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