By: Carona, Van de Putte S.B. No. 980

A BILL TO BE ENTITLED

AN ACT

relating to communications services and markets.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subsections (a) and (g), Section 51.001, Utilities Code, are amended to read as follows:

(a) Significant changes have occurred in telecommunications since the law from which this title is derived was originally adopted. Communications providers, including providers not subject to state regulation, such as wireless communications providers and Voice over Internet Protocol providers, have made investments in this state and broadened the range of communications choices available to consumers. To encourage and accelerate the development of a competitive and advanced telecommunications environment and infrastructure, [new] rules, policies, and principles must be reformulated [formulated and applied] to reduce regulation of incumbent local exchange companies, ensure fair business practices, and protect the public interest. [Changes in technology and market structure have increased the need for minimum standards of service quality, customer service, and fair business practices to ensure high-quality service to customers and a healthy marketplace where competition is permitted by law. It is the purpose of this subtitle to grant the commission authority to make and enforce rules necessary to protect customers of telecommunications services consistent with the public interest.]

(g) It is the policy of this state to ensure that customers in all regions of this state, including low-income customers and customers in rural and high cost areas, have access to telecommunications and information services, including interexchange services, cable services, wireless services, and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at prices that are reasonably comparable to prices charged for similar services in urban areas. [Not later than November 1, 1999, the commission shall begin a review and evaluation of the availability and the pricing of telecommunications and information services, including interexchange services, cable services, wireless services, and advanced telecommunications and information services, in rural and high cost areas, as well as the convergence of telecommunications services. The commission shall file a report with the legislature not later than January 1, 2001. The report must include the commission's recommendations on the issues reviewed and evaluated.]

SECTION 2. Section 51.002, Utilities Code, is amended by adding Subdivisions (3-a) and (13) to read as follows:

(3-a) "Internet Protocol enabled service" means a service, capability, functionality, or application that uses Internet Protocol or a successor protocol to allow an end user to send or receive a data, video, or voice communication in Internet Protocol or a successor protocol.

(13) "Voice over Internet Protocol service" means a service that:

(A) uses Internet Protocol or a successor protocol to enable a real-time, two-way voice communication that originates from or terminates to the user's location in Internet Protocol or a successor protocol;

(B) requires a broadband connection from the user's location; and

(C) permits a user generally to receive a call that originates on the public switched telephone network and to terminate a call to the public switched telephone network.

SECTION 3. Section 52.002, Utilities Code, is amended by adding Subsections (c) and (d) to read as follows:

(c) The commission may not require a telecommunications utility that is not a public utility, including a deregulated or transitioning company, to comply with a requirement or standard that is more burdensome than a requirement or standard the commission imposes on a public utility.

(d) Notwithstanding any other law, a department, agency, or political subdivision of this state may not by rule, order, or other means directly or indirectly regulate rates charged for, service or contract terms for, conditions for, or requirements for entry into the market for Voice over Internet Protocol services or other Internet Protocol enabled services. This subsection does not:

(1) affect requirements pertaining to use of a right-of-way or payment of right-of-way fees applicable to Voice over Internet Protocol services under Chapter 283, Local Government Code;

(2) affect any person's obligation to provide video or cable service, as defined under applicable state or federal law;

(3) require or prohibit assessment of enhanced 9-1-1, relay access service, or universal service fund fees on Voice over Internet Protocol service;

(4) affect any entity's obligations under Sections 251 and 252, Communications Act of 1934 (47 U.S.C. Sections 251 and 252), or a right granted to an entity by those sections;

(5) affect any applicable wholesale tariff;

(6) grant, modify, or affect the authority of the commission to implement, carry out, or enforce the rights or obligations provided by Sections 251 and 252, Communications Act of 1934 (47 U.S.C. Sections 251 and 252), or of an applicable wholesale tariff through arbitration proceedings or other available mechanisms and procedures;

(7) require or prohibit payment of switched network access rates or other intercarrier compensation rates, as applicable;

(8) limit any commission authority over the subjects listed in Subdivisions (1)-(7) or grant the commission any authority over those subjects; or

(9) affect the assessment, administration, collection, or enforcement of any tax or fee over which the comptroller has authority.

SECTION 4. Subchapter A, Chapter 52, Utilities Code, is amended by adding Section 52.007 to read as follows:

Sec. 52.007. TARIFF REQUIREMENTS RELATING TO PROVIDERS NOT SUBJECT TO RATE OF RETURN REGULATION. (a) This section applies only to a telecommunications provider that is not subject to rate of return regulation under Chapter 53.

(b) A telecommunications provider:

(1) may, but is not required to, maintain on file with the commission tariffs, price lists, or customer service agreements governing the terms of providing service;

(2) may make changes in its tariffs, price lists, and customer service agreements in relation to services that are not subject to regulation without commission approval; and

(3) may cross-reference its federal tariff in its state tariff if the provider's intrastate switched access rates are the same as the provider's interstate switched access rates.

(c) A telecommunications provider may withdraw a tariff, price list, or customer service agreement not required to be filed or maintained with the commission under this section if the telecommunications provider:

(1) files written notice of the withdrawal with the commission; and

(2) notifies its customers of the withdrawal and posts the current tariffs, price lists, or generic customer service agreements on the telecommunications provider's Internet website.

(d) The commission may not require a telecommunications provider to withdraw a tariff, price list, or customer service agreement.

(e) This section does not affect the authority of the commission to regulate wholesale services, or administer or enforce Chapter 56 or any other applicable regulation permitted or required under this title.

SECTION 5. Section 52.056, Utilities Code, is amended to read as follows:

Sec. 52.056. SPECIFICALLY AUTHORIZED REGULATORY TREATMENTS. The regulatory treatments the commission may implement under Section 52.054 include:

(1) approval of a range of rates for a specific service; and

(2) [approval of a customer-specific contract for a specific service; and

[(3)] the detariffing of rates.

SECTION 6. Subsection (b), Section 54.251, Utilities Code, is amended to read as follows:

(b) Except as specifically determined otherwise by the commission under this subchapter or Subchapter G of this chapter, and except as provided by Subchapters C and D, Chapter 65, the holder of a certificate of convenience and necessity[, or the holder of a certificate of operating authority issued under Chapter 65,] for an area has the obligations of a provider of last resort regardless of whether another provider has a certificate of operating authority or service provider certificate of operating authority for that area.

SECTION 7. Section 54.3015, Utilities Code, is amended to read as follows:

Sec. 54.3015. APPLICABILITY OF SUBCHAPTER. This subchapter applies to a transitioning company [holder of a certificate of operating authority issued] under Chapter 65 in relation to its regulated exchanges in the same manner and to the same extent this subchapter applies to a holder of a certificate of convenience and necessity.

SECTION 8. Subchapter B, Chapter 55, Utilities Code, is amended by adding Section 55.026 to read as follows:

Sec. 55.026. NEW ORDERS PROHIBITED AFTER CERTAIN DATE. On or after September 1, 2011, the commission may not require a telecommunications provider to provide mandatory or optional extended area service to additional metropolitan areas or calling areas.

SECTION 9. Subchapter C, Chapter 55, Utilities Code, is amended by adding Section 55.049 to read as follows:

Sec. 55.049. EXPANSION PROHIBITED AFTER CERTAIN DATE. On or after September 1, 2011, the commission may not order an expansion of a toll-free local calling area.

SECTION 10. Subsection (d), Section 56.023, Utilities Code, is amended to read as follows:

(d) The commission shall adopt rules for the administration of the universal service fund and this chapter and may act as necessary and convenient to administer the fund and this chapter. The rules must include procedures to ensure reasonable transparency and accountability in the administration of the universal service fund.

SECTION 11. Subchapter B, Chapter 56, Utilities Code, is amended by adding Section 56.032 to read as follows:

Sec. 56.032. SUPPORT AVAILABLE TO DEREGULATED MARKETS. (a) An incumbent local exchange company may not receive support from the universal service fund for a deregulated market that has a population of at least 30,000.

(b) An incumbent local exchange company may receive support from the universal service fund for a deregulated market that has a population of less than 30,000 only if the company demonstrates to the commission that the company needs the support to provide basic local telecommunications service at reasonable rates in the affected market. A company may use evidence from outside the affected market to make the demonstration.

(c) An incumbent local exchange company may make the demonstration described by Subsection (b) in relation to a market before submitting a petition to deregulate the market.

SECTION 12. Subsection (c), Section 58.255, Utilities Code, is amended to read as follows:

(c) [Each contract shall be filed with the commission.] Commission approval of a contract is not required.

SECTION 13. Subsection (c), Section 59.074, Utilities Code, is amended to read as follows:

(c) [Each contract shall be filed with the commission.] Commission approval of a contract is not required.

SECTION 14. Section 65.051, Utilities Code, is amended to read as follows:

Sec. 65.051. MARKETS DEREGULATED. A market that is deregulated as of September 1, 2011, shall remain deregulated. Notwithstanding any other provision of this title, the commission may not reregulate a market or company that has been deregulated [(a) Except as provided by Subsection (b), all markets of all incumbent local exchange companies are deregulated on January 1, 2006, unless the commission determines under Section 65.052(a) that a market or markets should remain regulated.

[(b) A market of an incumbent local exchange company in which the population in the area included in the market is less than 30,000 is deregulated on January 1, 2007, unless the commission determines under Section 65.052(f) that the market should remain regulated].

SECTION 15. Subsections (a), (b), and (c), Section 65.052, Utilities Code, are amended to read as follows:

(a) An incumbent local exchange company may petition the commission to deregulate a market of the company that the commission previously determined should remain regulated. Notwithstanding any other provision of this title, only the incumbent local exchange company may initiate a proceeding to deregulate one of the company's markets. Not later than the 90th day after the date the commission receives the petition, [Except as provided by Subsection (f),] the commission shall:

(1) determine whether the regulated [each] market [of an incumbent local exchange company] should remain regulated [on and after January 1, 2006]; and

(2) issue a final order classifying the market [company] in accordance with this section [effective January 1, 2006].

(b) In making a determination under Subsection (a), the commission may not determine that a market should remain regulated if:

(1) the population in the area included in the market is at least 100,000; or

(2) the population in the area included in the market is [at least 30,000 but] less than 100,000 and, in addition to the incumbent local exchange company, there are at least two competitors operating in all or part of the market that [three competitors of which]:

(A) are unaffiliated with the incumbent local exchange company [at least one is a telecommunications provider that holds a certificate of operating authority or service provider certificate of operating authority and provides residential local exchange telephone service in the market]; and

(B) provide voice communications service without regard to the delivery technology, including through:

(i) Internet Protocol or a successor protocol;

(ii) satellite; or

(iii) a technology used by a wireless provider or a commercial mobile service provider, as that term is defined by Section 64.201 [at least one is an entity providing residential telephone service in the market using facilities that the entity or its affiliate owns; and

[(C) at least one is a provider in that market of commercial mobile service as defined by Section 332(d), Communications Act of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications Commission rules, and the Omnibus Budget Reconciliation Act of 1993 (Pub. L. No. 103-66), that is not affiliated with the incumbent local exchange company].

(c) If the commission deregulates a market under this section and the deregulation results in a regulated or transitioning company no longer meeting the definition of a regulated or transitioning company, the commission shall issue an order reclassifying the company as a transitioning company or deregulated company, as those terms are defined by Section 65.002 [The commission shall issue an order classifying an incumbent local exchange company as a deregulated company that is subject to Subchapter C if:

[(1) the company does not have any markets in which the population in the area included in the market is less than 30,000; and

[(2) the commission does not determine that a market of the company should remain regulated on and after January 1, 2006].

SECTION 16. Section 65.102, Utilities Code, is amended to read as follows:

Sec. 65.102. REQUIREMENTS. (a) A deregulated company that holds a certificate of operating authority issued under this subchapter:

(1) is a nondominant carrier governed in the same manner as a holder of a certificate of operating authority issued under Chapter 54;

(2) is not required to:

(A) fulfill the obligations of a provider of last resort;

(B) comply with retail quality of service standards or reporting requirements;

(C) file an earnings report with the commission unless the company is receiving support from the Texas High Cost Universal Service Plan; or

(D) comply with a pricing requirement other than a requirement prescribed by this subchapter; and

(3) [, except that the deregulated company:

[(1) retains the obligations of a provider of last resort under Chapter 54;

[(2)] is subject to the following provisions in the same manner as an incumbent local exchange company that is not deregulated:

(A) Sections 54.156, 54.158, and 54.159;

(B) Section 55.012; and

(C) Chapter 60[; and

[(3) may not increase the company's rates for stand-alone residential local exchange voice service before the date that the commission has the opportunity to revise the monthly per line support under the Texas High Cost Universal Service Plan pursuant to Section 56.031, regardless of whether the company is an electing company under Chapter 58].

(b) Except as provided by Subsection (c), in [In] each deregulated market, a deregulated company shall make available to all residential customers uniformly throughout that market the same price, terms, and conditions for all basic and non-basic services, consistent with any pricing flexibility available to such company [on or before August 31, 2005].

(c) A deregulated company may offer to an individual residential customer a promotional offer that is not available uniformly throughout the market if the company makes the offer through a medium other than direct mail or mass electronic media and the offer is intended to retain or obtain a customer.

SECTION 17. Section 65.151, Utilities Code, is amended to read as follows:

Sec. 65.151. PROVISIONS APPLICABLE TO TRANSITIONING COMPANY. (a) Except as provided by Subsection (b), a [A] transitioning company is governed by this subchapter and the provisions of this title that applied to the company immediately before the date the company was classified as a transitioning company. If there is a conflict between this subchapter and the other applicable provisions of this title, this subchapter controls.

(b) A transitioning company is not required to fulfill the obligations of a provider of last resort in a deregulated market.

SECTION 18. Section 65.152, Utilities Code, is amended to read as follows:

Sec. 65.152. GENERAL REQUIREMENTS. (a) A transitioning company may:

(1) exercise pricing flexibility in a market subject only to the price and rate standards prescribed by Sections 65.153 and 65.154 [in the manner provided by Section 58.063 one day after providing an informational notice as required by that section]; and

(2) introduce a new service in a market subject only to the price and rate standards prescribed by Sections 65.153 and 65.154 [in the manner provided by Section 58.153 one day after providing an informational notice as required by that section].

(b) A transitioning company may not be required to:

(1) comply with [exchange-specific] retail quality of service standards or reporting requirements in a market that is deregulated; or

(2) file an earnings report with the commission unless the company is receiving support from the Texas High Cost Universal Service Plan.

SECTION 19. Section 65.153, Utilities Code, is amended by amending Subsection (c) and adding Subsection (c-1) to read as follows:

(c) Except as provided by Subsection (c-1), in [In] each deregulated market, a transitioning company shall make available to all residential customers uniformly throughout that market the same price, terms, and conditions for all basic and non-basic services, consistent with any pricing flexibility available to such company [on or before August 31, 2005].

(c-1) A transitioning company may offer to an individual residential customer a promotional offer that is not available uniformly throughout the market if the company makes the offer through a medium other than direct mail or mass electronic media and the offer is intended to retain or obtain a customer.

SECTION 20. Subchapter D, Chapter 65, Utilities Code, is amended by adding Sections 65.154 and 65.155 to read as follows:

Sec. 65.154. RATE AND PRICE REQUIREMENTS NOT APPLICABLE. (a) A transitioning company is not required to comply with the following requirements prescribed by this title on submission of a written notice to the commission:

(1) a direct or indirect requirement to price a residential service at, above, or according to the long-run incremental cost of the service or to otherwise use long-run incremental cost in establishing prices for residential services; or

(2) a requirement to file with the commission a long-run incremental cost study for residential or business services.

(b) Notwithstanding Subsection (a), a transitioning company may not:

(1) establish a retail rate, price, term, or condition that is anticompetitive or unreasonably preferential, prejudicial, or discriminatory;

(2) establish a retail rate for a basic or non-basic service in a deregulated market that is subsidized either directly or indirectly by a basic or non-basic service provided in an exchange that is not deregulated; or

(3) engage in predatory pricing or attempt to engage in predatory pricing.

(c) A rate or price for a basic local telecommunications service is not anticompetitive, predatory, or unreasonably preferential, prejudicial, or discriminatory if the rate or price is equal to or greater than the rate or price in the transitioning company's tariff for that service in effect on the date the transitioning company submits notice to the commission under Subsection (a).

(d) This section, including Subsection (a)(1), does not affect:

(1) other law or legal standards governing predatory pricing or anticompetitive conduct; or

(2) an infrastructure commitment under Chapter 58 or 59.

Sec. 65.155. COMPLAINT BY AFFECTED PERSON. (a) An affected person may file a complaint at the commission challenging whether a transitioning company is complying with Section 65.154(b).

(b) Notwithstanding Section 65.154(a)(2), the commission may require a transitioning company to submit a long-run incremental cost study for a business service that is the subject of a complaint submitted under Subsection (a).

SECTION 21. The following provisions of the Utilities Code are repealed:

(1) Section 52.057;

(2) Subsection (b), Section 53.065;

(3) Subsections (d), (e), and (f), Section 65.052;

(4) Section 65.054; and

(5) Section 65.055.

SECTION 22. (a) In this section, "commission" means the Public Utility Commission of Texas.

(b) The commission shall initiate one or more proceedings to review and evaluate whether the universal service fund accomplishes the fund's purposes, as prescribed by Section 56.021, Utilities Code, or whether changes are necessary to accomplish those purposes. The commission may not initiate a proceeding to review the Texas High Cost Universal Service Plan before January 2, 2012.

(c) The commission has all authority necessary to conduct the review, including determining issues relevant to each telecommunications provider's need for universal service fund support, adjusting monthly per line support amounts under Section 56.031, Utilities Code, and implementing any other changes it determines are necessary and in the public interest.

(d) Notwithstanding Subsection (b), Section 56.024, Utilities Code, a party to a commission proceeding examining the universal service fund is entitled to access confidential information provided to the commission under Subsection (a), Section 56.024, Utilities Code, if a protective order is issued for the confidential information in the proceeding.

(e) The commission shall complete each proceeding required by this section not later than November 1, 2012. The commission shall provide to the legislature a copy of the commission's findings and of any orders issued under this section.

SECTION 23. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2011.

(b) Sections 56.032, 65.154, and 65.155, Utilities Code, as added by this Act, take effect January 2, 2012.