By:  King of Parker                                               H.B. No. 3179


A BILL TO BE ENTITLED
AN ACT
relating to the promotion of fair competition and intermodal parity among communications service providers, including assessment on the sale of communications service and municipal and state authority with regard to the providers. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. (a) The legislature finds that rapid advances in, and the convergence of technologies in, the communications industry, including landline, wireless, satellite, and Internet transmissions, require that existing regulatory and compensation structures be conformed to ensure that competing services are treated fairly in the marketplace. In particular, fee assessment and tax treatment of competing voice and video services have developed in a patchwork manner that is not competitively neutral among competing communications service providers. (b) It is the policy of this state to: (1) promote competition in the communications market of this state so that customers may benefit from innovations in service quality and market-based pricing; (2) ensure that providers of communications services are treated in a competitively neutral and nondiscriminatory manner; (3) promote intermodal parity so that customers may benefit from advances in technology; (4) ensure that providers of communications services are treated in a technology neutral and nondiscriminatory manner; (5) establish a uniform method of applying fees and assessments among competing communications service providers; (6) replace existing compensation structures with a new compensation structure that reflects the existing competitive environment and the latest technological advancements; and (7) provide municipalities with a stable source of revenue based on the sales of communications services within the municipalities. SECTION 2. Subtitle E, Title 2, Tax Code, is amended by adding Chapter 153 to read as follows:
CHAPTER 153. ASSESSMENT ON COMMUNICATIONS SERVICES
Sec. 153.001. DEFINITIONS. In this chapter: (1) "Communications service" means the transmission, conveyance, or routing of a video service or voice service by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method irrespective of when devised, regardless of the protocol used for such transmission or conveyance. (2) "Communications service provider" means any person or group of persons engaged in the provision of communications services, without regard to certification status or ownership of a communications network. (3) "Intermodal communications assessment" means the assessment described in Section 153.002. (4) "Sale" means a sale as defined by Section 151.005. (5) "Taxable item" means a taxable item as defined by Section 151.010. (6) "Video service" means cable television service as defined by Section 151.0033 and includes Internet protocol enabled video service. (7) "Voice service" means telecommunications services as defined by Section 151.0103 and includes Internet protocol enabled voice service. Sec. 153.002. ASSESSMENT ON COMMUNICATIONS SERVICES. (a) An intermodal communications assessment is imposed on each sale of a communications service that is a taxable item in this state. The assessment rate shall be 3.95 percent. (b) The intermodal communications assessment is due and payable quarterly. Returns are to be filed on or before the last day of the month following the end of the quarter. (c) The comptroller may require a communications service provider to provide information necessary to fulfill the comptroller's duties under this chapter or to ensure a communications service provider's compliance with the communications service provider's obligations under this chapter. Information provided to the comptroller under this chapter is confidential and exempt from disclosure under Chapter 552, Government Code. (d) The comptroller, on request by a municipality, shall provide information relating to the amount of the intermodal communications assessment remitted to the comptroller under this chapter during the preceding or current calendar year by each communications service provider providing communications services within the municipality. Information received by a municipality under this section is confidential and exempt from disclosure under Chapter 552, Government Code, and may be used by a municipality only for the purpose of economic forecasting or for internal auditing of an intermodal communications assessment collected under this chapter. (e) A communications service provider that is required to pay an intermodal communications assessment may identify as a separate line item on each regular bill of each subscriber the amount of the intermodal communications assessment imposed on the transaction between the communications service provider and the subscriber. Sec. 153.003. TRUST ACCOUNT. The comptroller shall deposit intermodal communications assessments collected under this chapter to the credit of a separate account in the general revenue fund for distribution to municipalities and the office of Rural Community Affairs as provided by Section 153.004. Sec. 153.004. DISTRIBUTION OF INTERMODAL COMMUNICATIONS ASSESSMENT. (a) On a quarterly basis, the comptroller shall distribute to each municipality, including municipalities incorporated after the effective date of this Act, its share of intermodal communications service assessment collections determined by this chapter. Sourcing, allocation, and distribution of the assessment on behalf of a municipality shall be done by the comptroller in the same manner as sourcing, allocation, and distribution of any telecommunications service or other service that is taxable, or taxable at the option of a municipality, under Chapter 321 or Chapter 151 of this Code. To the extent that the assessment captures in its base amount services not presently taxable under Chapter 321 or Chapter 151 of this Code, the comptroller shall by rule establish sourcing, allocation, and distribution guidelines for each service that are consistent with a similarly taxable service. (b) On a quarterly basis, the comptroller shall distribute to the rural development fund to be administered by the office of Rural Community Affairs the share of collections generated by the payment of the intermodal communications assessment for communications services provided in unincorporated areas. Disbursements from the rural development fund shall be distributed by the Office of Rural Community Affairs in accordance with the following requirements: (1) broadband service must be provided to rural areas that are without broadband service; (2) the selection of a broadband service provider must be made through a competitive bidding process; and (3) the selection of broadband service must be made on a technology-neutral basis. Sec. 153.005. ENFORCEMENT. The comptroller and a municipality are entitled to ensure that a communications service provider complies with this chapter, including the right to initiate legal action against a communications service provider for payment of the intermodal communications assessment. Sec. 153.006. SAVING CLAUSE. (a) If any part of the intermodal communications assessment provided by this chapter or the application of the assessment to any communications service provider is for any reason held to be unconstitutional, void, or invalid, the validity of the remaining portions of this chapter or its application to other communications service providers shall not be affected, it being the intent of the legislature that no portion of the remainder of this chapter shall become inoperative or fail by reason of a unconstitutionality, voidness, or invalidity of any other portion, and all provisions of this chapter are declared to be severable for that purpose. (b) Notwithstanding Subsection (a), if any communications service provider is determined by law to be exempt from the payment of any portion of the intermodal communications assessment, the assessment rate shall be adjusted by the comptroller to the extent necessary to maintain the same level of intermodal communications assessment collections that would have been collected but for the exemption; provided, however, that the assessment rate may not exceed five percent. The remaining communications service providers shall be afforded an adjustment that ensures competitive neutrality in the application of the assessment. SECTION 3. It is the policy of this state to: (1) promote competition in the marketplace so that customers may benefit from innovations in service quality and market–based pricing of communications services; (2) reduce the barriers to entry for providers of communications services so that the number and types of services offered by providers continue to increase through competition; (3) ensure that all communications service providers have nondiscriminatory access to public rights-of-way, buildings, utility poles, and conduits owned by public entities; (4) preserve municipal authority to manage a public right-of-way within the municipality to ensure the health, safety, and welfare of the public; and (5) grant a municipality the authority to adopt rules by ordinance uniformly applicable to all communications service providers to ensure compliance with certain requirements imposed on video service providers granted a state-authorized franchise. SECTION 4. Subtitle C, Title 2, Utilities Code, is amended by adding Chapter 65 to read as follows:
CHAPTER 65. MUNICIPAL REGULATION OF COMMUNICATIONS SERVICE PROVIDERS
Sec. 65.001. DEFINITIONS. In this chapter: (1) "Certificated provider" means a person who has been issued a certificate under Chapter 54. (2) "Communications network" means a component or facility that is, in whole or in part, physically located within a public right-of-way and used to offer video or voice services. (3) "Communications service" means the transmission, conveyance, or routing of a video service or voice service by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method irrespective of when devised, regardless of the protocol used for such transmission or conveyance. (4) "Communications service provider" means a person or group of persons engaged in the provision of communications services, without regard to ownership of a communications network. (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 or operation of a communications network in the public rights-of-way. (6) "Franchisee" means a communications service provider that has been granted a franchise. (7) "Franchise fee" means the amount of compensation paid to a franchising authority by a franchisee under the terms of the franchise. (8) "Public improvement project" means construction or improvement activity in the public rights-of-way undertaken by a municipality or on behalf of a municipality or in conjunction with another governmental entity for any public purpose, excluding those solely undertaken for beautification purposes. (9) "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. (10) "Video service" means cable television service as defined by Section 151.0033, Tax Code, and includes Internet protocol enabled video service. (11) "Voice service" means telecommunications services as defined by Section 151.0103, Tax Code, and includes Internet protocol enabled voice service. Sec. 65.002. REQUIREMENTS APPLICABLE TO VIDEO SERVICE PROVIDERS. (a) A communications service provider that owns a communications network or that leases or otherwise uses a third-party communications network, including that of an affiliate, to deliver video service within the municipality shall, not later than 90 days after a request by a municipality in which the communications service provider offers digital video service at a 750-megahertz capacity, provide the municipality with access to public, educational, and governmental access channels for noncommercial programming as follows: (1) up to three channels for a municipality with a population of at least 50,000; and (2) up to two channels for a municipality with population of less than 50,000. (b) Notwithstanding Subsection (a), the number of channels required to be provided by each video service provider shall not be less than the number of channels a municipality receives under the terms of any franchise immediately preceding the effective date of this chapter, regardless of whether the franchise is terminated under this chapter. If a franchise existing on the effective date of this chapter contains a provision to reduce the number of channels, the reduced number of channels shall be the maximum that the municipality may require from each video service provider. (c) If a communications service provider described by Subsection (a) and offering video service is also a certificated provider or an affiliate of a certificated provider, then, within a reasonable period of time, the communications service provider shall provide video service to the same areas where the certificated provider uses its communications network on the effective date of this chapter to provide voice service. The service provider may not discriminate against low-income, minority, or rural residents of the municipality in the sequence in which it fulfills that service requirement. If the communications service provider is not a certificated provider or an affiliate of a certificated provider, then video service shall be offered, within a reasonable period of time, to the same areas served by a communications service provider on the effective date of this chapter that is not a certificated provider or an affiliate of a certificated provider in a sequence that does not discriminate against low-income, minority or rural residents of the municipality. (d) A video service provider or an affected person may seek enforcement of the requirement described in Subsection (c). A video service provider or affected person seeking to enforce the requirement may seek enforcement by initiating a proceeding with a court of competent jurisdiction or through arbitration in accordance with the rules of the American Arbitration Association. (e) A communications service provider described by Subsection (a) shall abide by any customer service requirements that may be established by the municipality where the video service is provided, except that the customer service requirements may not exceed the customer service requirements set forth in 47 C.F.R. 76.309(c). (f) If a communications service provider complies with the requirements of this section, the provider shall be considered to have a state-authorized franchise to provide video service in the municipality in which the video service is being provided and shall not be subject to municipal franchise requirements. (g) A municipality in which video service is provided may enforce, by ordinance, the requirements provided by Subsections (a)-(e); provided, however, that a municipality may not prefer or give advantage to any video service provider or discriminate against any video service provider in any manner in the enforcement of the requirements. The enforcement shall be uniformly applied, by ordinance, to all video service providers within the municipality. A municipality's authority to regulate the activities of a video service provider is limited to enforcement of the requirements imposed on a video service provider by this section, except that a municipality may impose a requirement that a communications service provider providing video service within the municipality register with the municipality and maintain a current point of contact and other requirements consistent with federal law, which may include: (1) requiring reports, on request, as to compliance with customer service standards; (2) reasonable sanctions for noncompliance with the requirements described in Subsections (a), (b), and (e), which sanctions must be proportionate to the noncompliance; and (3) guidelines regarding the use of the public, educational, and governmental access channels. (h) Nothing in this section prohibits a municipality from exercising its police power under Section 65.008 with respect to a communications service provider. A court of competent jurisdiction shall have jurisdiction to enforce and determine the lawfulness of any ordinance adopted by a municipality under this section. Sec. 65.003. SANCTIONS FOR FAILURE TO COMPLY WITH FRANCHISE REQUIREMENTS. (a) If a communications service provider that has been granted a state-authorized franchise to provide video service in a municipality fails to comply with the requirements described in Section 65.002(a), (b), or (e), the municipality in which the video service is provided may impose reasonable sanctions for the failure; provided, however, that a municipality must adhere to the procedures provided by this section. (b) The municipality must give written notice to the communications service provider of its intent to impose a sanction and must describe the nature of the noncompliance. Not later than 90, days after the notice is issued, the communications service provider must correct the noncompliance or object in writing and state its reasons for the objection. (c) If the municipality does not receive a satisfactory response from the communications service provider as provided by Subsection (b), the municipality may seek to impose reasonable sanctions following a public hearing. The municipality shall cause to be served on the communications service provider, not later than 30 days before the hearing, a written notice specifying the time and place of the hearing and stating the municipality's intent to impose sanctions. (d) At the hearing, the communications service provider shall be provided a fair opportunity for full participation, including the right to be represented by legal counsel, to introduce relevant evidence, to require the production of evidence, to compel the relevant testimony of officials, agents, employees, or consultants of the municipality, to compel the testimony of other persons as permitted by law, and to question or cross-examine witnesses. A complete verbatim record and transcript shall be made of the hearing. (e) Not later than 30 days after the public hearing, the communications service provider shall submit its proposed findings and conclusions in writing. The municipality shall determine whether there has been noncompliance, whether such noncompliance is excusable, and whether noncompliance has been corrected or will be corrected by the communications service provider. (f) If the municipality determines that sanctions should be imposed, the municipality shall promptly notify the communications service provider with a written decision setting forth the reasons for the imposition of sanctions. The communications service provider may appeal the determination to a court of competent jurisdiction, which shall have the power to review the decision of the municipality in the same manner as the decision of a state agency is reviewed under Section 2001.174, Government Code. The appeal must be taken within 60 days of the provider's receipt of the determination by the municipality. Sec. 65.004. TERMINATION OF FRANCHISE BY VIDEO SERVICE PROVIDER. A video service provider may elect to terminate a franchise by providing written notice to the affected municipality. The termination shall be effective as of the date the municipality receives the notice. If the video 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. Sec. 65.005. CERTIFICATED PROVIDERS; TERMINATION OF FRANCHISE. (a) A certificated provider is not subject to municipal franchise authority. (b) A certificated provider may elect to terminate a franchise by providing written notice to the affected municipality. The termination shall be effective as of the date the municipality receives the notice. Sec. 65.006. NONDISCRIMINATION BY MUNICIPALITY. (a) A municipality shall allow a communications service provider to install a communications network within a public right-of-way and shall provide the communications service provider with open, comparable, nondiscriminatory, and competitively neutral access to the public right-of-way. All use of a public right-of-way by the communications service provider is nonexclusive and subject to Section 65.008. (b) A municipality may not discriminate against a communications service provider 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 rate or term. (c) A municipal utility may not charge a pole attachment rate or underground conduit rate that exceeds the fee the utility would be permitted to charge if the utility's rates were regulated under federal law and the rules of the Federal Communications Commission. Sec. 65.007. PROHIBITION ON FEES AND NONMONETARY COMPENSATION. (a) A municipality may not require any monetary compensation, nonmonetary compensation, facilities, value, in-kind support, free service, or other thing of value for the right or privilege of a communications service provider to occupy or use a public right-of-way. (b) A municipality may not require a communications service provider to pay the municipality any fee or assessment, including any application, permit, excavation, or inspection fee or any fee for the support of public, educational, or governmental access channels. Sec. 65.008. 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 all persons within the municipality. A municipality may enforce police power-based regulations in the management of the activities of a communications service provider only to the extent that they are reasonably necessary to protect the health, safety, and welfare of the public. Police power-based regulation of a communications service provider's use of the public right-of-way must be competitively neutral and may not be unreasonable or discriminatory. A municipality may not impose regulations on activities that are within the sole business discretion of the communications service provider, including: (1) requirements that particular business offices located in the municipality; (2) requirements for 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; provided, however, that a municipality may request maps and records of the location of the portions of a communications network that occupy public rights-of-way; (3) the inspection of a communications service provider's business records; and (4) the approval of transfers of ownership or control of a communications service provider's business, except that a municipality may require that a communications service provider maintain a current point of contact and provide notice of a transfer within a reasonable time. (b) Notwithstanding any other law, a municipality may require the issuance of a construction permit, without cost, to a communications service provider that is locating facilities in or on a public right-of-way within 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 a communications service provider for a permit, license, or consent to excavate, set poles, locate lines, construct facilities, make repairs, affect traffic flow, obtain zoning or subdivision regulation approvals, or other similar approvals and shall make every reasonable effort to not delay or unduly burden the provider in the timely conduct of its business. (d) If there is an emergency necessitating response work or repair, a communications service provider 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 communications service provider 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. Sec. 65.009. INDEMNITY IN CONNECTION WITH RIGHT-OF-WAY; NOTICE OF LIABILITY. (a) A communications service provider 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 cause solely by the negligent act, error, or omission of the communications service provider, any agent, officer, director, representative, employee, affiliate, or subcontractor of the communications service provider, 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 a communications service provider 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 communications service provider and does not create or grant any rights, contractual or otherwise, to any other person or entity. (b) A communications service provider or municipality shall promptly advise the other in writing of any known claim or demand against the communications service provider or the municipality related to or arising out of the communications service provider's activities in a public right-of-way. Sec. 65.010. RELOCATION OF COMMUNICATIONS FACILITY LOCATED IN PUBLIC RIGHT-OF-WAY. (a) In this section: (1) "Communications facility" means the equipment and components of a communications network provider, and includes the property owned, operated, leased, licensed, used, controlled, or supplied for, by, or in connection with the provider's business operations. (2) "Communications network provider" means a publicly, privately, or cooperatively owned entity that provides voice, video, telephone, telegraph, communications, cable, information, broadband, or another form of advanced telecommunications services. (3) "Public improvement project" means a construction or improvement activity in a public right-of-way undertaken by or on behalf of a municipality or in conjunction with another entity for any public purpose, other than a construction or improvement activity undertaken solely for beautification purposes. (4) "Public right-of-way" means the area on, below, or above a public roadway, highway, street, public sidewalk, alley, waterway, or utility easement in which the municipality has an interest. (b) A municipality must design public improvement projects to minimize the relocation of any communications facility. If a municipality determines during the design of a public improvement project that, based on available information, the relocation of any portion of a communications facility may be necessary, the municipality shall provide the communications network provider: (1) written notice of the planned public improvement project at a point in the design stage that allows the communications network provider sufficient time to offer planning and design alternatives; and (2) plans and drawings of the project that are sufficient to enable the communications network provider to develop plans for and determine the cost of the necessary relocation. (c) On the municipality's request, a communications network provider shall provide the municipality information concerning the provider's facility location. After the municipality and the provider have exchanged information regarding the design and facility location, the municipality shall give the provider an opportunity to discuss potential design alternatives that may avoid facility relocation. (d) Notwithstanding any other provision of law, the governing body of a municipality may require a communications network provider to relocate the provider's facility that is located in a public right-of-way at the provider's sole expense to accommodate a public improvement project. (e) A communications network provider shall relocate its facility as required by the municipality if the municipality: (1) gives the provider 30 days' written notice of the municipality's determination that the facility must be relocated; (2) specifies the new location for the facility along the public right-of-way; and (3) prescribes a reasonable time for relocating the facility that is not earlier than the 90th day after the date the provider receives the information required by Subdivisions (1) and (2). (f) The notification requirements and time limitations provided by this chapter do not apply to the relocation of a communications facility the necessity of which is discovered during the construction process of a public improvement project if the relocation is due to inaccurate or insufficient information provided to a municipality by a communications network provider and if the requirements of this section were met initially. (g) The time for relocation prescribed by the municipality under Subsection (e)(3) may be extended by mutual agreement of the municipality and the communications network provider. (h) A municipality shall make a good faith effort to obtain available third-party funding for a communications facility relocation. If any part of the public improvement project is financed with federal funds, the funds allocated for communications facility relocations shall be used to pay for the relocation of the communications facility. (i) Before the fourth anniversary of the completion date of the relocation of a portion of a communications facility as certified by a municipality, the municipality may not require a communications network provider to relocate that portion of the facility unless the relocation is required by an imminent threat to public health or safety. If the relocation of a portion of a communications facility is necessary before the fourth anniversary of the certified completion date, the municipality shall pay in advance for this relocation. (j) This section does not limited the authority of a municipality and a communications network provider to enter into an agreement that establishes the terms for relocating a communications facility, including terms that preempt a provision of this section. (k) For purposes of this section, a requirement to buy an existing aerial communications facility owned by a communications network provider may not be considered to be a municipal public improvement project. (l) A municipality's exercise of authority under this section must be competitively neutral and may not be unreasonable or discriminatory. (m) This section does not affect a municipality's authority under an agreement, ordinance, or statute to require the relocation of another type of utility facility located in a public right-of-way. (n) To the extent of a conflict between this section and another law relating to the relocation of a utility, this section controls. Sec. 65.011. CHAPTER 283 REPEALED. Chapter 283 of the Local Government Code is hereby repealed; provided, however, that a municipality shall be authorized to conduct an authorized review of a certificated provider to ensure compliance with the access line reporting requirements of such chapter before its repeal, so long as the municipality commences its authorized review within ninety (90) days after the filing of a certificated provider's report of access lines. Sec. 65.012. CHAPTER 62 REPEALED. Chapter 62 of the Utilities Code is hereby repealed.