By: King of Hemphill H.B. No. 3127

A BILL TO BE ENTITLED

AN ACT

relating to the authority of certain telecommunications providers to commit to making infrastructure and network improvements in exchange for support from the universal service fund.

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

SECTION 1. Subtitle C, Title 2, Utilities Code, is amended by adding Chapter 53A to read as follows:

CHAPTER 53A. RURAL ADVANCED PLAN FOR INFRASTRUCTURE DEPLOYMENT

Sec. 53A.001. POLICY. In accordance with the policy stated in Section 51.001(g), considering the differences in the geographic and economic challenges posed by providing basic local telecommunications services and competitive and advanced telecommunications services to rural areas as opposed to urban areas, the benefits incident to those services, the status of universal service in the rural areas of this state, state and national initiatives for widespread deployment of broadband services, and the telecommunications services network and infrastructure advancements needed to make possible the future deployment of an electric smart grid in rural areas, it is the policy of this state to:

(1) upgrade and maintain the telecommunications services infrastructure in rural areas of this state in an effort to:

(A) provide to each resident of this state a network capable of providing access to basic local telecommunications services and advanced telecommunications services so that a majority of residents in rural areas have the option to use those services; and

(B) ensure that each resident has advanced telecommunications services to maintain the role of this state as a leader in commerce and education;

(2) ensure that the residents of rural areas have access to a wide range of advanced telecommunications services and other competitive benefits in a manner and at prices similar to the access available to residents in urban areas;

(3) provide the necessary infrastructure in rural areas to support access to an array of telecommunications, data, and video services, economic development and educational opportunities, and telemedicine applications;

(4) provide the required underlying primary network infrastructure to support major state and national energy policy initiatives established to create an electric smart grid that requires the support of an advanced telecommunications services network;

(5) provide incentives and flexibility similar to programs available in urban areas for small incumbent local exchange companies that serve rural areas to complete a basic local and advanced telecommunications services infrastructure that will support universal service; and

(6) promote economic stabilization and growth in rural areas through basic local and advanced telecommunications services networks.

Sec. 53A.002. DEFINITIONS. In this chapter:

(1) "Advanced telecommunications services" includes high speed, switched, broadband telecommunications service that enables users to originate and receive high quality voice, data, graphics, and video telecommunications.

(2) "Community center" means an organized public or private entity that provides a location for specialized groups or the general public to meet for group activities involving community, educational, patriotic, political, public information, recreational, religious, or social functions. The term includes recreational centers, senior centers, youth centers, and publicly owned meeting facilities. The commission may by rule designate additional types of facilities or entities as community centers.

(3) "Educational institution" has the meaning assigned by Section 57.021.

(4) "Electing provider" means a small provider that elects to be subject to the infrastructure commitment and corresponding regulation under this chapter.

(5) "Emergency services facility" means a facility from which a person, including a firefighter, paramedic, emergency medical technician, police officer, sheriff, constable, or other state or federal law enforcement representative, responds to emergencies, including 9-1-1 calls.

(6) "Library" means:

(A) a public library or regional library system, as defined by Section 441.122, Government Code;

(B) a library operated by an institution of higher education or a school district; or

(C) a library operated by a nonprofit corporation, as defined by Section 441.221, Government Code.

(7) "Private network services" means telecommunications services, including basic local telecommunications services, broadband services, customized services, and packaged network services.

(8) "Small provider" means:

(A) an incumbent local exchange company or cooperative that on September 1, 2013, together with all local exchange companies affiliated with the company or cooperative on that date, served 31,000 or fewer access lines in this state; or

(B) a company or cooperative that is a successor to a company or cooperative described by Subparagraph (A).

(9) "Smart grid" means infrastructure required to produce an advanced electric energy grid system under the state and national policy initiatives under the Energy Independence and Security Act of 2007 (42 U.S.C. Section 17001 et seq.).

(10) "Telemedicine center" means a facility that is equipped to transmit, by video, data, or voice service, medical information for the diagnosis or treatment of an illness or disease and that is:

(A) owned or operated by a public or not-for-profit hospital; or

(B) owned by a state-licensed health care practitioner and operated on a nonprofit basis.

Sec. 53A.003. CHAPTER CONTROLS. To the extent this chapter conflicts with Chapter 53, this chapter controls.

Sec. 53A.004. ELECTION. (a) A small provider that is not an electing company under Chapter 58 or 59 as of September 1, 2013, may elect to be subject to this chapter and make the corresponding infrastructure commitment under this chapter by notifying the commission in writing of the election.

(b) The notice must include the information required by Section 56.034 and a statement that the provider agrees to fulfill the infrastructure commitment prescribed by this chapter.

(c) A small provider may not revoke an election.

Sec. 53A.005. INFRASTRUCTURE COMMITMENT. (a) After the date the commission receives notice of the small provider's election under Section 53A.004, the electing provider shall:

(1) commit to make all reasonable efforts and investments in this state necessary to improve or upgrade network infrastructure in the manner described by this chapter;

(2) work to ensure that the electing provider's network backbone interoffice facilities are capable of supporting services that include, at a minimum, broadband speeds that are not less than the minimum speeds required by the Federal Communications Commission, voice services, video signal at a quality level comparable to a television broadcast signal, and other reasonably anticipated basic local or advanced telecommunications services that may become available to the public in the future; and

(3) work to ensure that all new or upgraded local loops that are the subject of an equitable request for service are capable of supporting basic local and advanced telecommunications services, including broadband service at a speed that is not less than the minimum broadband speed required by the Federal Communications Commission.

(b) To meet the requirements of this chapter, an electing provider may use any technology capable of achieving the required level of service capabilities. This includes both new construction and upgrades to existing facilities.

Sec. 53A.006. EQUITABLE REQUESTS FOR SERVICE. (a) For the purposes of this chapter, a request for service is considered an equitable request for service only if provision of the requested service by the electing provider receiving the request is technologically and economically feasible, including the provision of network extensions or upgrades necessary to support any services the requesting entity is receiving at the time the request is made and other reasonably anticipated basic local or advanced telecommunications services that may become available to the public in the future.

(b) An electing provider shall determine whether a request for service is an equitable request. If the electing provider determines that the request is not an equitable request, the electing provider shall provide written notice of that determination to the requesting person. The requesting person may appeal to the commission a determination that a request for service is not an equitable request.

(c) An electing provider may deny a request that is not an equitable request. An infrastructure commitment associated with a denied request is waived.

(d) If the electing provider or the commission determines that a request for service is an equitable request, the electing provider shall, regardless of technology used, work to ensure that the provider meets the commitments prescribed by Section 53A.005.

Sec. 53A.007. PRIVATE NETWORK SERVICES FOR CERTAIN ENTITIES. (a) An electing provider shall, after receiving an equitable request for service under Section 53A.006, provide private network services to:

(1) a community center;

(2) an educational institution;

(3) a library;

(4) a public or not-for-profit emergency services facility;

(5) a telemedicine center; or

(6) a legally constituted consortium of entities listed in this subsection.

(b) The electing provider shall provide the private network services for the private and sole use of the receiving entity or entities. The provider may provide the services jointly with a facility that is used to provide another service to another customer.

(c) The entities described by Subsection (a) are a special class of customers for the purposes of the private network for distance learning, telemedicine, and information-sharing uses.

(d) An electing provider may provide a private network service under a customer-specific contract.

(e) The entities described by Subsection (a) warrant preferred rate treatment. An electing provider shall provide private network services to those entities at a reduced rate equal to 65 percent of the amount owed under the customer-specific contract or under the otherwise applicable tariffed rate after applicable federal discounts are applied.

(f) On request of an electing provider, the commission shall provide reimbursement through the universal service fund, in addition to monthly support received under Section 56.034(d)(1) or (2), for reduced rates for private network services for entities described by Subsection (a). The amount of reimbursement shall be equal to the difference between the electing provider's customer-specific contract or otherwise applicable tariffed rate for that service, and the reduced rate offered for that service under this chapter.

Sec. 53A.008. WAIVER OF INFRASTRUCTURE COMMITMENT REQUIREMENTS. (a) On the request of an electing provider, the commission may waive an infrastructure commitment requirement under Section 53A.005 or 53A.009 or a requirement under an equitable request for service under Section 53A.006.

(b) The commission may grant a waiver in relation to an equitable request for service under Section 53A.006 if the electing provider demonstrates that the requested investment or service places an undue burden on the universal service fund or the electing provider.

(c) Before granting a waiver under Subsection (b), the commission must consider the public benefits that would result from the investment or service, the willingness and ability of the requestor to pay a reasonable aid to construction charge, and the allowance of additional universal service fund support to allow timely completion of the request.

(d) The commission shall review a waiver granted under Subsection (a) or (b) at least once every three years if the corresponding requirement or the corresponding equitable request for service remains pending. The commission may not extend a waiver until the commission reviews the factors listed in Subsection (c), the technical ability of the provider to meet the waived requirement, and the effect of extending the waiver on the universal service fund.

Sec. 53A.009. PLAN. (a) An electing provider shall develop and implement a five-year infrastructure investment plan to maintain and upgrade existing network facilities to ensure connectivity capable of meeting the standards prescribed by this chapter.

(b) The plan must include a description of the proposed improvements or upgrades to the electing provider's network throughout its service area that will help the provider meet infrastructure commitments and customer needs.

(c) An electing provider who is subject to a requirement under federal law to file a five-year plan is not required to create an additional plan under this section.

Sec. 53A.010. PROGRESS AND ACCOUNTABILITY REPORT. (a) An electing provider shall file annually with the commission a report on the provider's progress toward fulfilling the provider's infrastructure commitment.

(b) The report must include:

(1) the plan described by Section 53A.009 or the provider's federally prescribed five-year plan;

(2) a description of the provider's progress on implementing the plan, how the provider is using universal service support funds to improve service quality, coverage, or capacity, and an explanation detailing why improvements or targets for the previous calendar year have not been met, including adjustments for evolving standards;

(3) a summary of financial data for the previous calendar year that includes total company data, including:

(A) plant-specific operations expenses;

(B) plant non-specific operations expenses;

(C) customer operations expenses;

(D) corporate operations expenses;

(E) depreciation and amortization expenses;

(F) other operating expenses;

(G) total telecom plant in service;

(H) total property held for future use; and

(I) total telecom plant under construction; and

(4) average network capacity and speed capabilities available to customers.

(c) A report filed under this section is confidential and not subject to disclosure under Chapter 552, Government Code.

(d) The commission shall monitor the progress of each electing provider through the reports submitted under this section.

Sec. 53A.011. UNIVERSAL SERVICE FUND RECOVERY. (a) An electing provider is eligible to receive support from the universal service fund as provided by this chapter and Section 56.034.

(b) This chapter does not affect the eligibility of an electing provider to receive support under Section 56.025.

SECTION 2. Section 56.021, Utilities Code, is amended to read as follows:

Sec. 56.021. UNIVERSAL SERVICE FUND ESTABLISHED. The commission shall adopt and enforce rules requiring local exchange companies to establish a universal service fund to:

(1) assist telecommunications providers in providing basic local telecommunications service at reasonable rates in high cost rural areas under two plans:

(A) the Texas High Cost Universal Service Plan (16 T.A.C. Section 26.403); and

(B) the Small and Rural Incumbent Local Exchange Company Universal Service Plan (16 T.A.C. Section 26.404);

(2) reimburse the telecommunications carrier that provides the statewide telecommunications relay access service under Subchapter D;

(3) finance the specialized telecommunications assistance program established under Subchapter E;

(4) reimburse the department and the commission for costs incurred in implementing this chapter and Chapter 57;

(5) reimburse a telecommunications carrier providing lifeline service as provided by 47 C.F.R. Part 54, Subpart E, as amended;

(6) finance the implementation and administration of an integrated eligibility process created under Section 17.007 for customer service discounts relating to telecommunications services, including outreach expenses the commission determines are reasonable and necessary;

(7) reimburse a designated provider under Subchapter F;

(8) reimburse a successor utility under Subchapter G; [and]

(9) finance the program established under Subchapter H; and

(10) assist telecommunications providers that are small and rural local exchange companies in providing basic local and advanced telecommunications services in high cost rural areas through fulfilling infrastructure commitments under Chapter 53A, as provided by Section 56.034.

SECTION 3. Subchapter B, Chapter 56, Utilities Code, is amended by adding Section 56.034 to read as follows:

Sec. 56.034. SUPPORT FOR RURAL ADVANCED PLAN FOR INFRASTRUCTURE DEPLOYMENT. (a) Support for the Rural Advanced Plan for Infrastructure Deployment is available to telecommunications providers who are electing providers under Chapter 53A.

(b) Not later than January 1, 2017, the commission shall implement a mechanism for electing providers to transition support from the Small and Rural Incumbent Local Exchange Company Universal Service Plan to the Rural Advanced Plan for Infrastructure Deployment. Until the mechanism is in place, an electing provider's support level may not be decreased from the level the provider receives on the date the commission receives notice under Section 53A.004 of the provider's election.

(c) When a provider notifies the commission that it elects to be subject to Chapter 53A, the provider shall request that the commission determine and disburse support to the provider under Subsection (d)(1) or (d)(2).

(d) An electing provider may request that the commission disburse funds to the provider in fixed monthly amounts based on:

(1) the company's annualized amount of recovery from the universal service fund for the fiscal year ending on August 31, 2017, but only if the commission receives notice under Section 53A.004 of the provider's election on or before September 1, 2017; or

(2) an annualized support amount determined to be sufficient, based on the Federal Communications Commission cost study and independently audited financials of the provider for the most recently ended fiscal year and when considered with other revenues, to permit the company the opportunity to earn a reasonable return in accordance with Section 53.051.

(e) The commission shall determine the initial support level not later than the 60th day after the date the commission receives the notice under Section 53A.004.

(f) An electing provider who requests to have the provider's initial support level determined and disbursed under Subsection (d)(1) may, not earlier than the first anniversary of the date of the determination of initial support level, make a one-time request to have the provider's fixed monthly support determined and disbursed under Subsection (d)(2). Not later than the 60th day after the date the commission receives a request under this subsection, the commission shall recalculate the amount of the electing provider's support as provided by Subsection (d)(2) and the electing provider is considered to have made a request under Subsection (d)(2) for the purposes of all future adjustments. This subsection does not limit a provider's ability to make a request under Subsection (g).

(g) Not earlier than the first anniversary of the date of the determination of an initial support level the electing provider will receive under Subsection (d), or after an election under Subsection (f), the commission may, only for good cause and on its own motion, or shall, on the written request of the provider, initiate a proceeding to recalculate the annual support amount to be used as the basis for the fixed monthly support amounts. The commission shall base the recalculation under this subsection on an annualized support amount determined to be sufficient, when considered with other revenues, to permit the company the opportunity to earn a reasonable return in accordance with Section 53.051. Except for good cause, the commission may not initiate a proceeding to adjust a provider's support under this subsection more frequently than once every three years.

(h) The commission shall adjust support disbursed under Subsection (d)(2) automatically every three years using the calculation prescribed by Subsection (d)(2). An adjustment proceeding under this subsection must be completed in not more than 60 days.

SECTION 4. This Act takes effect September 1, 2015.