By Chisum, Hardcastle, Turner of Coleman,             H.B. No. 2388
         77R11587 CBH-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the provision of telecommunications services to
 1-3     permanent residential or business premises that are not included in
 1-4     a certificated service area.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 56.001, Utilities Code, is amended to read
 1-7     as follows:
 1-8           Sec. 56.001.  DEFINITIONS [DEFINITION]. In this chapter:
 1-9                 (1)  "Department" [, "department"] means the Texas
1-10     Department of Human Services.
1-11                 (2)  "Designated provider" means a telecommunications
1-12     provider designated by the commission to provide services to an
1-13     uncertificated area under Subchapter F.
1-14           SECTION 2. Section 56.021, Utilities Code, is amended to read
1-15     as follows:
1-16           Sec. 56.021.  UNIVERSAL SERVICE FUND ESTABLISHED. The
1-17     commission shall adopt and enforce rules requiring local exchange
1-18     companies to establish a universal service fund to:
1-19                 (1)  assist telecommunications providers in providing
1-20     basic local telecommunications service at reasonable rates in high
1-21     cost rural areas;
1-22                 (2)  reimburse telecommunications providers for revenue
1-23     lost by providing tel-assistance service under Subchapter C;
1-24                 (3)  reimburse the telecommunications carrier that
1-25     provides the statewide telecommunications relay access service
 2-1     under Subchapter D;
 2-2                 (4)  finance the specialized telecommunications
 2-3     assistance program established under Subchapter E;
 2-4                 (5)  reimburse the department, the Texas Commission for
 2-5     the Deaf and Hard of Hearing, and the commission for costs incurred
 2-6     in implementing this chapter and Chapter 57; [and]
 2-7                 (6)  reimburse a telecommunications carrier providing
 2-8     lifeline service as provided by 47 C.F.R. Part 54, Subpart E, as
 2-9     amended; and
2-10                 (7)  reimburse a designated provider under Subchapter
2-11     F.
2-12           SECTION 3. Section 56.023, Utilities Code, is amended by
2-13     amending Subsections (b) and (c) and adding Subsection (d) to read
2-14     as follows:
2-15           (b)  The eligibility criteria must require that a
2-16     telecommunications provider, in compliance with the commission's
2-17     quality of service requirements:
2-18                 (1)  offer service to each consumer within the
2-19     company's certificated area and to any permanent residential or
2-20     business premises to which the company is designated to provide
2-21     services under Subchapter F; and
2-22                 (2)  render continuous and adequate service within the
2-23     company's certificated area and to any permanent residential or
2-24     business premises to which the company is designated to provide
2-25     services under Subchapter F.
2-26           (c)  A company designated under Subchapter F to provide
2-27     services to permanent residential or business premises within an
 3-1     uncertificated area and that complies with Subsection (b) shall
 3-2     receive universal service fund distributions to assist the provider
 3-3     in providing those services.  In addition, the commission shall
 3-4     designate the provider as an eligible telecommunications carrier
 3-5     under 47 U.S.C. Section 214(e)(2), as amended, for those permanent
 3-6     residential or business premises.
 3-7           (d)  The commission shall adopt rules for the administration
 3-8     of the universal service fund and this chapter and may act as
 3-9     necessary and convenient to administer the fund and this chapter.
3-10           SECTION 4. Chapter 56, Utilities Code, is amended by adding
3-11     Subchapter F to read as follows:
3-12                SUBCHAPTER F.  SERVICE TO UNCERTIFICATED AREA
3-13           Sec. 56.201.  DEFINITION. In this subchapter, "permanent
3-14     residential or business premises" means a premises that has
3-15     permanent facilities for water, wastewater, and  electricity.
3-16           Sec. 56.202.  DESIGNATION OF PROVIDER. (a)  Notwithstanding
3-17     Section 54.001, the commission may designate a telecommunications
3-18     provider under this section to provide voice-grade services to
3-19     permanent residential or business premises that are not included
3-20     within the certificated area of a holder of a certificate of
3-21     convenience and necessity.
3-22           (b)  The commission may designate a provider only if the
3-23     provider is otherwise eligible to receive universal service funds
3-24     under Section 56.023(b).
3-25           Sec. 56.203.  PETITION FOR SERVICE. Persons residing in
3-26     permanent residential premises or owners of permanent residential
3-27     or business premises that are not included within the certificated
 4-1     area of a holder of a certificate of convenience and necessity may
 4-2     petition the commission to designate a telecommunications provider
 4-3     to provide to those premises voice-grade services supported by
 4-4     state and federal universal service support mechanisms.
 4-5           Sec. 56.204.  CONTENTS OF PETITION. (a)  A petition for
 4-6     designation of a service provider must:
 4-7                 (1)  state with reasonable particularity the locations
 4-8     of the permanent residential or business premises for which the
 4-9     petitioners are requesting service;
4-10                 (2)  establish that those locations are within
4-11     reasonable proximity to one another so that the petitioners possess
4-12     a sufficient community of interest to warrant the designation of a
4-13     provider and the expenditure of universal service funds necessary
4-14     to establish service;
4-15                 (3)  except as provided by Subsection (b), be signed by
4-16     at least five persons who:
4-17                       (A)  are not members of the same household;
4-18                       (B)  reside in the permanent residential premises
4-19     or are the owners of the permanent residential or business premises
4-20     for which service is sought and that are not located within a
4-21     certificated area;
4-22                       (C)  want service to those premises; and
4-23                       (D)  commit to pay the aid to construction
4-24     charges for service to those premises as determined by the
4-25     commission;
4-26                 (4)  nominate as potential providers of service not
4-27     more than five telecommunications providers serving territory that
 5-1     is contiguous to the location of the permanent residential or
 5-2     business premises using wireless or wireline facilities, resale, or
 5-3     unbundled network elements; and
 5-4                 (5)  include as an attachment or an appendix
 5-5     documentation indicating the required residence or ownership,
 5-6     including a state-issued license or identification, tax records,
 5-7     deeds, or voter registration materials.
 5-8           (b)  The commission may accept a petition that is signed by
 5-9     fewer than five persons if a petitioner provides an affidavit
5-10     stating that the petitioners have taken all reasonable steps to
5-11     secure the signatures of the residents of permanent residential
5-12     premises or the owners of permanent residential or business
5-13     premises within reasonably close proximity to the petitioning
5-14     premises who are not receiving telephone service when the petition
5-15     is filed and who want telephone service initiated.
5-16           Sec. 56.205.  HEARING. If the commission finds that the
5-17     petition complies with Section 56.204, the commission shall hold an
5-18     evidentiary hearing to determine if a telecommunications provider
5-19     is willing to be designated to provide service to those premises
5-20     or, if a provider is not willing to be designated, to determine the
5-21     telecommunications provider that is best able to serve those
5-22     premises under the criteria prescribed by this subchapter.
5-23           Sec. 56.206.  DENIAL OF PETITION. The commission shall deny a
5-24     petition if the commission determines that services cannot be
5-25     extended to the petitioning premises at a reasonable cost.  In
5-26     making that determination, the commission shall consider all
5-27     relevant factors, including:
 6-1                 (1)  the original cost to be incurred by a designated
 6-2     provider to deploy service to the petitioning premises, and the
 6-3     effect of reimbursement of those costs on the state universal
 6-4     service fund;
 6-5                 (2)  the number of access lines requested by the
 6-6     petitioners for the petitioning premises;
 6-7                 (3)  the size of the geographic territory in which the
 6-8     petitioning premises are included;
 6-9                 (4)  the proximity of existing facilities and the
6-10     existence of a preferred designated provider under Section 56.213;
6-11     and
6-12                 (5)  any technical barriers to the provision of
6-13     service.
6-14           Sec. 56.207.  ORDER. In any order granting a petition, the
6-15     commission shall:
6-16                 (1)  approve the facilities to be deployed based on the
6-17     estimated costs of deployment submitted in accordance with Section
6-18     56.208(a);
6-19                 (2)  approve the amount of original cost of deployment
6-20     to be recovered from the state universal service fund and the terms
6-21     of original cost recovery under Section 56.209; and
6-22                 (3)  approve the recurring cost recovery under Section
6-23     56.209, including the monthly rate for services and the monthly per
6-24     line fee to be recovered from the state universal service fund
6-25     under that section.
6-26           Sec. 56.208.  DESIGNATION OF PROVIDER. (a)  In determining
6-27     which nominated telecommunications provider the commission will
 7-1     designate to provide service to the petitioning premises, the
 7-2     commission shall consider the relative estimated cost to be
 7-3     incurred by contiguous providers to serve the petitioning premises
 7-4     and give preference to the provider having the least cost
 7-5     technology that meets the quality of service standards prescribed
 7-6     by the commission applicable to that provider.
 7-7           (b)  The commission may not designate a telecommunications
 7-8     provider to serve the petitioning premises unless the premises are
 7-9     located in an area that is contiguous to an area in which the
7-10     telecommunications provider has previously been designated eligible
7-11     to receive universal service funding under Section 56.023(b). This
7-12     subsection does not apply if the commission designates the provider
7-13     after the provider voluntarily agrees to provide service to the
7-14     petitioning premises.
7-15           Sec. 56.209.  RECOVERY OF COSTS. (a)  If, after a hearing,
7-16     the commission designates a telecommunications provider to serve
7-17     the petitioning premises, the commission shall permit the
7-18     designated provider to recover from the state universal service
7-19     fund the provider's actual costs of providing service to the
7-20     premises, including the provider's original cost of deployment and
7-21     actual recurring costs.
7-22           (b)  The reimbursable original cost of deploying facilities
7-23     to the petitioning premises is the original cost of the
7-24     telecommunications provider's facilities installed in, or upgraded
7-25     to permit the provision of service to, the petitioning premises as
7-26     determined by the financial accounting standards applicable to the
7-27     provider, including an amount for the recovery of all costs that
 8-1     are typically included as capital costs for accounting purposes,
 8-2     that are not recovered through an aid to construction charge
 8-3     assessed to the petitioners.  The final order permitting or
 8-4     requiring the designated provider to provide service to the
 8-5     petitioning premises  shall ensure that all the original cost of
 8-6     the provider shall be amortized and recovered from the state
 8-7     universal service fund, together with interest at the prevailing
 8-8     commercial lending rate:
 8-9                 (1)  not later than the third anniversary of the date
8-10     of the order, for a deployment with an original cost of $1 million
8-11     or less;
8-12                 (2)  not later than the fifth anniversary of the date
8-13     of the order, for a deployment with an original cost of more than
8-14     $1 million, but not more than $2 million; and
8-15                 (3)  not later than the seventh anniversary of the date
8-16     of the order, for a deployment with an original cost of more than
8-17     $2 million.
8-18           (c)  The designated provider shall recover the provider's
8-19     actual recurring costs of service, including maintenance and the
8-20     ongoing operational costs of providing service after deployment of
8-21     the facilities to the petitioning premises and a reasonable
8-22     operating margin, from:
8-23                 (1)  the monthly rate charged the customer; and
8-24                 (2)  a monthly per line state universal service fund
8-25     payment in an amount equal to the unrecovered recurring costs
8-26     incurred in providing service divided by the access lines served in
8-27     the petitioning premises.
 9-1           (d)  The monthly per line fee established under Subsection
 9-2     (c) is in addition to the universal service funds associated with
 9-3     the recovery of the original cost of deployment and interest
 9-4     authorized by Subsection (b) and in addition to the universal
 9-5     service funds the designated provider receives to provide service
 9-6     in other areas of this state.
 9-7           (e)  The commission may not authorize or require any services
 9-8     to be provided to petitioning premises under this subchapter during
 9-9     a fiscal year if the total amount of required reimbursements of
9-10     actual original cost of deployment to all approved petitioning
9-11     premises under this section, together with interest, including
9-12     obligations for reimbursements from preceding years, would equal an
9-13     amount that exceeds 0.02 percent of the annual gross revenues
9-14     reported to the state universal service fund during the preceding
9-15     fiscal year.
9-16           Sec. 56.210.  AID TO CONSTRUCTION CHARGE; CONTRACT FOR
9-17     SERVICES. The commission shall establish a reasonable aid to
9-18     construction charge, not to exceed $3,000, to be assessed each
9-19     petitioner. The commission may not require a designated provider to
9-20     begin construction until:
9-21                 (1)  each petitioner has paid or executed an agreement
9-22     acceptable to the provider to pay the aid to construction charge;
9-23     and
9-24                 (2)  each petitioner has executed an assignable
9-25     agreement for subscription to basic local service to the
9-26     petitioning premises from the designated provider for a period at
9-27     least equal to the period during which the provider will receive
 10-1    reimbursement for the original cost of deployment under Section
 10-2    56.209(b).
 10-3          Sec. 56.211.  PERMANENT PREMISES REQUIRED. A
 10-4    telecommunications provider may not under any circumstances be
 10-5    required to extend service to a location that is not a permanent
 10-6    residential or business premises or be required to provide service
 10-7    to the petitioning premises before the 180th day after the date the
 10-8    provider was designated to provide service to the petitioning
 10-9    premises.
10-10          Sec. 56.212.  SUBSEQUENT RELATED PETITIONS. (a)  If the
10-11    commission approves a petition requesting service, residents of
10-12    permanent residential premises or owners of permanent residential
10-13    or business premises in reasonable proximity to the premises that
10-14    were the subject of an approved petition who did not sign the prior
10-15    petition requesting service are not entitled to receive service
10-16    under this subchapter until the fifth anniversary of the date the
10-17    prior petition was filed unless the residents or owners file a new
10-18    petition under this subchapter and agree to pay aid to construction
10-19    charges on the same terms as applicable to the prior petitioners.
10-20          (b)  The designated provider shall receive reimbursement for
10-21    the original cost of deployment and actual recurring costs of
10-22    providing service to those additional residents in the same manner
10-23    as the provider received reimbursement of those costs in relation
10-24    to the prior petitioners.  The provider may not receive
10-25    reimbursement for the original cost of deployment under a
10-26    subsequent petition if the provider previously received complete
10-27    reimbursement for those costs from the state universal service
 11-1    fund.  If the state universal service fund has completely
 11-2    reimbursed the original cost of deployment as provided by this
 11-3    subchapter, each subsequent petitioner must pay into the state
 11-4    universal service fund an amount equal to the aid to construction
 11-5    charge paid by each prior petitioner.
 11-6          Sec. 56.213.  PREFERRED PROVIDER. (a)  A provider who is
 11-7    designated to serve petitioning premises located within an
 11-8    uncertificated area under this subchapter is the preferred provider
 11-9    for any permanent residential or business premises in reasonable
11-10    proximity to those petitioning premises for later petitions filed
11-11    under Section 56.212.
11-12          (b)  A preferred designated provider is entitled to an
11-13    opportunity for a hearing under Section 56.205 on a petition filed
11-14    under Section 56.203.
11-15          Sec. 56.214.  CERTIFICATE NOT AMENDED. The designation of a
11-16    provider to serve permanent residential or business premises within
11-17    an uncertificated area under this subchapter does not have the
11-18    effect of:
11-19                (1)  amending the boundaries of the provider's
11-20    certificate to provide local exchange service; or
11-21                (2)  imposing carrier of last resort responsibilities
11-22    on the provider.
11-23          SECTION 5. Section 51.002(10), Utilities Code, as amended by
11-24    Chapters 1212 and 1579, Acts of the 76th Legislature, Regular
11-25    Session, 1999, is reenacted and amended to read as follows:
11-26                (10)  "Telecommunications provider":
11-27                      (A)  means:
 12-1                            (i)  a certificated telecommunications
 12-2    utility;
 12-3                            (ii)  a shared tenant service provider;
 12-4                            (iii)  a nondominant carrier of
 12-5    telecommunications services;
 12-6                            (iv)  a provider of commercial mobile
 12-7    service as defined by Section 332(d), Communications Act of 1934
 12-8    (47 U.S.C. Section 151 et seq.), Federal Communications Commission
 12-9    rules, and the Omnibus Budget Reconciliation Act of 1993 (Public
12-10    Law 103-66), except that the term does not include these entities
12-11    for the purposes of Chapter 17, 55, or 64;
12-12                            (v)  a telecommunications entity that
12-13    provides central office based PBX-type sharing or resale
12-14    arrangements;
12-15                            (vi)  an interexchange telecommunications
12-16    carrier;
12-17                            (vii)  a specialized common carrier;
12-18                            (viii)  a reseller of communications;
12-19                            (ix)  a provider of operator services;
12-20                            (x)  a provider of customer-owned pay
12-21    telephone service; or
12-22                            (xi)  a [another] person or entity
12-23    determined by the commission to provide telecommunications services
12-24    to customers in this state; and
12-25                      (B)  does not mean:
12-26                            (i)  a provider of enhanced or information
12-27    services, or another user of telecommunications services, who does
 13-1    not also provide telecommunications services; or
 13-2                            (ii)  a state agency or state institution
 13-3    of higher education, or a service provided by a state agency or
 13-4    state institution of higher education.
 13-5          SECTION 6. This Act takes effect September 1, 2001.