1-1     By:  Chisum, et al. (Senate Sponsor - Bivins)         H.B. No. 2388
 1-2           (In the Senate - Received from the House May 11, 2001;
 1-3     May 11, 2001, read first time and referred to Committee on Business
 1-4     and Commerce; May 11, 2001, reported favorably by the following
 1-5     vote:  Yeas 4, Nays 0; May 11, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the provision of telecommunications services to
 1-9     permanent residential or business premises that are not included in
1-10     a certificated service area.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1. Section 56.001, Utilities Code, is amended to read
1-13     as follows:
1-14           Sec. 56.001.  DEFINITIONS [DEFINITION]. In this chapter:
1-15                 (1)  "Department" [, "department"] means the Texas
1-16     Department of Human Services.
1-17                 (2)  "Designated provider" means a telecommunications
1-18     provider designated by the commission to provide services to an
1-19     uncertificated area under Subchapter F.
1-20           SECTION 2. Section 56.021, Utilities Code, is amended to read
1-21     as follows:
1-22           Sec. 56.021.  UNIVERSAL SERVICE FUND ESTABLISHED. The
1-23     commission shall adopt and enforce rules requiring local exchange
1-24     companies to establish a universal service fund to:
1-25                 (1)  assist telecommunications providers in providing
1-26     basic local telecommunications service at reasonable rates in high
1-27     cost rural areas;
1-28                 (2)  reimburse telecommunications providers for revenue
1-29     lost by providing tel-assistance service under Subchapter C;
1-30                 (3)  reimburse the telecommunications carrier that
1-31     provides the statewide telecommunications relay access service
1-32     under Subchapter D;
1-33                 (4)  finance the specialized telecommunications
1-34     assistance program established under Subchapter E;
1-35                 (5)  reimburse the department, the Texas Commission for
1-36     the Deaf and Hard of Hearing, and the commission for costs incurred
1-37     in implementing this chapter and Chapter 57; [and]
1-38                 (6)  reimburse a telecommunications carrier providing
1-39     lifeline service as provided by 47 C.F.R. Part 54, Subpart E, as
1-40     amended; and
1-41                 (7)  reimburse a designated provider under Subchapter
1-42     F.
1-43           SECTION 3. Section 56.023, Utilities Code, is amended by
1-44     amending Subsections (b) and (c) and adding Subsection (d) to read
1-45     as follows:
1-46           (b)  The eligibility criteria must require that a
1-47     telecommunications provider, in compliance with the commission's
1-48     quality of service requirements:
1-49                 (1)  offer service to each consumer within the
1-50     company's certificated area and to any permanent residential or
1-51     business premises to which the company is designated to provide
1-52     services under Subchapter F; and
1-53                 (2)  render continuous and adequate service within the
1-54     company's certificated area and to any permanent residential or
1-55     business premises to which the company is designated to provide
1-56     services under Subchapter F.
1-57           (c)  A company designated under Subchapter F to provide
1-58     services to permanent residential or business premises within an
1-59     uncertificated area and that complies with Subsection (b) shall
1-60     receive universal service fund distributions to assist the provider
1-61     in providing those services.  In addition, the commission shall
1-62     designate the provider as an eligible telecommunications carrier
1-63     under 47 U.S.C. Section 214(e)(2), as amended, for those permanent
1-64     residential or business premises.
 2-1           (d)  The commission shall adopt rules for the administration
 2-2     of the universal service fund and this chapter and may act as
 2-3     necessary and convenient to administer the fund and this chapter.
 2-4           SECTION 4. Chapter 56, Utilities Code, is amended by adding
 2-5     Subchapter F to read as follows:
 2-6                SUBCHAPTER F.  SERVICE TO UNCERTIFICATED AREA
 2-7           Sec. 56.201.  DEFINITION. In this subchapter, "permanent
 2-8     residential or business premises" means a premises that has
 2-9     permanent facilities for water, wastewater, and  electricity.
2-10           Sec. 56.202.  DESIGNATION OF PROVIDER. (a)  Notwithstanding
2-11     Section 54.001, the commission may designate a telecommunications
2-12     provider under this section to provide voice-grade services to
2-13     permanent residential or business premises that are not included
2-14     within the certificated area of a holder of a certificate of
2-15     convenience and necessity.
2-16           (b)  The commission may designate a provider only if the
2-17     provider is otherwise eligible to receive universal service funds
2-18     under Section 56.023(b).
2-19           Sec. 56.203.  PETITION FOR SERVICE. Persons residing in
2-20     permanent residential premises or owners of permanent residential
2-21     or business premises that are not included within the certificated
2-22     area of a holder of a certificate of convenience and necessity may
2-23     petition the commission to designate a telecommunications provider
2-24     to provide to those premises voice-grade services supported by
2-25     state and federal universal service support mechanisms.
2-26           Sec. 56.204.  CONTENTS OF PETITION. (a)  A petition for
2-27     designation of a service provider must:
2-28                 (1)  state with reasonable particularity the locations
2-29     of the permanent residential or business premises for which the
2-30     petitioners are requesting service;
2-31                 (2)  establish that those locations are within
2-32     reasonable proximity to one another so that the petitioners possess
2-33     a sufficient community of interest to warrant the designation of a
2-34     provider and the expenditure of universal service funds necessary
2-35     to establish service;
2-36                 (3)  except as provided by Subsection (b), be signed by
2-37     at least five persons who:
2-38                       (A)  are not members of the same household;
2-39                       (B)  reside in the permanent residential premises
2-40     or are the owners of the permanent residential or business premises
2-41     for which service is sought and that are not located within a
2-42     certificated area;
2-43                       (C)  want service to those premises; and
2-44                       (D)  commit to pay the aid to construction
2-45     charges for service to those premises as determined by the
2-46     commission;
2-47                 (4)  nominate as potential providers of service not
2-48     more than five telecommunications providers serving territory that
2-49     is contiguous to the location of the permanent residential or
2-50     business premises using wireless or wireline facilities, resale, or
2-51     unbundled network elements; and
2-52                 (5)  include as an attachment or an appendix
2-53     documentation indicating the required residence or ownership,
2-54     including a state-issued license or identification, tax records,
2-55     deeds, or voter registration materials.
2-56           (b)  The commission may accept a petition that is signed by
2-57     fewer than five persons if a petitioner provides an affidavit
2-58     stating that the petitioners have taken all reasonable steps to
2-59     secure the signatures of the residents of permanent residential
2-60     premises or the owners of permanent residential or business
2-61     premises within reasonably close proximity to the petitioning
2-62     premises who are not receiving telephone service when the petition
2-63     is filed and who want telephone service initiated.
2-64           Sec. 56.205.  HEARING. If the commission finds that the
2-65     petition complies with Section 56.204, the commission shall hold an
2-66     evidentiary hearing to determine if a telecommunications provider
2-67     is willing to be designated to provide service to those premises
2-68     or, if a provider is not willing to be designated, to determine the
2-69     telecommunications provider that is best able to serve those
 3-1     premises under the criteria prescribed by this subchapter.
 3-2           Sec. 56.206.  DENIAL OF PETITION. The commission shall deny a
 3-3     petition if the commission determines that services cannot be
 3-4     extended to the petitioning premises at a reasonable cost.  In
 3-5     making that determination, the commission shall consider all
 3-6     relevant factors, including:
 3-7                 (1)  the original cost to be incurred by a designated
 3-8     provider to deploy service to the petitioning premises, and the
 3-9     effect of reimbursement of those costs on the state universal
3-10     service fund;
3-11                 (2)  the number of access lines requested by the
3-12     petitioners for the petitioning premises;
3-13                 (3)  the size of the geographic territory in which the
3-14     petitioning premises are included;
3-15                 (4)  the proximity of existing facilities and the
3-16     existence of a preferred designated provider under Section 56.213;
3-17     and
3-18                 (5)  any technical barriers to the provision of
3-19     service.
3-20           Sec. 56.207.  ORDER. In any order granting a petition, the
3-21     commission shall:
3-22                 (1)  approve the facilities to be deployed based on the
3-23     estimated costs of deployment submitted in accordance with Section
3-24     56.208(a);
3-25                 (2)  approve the amount of original cost of deployment
3-26     to be recovered from the state universal service fund and the terms
3-27     of original cost recovery under Section 56.209; and
3-28                 (3)  approve the recurring cost recovery under Section
3-29     56.209, including the monthly rate for services and the monthly per
3-30     line fee to be recovered from the state universal service fund
3-31     under that section.
3-32           Sec. 56.208.  DESIGNATION OF PROVIDER. (a)  In determining
3-33     which nominated telecommunications provider the commission will
3-34     designate to provide service to the petitioning premises, the
3-35     commission shall consider the relative estimated cost to be
3-36     incurred by contiguous providers to serve the petitioning premises
3-37     and give preference to the provider having the least cost
3-38     technology that meets the quality of service standards prescribed
3-39     by the commission applicable to that provider.
3-40           (b)  The commission may not designate a telecommunications
3-41     provider to serve the petitioning premises unless the premises are
3-42     located in an area that is contiguous to an area in which the
3-43     telecommunications provider has previously been designated eligible
3-44     to receive universal service funding under Section 56.023(b). This
3-45     subsection does not apply if the commission designates the provider
3-46     after the provider voluntarily agrees to provide service to the
3-47     petitioning premises.
3-48           Sec. 56.209.  RECOVERY OF COSTS. (a)  If, after a hearing,
3-49     the commission designates a telecommunications provider to serve
3-50     the petitioning premises, the commission shall permit the
3-51     designated provider to recover from the state universal service
3-52     fund the provider's actual costs of providing service to the
3-53     premises, including the provider's original cost of deployment and
3-54     actual recurring costs.
3-55           (b)  The reimbursable original cost of deploying facilities
3-56     to the petitioning premises is the original cost of the
3-57     telecommunications provider's facilities installed in, or upgraded
3-58     to permit the provision of service to, the petitioning premises as
3-59     determined by the financial accounting standards applicable to the
3-60     provider, including an amount for the recovery of all costs that
3-61     are typically included as capital costs for accounting purposes,
3-62     that are not recovered through an aid to construction charge
3-63     assessed to the petitioners.  The final order permitting or
3-64     requiring the designated provider to provide service to the
3-65     petitioning premises  shall ensure that all the original cost of
3-66     the provider shall be amortized and recovered from the state
3-67     universal service fund, together with interest at the prevailing
3-68     commercial lending rate:
3-69                 (1)  not later than the third anniversary of the date
 4-1     of the order, for a deployment with an original cost of $1 million
 4-2     or less;
 4-3                 (2)  not later than the fifth anniversary of the date
 4-4     of the order, for a deployment with an original cost of more than
 4-5     $1 million, but not more than $2 million; and
 4-6                 (3)  not later than the seventh anniversary of the date
 4-7     of the order, for a deployment with an original cost of more than
 4-8     $2 million.
 4-9           (c)  The designated provider shall recover the provider's
4-10     actual recurring costs of service, including maintenance and the
4-11     ongoing operational costs of providing service after deployment of
4-12     the facilities to the petitioning premises and a reasonable
4-13     operating margin, from:
4-14                 (1)  the monthly rate charged the customer; and
4-15                 (2)  a monthly per line state universal service fund
4-16     payment in an amount equal to the unrecovered recurring costs
4-17     incurred in providing service divided by the access lines served in
4-18     the petitioning premises.
4-19           (d)  The monthly per line fee established under Subsection
4-20     (c) is in addition to the universal service funds associated with
4-21     the recovery of the original cost of deployment and interest
4-22     authorized by Subsection (b) and in addition to the universal
4-23     service funds the designated provider receives to provide service
4-24     in other areas of this state.
4-25           (e)  The commission may not authorize or require any services
4-26     to be provided to petitioning premises under this subchapter during
4-27     a fiscal year if the total amount of required reimbursements of
4-28     actual original cost of deployment to all approved petitioning
4-29     premises under this section, together with interest, including
4-30     obligations for reimbursements from preceding years, would equal an
4-31     amount that exceeds 0.02 percent of the annual gross revenues
4-32     reported to the state universal service fund during the preceding
4-33     fiscal year.
4-34           Sec. 56.210.  AID TO CONSTRUCTION CHARGE; CONTRACT FOR
4-35     SERVICES. The commission shall establish a reasonable aid to
4-36     construction charge, not to exceed $3,000, to be assessed each
4-37     petitioner. The commission may not require a designated provider to
4-38     begin construction until:
4-39                 (1)  each petitioner has paid or executed an agreement
4-40     acceptable to the provider to pay the aid to construction charge;
4-41     and
4-42                 (2)  each petitioner has executed an assignable
4-43     agreement for subscription to basic local service to the
4-44     petitioning premises from the designated provider for a period at
4-45     least equal to the period during which the provider will receive
4-46     reimbursement for the original cost of deployment under Section
4-47     56.209(b).
4-48           Sec. 56.211.  PERMANENT PREMISES REQUIRED. A
4-49     telecommunications provider may not under any circumstances be
4-50     required to extend service to a location that is not a permanent
4-51     residential or business premises or be required to provide service
4-52     to the petitioning premises before the 180th day after the date the
4-53     provider was designated to provide service to the petitioning
4-54     premises.
4-55           Sec. 56.212.  SUBSEQUENT RELATED PETITIONS. (a)  If the
4-56     commission approves a petition requesting service, residents of
4-57     permanent residential premises or owners of permanent residential
4-58     or business premises in reasonable proximity to the premises that
4-59     were the subject of an approved petition who did not sign the prior
4-60     petition requesting service are not entitled to receive service
4-61     under this subchapter until the fifth anniversary of the date the
4-62     prior petition was filed unless the residents or owners file a new
4-63     petition under this subchapter and agree to pay aid to construction
4-64     charges on the same terms as applicable to the prior petitioners.
4-65           (b)  The designated provider shall receive reimbursement for
4-66     the original cost of deployment and actual recurring costs of
4-67     providing service to those additional residents in the same manner
4-68     as the provider received reimbursement of those costs in relation
4-69     to the prior petitioners.  The provider may not receive
 5-1     reimbursement for the original cost of deployment under a
 5-2     subsequent petition if the provider previously received complete
 5-3     reimbursement for those costs from the state universal service
 5-4     fund.  If the state universal service fund has completely
 5-5     reimbursed the original cost of deployment as provided by this
 5-6     subchapter, each subsequent petitioner must pay into the state
 5-7     universal service fund an amount equal to the aid to construction
 5-8     charge paid by each prior petitioner.
 5-9           Sec. 56.213.  PREFERRED PROVIDER. (a)  A provider who is
5-10     designated to serve petitioning premises located within an
5-11     uncertificated area under this subchapter is the preferred provider
5-12     for any permanent residential or business premises in reasonable
5-13     proximity to those petitioning premises for later petitions filed
5-14     under Section 56.212.
5-15           (b)  A preferred designated provider is entitled to an
5-16     opportunity for a hearing under Section 56.205 on a petition filed
5-17     under Section 56.203.
5-18           Sec. 56.214.  CERTIFICATE NOT AMENDED. The designation of a
5-19     provider to serve permanent residential or business premises within
5-20     an uncertificated area under this subchapter does not have the
5-21     effect of:
5-22                 (1)  amending the boundaries of the provider's
5-23     certificate to provide local exchange service; or
5-24                 (2)  imposing carrier of last resort responsibilities
5-25     on the provider.
5-26           SECTION 5. Section 51.002(10), Utilities Code, as amended by
5-27     Chapters 1212 and 1579, Acts of the 76th Legislature, Regular
5-28     Session, 1999, is reenacted and amended to read as follows:
5-29                 (10)  "Telecommunications provider":
5-30                       (A)  means:
5-31                             (i)  a certificated telecommunications
5-32     utility;
5-33                             (ii)  a shared tenant service provider;
5-34                             (iii)  a nondominant carrier of
5-35     telecommunications services;
5-36                             (iv)  a provider of commercial mobile
5-37     service as defined by Section 332(d), Communications Act of 1934
5-38     (47 U.S.C. Section 151 et seq.), Federal Communications Commission
5-39     rules, and the Omnibus Budget Reconciliation Act of 1993 (Public
5-40     Law 103-66), except that the term does not include these entities
5-41     for the purposes of Chapter 17, 55, or 64;
5-42                             (v)  a telecommunications entity that
5-43     provides central office based PBX-type sharing or resale
5-44     arrangements;
5-45                             (vi)  an interexchange telecommunications
5-46     carrier;
5-47                             (vii)  a specialized common carrier;
5-48                             (viii)  a reseller of communications;
5-49                             (ix)  a provider of operator services;
5-50                             (x)  a provider of customer-owned pay
5-51     telephone service; or
5-52                             (xi)  a [another] person or entity
5-53     determined by the commission to provide telecommunications services
5-54     to customers in this state; and
5-55                       (B)  does not mean:
5-56                             (i)  a provider of enhanced or information
5-57     services, or another user of telecommunications services, who does
5-58     not also provide telecommunications services; or
5-59                             (ii)  a state agency or state institution
5-60     of higher education, or a service provided by a state agency or
5-61     state institution of higher education.
5-62           SECTION 6. This Act takes effect September 1, 2001.
5-63                                  * * * * *