S.B. No. 1087
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), (b-2), and (b-3) 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 such
municipalities is not eligible to seek a state-issued certificate
of franchise authority under this chapter as to those
municipalities until the expiration date of the existing franchise
agreement, except as provided by Subsections (b), (b-1), (b-2),
(b-3), and (c).
(b-1) Beginning September 1, 2011, a cable service provider
or video service provider in a municipality with a population of
less than 215,000 that was not allowed to or did not terminate a
municipal franchise under Subsection (b) may elect to terminate not
less than all unexpired franchises in municipalities with a
population of less than 215,000 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) A cable service provider or video service provider in
a municipality with a population of at least 215,000 may terminate a
municipal franchise in that municipality in the manner described by
Subsection (b-1) if:
(1) the cable service provider or video service
provider is not the incumbent cable service provider in that
municipality; and
(2) the incumbent cable service provider received a
state-issued certificate of franchise authority from the
commission before September 1, 2011.
(b-3) A municipality with a population of at least 215,000
may enter into an agreement with any cable service provider in the
municipality to terminate a municipal cable franchise before the
expiration of the franchise. To the extent that the mutually agreed
on terms and conditions for early termination of the unexpired
municipal cable franchise conflict with a provision of this
chapter, the agreed on terms and conditions control.
(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), (b-1), or (b-2) 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) or (b-2), 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)
or (b-2) 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. Subsection (b), Section 66.005, Utilities Code,
is amended to read as follows:
(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; further,
these payments are not chargeable as a credit against the franchise
fee payments authorized under this chapter.
(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) 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) may not spend revenue from the fees except
directly from the separate account.
(d) 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 [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 as was provided to the municipality
prior to the date of expiration or [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 services may deduct from the
franchise fee to be paid to the municipality an amount equal to the
actual incremental cost of the services if the municipality
requires the 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 provided by
Subdivisions (1) and (2) based on the municipality's population on
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, before September
1, 2011, shall, on September 1, 2011, transfer any fees that have
not been disbursed to a separate account as required by Subsection
(c-2), Section 66.006, Utilities Code, as added by this Act.
(b) The change in law made by this Act in adding Subdivision
(3), Subsection (c-2), 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 September 1, 2011.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1087 passed the Senate on
April 6, 2011, by the following vote: Yeas 26, Nays 5;
May 17, 2011, Senate refused to concur in House amendment and
requested appointment of Conference Committee; May 24, 2011, House
granted request of the Senate; May 28, 2011, Senate adopted
Conference Committee Report by the following vote: Yeas 28,
Nays 3.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1087 passed the House, with
amendment, on May 12, 2011, by the following vote: Yeas 145,
Nays 1, two present not voting; May 24, 2011, House granted request
of the Senate for appointment of Conference Committee;
May 28, 2011, House adopted Conference Committee Report by the
following vote: Yeas 146, Nays 0, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor