By: Carona S.B. No. 1087
A BILL TO BE ENTITLED
AN ACT
relating to state-issued certificates of franchise authority to
provide cable service and video service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (a), Section 66.003, Utilities Code,
is amended to read as follows:
(a) An entity or person seeking to provide cable service or
video service in this state [after September 1, 2005,] shall file an
application for a state-issued certificate of franchise authority
with the commission as required by this section. An entity
providing cable service or video service under a franchise
agreement with a municipality is not subject to this subsection
with respect to such municipality until the franchise agreement is
terminated under Section 66.004 or until the franchise agreement
expires[, except as provided by Section 66.004].
SECTION 2. Section 66.004, Utilities Code, is amended by
amending Subsections (a), (c), and (f) and adding Subsections (b-1)
and (b-2) to read as follows:
(a) A cable service provider or a video service provider
that currently has or had previously received a franchise to
provide cable service or video service with respect to a
municipality may [such municipalities is not eligible to] seek a
state-issued certificate of franchise authority to provide service
to the municipality under this section [chapter as to those
municipalities until the expiration date of the existing franchise
agreement, except as provided by Subsections (b) and (c)].
(b-1) Beginning October 1, 2011, a cable service provider or
video service provider that was not allowed to or did not terminate
a municipal franchise under Subsection (b) may elect to terminate
all unexpired municipal franchises and seek a state-issued
certificate of franchise authority for each area served under a
terminated municipal franchise by providing written notice to the
commission and each affected municipality before January 1, 2012.
A municipal franchise is terminated on the date the commission
issues a state-issued certificate of franchise authority to the
provider for the area served under that terminated franchise.
(b-2) Notwithstanding Subsection (b-1), a cable service
provider or video service provider that is subject to a municipal
franchise in effect on September 30, 2011, in a municipality that by
ordinance requires the provider to bury a new or existing component
or facility may not terminate the municipal franchise under
Subsection (b-1) unless the provider agrees to comply with the
terms of the ordinance until the date the municipal franchise is
otherwise scheduled to expire or a date agreed on by the provider
and the municipality. The commission may not issue a state-issued
certificate of franchise authority to a provider under Subsection
(b-1) unless the provider provides proof that the provider has
agreed to comply with this subsection. A person or other entity
holding a right reserved in this subsection may enforce that right
by an action brought in a court of competent jurisdiction.
(c) A cable service provider [that serves fewer than 40
percent of the total cable customers in a municipal franchise area
and] that elects under Subsection (b) or (b-1) to terminate an
existing municipal franchise is responsible for remitting to the
affected municipality before the 91st day after the date the
municipal franchise is terminated any accrued but unpaid franchise
fees due under the terminated franchise. If the cable service
provider has credit remaining from prepaid franchise fees, the
provider may deduct the amount of the remaining credit from any
future fees or taxes it must pay to the municipality, either
directly or through the comptroller.
(f) Except as provided in this chapter, nothing in this
chapter is intended to abrogate, nullify, or adversely affect in
any way the contractual rights, duties, and obligations existing
and incurred by a cable service provider or a video service provider
before the date a franchise expires or the date a provider
terminates a franchise under Subsection (b-1), as applicable,
[enactment of this chapter,] and owed or owing to any private
person, firm, partnership, corporation, or other entity including
without limitation those obligations measured by and related to the
gross revenue hereafter received by the holder of a state-issued
certificate of franchise authority for services provided in the
geographic area to which such prior franchise or permit applies.
All liens, security interests, royalties, and other contracts,
rights, and interests in effect on September 1, 2005, or the date a
franchise is terminated under Subsection (b-1) shall continue in
full force and effect, without the necessity for renewal,
extension, or continuance, and shall be paid and performed by the
holder of a state-issued certificate of franchise authority, and
shall apply as though the revenue generated by the holder of a
state-issued certificate of franchise authority continued to be
generated pursuant to the permit or franchise issued by the prior
local franchising authority or municipality within the geographic
area to which the prior permit or franchise applies. It shall be a
condition to the issuance and continuance of a state-issued
certificate of franchise authority that the private contractual
rights and obligations herein described continue to be honored,
paid, or performed to the same extent as though the cable service
provider continued to operate under its prior franchise or permit,
for the duration of such state-issued certificate of franchise
authority and any renewals or extensions thereof, and that the
applicant so agrees. Any person, firm, partnership, corporation,
or other entity holding or claiming rights herein reserved may
enforce same by an action brought in a court of competent
jurisdiction.
SECTION 3. Subsections (a) and (b), Section 66.005,
Utilities Code, are amended to read as follows:
(a) The holder of a state-issued certificate of franchise
authority shall pay each municipality in which it provides cable
service or video service a franchise fee of five percent based upon
the definition of gross revenues as set forth in this chapter. That
same franchise fee structure shall apply to any unincorporated
areas that are annexed by a municipality after the effective date of
the state-issued certificate of franchise authority. The franchise
fee paid by the holder of a state-issued certificate of franchise
authority shall not be deemed a state or local tax.
(b) The franchise fee payable under this section is to be
paid quarterly, within 45 days after the end of the quarter for the
preceding calendar quarter. Each payment shall be accompanied by a
summary explaining the basis for the calculation of the fee. A
municipality may review the business records of the cable service
provider or video service provider to the extent necessary to
ensure compensation in accordance with Subsection (a), provided
that the municipality may only review records that relate to the
48-month period preceding the date of the last franchise fee
payment. Each party shall bear the party's own costs of the
examination. A municipality may, in the event of a dispute
concerning compensation under this section, bring an action in a
court of competent jurisdiction.
SECTION 4. Section 66.006, Utilities Code, is amended to
read as follows:
Sec. 66.006. IN-KIND CONTRIBUTIONS TO MUNICIPALITY.
(a) Until the expiration or termination of the incumbent cable
service provider's agreement, the holder of a state-issued
certificate of franchise authority shall pay a municipality in
which it is offering cable service or video service the same cash
payments on a per subscriber basis as required by the incumbent
cable service provider's franchise agreement. All cable service
providers and all video service providers shall report quarterly to
the municipality the total number of subscribers served within the
municipality. The amount paid by the holder of a state-issued
certificate of franchise authority shall be calculated quarterly by
the municipality by multiplying the amount of cash payment under
the incumbent cable service provider's franchise agreement by a
number derived by dividing the number of subscribers served by a
video service provider or cable service provider by the total
number of video or cable service subscribers in the municipality.
Such pro rata payments are to be paid quarterly to the municipality
within 45 days after the end of the quarter for the preceding
calendar quarter.
(b) On the expiration or termination of the incumbent cable
service provider's agreement, the holder of a state-issued
certificate of franchise authority shall pay a municipality in
which it is offering cable service or video service one percent of
the provider's gross revenues, as defined by this chapter, or at the
municipality's election, the per subscriber fee that was paid to
the municipality under the expired or terminated incumbent cable
service provider's agreement, in lieu of in-kind compensation and
grants. Payments under this subsection shall be paid in the same
manner as outlined in Section 66.005(b).
(c) All fees paid to municipalities under this section are
paid in accordance with 47 U.S.C. Sections 531 and 541(a)(4)(B) and
may be used by the municipality as allowed by federal law.
(c-1) The holder of a state-issued certificate of franchise
authority shall include with a fee paid to a municipality under this
section a statement identifying the fee.
(c-2) If a municipality uses fees paid to the municipality
under this section for a purpose described by 47 U.S.C. Section
542(g)(2)(C), the fees[; further, these payments] are not
chargeable as a credit against the franchise fee payments
authorized under this chapter. If the municipality uses the fees
for another purpose, the fees are chargeable as a credit against the
franchise fee payments authorized under this chapter.
(c-3) A municipality that receives fees under this section:
(1) shall maintain revenue from the fees in a separate
account established for that purpose;
(2) may not commingle revenue from the fees with any
other money;
(3) shall maintain a record of each deposit to and
disbursement from the separate account, including a record of the
payee and purpose of each disbursement; and
(4) not later than January 31 of each year, shall
provide to each certificate holder that pays a fee to the
municipality under this section a detailed accounting of the
deposits to and disbursements from the separate account made in the
preceding calendar year.
(d) Cable services to community public buildings, such as
municipal buildings and public schools, [The following services]
shall continue to be provided by the cable provider that was
furnishing services pursuant to its municipal cable franchise
[until January 1, 2008, or] until the expiration or termination
[term] of the franchise; and [was to expire, whichever is later, and
thereafter as provided in Subdivisions (1) and (2) below:
[(1)] institutional network capacity, however defined
or referred to in the municipal cable franchise but generally
referring to a private line data network capacity for use by the
municipality for noncommercial purposes, shall continue to be
provided at the same capacity by the cable provider that was
furnishing services pursuant to its municipal cable franchise until
the date of expiration or termination of the franchise, whichever
is later, for municipalities with a population greater than one
million as of January 1, 2012 [as was provided to the municipality
prior to the date of the termination, provided that the
municipality will compensate the provider for the actual
incremental cost of the capacity; and
[(2) cable services to community public buildings,
such as municipal buildings and public schools, shall continue to
be provided to the same extent provided immediately prior to the
date of the termination]. On [Beginning on January 1, 2008, or] the
expiration or termination of the franchise agreement, [whichever is
later,] a provider that provides the cable services as described by
this section may deduct from the franchise fee to be paid to the
municipality an amount equal to the actual incremental cost of the
cable services if the municipality requires the cable services
after that date. Such cable service generally refers to the
existing cable drop connections to such facilities and the tier of
cable service provided pursuant to the franchise at the time of the
expiration or termination.
SECTION 5. Subsections (c) and (h), Section 66.009,
Utilities Code, are amended to read as follows:
(c) If a municipality did not have the maximum number of PEG
access channels as of September 1, 2005, as set out in Subdivisions
(1) and (2) based on its population as of that date, the cable
service provider or video service provider shall furnish at the
request of the municipality:
(1) up to three PEG channels for a municipality with a
population of at least 50,000; and
(2) up to two PEG channels for a municipality with a
population of less than 50,000.
(h) Where technically feasible, the holder of a
state-issued certificate of franchise authority that is not an
incumbent cable service provider and an incumbent cable service
provider, including an incumbent cable service provider that holds
a state-issued certificate of franchise authority issued under
Section 66.004(b-1), shall use reasonable efforts to interconnect
their cable or video systems for the purpose of providing PEG
programming. Interconnection may be accomplished by direct cable,
microwave link, satellite, or other reasonable method of
connection. The holder [Holders] of a state-issued certificate of
franchise authority and the incumbent cable service provider
[providers] shall negotiate in good faith, and the incumbent cable
service provider [providers] may not withhold interconnection of
PEG channels.
SECTION 6. (a) A municipality that received fees described
by Subsection (c), Section 66.006, Utilities Code, as amended by
this Act, before October 1, 2011, shall, on October 1, 2011,
transfer any fees that have not been disbursed to a separate account
as required by Subsection (c-3), Section 66.006, Utilities Code, as
added by this Act.
(b) The change in law made by this Act in adding
Subdivisions (3) and (4), Subsection (c-3), Section 66.006,
Utilities Code, applies only to transfers, deposits, and
disbursements made on or after the effective date of this Act. A
transfer, deposit, or disbursement made before the effective date
of this Act is governed by the law in effect on the date the
transfer, deposit, or disbursement was made, and the former law is
continued in effect for that purpose.
SECTION 7. This Act takes effect only if House Bill No. 259
or House Bill No. 3675 or similar legislation by the 82nd
Legislature, Regular Session, 2011, is enacted and becomes law that
imposes an assessment on providers of subscription video services
and allows subscription video service providers to claim a credit
against the assessment for fees paid to municipalities pursuant to
a municipal franchise or state-issued certificate of franchise
authority and provides that at least 25 percent of the revenue
generated by the state assessment on providers of subscription
video services be distributed to municipalities and counties. If
legislation described by this section is not enacted by the 82nd
Legislature, Regular Session, 2011, or does not become law, this
Act has no effect.
SECTION 8. Except as provided by Section 7 of this Act, this
Act takes effect October 1, 2011.