities Code, are
 36-1    amended to read as follows:
 36-2          Sec. 56.023.  COMMISSION POWERS AND DUTIES.  (a)  The
 36-3    commission shall:
 36-4                (1)  in a manner that assures reasonable rates for
 36-5    basic local telecommunications service, adopt eligibility criteria
 36-6    and review procedures, including a method for administrative
 36-7    review, the commission finds necessary to fund the universal
 36-8    service fund and make distributions from that fund;
 36-9                (2)  determine which telecommunications providers
36-10    [local exchange companies] meet the eligibility criteria;
36-11                (3)  determine the amount of and approve a procedure
36-12    for reimbursement to telecommunications providers [local exchange
36-13    companies] of revenue lost in providing tel-assistance service
36-14    under Subchapter C;
36-15                (4)  establish and collect fees from the universal
36-16    service fund necessary to recover the costs the department and the
36-17    commission incur in administering this chapter and Chapter 57; and
36-18                (5)  approve procedures for the collection and
36-19    disbursal of the revenue of the universal service fund.
36-20          (b)  The eligibility criteria must require that a
36-21    telecommunications provider [local exchange company], in compliance
36-22    with the commission's quality of service requirements:
36-23                (1)  offer service to each consumer within the
36-24    company's certificated area; and
36-25                (2)  render continuous and adequate service within the
36-26    company's certificated area.
 37-1          (c)  The commission shall adopt rules for the administration
 37-2    of the universal service fund and may act as necessary and
 37-3    convenient to administer the fund.
 37-4          Sec. 56.024.  REPORTS; CONFIDENTIALITY.  (a)  The commission
 37-5    may require a [local exchange company or another]
 37-6    telecommunications provider to provide a report or information
 37-7    necessary to assess contributions and disbursements to the
 37-8    universal service fund.
 37-9          (b)  A report or information is confidential and not subject
37-10    to disclosure under Chapter 552, Government Code.
37-11          SECTION 25.  Section 56.026, Utilities Code, is amended to
37-12    read as follows:
37-13          Sec. 56.026.  UNIVERSAL SERVICE FUND DISBURSEMENTS.  (a)  A
37-14    revenue requirement showing is not required for a disbursement from
37-15    the universal service fund under this subchapter.
37-16          (b)  The commission shall make each disbursement from the
37-17    universal service fund promptly and efficiently so that a
37-18    telecommunications provider [or local exchange company] does not
37-19    experience an unnecessary cash-flow change as a result of a change
37-20    in governmental policy.
37-21          (c)  Notwithstanding any other provision of this title, if an
37-22    electing company reduces rates in conjunction with receiving
37-23    disbursements from the universal service fund, the commission may
37-24    not reduce the amount of those disbursements, except that:
37-25                (1)  if a local end user customer of the electing
37-26    company switches to another local service provider that serves the
 38-1    customer entirely through the use of its own facilities and not
 38-2    partially or solely through the use of unbundled network elements,
 38-3    the electing company's disbursement may be reduced by the amount
 38-4    attributable to that customer under Section 56.021(1); or
 38-5                (2)  if a local end user customer of the electing
 38-6    company switches to another local service provider, and the new
 38-7    local service provider serves the customer partially or solely
 38-8    through the use of unbundled network elements provided by the
 38-9    electing company, the electing company's disbursement attributable
38-10    to that customer under Section 56.021(1) may be reduced only if the
38-11    commission establishes an equitable allocation formula for the
38-12    disbursement.
38-13          (d)  Any reductions in switched access service rates for
38-14    local exchange companies with more than 125,000 access lines in
38-15    service in this state on December 31, 1998, that are made in
38-16    accordance with this section shall be proportional, based on
38-17    equivalent minutes of use, to reductions in intraLATA toll rates,
38-18    and those reductions shall be offset by equal disbursements from
38-19    the universal service fund under Section 56.021(1).  To the extent
38-20    that the disbursements from the universal service fund under
38-21    Section 56.021(1) for small and rural local exchange companies are
38-22    used to decrease the implicit support in intraLATA toll and
38-23    switched access rates, the decrease shall be made in a
38-24    competitively neutral manner.
38-25          SECTION 26.  Subchapter B, Chapter 56, Utilities Code, is
38-26    amended by adding Section 56.028 to read as follows:
 39-1          Sec. 56.028.  UNIVERSAL SERVICE FUND REIMBURSEMENT FOR
 39-2    CERTAIN INTRALATA SERVICE.  On request of an incumbent local
 39-3    exchange company that is not an electing company under Chapters 58
 39-4    and 59, the commission shall provide reimbursement through the
 39-5    universal service fund for reduced rates for intraLATA
 39-6    interexchange high capacity (1.544 Mbps) service for entities
 39-7    described in Section 58.253(a).  The amount of reimbursement shall
 39-8    be the difference between the company's tariffed rate for that
 39-9    service as of January 1, 1998, and the lowest rate offered for that
39-10    service by any local exchange company electing incentive regulation
39-11    under Chapter 58.
39-12          SECTION 27.  Section 56.071, Utilities Code, is amended to
39-13    read as follows:
39-14          Sec. 56.071.  TEL-ASSISTANCE SERVICE REQUIREMENTS.  (a)  The
39-15    commission shall adopt and enforce rules requiring a local exchange
39-16    company to establish a telecommunications service assistance
39-17    program to provide a reduction in the cost of telecommunications
39-18    service to each eligible consumer in the company's certificated
39-19    area.  The reduction must be a reduction on the consumer's
39-20    telephone bill.
39-21          (b)  In addition to local exchange companies, this subchapter
39-22    applies to telecommunications providers that receive universal
39-23    service fund support in accordance with the commission's universal
39-24    service fund rules, and any reference to or requirement imposed on
39-25    local exchange companies in this subchapter shall also apply to
39-26    those telecommunications providers.
 40-1          (c)  Except as provided by Section 56.075(b), the reduction
 40-2    allowed by the program is 65 percent of the applicable tariff rate
 40-3    for the service provided.
 40-4          (d) [(c)]  The program is named "tel-assistance service."
 40-5          SECTION 28.  Subsection (b), Section 56.072, Utilities Code,
 40-6    is amended to read as follows:
 40-7          (b)  To be eligible for the tel-assistance service program,
 40-8    an applicant must:
 40-9                (1)  be a head of household and disabled, as determined
40-10    by the department, or be 65 years of age or older; and
40-11                (2)  have a household income at or below the poverty
40-12    level, as determined by the United States Office of Management and
40-13    Budget and reported annually in the Federal Register.
40-14          SECTION 29.  Section 56.072, Utilities Code, is amended by
40-15    adding Subsection (d) to read as follows:
40-16          (d)  The commission shall adopt rules providing for automatic
40-17    enrollment to receive tel-assistance service for eligible
40-18    consumers.  The department, on request of the commission, shall
40-19    assist in the adoption and implementation of those rules.  The
40-20    commission and the department shall enter into a memorandum of
40-21    understanding establishing the respective duties of the commission
40-22    and the department in relation to the automatic enrollment.
40-23          SECTION 30.  Subsection (a), Section 56.073, Utilities Code,
40-24    is amended to read as follows:
40-25          (a)  Each three [six] months, the department shall provide to
40-26    each local exchange company a list of all persons eligible for the
 41-1    tel-assistance service program that includes each person's:
 41-2                (1)  name;
 41-3                (2)  address; and
 41-4                (3)  if applicable, telephone number.
 41-5          SECTION 31.  Subchapter C, Chapter 56, Utilities Code, is
 41-6    amended by adding Section 56.079 to read as follows:
 41-7          Sec. 56.079.  RELATIONSHIP TO OTHER SERVICES.  (a)  The
 41-8    commission shall adopt rules prohibiting a telecommunications
 41-9    provider from discontinuing local exchange telephone service to a
41-10    consumer who receives tel-assistance service because of nonpayment
41-11    by the consumer of charges for other services billed by the
41-12    provider, including long distance service.
41-13          (b)  A telecommunications provider may block a tel-assistance
41-14    service participant's access to all long distance service except
41-15    toll-free numbers when the participant owes an outstanding amount
41-16    for that service.  The telecommunications provider shall remove the
41-17    block without additional cost to the participant on payment of the
41-18    outstanding amount.
41-19          (c)  A telecommunications provider shall offer a consumer who
41-20    applies for or receives tel-assistance service the option of
41-21    blocking all toll calls or, if technically capable, placing a limit
41-22    on the amount of toll calls.  The provider may not charge the
41-23    consumer an administrative charge or other additional amount for
41-24    the blocking service.
41-25          SECTION 32.  Section 57.042, Utilities Code, is amended to
41-26    read as follows:
 42-1          Sec. 57.042.  DEFINITIONS.  In this subchapter:
 42-2                (1)  "Ambulatory health care center" means a health
 42-3    care  clinic or an association of such a clinic that is:
 42-4                      (A)  exempt from federal income taxation under
 42-5    Section 501(a), Internal Revenue Code of 1986, as amended, as an
 42-6    organization described by Section 501(c)(3), as amended; and
 42-7                      (B)  funded wholly or partly by a grant under 42
 42-8    U.S.C. Section 254b, 254c, or 256, as amended.
 42-9                (2)  "Board" means the telecommunications
42-10    infrastructure fund board.
42-11                (3) [(2)]  "Commercial mobile service provider" means a
42-12    provider of commercial mobile service as defined by Section 332(d),
42-13    Communications Act of 1934 (47 U.S.C. Section 151 et seq.), Federal
42-14    Communications Commission rules, and the Omnibus Budget
42-15    Reconciliation Act of 1993 (Pub. L. No. 103-66).
42-16                (4) [(3)]  "Fund" means the telecommunications
42-17    infrastructure fund.
42-18                (5) [(4)]  "Institution of higher education" means:
42-19                      (A)  an institution of higher education as
42-20    defined by Section 61.003, Education Code; or
42-21                      (B)  a private or independent institution of
42-22    higher education as defined by Section 61.003, Education Code.
42-23                (6) [(5)]  "Library" means:
42-24                      (A)  a public library or regional library system
42-25    as those terms are defined by Section 441.122, Government Code; or
42-26                      (B)  a library operated by an institution of
 43-1    higher education or a school district.
 43-2                (7) [(6)]  "Public not-for-profit health care facility"
 43-3    means a rural or regional hospital or other entity such as a rural
 43-4    health clinic that:
 43-5                      (A)  is supported by local or regional tax
 43-6    revenue; [or]
 43-7                      (B)  is a certified not-for-profit health
 43-8    corporation, under federal law; or
 43-9                      (C)  is an ambulatory health care center.
43-10                (8) [(7)]  "School district" includes an independent
43-11    school district, a common school district, and a rural high school
43-12    district.
43-13                (9) [(8)]  "Public school" means a public elementary or
43-14    secondary school, including an open-enrollment charter school, a
43-15    home-rule school district school, and a school with a campus or
43-16    campus program charter.
43-17                (10) [(9)]  "Taxable telecommunications receipts" means
43-18    taxable telecommunications receipts reported under Chapter 151, Tax
43-19    Code.
43-20                (11) [(10)]  "Telemedicine":
43-21                      (A)  means medical services delivered by
43-22    telecommunications technologies to rural or underserved public
43-23    not-for-profit health care facilities or primary health care
43-24    facilities in collaboration with an academic health center and an
43-25    associated teaching hospital or tertiary center or with another
43-26    public not-for-profit health care facility; and
 44-1                      (B)  includes consultive services, diagnostic
 44-2    services, interactive video consultation, teleradiology,
 44-3    telepathology, and distance education for working health care
 44-4    professionals.
 44-5          SECTION 33.  Subchapter A, Chapter 58, Utilities Code, is
 44-6    amended by adding Section 58.003 to read as follows:
 44-7          Sec. 58.003.  CUSTOMER-SPECIFIC CONTRACTS.  (a)
 44-8    Notwithstanding any other provision of this chapter, but subject to
 44-9    Subsection (b), an electing company may not offer in an exchange a
44-10    service, or an appropriate subset of a service, listed in Sections
44-11    58.051(a)(1)-(4) or Sections 58.151(1)-(4) in a manner that results
44-12    in a customer-specific contract, unless the other party to the
44-13    contract is a federal, state, or local governmental entity, until
44-14    the earlier of September 1, 2003, or the date on which the
44-15    commission finds that at least 40 percent of the total access lines
44-16    for that service or appropriate subset of that service in that
44-17    exchange are served by competitive alternative providers that are
44-18    not affiliated with the electing company.
44-19          (b)  The requirements prescribed by Subsection (a) do not
44-20    apply to an electing company serving fewer than five million access
44-21    lines after the date on which it completes the infrastructure
44-22    improvements described in this subsection.  The electing company
44-23    must also notify the commission of the company's binding commitment
44-24    to make the following infrastructure improvements not later than
44-25    September 1, 2000:
44-26                (1)  install Common Channel Signaling 7 capability in
 45-1    each central office; and
 45-2                (2)  connect all of the company's serving central
 45-3    offices to their respective LATA tandem central offices with
 45-4    optical fiber or equivalent facilities.
 45-5          (c)  The commission by rule shall prescribe appropriate
 45-6    subsets of services.
 45-7          (d)  An electing company may file with the commission a
 45-8    request for a finding under this section.  The filing must include
 45-9    information sufficient for the commission to perform a review and
45-10    evaluation in relation to the particular exchange and the
45-11    particular service or appropriate subset of a service for which the
45-12    electing company wants to offer customer-specific contracts.  The
45-13    commission must grant or deny the request not later than the 60th
45-14    day after the date the electing company files the request.
45-15          (e)  The commitments described by Subsection (b) do not apply
45-16    to exchanges of the company sold or transferred before, or for
45-17    which contracts for sale or transfer are pending on, September 1,
45-18    2001.  In the case of exchanges for which contracts for sale or
45-19    transfer are pending as of March 1, 2001, where the purchaser
45-20    withdrew or defaulted before September 1, 2001, the company shall
45-21    have one year from the date of withdrawal or default to comply with
45-22    the commitments.
45-23          (f)  This section does not preclude an electing company from
45-24    offering a customer-specific contract to the extent allowed by this
45-25    title as of August 31, 1999.
45-26          SECTION 34.  Subchapter A, Chapter 58, Utilities Code, is
 46-1    amended by adding Section 58.004 to read as follows:
 46-2          Sec. 58.004.  PACKAGING, TERM AND VOLUME DISCOUNTS, AND
 46-3    PROMOTIONAL OFFERINGS.  (a)  Notwithstanding any other provision of
 46-4    this chapter, an electing company that has more than five million
 46-5    access lines in this state may not offer in an exchange a service
 46-6    listed in Sections 58.151(1)-(4) as a component of a package of
 46-7    services or as a promotional offering until the company makes the
 46-8    reduction in switched access service rates required by Section
 46-9    58.301(2) unless the customer of one of the pricing flexibility
46-10    offerings described in this subsection is a federal, state, or
46-11    local governmental entity.
46-12          (b)  Notwithstanding any other provision of this chapter, an
46-13    electing company that has more than five million access lines in
46-14    this state may not offer a volume or term discount on any service
46-15    listed in Sections 58.151(1)-(4) until September 1, 2000, unless
46-16    the customer of one of the pricing flexibility offerings described
46-17    in this subsection is a federal, state, or local governmental
46-18    entity.
46-19          (c)  Notwithstanding any other provision of this chapter, an
46-20    electing company that has more than five million access lines in
46-21    this state may offer in an exchange a service listed in Sections
46-22    58.051(a)(1)-(4) as a component of a package of services, as a
46-23    promotional offering, or with a volume or term discount on and
46-24    after September 1, 1999.
46-25          SECTION 35.  Section 58.021, Utilities Code, is amended to
46-26    read as follows:
 47-1          Sec. 58.021.  ELECTION.  (a)  An incumbent local exchange
 47-2    company may elect to be subject to incentive regulation and to make
 47-3    the corresponding infrastructure commitment under this chapter by
 47-4    notifying the commission in writing of its election.
 47-5          (b)  The notice must include a statement that the company
 47-6    agrees to:
 47-7                (1)  limit until September 1, 2005, [for four years]
 47-8    any increase in a rate the company charges for basic network
 47-9    services as prescribed by Subchapter C; and
47-10                (2)  fulfill the infrastructure commitment prescribed
47-11    by Subchapters F and G.
47-12          (c)  Except as provided in Subsection (d), an election under
47-13    this chapter remains in effect until the legislature eliminates the
47-14    incentive regulation authorized by this chapter and Chapter 59.
47-15          (d)  The commission may allow an electing company serving
47-16    fewer than five million access lines to withdraw the company's
47-17    election under this chapter:
47-18                (1)  on application by the company; and
47-19                (2)  only for good cause.
47-20          (e)  In this section, "good cause" includes only matters
47-21    beyond the control of the company.
47-22          SECTION 36.  Section 58.023, Utilities Code, is amended to
47-23    read as follows:
47-24          Sec. 58.023.  SERVICE CLASSIFICATION.  On election, the
47-25    services provided by an electing company are classified into two
47-26    [three] categories:
 48-1                (1)  basic network services governed by Subchapter C;
 48-2    and
 48-3                (2)  nonbasic [discretionary services governed by
 48-4    Subchapter D; and]
 48-5                [(3)  competitive] services governed by Subchapter E.
 48-6          SECTION 37.  Section 58.024, Utilities Code, is amended to
 48-7    read as follows:
 48-8          Sec. 58.024.  SERVICE RECLASSIFICATION.  (a)  The commission
 48-9    may reclassify a[:]
48-10                [(1)]  basic network service as a nonbasic
48-11    [discretionary or competitive] service[; or]
48-12                [(2)  discretionary service as a competitive service].
48-13          (b)  The commission shall establish criteria for determining
48-14    whether a service should be reclassified.  The criteria must
48-15    include consideration of the:
48-16                (1)  availability of the service from other providers;
48-17                (2)  [proportion of the market that receives the
48-18    service;]
48-19                [(3)]  effect of the reclassification on service
48-20    subscribers; and
48-21                (3) [(4)]  nature of the service.
48-22          (c)  The commission may not reclassify a service until:
48-23                (1)  each competitive safeguard prescribed by
48-24    Subchapters B-H, Chapter 60, is fully implemented; or
48-25                (2)  for a company that serves more than five million
48-26    access lines in this state, the date on which the Federal
 49-1    Communications Commission determines in accordance with 47 U.S.C.
 49-2    Section 271 that the company or any of its affiliates may enter the
 49-3    interLATA telecommunications market in this state.
 49-4          (d)  The commission may reclassify a service subject to the
 49-5    following conditions:
 49-6                (1)  the electing company must file a request for a
 49-7    service reclassification including information sufficient for the
 49-8    commission to perform a review and evaluation under Subsection (b);
 49-9                (2)  the commission must grant or deny the request not
49-10    later than the 60th day after the date the electing company files
49-11    the request for service reclassification; and
49-12                (3)  there is a rebuttable presumption that the request
49-13    for service reclassification by the electing company should be
49-14    granted if the commission finds that there is a competitive
49-15    alternative provider serving customers through means other than
49-16    total service resale.
49-17          SECTION 38.  Section 58.028, Utilities Code, is amended to
49-18    read as follows:
49-19          Sec. 58.028.  REVIEW AND REPORT OF EFFECTS OF ELECTION.
49-20    (a)  Not later than January 1, 2004 [2000], the commission shall
49-21    begin a review and evaluation of each company that elects under
49-22    this chapter or Chapter 59.
49-23          (b)  The review must include an evaluation of the effects of
49-24    the election, including:
49-25                (1)  consumer benefits;
49-26                (2)  impact of competition;
 50-1                (3)  infrastructure investments; and
 50-2                (4)  quality of service.
 50-3          (c)  The commission shall file a report with the legislature
 50-4    not later than January 1, 2005 [2001].  The report must include the
 50-5    commission's recommendations as to whether the incentive regulation
 50-6    provided by this chapter and Chapter 59 should be extended,
 50-7    modified, eliminated, or replaced with another form of regulation.
 50-8          (d)  This section expires September 1, 2005 [2001].
 50-9          SECTION 39.  Section 58.051, Utilities Code, is amended to
50-10    read as follows:
50-11          Sec. 58.051.  SERVICES INCLUDED.  (a)  Unless reclassified
50-12    under Section 58.024, the following services are basic network
50-13    services:
50-14                (1)  flat rate residential [and business] local
50-15    exchange telephone service, including primary directory listings
50-16    and the receipt of a directory and any applicable mileage or zone
50-17    charges;
50-18                (2)  residential tone dialing service;
50-19                (3)  lifeline and tel-assistance service;
50-20                (4)  service connection for basic residential services;
50-21                (5)  direct inward dialing service for basic
50-22    residential services;
50-23                (6)  private pay telephone access service;
50-24                (7)  call trap and trace service;
50-25                (8)  access for all residential and business end users
50-26    to 911 service provided by a local authority and access to dual
 51-1    party relay service;
 51-2                (9)  [switched access service;]
 51-3                [(10)  interconnection to competitive providers;]
 51-4                [(11)]  mandatory residential extended area service
 51-5    arrangements;
 51-6                (10) [(12)]  mandatory residential extended
 51-7    metropolitan service or other mandatory residential toll-free
 51-8    calling arrangements; and
 51-9                (11)  residential call waiting service
51-10                [(13)  interconnection for commercial mobile service
51-11    providers;]
51-12                [(14)  directory assistance; and]
51-13                [(15)  "1-plus" intraLATA message toll service].
51-14          (b)  Electing companies shall offer each basic network
51-15    service as a separately tariffed service in addition to any
51-16    packages or other pricing flexibility offerings that include those
51-17    basic network services.
51-18          SECTION 40.  Sections 58.054 and 58.055, Utilities Code, are
51-19    amended to read as follows:
51-20          Sec. 58.054.  RATES CAPPED.  (a)  As a condition of election
51-21    under this chapter, an electing company shall commit to not
51-22    increasing a rate for a basic network service on or before the
51-23    fourth anniversary of its election date.
51-24          (b)  The rates an electing company may charge on or before
51-25    that fourth anniversary are the rates charged by the company on
51-26    June 1, 1995, or, for a company that elects under this chapter
 52-1    after September 1, 1999, the rates charged on the date of its
 52-2    election, without regard to a proceeding pending under:
 52-3                (1)  Section 15.001;
 52-4                (2)  Subchapter D, Chapter 53; or
 52-5                (3)  Subchapter G, Chapter 2001, Government Code.
 52-6          (c)  Notwithstanding Subsections (a) and (b), the cap on the
 52-7    rates for basic network services for a company electing under this
 52-8    chapter may not expire before September 1, 2005.
 52-9          Sec. 58.055.  RATE ADJUSTMENT BY COMPANY.  (a)  An electing
52-10    company may increase a rate for a basic network service during the
52-11    election [four-year] period prescribed by Section 58.054 only:
52-12                (1)  with commission approval that the proposed change
52-13    is included in Section 58.056, 58.057, or 58.058; and
52-14                (2)  as provided by Sections 58.056, 58.057, 58.058,
52-15    and 58.059.
52-16          (b)  Notwithstanding Subchapter F, Chapter 60, an electing
52-17    company may, on its own initiative, decrease a rate for a basic
52-18    network service during the electing [four-year] period.
52-19          (c)  [The company may decrease the rate for switched access
52-20    service to an amount above the service's long run incremental cost.]
52-21          [(d)]  The company may decrease the rate for a basic local
52-22    telecommunications service [other than switched access] to an
52-23    amount above the service's appropriate cost.  If the company has
52-24    been required to perform or has elected to perform a long run
52-25    incremental cost study, the appropriate cost for the service is the
52-26    service's long run incremental cost.
 53-1          SECTION 41.  Section 58.060, Utilities Code, is amended to
 53-2    read as follows:
 53-3          Sec. 58.060.  RATE ADJUSTMENT AFTER CAP EXPIRATION.  After
 53-4    the expiration of the [four-year] period during which the rates for
 53-5    basic network services are capped as prescribed by Section 58.054
 53-6    [expires], an electing company may increase a rate for a basic
 53-7    network service only:
 53-8                (1)  with commission approval subject to this title;
 53-9    and
53-10                (2)  to the extent consistent with achieving universal
53-11    affordable service.
53-12          SECTION 42.  Subchapter C, Chapter 58, Utilities Code, is
53-13    amended by adding Section 58.063 to read as follows:
53-14          Sec. 58.063.  PRICING AND PACKAGING FLEXIBILITY.
53-15    (a)  Notwithstanding Section 58.052(b) or Subchapter F, Chapter 60,
53-16    an electing company may exercise pricing flexibility for basic
53-17    network services, including the packaging of basic network services
53-18    with any other regulated or unregulated service or any service of
53-19    an affiliate.  The company may exercise pricing flexibility in
53-20    accordance with this section 10 days after providing an
53-21    informational notice to the commission, to the office, and to any
53-22    person who holds a certificate of operating authority in the
53-23    electing company's certificated area or areas or who has an
53-24    effective interconnection agreement with the electing company.
53-25          (b)  An electing company shall set the price of a package of
53-26    services containing basic network services and nonbasic services at
 54-1    any level at or above the lesser of:
 54-2                (1)  the sum of the long run incremental costs of any
 54-3    basic network services and nonbasic services contained in the
 54-4    package; or
 54-5                (2)  the sum of the tariffed prices of any basic
 54-6    network services contained in the package and the long run
 54-7    incremental costs of nonbasic services contained in the package.
 54-8          (c)  Except as provided by Section 58.003, an electing
 54-9    company may flexibly price a package that includes a basic network
54-10    service in any manner provided by Section 51.002(7).
54-11          SECTION 43.  Subchapter E, Chapter 58, Utilities Code, is
54-12    amended to read as follows:
54-13              SUBCHAPTER E.  NONBASIC [COMPETITIVE] SERVICES
54-14          Sec. 58.151.  SERVICES INCLUDED.  The following services are
54-15    classified as nonbasic [competitive] services:
54-16                (1)  flat rate business local exchange telephone
54-17    service, including primary directory listings and the receipt of a
54-18    directory, and any applicable mileage or zone charges, except that
54-19    the prices for this service shall be capped until September 1,
54-20    2005, at the prices in effect on September 1, 1999;
54-21                (2)  business tone dialing service, except that the
54-22    prices for this service shall be capped until September 1, 2005, at
54-23    the prices in effect on September 1, 1999;
54-24                (3)  service connection for all business services,
54-25    except that the prices for this service shall be capped until
54-26    September 1, 2005, at the prices in effect on September 1, 1999;
 55-1                (4)  direct inward dialing for basic business services,
 55-2    except that the prices for this service shall be capped until
 55-3    September 1, 2005, at the prices in effect on September 1, 1999;
 55-4                (5)  "1-plus" intraLATA message toll services;
 55-5                (6)  0+ and 0- operator services;
 55-6                (7)  call waiting, call forwarding, and custom calling,
 55-7    except that:
 55-8                      (A)  residential call waiting service shall be
 55-9    classified as a basic network service; and
55-10                      (B)  for an electing company subject to Section
55-11    58.301, prices for residential call forwarding and other custom
55-12    calling services shall be capped at the prices in effect on
55-13    September 1, 1999, until the electing company implements the
55-14    reduction in switched access rates described by Section 58.301(2);
55-15                (8)  call return, caller identification, and call
55-16    control options, except that, for an electing company subject to
55-17    Section 58.301, prices for residential call return, caller
55-18    identification, and call control options shall be capped at the
55-19    prices in effect on September 1, 1999, until the electing company
55-20    implements the reduction in switched access rates described by
55-21    Section 58.301(2);
55-22                (9)  central office based PBX-type services;
55-23                (10)  billing and collection services, including
55-24    installment billing and late payment charges for customers of the
55-25    electing company;
55-26                (11)  integrated services digital network (ISDN)
 56-1    services, except that prices for Basic Rate Interface (BRI) ISDN
 56-2    services, which comprise up to two 64 Kbps B-channels and one 16
 56-3    Kbps D-channel, shall be capped until September 1, 2005, at the
 56-4    prices in effect on September 1, 1999;
 56-5                (12)  new services;
 56-6                (13)  directory assistance services, except that an
 56-7    electing company shall provide to a residential customer the first
 56-8    three directory assistance inquiries in a monthly billing cycle at
 56-9    no charge;
56-10                (14)  services described in the WATS tariff as the
56-11    tariff existed on January 1, 1995;
56-12                (15) [(2)]  800 and foreign exchange services;
56-13                (16) [(3)]  private line service;
56-14                (17) [(4)]  special access service;
56-15                (18) [(5)]  services from public pay telephones;
56-16                (19) [(6)]  paging services and mobile services (IMTS);
56-17                (20) [(7)]  911 services provided to a local authority
56-18    that are available from another provider [premises equipment];
56-19                (21) [(8)]  speed dialing; [and]
56-20                (22) [(9)]  three-way calling; and
56-21                (23)  all other services subject to the commission's
56-22    jurisdiction  that are not specifically classified as basic network
56-23    services in Section 58.051, except that nothing in this section
56-24    shall preclude a customer from subscribing to a local flat rate
56-25    residential or business line for a computer modem or a facsimile
56-26    machine.
 57-1          Sec. 58.152.  PRICES.  (a)  An electing company may set the
 57-2    price for any nonbasic [a competitive] service at any level above
 57-3    the lesser of the:
 57-4                (1)  service's long run incremental cost in accordance
 57-5    with the imputation rules prescribed by or under Subchapter D,
 57-6    Chapter 60; or
 57-7                (2)  price for the service in effect on September 1,
 57-8    1999.
 57-9          (b)  Subject to Section 51.004, an electing [Subject to the
57-10    requirements of Sections 60.001 and 60.002, the] company may use
57-11    pricing flexibility for a nonbasic [competitive] service.  Pricing
57-12    flexibility includes all pricing arrangements included in the
57-13    definition of "pricing flexibility" prescribed by Section 51.002
57-14    and includes packages that include basic network services
57-15    [(c)  Notwithstanding Subsection (a) or (b), the company may not
57-16    increase the price of a competitive service in a geographic area in
57-17    which that service or a functionally equivalent service is not
57-18    readily available from another provider].
57-19          Sec. 58.153.  NEW SERVICES.  (a)  Subject to the pricing
57-20    conditions prescribed by Section 58.152(a), an electing company may
57-21    introduce a new service 10 days after providing an informational
57-22    notice to the commission, to the office, and to any person who
57-23    holds a certificate of operating authority in the electing
57-24    company's certificated area or areas or who has an effective
57-25    interconnection agreement with the electing company.
57-26          (b)  An electing company serving more than five million
 58-1    access lines in this state shall provide notice to any person who
 58-2    holds a certificate of operating authority in the electing
 58-3    company's certificated area or areas or who has an effective
 58-4    interconnection agreement with the electing company of any changes
 58-5    in the generally available prices and terms under which the
 58-6    electing company offers basic or nonbasic telecommunications
 58-7    services regulated by the commission at retail rates to subscribers
 58-8    that are not telecommunications providers.  Changes requiring
 58-9    notice under this subsection include the introduction of any new
58-10    nonbasic services, any new features or functions of basic or
58-11    nonbasic services, promotional offerings of basic or nonbasic
58-12    services, or the discontinuation of then-current features or
58-13    services.  The electing company shall provide the notice:
58-14                (1)  if the electing company is required to give notice
58-15    to the commission, at the same time the company provides that
58-16    notice; or
58-17                (2)  if the electing company is not required to give
58-18    notice to the commission, at least 45 days before the effective
58-19    date of a price change or 90 days before the effective date of a
58-20    change other than a price change, unless the commission determines
58-21    that the notice should not be given.
58-22          (c)  An affected person, the office on behalf of residential
58-23    or small commercial customers, or the commission may file a
58-24    complaint at the commission challenging whether the pricing by an
58-25    incumbent local exchange company of a new service is in compliance
58-26    with Section 58.152(a).  The commission shall allow the company to
 59-1    continue to provide the service while the complaint is pending.
 59-2          (d)  If a complaint is filed under Subsection (c), the
 59-3    electing company has the burden of proving that the company set the
 59-4    price for the new service in accordance with Section 58.152(a).  If
 59-5    the complaint is finally resolved in favor of the complainant, the
 59-6    company:
 59-7                (1)  shall, not later than the 10th day after the date
 59-8    the complaint is finally resolved, amend the price of the service
 59-9    as necessary to comply with the final resolution; or
59-10                (2)  may, at the company's option, discontinue the
59-11    service.
59-12          (e)  The notice requirement prescribed by Subsection (b)
59-13    expires September 1, 2003.
59-14          SECTION 44.  Subchapter E, Chapter 58, Utilities Code, is
59-15    amended by adding Section 58.155 to read as follows:
59-16          Sec. 58.155.  INTERCONNECTION.  Because interconnection to
59-17    competitive providers and interconnection for commercial mobile
59-18    service providers are subject to the requirements of Sections 251
59-19    and 252, Communications Act of 1934 (47 U.S.C. Sections 251 and
59-20    252), as amended, and Federal Communications Commission rules,
59-21    including the commission's authority to arbitrate issues,
59-22    interconnection is not addressed in this subchapter or Subchapter
59-23    B.
59-24          SECTION 45.  Chapter 58, Utilities Code, is amended by adding
59-25    Subchapter H to read as follows:
 60-1                  SUBCHAPTER H.  SWITCHED ACCESS SERVICES
 60-2          Sec. 58.301.  SWITCHED ACCESS RATE REDUCTION.  An electing
 60-3    company with greater than five million access lines in this state
 60-4    shall reduce its switched access rates on a combined originating
 60-5    and terminating basis as follows:
 60-6                (1)  the electing company shall reduce switched access
 60-7    rates on a combined originating and terminating basis in effect on
 60-8    September 1, 1999, by one cent a minute; and
 60-9                (2)  the electing company shall reduce switched access
60-10    rates on a combined originating and terminating basis by an
60-11    additional two cents a minute on the earlier of:
60-12                      (A)  July 1, 2000; or
60-13                      (B)  the date the electing company, or its
60-14    affiliate formed in compliance with 47 U.S.C. Section 272, as
60-15    amended, actually begins providing interLATA services in this state
60-16    in accordance with the authorization required by 47 U.S.C. Section
60-17    271, as amended.
60-18          Sec. 58.302.  SWITCHED ACCESS RATE CAP.  (a)  An electing
60-19    company may not increase the per minute rates for switched access
60-20    services on a combined originating and terminating basis above the
60-21    lesser of:
60-22                (1)  the rates for switched access services charged by
60-23    that electing company on September 1, 1999, as may be further
60-24    reduced on implementation of the universal service fund under
60-25    Chapter 56; or
60-26                (2)  the applicable rate described by Section 58.301 as
 61-1    may be further reduced on implementation of the universal service
 61-2    fund under Chapter 56.
 61-3          (b)  Notwithstanding Subchapter F, Chapter 60, but subject to
 61-4    Section 60.001, an electing company may, on its own initiative,
 61-5    decrease a rate charged for switched access service to any amount
 61-6    above the long run incremental cost of the service.
 61-7          Sec. 58.303.  SWITCHED ACCESS CHARGE STUDY.  (a)  Not later
 61-8    than November 1, 1999, the commission shall begin a review and
 61-9    evaluation of the rates for intrastate switched access service.
61-10    The review shall include an evaluation of at least the following
61-11    issues:
61-12                (1)  whether alternative rate structures for recovery
61-13    of switched access revenues are in the public interest and
61-14    competitively neutral; and
61-15                (2)  whether disparities in rates for switched access
61-16    service between local exchange companies are in the public
61-17    interest.
61-18          (b)  The commission shall file a report with the legislature
61-19    not later than January 1, 2001.  The report must include the
61-20    commission's recommendations on the issues reviewed and evaluated.
61-21          (c)  This section expires September 1, 2001.
61-22          SECTION 46.  Section 59.021, Utilities Code, is amended by
61-23    adding Subsection (c) to read as follows:
61-24          (c)  A company electing under this chapter may renew the
61-25    election for successive two-year periods.  An election that is
61-26    renewed under this subsection remains in effect until the earlier
 62-1    of the date that:
 62-2                (1)  the election expires because it was not renewed;
 62-3                (2)  the commission allows the company to withdraw its
 62-4    election under Section 59.022; or
 62-5                (3)  the legislature eliminates the incentive
 62-6    regulation authorized by this chapter and Chapter 58.
 62-7          SECTION 47.  Section 59.024, Utilities Code, is amended to
 62-8    read as follows:
 62-9          Sec. 59.024.  RATE CHANGES.  (a)  Except for the charges
62-10    permitted under Subchapter C, Chapter 55, Subchapter B, Chapter 56,
62-11    and Section 55.024, an electing company may not, [on or] before the
62-12    end of the company's election period under this chapter [sixth
62-13    anniversary of its election date], increase a rate previously
62-14    established for that company under this title unless the commission
62-15    approves the proposed change as authorized under Subsection (c) or
62-16    (d).
62-17          (b)  For purposes of Subsection (a), the company's previously
62-18    established rates are the rates charged by the company on its
62-19    election date without regard to a proceeding pending under:
62-20                (1)  Section 15.001;
62-21                (2)  Subchapter D, Chapter 53; or
62-22                (3)  Subchapter G, Chapter 2001, Government Code.
62-23          (c)  The commission, on motion of the electing company or on
62-24    its own motion, shall adjust prices for services to reflect changes
62-25    in Federal Communications Commission separations that affect
62-26    intrastate net income by at least 10 percent.
 63-1          (d)  Notwithstanding Subsection (a), the [The] commission, on
 63-2    request of the electing company, shall allow a rate group
 63-3    reclassification that results from access line growth.
 63-4          (e)  Section 58.059 applies to a rate change under this
 63-5    section.
 63-6          SECTION 48.  Section 59.025, Utilities Code, is amended to
 63-7    read as follows:
 63-8          Sec. 59.025.  SWITCHED ACCESS RATES.  Notwithstanding any
 63-9    other provision of this title, the commission may not, on the
63-10    commission's own motion, reduce an electing company's rates for
63-11    switched access services before the expiration of the election
63-12    [six-year] period prescribed by Section 59.024, but may approve a
63-13    reduction proposed by the electing company.
63-14          SECTION 49.  Subsection (a), Section 59.026, Utilities Code,
63-15    is amended to read as follows:
63-16          (a)  On or before the end [sixth anniversary] of the
63-17    company's election period [date], an electing company is not, under
63-18    any circumstances, subject to:
63-19                (1)  a complaint or hearing regarding the
63-20    reasonableness of the company's:
63-21                      (A)  rates;
63-22                      (B)  overall revenues;
63-23                      (C)  return on invested capital; or
63-24                      (D)  net income; or
63-25                (2)  a complaint that a rate is excessive.
63-26          SECTION 50.  Subchapter B, Chapter 59, Utilities Code, is
 64-1    amended by adding Sections 59.030, 59.031, and 59.032 to read as
 64-2    follows:
 64-3          Sec. 59.030.  NEW SERVICES.  (a)  An electing company may
 64-4    introduce a new service 10 days after providing an informational
 64-5    notice to the commission, to the office, and to any person who
 64-6    holds a certificate of operating authority in the electing
 64-7    company's certificated area or areas or who has an effective
 64-8    interconnection agreement with the electing company.
 64-9          (b)  An electing company shall price each new service at or
64-10    above the service's long run incremental cost.  The commission
64-11    shall allow a company serving fewer than one million access lines
64-12    to establish a service's long run incremental cost by adopting, at
64-13    that company's option, the cost studies of a larger company for
64-14    that service that has been accepted by the commission.
64-15          (c)  An affected person, the office on behalf of residential
64-16    or small commercial customers, or the commission may file a
64-17    complaint at the commission challenging whether the pricing by an
64-18    electing company of a new service is in compliance with Subsection
64-19    (b).
64-20          (d)  If a complaint is filed under Subsection (c), the
64-21    electing company has the burden of proving that the company set the
64-22    price for the new service in accordance with the applicable
64-23    provisions of this subchapter.  If the complaint is finally
64-24    resolved in favor of the complainant, the electing company:
64-25                (1)  shall, not later than the 10th day after the date
64-26    the complaint is finally resolved, amend the price of the service
 65-1    as necessary to comply with the final resolution; or
 65-2                (2)  may, at the company's option, discontinue the
 65-3    service.
 65-4          Sec. 59.031.  PRICING AND PACKAGING FLEXIBILITY.
 65-5    (a)  Notwithstanding Section 59.027(b) or Subchapter F, Chapter 60,
 65-6    an electing company may exercise pricing flexibility in accordance
 65-7    with this section, including the packaging of any regulated service
 65-8    such as basic local telecommunications service with any other
 65-9    regulated or unregulated service or any service of an affiliate.
65-10    The electing company may exercise pricing flexibility 10 days after
65-11    providing an informational notice to the commission, to the office,
65-12    and to any person who holds a certificate of operating authority in
65-13    the electing company's certificated area or areas or who has an
65-14    effective interconnection agreement with the electing company.
65-15    Pricing flexibility includes all pricing arrangements included in
65-16    the definition of "pricing flexibility" prescribed by Section
65-17    51.002(7) and includes packaging of regulated services with
65-18    unregulated services or any service of an affiliate.
65-19          (b)  An electing company, at the company's option, shall
65-20    price each regulated service offered separately or as part of a
65-21    package under Subsection (a) at either the service's tariffed rate
65-22    or at a rate not lower than the service's long run incremental
65-23    cost.  The commission shall allow a company serving fewer than one
65-24    million access lines to establish a service's long run incremental
65-25    cost by adopting, at that company's option, the cost studies of a
65-26    larger company for that service that have been accepted by the
 66-1    commission.
 66-2          (c)  An affected person, the office on behalf of residential
 66-3    or small commercial customers, or the commission may file a
 66-4    complaint alleging that an electing company has priced a regulated
 66-5    service in a manner that does not meet the pricing standards of
 66-6    this subchapter.  The complaint must be filed before the 31st day
 66-7    after the company implements the rate.
 66-8          Sec. 59.032.  CUSTOMER PROMOTIONAL OFFERINGS.  (a)  An
 66-9    electing company may offer a promotion for a regulated service for
66-10    not more than 90 days in any 12-month period.
66-11          (b)  The electing company shall file with the commission a
66-12    promotional offering that consists of:
66-13                (1)  waiver of installation charges or service order
66-14    charges, or both, for not more than 90 days in a 12-month period;
66-15    or
66-16                (2)  a temporary discount of not more than 25 percent
66-17    from the tariffed rate for not more than 60 days in a 12-month
66-18    period.
66-19          (c)  An electing company is not required to obtain commission
66-20    approval to make a promotional offering described by Subsection
66-21    (b).
66-22          (d)  An electing company may offer a promotion of any
66-23    regulated service as part of a package of services consisting of
66-24    any regulated service with any other regulated or unregulated
66-25    service or any service of an affiliate.
66-26          SECTION 51.  Section 60.042, Utilities Code, is amended to
 67-1    read as follows:
 67-2          Sec. 60.042.  PROHIBITED RESALE OR SHARING.  (a)  A provider
 67-3    of telecommunications service may not impose a restriction on the
 67-4    resale or sharing of a service:
 67-5                (1)  for which the provider is not a dominant provider;
 67-6    or
 67-7                (2)  entitled to regulatory treatment as a nonbasic
 67-8    [competitive] service under Subchapter E, Chapter 58, if the
 67-9    provider is a company electing regulation under Chapter 58.
67-10          (b)  An incumbent local exchange company must comply with the
67-11    resale provisions of 47 U.S.C. Section 251(c)(4), as amended,
67-12    unless exempted under 47 U.S.C. Section 251(f), as amended.
67-13          (c)  If a company electing under Chapter 58 offers basic or
67-14    nonbasic services regulated by the commission to its retail
67-15    customers as a promotional offering, the electing company shall
67-16    make those services available for resale by a certificated
67-17    telecommunications utility on terms that are no less favorable than
67-18    the terms on which the services are made available to retail
67-19    customers in accordance with this section.  For a promotion with a
67-20    duration of 90 days or less, the electing company's basic or
67-21    nonbasic services shall be made available to the certificated
67-22    telecommunications utility at the electing company's promotional
67-23    rate, without an avoided-cost discount.  For a promotion with a
67-24    duration of more than 90 days, the electing company's basic or
67-25    nonbasic services shall be made available to the certificated
67-26    telecommunications utility at a rate reflecting the avoided-cost
 68-1    discount, if any, from the promotional rate.
 68-2          SECTION 52.  Subchapter I, Chapter 60, Utilities Code, is
 68-3    amended by adding Sections 60.164 and 60.165 to read as follows:
 68-4          Sec. 60.164.  PERMISSIBLE JOINT MARKETING.  Except as
 68-5    prescribed in Chapters 61, 62, and 63, the commission may not adopt
 68-6    any rule or order that would prohibit a local exchange company from
 68-7    jointly marketing or selling its products and services with the
 68-8    products and services of any of its affiliates in any manner
 68-9    permitted by federal law or applicable rules or orders of the
68-10    Federal Communications Commission.
68-11          Sec. 60.165.  AFFILIATE RULE.  Except as prescribed in
68-12    Chapters 61, 62, and 63, the commission may not adopt any rule or
68-13    order that would prescribe for any local exchange company any
68-14    affiliate rule, including any accounting rule, any cost allocation
68-15    rule, or any structural separation rule, that is more burdensome
68-16    than federal law or applicable rules or orders of the Federal
68-17    Communications Commission.  Notwithstanding any other provision in
68-18    this title, the commission may not attribute or impute to a local
68-19    exchange company a price discount offered by an affiliate of the
68-20    local exchange company to the affiliate's customers.  This section
68-21    does not limit the authority of the commission to consider a
68-22    complaint brought under Subchapter A, Chapter 52, Section 53.003,
68-23    or this chapter.
68-24          SECTION 53.  Section 62.108, Utilities Code, is amended to
68-25    read as follows:
68-26          Sec. 62.108.  EXPIRATION.  This subchapter expires August 31,
 69-1    2005 [1999].
 69-2          SECTION 54.  Section 62.136, Utilities Code, is amended to
 69-3    read as follows:
 69-4          Sec. 62.136.  EXPIRATION.  This subchapter expires August 31,
 69-5    2005 [1999].
 69-6          SECTION 55.  Subtitle C, Title 2, Utilities Code, is amended
 69-7    by adding Chapter 64 to read as follows:
 69-8                     CHAPTER 64.  CUSTOMER PROTECTION
 69-9                     SUBCHAPTER A.  GENERAL PROVISIONS
69-10          Sec. 64.001.  CUSTOMER PROTECTION POLICY.  (a)  The
69-11    legislature finds that new developments in telecommunications
69-12    services, as well as changes in market structure, marketing
69-13    techniques, and technology, make it essential that customers have
69-14    safeguards against fraudulent, unfair, misleading, deceptive, or
69-15    anticompetitive business practices and against businesses that do
69-16    not have the technical and financial resources to provide adequate
69-17    service.
69-18          (b)  The purpose of this chapter is to establish customer
69-19    protection standards and confer on the commission authority to
69-20    adopt and enforce rules to protect customers from fraudulent,
69-21    unfair, misleading, deceptive, or anticompetitive practices.
69-22          (c)  Nothing in this section shall be construed to abridge
69-23    customer rights set forth in commission rules in effect at the time
69-24    of the enactment of this chapter.
69-25          (d)  This chapter does not limit the constitutional,
69-26    statutory, and common law authority of the office of the attorney
 70-1    general.
 70-2          Sec. 64.002.  DEFINITIONS.  In this chapter:
 70-3                (1)  "Billing agent" means any entity that submits
 70-4    charges to the billing utility on behalf of itself or any provider
 70-5    of a product or service.
 70-6                (2)  "Billing utility" means any telecommunications
 70-7    provider, as defined by Section 51.002, that issues a bill directly
 70-8    to a customer for any telecommunications product or service.
 70-9                (3)  "Certificated telecommunications utility" means a
70-10    telecommunications utility that has been granted either a
70-11    certificate of convenience and necessity, a certificate of
70-12    operating authority, or a service provider certificate of operating
70-13    authority.
70-14                (4)  "Customer" means any person in whose name
70-15    telephone service is billed, including individuals, governmental
70-16    units at all levels of government, corporate entities, and any
70-17    other entity with legal capacity to be billed for telephone
70-18    service.
70-19                (5)  "Service provider" means any entity that offers a
70-20    product or service to a customer and that directly or indirectly
70-21    charges to or collects from a customer's bill an amount for the
70-22    product or service on a customer's bill received from a billing
70-23    utility.
70-24                (6)  "Telecommunications utility" has the meaning
70-25    assigned by Section 51.002.
70-26          Sec. 64.003.  CUSTOMER AWARENESS.  (a)  The commission shall
 71-1    promote public awareness of changes in telecommunications markets,
 71-2    provide customers with information necessary to make informed
 71-3    choices about available options, and ensure that customers have an
 71-4    adequate understanding of their rights.
 71-5          (b)  The commission shall compile a report on customer
 71-6    service at least once each year showing the comparative customer
 71-7    information from reports given to the commission it deems
 71-8    necessary.
 71-9          (c)  The commission shall adopt and enforce rules to require
71-10    a certificated telecommunications utility to give clear, uniform,
71-11    and understandable information to customers about rates, terms,
71-12    services, customer rights, and other necessary information as
71-13    determined by the commission.
71-14          (d)  Customer awareness efforts by the commission shall be
71-15    conducted in English and Spanish and any other language as
71-16    necessary.
71-17          Sec. 64.004.  CUSTOMER PROTECTION STANDARDS.  (a)  All buyers
71-18    of telecommunications services are entitled to:
71-19                (1)  protection from fraudulent, unfair, misleading,
71-20    deceptive, or anticompetitive practices, including protection from
71-21    being billed for services that were not authorized or provided;
71-22                (2)  choice of a telecommunications service provider
71-23    and to have that choice honored;
71-24                (3)  information in English and Spanish and any other
71-25    language as the commission deems necessary concerning rates, key
71-26    terms, and conditions;
 72-1                (4)  protection from discrimination on the basis of
 72-2    race, color, sex, nationality, religion, marital status, income
 72-3    level, or source of income and from unreasonable discrimination on
 72-4    the basis of geographic location;
 72-5                (5)  impartial and prompt resolution of disputes with a
 72-6    certificated telecommunications utility and disputes with a
 72-7    telecommunications service provider related to unauthorized charges
 72-8    and switching of service;
 72-9                (6)  privacy of customer consumption and credit
72-10    information;
72-11                (7)  accuracy of billing;
72-12                (8)  bills presented in a clear, readable format and
72-13    easy-to-understand language;
72-14                (9)  information in English and Spanish and any other
72-15    language as the commission deems necessary concerning low-income
72-16    assistance programs and deferred payment plans;
72-17                (10)  all consumer protections and disclosures
72-18    established by the Fair Credit Reporting Act (15 U.S.C. Section
72-19    1681 et seq.) and the Truth in Lending Act (15 U.S.C. Section 1601
72-20    et seq.); and
72-21                (11)  programs that offer eligible low-income customers
72-22    an affordable rate package and bill payment assistance programs
72-23    designed to reduce uncollectible accounts.
72-24          (b)  The commission may adopt and enforce rules as necessary
72-25    or appropriate to carry out this section, including rules for
72-26    minimum service standards for a certificated telecommunications
 73-1    utility relating to customer deposits and the extension of credit,
 73-2    switching fees, termination of service, an affordable rate package,
 73-3    and bill payment assistance programs for low-income customers.  The
 73-4    commission may waive language requirements for good cause.
 73-5          (c)  The commission shall request the comments of the office
 73-6    of the attorney general in developing the rules that may be
 73-7    necessary or appropriate to carry out this section.
 73-8          (d)  The commission shall coordinate its enforcement efforts
 73-9    regarding the prosecution of fraudulent, misleading, deceptive, and
73-10    anticompetitive business practices with the office of the attorney
73-11    general in order to ensure consistent treatment of specific alleged
73-12    violations.
73-13          (e)  Nothing in this section shall be construed to abridge
73-14    customer rights set forth in commission rules in effect at the time
73-15    of the enactment of this chapter.
73-16                SUBCHAPTER B.  CERTIFICATION, REGISTRATION,
73-17                        AND REPORTING REQUIREMENTS
73-18          Sec. 64.051.  ADOPTION OF RULES.  (a)  The commission shall
73-19    adopt rules relating to certification, registration, and reporting
73-20    requirements for a certificated telecommunications utility, all
73-21    telecommunications utilities that are not dominant carriers, and
73-22    pay telephone providers.
73-23          (b)  The rules adopted under Subsection (a) shall be
73-24    consistent with and no less effective than federal law and may not
73-25    require the disclosure of highly sensitive competitive or trade
73-26    secret information.
 74-1          Sec. 64.052.  SCOPE OF RULES.  The commission may adopt and
 74-2    enforce rules to:
 74-3                (1)  require certification or registration with the
 74-4    commission as a condition of doing business in this state;
 74-5                (2)  amend certificates or registrations to reflect
 74-6    changed ownership and control;
 74-7                (3)  establish rules for customer service and
 74-8    protection;
 74-9                (4)  suspend or revoke certificates or registrations
74-10    for repeated violations of this chapter or commission rules, except
74-11    that the commission may not revoke a certificate of convenience and
74-12    necessity of a telecommunications utility except as provided by
74-13    Section 54.008; and
74-14                (5)  order disconnection of a pay telephone service
74-15    provider's pay telephones or revocation of certification or
74-16    registration for repeated violations of this chapter or commission
74-17    rules.
74-18          Sec. 64.053.  REPORTS.  The commission may require a
74-19    telecommunications service provider to submit reports to the
74-20    commission concerning any matter over which it has authority under
74-21    this chapter.
74-22                 SUBCHAPTER C.  CUSTOMER'S RIGHT TO CHOICE
74-23          Sec. 64.101.  POLICY.  It is the policy of this state that
74-24    all customers be protected from the unauthorized switching of a
74-25    telecommunications service provider selected by the customer to
74-26    provide service.
 75-1          Sec. 64.102.  RULES RELATING TO CHOICE.  The commission shall
 75-2    adopt and enforce rules that:
 75-3                (1)  ensure that customers are protected from deceptive
 75-4    practices employed in obtaining authorizations of service and in
 75-5    the verification of change orders, including negative option
 75-6    marketing, sweepstakes, and contests that cause customers to
 75-7    unknowingly change their telecommunications service provider;
 75-8                (2)  provide for clear, easily understandable
 75-9    identification, in each bill sent to a customer, of all
75-10    telecommunications service providers submitting charges on the
75-11    bill;
75-12                (3)  ensure that every service provider submitting
75-13    charges on the bill is clearly and easily identified on the bill
75-14    along with its services, products, and charges;
75-15                (4)  provide that unauthorized changes in service be
75-16    remedied at no cost to the customer within a period established by
75-17    the commission;
75-18                (5)  require refunds or credits to the customer in the
75-19    event of an unauthorized change; and
75-20                (6)  provide for penalties for violations of commission
75-21    rules adopted under this section, including fines and revocation of
75-22    certificates or registrations, by this action denying the
75-23    certificated telecommunications utility the right to provide
75-24    service in this state, except that the commission may not revoke a
75-25    certificate of convenience and necessity of a telecommunications
75-26    utility except as provided by Section 54.008.
 76-1          SUBCHAPTER D.  PROTECTION AGAINST UNAUTHORIZED CHARGES
 76-2          Sec. 64.151.  REQUIREMENTS FOR SUBMITTING CHARGES.  (a)  A
 76-3    service provider or billing agent may submit charges for a new
 76-4    product or service to be billed on a customer's telephone bill on
 76-5    or after the effective date of this section only if:
 76-6                (1)  the service provider offering the product or
 76-7    service has thoroughly informed the customer of the product or
 76-8    service being offered, including all associated charges, and has
 76-9    explicitly informed the customer that the associated charges for
76-10    the product or service will appear on the customer's telephone
76-11    bill;
76-12                (2)  the customer has clearly and explicitly consented
76-13    to obtain the product or service offered and to have the associated
76-14    charges appear on the customer's telephone bill and the consent has
76-15    been verified as provided by Subsection (b); and
76-16                (3)  the service provider offering the product or
76-17    service and any billing agent for the service provider:
76-18                      (A)  has provided the customer with a toll-free
76-19    telephone number the customer may call and an address to which the
76-20    customer may write to resolve any billing dispute and to answer
76-21    questions; and
76-22                      (B)  has contracted with the billing utility to
76-23    bill for products and services on the billing utility's bill as
76-24    provided by Subsection (c).
76-25          (b)  The customer consent required by Subsection (a)(2) must
76-26    be verified by the service provider offering the product or service
 77-1    by authorization from the customer.  A record of the customer
 77-2    consent, including verification, must be maintained by the service
 77-3    provider offering the product or service for a period of at least
 77-4    24 months immediately after the consent and verification have been
 77-5    obtained.  The method of obtaining customer consent and
 77-6    verification must include one or more of the following:
 77-7                (1)  written authorization from the customer;
 77-8                (2)  toll-free electronic authorization placed from the
 77-9    telephone number that is the subject of the product or service;
77-10                (3)  oral authorization obtained by an independent
77-11    third party; or
77-12                (4)  any other method of authorization approved by the
77-13    commission or the Federal Communications Commission.
77-14          (c)  The contract required by Subsection (a)(3)(B) must
77-15    include the service provider's name, business address, and business
77-16    telephone number and shall be maintained by the billing utility for
77-17    as long as the billing for the products and services continues and
77-18    for the 24 months immediately following the permanent
77-19    discontinuation of the billing.
77-20          (d)  A service provider offering a product or service to be
77-21    charged on a customer's telephone bill and any billing agent for
77-22    the service provider may not use any fraudulent, unfair,
77-23    misleading, deceptive, or anticompetitive marketing practice to
77-24    obtain customers, including the use of negative option marketing,
77-25    sweepstakes, and contests.
77-26          (e)  Unless verification is required by federal law or rules
 78-1    implementing federal law, Subsection (b) does not apply to
 78-2    customer-initiated transactions with a certificated
 78-3    telecommunications provider for which the service provider has the
 78-4    appropriate documentation.
 78-5          (f)  If a service provider is notified by a billing utility
 78-6    that a customer has reported to the billing utility that a charge
 78-7    made by the service provider is unauthorized, the service provider
 78-8    shall cease to charge the customer for the unauthorized product or
 78-9    service.
78-10          (g)  This section does not apply to message
78-11    telecommunications services charges that are initiated by dialing
78-12    1+, 0+, 0-, 1010XXX, or collect calls and charges for video
78-13    services if the service provider has the necessary call detail
78-14    record to establish the billing for the call or service.
78-15          Sec. 64.152.  RESPONSIBILITIES OF BILLING UTILITY.  (a)  If a
78-16    customer's telephone bill is charged for any product or service
78-17    without proper customer consent or verification, the billing
78-18    utility, on its knowledge or notification of any unauthorized
78-19    charge, shall promptly, not later than 45 days after the date of
78-20    knowledge or notification of the charge:
78-21                (1)  notify the service provider to cease charging the
78-22    customer for the unauthorized product or service;
78-23                (2)  remove any unauthorized charge from the customer's
78-24    bill;
78-25                (3)  refund or credit to the customer all money that
78-26    has been paid by the customer for any unauthorized charge, and if
 79-1    the unauthorized charge is not adjusted within three billing
 79-2    cycles, shall pay interest on the amount of the unauthorized
 79-3    charge;
 79-4                (4)  on the customer's request, provide the customer
 79-5    with all billing records under its control related to any
 79-6    unauthorized charge within 15 business days after the date of the
 79-7    removal of the unauthorized charge from the customer's bill; and
 79-8                (5)  maintain for at least 24 months a record of every
 79-9    customer who has experienced any unauthorized charge for a product
79-10    or service on the customer's telephone bill and who has notified
79-11    the billing utility of the unauthorized charge.
79-12          (b)  A record required by Subsection (a)(5) shall contain for
79-13    each unauthorized charge:
79-14                (1)  the name of the service provider that offered the
79-15    product or service;
79-16                (2)  any affected telephone numbers or addresses;
79-17                (3)  the date the customer requested that the billing
79-18    utility remove the unauthorized charge;
79-19                (4)  the date the unauthorized charge was removed from
79-20    the customer's telephone bill; and
79-21                (5)  the date any money that the customer paid for the
79-22    unauthorized charges was refunded or credited to the customer.
79-23          (c)  A billing utility may not:
79-24                (1)  disconnect or terminate telecommunications service
79-25    to any customer for nonpayment of an unauthorized charge; or
79-26                (2)  file an unfavorable credit report against a
 80-1    customer who has not paid charges the customer has alleged were
 80-2    unauthorized unless the dispute regarding the unauthorized charge
 80-3    is ultimately resolved against the customer, except that the
 80-4    customer shall remain obligated to pay any charges that are not in
 80-5    dispute, and this subsection does not apply to those undisputed
 80-6    charges.
 80-7          Sec. 64.153.  RECORDS OF DISPUTED CHARGES.  (a)  Every
 80-8    service provider shall maintain a record of every disputed charge
 80-9    for a product or service placed on a customer's bill.
80-10          (b)  The record required under Subsection (a) shall contain
80-11    for every disputed charge:
80-12                (1)  any affected telephone numbers or addresses;
80-13                (2)  the date the customer requested that the billing
80-14    utility remove the unauthorized charge;
80-15                (3)  the date the unauthorized charge was removed from
80-16    the customer's telephone bill; and
80-17                (4)  the date action was taken to refund or credit to
80-18    the customer any money that the customer paid for the unauthorized
80-19    charges.
80-20          (c)  The record required by Subsection (a) shall be
80-21    maintained for at least 24 months following the completion of all
80-22    steps required by Section 64.152(a).
80-23          Sec. 64.154.  NOTICE.  (a)  A billing utility shall provide
80-24    notice of a customer's rights under this section in the manner
80-25    prescribed by the commission.
80-26          (b)  Notice of a customer's rights must be provided by mail
 81-1    to each residential and retail business customer within 60 days of
 81-2    the effective date of this section or by inclusion in the
 81-3    publication of the telephone directory next following the effective
 81-4    date of this section.  In addition, each billing utility shall send
 81-5    the notice to new customers at the time service is initiated or to
 81-6    any customer at that customer's request.
 81-7          Sec. 64.155.  PROVIDING COPY OF RECORDS.  A billing utility
 81-8    shall provide a copy of records maintained under Sections
 81-9    64.151(c), 64.152, and 64.154 to the commission staff on request.
81-10    A service provider shall provide a copy of records maintained under
81-11    Sections 64.151(b) and 64.153 to the commission on request.
81-12          Sec. 64.156.  VIOLATIONS.  (a)  If the commission finds that
81-13    a billing utility violated this subchapter, the commission may
81-14    implement penalties and other enforcement actions under Chapter 15.
81-15          (b)  If the commission finds that any other service provider
81-16    or billing agent subject to this subchapter has violated this
81-17    subchapter or has knowingly provided false information to the
81-18    commission on matters subject to this subchapter, the commission
81-19    may enforce the provisions of Chapter 15 against the service
81-20    provider or billing agent as if it were regulated by the
81-21    commission.
81-22          (c)  Neither the authority granted under this section nor any
81-23    other provision of this subchapter shall be construed to grant the
81-24    commission jurisdiction to regulate service providers or billing
81-25    agents who are not otherwise subject to commission regulation,
81-26    other than as specifically provided by this chapter.
 82-1          (d)  If the commission finds that a billing utility or
 82-2    service provider repeatedly violates this subchapter, the
 82-3    commission may, if the action is consistent with the public
 82-4    interest, suspend, restrict, or revoke the registration or
 82-5    certificate of the telecommunications service provider, by this
 82-6    action denying the telecommunications service provider the right to
 82-7    provide service in this state, except that the commission may not
 82-8    revoke a certificate of convenience and necessity of a
 82-9    telecommunications utility except as provided by Section 54.008.
82-10          (e)  If the commission finds that a service provider or
82-11    billing agent has repeatedly violated any provision of this
82-12    subchapter, the commission may order the billing utility to
82-13    terminate billing and collection services for that service provider
82-14    or billing agent.
82-15          (f)  Nothing in this subchapter shall be construed to
82-16    preclude a billing utility from taking action on its own to
82-17    terminate or restrict its billing and collection services.
82-18          Sec. 64.157.  DISPUTES.  (a) The commission may resolve
82-19    disputes between a retail customer and a billing utility, service
82-20    provider, or telecommunications utility.
82-21          (b)  In exercising its authority under Subsection (a), the
82-22    commission may:
82-23                (1)  order a billing utility or service provider to
82-24    produce information or records;
82-25                (2)  require that all contracts, bills, and other
82-26    communications from a billing utility or service provider display a
 83-1    working toll-free telephone number that customers may call with
 83-2    complaints and inquiries;
 83-3                (3)  require a billing utility or service provider to
 83-4    refund or credit overcharges or unauthorized charges with interest
 83-5    if the billing utility or service provider has failed to comply
 83-6    with commission rules or a contract with the customer;
 83-7                (4)  order appropriate relief to ensure that a
 83-8    customer's choice of a telecommunications service provider is
 83-9    honored;
83-10                (5)  require the continuation of service to a
83-11    residential or small commercial customer while a dispute is pending
83-12    regarding charges the customer has alleged were unauthorized; and
83-13                (6)  investigate an alleged violation.
83-14          (c)  The commission shall adopt procedures for the resolution
83-15    of disputes in a timely manner, which in no event shall exceed 60
83-16    days.
83-17          Sec. 64.158.  CONSISTENCY WITH FEDERAL LAW.  Rules adopted by
83-18    the commission under this subchapter shall be consistent with and
83-19    not more burdensome than applicable federal laws and rules.
83-20          SECTION 56.  Section 55.012, Utilities Code, as added by this
83-21    Act, takes effect March 1, 2000.
83-22          SECTION 57.  The following provisions of the Utilities Code
83-23    are repealed:
83-24                (1)  Section 58.062; and
83-25                (2)  Subchapter D, Chapter 58.
83-26          SECTION 58.  This Act takes effect September 1, 1999.
                                                                S.B. No. 560
 84-1          SECTION 59.  The importance of this legislation and the
 84-2    crowded condition of the calendars in both houses create an
 84-3    emergency and an imperative public necessity that the
 84-4    constitutional rule requiring bills to be read on three several
 84-5    days in each house be suspended, and this rule is hereby suspended,
 84-6    and that this Act take effect and be in force according to its
 84-7    terms, and it is so enacted.
         ________________________________   ________________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 560 passed the Senate on
         April 16, 1999, by the following vote:  Yeas 30, Nays 0;
         May 27, 1999, Senate refused to concur in House amendments and
         requested appointment of Conference Committee; May 28, 1999, House
         granted request of the Senate; May 30, 1999, Senate adopted
         Conference Committee Report by the following vote:  Yeas 30,
         Nays 0.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 560 passed the House, with
         amendments, on May 25, 1999, by a non-record vote; May 28, 1999,
         House granted request of the Senate for appointment of Conference
         Committee; May 30, 1999, House adopted Conference Committee Report
         by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         ________________________________
                      Date
         ________________________________
                    Governor