First Regular Session Sixty-sixth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 07-0574.01 Duane Gall HOUSE BILL 07-1222 HOUSE SPONSORSHIP Balmer, SENATE SPONSORSHIP (None), House Committees Senate Committees Transportation & Energy A BILL FOR AN ACT Concerning the enabling of competitive cable television services through the issuance by the public utilities commission of state-authorized franchises for the delivery of cable television services, and, in connection therewith, providing greater consumer choice, imposing build-out requirements on the predominant service provider in a specified geographic area, requiring service providers to carry public, educational, and government programming, providing for the payment of fees, and providing for enforcement of requirements exclusively through a court of competent jurisdiction. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Allows competition in the local cable television market by directing the Colorado public utilities commission (PUC) to issue state authorizations to provide cable service or video service. Requires the PUC to issue such authorization within 30 days to a competitive cable service provider or competitive video service provider that files an affidavit stating:  Its business address and the names of its principal officers;  Its intention to abide by applicable state and federal requirements; and  A description of the geographic area in which it intends to offer cable service or video service. Requires a cable operator or a competitive video service provider to obtain state authorization before offering service in any area of the state. Exempts cable operators that are currently operating under the authority of a municipal franchise. Imposes a build-out requirement, under which a holder of state authorization to provide cable service or video service that controls more than 50% of the market within a geographic area must extend its system at no additional charge to any potential subscriber who requests it if the same geographic area contains at least 250 homes within 4,000 feet of the provider's nearest remote terminal and service is not available from another cable service provider or video service provider. Requires competitive cable service providers and competitive video service providers to carry public, educational, and governmental (PEG) programming for any municipality that requests it, on the same basis as may be currently offered by the incumbent cable operator, within 6 months after the request. Requires incumbent cable operators and competitive cable service and video service providers to cooperate on interconnection for PEG programming. Prohibits advertising or branding by cable providers on PEG channels, and requires cable operators and video service providers to carry competitors' advertisements on non-PEG channels. Requires competitive cable service providers and competitive video service providers to pay a fee to municipalities in which they operate, upon request. Caps the fee at 5% of gross revenues or the percentage currently paid by the incumbent cable operator, whichever is less. Upon request of a municipality, directs the PUC to hire an independent auditor to verify the accuracy of calculation of the fee, with the cost of such audit to be borne by the requesting municipality, and with the operator and the municipality to each bear their own expenses associated with the audit. Prohibits a municipality from discriminating among cable service providers or video service providers with respect to rights-of-way, pole attachment, and building access. Prohibits redlining of customers by competitive cable service operators or competitive video service providers. Gives enforcement authority exclusively to the courts. States that this act is intended to be consistent with existing federal law. Contains severability provisions. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. 40-15-401 (1) (a), Colorado Revised Statutes, is amended to read: 40-15-401. Services, products, and providers exempt from regulation. (1) The following products, services, and providers are exempt from regulation under this article or under the "Public Utilities Law" of the state of Colorado: (a) Except as otherwise provided in part 6 of this article, cable services as defined by section 602 (5) of the federal "Cable Franchise Policy and Communications Act of 1984"; SECTION 2. Article 15 of title 40, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 6 CABLE TELEVISION SERVICES 40-15-601. Short title. This part 6 shall be known and may be cited as the "Colorado Consumer Cable Act". 40-15-602. Legislative declaration. (1) The general assembly finds, determines, and declares that it is the policy of this state to promote fair competition, consumer choice, and investment in new communications and cable television infrastructure, including fiber optic and internet protocol technologies. (2) The general assembly further finds and declares that: (a) There is a need for statewide uniformity in the regulation of private entities that provide cable television service in competition with incumbent cable operators; (b) Statewide uniformity in the regulation of competitive cable television service providers will promote free and uniform access to video markets; (c) Technological convergence and the globalization of communications networks has greatly increased the need for uniformity of regulation in competitive cable television markets; (d) Municipal ordinances, rules, and other regulations governing the franchise requirements for the provision of cable television service impede or prohibit competitive entry into cable television markets; (e) Municipal ordinances, rules, and other regulations governing the franchise requirements for the provision of cable television service by competitive entrants affect persons living outside the municipality because the investment decisions relating to the provision of cable television service span municipal boundaries; and (f) Regulating the provision of competitive cable television service in order to promote competition and investment in cable television infrastructure is a matter of statewide concern. 40-15-603. Definitions. As used in this part 6, unless the context otherwise requires: (1) "Cable operator" shall have the meaning set forth in 47 U.S.C. sec. 522 (5). (2) "Cable service" shall have the meaning set forth in 47 U.S.C. sec. 522 (6). (3) "Cable system" shall have the meaning set forth in 47 U.S.C. sec. 522 (7). (4) "Competitive cable service provider" means an entity authorized by this part 6 to provide cable service over a cable system; except that the term does not include an incumbent cable operator that, as of July 1, 2007, was providing service in the area to be served by the competitive cable service provider. (5) "Competitive cable service provider fee" means the amount paid by a competitive cable service provider pursuant to section 40-15-605. (6) "Competitive video service provider" means an entity authorized by this part 6 to provide video service; except that the term does not include a cable operator. A competitive video service provider shall not be considered a cable operator, and the facilities of a competitive video service provider shall not be considered a cable system. (7) "Competitive video service provider fee" means the amount paid by a competitive video service provider pursuant to section 40-15-605. (8) "Franchise" means an initial authorization, or renewal of an authorization, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of a cable system or video service provider's network in public rights-of-way under the control of a local government. (9) "Incumbent cable operator" means the cable service provider serving the largest number of cable television subscribers in a particular local franchise area on July 1, 2007. (10) "Local government" means a town, city, county, city and county, or other political subdivision of this state, including, without limitation, a home rule municipality. (11) "PEG" means noncommercial public, educational, and governmental programming. (12) "Public right-of-way" means the area on, below, or above a public roadway, highway, street, public sidewalk, alley, waterway, or utility easement dedicated for compatible uses. (13) "Video programming" means programming provided by, or generally considered comparable to programming provided by, a television broadcast station as defined in 47 U.S.C. sec. 522 (20). (14) "Video service" means video programming services provided through wireline facilities located at least in part in the public right-of-way without regard to delivery technology, including internet protocol technology. "Video service" does not include any video programming provided by a commercial mobile service provider, as defined in 47 U.S.C. sec. 332 (d), or cable service provided by a competitive cable service provider. 40-15-604. State authorization to provide cable service or video service - application - fees - rules - obligations of provider. (1) A competitive cable service provider or competitive video service provider seeking to provide cable service or video service in Colorado after July 1, 2007, shall file an application for authorization with the commission as required by this section. (2) The commission may charge a fee for the filing of an application under this section. The fee shall be established by the commission by rule, in an amount sufficient to approximate the commission's direct and indirect costs of processing and reviewing the application. The commission shall transfer the fees collected pursuant to this section to the state treasurer, who shall deposit them in the public utilities commission fixed utility fund created in section 40-2-114. (3) The commission shall issue an authorization permitting a competitive cable service provider to provide cable service or a competitive video service provider to provide video service in the state of Colorado within thirty calendar days after receipt of a completed application for authorization. The application shall include an affidavit submitted by the provider and signed by an officer or general partner of the applicant affirming the following: (a) The location of the principal place of business and the names of the principal executive officers of the applicant; (b) That the applicant agrees to comply with all applicable federal and state laws and regulations; and (c) A written description of the town, city, county, city and county, special district, or other political subdivision of this state to be served, in whole or in part, by the applicant, which written description shall be amended by the applicant before the provision of service within an area not described in a previous application or amendment filed by the applicant. For purposes of this paragraph (c), a map or other graphic representation may supplement, but not substitute for, the written description. (4) A holder of a state authorization to provide cable service or video service who seeks to amend the authorization to include additional areas to be served shall file an amended application with the commission that reflects the new areas to be served. (5) The authorization issued by the commission is fully transferable to any successor in interest to the applicant to which it is initially granted. A notice of transfer shall be filed with the commission within thirty days after the completion of such transfer. (6) The authorization issued by the commission may be terminated by the competitive cable service provider or competitive video service provider by submitting notice to the commission. (7) To the extent required by applicable law, any cable service or video service authorization granted by the commission under this part 6 shall constitute a "franchise" for purposes of 47 U.S.C. sec. 541 (b) (1). To the extent required for purposes of 47 U.S.C. secs. 521 to 561, only the commission shall constitute the exclusive "franchising authority" for competitive cable service providers and competitive video service providers in the state of Colorado. (8) Neither the commission nor any other state agency or local government shall: (a) Require a competitive cable service provider or competitive video service provider to obtain a separate franchise; or (b) Otherwise impose any fee or franchise requirement on any competitive cable service provider or competitive video service provider except as provided in this part 6. For purposes of this paragraph (b), a franchise requirement includes, without limitation, any provision that: (I) Regulates the rates charged by competitive cable service providers or competitive video service providers; (II) Requires competitive cable service providers or competitive video service providers to satisfy any build-out requirements or deploy any facilities or equipment; (III) Requires a franchise to be approved by a vote of the registered electors; or (IV) Requires a competitive cable service provider or a competitive video service provider to meet customer service requirements. (9) Nothing in this part 6 is intended to abrogate, nullify, or adversely affect any franchise or other contractual rights, duties, or obligations existing and incurred by a cable operator before July 1, 2007. A cable operator with an existing franchise with a local government to provide cable service in the state as of July 1, 2007, is not eligible to obtain a state authorization to provide cable service or video service for any area for which the cable operator has an existing franchise agreement with such local government, or any portion thereof, until the expiration date of the existing franchise agreement. (10) Whenever the holder of a state authorization receives a request for service from a potential subscriber within its authorized service area and there are at least two hundred fifty dwelling units located within four thousand feet of a remote terminal that do not have cable service or video service available from another cable service provider or video service provider, the holder of a state authorization shall extend its system to such potential subscriber at no cost to the potential subscriber; except that this subsection (10) shall only apply after the first date on which the holder of a state authorization is providing cable service or video service to more than one-half of all subscribers receiving cable service or video service from both the holder of a state authorization and any other providers of cable service or video service within the authorized area. (11) (a) Not later than one hundred eighty days after a request by a local government for an authorized service area in which a competitive cable service provider is providing cable service or a competitive video service provider is providing video service, the holder of a state authorization to provide cable service or video service shall designate a sufficient amount of capacity on its communications network to allow the provision of channels of PEG programming comparable to the number of channels provided by the incumbent cable operator. (b) In order to ensure that all PEG content is competitively neutral to all cable operators and video service providers, all cable operators and video service providers, including the incumbent cable operator, shall be prohibited from placing logos, advertisements, promotions, or any other marketing materials that would have the effect of favoring or promoting any cable operator or video service provider over another on any channel space designated for PEG programming. (c) The operation of a PEG channel pursuant to this subsection (11) shall be the responsibility of the local government receiving the benefit of the channel, and the holder of a state authorization to provide cable service or video service bears only the responsibility for the transmission of the channel. The local government shall ensure that all transmissions, content, or programming to be transmitted by a holder of a state authorization to provide cable service or video service are provided or submitted to the competitive cable service provider or competitive video service provider in a manner or form that is capable of being accepted and transmitted by a provider, without a requirement for additional alteration or change in the content by the provider, over the particular network of the competitive cable service provider or competitive video service provider, which is compatible with the technology or protocol utilized by the competitive cable service provider or competitive video service provider to deliver services. (12) A provider of cable service or video service may not refuse to carry advertising requested by any other provider of cable service or video service on advertising space owned and controlled by the provider of the cable service or video service. To ensure that the intent of this subsection (12) is met, a provider of cable service or video service shall ensure that at least three percent of all advertising space owned and controlled by the cable operator or competitive video service provider is made available to all cable operators and competitive video service providers. (13) Where technically feasible, the holder of a state authorization to provide cable service or video service and an incumbent cable operator shall use reasonable efforts to interconnect their cable systems 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. Holders of a state authorization to provide cable service or video service and incumbent cable operators shall negotiate in good faith, and incumbent cable operators may not withhold interconnection of PEG channels. (14) If an incumbent cable operator collects for and remits a monthly charge to a local government for PEG channels, any subsequent holder of a state authorization to provide cable service or video service in an authorized service area within the jurisdiction of the local government shall pay this monthly charge at the same rate. All fees collected pursuant to this subsection (14) shall be used only for the support of PEG channels. (15) Competitive cable service providers and competitive video service providers shall comply with customer service requirements consistent with, but not to exceed, the requirements of 47 CFR 76.309 (c), as amended from time to time, and emergency alert requirements established by the federal communications commission. Such requirements shall be applicable to all competitive cable service providers and competitive video service providers on a competitively neutral basis. (16) Except as otherwise specifically provided in this part 6, a court of competent jurisdiction shall have exclusive jurisdiction to enforce any requirement under this part 6. (17) Except as otherwise provided in subsections (1) to (15) of this section, competitive cable service providers and competitive video service providers shall enjoy the same rights under the law of this state as incumbent cable operators and other providers of video programming. 40-15-605. Fees - competitive cable service provider fee - competitive video service provider fee. (1) A competitive cable service provider or competitive video service provider shall provide notice to the appropriate local government with jurisdiction over the public right-of-way in which the competitive cable service provider or competitive video service provider begins to offer cable service or video service. (2) In any locality in which a competitive cable service provider offers cable service or a competitive video service provider offers video service, the competitive cable service provider or competitive video service provider shall calculate and pay the competitive cable service provider fee or competitive video service provider fee to the appropriate local government with jurisdiction over the public right-of-way, upon the local government's written request. If the local government makes such a request, the competitive cable service provider fee or competitive video service provider fee shall be due on a quarterly basis, forty-five days after the close of the quarter, and shall be calculated as a percentage of gross revenues as defined in subsection (4) of this section. The local government shall not demand any additional fees or charges from the competitive cable service provider or competitive video service provider except as provided by this part 6, and shall not demand the use of any other calculation method. (3) The local government shall set the percentage to be applied against gross revenues pursuant to subsection (1) of this section, which shall be equal to the percentage paid by the incumbent cable operator or five percent, whichever is less. The local government's notice to the competitive cable service provider shall identify the percentage. (4) (a) For purposes of this section, "gross revenues" means all consideration of any kind or nature, including, without limitation, cash, credits, property, and in-kind contributions of services or goods received from subscribers for the provision of cable service over a cable system by a competitive cable provider or video service by a competitive video service provider within the local government's jurisdiction. "Gross revenues" include, without limitation: (I) Monthly fees charged subscribers for basic service; (II) Additional charges for any expanded tiers of cable service or video service; (III) Charges or fees for optional premium services; (IV) Installation, disconnection, reconnection, and change-in-service fees; (V) Leased access channel fees; (VI) Remote control rental fees; (VII) All cable service lease payments from the cable system or video service lease payments from the video system; (VIII) Late fees and administrative fees; (IX) Fees, payments, or other consideration received by the provider from programmers for carriage of programming on the cable system or video system; (X) Revenues from rentals or sales of converters or other system equipment; (XI) Advertising revenues; (XII) Launch fees; (XIII) The fair market value of consideration received by the provider for use of the cable system to provide cable service or the video system to provide video service; (XIV) Revenues from program guides; (XV) Revenues from data transmissions, to the extent such transmissions are considered cable services under federal law; (XVI) The competitive cable service provider fee or competitive video service provider fee specified in this section; (XVII) Additional outlet fees; (XVIII) Revenue from cable internet service, to the extent this service is considered a cable service under federal law; (XIX) Revenue from interactive services, to the extent they are considered cable services under federal law; (XX) Revenue from the sale or carriage of other cable services or video services; and (XXI) Revenue from home shopping and bank-at-home channels and other revenue-sharing arrangements. (b) "Gross revenues" does not include: (I) Revenues not actually received, even if billed, such as bad debt; (II) Capital contributions specified in section 40-15-604 (14); (III) Any tax of general applicability imposed upon the competitive cable service provider or competitive video service provider or upon subscribers by a city, state, federal, or other governmental entity and required to be collected by the competitive cable service provider or competitive video service provider and remitted to the taxing entity, including, without limitation, sales and use tax, gross receipts tax, excise tax, utility users tax, public service tax, and communication taxes; or (IV) Charges, other than those described in this subsection (4), that are aggregated or bundled with amounts billed to subscribers. (5) At the request of a local government, but no more than once per year, the commission may retain an independent auditor to perform reasonable audits of the competitive cable service provider's or competitive video service provider's calculation of the competitive cable service provider fee or competitive video service provider fee. The requesting local government and the competitive cable service provider or competitive video service provider shall each bear their own costs associated with such an audit. The requesting local government shall also bear the commission's costs, including, but not limited to, the commission's costs to retain an independent auditor to perform an audit. (6) A competitive cable service provider or competitive video service provider may identify and collect the amount of the competitive cable service provider fee or competitive video service provider fee as a separate line item on the regular bill of each subscriber. 40-15-606. Nondiscrimination by local governments. (1) A local government shall allow the holder of a state authorization to provide cable service or video service to install, construct, and maintain a communications network within public rights-of-way and shall provide the holder of a state authorization to provide cable service or video service with open, comparable, nondiscriminatory, and competitively neutral access to the public rights-of-way. (2) A local government shall not discriminate among providers of cable service or video service regarding, without limitation: (a) The authorization or placement of a communications network in public rights-of-way; (b) Access to a building; or (c) A municipal utility pole attachment term. (3) A local government may impose on a competitive cable service provider or competitive video service provider a permit fee only to the extent it imposes such a fee on incumbent cable operators. Any such fee shall not exceed the actual, direct costs incurred by the local government for issuing the relevant permit. In no event may a fee under this subsection (3) be levied: (a) If the competitive cable service provider or competitive video service provider already has paid a permit fee of any kind in connection with the same activity that would otherwise be covered by the permit fee under this subsection (3) or is otherwise authorized by law or contract to place the facilities used by the competitive cable service provider or competitive video service provider in a public right-of-way; or (b) For general revenue purposes. 40-15-607. Discrimination prohibited. A competitive cable service provider or competitive video service provider that has been granted a state authorization to provide cable service or video service shall comply with the provisions set forth in 47 U.S.C. sec. 541 (a) (3) relating to equal access to service, and, in addition, shall not deny service to any group of potential residential subscribers based on income, race, or national origin. 40-15-608. Applicability of other law - severability. (1) The provisions of this part 6 are intended to be consistent with the federal "Cable Communications Policy Act of 1984", 47 U.S.C. sec. 521 et seq., as amended. (2) Except as otherwise provided in this part 6, nothing in this part 6 shall be construed to prevent a competitive cable service provider, a competitive video service provider, a cable operator, or a local government from seeking clarification of its rights and obligations under federal law or to exercise any right or authority under federal or state law. (3) If any provision of this part 6 or the application thereof to any person or circumstance is held invalid for any reason in a court of competent jurisdiction, the invalidity shall not affect other provisions or any other application of this part 6 which can be given effect without the invalid provision or application, and for this purpose the provisions of this part 6 are hereby declared severable. SECTION 3. Effective date. This act shall take effect July 1, 2007. SECTION 4. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.