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A BILL TO BE ENTITLED
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AN ACT
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relating to state-issued certificates of franchise authority to |
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provide cable service and video service. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subsection (a), Section 66.003, Utilities Code, |
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is amended to read as follows: |
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(a) An entity or person seeking to provide cable service or |
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video service in this state [after September 1, 2005,] shall file an |
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application for a state-issued certificate of franchise authority |
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with the commission as required by this section. An entity |
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providing cable service or video service under a franchise |
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agreement with a municipality is not subject to this subsection |
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with respect to such municipality until the franchise agreement is |
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terminated under Section 66.004 or until the franchise agreement |
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expires[, except as provided by Section 66.004]. |
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SECTION 2. Section 66.004, Utilities Code, is amended by |
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amending Subsections (a), (c), and (f) and adding Subsection (b-1) |
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to read as follows: |
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(a) A cable service provider or a video service provider |
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that currently has or had previously received a franchise to |
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provide cable service or video service with respect to a |
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municipality may [such municipalities is not eligible to] seek a |
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state-issued certificate of franchise authority to provide service |
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to the municipality under this section [chapter as to those
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municipalities until the expiration date of the existing franchise
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agreement, except as provided by Subsections (b) and (c)]. |
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(b-1) Beginning September 1, 2011, a cable service provider |
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or video service provider that was not allowed to or did not |
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terminate a municipal franchise under Subsection (b) may elect to |
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terminate all unexpired municipal franchises and seek a |
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state-issued certificate of franchise authority for each area |
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served under a terminated municipal franchise by providing written |
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notice to the commission and each affected municipality before |
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January 1, 2012. A municipal franchise is terminated on the date |
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the commission issues a state-issued certificate of franchise |
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authority to the provider for the area served under that terminated |
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franchise. |
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(c) A cable service provider [that serves fewer than 40
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percent of the total cable customers in a municipal franchise area
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and] that elects under Subsection (b) or (b-1) to terminate an |
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existing municipal franchise is responsible for remitting to the |
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affected municipality before the 91st day after the date the |
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municipal franchise is terminated any accrued but unpaid franchise |
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fees due under the terminated franchise. If the cable service |
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provider has credit remaining from prepaid franchise fees, the |
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provider may deduct the amount of the remaining credit from any |
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future fees or taxes it must pay to the municipality, either |
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directly or through the comptroller. |
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(f) Except as provided in this chapter, nothing in this |
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chapter is intended to abrogate, nullify, or adversely affect in |
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any way the contractual rights, duties, and obligations existing |
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and incurred by a cable service provider or a video service provider |
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before the date a franchise expires or the date a provider |
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terminates a franchise under Subsection (b-1), as applicable, |
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[enactment of this chapter,] and owed or owing to any private |
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person, firm, partnership, corporation, or other entity including |
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without limitation those obligations measured by and related to the |
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gross revenue hereafter received by the holder of a state-issued |
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certificate of franchise authority for services provided in the |
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geographic area to which such prior franchise or permit applies. |
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All liens, security interests, royalties, and other contracts, |
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rights, and interests in effect on September 1, 2005, or the date a |
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franchise is terminated under Subsection (b-1) shall continue in |
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full force and effect, without the necessity for renewal, |
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extension, or continuance, and shall be paid and performed by the |
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holder of a state-issued certificate of franchise authority, and |
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shall apply as though the revenue generated by the holder of a |
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state-issued certificate of franchise authority continued to be |
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generated pursuant to the permit or franchise issued by the prior |
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local franchising authority or municipality within the geographic |
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area to which the prior permit or franchise applies. It shall be a |
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condition to the issuance and continuance of a state-issued |
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certificate of franchise authority that the private contractual |
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rights and obligations herein described continue to be honored, |
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paid, or performed to the same extent as though the cable service |
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provider continued to operate under its prior franchise or permit, |
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for the duration of such state-issued certificate of franchise |
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authority and any renewals or extensions thereof, and that the |
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applicant so agrees. Any person, firm, partnership, corporation, |
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or other entity holding or claiming rights herein reserved may |
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enforce same by an action brought in a court of competent |
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jurisdiction. |
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SECTION 3. Subsections (a) and (b), Section 66.005, |
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Utilities Code, are amended to read as follows: |
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(a) The holder of a state-issued certificate of franchise |
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authority shall pay each municipality in which it provides cable |
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service or video service a franchise fee of five percent based upon |
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the definition of gross revenues as set forth in this chapter. That |
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same franchise fee structure shall apply to any unincorporated |
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areas that are annexed by a municipality after the effective date of |
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the state-issued certificate of franchise authority. The franchise |
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fee paid by the holder of a state-issued certificate of franchise |
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authority shall not be deemed a state or local tax. |
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(b) The franchise fee payable under this section is to be |
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paid quarterly, within 45 days after the end of the quarter for the |
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preceding calendar quarter. Each payment shall be accompanied by a |
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summary explaining the basis for the calculation of the fee. A |
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municipality may review the business records of the cable service |
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provider or video service provider to the extent necessary to |
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ensure compensation in accordance with Subsection (a), provided |
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that the municipality may only review records that relate to the |
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48-month period preceding the date of the last franchise fee |
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payment. Each party shall bear the party's own costs of the |
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examination. A municipality may, in the event of a dispute |
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concerning compensation under this section, bring an action in a |
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court of competent jurisdiction. |
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SECTION 4. Section 66.006, Utilities Code, is amended to |
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read as follows: |
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Sec. 66.006. IN-KIND CONTRIBUTIONS TO MUNICIPALITY. |
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(a) Until the expiration or termination of the incumbent cable |
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service provider's agreement, the holder of a state-issued |
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certificate of franchise authority shall pay a municipality in |
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which it is offering cable service or video service the same cash |
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payments on a per subscriber basis as required by the incumbent |
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cable service provider's franchise agreement. All cable service |
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providers and all video service providers shall report quarterly to |
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the municipality the total number of subscribers served within the |
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municipality. The amount paid by the holder of a state-issued |
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certificate of franchise authority shall be calculated quarterly by |
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the municipality by multiplying the amount of cash payment under |
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the incumbent cable service provider's franchise agreement by a |
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number derived by dividing the number of subscribers served by a |
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video service provider or cable service provider by the total |
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number of video or cable service subscribers in the municipality. |
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Such pro rata payments are to be paid quarterly to the municipality |
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within 45 days after the end of the quarter for the preceding |
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calendar quarter. |
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(b) On the expiration or termination of the incumbent cable |
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service provider's agreement, the holder of a state-issued |
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certificate of franchise authority shall pay a municipality in |
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which it is offering cable service or video service one percent of |
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the provider's gross revenues, as defined by this chapter, or at the |
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municipality's election, the per subscriber fee that was paid to |
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the municipality under the expired or terminated incumbent cable |
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service provider's agreement, in lieu of in-kind compensation and |
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grants. Payments under this subsection shall be paid in the same |
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manner as outlined in Section 66.005(b). |
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(c) All fees paid to municipalities under this section are |
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paid in accordance with 47 U.S.C. Sections 531 and 541(a)(4)(B) and |
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may be used by the municipality as allowed by federal law. |
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(c-1) The holder of a state-issued certificate of franchise |
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authority shall include with a fee paid to a municipality under this |
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section a statement identifying the fee. |
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(c-2) If a municipality uses fees paid to the municipality |
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under this section for a purpose described by 47 U.S.C. Section |
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542(g)(2)(C), the fees[; further, these payments] are not |
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chargeable as a credit against the franchise fee payments |
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authorized under this chapter. If the municipality uses the fees |
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for another purpose, the fees are chargeable as a credit against the |
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franchise fee payments authorized under this chapter. |
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(c-3) A municipality that receives fees under this section: |
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(1) shall maintain revenue from the fees in a separate |
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account established for that purpose; |
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(2) may not commingle revenue from the fees with any |
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other money; |
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(3) shall maintain a record of each deposit to and |
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disbursement from the separate account, including a record of the |
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payee and purpose of each disbursement; and |
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(4) not later than January 31 of each year, shall |
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provide to each certificate holder that pays a fee to the |
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municipality under this section a detailed accounting of the |
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deposits to and disbursements from the separate account made in the |
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preceding calendar year. |
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(d) Cable services to community public buildings, such as |
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municipal buildings and public schools, [The following services] |
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shall continue to be provided by the cable provider that was |
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furnishing services pursuant to its municipal cable franchise |
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[until January 1, 2008, or] until the expiration or termination |
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[term] of the franchise; and [was to expire, whichever is later, and
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thereafter as provided in Subdivisions (1) and (2) below:
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[(1)] institutional network capacity, however defined |
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or referred to in the municipal cable franchise but generally |
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referring to a private line data network capacity for use by the |
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municipality for noncommercial purposes, shall continue to be |
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provided at the same capacity by the cable provider that was |
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furnishing services pursuant to its municipal cable franchise until |
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the date of expiration or termination of the franchise, whichever |
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is later, for municipalities with a population greater than one |
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million as of January 1, 2012 [as was provided to the municipality
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prior to the date of the termination, provided that the
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municipality will compensate the provider for the actual
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incremental cost of the capacity; and
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[(2)
cable services to community public buildings,
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such as municipal buildings and public schools, shall continue to
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be provided to the same extent provided immediately prior to the
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date of the termination]. On [Beginning on January 1, 2008, or] the |
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expiration or termination of the franchise agreement, [whichever is
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later,] a provider that provides the cable services as described by |
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this section may deduct from the franchise fee to be paid to the |
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municipality an amount equal to the actual incremental cost of the |
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cable services if the municipality requires the cable services |
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after that date. Such cable service generally refers to the |
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existing cable drop connections to such facilities and the tier of |
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cable service provided pursuant to the franchise at the time of the |
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expiration or termination. |
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SECTION 5. Subsections (c) and (h), Section 66.009, |
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Utilities Code, are amended to read as follows: |
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(c) If a municipality did not have the minimum number of PEG |
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access channels as of September 1, 2005, as set out in Subdivisions |
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(1) and (2) based on its population as of that date, the cable |
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service provider or video service provider shall furnish: |
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(1) up to three PEG channels for a municipality with a |
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population of at least 50,000; and |
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(2) up to two PEG channels for a municipality with a |
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population of less than 50,000. |
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(h) Where technically feasible, the holder of a |
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state-issued certificate of franchise authority that is not an |
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incumbent cable service provider and an incumbent cable service |
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provider, including an incumbent cable service provider that holds |
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a state-issued certificate of franchise authority issued under |
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Section 66.004(b-1), shall use reasonable efforts to interconnect |
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their cable or video systems for the purpose of providing PEG |
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programming. Interconnection may be accomplished by direct cable, |
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microwave link, satellite, or other reasonable method of |
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connection. The holder [Holders] of a state-issued certificate of |
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franchise authority and the incumbent cable service provider |
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[providers] shall negotiate in good faith, and the incumbent cable |
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service provider [providers] may not withhold interconnection of |
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PEG channels. |
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SECTION 6. (a) A municipality that received fees described |
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by Subsection (c), Section 66.006, Utilities Code, as amended by |
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this Act, before September 1, 2011, shall, on September 1, 2011, |
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transfer any fees that have not been disbursed to a separate account |
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as required by Subsection (c-3), Section 66.006, Utilities Code, as |
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added by this Act. |
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(b) The change in law made by this Act in adding |
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Subdivisions (3) and (4), Subsection (c-3), Section 66.006, |
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Utilities Code, applies only to transfers, deposits, and |
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disbursements made on or after the effective date of this Act. A |
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transfer, deposit, or disbursement made before the effective date |
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of this Act is governed by the law in effect on the date the |
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transfer, deposit, or disbursement was made, and the former law is |
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continued in effect for that purpose. |
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SECTION 7. This Act takes effect only if House Bill No. 259 |
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or House Bill No. 3675 or similar legislation by the 82nd |
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Legislature, Regular Session, 2011, is enacted and becomes law that |
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imposes an assessment on providers of subscription video services |
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and allows subscription video service providers to claim a credit |
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against the assessment for fees paid to municipalities pursuant to |
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a municipal franchise or state-issued certificate of franchise |
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authority and provides that at least 25 percent of the revenue |
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generated by the state assessment on providers of subscription |
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video services be distributed to municipalities and counties. If |
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legislation described by this section is not enacted by the 82nd |
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Legislature, Regular Session, 2011, or does not become law, this |
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Act has no effect. |
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SECTION 8. Except as provided by Section 7 of this Act, this |
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Act takes effect October 1, 2011. |
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* * * * * |