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.