79S20038 MTB-F
By: Fraser S.B. No. 5
A BILL TO BE ENTITLED
AN ACT
relating to furthering competition in the communications industry.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 33.001, Utilities Code, is amended to
read as follows:
Sec. 33.001. MUNICIPAL JURISDICTION. (a) To provide fair,
just, and reasonable rates and adequate and efficient services, the
governing body of a municipality has exclusive original
jurisdiction over the rates, operations, and services of an
electric utility in areas in the municipality, subject to the
limitations imposed by this title.
(b) Notwithstanding Subsection (a), the governing body of a
municipality shall not have jurisdiction over the BPL system, BPL
services, telecommunications using BPL services, or the rates,
operations, or services of the electric utility or transmission and
distribution utility to the extent that such rates, operations, or
services are related, wholly or partly, to the construction,
maintenance, or operation of a BPL system used to provide BPL
services to affiliated or unaffiliated entities.
SECTION 2. Subtitle B, Title 2, Utilities Code, is amended
by adding Chapter 43 to read as follows:
CHAPTER 43. USE OF ELECTRIC DELIVERY SYSTEM FOR ACCESS TO BROADBAND
AND OTHER ENHANCED SERVICES, INCLUDING COMMUNICATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 43.001. LEGISLATIVE FINDINGS. (a) The legislature
finds that broadband over power lines, also known as BPL, is an
emerging technology platform that offers a means of providing
broadband services to reach homes and businesses. BPL services can
also be used to enhance existing electric delivery systems, which
can result in improved service and reliability for electric
customers.
(b) The legislature finds that access to quality, high speed
broadband services is important to this state. BPL deployment in
Texas has the potential to extend broadband service to customers
where broadband access is currently not available and may provide
an additional option for existing broadband consumers in Texas,
resulting in a more competitive market for broadband services. The
legislature further finds that BPL development in Texas is fully
dependent upon the participation of electric utilities in this
state that own and operate power lines and related facilities that
are necessary for the construction of BPL systems and the provision
of BPL services.
(c) Consistent with the goal of increasing options for
telecommunications in this state, the legislature finds that it is
in the public interest to encourage the deployment of BPL by
permitting affiliates of the electric utility, or permitting
unaffiliated entities, to own or operate all or a portion of such
BPL systems. The purpose of this chapter is to provide the
appropriate framework to support the deployment of BPL.
(d) The legislature finds that an electric utility may
choose to implement BPL under the procedures set forth in this
chapter, but is not required to do so. The electric utility shall
have the right to decide, in its sole discretion, whether to
implement BPL and may not be penalized for deciding to implement or
not to implement BPL.
Sec. 43.002. APPLICABILITY. (a) This chapter applies to
an electric utility whether or not the electric utility is offering
customer choice under Chapter 39.
(b) If there is a conflict between the specific provisions
of this chapter and any other provisions of this title, the
provisions of this chapter control.
(c) No provision of this title shall impose an obligation on
an electric utility to implement BPL, to provide broadband
services, or to allow others to install BPL facilities or use the
electric utility's facilities for the provision of broadband
services.
Sec. 43.003. DEFINITIONS. In this chapter:
(1) "BPL," "broadband over power lines," and "BPL
services" mean the provision of broadband services over electric
power lines and related facilities, whether above ground or in
underground conduit.
(2) "BPL access" means the ability to access broadband
services via a BPL operator or BPL Internet service provider.
(3) "BPL operator" means an entity that owns or
operates a BPL system on the electric power lines and related
facilities of an electric utility.
(4) "BPL Internet service provider" and "BPL ISP" mean
an entity that provides Internet services to others on a wholesale
basis or to end-use customers on a retail basis.
(5) "BPL system" means the materials, equipment, and
other facilities installed on electric utility property to
facilitate the provision of BPL services.
(6) "BPL electric utility applications" means
services and technologies that are used and useful and designed to
improve the operational performance and service reliability of an
electric utility including, but not limited to, automated meter
reading, real time system monitoring and meter control, remote
service control, outage detection and restoration, predictive
maintenance and diagnostics, and monitoring and enhancement of
power quality.
(7) "Electric delivery system" means the power lines
and related transmission and distribution facilities used by an
electric utility to deliver electric energy.
(8) "Electric utility" shall include an electric
utility and a transmission and distribution utility as defined in
Section 31.002(6) or (19).
[Sections 43.004-43.050 reserved for expansion]
SUBCHAPTER B. DEVELOPMENT OF BPL SYSTEMS
Sec. 43.051. AUTHORIZATION FOR BPL SYSTEM. An affiliate of
an electric utility or a person unaffiliated with an electric
utility may own, construct, maintain, and operate a BPL system and
provide BPL services on an electric utility's electric delivery
system consistent with the requirements of this chapter. Nothing
in this chapter shall prohibit an entity defined in Section
11.003(9) from providing BPL service or owning and operating a BPL
system. Nothing in this chapter shall prohibit an electric utility
from providing construction or maintenance services to a BPL
operator or BPL ISP provided that the costs of these services are
properly accounted for between the electric utility and the BPL
operator or BPL ISP.
Sec. 43.052. OWNERSHIP AND OPERATION OF BPL SYSTEM.
(a) An electric utility may elect to:
(1) allow an affiliate to own or operate a BPL system
on the utility's electric delivery system;
(2) allow an unaffiliated entity to own or operate a
BPL system on the electric utility's electric delivery system; or
(3) allow an affiliate or unaffiliated entity to
provide Internet service over a BPL system.
(b) The BPL operator and the electric utility shall
determine what BPL Internet service providers may have access to
broadband capacity on the BPL system.
Sec. 43.053. FEES AND CHARGES. (a) An electric utility
that allows an affiliate or an unaffiliated entity to own a BPL
system on the electric utility's electric delivery system shall
charge the owner of the BPL system for the use of the electric
utility's electric delivery system.
(b) An electric utility may pay a BPL owner, a BPL operator,
or a BPL ISP for the use of the BPL system required to operate BPL
utility applications.
(c) If all or part of a BPL system is installed on poles or
other structures of a telecommunications utility as that term is
defined in Section 51.002, the owner of the BPL system shall be
required to pay the telecommunications utility an annual fee
consistent with the usual and customary charges for access to the
space occupied by that portion of the BPL system so installed.
(d) Notwithstanding Subsections (a)-(c):
(1) an electric utility may not charge an affiliate
under this section an amount less than the electric utility would
charge an unaffiliated entity for the same item or class of items;
(2) an electric utility may not pay an affiliate under
this section an amount more than the affiliate would charge an
unaffiliated entity for the same item or class of items; and
(3) an electric utility or an affiliate of an electric
utility may not discriminate against a retail electric provider
that is not affiliated with the utility in the terms or availability
of BPL services.
Sec. 43.054. NO ADDITIONAL EASEMENTS OR CONSIDERATION
REQUIRED. Because BPL systems provide benefits to electric
delivery systems, the installation of a BPL system on an electric
delivery system shall not require the electric utility or the owner
of the BPL system or an entity defined in Section 11.003(9) to
obtain or expand easements or other rights-of-way for the BPL
system or to give additional consideration as a result of the
installation or the operation of a BPL system. For purposes of this
section, installation of a BPL system shall be deemed to be
consistent with installation of an electric delivery system.
Sec. 43.055. RELIABILITY OF ELECTRIC SYSTEMS MAINTAINED.
An electric utility that allows the installation and operation of a
BPL system on its electric delivery system shall employ all
reasonable measures to ensure that the operation of the BPL system
does not interfere with or diminish the reliability of the
utility's electric delivery system. Should a disruption in the
provision of electric service occur, the electric utility shall be
governed by the terms and conditions of the retail electric
delivery service tariff. At all times, the provision of broadband
services shall be secondary to the reliable provision of electric
delivery services.
[Sections 43.056-43.100 reserved for expansion]
SUBCHAPTER C. IMPLEMENTATION OF BPL SYSTEM BY
ELECTRIC UTILITY
Sec. 43.101. PARTICIPATION BY ELECTRIC UTILITY. (a) An
electric utility, through an affiliate or through an unaffiliated
entity, may elect to install and operate a BPL system on some or all
of its electric delivery system in any part or all of its
certificated service area.
(b) The installation, operation, and use of a BPL system and
the provision of BPL services shall not be regulated by any state
agency, a municipality, or local government other than as provided
for in this chapter.
(c) The commission or a state or local government or a
regulatory or quasi-governmental or a quasi-regulatory authority
may not:
(1) require an electric utility, either through an
affiliate or an unaffiliated entity, to install a BPL system on its
power lines or offer BPL services in all or any part of the electric
utility's certificated service area;
(2) require an electric utility to allow others to
install a BPL system on the utility's electric delivery system in
any part or all of the electric utility's certificated service
area; or
(3) prohibit an electric utility from having an
affiliate or unaffiliated entity install a BPL system or offering
BPL services in any part or all of the electric utility's
certificated service area.
(d) If a municipality or local government is already
collecting a charge or fee from the electric utility for the use of
the public rights-of-way for the delivery of electricity to retail
electric customers, the municipality or local government is
prohibited from requiring a franchise or an amendment to a
franchise or from requiring a charge, fee, or tax from any entity
for use of the public rights-of-way for a BPL system.
(e) The state or a municipality may impose a charge on the
provision of BPL services, but the charge may not be greater than
the lowest charge that the state or municipality imposes on other
providers of broadband services for use of the public rights-of-way
in its respective jurisdiction.
Sec. 43.102. COST RECOVERY FOR DEPLOYMENT OF BPL AND
UTILITY APPLICATIONS. (a) Where an electric utility permits the
installation of a BPL system on its electric delivery system under
Section 43.052(a), the electric utility's investment in that BPL
system to directly support the BPL electric utility applications
and other BPL services consumed by the electric utility that are
used and useful in providing electric utility service shall be
eligible for inclusion in the electric utility's invested capital,
and any fees or operating expenses that are reasonable and
necessary shall be eligible for inclusion as operating expenses for
purposes of any proceeding under Chapter 36. The invested capital
and expenses described in this section must be allocated to the
customer classes directly receiving the services.
(b) In any proceeding under Chapter 36, just and reasonable
charges for the use of the electric utility's electric delivery
system by a BPL owner or operator shall be limited to the usual and
customary pole attachment charges paid to the electric utility for
comparable space by cable television operators.
(c) The revenues of an affiliated BPL operator or an
affiliated BPL ISP shall not be deemed the revenues of an electric
utility for purposes of setting rates under Chapter 36.
[Sections 43.103-43.150 reserved for expansion]
SUBCHAPTER D. MISCELLANEOUS PROVISIONS
Sec. 43.151. AFFILIATES OF ELECTRIC UTILITY. (a) Subject
to the limitations of this chapter, an electric utility may have a
full or partial ownership interest in a BPL operator or a BPL ISP.
Whether a BPL operator or a BPL ISP is an affiliate of the electric
utility shall be determined under Section 11.003(2) or Section
11.006.
(b) Neither a BPL operator nor a BPL ISP shall be considered
a "competitive affiliate" of an electric utility as that term is
defined in Section 39.157.
Sec. 43.152. COMPLIANCE WITH FEDERAL LAW. BPL operators
shall comply with all applicable federal laws, including those
protecting licensed spectrum users from interference by BPL
systems. The operator of a radio frequency device shall be required
to cease operating the device upon notification by a Federal
Communications Commission or Public Utilities Commission
representative that the device is causing harmful interference.
Operation shall not resume until the condition causing the harmful
interference has been corrected.
SECTION 3. Section 52.155, Utilities Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) A telecommunications utility that holds a certificate
of operating authority or a service provider certificate of
operating authority may not charge a higher amount for originating
or terminating intrastate switched access than the prevailing rates
charged by the holder of the certificate of convenience and
necessity or the holder of a certificate of operating authority
issued under Chapter 65 in whose territory the call originated or
terminated unless:
(1) the commission specifically approves the higher
rate; or
(2) subject to commission review, the
telecommunications utility establishes statewide average composite
originating and terminating intrastate switched access rates based
on a reasonable approximation of traffic originating and
terminating between all holders of certificates of convenience and
necessity in this state.
(c) Notwithstanding Subsection (a), Chapter 65 governs the
switched access rates of a company that holds a certificate of
operating authority issued under Chapter 65.
SECTION 4. Subchapter D, Chapter 52, Utilities Code, is
amended by adding Section 52.156 to read as follows:
Sec. 52.156. RETAIL RATES, TERMS, AND CONDITIONS. A
telecommunications utility may not:
(1) establish a retail rate, term, or condition that
is anticompetitive or unreasonably preferential, prejudicial, or
discriminatory; or
(2) engage in predatory pricing or attempt to engage
in predatory pricing.
SECTION 5. Section 54.202, Utilities Code, is amended by
adding Subsection (c) to read as follows:
(c) This section may not be construed to prevent a
municipally owned utility from providing to its energy customers,
either directly or indirectly, any energy related service involving
the transfer or receipt of information or data concerning the use,
measurement, monitoring, or management of energy utility services
provided by the municipally owned utility, including services such
as load management or automated meter reading.
SECTION 6. Subsections (a), (b), and (c), Section 54.204,
Utilities Code, are amended to read as follows:
(a) Notwithstanding Section 14.008, a municipality or a
municipally owned utility may not discriminate against a
certificated telecommunications provider [telecommunications
utility] regarding:
(1) the authorization or placement of a
[telecommunications] facility in a public right-of-way;
(2) access to a building; or
(3) a municipal utility pole attachment rate or term[,
to the extent not addressed by federal law].
(b) In granting consent, a franchise, or a permit for the
use of a public street, alley, or right-of-way within its municipal
boundaries, a municipality or municipally owned utility may not
discriminate in favor of or against a certificated
telecommunications provider [telecommunications utility that holds
or has applied for a certificate of convenience and necessity, a
certificate of operating authority, or a service provider
certificate of operating authority] regarding:
(1) municipal utility pole attachment or underground
conduit rates or terms[, to the extent not addressed by federal
law]; or
(2) the authorization, placement, replacement, or
removal of a [telecommunications] facility in a public right-of-way
and the reasonable compensation for the authorization, placement,
replacement, or removal regardless of whether the compensation is
in the form of:
(A) money;
(B) services;
(C) use of facilities; or
(D) another kind of consideration.
(c) A municipality or a municipally owned [Notwithstanding
Subsection (b)(1), a municipal] utility may not charge any entity,
regardless of the nature of the services provided by that entity, a
pole attachment rate or underground conduit rate that exceeds the
fee the municipality or municipally owned utility would be
permitted to charge under rules adopted by the Federal
Communications Commission under 47 U.S.C. Section 224(e) if the
municipality's or municipally owned utility's rates were regulated
under federal law and the rules of the Federal Communications
Commission. In addition, not later than September 1, 2006, a
municipality or municipally owned utility shall charge a single,
uniform pole attachment or underground conduit rate to all entities
that are not affiliated with the municipality or municipally owned
utility regardless of the services carried over the networks
attached to the poles or underground conduit.
SECTION 7. Section 54.251, Utilities Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) Except as specifically determined otherwise by the
commission under this subchapter or Subchapter G, the holder of a
certificate of convenience and necessity, or the holder of a
certificate of operating authority issued under Chapter 65, for an
area has the obligations of a provider of last resort regardless of
whether another provider has a certificate of operating authority
or service provider certificate of operating authority for that
area.
(c) A certificate holder may meet the holder's provider of
last resort obligations using any available technology.
Notwithstanding any provision of Chapter 56, the commission may
adjust disbursements from the universal service fund to companies
using technologies other than traditional wireline or landline
technologies to meet provider of last resort obligations. As
determined by the commission, the certificate holder shall meet
minimum quality of service standards, including standards for 911
service, comparable to those established for traditional wireline
or landline technologies and shall offer services at a price
comparable to the monthly service charge for comparable services in
that exchange or the provider's nearest exchange.
SECTION 8. Subchapter G, Chapter 54, Utilities Code, is
amended by adding Section 54.3015 to read as follows:
Sec. 54.3015. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to a holder of a certificate of operating authority issued
under Chapter 65 in the same manner and to the same extent this
subchapter applies to a holder of a certificate of convenience and
necessity.
SECTION 9. Section 55.015, Utilities Code, is amended by
amending Subsections (a), (c), and (d) and adding Subsections
(b-1), (d-1), and (d-2) to read as follows:
(a) The commission shall adopt rules prohibiting a
certificated provider of local exchange telephone service
[telecommunications provider] from discontinuing basic network
services listed in Section 58.051 [local exchange telephone
service] to a consumer who receives lifeline service because of
nonpayment by the consumer of charges for other services billed by
the provider, including interexchange telecommunications [long
distance] service.
(b-1) The commission shall adopt rules requiring
certificated providers of local exchange telephone service to
implement procedures to ensure that all consumers are clearly
informed both orally and in writing of the existence of the lifeline
service program when they request or initiate service or change
service locations or providers. On or before June 1, 2006, the
commission shall enter into a memorandum of understanding with the
Health and Human Services Commission and, to the maximum extent
feasible, housing authorities in the principal cities of each
metropolitan statistical area, to improve enrollment rates in the
lifeline service program.
(c) A certificated provider of local exchange telephone
service [telecommunications provider] may block a lifeline service
participant's access to all interexchange telecommunications [long
distance] service except toll-free numbers when the participant
owes an outstanding amount for that service. The provider
[telecommunications provider] shall remove the block without
additional cost to the participant on payment of the outstanding
amount.
(d) A certificated provider of local exchange telephone
service [telecommunications provider] shall offer a consumer who
applies for or receives lifeline service the option of blocking all
toll calls or, if technically capable, placing a limit on the amount
of toll calls. The provider may not charge the consumer an
administrative charge or other additional amount for the blocking
service.
(d-1) A certificated provider of local exchange telephone
service shall provide access to lifeline service to a customer
whose income is not more than 150 percent of the applicable income
level established by the federal poverty guidelines or in whose
household resides a person who receives or has a child who receives:
(1) Medicaid;
(2) food stamps;
(3) Supplemental Security Income;
(4) federal public housing assistance;
(5) Low Income Home Energy Assistance Program (LIHEAP)
assistance; or
(6) health benefits coverage under the state child
health plan under Chapter 62, Health and Safety Code.
(d-2) A certificated provider of local exchange telephone
service shall provide consumers who apply for or receive lifeline
service access to available vertical services or custom calling
features, including caller ID, call waiting, and call blocking, at
the same price as other consumers. Lifeline discounts shall only
apply to that portion of the bill that is for basic network service.
SECTION 10. Subchapter H, Chapter 55, Utilities Code, is
amended by adding Section 55.1735 to read as follows:
Sec. 55.1735. CHARGE FOR PAY PHONE ACCESS LINE. The charge
or surcharge a local exchange company imposes for an access line
used to provide pay telephone service in an exchange may not exceed
the amount of the charge or surcharge the company imposes for an
access line used for regular business purposes in that exchange.
SECTION 11. Section 56.021, Utilities Code, is amended to
read as follows:
Sec. 56.021. UNIVERSAL SERVICE FUND ESTABLISHED. The
commission shall adopt and enforce rules requiring local exchange
companies to establish a universal service fund to:
(1) assist telecommunications providers in providing
basic local telecommunications service at reasonable rates in high
cost rural areas;
(2) reimburse the telecommunications carrier that
provides the statewide telecommunications relay access service
under Subchapter D;
(3) finance the specialized telecommunications
assistance program established under Subchapter E;
(4) reimburse the department, the Texas Commission for
the Deaf and Hard of Hearing, and the commission for costs incurred
in implementing this chapter and Chapter 57;
(5) reimburse a telecommunications carrier providing
lifeline service as provided by 47 C.F.R. Part 54, Subpart E, as
amended;
(6) finance the implementation and administration of
an integrated eligibility process created under Section 17.007 for
customer service discounts relating to telecommunications
services, including outreach expenses the commission determines
are reasonable and necessary;
(7) reimburse a designated provider under Subchapter
F; [and]
(8) reimburse a successor utility under Subchapter G;
and
(9) finance the program established under Subchapter
H.
SECTION 12. Section 56.025(a), Utilities Code, is amended
to read as follows:
(a) In addition to the authority provided by Section 56.021,
for each local exchange company that serves fewer than 31,000 [five
million] access lines and each cooperative, the commission:
(1) may adopt a mechanism necessary to maintain
reasonable rates for local exchange telephone service; and
(2) shall adopt rules to expand the universal service
fund in the circumstances prescribed by this section.
SECTION 13. Section 56.026, Utilities Code, is amended by
adding Subsection (e) to read as follows:
(e) This subsection and Subsections (c) and (d) expire
August 31, 2007.
SECTION 14. Subchapter B, Chapter 56, Utilities Code, is
amended by adding Sections 56.029, 56.030, and 56.031 to read as
follows:
Sec. 56.029. UNIVERSAL SERVICE FUND STUDY; ATTESTATION
REQUIREMENT. (a) The commission shall conduct a review and
evaluation of whether the universal service fund accomplishes the
fund's purposes as prescribed by Section 56.021 and the
commission's final orders issued in Docket No. 18515 and Docket No.
18516. The evaluation shall determine whether the fund's purposes
have been sufficiently achieved, whether the fund should be
abolished or phased out, whether the fund should be brought within
the state treasury, and whether the entities receiving those funds
are spending the money for its intended purposes. The evaluation
must include a forward-looking, comprehensive assessment of the
appropriate use of the money in the fund and the manner in which
that money is collected and disbursed.
(b) Not later than January 1, 2006, the commission shall
require telecommunications providers receiving disbursements under
the universal service fund to provide to the commission the
information that the commission determines is necessary to
discharge the commission's duties under this section, including
information necessary to review and evaluate how money is collected
for the universal service fund and expended.
(c) Information provided under Subsection (b) is
confidential and is not subject to disclosure under Chapter 552,
Government Code.
(d) The commission may classify telecommunications
providers as the commission considers appropriate for efficiency
and may permit providers to share the cost of developing
information the commission determines is necessary to discharge the
commission's responsibilities under this section.
(e) Not later than January 5, 2007, the commission shall
deliver to the legislature a report for the legislature's revision
and approval on the results of the review and evaluation. The
report must:
(1) include recommendations that are consistent with
the policies provided by this title;
(2) include the commission's assessment of the
universal service fund, including:
(A) how the money in the fund should be
collected;
(B) how the money in the fund should be disbursed
and the purposes for which the money should be used by the
telecommunications provider receiving the money; and
(C) any recommendations the commission has in
relation to accountability for use of the money in the fund,
including the usefulness of the attestation required by Subsection
(g); and
(3) include recommendations that ensure that a
telecommunications provider's support from the universal service
fund for a geographic area is consistent with Section 56.021 and the
commission's final orders issued in Docket No. 18515 and Docket No.
18516.
(f) The evaluation shall determine whether the fund's
purposes have been sufficiently achieved, whether the fund should
be abolished or phased out, whether the fund should be brought
within the state treasury, and whether the entities receiving those
funds are spending the money for its intended purposes.
(g) Not later than December 31, 2005, each
telecommunications provider receiving universal service fund money
shall file with the commission an affidavit attesting that the
money from the fund has been used in a manner that is consistent
with the purposes provided by Section 56.021 and the commission's
final orders issued in Docket No. 18515 and Docket No. 18516.
(h) In addition to the study required by this section, the
commission shall compile information necessary to determine
whether the current funding mechanism for the universal service
fund will be adequate in the future to sustain the purposes for
which the fund was created considering the development of new
technologies that are not subject to the existing funding mechanism
and the shift in jurisdictional control from this state to the
federal government. The commission shall also review and make
recommendations on any mechanisms adopted under Section 56.025.
Not later than January 5, 2007, the commission shall deliver to the
legislature a report on these issues. If the commission determines
that the existing funding mechanism is not adequate, or proposes to
change the manner or level of current funding, the commission must
include recommendations for alternative funding and basic service
pricing methods that will be adequate and are consistent with a
policy of technology and competitive neutrality in the assessment
of fees and other state-imposed economic burdens.
(i) This section expires September 1, 2007.
Sec. 56.030. AFFIDAVITS OF COMPLIANCE. On or before
September 1 of each year, a telecommunications provider that
receives disbursements from the universal service fund shall file
with the commission an affidavit certifying that the
telecommunications provider is in compliance with the requirements
for receiving money from the universal service fund and
requirements regarding the use of money from each universal service
fund program for which the telecommunications provider receives
disbursements.
Sec. 56.031. ADJUSTMENTS. The commission may revise the
monthly per line support amounts to be made available from the Texas
High Cost Universal Service Plan and from the Small and Rural
Incumbent Local Exchange Company Universal Service Plan at any time
after September 1, 2007, after notice and an opportunity for
hearing. In determining appropriate monthly per line support
amounts, the commission shall consider the adequacy of basic rates
to support universal service.
SECTION 15. Subchapter B, Chapter 56, Utilities Code, is
amended by adding Section 56.032 to read as follows:
Sec. 56.032. COMMISSION REVIEW AND EVALUATION OF DISTANCE
LEARNING DISCOUNTS AND PRIVATE NETWORK SERVICES FOR CERTAIN
ENTITIES. (a) On or before October 1, 2005, the commission shall
initiate a study for the purpose of evaluating a new funding
mechanism to provide financial support to all telecommunications
utilities that provide discounts or private network services at
prescribed rates to the entities identified in Subchapter B,
Chapter 57, Subchapter G, Chapter 58, and Subchapter D, Chapter 59.
(b) The study must include an evaluation of alternative
sources of funding such support, including utilizing federal E-rate
funding, and an evaluation of alternative funding mechanisms that
would result in support being made available to all
telecommunications utilities on a nondiscriminatory basis and on a
technology neutral basis in exchange for providing services at
rates comparable to those preferred rates being paid by the
entities identified under Subchapter B, Chapter 57, Subchapter G,
Chapter 58, and Subchapter D, Chapter 59, provisions.
(c) The commission shall conduct necessary proceedings to
evaluate the appropriate funding mechanism and the appropriate
method for determining the amount of support to be made available to
telecommunications utilities that provide discounts to entities
listed in Subsection (b).
(d) On or before November 15, 2006, the commission shall
issue a report to the speaker of the house of representatives and
the lieutenant governor on the viability of establishing a new
program or funding mechanism through which support shall be funded
and disbursed in exchange for providing discounts to the entities
listed in Subsection (b). The commission shall include in the
report its findings regarding the cost of any new funding
mechanism, the benefit of establishing a new program or funding
mechanism, and any other relevant information the commission deems
appropriate to assist the legislature in its review of discounts
for distance learning and private network services.
(e) This section expires September 1, 2007.
SECTION 16. Chapter 56, Utilities Code, is amended by
adding Subchapter H to read as follows:
SUBCHAPTER H. AUDIO NEWSPAPER PROGRAM
Sec. 56.301. AUDIO NEWSPAPER ASSISTANCE PROGRAM. The
commission by rule shall establish a program to provide from the
universal service fund financial assistance for a free telephone
service for blind and visually impaired persons that offers the
text of newspapers using synthetic speech. The commission may
adopt rules to implement the program.
SECTION 17. Section 58.051, Utilities Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (c), and (d)
to read as follows:
(a) Unless reclassified under Section 58.024, the following
services are basic network services:
(1) flat rate residential local exchange telephone
service, including primary directory listings and the receipt of a
directory and any applicable mileage or zone charges;
(2) residential tone dialing service;
(3) lifeline and tel-assistance service;
(4) service connection for basic residential
services;
(5) direct inward dialing service for basic
residential services;
(6) private pay telephone access service;
(7) call trap and trace service;
(8) access for all residential and business end users
to 911 service provided by a local authority and access to dual
party relay service;
(9) mandatory residential extended area service
arrangements; and
(10) mandatory residential extended metropolitan
service or other mandatory residential toll-free calling
arrangements[; and
[(11) residential call waiting service].
(a-1) Notwithstanding Subsection (a) and Section 58.151,
basic network services include residential caller identification
services if the customer to whom the service is billed is at least
65 years of age.
(c) At the election of the affected incumbent local exchange
company, the price for basic network service shall also include the
fees and charges for any mandatory extended area service
arrangements, mandatory expanded toll-free calling plans, and any
other service included in the definition of basic network service.
(d) A non-permanent expanded toll-free local calling
service surcharge established by the commission to recover the
costs of mandatory expanded toll-free local calling service:
(1) is considered a part of basic network service;
(2) may not be aggregated under Subsection (c); and
(3) continues to be transitioned in accordance with
commission orders and substantive rules.
SECTION 18. Section 58.151, Utilities Code, is amended to
read as follows:
Sec. 58.151. SERVICES INCLUDED. The following services are
classified as nonbasic services:
(1) flat rate business local exchange telephone
service, including primary directory listings and the receipt of a
directory, and any applicable mileage or zone charges, except that
the prices for this service shall be capped until September 1, 2005,
at the prices in effect on September 1, 1999;
(2) business tone dialing service, except that the
prices for this service shall be capped until September 1, 2005, at
the prices in effect on September 1, 1999;
(3) service connection for all business services,
except that the prices for this service shall be capped until
September 1, 2005, at the prices in effect on September 1, 1999;
(4) direct inward dialing for basic business services,
except that the prices for this service shall be capped until
September 1, 2005, at the prices in effect on September 1, 1999;
(5) "1-plus" intraLATA message toll services;
(6) 0+ and 0- operator services;
(7) call waiting, call forwarding, and custom calling,
except that:
(A) residential call waiting service shall be
classified as a basic network service until July 1, 2006; and
(B) for an electing company subject to Section
58.301, prices for residential call forwarding and other custom
calling services shall be capped at the prices in effect on
September 1, 1999, until the electing company implements the
reduction in switched access rates described by Section 58.301(2);
(8) call return, caller identification, and call
control options, except that, for an electing company subject to
Section 58.301, prices for residential call return, caller
identification, and call control options shall be capped at the
prices in effect on September 1, 1999, until the electing company
implements the reduction in switched access rates described by
Section 58.301(2);
(9) central office based PBX-type services;
(10) billing and collection services, including
installment billing and late payment charges for customers of the
electing company;
(11) integrated services digital network (ISDN)
services, except that prices for Basic Rate Interface (BRI) ISDN
services, which comprise up to two 64 Kbps B-channels and one 16
Kbps D-channel, shall be capped until September 1, 2005, at the
prices in effect on September 1, 1999;
(12) new services;
(13) directory assistance services, except that an
electing company shall provide to a residential customer the first
three directory assistance inquiries in a monthly billing cycle at
no charge until July 1, 2006;
(14) services described in the WATS tariff as the
tariff existed on January 1, 1995;
(15) 800 and foreign exchange services;
(16) private line service;
(17) special access service;
(18) services from public pay telephones;
(19) paging services and mobile services (IMTS);
(20) 911 services provided to a local authority that
are available from another provider;
(21) speed dialing;
(22) three-way calling; and
(23) all other services subject to the commission's
jurisdiction that are not specifically classified as basic network
services in Section 58.051, except that nothing in this section
shall preclude a customer from subscribing to a local flat rate
residential or business line for a computer modem or a facsimile
machine.
SECTION 19. Subsection (a), Section 58.258, Utilities Code,
is amended to read as follows:
(a) Notwithstanding the pricing flexibility authorized by
this subtitle, an electing company's rates for private network
services may not be increased [on or] before January 1, 2012 [the
sixth anniversary of the company's date of election]. However, an
electing company may increase a rate in accordance with the
provisions of a customer specific contract.
SECTION 20. Subchapter G, Chapter 58, Utilities Code, is
amended by adding Section 58.268 to read as follows:
Sec. 58.268. CONTINUATION OF OBLIGATION. Notwithstanding
any other provision of this title, an electing company shall
continue to comply with this subchapter until January 1, 2012,
regardless of:
(1) the date the company elected under this chapter;
or
(2) any action taken in relation to that company under
Chapter 65.
SECTION 21. Subsection (a), Section 59.077, Utilities Code,
is amended to read as follows:
(a) Notwithstanding the pricing flexibility authorized by
this subtitle, an electing company's rates for private network
services may not be increased [on or] before January 1, 2012 [the
sixth anniversary of the company's election date].
SECTION 22. Subchapter D, Chapter 59, Utilities Code, is
amended by adding Section 59.083 to read as follows:
Sec. 59.083. CONTINUATION OF OBLIGATION. Notwithstanding
any other provision of this title, an electing company shall
continue to comply with this subchapter until January 1, 2012,
regardless of:
(1) the date the company elected under this chapter;
or
(2) any action taken in relation to that company under
Chapter 65.
SECTION 23. Chapter 60, Utilities Code, is amended by
adding Subchapter J to read as follows:
SUBCHAPTER J. WHOLESALE CODE OF CONDUCT
Sec. 60.201. STATEMENT OF POLICY. It is the policy of this
state that providers of telecommunications services operate in a
manner that is consistent with minimum standards to provide
customers with continued competitive choices.
Sec. 60.202. APPLICABILITY OF SUBCHAPTER. A provision of
this subchapter applies only to the extent the provision has not
been preempted by federal law or a rule, regulation, or order of the
Federal Communications Commission.
Sec. 60.203. MINIMUM SERVICE REQUIREMENTS. A
telecommunications provider may not unreasonably:
(1) discriminate against another provider by refusing
access to an exchange;
(2) refuse or delay an interconnection to another
provider;
(3) degrade the quality of access the
telecommunications provider provides to another provider;
(4) impair the speed, quality, or efficiency of a line
used by another provider;
(5) fail to fully disclose in a timely manner on
request all available information necessary to design equipment
that will meet the specifications of the network; or
(6) refuse or delay access by a person to another
provider.
Sec. 60.204. INTERCONNECTION. A telecommunications provider
shall provide interconnection with other telecommunications
providers' networks for the transmission and routing of telephone
exchange service and exchange access.
Sec. 60.205. NUMBER PORTABILITY. A telecommunications
provider shall provide number portability in accordance with
federal requirements.
Sec. 60.206. DUTY TO NEGOTIATE. A telecommunications
provider shall negotiate in good faith the terms and conditions of
any agreement.
Sec. 60.207. DIALING PARITY. (a) A telecommunications
provider shall provide dialing parity to competing
telecommunications providers of telephone exchange service and
telephone toll service.
(b) A telecommunications provider shall provide
nondiscriminatory access to telephone numbers, operator services,
directory assistance, and directory listings and may not delay that
access unreasonably.
Sec. 60.208. ACCESS TO RIGHTS-OF-WAY. A telecommunications
provider shall provide access to poles, ducts, conduits, and
rights-of-way to competing providers of telecommunications service on
rates, terms, and conditions that are just, reasonable, and
nondiscriminatory.
Sec. 60.209. RECIPROCAL COMPENSATION. A telecommunications
provider shall establish reciprocal compensation arrangements for the
transport and termination of telecommunications.
Sec. 60.210. ACCESS TO SERVICES. A telecommunications
provider shall provide access to:
(1) 911 and E-911 service;
(2) directory assistance service to allow other
telecommunications providers' customers to obtain telephone
numbers; and
(3) operator call completion service.
SECTION 24. Subchapter A, Chapter 62, Utilities Code, is
amended by adding Section 62.003 to read as follows:
Sec. 62.003. REQUIREMENTS RELATING TO AUDIO AND VIDEO
PROGRAMMING. (a) This section applies only to a provider of
advanced services or local exchange telephone service that has more
than 500,000 access lines in service in this state and that delivers
audio programming with localized content or video programming to
its subscribers.
(b) Notwithstanding any other provision of this title, a
provider of advanced services or local exchange telephone service
shall provide subscribers access to the signals of the local
broadcast television and radio stations licensed by the Federal
Communications Commission to serve those subscribers over the air;
provided with respect to low power television stations, this
section shall only apply to those low power television stations
that are "qualified low power stations" as defined in 47 U.S.C.
Section 534(h)(2).
(c) To facilitate access by subscribers of a provider of
advanced services or local exchange telephone service to the
signals of local broadcast stations, a station either shall be
granted mandatory carriage or may request retransmission consent
with the provider.
(d) This title does not require a provider of advanced
services or local exchange telephone service to provide a
television or radio station valuable consideration in exchange for
carriage.
(e) A provider of advanced services or local exchange
telephone service shall transmit without degradation the signals a
local broadcast station delivers to the provider. The transmission
quality offered a broadcast station may not be lower than the
quality made available to another broadcast station or video or
audio programming source.
(f) A provider of advanced services or local exchange
telephone service that delivers audio or video programming to its
subscribers may not:
(1) discriminate among broadcast stations or between
broadcast stations on the one hand and programming providers on the
other with respect to transmission of their signals, taking into
account any consideration afforded a provider of advanced services
or local exchange telephone service by any such programming
provider or broadcast station; or
(2) delete, change, or alter a copyright
identification transmitted as part of a broadcast station's signal.
(g) A provider of advanced services or local exchange
telephone service that delivers audio or video programming shall be
subject to any applicable network non-duplication or syndicated
exclusivity rules promulgated by the Federal Communications
Commission to the extent applicable to cable systems as defined by
the commission.
(h) A provider of advanced services or local exchange
telephone service that delivers audio or video programming to its
subscribers shall include all programming providers in a subscriber
programming guide, if any, that lists program schedules.
SECTION 25. Chapter 64, Utilities Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. TRUTH IN TELECOMMUNICATIONS BILLING
Sec. 64.251. DEFINITION. In this subchapter, "commercial
mobile service provider" means a provider of commercial mobile
service as defined by Section 332(d), Communications Act of 1934
(47 U.S.C. Section 151 et seq.), Federal Communications Commission
rules, and the Omnibus Budget Reconciliation Act of 1993 (Pub. L.
No. 103-66).
Sec. 64.252. BILLING STATEMENT. (a) A commercial mobile
service provider or a provider of voice service, as defined in
Section 283.002, Local Government Code, may include only the
following in an end-user customer's bill:
(1) applicable charges for service and options
requested by the end-user customer; and
(2) taxes imposed by a governmental entity
specifically on the end-user customer.
(b) An end-user customer's bill may not contain a fee,
charge, or tax unless a contract provision, tariff, or state or
federal law:
(1) requires the end-user customer to pay the fee,
charge, or tax; or
(2) authorizes a commercial mobile service provider or
a provider of voice service, as defined in Section 283.002, Local
Government Code, to include the fee, charge, or tax in an end-user
customer's bill.
(c) This section shall not apply to a billing utility, as
defined in Section 64.002, that bills for goods or services
provided by another entity.
(d) A violation of this section is a false, misleading, or
deceptive act or practice within the meaning of Section 17.46,
Business & Commerce Code, but shall only be actionable by the
attorney general.
SECTION 26. Subtitle C, Title 2, Utilities Code, is amended
by adding Chapter 65 to read as follows:
CHAPTER 65. DEREGULATION OF CERTAIN INCUMBENT LOCAL EXCHANGE
COMPANY MARKETS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 65.001. STATEMENT OF POLICY. It is the policy of this
state to provide for full rate and service competition in the
telecommunications market of this state so that customers may
benefit from innovations in service quality and market-based
pricing.
Sec. 65.002. DEFINITIONS. In this chapter:
(1) "Deregulated company" means an incumbent local
exchange company for which all of the company's markets have been
deregulated.
(2) "Market" means an exchange in which an incumbent
local exchange company provides residential local exchange
telephone service.
(3) "Regulated company" means an incumbent local
exchange company for which none of the company's markets have been
deregulated.
(4) "Stand-alone residential local exchange voice
service" means:
(A) residential tone dialing service;
(B) services and functionalities supported under
the lifeline program;
(C) access for all residential end users to 911
service provided by a local authority and access to dual party relay
service;
(D) at the election of the incumbent local
exchange company, mandatory residential extended area service
arrangements, mandatory residential extended metropolitan service
or other mandatory residential toll-free calling arrangements,
mandatory expanded local calling service arrangements, or another
service that a company is required under a tariff to provide to a
customer who subscribes or may subscribe to basic network services;
(E) flat rate residential local exchange
telephone service delivered by landline, but only if the service is
ordered and received independent of:
(i) a service classified as a nonbasic
service under Section 58.151 or residential call waiting service;
(ii) a package of services that includes a
service classified as a nonbasic service under Section 58.151; or
(iii) another flat rate residential local
exchange service delivered by landline; and
(F) residential caller identification services
if the customer to whom the service is billed is at least 65 years of
age.
(5) "Transitioning company" means an incumbent local
exchange company for which at least one, but not all, of the
company's markets has been deregulated.
Sec. 65.003. COMMISSION AUTHORITY. (a) Notwithstanding
any other provisions of this title, the commission has authority to
implement and enforce this chapter.
(b) The commission may adopt rules and conduct proceedings
necessary to administer and enforce this chapter, including rules
to determine whether a market should remain regulated, should be
deregulated, or should be reregulated.
Sec. 65.004. INFORMATION. (a) The commission may collect
and compile information from all telecommunications providers as
necessary to implement and enforce this chapter.
(b) The commission shall maintain the confidentiality of
information collected under this chapter that is claimed to be
confidential for competitive purposes. Information that is claimed
to be confidential is exempt from disclosure under Chapter 552,
Government Code.
Sec. 65.005. CUSTOMER PROTECTION. This chapter does not
affect a customer's right to complain to the commission regarding a
telecommunications provider.
[Sections 65.006-65.050 reserved for expansion]
SUBCHAPTER B. DETERMINATION OF WHETHER MARKET SHOULD BE REGULATED
Sec. 65.051. MARKETS DEREGULATED. (a) Except as provided
by Subsection (b), all markets of all incumbent local exchange
companies are deregulated on January 1, 2006, unless the commission
determines under Section 65.052(a) that a market or markets should
remain regulated.
(b) A market of an incumbent local exchange company in which
the population in the area included in the market is less than
30,000 is deregulated on January 1, 2007, unless the commission
determines under Section 65.052(f) that the market should remain
regulated.
Sec. 65.052. DETERMINATION OF WHETHER A MARKET SHOULD
REMAIN REGULATED. (a) Except as provided by Subsection (f), the
commission shall:
(1) determine whether each market of an incumbent
local exchange company should remain regulated on and after January
1, 2006; and
(2) issue a final order classifying the company in
accordance with this section effective January 1, 2006.
(b) In making a determination under Subsection (a), the
commission may not determine that a market should remain regulated
if:
(1) the population in the area included in the market
is at least 100,000; or
(2) the population in the area included in the market
is at least 30,000 but less than 100,000 and, in addition to the
incumbent local exchange company, there are at least three
competitors of which:
(A) at least one is a telecommunications provider
that holds a certificate of operating authority or service provider
certificate of operating authority and provides residential local
exchange telephone service in the market;
(B) at least one is an entity providing
residential telephone service in the market using facilities that
the entity or its affiliate owns; and
(C) at least one is a provider in that market of
commercial mobile service as defined by Section 332(d),
Communications Act of 1934 (47 U.S.C. Section 151 et seq.), Federal
Communications Commission rules, and the Omnibus Budget
Reconciliation Act of 1993 (Pub. L. No. 103-66), that is not
affiliated with the incumbent local exchange company.
(c) The commission shall issue an order classifying an
incumbent local exchange company as a deregulated company that is
subject to Subchapter C if:
(1) the company does not have any markets in which the
population in the area included in the market is less than 30,000;
and
(2) the commission does not determine that a market of
the company should remain regulated on and after January 1, 2006.
(d) Regardless of the population in the area included in an
incumbent local exchange company's markets, the commission shall
issue an order classifying the company as a transitioning company
that is subject to Subchapter D if the commission determines that
one or more, but not all, of the markets of the company should
remain regulated on and after January 1, 2006.
(e) The commission shall issue an order classifying the
company as a regulated company that is subject to the provisions of
this title that applied to the company on September 1, 2005, if the
commission determines that all of the markets of the company in
which the population in each area included in the markets is at
least 30,000 should remain regulated on and after January 1, 2006.
This subsection does not affect the authority of a regulated
company to elect under Chapter 58 or 59 after January 1, 2005, and
to be regulated under the chapter under which the company elected.
(f) Not later than November 30, 2006, the commission shall
determine whether a market of an incumbent local exchange company
in which the population in the area included in the market is less
than 30,000 should remain regulated on or after January 1, 2007.
The commission by rule shall determine the market test to be applied
in determining whether the market should remain regulated. If the
commission does not determine that the market should remain
regulated on or after January 1, 2007, and the deregulation of that
market results in a transitioning or regulated company no longer
meeting the definition of a transitioning or regulated company, as
appropriate, the commission shall issue an order reclassifying the
company appropriately.
Sec. 65.053. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS.
(a) Notwithstanding Section 65.052, an incumbent local exchange
company may elect to have all of the company's markets remain
regulated on and after January 1, 2006.
(b) To make an election under Subsection (a), an incumbent
local exchange company must file an affidavit with the commission
making that election not later than December 1, 2005.
(c) If an incumbent local exchange company makes an election
under this section, the commission shall issue an order classifying
the company as a regulated company that is subject to the provisions
of this title that applied to the company on September 1, 2005.
This subsection does not affect the authority of a regulated
company to elect under Chapter 58 or 59 after January 1, 2005, and
to be regulated under the chapter under which the company elected.
Sec. 65.054. PETITION FOR DEREGULATION. (a) After July 1,
2007, a company may petition the commission to deregulate a market
that the commission previously determined should remain regulated.
(b) If the commission deregulates a market under this
section and the deregulation results in the transitioning or
regulated company no longer meeting the definition of a
transitioning or regulated company, as appropriate, the commission
shall issue an order reclassifying the company appropriately.
Sec. 65.055. COMMISSION AUTHORITY TO REREGULATE CERTAIN
MARKETS. (a) This section applies only to a market of an incumbent
local exchange company in which the population in the area included
in the market is less than 100,000.
(b) The commission, on its own motion or on a complaint that
the commission considers to have merit, may determine that a market
that was previously deregulated should again be subject to
regulation.
(c) The commission by rule shall prescribe the procedures
and standards applicable to a determination under this section.
[Sections 65.056-65.100 reserved for expansion]
SUBCHAPTER C. DEREGULATED COMPANY
Sec. 65.101. ISSUANCE OF CERTIFICATE OF OPERATING
AUTHORITY. (a) A deregulated company may petition the commission
to relinquish the company's certificate of convenience and
necessity and receive a certificate of operating authority.
(b) The commission shall issue the deregulated company a
certificate of operating authority and rescind the deregulated
company's certificate of convenience and necessity if the
commission finds that all of the company's markets have been
deregulated under Subchapter B.
Sec. 65.102. REQUIREMENTS. (a) A deregulated company that
holds a certificate of operating authority issued under this
subchapter is a nondominant carrier governed in the same manner as a
holder of a certificate of operating authority issued under Chapter
54, except that the deregulated company:
(1) retains the obligations of a provider of last
resort under Chapter 54;
(2) is subject to the following provisions in the same
manner as an incumbent local exchange company that is not
deregulated:
(A) Sections 54.156, 54.158, and 54.159;
(B) Section 55.012; and
(C) Chapter 60; and
(3) may not increase the company's rates for
stand-alone residential local exchange voice service before the
date that the commission has the opportunity to revise the monthly
per line support under the Texas High Cost Universal Service Plan
pursuant to Section 56.031, regardless of whether the company is an
electing company under Chapter 58.
(b) In each deregulated market, a deregulated company shall
make available to all residential customers uniformly throughout
that market the same price, terms, and conditions for all basic and
non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
[Sections 65.103-65.150 reserved for expansion]
SUBCHAPTER D. TRANSITIONING COMPANY
Sec. 65.151. PROVISIONS APPLICABLE TO TRANSITIONING
COMPANY. A transitioning company is governed by this subchapter
and the provisions of this title that applied to the company
immediately before the date the company was classified as a
transitioning company. If there is a conflict between this
subchapter and the other applicable provisions of this title, this
subchapter controls.
Sec. 65.152. GENERAL REQUIREMENTS. (a) A transitioning
company may:
(1) exercise pricing flexibility in a market in the
manner provided by Section 58.063 one day after providing an
informational notice as required by that section; and
(2) introduce a new service in a market in the manner
provided by Section 58.153 one day after providing an informational
notice as required by that section.
(b) A transitioning company may not be required to comply
with exchange-specific retail quality of service standards or
reporting requirements in a market that is deregulated.
Sec. 65.153. RATE REQUIREMENTS. (a) In a market that
remains regulated, a transitioning company shall price the
company's retail services in accordance with the provisions that
applied to that company immediately before the date the company was
classified as a transitioning company.
(b) In a market that is deregulated, a transitioning company
shall price the company's retail services as follows:
(1) for all services, other than basic local
telecommunications service, at any price higher than the service's
long run incremental cost; and
(2) for basic local telecommunications service, at any
price higher than the lesser of the service's long run incremental
cost or the tariffed price on the date that market was deregulated,
provided that the company may not increase the company's rates for
stand-alone residential local exchange voice service before the
date that the commission has the opportunity to revise the monthly
per line support under the Texas High Cost Universal Service Plan
pursuant to Section 56.031, regardless of whether the company is an
electing company under Chapter 58.
(c) In each deregulated market, a transitioning company
shall make available to all residential customers uniformly
throughout that market the same price, terms, and conditions for
all basic and non-basic services, consistent with any pricing
flexibility available to such company on or before August 31, 2005.
(d) In any market, regardless of whether regulated or
deregulated, the transitioning company may not:
(1) establish a retail rate, term, or condition that
is anticompetitive or unreasonably preferential, prejudicial, or
discriminatory;
(2) establish a retail rate for a basic or non-basic
service in a deregulated market that is subsidized either directly
or indirectly by a basic or non-basic service provided in an
exchange that is not deregulated; or
(3) engage in predatory pricing or attempt to engage
in predatory pricing.
(e) A rate that meets the pricing requirements in Subsection
(b) shall be deemed compliant with Subsection (d)(2).
[Sections 65.154-65.200 reserved for expansion]
SUBCHAPTER E. REDUCTION OF SWITCHED ACCESS RATES
Sec. 65.201. REDUCTION OF SWITCHED ACCESS RATES BY
DEREGULATED COMPANY. (a) On the date the last market of an
incumbent local exchange company is deregulated, the company shall
reduce both the company's originating and terminating per minute of
use switched access rates in each market to parity with the
company's respective federal originating and terminating per
minute of use switched access rates.
(b) After reducing the rates under Subsection (a), a
deregulated company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and terminating
per minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access rates
in each market as necessary to re-achieve parity with the company's
federal originating and terminating per minute of use switched
access rates.
Sec. 65.202. REDUCTION OF SWITCHED ACCESS RATES BY
TRANSITIONING COMPANY WITH MORE THAN THREE MILLION ACCESS LINES.
(a) Notwithstanding any other provision of this title, a
transitioning company that has more than three million access lines
in service in this state on January 1, 2006, shall:
(1) on July 1, 2006, reduce both the company's
originating and terminating per minute of use switched access rates
in each market by an amount equal to 33 percent of the difference in
the rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates;
(2) on July 1, 2007, reduce both the company's
originating and terminating per minute of use switched access rates
in each market by an amount equal to 33 percent of the difference in
the rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates; and
(3) on July 1, 2008, reduce both the company's
originating and terminating per minute of use switched access rates
in each market to parity with the company's respective federal
originating and terminating per minute of use switched access
rates.
(b) After reducing the rates under Subsection (a), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and terminating
per minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access rates
in each market as necessary to re-achieve parity with the company's
federal originating and terminating per minute of use switched
access rates.
Sec. 65.203. REDUCTION OF SWITCHED ACCESS RATES BY CERTAIN
TRANSITIONING COMPANIES WITH NOT MORE THAN THREE MILLION ACCESS
LINES. (a) Notwithstanding any other provision of this title, a
company that is classified as a transitioning company effective
January 1, 2006, and that has not more than three million access
lines in service in this state on that date shall reduce both the
company's originating and terminating per minute of use switched
access rates in each market in accordance with this section.
(b) On July 1, 2006, the transitioning company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates
in effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access rates
in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that are not regulated on July 1, 2006, by the total number
of the company's markets on December 30, 2005.
(c) On July 1, 2007, the transitioning company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates
in effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access rates
in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On July 1, 2008, the transitioning company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates
in effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access rates
in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On July 1, 2009, and each succeeding year thereafter on
July 1, the transitioning company shall reduce both the company's
originating and terminating per minute of use switched access rates
in each market by an amount derived by multiplying the difference in
the company's rates in effect on June 30, 2006, and the company's
respective federal originating and terminating per minute of use
switched access rates in effect on that date by a percentage derived
by dividing the number of the company's markets that were
deregulated in the prior 12 months by the total number of the
company's markets on December 30, 2005, except that a transitioning
company shall be required to reduce both the company's originating
and terminating per minute of use switched access charges to parity
with the company's respective federal originating and terminating
per minute of use switched access charges if more than 75 percent of
the transitioning company's markets are not regulated on July 1 of
2009 or any succeeding year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and terminating
per minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access rates
in each market as necessary to re-achieve parity with the company's
federal originating and terminating per minute of use switched
access rates.
Sec. 65.204. REDUCTION OF SWITCHED ACCESS RATES BY NEWLY
DESIGNATED TRANSITIONING COMPANY. (a) Notwithstanding any other
provision of this title, a company that is classified as a
transitioning company after January 1, 2006, shall reduce both the
company's originating and terminating per minute of use switched
access rates in each market in accordance with this section.
(b) On the date the company is classified as a transitioning
company, the company shall reduce both the company's originating
and terminating per minute of use switched access rates in each
market by an amount equal to the lesser of:
(1) 25 percent of the difference in the company's rates
in effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that are not regulated on the date the company is classified
as a transitioning company by the total number of the company's
markets on December 30, 2005.
(c) On the first anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates
in effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On the second anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates
in effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference
by a percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On the third anniversary of the date the company is
classified as a transitioning company and each anniversary
thereafter, the company shall reduce both the company's originating
and terminating per minute of use switched access rates in each
market by an amount derived by multiplying the difference in the
company's rates in effect on the day before the date the company was
classified as a transitioning company, and the company's respective
federal originating and terminating per minute of use switched
access rates in effect on that date by a percentage derived by
dividing the number of the company's markets that were deregulated
in the prior 12 months by the total number of the company's markets
on December 30, 2005, except that a transitioning company shall be
required to reduce both the company's originating and terminating
per minute of use switched access charges to parity with the
company's respective federal originating and terminating per
minute of use switched access charges if more than 75 percent of the
transitioning company's markets are not regulated on July 1 of 2009
or any succeeding year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and terminating
per minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access rates
in each market as necessary to re-achieve parity with the company's
federal originating and terminating per minute of use switched
access rates.
Sec. 65.205. MAINTENANCE OF REDUCTION OR PARITY.
(a) After a deregulated or transitioning company reduces the
company's rates under this subchapter, the company may not increase
those rates above the applicable rates prescribed by this
subchapter.
(b) If a transitioning company's federal per minute of use
switched access rates are reduced, the company shall reduce the
company's per minute of use switched access rates to not more than
the applicable rates prescribed by this subchapter.
(c) Notwithstanding Subsections (a) and (b), a deregulated
or transitioning company may decrease the company's per minute of
use switched access rates to amounts that are less than the
applicable rates prescribed by this subchapter.
[Sections 65.206-65.250 reserved for expansion]
SUBCHAPTER F. LEGISLATIVE OVERSIGHT COMMITTEE
Sec. 65.251. OVERSIGHT COMMITTEE. (a) In this subchapter,
"committee" means the telecommunications competitiveness
legislative oversight committee.
(b) The committee is composed of nine members as follows:
(1) the chair of the Senate Committee on Business and
Commerce;
(2) the chair of the House Committee on Regulated
Industries;
(3) three members of the senate appointed by the
lieutenant governor;
(4) three members of the house of representatives
appointed by the speaker of the house of representatives; and
(5) the chief executive of the Office of Public
Utility Counsel.
(c) An appointed member of the committee serves at the
pleasure of the appointing official.
Sec. 65.252. COMMITTEE DUTIES. (a) The committee shall
conduct joint public hearings with the commission at least annually
regarding the introduction of full competition to
telecommunications services in this state.
(b) The commission shall:
(1) collect and compile information from all
telecommunications providers as necessary to conduct a hearing
under this section; and
(2) maintain the confidentiality of information
collected under this section that is claimed to be confidential for
competitive purposes.
(c) Information that is claimed to be confidential under
Subsection (b) is exempt from disclosure under Chapter 552,
Government Code.
(d) The commission shall provide to the committee
information regarding rules relating to telecommunications
deregulation proposed by the commission. The committee may submit
comments to the commission on those proposed rules.
(e) The committee shall monitor the effectiveness of
telecommunications deregulation, including the fairness of rates,
the quality of service, and the effect of regulation on the normal
forces of competition.
(f) The committee may request reports and other information
from the commission as necessary to carry out this subchapter.
(g) Not later than November 15 of each even-numbered year,
the committee shall report to the governor, lieutenant governor,
and speaker of the house of representatives on the committee's
activities under this subchapter. The report must include:
(1) an analysis of any problems caused by
telecommunications deregulation; and
(2) recommendations for any legislative action
necessary to address those problems and to further competition
within the telecommunications industry.
SECTION 27. Subtitle C, Title 2, Utilities Code, is amended
by adding Chapter 66 to read as follows:
CHAPTER 66. STATE-ISSUED CABLE AND VIDEO FRANCHISE
Sec. 66.001. FRANCHISING AUTHORITY. The commission shall
be designated as the franchising authority for a state-issued
franchise for the provision of cable service or video service.
Sec. 66.002. DEFINITIONS. In this chapter:
(1) "Actual incremental cost" means only current
out-of-pocket expenses for labor, equipment repair, equipment
replacement, and tax expenses directly associated with the labor or
the equipment of a service provider that is necessarily and
directly used to provide what were, under a superseded franchise,
in-kind services, exclusive of any profit or overhead such as
depreciation, amortization, or administrative expense.
(2) "Cable service" is defined as set forth in 47
U.S.C. Section 522(6).
(3) "Cable service provider" means a person who
provides cable service.
(4) "Communications network" means a component or
facility that is, wholly or partly, physically located within a
public right-of-way and that is used to provide video programming,
cable, voice, or data services.
(5) "Franchise" means an initial authorization, or
renewal of an authorization, issued by a franchising authority,
regardless of whether the authorization is designated as a
franchise, permit, license, resolution, contract, certificate,
agreement, or otherwise, that authorizes the construction and
operation of a cable or video services network in the public
rights-of-way.
(6)(A) "Gross revenues" means all consideration of any
kind or nature including without limitation cash, credits,
property, and in-kind contributions (services or goods) derived by
the holder of a state-issued certificate of franchise authority
from the operation of the cable service provider's or the video
service provider's network to provide cable service or video
service within the municipality. Gross revenue shall include all
consideration paid to the holder of a state-issued certificate of
franchise authority and its affiliates (to the extent either is
acting as a provider of a cable service or video service as
authorized by this chapter), which shall include but not be limited
to the following: (i) all fees charged to subscribers for any and
all cable service or video service provided by the holder of a
state-issued certificate of franchise authority; (ii) any fee
imposed on the holder of a state-issued certificate of franchise
authority by this chapter that is passed through and paid by
subscribers (including without limitation the franchise fee set
forth in this chapter); and (iii) compensation received by the
holder of a state-issued certificate of franchise authority or its
affiliates that is derived from the operation of the holder of a
state-issued certificate of franchise authority's network to
provide cable service or video service with respect to commissions
that are paid to the holder of a state-issued certificate of
franchise authority as compensation for promotion or exhibition of
any products or services on the holder of a state-issued
certificate of franchise authority's network, such as a "home
shopping" or a similar channel, subject to Paragraph (B)(v). Gross
revenue includes a pro rata portion of all revenue derived by the
holder of a state-issued certificate of franchise authority or its
affiliates pursuant to compensation arrangements for advertising
derived from the operation of the holder of a state-issued
certificate of franchise authority's network to provide cable
service or the video service within a municipality, subject to
Paragraph (B)(iii). The allocation shall be based on the number of
subscribers in the municipality divided by the total number of
subscribers in relation to the relevant regional or national
compensation arrangement. Advertising commissions paid to third
parties shall not be netted against advertising revenue included in
gross revenue. Revenue of an affiliate derived from the
affiliate's provision of cable service or the video service shall
be gross revenue to the extent the treatment of such revenue as
revenue of the affiliate and not of the holder of a state-issued
certificate of franchise authority has the effect (whether
intentional or unintentional) of evading the payment of fees which
would otherwise be paid to the municipality. In no event shall
revenue of an affiliate be gross revenue to the holder of a
state-issued certificate of franchise authority if such revenue is
otherwise subject to fees to be paid to the municipality.
(B) For purposes of this section, "gross
revenues" does not include:
(i) any revenue not actually received, even
if billed, such as bad debt;
(ii) non-cable services or non-video
services revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the holder of a
state-issued certificate of franchise authority to provide cable
service or video service;
(iii) refunds, rebates, or discounts made
to subscribers, leased access providers, advertisers, or a
municipality;
(iv) any revenues from services classified
as non-cable service or non-video service under federal law
including without limitation revenue received from
telecommunications services; revenue received from information
services (but not excluding cable services or video services); and
any other revenues attributed by the holder of a state-issued
certificate of franchise authority to non-cable service or
non-video service in accordance with Federal Communications
Commission or commission rules, regulations, standards, or orders;
(v) any revenue paid by subscribers to home
shopping programmers directly from the sale of merchandise through
any home shopping channel offered as part of the cable services or
video services, but not excluding any commissions that are paid to
the holder of a state-issued certificate of franchise authority as
compensation for promotion or exhibition of any products or
services on the holder of a state-issued certificate of franchise
authority's network, such as a "home shopping" or a similar
channel;
(vi) the sale of cable services or video
services for resale in which the purchaser is required to collect
this chapter's fees from the purchaser's customer. Nothing under
this chapter is intended to limit state's rights pursuant to 47
U.S.C. Section 542(h);
(vii) the provision of cable services or
video services to customers at no charge, as required or allowed by
this chapter, including without limitation the provision of cable
services or video services to public institutions, as required or
permitted in this chapter, including without limitation public
schools or governmental entities, as required or permitted in this
chapter;
(viii) any tax of general applicability
imposed upon the holder of a state-issued certificate of franchise
authority or upon subscribers by a city, state, federal, or any
other governmental entity and required to be collected by the
holder of a state-issued certificate of franchise authority and
remitted to the taxing entity (including, but not limited to, sales
and use tax, gross receipts tax, excise tax, utility users tax,
public service tax, communication taxes, and fees not imposed by
this chapter);
(ix) any forgone revenue from the holder of
a state-issued certificate of franchise authority's provision of
free or reduced cost cable services or video services to any person
including without limitation employees of the holder of a
state-issued certificate of franchise authority, to the
municipality and other public institutions or other institutions as
allowed in this chapter; provided, however, that any forgone
revenue which the holder of a state-issued certificate of franchise
authority chooses not to receive in exchange for trades, barters,
services, or other items of value shall be included in gross
revenue;
(x) sales of capital assets or sales of
surplus equipment that is not used by the purchaser to receive cable
services or video services from the holder of a state-issued
certificate of franchise authority;
(xi) directory or Internet advertising
revenue including, but not limited to, yellow pages, white pages,
banner advertisement, and electronic publishing; and
(xii) reimbursement by programmers of
marketing costs incurred by the holder of a state-issued franchise
for the introduction of new programming that exceed the actual
costs.
(C) For purposes of this definition, a provider's
network consists solely of the optical spectrum wavelengths,
bandwidth, or other current or future technological capacity used
for the transmission of video programming over wireline directly to
subscribers within the geographic area within the municipality as
designated by the provider in its franchise.
(7) "Incumbent cable service provider" means the cable
service provider serving the largest number of cable subscribers in
a particular municipal franchise area on September 1, 2005.
(8) "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 a municipality has an
interest.
(9) "Video programming" means programming provided
by, or generally considered comparable to programming provided by,
a television broadcast station, as set forth in 47 U.S.C. Section
522(20).
(10) "Video service" means video programming services
provided through wireline facilities located at least in part in
the public right-of-way without regard to delivery technology,
including Internet protocol technology. This definition does not
include any video service provided by a commercial mobile service
provider as defined in 47 U.S.C. Section 332(d).
(11) "Video service provider" means a video
programming distributor that distributes video programming
services through wireline facilities located at least in part in
the public right-of-way without regard to delivery technology.
This term does not include a cable service provider.
Sec. 66.003. STATE AUTHORIZATION TO PROVIDE CABLE SERVICE
OR VIDEO SERVICE. (a) An entity or person seeking to provide cable
service or video service in this state after September 1, 2005,
shall file an application for a state-issued certificate of
franchise authority with the commission as required by this
section. An entity providing cable service or video service under a
franchise agreement with a municipality is not subject to this
subsection with respect to such municipality until the franchise
agreement expires, except as provided by Section 66.004.
(a-1) The commission shall notify an applicant for a
state-issued certificate of franchise authority whether the
applicant's affidavit described by Subsection (b) is complete
before the 15th business day after the applicant submits the
affidavit.
(b) The commission shall issue a certificate of franchise
authority to offer cable service or video service before the 17th
business day after receipt of a completed affidavit submitted by
the applicant and signed by an officer or general partner of the
applicant affirming:
(1) that the applicant has filed or will timely file
with the Federal Communications Commission all forms required by
that agency in advance of offering cable service or video service in
this state;
(2) that the applicant agrees to comply with all
applicable federal and state statutes and regulations;
(3) that the applicant agrees to comply with all
applicable municipal regulations regarding the use and occupation
of public rights-of-way in the delivery of the cable service or
video service, including the police powers of the municipalities in
which the service is delivered;
(4) a description of the service area footprint to be
served within the municipality, if applicable, otherwise the
municipality to be served by the applicant, which may include
certain designations of unincorporated areas, which description
shall be updated by the applicant prior to the expansion of cable
service or video service to a previously undesignated service area
and, upon such expansion, notice to the commission of the service
area to be served by the applicant; and
(5) the location of the applicant's principal place of
business and the names of the applicant's principal executive
officers.
(c) The certificate of franchise authority issued by the
commission shall contain:
(1) a grant of authority to provide cable service or
video service as requested in the application;
(2) a grant of authority to use and occupy the public
rights-of-way in the delivery of that service, subject to the laws
of this state, including the police powers of the municipalities in
which the service is delivered; and
(3) a statement that the grant of authority is subject
to lawful operation of the cable service or video service by the
applicant or its successor in interest.
(d) The certificate of franchise authority issued by the
commission is fully transferable to any successor in interest to
the applicant to which it is initially granted. A notice of
transfer shall be filed with the commission and the relevant
municipality within 14 business days of the completion of such
transfer.
(e) The certificate of franchise authority issued by the
commission may be terminated by the cable service provider or video
service provider by submitting notice to the commission.
Sec. 66.004. ELIGIBILITY FOR COMMISSION-ISSUED FRANCHISE.
(a) A cable service provider or a video service provider that
currently has or had previously received a franchise to provide
cable service or video service with respect to such municipalities
is not eligible to seek a state-issued certificate of franchise
authority under this chapter as to those municipalities until the
expiration date of the existing franchise agreement, except as
provided by Subsections (b) and (c).
(b) Beginning September 1, 2005, a cable service provider or
video service provider that is not the incumbent cable service
provider and serves fewer than 40 percent of the total cable
customers in a particular municipal franchise area may elect to
terminate that municipal franchise and seek a state-issued
certificate of franchise authority by providing written notice to
the commission and the affected municipality before January 1,
2006. The municipal franchise is terminated on the date the
commission issues the state-issued certificate of franchise
authority.
(c) A cable service provider that serves fewer than 40
percent of the total cable customers in a municipal franchise area
and that elects under Subsection (b) to terminate an existing
municipal franchise is responsible for remitting to the affected
municipality before the 91st day after the date the municipal
franchise is terminated any accrued but unpaid franchise fees due
under the terminated franchise. If the cable service provider has
credit remaining from prepaid franchise fees, the provider may
deduct the amount of the remaining credit from any future fees or
taxes it must pay to the municipality, either directly or through
the comptroller.
(d) For purposes of this section, a cable service provider
or video service provider will be deemed to have or have had a
franchise to provide cable service or video service in a specific
municipality if any affiliates or successor entity of the cable or
video provider has or had a franchise agreement granted by that
specific municipality.
(e) The terms "affiliates or successor entity" in this
section shall include but not be limited to any entity receiving,
obtaining, or operating under a municipal cable or video franchise
through merger, sale, assignment, restructuring, or any other type
of transaction.
(f) Except as provided in this chapter, nothing in this
chapter is intended to abrogate, nullify, or adversely affect in
any way the contractual rights, duties, and obligations existing
and incurred by a cable service provider or a video service provider
before the enactment of this chapter, and owed or owing to any
private person, firm, partnership, corporation, or other entity
including without limitation those obligations measured by and
related to the gross revenue hereafter received by the holder of a
state-issued certificate of franchise authority for services
provided in the geographic area to which such prior franchise or
permit applies. All liens, security interests, royalties, and
other contracts, rights, and interests in effect on September 1,
2005, shall continue in full force and effect, without the
necessity for renewal, extension, or continuance, and shall be paid
and performed by the holder of a state-issued certificate of
franchise authority, and shall apply as though the revenue
generated by the holder of a state-issued certificate of franchise
authority continued to be generated pursuant to the permit or
franchise issued by the prior local franchising authority or
municipality within the geographic area to which the prior permit
or franchise applies. It shall be a condition to the issuance and
continuance of a state-issued certificate of franchise authority
that the private contractual rights and obligations herein
described continue to be honored, paid, or performed to the same
extent as though the cable service provider continued to operate
under its prior franchise or permit, for the duration of such
state-issued certificate of franchise authority and any renewals or
extensions thereof, and that the applicant so agrees. Any person,
firm, partnership, corporation, or other entity holding or claiming
rights herein reserved may enforce same by an action brought in a
court of competent jurisdiction.
Sec. 66.005. FRANCHISE FEE. (a) The holder of a
state-issued certificate of franchise authority shall pay each
municipality in which it provides cable service or video service a
franchise fee of five percent based upon the definition of gross
revenues as set forth in this chapter. That same franchise fee
structure shall apply to any unincorporated areas that are annexed
by a municipality after the effective date of the state-issued
certificate of franchise authority.
(b) The franchise fee payable under this section is to be
paid quarterly, within 45 days after the end of the quarter for the
preceding calendar quarter. Each payment shall be accompanied by a
summary explaining the basis for the calculation of the fee. A
municipality may review the business records of the cable service
provider or video service provider to the extent necessary to
ensure compensation in accordance with Subsection (a). Each party
shall bear the party's own costs of the examination. A municipality
may, in the event of a dispute concerning compensation under this
section, bring an action in a court of competent jurisdiction.
(c) The holder of a state-issued certificate of franchise
authority may recover from the provider's customers any fee imposed
by this chapter.
Sec. 66.006. IN-KIND CONTRIBUTIONS TO MUNICIPALITY.
(a) Until the expiration of the incumbent cable service provider's
agreement, the holder of a state-issued certificate of franchise
authority shall pay a municipality in which it is offering cable
service or video service the same cash payments on a per subscriber
basis as required by the incumbent cable service provider's
franchise agreement. The holder of a state-issued certificate of
franchise authority shall report quarterly to the municipality the
total number of subscribers served within the municipality. The
amount paid by the holder of a state-issued certificate of
franchise authority shall be calculated quarterly by the
municipality by multiplying the amount of cash payment under the
incumbent cable service provider's franchise agreement by a number
derived by dividing the number of subscribers served by a video
service provider or cable service provider by the total number of
video or cable service subscribers in the municipality. Such pro
rata payments are to be paid quarterly to the municipality within 45
days after the end of the quarter for the preceding calendar
quarter.
(b) On the expiration of the incumbent cable service
provider's agreement, the holder of a state-issued certificate of
franchise authority shall pay a municipality in which it is
offering cable service or video service one percent of the
provider's gross revenues, as defined by this chapter, or at the
municipality's election, the per subscriber fee that was paid to
the municipality under the expired incumbent cable service
provider's agreement, in lieu of in-kind compensation and grants.
Payments under this subsection shall be paid in the same manner as
outlined in Section 66.005(b).
(c) All fees paid to municipalities under this section are
paid in accordance with 47 U.S.C. Sections 531 and 541(a)(4)(B) and
may be used by the municipality as allowed by federal law; further,
these payments are not chargeable as a credit against the franchise
fee payments authorized under this chapter.
(d) The following services shall continue to be provided by
the cable provider that was furnishing services pursuant to its
municipal cable franchise until January 1, 2008, or until the term
of the franchise was to expire, whichever is later:
(1) institutional network capacity, however defined
or referred to in the municipal cable franchise but generally
referring to a private line data network capacity for use by the
municipality for noncommercial purposes, shall continue to be
provided at the same capacity as was provided to the municipality
prior to the date of the termination, provided that the
municipality will compensate the provider for the actual
incremental cost of the capacity; and
(2) cable services to community public buildings, such
as municipal buildings and public schools, shall continue to be
provided to the same extent provided immediately prior to the date
of the termination until January 1, 2008, after which a provider
that provides the services may deduct from the franchise fee to be
paid to the municipality an amount equal to the actual incremental
cost of the services if the municipality requires the services
after that date. Such cable service generally refers to the
existing cable drop connections to such facilities and the tier of
cable service provided pursuant to the franchise at the time of the
termination.
Sec. 66.007. BUILD-OUT. The holder of a state-issued
certificate of franchise authority shall not be required to comply
with mandatory build-out provisions.
Sec. 66.008. CUSTOMER SERVICE STANDARDS. The holder of a
state-issued certificate of franchise authority shall comply with
customer service requirements consistent with 47 C.F.R. Section
76.309(c) until there are two or more providers offering service,
excluding direct-to-home satellite service, in the relevant
municipality.
Sec. 66.009. PUBLIC, EDUCATIONAL, AND GOVERNMENTAL ACCESS
CHANNELS. (a) Not later than 120 days after a request by a
municipality, the holder of a state-issued certificate of franchise
authority shall provide the municipality with capacity in its
communications network to allow public, educational, and
governmental (PEG) access channels for noncommercial programming.
(b) The holder of a state-issued certificate of franchise
authority shall provide no fewer than the number of PEG access
channels a municipality has activated under the incumbent cable
service provider's franchise agreement as of September 1, 2005.
(c) If a municipality did not have PEG access channels as of
September 1, 2005, the cable service provider or video service
provider shall furnish:
(1) up to three PEG channels for a municipality with a
population of at least 50,000; and
(2) up to two PEG channels for a municipality with a
population of less than 50,000.
(d) Any PEG channel provided pursuant to this section that
is not utilized by the municipality for at least eight hours a day
shall no longer be made available to the municipality, but may be
programmed at the cable service provider's or video service
provider's discretion. At such time as the municipality can
certify to the cable service provider or video service provider a
schedule for at least eight hours of daily programming, the cable
service provider or video service provider shall restore the
previously lost channel but shall be under no obligation to carry
that channel on a basic or analog tier.
(e) In the event a municipality has not utilized the minimum
number of access channels as permitted by Subsection (c), access to
the additional channel capacity allowed in Subsection (c) shall be
provided upon 90 days' written notice if the municipality meets the
following standard: if a municipality has one active PEG channel
and wishes to activate an additional PEG channel, the initial
channel shall be considered to be substantially utilized when 12
hours are programmed on that channel each calendar day. In
addition, at least 40 percent of the 12 hours of programming for
each business day on average over each calendar quarter must be
nonrepeat programming. Nonrepeat programming shall include the
first three video-castings of a program. If a municipality is
entitled to three PEG channels under Subsection (c) and has in
service two active PEG channels, each of the two active channels
shall be considered to be substantially utilized when 12 hours are
programmed on each channel each calendar day and at least 50 percent
of the 12 hours of programming for each business day on average over
each calendar quarter is nonrepeat programming for three
consecutive calendar quarters.
(f) The operation of any PEG access channel provided
pursuant to this section shall be the responsibility of the
municipality receiving the benefit of such channel, and the holder
of a state-issued certificate of franchise authority bears only the
responsibility for the transmission of such channel. The holder of
a state-issued certificate of franchise authority shall be
responsible for providing the connectivity to each PEG access
channel distribution point up to the first 200 feet.
(g) The municipality must ensure that all transmissions,
content, or programming to be transmitted over a channel or
facility by a holder of a state-issued certificate of franchise
authority are provided or submitted to the cable service provider
or video service provider in a manner or form that is capable of
being accepted and transmitted by a provider, without requirement
for additional alteration or change in the content by the provider,
over the particular network of the cable service provider or video
service provider, which is compatible with the technology or
protocol utilized by the cable service provider or video service
provider to deliver services.
(h) Where technically feasible, the holder of a
state-issued certificate of franchise authority and an incumbent
cable service provider shall use reasonable efforts to interconnect
their cable or video systems for the purpose of providing PEG
programming. Interconnection may be accomplished by direct cable,
microwave link, satellite, or other reasonable method of
connection. Holders of a state-issued certificate of franchise
authority and incumbent cable service providers shall negotiate in
good faith and incumbent cable service providers may not withhold
interconnection of PEG channels.
(i) A court of competent jurisdiction shall have exclusive
jurisdiction to enforce any requirement under this section.
Sec. 66.010. NONDISCRIMINATION BY MUNICIPALITY. (a) A
municipality shall allow the holder of a state-issued certificate
of franchise authority to install, construct, and maintain a
communications network within a public right-of-way and shall
provide the holder of a state-issued certificate of franchise
authority with open, comparable, nondiscriminatory, and
competitively neutral access to the public right-of-way. All use
of a public right-of-way by the holder of a state-issued
certificate of franchise authority is nonexclusive and subject to
Section 66.011.
(b) A municipality may not discriminate against the holder
of a state-issued certificate of franchise authority regarding:
(1) the authorization or placement of a communications
network in a public right-of-way;
(2) access to a building; or
(3) a municipal utility pole attachment term.
Sec. 66.011. MUNICIPAL POLICE POWER; OTHER AUTHORITY.
(a) A municipality may enforce police power-based regulations in
the management of a public right-of-way that apply to the holder of
a state-issued certificate of franchise authority within the
municipality. A municipality may enforce police power-based
regulations in the management of the activities of the holder of a
state-issued certificate of franchise authority to the extent that
they are reasonably necessary to protect the health, safety, and
welfare of the public. Police power-based regulation of the holder
of a state-issued certificate of franchise authority's use of the
public right-of-way must be competitively neutral and may not be
unreasonable or discriminatory. A municipality may not impose on
activities of the holder of a state-issued certificate of franchise
authority a requirement:
(1) that particular business offices be located in the
municipality;
(2) regarding the filing of reports and documents with
the municipality that are not required by state or federal law and
that are not related to the use of the public right-of-way except
that a municipality may request maps and records maintained in the
ordinary course of business for purposes of locating the portions
of a communications network that occupy public rights-of-way. Any
maps or records of the location of a communications network
received by a municipality shall be confidential and exempt from
disclosure under Chapter 552, Government Code, and may be used by a
municipality only for the purpose of planning and managing
construction activity in the public right-of-way. A municipality
may not request information concerning the capacity or technical
configuration of the holder of a state-issued certificate of
franchise authority's facilities;
(3) for the inspection of the holder of a state-issued
certificate of franchise authority's business records except to
extent permitted under Section 66.005(b);
(4) for the approval of transfers of ownership or
control of the holder of a state-issued certificate of franchise
authority's business, except that a municipality may require that
the holder of a state-issued certificate of franchise authority
maintain a current point of contact and provide notice of a transfer
within a reasonable time; or
(5) that the holder of a state-issued certificate of
franchise authority that is self-insured under the provisions of
state law obtain insurance or bonding for any activities within the
municipality, except that a self-insured provider shall provide
substantially the same defense and claims processing as an insured
provider. A bond may not be required from a provider for any work
consisting of aerial construction except that a reasonable bond may
be required of a provider that cannot demonstrate a record of at
least four years' performance of work in any municipal public
right-of-way free of currently unsatisfied claims by a municipality
for damage to the right-of-way.
(b) Notwithstanding any other law, a municipality may
require the issuance of a construction permit, without cost, to the
holder of a state-issued certificate of franchise authority that is
locating facilities in or on a public right-of-way in the
municipality. The terms of the permit shall be consistent with
construction permits issued to other persons excavating in a public
right-of-way.
(c) In the exercise of its lawful regulatory authority, a
municipality shall promptly process all valid and administratively
complete applications of the holder of a state-issued certificate
of franchise authority for a permit, license, or consent to
excavate, set poles, locate lines, construct facilities, make
repairs, affect traffic flow, or obtain zoning or subdivision
regulation approvals or other similar approvals. A municipality
shall make every reasonable effort not to delay or unduly burden the
provider in the timely conduct of the provider's business.
(d) If there is an emergency necessitating response work or
repair, the holder of a state-issued certificate of franchise
authority may begin the repair or emergency response work or take
any action required under the circumstances without prior approval
from the affected municipality, if the holder of a state-issued
certificate of franchise authority notifies the municipality as
promptly as possible after beginning the work and later obtains any
approval required by a municipal ordinance applicable to emergency
response work.
(e) The commission shall have no jurisdiction to review such
police power-based regulations and ordinances adopted by a
municipality to manage the public rights-of-way.
Sec. 66.012. INDEMNITY IN CONNECTION WITH RIGHT-OF-WAY;
NOTICE OF LIABILITY. (a) The holder of a state-issued certificate
of franchise authority shall indemnify and hold a municipality and
its officers and employees harmless against any and all claims,
lawsuits, judgments, costs, liens, losses, expenses, fees
(including reasonable attorney's fees and costs of defense),
proceedings, actions, demands, causes of action, liability, and
suits of any kind and nature, including personal or bodily injury
(including death), property damage, or other harm for which
recovery of damages is sought, that is found by a court of competent
jurisdiction to be caused solely by the negligent act, error, or
omission of the holder of a state-issued certificate of franchise
authority or any agent, officer, director, representative,
employee, affiliate, or subcontractor of the holder of a
state-issued certificate of franchise authority or their
respective officers, agents, employees, directors, or
representatives, while installing, repairing, or maintaining
facilities in a public right-of-way. The indemnity provided by
this subsection does not apply to any liability resulting from the
negligence of the municipality or its officers, employees,
contractors, or subcontractors. If the holder of a state-issued
certificate of franchise authority and the municipality are found
jointly liable by a court of competent jurisdiction, liability
shall be apportioned comparatively in accordance with the laws of
this state without, however, waiving any governmental immunity
available to the municipality under state law and without waiving
any defenses of the parties under state law. This subsection is
solely for the benefit of the municipality and the holder of a
state-issued certificate of franchise authority and does not create
or grant any rights, contractual or otherwise, for or to any other
person or entity.
(b) The holder of a state-issued certificate of franchise
authority and a municipality shall promptly advise the other in
writing of any known claim or demand against the holder of a
state-issued certificate of franchise authority or the
municipality related to or arising out of the holder of a
state-issued certificate of franchise authority's activities in a
public right-of-way.
(c) The commission shall have no jurisdiction to review such
police power-based regulations and ordinances adopted by a
municipality to manage the public rights-of-way.
Sec. 66.013. MUNICIPAL AUTHORITY. In addition to a
municipality's authority to exercise its nondiscriminatory police
power with respect to public rights-of-way under current law, a
municipality's authority to regulate the holder of state-issued
certificate of franchise authority is limited to:
(1) a requirement that the holder of a state-issued
certificate of franchise authority who is providing cable service
or video service within the municipality register with the
municipality and maintain a point of contact;
(2) the establishment of reasonable guidelines
regarding the use of public, educational, and governmental access
channels; and
(3) submitting reports within 30 days on the customer
service standards referenced in Section 66.008 if the provider is
subject to those standards and has continued and unresolved
customer service complaints indicating a clear failure on the part
of the holder of a state-issued certificate of franchise authority
to comply with the standards.
Sec. 66.014. DISCRIMINATION PROHIBITED. (a) The purpose
of this section is to prevent discrimination among potential
residential subscribers.
(b) A cable service provider or video service provider that
has been granted a state-issued certificate of franchise authority
may not deny access to service to any group of potential residential
subscribers because of the income of the residents in the local area
in which such group resides.
(c) An affected person may seek enforcement of the
requirements described by Subsection (b) by initiating a proceeding
with the commission. A municipality within which the potential
residential cable service or video service subscribers referenced
in Subsection (b) may be considered an affected person for purposes
of this section.
(d) The holder of a state-issued certificate of franchise
authority shall have a reasonable period of time to become capable
of providing cable service or video service to all households
within the designated franchise area as defined in Section
66.003(b)(4) and may satisfy the requirements of this section
through the use of an alternative technology that provides
comparable content, service, and functionality.
(e) Notwithstanding any provision of this chapter, the
commission has the authority to make the determination regarding
the comparability of the technology and the service provided.
Notwithstanding any provision of this chapter, the commission has
the authority to monitor the deployment of cable services, video
services, or alternate technology.
Sec. 66.015. COMPLIANCE. (a) Should the holder of a
state-issued certificate of franchise authority be found by a court
of competent jurisdiction to be in noncompliance with the
requirements of this chapter, the court shall order the holder a
state-issued certificate of franchise authority, within a
specified reasonable period of time, to cure such noncompliance.
Failure to comply shall subject the holder of the state-issued
franchise of franchise authority to penalties as the court shall
reasonably impose, up to and including revocation of the
state-issued certificate of franchise authority granted under this
chapter.
(b) A municipality within which the provider offers cable
service or video service shall be an appropriate party in any such
litigation.
Sec. 66.016. APPLICABILITY OF OTHER LAWS. (a) Nothing in
this chapter shall be interpreted to prevent a voice provider,
cable service provider or video service provider, or municipality
from seeking clarification of its rights and obligations under
federal law or to exercise any right or authority under federal or
state law.
(b) Nothing in this chapter shall limit the ability of a
municipality under existing law to receive compensation for use of
the public rights-of-way from entities determined not to be subject
to all or part of this chapter, including but not limited to
provider of Internet protocol cable or video services, unless such
payments are expressly prohibited by federal law.
Sec. 66.017. STUDY. (a) The telecommunications
competitiveness legislative oversight committee shall conduct a
joint interim study with the commission regarding the following:
(1) appropriate alternative forms of competitively
neutral compensation methodology that should flow to
municipalities from all sources related to the provision of
information services, telecommunication services, cable services,
and video services;
(2) right-of-way access and fees;
(3) the transition from local franchise authority to
state-issued authority, including methods to maintain current
municipal revenue streams, including franchise fees and in-kind
contributions; continuation of public, educational, and
governmental access channels; and build-out requirements; and
(4) other relevant issues.
(b) The committee shall report its findings to the
lieutenant governor and speaker of the House of Representatives no
later than December 31, 2006.
(c) This section expires January 1, 2007.
SECTION 28. Section 283.002, Local Government Code, is
amended by amending Subdivision (2) and adding Subdivision (7) to
read as follows:
(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 or a person who provides voice service.
(7) "Voice service" means voice communications
services provided through wireline facilities located at least in
part in the public right-of-way, without regard to the delivery
technology, including Internet protocol technology. The term does
not include voice service provided by a commercial mobile service
provider as defined by 47 U.S.C. Section 332(d).
SECTION 29. The following provisions of the Utilities Code
are repealed:
(1) Subchapters B through F, Chapter 62; and
(2) Chapters 61 and 63.
SECTION 30. The Public Utility Commission of Texas shall
conduct a study to determine whether Title 2, Utilities Code,
adequately preserves customer choice in the Internet-enabled
applications employed in association with broadband service and
shall report its conclusions and recommendations to the legislature
not later than January 1, 2007. The study must include
consultation with and comment from all interested parties.
SECTION 31. If any provision of this Act or its application
to any person or circumstance is held invalid, the invalidity does
not affect other provisions or applications of this Act that can be
given effect without the invalid provision or application, and to
this end the provisions of this Act are declared to be severable.
SECTION 32. This Act takes effect September 1, 2005, if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for effect on that
date, this Act takes effect on the 91st day after the last day of the
legislative session.