By: Hill H.B. No. 3186
A BILL TO BE ENTITLED
AN ACT
relating to the compensation of a municipality for the use of public
right-of-way by providers of local exchange telephone service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 283.002, Local Government Code, is
amended to read as follows:
Sec. 283.002. DEFINITIONS. In this chapter:
(1) ["Access line":
(A) means, unless the commission adopts a different
definition under Section 283.003, a unit of measurement
representing:
(i) each switched transmission path of the
transmission media that is physically within a public right-of-way
extended to the end-use customer's premises within the
municipality, that allows the delivery of local exchange telephone
services within a municipality, and that is provided by means of
owned facilities, unbundled network elements or leased facilities,
or resale;
(ii) each termination point or points of a
nonswitched telephone or other circuit consisting of transmission
media located within a public right-of-way connecting specific
locations identified by, and provided to, the end-use customer for
delivery of nonswitched telecommunications services within the
municipality; or
(iii) each switched transmission path within a
public right-of-way used to provide central office-based PBX-type
services for systems of any number of stations within the
municipality, and in that instance, one path shall be counted for
every 10 stations served; and
(B) may not be construed to include interoffice
transport or other transmission media that do not terminate at an
end-use customer's premises or to permit duplicate or multiple
assessment of access line rates on the provision of a single
service.
(2)] "Certificated telecommunications provider" means a
person who has been issued a certificate of convenience and
necessity, certificate of operating authority, or service provider
certificate of operating authority by the commission to offer local
exchange telephone service.
(2) [(3)] "Commission" means the Public Utility Commission
of Texas.
[(4) "Consumer price index" means the annual revised
consumer price index for all urban consumers for Texas, as
published by the Federal Bureau of Labor Statistics.]
(3) [(5)] "Local exchange telephone service" has the
meaning assigned by Section 51.002, Utilities Code.
(4) [(6)] "Public right-of-way" means the area on, below,
or above a public roadway, highway, street, public sidewalk, alley,
waterway, or utility easement in which the municipality has an
interest. The term does not include the airwaves above a
right-of-way with regard to wireless telecommunications.
SECTION 2. Section 283.006, Local Government Code, is
amended to read as follows:
Sec. 283.006. FEE REQUIREMENT FOR USE OF RIGHT-OF-WAY. [a]
Notwithstanding any other law, a certificated telecommunications
provider that does not use a public right-of-way within the
municipality may not be required to pay franchise fees,
right-of-way fees or any other fee or other compensation, other
than a fee or compensation excluded from the "base amount" under
Section 283.053(a), directly to the municipality to provide local
exchange telephone service in the municipality.
[(b) This section does not affect the number of access lines
counted and reported to the commission under Section 283.055.
(c) The commission shall adopt rules to determine the method
of payment and to ensure that access line fees are paid on a
competitively neutral and non-discriminatory basis by certificated
telecommunications providers that provide more access lines than
they purchase from an underlying provider of resold services or
unbundled network elements.]
SECTION 3. Section 283.053, Local Government Code, is
amended to read as follows:
Sec. 283.053. BASE AMOUNT. (a) In determining a
municipality's "base amount" under this section, pole rental fees,
special assessments, and taxes of any kind, including ad valorem or
sales and use taxes, or other compensation not related to the use of
a public right-of-way, are not included.
(b) For purposes of determining the amount of a
municipality's right-of-way fee under Section 283.055, the "base
amount" for a municipality not described by another subsection is
the total amount of revenue received by the municipality in
franchise, license, permit, and application fees and in-kind
services or facilities from certificated telecommunications
providers in 2002 [1998] within the boundaries of the municipality,
including all newly annexed areas. The base amount prescribed
under this subsection shall include the municipal fee rate
escalation provisions and the value of in-kind services or
facilities received in 2002 [1998] in accordance with Subsection
(f) specifically prescribed in applicable agreements or ordinances
effective or adopted by January 12, 2003 [1999], unless the
governing body of the municipality elects otherwise. However, that
additional compensation may not become part of the base amount
before it becomes effective under the existing franchise agreement
or ordinance.
(c) The base amount for a municipality located in a county
with a population of less than 25,000 or a municipality that either
did not have an effective franchise agreement or ordinance on
January 12, 2003 [1999], or was not in existence on that date shall
be, at the election of the governing body of the municipality, equal
to:
(1) an amount not greater than the statewide average
fee per line for each category of access line of the certificated
telecommunications provider with the greatest number of access
lines in that municipality, multiplied by the total number of
access lines in each category located within the boundaries of the
municipality on December 31, 2002 [1998], for a municipality in
existence on that date, or on the date of incorporation for a
municipality incorporated after that date;
(2) an amount not greater than the base amount
determined for a similarly sized municipality in the same or an
adjacent county in which the certificated telecommunications
provider with the greatest number of access lines in the
municipality is the same for each municipality; or
(3) the total amount of the taxable telecommunications
receipts of the certificated telecommunications providers
providing service in [revenue received by] the municipality in 2002
[franchise, license, permit; and application fees from all
certificated telecommunications providers in 1998].
(d) [The base amount for a municipality that was involved in
litigation relating to franchise fees with one or more certificated
telecommunications providers during any part of 1998 and that, not
later than December 1, 1999, repeals any ordinance subject to
dispute in the litigation, voluntarily dismisses with prejudice any
claims in the litigation for compensation, and agrees to waive any
potential claim for compensation under any franchise agreement or
ordinance expired or in existence on September 1, 1999, is equal to,
at the municipality's election:
(1) an amount not to exceed the state average access
line rate on a per category basis for the certificated
telecommunications provider with the greatest number of access
lines in that municipality multiplied by the total number of access
lines located within the boundaries of the municipality on December
31, 1998, including any newly annexed areas; or
(2) an amount not to exceed 21 percent of the total
sales and use tax revenue received by the municipality pursuant to
Chapter 321, Tax Code. The amount does not include sales and use
taxes collected under:
(A) Chapter 451, 452, 453, or 454, Transportation
Code, for a mass transit authority;
(B) the Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), for a 4A or 4B
Development Corporation;
(C) Chapters 334 and 335, Local Government Code;
or
(D) Chapters 321, 322, and 323, Tax Code, for a
special district, including health service, crime control,
hospital, and emergency service districts.
(e) A litigating municipality electing to dismiss with
prejudice its claims in the litigation and repealing any ordinance
subject to dispute in the litigation does not, by making the
election, waive any defenses it may have to claims by other parties
to the litigation. A municipality in litigation relating to
franchise fees with one or more certificated telecommunications
providers during any part of 1998 that does not make an effective
election under Subsection (d) shall be governed by Subsection (b).
(f)] For the purpose of determining the base amount, in-kind
services or facilities provided to municipalities under existing
franchise agreements or ordinances by certificated
telecommunications providers shall be valued at one percent of the
total 2002 [1998] revenue from franchise, permit, license, and
application fees paid to the municipality under all applicable
telecommunications franchise agreements or ordinances, unless a
municipality can establish before the commission that those
services or facilities received by the municipality had a greater
value in 2002 [1998].
SECTION 4. Section 283.054, Local Government Code, is
amended to read as follows:
Sec. 283.054. EXISTING FRANCHISE AGREEMENTS AND
ORDINANCES. (a) Except as otherwise provided by this chapter,
this chapter does not affect the validity of a franchise agreement
or ordinance with a certificated telecommunications provider
executed before January 12, 2003 [1999] that remains in effect on
the effective date of this act. A municipality may continue to
enforce a franchise agreement or ordinance and to collect franchise
fees and other charges under that franchise agreement or ordinance
until the date on which the agreement or ordinance expires by its
own terms or is terminated in accordance with the terms of this
section. [A provider may elect to terminate a franchise agreement
or obligations under an existing ordinance as of the effective date
of the right-of-way fee rates adopted in accordance with the
commission's rules adopted under this chapter. A provider
terminating a franchise agreement or obligations under an existing
ordinance under this section shall become governed by this chapter
on the date of termination. A termination under this subsection
does not affect the calculation of the municipality's base amount
under Section 283.053. A certificated telecommunications provider
electing to terminate an existing franchise agreement or
obligations under an ordinance under this section shall provide
notice to the commission and the affected municipality not later
than December 1, 1999.]
(b) If a franchise agreement or obligations under an
ordinance in a municipality expire [or are terminated under
Subsection (a)] before the commission has determined the amounts to
be paid to a municipality, the affected certificated
telecommunications providers operating in the municipality shall
continue paying at the rates required under the terms of the expired
agreement or ordinance until the commission's determination and the
certificated telecommunications providers' implementation of
appropriate rates under this chapter.
(c) During the period in which a franchise agreement or
ordinance described by Subsection (a) is in effect, a certificated
telecommunications provider not subject to an existing franchise
agreement or ordinance that wants to construct facilities to offer
telecommunications services in the municipality shall pay
right-of-way fees that are competitively neutral and
nondiscriminatory, consistent with the charges of the most recent
agreement or ordinance between the municipality and the
certificated telecommunications provider serving the largest
number of access lines within the municipality. The provider shall
pay those fees for the duration of that agreement or ordinance or
until the right-of-way fees established by commission rule take
effect. If the existing franchise agreement or ordinance contains
a provision requiring in-kind services or facilities, the
certificated telecommunications provider not subject to an
existing franchise agreement or ordinance shall pay an amount equal
to an additional one percent of its total fees under the applicable
agreement or ordinance in lieu of any in-kind services or
facilities, if any, that otherwise are required under the terms of
the existing franchise agreement or ordinance. However, the
municipality may not require a certificated telecommunications
provider to provide any services or facilities without compensation
or at below-market rates for the right to use a public right-of-way
or to provide telecommunications services in the municipality. [On
request of the certificated telecommunications provider not
subject to an existing franchise agreement or ordinance, the
commission shall convert the compensation under the existing
franchise agreement or ordinance to a fee per access line on a
competitively neutral and non-discriminatory basis, and the
certificated telecommunications provider may elect to pay the
municipality on a fee per access line basis rather than the manner
of compensation provided under the existing franchise agreement or
ordinance.
SECTION 5. Section 283.055, Local Government Code, is
amended to read as follows:
Sec. 283.055. DETERMINATION OF FEES BY COMMISSION. (a) A
municipality may not assess more than two levels of rates within the
municipality.
(b) A municipality may not assess more than a single rate to
taxable telecommunications receipts received from residential
customers.
(c) [Not later than November 1, 1999, the commission shall
establish not more than three categories of access lines for
statewide use.
(b)] Not later than February [March] 1, 2004 [2000], the
commission shall establish[:
(1)] for each municipality, not more than two maximum
levels of rates that the municipality may impose on the taxable
telecommunications receipts received within the municipality by a
certificated telecommunications provider providing service within
that municipality. [rates per access line by category for the use of
the rights-of-way in that municipality; and
(2) the statewide average of those rates per access
line by category for each certificated telecommunications
provider, if necessary.]
(d) [(c)] The rates when applied to the total taxable
telecommunications receipts received from within the municipality
by certificated telecommunications providers providing services
within that municipality [number of access lines by category in the
municipality] shall be equal to the base amount.
[(d) Not later than December 1, 1999~ a municipality that
wants to effect an allocation of the base amount over specific
access line categories to be assessed rates shall notify the
commission of the desired allocation. The commission shall
establish an allocation of the base amount over the categories of
access lines if a municipality does not file its proposed
allocation by December 1, 1999. A municipality may request a
modification of the commission's allocation not more than once
every 24 months by noti1~ring the commission and all affected
certificated telecommunications providers in September of that
year that the municipality wants to change the allocation for the
next calendar year. A municipality's allocation shall be
implemented unless, on complaint by an affected certificated
telecommunications provider, the commission determines that the
allocation is not just and reasonable, is not competitively
neutral, or is discriminatory.]
(e) Rates imposed under this section [and the allocation
among certificated telecommunications providers] must be exercised
in a competitively neutral manner, may not unduly impair
competition, must be non-discriminatory, and must comply with state
and federal law. [The commission shall determine the applicable
rates for each municipality for each category, taking into account
the allocation under Subsection (d) and the type, use, and function
of access lines.]
(f) Certificated telecommunications providers shall pay to
the municipality a quarterly amount calculated monthly based on the
[access line] rates established by the commission under this
section and the taxable telecommunications receipts received
within the municipality by a certificated telecommunications
provider providing service within that municipality [number of
access lines as reflected in the reports filed under subsection
(j)]. The providers shall make the quarterly payment not later than
45 days after the end of the quarter.
(g) [Beginning 24 months after the date the commission
establishes rates per access line, he commission shall annually
adjust the rates per access line for each municipality by an amount
equal to one-half the annual change, if any, in the consumer price
index. At that time, the commission shall provide each
certificated telecommunications provider and municipality with the
adjusted monthly rates for each category of access line.
(h) On an annual basis, an affected municipality may provide
notice to the commission to decline all or any portion of any
increase in the per category access line rates.
(i) A certificated telecommunications provider may not be
required to remit a right-of-way fee to a municipality on those
access lines that have been resold, leased, or otherwise provided o
another certificated telecommunications provider, if the
underlying certificated telecommunications provider supplying
those services or facilities has been furnished with adequate) roof
that the provider of services to the end-use customer will directly
remit. to the municipality a right-of-way fee based on those access
lines.
(j) On a quarterly basis, each certificated
telecommunications provider shall file a report with the commission
that shows the number of access lines, including access lines by
category, that the provider has within each municipality at the end
of each month of the quarter. The provider shall include with the
report a certified statement from an authorized officer or duly
authorized representative of the provider stating that the
information contained in the report s true and correct to the best
of the officer's or representative's knowledge and belief after
inquiry. On request and subject to the confidentiality protections
of Section 283.005, each certificated telecommunications provider
shall provide each affected municipality with a copy of the report
required by this subsection.
(k) On request of the commission and to the extent
available, the report required by Subsection (j) shall specifically
identify access lines that are provided by means of resold services
or unbundled facilities to another certificated telecommunications
provider who is not an end-use customer and the identity of the
certificated telecommunications, providers obtaining the resold
services or unbundled facilities to provide services to end-use
customers. A provider may not include in its monthly count of
access lines and is not required to remit a right-of-way fee to the
municipality on access lines that are resold, leased, or otherwise
provided to another certificated telecommunications provider if
the provider receives adequate proof that the provider leasing or
purchasing the access lines will include the access lines in its
monthly count and remit payment on those access lines to the
municipality.
(l) The commission may use a report required under
Subsection (j) only to verify the number of access lines that serve
premises within the municipality.
(m)] Notwithstanding any other provision of this chapter,
payment by a certificated telecommunications provider that
complies with the terms of an unexpired franchise agreement or
right-of-way ordinance that applies to the provider satisfies the
payment attributable to the provider required by this chapter.
(h) [(n)] A municipality may not demand or require from a
certificated telecommunications provider services, facilities, or
goods without compensation or at below-market rates.
(i) [(o)] A certificated telecommunications provider
shall, to the extent required, implement commission established
[access line] rates not later than the 90th day after the date the
commission establishes the [access line] rates under this chapter.
(j) Notwithstanding any other provision of this section, a
municipality and a certificated telecommunications provider may
mutually agree to a different method for compensating the
municipality for the use of public right-of-way as long as the
amount of compensation paid to the municipality is not less than the
amount that otherwise would be paid to the municipality.
SECTION 6. This Act takes effect September 1, 2003.