HBA-ALS H.B. 1777 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1777 By: Wolens State Affairs 3/19/1999 Introduced BACKGROUND AND PURPOSE Currently, there is no statutory provision specifying the method and level of compensation that a municipality may collect from a telecommunications provider (provider) for the use of the public rights-of-way and the right to provide services within that municipality. The purpose of this bill is to provide policies and guidelines relating to compensation that a municipality may receive from a provider within the municipality. H.B. 1777 defines communications services to include services for telephones, telecommunication, commercial and personal communication, Internet, paging, satellite, and other wireless technology. This bill allows a municipality, by ordinance, to require providers of these communications services (providers) to pay reasonable compensation for using the municipality's public rights-of-way or for the right to provide services within the municipality. In addition, this bill allows a municipality to require providers to pay reasonable compensation to the municipality for its costs of exercising police power regulation over the providers. This bill specifies the maximum compensation that a municipality can charge a provider for these rights and uses, prohibits a municipality from charging a provider for other specified charges, and sets forth certain requirements for ordinances imposing charges under this Act. 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. Amends Chapter 311, Transportation Code, by adding Subchapter F, as follows: SUBCHAPTER F. COMPENSATION FOR RIGHT TO PROVIDE TELECOMMUNICATIONS SERVICES AND TO USE PUBLIC RIGHTS-OF-WAY Sec. 311.121. DEFINITIONS. Defines "communications services" and "public right-ofway." Sec. 311.122. COMPENSATION FOR USE OF PUBLIC RIGHT-OF-WAY. Authorizes a municipality by ordinance to require communications services providers (providers) who own facilities located within public rights-of-way within the municipality to pay reasonable compensation to use those rights-of way, in addition to any other compensation authorized by law. Prohibits the required compensation from exceeding four percent of the provider's gross receipts from selling communications services within the municipality. Sec. 311.123. COMPENSATION FOR RIGHT TO PROVIDE SERVICE. Authorizes a municipality by ordinance to require all providers who do not use public rights-of-ways within the municipality to pay reasonable compensation for the right to provide services within the municipality, in addition to any other compensation authorized by law. Prohibits the required compensation from exceeding two percent of the provider's gross receipts from selling communications services within the municipality. Sec. 311.124. COMPENSATION FOR COST OF EXERCISING POLICE POWER REGULATION. Authorizes a municipality by ordinance to require providers within the municipality to pay reasonable compensation for the municipality's cost of exercising police power regulation over the providers, in addition to the compensation pursuant to Sections 311.122 and 311.123. Prohibits the required compensation from exceeding one percent of the provider's gross receipts from selling communications services within the municipality. Sec. 311.125. LIMITATION ON OTHER CHARGES. Prohibits a municipality imposing a charge under Section 311.122, 311.123, or 311.124 from requiring the paying provider to pay any other specified fees, taxes, charges, or costs. Provides that this section does not affect the authority of a municipality to impose a sales and use tax under Chapter 321, Tax Code (Municipal Sales and Use Tax). Sec. 311.126. ORDINANCE. (a) Requires an ordinance which authorizes the imposition of a charge under this section to require the municipality to impose the charge in a manner that is competitively neutral and nondiscriminatory and to state the rate of the charge. (b) Authorizes a municipality to repeal an ordinance authorizing a charge under Section 311.122 and adopt a new ordinance that requires providers who own facilities within public rights-of-way within the municipality to pay reasonable compensation for the value of the provider's use of those rights-of-way. Prohibits the authorized compensation from exceeding the value of that use, as determined by a study conducted by the municipality. SECTION 2. Provides that this Act does not affect the validity of a franchise agreement with a provider that is executed before the effective date of this Act. Authorizes a municipality to enforce the franchise agreement and to collect fees and charges under the agreement until the date that the agreement expires by its own terms. SECTION 3. (a) Provides that Section 1 of this Act takes effect September 1, 1999, and all other sections take effect on the first day on which they are authorized to take effect under Section 39, Article III, Texas Constitution (Time of Taking Effect of Laws; Emergencies; Entry on Journal). (b) Prohibits a municipality after September 1, 1999, from requiring a provider to pay a franchise fee or charge for using a public right-of-way or providing services within the municipality unless the municipality adopted an ordinance pursuant to Subchapter F, Chapter 311, Transportation Code, as added by this Act, and has executed a franchise agreement with the provider in accordance with that ordinance, except as provided by Section 2 of this Act. SECTION 4. Emergency clause.