By: Fraser S.B. No. 332
A BILL TO BE ENTITLED
AN ACT
relating to furthering competition in the telecommunication
industry.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Utilities Code is amended by adding Chapter
65 to read as follows:
CHAPTER 65. DEREGULATION OF MARKETS IN INCUMBENT
LOCAL EXCHANGE COMPANY TERRITORIES.
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. COMMISSION AUTHORITY. (a) Notwithstanding
any other provisions of this title, the commission has the
authority to implement and enforce this chapter.
(b) The commission has the authority to collect and compile
information from all telecommunications providers as necessary to
implement and enforce this chapter. The commission shall maintain
the confidentiality of information collected under this chapter
that is claimed to be confidential for competitive purposes.
Confidential information is exempt from disclosure under Chapter
552, Government Code.
Sec. 65.003 DEFINITIONS. In this chapter:
(1) "Deregulated Company" means an incumbent local
exchange company as defined by Sec. 51.002(3) for which all markets
of the company's certificate of convenience and necessity territory
have been deregulated.
(2) "Market" means an exchange of the incumbent local
exchange company as defined by Sec. 51.002(3) in which residential
local exchange telephone service is provided by the incumbent local
exchange company.
(3) "Regulated company" means an incumbent local
exchange company as defined by Sec. 51.002(3) for which no market in
the company's certificate for convenience and necessity territory
has been deregulated.
(4) "Small local exchange company" means an incumbent
local exchange company as defined by Sec. 51.002(3) that has,
together with all of its affiliated incumbent local exchange
companies, fewer than 31,000 access lines in service in this state
or is a cooperative corporation.
(5) "Transitioning company" means an incumbent local
exchange company as defined by Sec. 51.002(3) for which at least one
market in the company's certificate for convenience and necessity
territory has been deregulated.
SUBCHAPTER B. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS
DEREGULATED.
Sec. 65.100 DEREGULATED MARKETS. Except as provided in
Subchapters C and K of this Chapter, the markets of all incumbent
local exchange companies are deregulated on August 1, 2007.
SUBCHAPTER C. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS
THAT SHOULD REMAIN REGULATED.
Sec. 65.110 DETERMINING WHETHER A MARKET OR MARKETS SHOULD
REMAIN REGULATED. (a) The commission shall determine whether a
market or markets of an incumbent local exchange company should
remain regulated on and after August 1, 2007.
(b) The commission shall adopt rules and conduct
proceedings necessary to make the determination whether a market or
markets of an incumbent local exchange company should remain
regulated on and after August 1, 2007. The commission's
determination shall include, but is not limited to, the
requirements of Subchapter F of this Chapter. The incumbent local
exchange carrier has the burden of proving that a market should not
remain regulated.
(c) An incumbent local exchange company for which the
commission does not determine that a market or markets in its
territory shall remain regulated on and after August 1, 2007 shall
be a deregulated company and subject to Subchapter G of this
Chapter.
(d) An incumbent local exchange company for which the
commission determines that a market or markets in its territory
shall remain regulated on and after August 1, 2007 and that a market
or markets in its territory shall not remain regulated shall be a
transitioning company and subject to Subchapter H of this Chapter.
(e) An incumbent local exchange company for which the
Commission determines that all markets in its territory shall
remain regulated on and after August 1, 2007 shall continue to be a
regulated company and subject to the provisions of this title
applicable to it on January 1, 2005, except that if the regulated
company elects pursuant Chapters 58 or 59 of this title after
January 1, 2005, such regulated company shall be regulated pursuant
to the provisions of the chapter under which it elected.
(f) The commission shall issue final orders in proceedings
held pursuant to this section no later than May 31, 2007.
Sec. 65.115 SMALL INCUMBENT LOCAL EXCHANGE COMPANY MARKETS.
(a) Notwithstanding Section 65.110, a small incumbent local
exchange company may elect for its market or markets to remain
regulated on and after August 1, 2007.
(b) By January 1, 2006, such small incumbent local exchange
company shall file an affidavit with the commission indicating that
it elects for its market or markets to remain regulated.
(c) A small incumbent local exchange company who elects to
remain regulated shall continue to be a regulated company and
subject to the provisions of this title applicable to it on January
1, 2005, except that if the regulated company elects pursuant
Chapters 58 or 59 of this title after January 1, 2005, such
regulated company shall be regulated pursuant to the provisions of
the chapter under which it elected.
SUBCHAPTER D. DEREGULATION OF MARKETS THAT REMAIN
REGULATED ON AND AFTER AUGUST 1, 2007.
Sec. 65.120. PETITION FOR DEREGULATION. (a) Pursuant to
this subchapter and after January 1, 2008, an incumbent local
exchange company may petition the commission for deregulation in a
market that remains regulated.
(b) The commission shall adopt rules and conduct
proceedings necessary to make the determination whether a market or
markets of an incumbent local exchange company that remain
regulated on and after August 1, 2007 shall be deregulated. The
commission's determination shall include, but is not limited to,
the requirements of Subchapter F of this Chapter. The incumbent
local exchange carrier has the burden of proving that a market
should be deregulated.
SUBCHAPTER E. RE-REGULATION OF MARKETS.
Sec. 65.130. COMMISSION AUTHORITY TO RE-REGULATE. (a) In
a market in which a transitioning company or a deregulated company
is deregulated, the commission may subject the transitioning
company or the deregulated company to re-regulation in that market
pursuant to Section 52.206 of this title.
(b) The commission shall adopt rules and conduct
proceedings necessary to make the determination whether a market or
markets of an incumbent local exchange company that are deregulated
shall be re-regulated. The commission's determination shall
include, but is not limited to, the requirements of Subchapter F of
this Chapter. The incumbent local exchange carrier has the burden
of proving that a market should not be re-regulated.
SUBCHAPTER F. MARKET TEST.
Sec. 65.140. MARKET TEST TO DETERMINE STATUS OF REGULATION.
(a) To determine whether a market of an incumbent local exchange
company should be regulated or deregulated, the commission shall
consider the following for residential local exchange telephone
service in that market:
(1) the elasticity of demand, including, but not
limited to:
(A) evidence that customers have changed or have
considered changing providers of service due to changes in price or
other competitive reasons;
(B) evidence that customers have purchased or
have considered purchasing substitutable products in response to
changes in price or other competitive reasons;
(C) evidence that the incumbent local exchange
company bases business decisions on the possibility of customer
substitution, and
(D) evidence of customer churn.
(2) the elasticity of supply, including but not
limited to:
(A) the number of providers of service in the
market;
(B) the existence of excess capacity among
competitors and their ability to expand capacity;
(C) barriers to entry arising from the
competitors' need to interconnect with and/or purchase wholesale
services from the incumbent local exchange company;
(D) barriers to entry arising from pricing
factors;
(E) the viability of competitors to provide a
check on the incumbent local exchange company pricing;
(F) the business plans of potential competitors
to enter the market;
(G) the viability of competitors to enter the
market or to expand within the market; and
(H) evidence that the incumbent local exchange
company bases business decisions on the prospect of losing
customers to competitors.
(3) other factors including but not limited to:
(A) evidence of a material decline in market
share of the incumbent local exchange company; and
(B) evidence of price competition.
SUBCHAPTER G. DEREGULATED COMPANY.
Sec. 65.150. REQUIREMENTS FOR A DEREGULATED COMPANY.
(a) A deregulated company may petition the commission to
relinquish its certificate of convenience and necessity and receive
a certificate of operating authority. Upon such a request and
findings that the company has met the definition of a deregulated
company, the commission shall issue the deregulated company a
certificate of operating authority and rescind the deregulated
company's certificate of convenience and necessity.
(b) A deregulated company holding a certificate of
operating authority shall be a non-dominant carrier governed in the
same manner as any holder of a certificate of operating authority
except that the deregulated company shall:
(1) retain the obligations of a provider of last
resort pursuant to Chapter 54 of this title; and
(2) be subject to the incumbent local exchange carrier
provisions set forth in the following:
(A) Section 52.206;
(B) Sections 54.156, 54.158, and 54.159;
(C) Section 55.012; and
(D) Chapters 60, 61, 62 and 63 of this title.
Sec. 65.151. SWITCHED ACCESS RATES FOR DEREGULATED COMPANY.
(a) Upon deregulation in the last market in its certificate of
convenience and necessity territory, the deregulated company shall
reduce both its originating and terminating per minute of use
switched access rates in all its markets to parity with its
respective local reciprocal compensation rates.
(b) After reducing its per minute of use switched access
rates pursuant to subsection (a), the deregulated company shall
maintain parity with its local reciprocal compensation rates.
After a change in its local reciprocal compensation rates, the
deregulated company shall change its per minute of use switched
access rates in all its markets to parity with its local reciprocal
compensation rates.
(c) The deregulated company shall not increase its per
minute of use switched access rates above its applicable reciprocal
compensation rates.
(d) The requirements of this section apply to a deregulated
company holding a certificate of convenience and necessity or a
certificate of operating authority pursuant to this subchapter.
SUBCHAPTER H. TRANSITIONING COMPANY.
Sec. 65.160. REQUIREMENTS FOR A TRANSITIONING COMPANY. A
transitioning company shall remain subject to the provisions of
this title applicable to such company immediately prior to becoming
a transitioning company and to the provisions of this subchapter.
Where the provisions are inconsistent, this subchapter controls.
Sec. 65.161. GENERAL REQUIREMENTS FOR A TRANSITIONING
COMPANY. (a) A transitioning company:
(1) may offer its services in all markets one day after
providing an informational notice as provided by Section 58.063 or
58.153 of this title; and
(2) shall not be required to comply with
exchange-specific retail quality of service standards and
reporting in markets that are deregulated.
Sec. 65.162. RATE REQUIREMENTS FOR TRANSITIONING COMPANY.
(a) In a market not subject to deregulation, the transitioning
company shall price its retail services in accordance with the
provisions applicable to such company immediately prior to becoming
a transitioning company.
(b) In a market subject to deregulation, the transitioning
company shall price its retail services in those markets as
follows:
(1) for all services, except 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 long run incremental cost or the
tariffed price on the date of deregulation in that market.
(c) In all markets, the transitioning company shall not:
(1) establish a retail rate, term, or condition that
is anticompetitive or unreasonably preferential, prejudicial, or
discriminatory;
(2) establish a retail rate that is subsidized either
directly or indirectly by a regulated monopoly service or a service
provided in an exchange that is not deregulated; and
(3) engage in predatory pricing or attempt to engage
in predatory pricing.
Sec. 65.163. SWITCHED ACCESS RATES FOR TRANSITIONING
COMPANY. (a) Notwithstanding any other provision of this title,
on August 1, 2007, the transitioning company shall reduce both its
originating and terminating per minute of use switched access rates
in all its markets to parity with its respective federal
originating and terminating per minute of use switched access
rates.
(b) After reducing its per minute of use switched access
rates pursuant to subsection (a), the transitioning company shall
maintain parity with its federal originating and terminating per
minute of use switched access rates. Upon reduction in its federal
per minute of use switched access rates, the transitioning company
shall reduce its per minute of use switched access rates in all its
markets to parity with its federal per minute of use switched access
rates.
(c) A transitioning company may not increase its per minute
of use switched access rates above the lesser of the rate set in
subsection (a) of this section or the rate set in accordance with
subsection (b) of this section.
SUBCHAPTER I. CUSTOMER PROTECTION.
Sec. 65.170. CUSTOMER PROTECTION. This Chapter does not
alter a customer's right to complain to the commission.
SUBCHAPTER J. LEGISLATIVE OVERSIGHT COMMITTEE.
Sec. 65.180. 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 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. 65.181. COMMITTEE DUTIES. (a) The committee shall
conduct joint public hearings with the commission at least annually
regarding the introduction of full competition to
telecommunication services in the state. 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. The confidential information is exempt from
disclosure under Chapter 552, Government Code.
(b) The committee shall receive information about rules
relating to telecommunications deregulation proposed by the
commission and may submit comments to the commission on those
proposed rules.
(c) 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.
(d) The committee may request reports and other information
from the commission as necessary to carry out this subchapter.
(e) 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 shall include:
(1) an analysis of any problems caused by
telecommunications deregulation; and
(2) recommendations of any legislative action
necessary to address those problems and to further competition
within the telecommunications industry.
Sec. 65.182. EFFECT OF SUNSET PROVISION. The committee is
subject to Chapter 325, Government Code (Texas Sunset Act). Unless
continued in existence as provided by that chapter, the committee
is abolished January 1, 2011.
SUBCHAPTER K. BASIC LOCAL TELECOMMUNICATIONS
SERVICES CAPPED.
Sec. 65.190. RATES CAPPED. (a) All incumbent local
exchange companies subject to this chapter shall not increase any
rate for basic local telecommunications services, except the
companies may increase rates for business local exchange telephone
service subject to provisions of this chapter.
(b) The rates of an incumbent local exchange carrier capped
by subsection (a) of this section are the rates charged by the
company on August 31, 2005.
SECTION 2. Section 51.002(3), Utilities Code, is amended to
read as follows:
Sec. 51.002 DEFINITIONS.
(3) "Incumbent local exchange company" means a local
exchange company that has a certificate of convenience and
necessity on January 1, 2005 [September 1, 1995].
SECTION 3. Section 52.155, Utilities Code, is amended to
read as follows:
Sec. 52.155. PROHIBITION OF EXCESSIVE ACCESS CHARGES.
(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
granted pursuant to Chapter 65 of this title 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 established 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.
(b) Notwithstanding any other provision of this title, the
commission has all jurisdiction necessary to enforce this section.
(c) Notwithstanding subsection (a) of this section, a
company that holds a certificate of operating authority received
pursuant Chapter 65 of this title shall have its switched access
charge rates governed by Chapter 65 of this title.
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 ESTABLISHED
BY HOLDERS OF COA OR SPCOA. A holder of a COA or SPCOA shall 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 54.251, Utilities Code, is amended to
read as follows:
Sec. 54.251. PROVISION OF SERVICE. (a) Except as provided
by this section, Section 54.252, Section 54.253, and Section
54.254, a telecommunications utility that holds a certificate of
convenience and necessity or a certificate of operating authority
shall:
(1) offer all basic local telecommunications services
to each customer in the utility's certificated area; and
(2) provide continuous and adequate service in that
area.
(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 granted pursuant to Chapter 65
of this title 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.
SECTION 6. Section 54.301, Utilities Code, is amended as
follows:
Sec. 54.301. DEFINITIONS. In this subchapter:
(1) "Exiting utility" means a telecommunications
utility that:
(A) holds a certificate of operating authority or
a service provider certificate of operating authority;
(B) is the predominant provider of basic local
telecommunications service in a defined geographic area and
provides those services using the utility's own facilities; and
(C) ceases operations in all or part of the
utility's certificated service area under Section 54.253 or 54.303.
(2) "Holder of Certificate of Convenience and
Necessity" means a holder of a certificate of convenience and
necessity or a holder of a certificate of operating authority
granted pursuant to Chapter 65 of this title.
(3) [(2)] "Provider of last resort" means a
certificated telecommunications utility that must offer basic
local telecommunications service throughout a defined geographic
area.
(4) [(3)] "Successor utility" means a
telecommunications utility that holds a certificate of convenience
and necessity, certificate of operating authority, or service
provider certificate of operating authority, and that is or is
designated to become the provider of last resort for the defined
geographic area previously served by an exiting utility.
SECTION 7. Section 56.026, Utilities Code, is amended by
revising Subsection (c) as follows:
(c) Notwithstanding any other provision of this title, as
follows:
(1) after notice and opportunity for hearing, the
commission may determine the appropriate universal service fund
disbursement amounts.
(2) when an incumbent local exchange company receiving
disbursements, as of January 1, 2005, from the Texas High Cost
Universal Service Plan, as established pursuant to this title,
becomes a deregulated company pursuant to Chapter 65 of this title,
telecommunications providers in such incumbent local exchange
company territory shall receive universal service fund
disbursements only for providing lifeline service pursuant to
Section 56.021(5) of this chapter.
[Notwithstanding any other provision of this title, if an
electing company reduces rates in conjunction with receiving
disbursements from the universal service fund, the commission may
not reduce the amount of those disbursements, except that:
[(1) if a local end user customer of the electing
company switches to another local service provider that serves the
customer entirely through the use of its own facilities and not
partially or solely through the use of unbundled network elements,
the electing company's disbursement may be reduced by the amount
attributable to that customer under Section 56.021(1); or
[(2) if a local end user customer of the electing
company switches to another local service provider, and the new
local service provider serves the customer partially or solely
through the use of unbundled network elements provided by the
electing company, the electing company's disbursement attributable
to that customer under Section 56.021(1) may be reduced only if the
commission establishes an equitable allocation formula for the
disbursement.]
SECTION 8. Subchapter G, Chapter 58, Utilities Code, is
amended by adding Section 58.268 to read as follows:
Sec. 58.268. CONTINUATION OF THIS SUBCHAPTER.
Notwithstanding any other provision of this title, the following
companies shall continue to comply with provisions of this
subchapter until January 1, 2012:
(1) A company electing pursuant to this chapter; or
(2) A company electing pursuant to this chapter that,
pursuant to Chapter 65, becomes a regulated company, a
transitioning company, a deregulated company, or a holder of a
certificate of convenience and necessity.
SECTION 9. Subchapter D, Chapter 59, Utilities Code, is
amended by adding Section 59.083 to read as follows:
Sec. 59.083. CONTINUATION OF THIS SUBCHAPTER.
Notwithstanding any other provision of this title, the following
companies shall continue to comply with provisions of this
Subchapter until January 1, 2012:
(1) A company electing pursuant to this chapter; or
(2) A company electing pursuant to this chapter that,
pursuant to Chapter 65, becomes a regulated company, a
transitioning company, a deregulated company, or a holder of a
certificate of convenience and necessity.
SECTION 10. Chapter 60, Utilities Code, is amended by
adding Subchapter J to read as follows:
SUBCHAPTER J. WHOLESALE CODE OF CONDUCT.
Sec. 60.175. STATEMENT OF POLICY. It is the policy of this
state that providers of telecommunications services operate
consistent with minimum standards to provide customers with
continued competitive choice for providers.
Sec. 60.176. MINIMUM SERVICE PROVIDER 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. 60.177. INTERCONNECTION. All telecommunications
providers shall have a duty to provide interconnection with other
telecommunications providers' networks:
(1) for the transmission routing of telephone exchange
service and exchange access;
(2) at any technically feasible point within the
network of the provider;
(3) at least equal in quality to that provided by the
telecommunications provider or any subsidiary, affiliate, or any
other party to which the provider provides interconnection;
(4) on rates, terms, and conditions that are just
reasonable, and nondiscriminatory.
Sec. 60.178. NUMBER PORTABILITY. All telecommunications
providers shall provide number portability in accordance with
federal requirements.
Sec. 60.179. DUTY TO NEGOTIATE. All telecommunications
providers shall negotiate in good faith the terms and conditions of
any agreements.
Sec. 60.180. DIALING PARITY. All telecommunications
providers shall provide dialing parity to competing
telecommunications providers of telephone exchange service and
telephone toll service and shall provide nondiscriminatory access
to telephone numbers, operator services, directory assistance, and
directory listing with no unreasonable delays.
Sec. 60.181. ACCESS TO RIGHTS OF WAY. All
telecommunications providers shall provide access to poles ducts,
conduits and rights-of-way to competing provides of
telecommunications service on rates, terms, and conditions that are
just, reasonable, and nondiscriminatory.
Sec. 60.182. RECIPROCAL COMPENSATION. All telecommunications
providers shall establish reciprocal compensation arrangements for
the transport and termination of telecommunications.
Sec. 60.183. 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 11. Chapter 60, Utilities Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. WHOLESALE COMPLIANCE AND ENFORCEMENT.
Sec. 60.200. MONITOR AND ENFORCE COMPLIANCE WITH CHAPTER 60
OF THIS TITLE AND 47 U.S.C. 251 AND 252. Notwithstanding any other
law, the commission has jurisdiction to monitor and enforce an
incumbent local exchange company's compliance with the
requirements of Chapter 60 of this title and 47 U.S.C. Sections 251
and 252. This jurisdiction includes, but is not limited to,
establishing benchmarks for performance for the incumbent local
exchange company and requiring the incumbent local exchange company
to provide reports to the commission.
SECTION 12. This act takes effect September 1, 2005.