HBA-ALS H.B. 1614 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1614 By: Carter Land & Resource Management 3/19/1999 Introduced BACKGROUND AND PURPOSE The purpose of this bill is to establish a uniform method for providers of telecommunications services (providers) to compensate municipalities for the use of public rights-of-way. H.B. 1614 requires the Public Utility Commission of Texas (commission) to adopt a uniform general use ordinance governing the conditions, limitations, and compensation which a municipality may impose on and require of providers for using the municipality's public right-of-way. This bill sets guidelines and requirements that a municipality must follow regarding its adoption of a uniform general use ordinance and its collection of franchise fees, costs, and other charges from providers. This bill creates a work group to draft a proposed uniform general use ordinance which is to be submitted to the commission. The commission is required to review, approve, and adopt the initial ordinance no later than December 15, 1999. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Subtitle A, Title 9, Local Government Code, by adding Chapter 283, as follows: CHAPTER 283. MANAGEMENT OF PUBLIC RIGHTS-OF-WAY USED BY CERTIFICATED TELECOMMUNICATIONS PROVIDER IN A MUNICIPALITY Sec. 283.001. STATE POLICY; PURPOSE. Provides that it is the policy of this state to: encourage competition in providing telecommunications services; reduce barriers to entry for providers of telecommunications services (providers) in order to increase the number and types of offered services through competition; and ensure that providers do not obtain a competitive advantage or disadvantage in obtaining a franchise for use of a public right-ofway from a municipality. (b) Provides that it is the policy of this state that municipalities retain the authority to manage their public rights-of-way and to ensure the health, safety, and welfare of the public, and continue to receive revenue from certified providers revenue for using public rights-of-way within the municipality. (c) Provides that the purpose of this chapter is to establish a uniform method for providers to compensate municipalities for the use of their public rights-of-way that meets certain specifications. Sec. 283.002. DEFINITIONS. Defines "access line," "certified telecommunications provider," "commission," "local exchange telephone service," and "public right-of-way." Sec 283.003. CERTAIN RIGHTS NOT AFFECTED. Provides that this chapter does not affect the right of a provider to use a public right-of-way to provide service and install necessary facilities, or the municipality to regulate the placement and management of those facilities in a manner that is reasonable, consistent, nondiscriminatory, and competitively neutral. Sec. 283.004. FRANCHISE REQUIREMENT PROHIBITED IF RIGHT-OF-WAY NOT USED. Prohibits a municipality from requiring a provider that does not use a public right-ofway within the municipality to obtain a franchise or license or permit or to pay any fee or compensation to provide local exchange telephone service in the municipality, notwithstanding any other law. Sec. 283.005. FRANCHISE REQUIREMENT; EFFECT OF UNIFORM GENERAL USE ORDINANCE REQUIREMENT. (a) Authorizes a municipality to require a certificated provider to obtain a franchise to use a public right-of-way within the municipality regardless of whether a municipality adopts the uniform general use ordinance prescribed by this chapter. Provides that reselling services, leasing the facilities of another provider, or interconnecting or transmitting a signal from a wireless carrier to the network of a wireline carrier does not constitute using a public right-of-way, for purposes of this section. (b) Authorizes a provider to erect poles or construct conduit, cable, switches, or related appurtenances and facilities in a municipality's public right-of-way in order to provide local exchange telephone service on execution of a franchise. (c) Prohibits a municipality from requiring a certificated telecommunications utility that has obtained a franchise from the municipality to pay a franchise fee under Section 283.008 unless the municipality adopts the uniform general use ordinance adopted by the Public Utility Commission of Texas (commission) under this chapter and the franchise complies with the ordinance, notwithstanding Subsection (a). Sec. 283.006. PROHIBITION ON OTHER FEES AND CHARGES. Prohibits a municipality from requiring a certificated provider to pay any fee other than the fee authorized by Section 283.008 or to provide any in-kind services without compensation or below market rates for the right to use a public right-of-way or provide local exchange telephone service in that municipality, regardless of whether the municipality adopts the uniform general use ordinance. Sec. 283.007. UNIFORM GENERAL USE ORDINANCE. (a) Requires the commission to adopt a uniform general use ordinance governing the conditions, limitations, and compensation a municipality may impose on certificated providers for the use of a public right-of-way. (b) Provides that the uniform general use ordinance must provide that municipal regulations which condition or limit a certificated provider's use of a public right-of-way must be based on lawful exercise of police power, must be exercised in a competitively neutral manner, may not unduly impair competition, may not be unreasonably restrictive, and must comply with state and federal law. (c) Provides that the uniform general use ordinance must provide that a municipality may receive compensation from a certificated provider only for the municipality's costs of managing the public right-of-way and according to Section 283.008. Provides that the uniform general use ordinance must recognize that differences between different areas of the state may dictate individual municipality requirements relating to regulation and compensation. Sec. 283.008. FRANCHISE FEE. (a) Authorizes a municipality that has adopted the uniform general use ordinance to impose a fee on a certificated provider that has executed a franchise agreement with the municipality as necessary to reimburse the municipality for costs of managing the right-of-way. Specifies items that constitute cost of managing the right-ofway. (b) Requires the municipality to allocate costs among certificated providers that have executed franchise agreements with the municipality based on the number of access lines served by those providers. (c) Requires the municipality to recover the costs by imposing a fee on each certificated provider's access line within the municipality that physically uses the public right-of-way to connect an end-user. Provides that the fee must be competitively neutral and prohibits the fee from being based on a certificated provider's revenues. (d) Requires the municipality to ensure that the total amount received by the municipality in the first year of the agreement from certificated providers that have executed franchise agreements does not exceed the amount that the municipality received from specified fees in 1998 from providers. Prohibits the municipality from increasing the amount of the fee unless the total amount received by the municipality will increase if there is an increase in the number of access lines within the municipality that physically use the public rightof-way to connect an end-user. (e) Requires the municipality to set the annual amount a certificated provider must pay under this section based on the number of access lines served by the provider within the municipal boundaries during that year. (f) Requires the commission to annually determine the total number of access lines within each municipality and the lines among certificated providers that have executed franchise agreements with the municipality. Authorizes the commission to perform audits relating to allocation of access lines. Provides that this subsection does not affect the authority of a municipality to perform audits relating to the allocation of access and the payment of fees. Provides that the commission has final audit authority. (g) Provides that if a municipality that has not imposed a provider fee or charge for using the public right-of-way before January 1, 2000, decides to impose a fee under this section, the municipality must adopt the uniform general use ordinance. Requires the municipality to impose and set the fee amount in a manner similar to the manner that a municipality with a similar population and geography imposes and sets the fee. Requires the municipality to ensure that the total amount it receives in the first year of the agreement from all certificated providers that have executed a franchise agreement does not exceed the amount described by Subsection (d) and received by the similarly situated municipality. Sec. 283.009. PREVENTION OF DOUBLE PAYMENT. (a) Requires a certificated provider that resells local exchange telecommunications services or facilities and that executes a franchise agreement with a municipality to provide a copy of the agreement to the provider from whom it purchases services or facilities. (b) Requires, at the beginning of the next billing period after the franchise agreement takes effect, the provider from whom the reseller purchases the services or facilities to cease applying the access line fee provided to the reseller, and requires the reseller to pay that fee to the municipality. SECTION 2. (a) Provides that a work group is created to draft a proposed uniform general use ordinance to submit to the commission for adoption according to Section 283.007, Local Government Code, as added by this Act. Provides that the work group is composed of representatives from specified entities who are appointed by the commission. (b) Requires the work group to submit a proposed uniform general use ordinance to the commission, no later than November 1, 1999. Provides that the proposed ordinance must comply with Chapter 283, Local Government Code, as added by this Act. Provides that if the proposed ordinance is not submitted by November 1, 1999, then the work group is dissolved and the commission is required to develop the ordinance. (c) Requires the commission to review a proposed ordinance to determine if it is in compliance. Authorizes the commission to review the proposed ordinance in an informal proceeding. (d) Requires the commission after review, to approve and adopt the ordinance, approve and adopt the ordinance as modified by the commission in agreement with the work group, or remand the ordinance back to the work group for additional work. (e) Requires the commission to adopt the ordinance no later than December 15, 1999. (f) Provides that this section expires February 1, 2000. SECTION 3. Provides that this Act does not affect the validity of a franchise agreement with a certificate provider executed before January 12, 1999, and authorizes a municipality to continue to enforce that agreement and to collect franchise fees and charges under the agreement until the agreement expires by its own terms. (b) Authorizes a municipality, during the period that a franchise agreement is in effect, to require a person who wants to offer local exchange telephone service in the municipality to comply with applicable terms of the agreement as a condition of providing services in the municipality. Prohibits the municipality from requiring the new entrant to provide any inkind services without compensation or below market rates for the right to use a public rightof-way or to provide service in the municipality. Provides that the municipality's authority to require compliance under this subsection expires on the day that the franchise agreement expires by its own terms. SECTION 4. Provides that Section 1 of this Act takes effect September 1, 1999, and the other sections of this Act take effect on the first date on which they may take effect under Section 39, Article III, Texas Constitution (Time of Taking Effect of Laws; Emergencies; Entry on Journal). (b) Prohibits a municipality from requiring a certificated provider to pay a franchise fee or charge for using a public right-of-way within the municipality unless the municipality has adopted the uniform general use ordinance required by Chapter 283, Local Government Code, as added by this Act, and has executed a franchise agreement with the provider. SECTION 5. Emergency clause. .