HBA-CCH H.B. 1400 77(R)     BILL ANALYSIS


Office of House Bill AnalysisH.B. 1400
By: Brimer
State Affairs
3/7/2001
Introduced



BACKGROUND AND PURPOSE 

Cable television modem service has become an increasingly popular means to
access the Internet. Historically, municipalities have exercised authority
over cable television companies by issuing franchises, imposing franchise
fees, regulating basic service rates, managing access, and establishing
customer service standards.  While a franchise does not always have
exclusive rights to operate a cable television system, effective
competition is uncommon because a second cable operator must  overbuild the
existing cable system.  As a result, most areas have only one cable
television company and without competition, they have little incentive to
provide fair prices and quality services.  Under current law, the state has
little authority and oversight over cable television companies and their
ability to access the Internet through a cable modem. House Bill 1400
grants the Public Utilities Commission authority to determine state
communications policy and to ensure that cable television companies provide
economical, efficient, fair, and quality services. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Public Utility Commission of Texas
in SECTION 1 (Section 11.002, Utilities Code), and  SECTION 2 (Sections
81.001, 82.002, 82.003, 82.004, 83.003, 83.004, 83.005, 84.001, 86.001,
86.002, 86.004, 86.051, 86.103, 86.105, 86.106, Utilities Code) of this
bill. 

ANALYSIS

General Purpose, Policy, and Application

House Bill 1400 amends the Utilities Code to require the Public Utilities
Commission (PUC) to determine state communications policy; ensure that
cable television companies provide adequate, economical, and efficient
services to subscribers, municipalities that have franchises, and other
relevant parties; oversee the development of the communications industry
for the public interest; encourage a competitive marketplace; and promote
public awareness of telecommunications issues.  H.B. 1400 requires the PUC
to review municipal practices for franchising cable television services,
prescribe standards for cable television systems and franchise practices,
provide consultation to community organizations and municipalities, ensure
full community access and a diversity of quality programming, and perform
various specific duties related to telecommunications (Secs. 81.001,
81.002, and 86.003).  The bill prohibits the PUC, a municipality, and a
cable television company from censoring a program or type of program or
engaging in discriminatory behavior that interferes with free speech (Sec.
81.006).   

PUC Duties

H.B. 1400 requires the PUC to develop a statewide plan for cable television
services, prescribe standards for the construction and operation of cable
television systems, and to provide advice and technical assistance to
municipalities and community organizations regarding franchises and
services.  The bill also requires the PUC to establish minimum
specifications for equipment, represent the interests of Texas residents
before the Federal Communications Commission and other appropriate federal
agencies, stimulate cooperation between various organizations, encourage
the creation of public and community groups, and  perform any necessary
studies related to meeting PUC's objectives (Sec. 82.002). 

H.B. 1400 requires the PUC, by rule, to prescribe the certification and
reporting requirements for a cable television company or system.  The bill
authorizes the PUC to require a cable television company to maintain and
file reports to the PUC and specifies the contents of the reports.  Before
January 15 of each odd-numbered year, the PUC is required to report to the
legislature on the scope of competition in cable television markets, the
effect of competition on subscribers, and an overall assessment of the
telecommunications industry and of the impact of adopted regulations (Sec.
82.004). 

The bill also requires the PUC to adopt and enforce rules to govern
franchises, oversee rates, consumer complaints,  network or program
changes, and whether a company offers what it advertises (Secs. 82.002,
83.053, 83.151, 86.004, 86.051, 86.103, 86.105, 86.106).  

Franchise Requirements and Certification of Confirmation

H.B. 1400 specifies requirements for franchises, and requires the PUC, by
rule, to prescribe standards for procedures and practices that a
municipality must follow in granting a franchise.  The bill prohibits a
municipality from granting an exclusive franchise (Sec. 83.001--83.003).
The bill provides that the PUC, by rule, prescribe minimum standards for
the terms of a franchise agreement necessary or appropriate to protect the
public interest, and to prescribe standards by which a municipality may
determine whether an applicant possesses the qualifications necessary to
operate a cable television system in the public interest (Secs. 83.004 and
83.005). The bill provides that a franchise application, a franchise
agreement, and all related documents accepted by the municipality in
relation to a franchise are public information and sets forth publication
requirements (Secs. 83.007 and 83.008).  A person is prohibited from
exercising a franchise without a confirmation from the PUC (Sec. 83.051).   

H.B. 1400 sets forth procedures for the application for a franchise and
makes provisions regarding the issuance of a certificate of confirmation
and for the transfer, renewal, amendment, suspension, or revocation of a
franchise and certificate of confirmation (Secs. 83.052, 83.053,
83.101--83.104, 83.151, and 83.152).  The bill also sets forth conditions
under which a cable television company is prohibited from abandoning any
service or portion of service that the company initially agreed to provide
(Sec. 83.154). 

Duties of Certificate Holders

H.B. 1400 requires the PUC, by rule, to prescribe standards relating to the
construction of cable television systems to promote quality service,
high-speed or broadband service, facilities that provide for local
programming, the capacity to connect with other systems in the PUC's
statewide plan, signal transmission from subscribers to the cable company,
and the prompt handling of inquiries, complaints, and requests (Sec.
84.001). The bill authorizes the PUC to order a cable television company to
construct, operate, or extend the company's system, regardless of its
economic feasibility, if the PUC finds that the construction or operation
of a cable television system has been unreasonably delayed or the extension
of service to a person or area within a cable television company's
territory has been unreasonably withheld, and is required to order the
construction, operation, or extension on any terms the PUC considers
reasonable and in the public interest (Sec. 84.002).  

The bill provides that a cable television company has a duty to provide
interconnection and open access to broadband Internet transport services to
any communications entity, unbundled, at rates and terms that are at least
as favorable as those the company provides itself, its affiliates, or any
other person (Secs. 84.053 and 84.054).  The bill requires a cable company
to maintain copies of all advertisements, lists, or other notifications
regarding programming sent to or made available to the public for three
years and is required to make them available to the PUC (Sec. 84.055). 

Rates

The bill provides the term of franchise rates, requires a cable television
company to charge rates specified  by the franchise, and authorizes the
franchise to establish reasonable classifications of service and categories
of subscribers (Sec. 85.001).  The bill authorizes the PUC to prescribe,
reduce, and restore rates based on whether the cable television company and
municipality engage in discriminatory practices, violate an order, or
remedy a deficiency (Secs. 85.003 and 85.004). 

Subscriber Protection and Notification

H.B. 1400 requires the PUC to adopt and enforce rules to protect individual
and retail subscribers from fraudulent, unfair, misleading, deceptive, or
anticompetitive practices.  The bill requires the PUC to adopt rules that
entitle subscribers to safe, reliable, and reasonably priced cable
television services, protect subscribers from service disconnections and
interruptions, protect the privacy of subscriber consumption and credit
information, protect subscribers from discrimination, provide information
in English and Spanish and any other appropriate language, provide deferred
payment plans, offer impartial and prompt resolution to disputes with the
cable television company, and present all cable television services on a
single bill.  The bill also requires the PUC to adopt rules prescribing the
maximum amounts subscribers of cable televison companies may be charged for
deposits, service termination, reconnection of service, and for a late
payment (Secs. 86.001 and 86.002).  A cable television company or system
may only use subscriberidentifying information for the business purpose for
which the information was first obtained.  A cable television company or
system may not share, sell, or lease subscriber-identifying information
without the subscriber's written affirmative consent (Sec. 86.006). 

The bill requires each municipality entering into a franchise agreement
with a cable company to establish and develop a subscriber complaint
department, and sets forth requirements for receiving complaints (Sec.
86.004).  A municipality must comply with these provisions before being
granted a franchise (Sec. 81.005). The bill also sets forth provisions for
landlord-tenant relationships regarding the installation of cable
television facilities (Sec. 86.005).  

The bill requires a cable television company, if it is technologically
feasible, to offer each subscriber a locking program control device that
enables the subscriber to limit the reception in the subscriber's residence
of any channel that displays public access programs or for which a
specific, optional premium charge is imposed, and install the locking
program control device at the subscriber's request. The bill sets forth
provisions related to informing subscribers about the availability of a
locking program device and of the fees to install the device (Sec. 86.007).
The bill also sets forth all the information that a company is required to
deliver to initial subscribers and to any person who requests the
information (Secs. 86.052 and 86.053).   

Network or Programming Changes

H.B. 1400 requires a cable television company to notify the PUC  and
subscribers of any significant network or programming changes, provides
when and how a company shall notify subscribers, and sets forth penalties
for a company's failure to comply with these provisions (Secs.
86.102-86.104).  The bill provides conditions under which a subscriber is
entitled to a refund, upgrade, a termination of services, a rebate, or
credit if a subscriber or group elects to continue services. In determining
the amount of any credit, the PUC is required to set a fair and equitable
amount after considering various specified factors (Secs. 86.105--86.107). 

The bill provides that these provisions apply to each cable television
company and cable television system in Texas to the maximum extent allowed
by federal law, and to a person who possesses a franchise for cable
television, regardless of whether the person acquires any property,
transacts any business, or exercises the franchise (Sec. 81.004). These
provisions do not limit the power of a municipality to impose or collect a
fee, tax, or charge on a cable television company (Sec. 81.005). 

Enforcement and Penalties

The bill authorizes the PUC to impose an administrative penalty for
violating a provision and sets limits on  the penalty (Secs. 87.001,
87.002, and 87.003). 

H.B. 1400 amends the Local Government Code to provide that the franchising
authority of home-rule and general-law municipalities is subject to the
provisions of this Act (SECTION 7). 

The bill provides that the PUC implement provisions related to the granting
of franchises and certificates of confirmation no later than January 1,
2002, and the other provisions no later than July 1, 2002. The bill
prohibits a cable television company from obtaining or renewing a franchise
during the period between September 1, 2001 and January 1, 2002.  A
franchise scheduled to expire during that period is extended until the end
of the period (SECTION 9).  

EFFECTIVE DATE

September 1, 2001.