Second Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 16-0382.02 Jennifer Berman x3286SENATE BILL 16-136 SENATE SPONSORSHIP Donovan, HOUSE SPONSORSHIP (None), Senate Committees House Committees State, Veterans, & Military Affairs A BILL FOR AN ACT Concerning broadband deployment, and, in connection therewith, modifying a local government's process for an exemption from the requirement for voter approval to provide its own advanced service in an unserved area, updating the definition of "broadband", modifying the procedure for determining how funds in the high cost support mechanism are allocated, and requiring coordination between state agencies to ensure nonduplication of funding for broadband deployment in rural areas. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Absent voter approval at an election, a local government is prohibited from providing its own cable television service, telecommunications service, or advanced service, which is defined as high-speed internet access greater than 256 kilobits per second. If no private provider of advanced service provides advanced service anywhere within the boundaries of a local government and if certain circumstances are met, the local government is exempt from the prohibition as an unserved area. Sections 1 through 6 of the bill modify the law respecting a local government's provision of these services. Section 1 updates the definition of "advanced service" to mean high-speed internet access capability at measurable speeds of at least 10 megabits per second downstream and one megabit per second upstream. Section 3 permits a local government to evaluate the feasibility of, or need for, providing cable television service, telecommunications service, or broadband service without having to call an election first. Section 3 also requires a local government to give at least 60 days' public notice to private providers of cable television, telecommunications, or advanced service of its intent to consider a ballot measure concerning the provision of such services and to publish a plan for the proposed service. Section 4 modifies the exemption from seeking voter approval to cover those local governments with an area that constitutes an unserved area, which is defined for advanced service as an area with advanced service that consists of one or more contiguous census blocks in which a majority of the households lack access to at least one provider of advanced service that uses satellite technology and at least one provider of advanced service that uses nonsatellite technology. Section 5 expands the activities that a local government may engage in without seeking voter approval to include leasing space or capacity to a private provider, entering into a joint trenching agreement with a private provider if the lease, trenching agreement is made or entered into in a nondiscriminatory and competitively neutral manner. Section 5 also excludes from the voter approval requirement a local government's purchase, lease, construction, maintenance, or operation of middle-mile transport facilities that are made available on a nondiscriminatory, nonexclusive, competitively neutral basis. Section 7 updates the definition of broadband network for purposes of telecommunications regulation and deregulation. Section 8 updates how the public utilities commission (commission) makes an effective competition determination for high cost support mechanism (HCSM) funding, which is financial assistance provided to telecommunications companies that provide basic telephone service or broadband service in areas that lack effective competition. Section 8 also updates the process for seeking review of an effective competition determination made by the commission. Section 10 establishes that HCSM funding cannot be used to support more than one business line per individual business, one wireline per individual household, or one wireless line per individual household. Sections 9 and 11 change the broadband fund to the broadband support mechanism, for the administration of money to award grants to projects aimed at deploying broadband service in unserved areas of the state. Section 11 also requires that a reasonable reserve of money be maintained in the broadband support mechanism. Section 11 further requires the executive director of the department of local affairs and the chief information officer of the office of information technology to report to the broadband deployment board on a quarterly basis to ensure nonduplication of state funding of broadband deployment projects. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 29-27-102, amend (1) as follows: 29-27-102. Definitions. As used in this article, unless the context otherwise requires: (1) (a) "Advanced service" means high-speed internet access capability in excess of two hundred fifty-six kilobits per second both upstream and at measurable speeds of at least ten megabits per second downstream and one megabit per second upstream. (b) "Advanced service" includes broadband, as defined in section 40-15-102 (3.3), C.R.S. SECTION 2. In Colorado Revised Statutes, 29-27-103, repeal (3) as follows: 29-27-103. Limitations on providing cable television, telecommunications, and broadband services. (3) Nothing in this article shall be construed to limit the authority of a local government to lease to a private provider physical space in or on its property for the placement of equipment or facilities the private provider uses to provide cable television, telecommunications, or advanced services. SECTION 3. In Colorado Revised Statutes, amend 29-27-201 as follows: 29-27-201. Vote - referendum - activities not requiring a vote. (1) (a) Before a local government may engage or offer to engage in providing cable television service, telecommunications service, or advanced service in an area that does not qualify as an unserved area, an election shall be called on whether or not the local government shall provide the proposed cable television service, telecommunications service, or advanced service. (b) For purposes of providing advanced service, "unserved area" means an area that consists of one or more contiguous census blocks in which a majority of the households lack access to at least one provider of advanced service that uses satellite technology and at least one provider of advanced service that uses nonsatellite technology. (2) Nothing in this section requires a local government to call an election to evaluate the feasibility of, or need for, providing cable television service, telecommunications service, or broadband service. Without calling an election, a local government may consult with incumbent providers, conduct feasibility or need analyses, engage consultants to survey the market, or conduct any analyses required to determine the potential feasibility of providing cable television service, telecommunications service, or broadband service. (3) At least sixty days before a governing body of a local government considers a potential ballot measure at a public meeting of the governing body, the local government shall notify the community of its intent to consider a ballot measure under this section on the local government's website. Private providers are encouraged to work with the local government within this sixty-day period to further define and address the service needs that the local government identified. (4) For purposes of considering at a public meeting a potential ballot measure to provide cable television, telecommunications, or advanced service in an area that does not qualify as an unserved area, a local government shall first make publicly available a plan explaining the reasons why the local government wishes to provide service in an area already being served by a private service provider. The plan must include: (a) The type of cable television service, telecommunications service, or advanced service to be provided and whether the service or services will be provided directly or indirectly, as described in section 29-27-103 (2) (a) and (2) (b); (b) The geographic area to be served; (c) Projected revenues from the proposed service and the source of the revenues for the first three years of operation of the service; and (d) Projected expenses, including debt service expenses, for the first three years of operation of the service. (2) (5) After the plan prepared pursuant to subsection (4) of this section has been made publicly available, the local government may call an election pursuant to subsection (1) of this section on whether the local government shall provide the proposed cable television service, telecommunications service, or advanced service. The ballot at an election conducted pursuant to this section shall must pose the question as a single subject and shall must include a description of the nature of the proposed service, the role that the local government will have in provision of the service, and the intended subscribers of such service, as provided for in the plan described in subsection (4) of this section. The ballot proposition shall not cannot take effect until submitted to the electors and approved by the majority of those voting on the ballot. SECTION 4. In Colorado Revised Statutes, amend 29-27-202 as follows: 29-27-202. Election exemption for unserved areas. (1) A local government shall be exempt from the requirements of this part 2 and may engage or offer to engage in providing provide cable television service, telecommunications service, or advance advanced service without first having held an election if: (a) No private provider of The area to be served is located within the local government's boundaries and: (I) For advanced service, qualifies as an unserved area, as described in subsection (2) of this section; or (II) For cable television service or telecommunications service, or advanced service provides a private provider does not provide the service anywhere within the boundaries of the local government; (b) The governing body of the local government has submitted a written request to provide the service to any all incumbent provider providers of cable television service, telecommunications service, or advanced service within the boundaries of the local government; and (c) The An incumbent provider has not affirmatively responded to and agreed within sixty days of after the receipt of a request submitted pursuant to paragraph (b) of this subsection (1), to provide the service or, if the provider has agreed, it has not commenced providing the service within fourteen months of after the receipt of the request. (2) For purposes of subsection (1) of this section and with regard to advanced service, the area within the boundaries of a local government is considered an "unserved area" if measurable speeds do not meet the speeds set forth in the definition of advanced service in section 29-27-102 (1). SECTION 5. In Colorado Revised Statutes, amend 29-27-302 as follows: 29-27-302. Protected local government activities. (1) Nothing in this article shall be construed to authorize any local government to: (a) Provide, directly or indirectly, cable television service, telecommunications service, or advanced service; or (b) Purchase, lease, construct, maintain, or operate a facility for the purpose of providing, directly or indirectly, cable television service, telecommunications service, or advanced service. (2) (a) Nothing in this article shall be construed to apply applies to a local government purchasing, leasing, constructing, maintaining, or operating facilities that are designed to provide cable television service, telecommunications service, or advanced service that the local government uses for internal or intergovernmental purposes, including advanced service in local government buildings. (b) A person accessing the facilities described in paragraph (a) does not constitute a subscriber. (3) (a) Nothing in this article applies to a local government purchasing, leasing, constructing, maintaining, or operating middle-mile transport facilities that create a redundant, diverse path. (b) As used in this subsection (3), "middle mile" means any carrier-to-carrier wholesale communications infrastructure within a single point of demarcation within the local government's geographic boundaries that: (I) Does not connect directly to end users or to end-user facilities; (II) May include interoffice transport, backhaul, internet connectivity, or special access; and (III) Is made available on a nondiscriminatory, nonexclusive, and competitively neutral basis. (4) If a lease is made on a nondiscriminatory and competitively neutral basis, nothing in this article limits the authority of a local government to lease the following to a private provider: (a) Physical space in or on its property for the placement of equipment or facilities that the private provider uses to provide cable television service, telecommunications service, or advanced service; or (b) Capacity constructed for internal or intergovernmental purposes. (5) Nothing in this article limits a local government's authority to enter into a joint trenching agreement with a private provider for the construction of a conduit if the agreement is entered into on a nondiscriminatory, nonexclusive, and competitively neutral basis. (3) (6) (a) Nothing in this article shall be construed to apply applies to the sale or lease of excess capacity by a local government to private providers, of excess capacity including under a public-private partnership, if: (a) (I) Such The excess capacity is insubstantial in relation to the capacity utilized by the local government for its own purposes; and (b) (II) The opportunity to purchase and the opportunity to use such the excess capacity is made available to any private provider in a nondiscriminatory, nonexclusive, and competitively neutral manner and is offered for sale or lease at fair market value. (b) For purposes of this subsection (6), excess capacity is insubstantial in relation to the capacity used by the local government for its own purposes if the excess capacity is less than ten percent of the capacity used by the local government, including capacity owned by any utility owned or operated by the local government. (4) (7) Nothing in this article shall be construed to limit limits either the authority of the statewide internet portal authority created in section 24-37.7-102, C.R.S., to carry out its mission or to integrate the electronic information delivery systems of local governments into the statewide internet portal as defined in article 37.7 of title 24 section 24-37.7-101 (7), C.R.S. (8) Nothing in this article limits a local government's authority to lease to a private provider physical space in or on its property for the placement of equipment or facilities that the private provider uses to provide cable television, telecommunications, or advanced service. SECTION 6. In Colorado Revised Statutes, 29-27-303, amend (1) as follows: 29-27-303. Enforcement and appeal. (1) Before an individual subscriber or a private provider that competes with a local government in the geographic boundaries within the jurisdiction of the local government may file an action in district court for violation of this article, that person shall file a written complaint with the local government. The failure by the local government to issue a final decision regarding the complaint within forty-five days shall be treated as an adverse decision for purposes of appeal. SECTION 7. In Colorado Revised Statutes, 40-15-102, amend (3.7) introductory portion as follows: 40-15-102. Definitions. As used in this article, unless the context otherwise requires: (3.7) "Broadband network" means the plant, equipment, components, facilities, hardware, and software used to provide broadband internet service at measurable speeds of at least four ten megabits per second downstream and one megabit per second upstream or at measurable speeds at least equal to the federal communications commission's definition of high-speed internet access or broadband, whichever is faster, with: SECTION 8. In Colorado Revised Statutes, amend 40-15-207 as follows: 40-15-207. Reclassification of services and products. (1) (a) Notwithstanding any other provision of this title, upon its own motion or upon application by any person, the commission shall regulate, pursuant to part 3 of this article, specific telecommunications services regulated under this part 2 upon a finding that there is effective competition in the relevant market for such the service and that such the regulation under part 3 of this article will promote the public interest and the provision of adequate and reliable service at just and reasonable rates. (b) (I) In determining whether money from the high cost support mechanism, established under section 40-15-208, may be used to support each household or business in the relevant market, the commission, on or before January 1, 2017, shall determine, after providing notice and an opportunity for a hearing, whether effective competition for a specific telecommunications service exists the commission shall make findings, after notice and opportunity for hearing, and shall issue an order for each household or business in the relevant market based upon consideration of the following factors a determination that effective competition for an individual household or business exists: (I) (A) The extent of economic, technological, or other barriers to market entry and exit For wireline service, if the individual household or business has access to service from two or more facilities-based wireline providers; and (II) (B) The number of other providers offering similar services in the relevant geographic area For wireless service, if the individual household or business has access to service from two or more facilities-based wireless providers. (II) The method for determining effective competition set forth in subparagraph (I) of this paragraph (b) does not apply to: (A) Areas that the commission has already deemed effectively competitive; or (B) Areas served by rural telecommunications providers. (III) The ability of consumers in the relevant geographic area to obtain the service from other providers at reasonable and comparable rates, on comparable terms, and under comparable conditions; (IV) The ability of any provider of such telecommunications service to affect prices or deter competition; and (V) Such other factors as the commission deems appropriate. (c) In determining geographic areas under paragraph (b) of this subsection (1), the commission shall not be unduly restrictive. For purposes of this section, an individual or business has access to: (I) A wireline provider if the wireline provider offers facilities-based voice service to the household or business; and (II) A wireless provider if the wireless provider offers facilities-based wireless service to the household or business with reasonably good coverage, as determined by the commission, based on ESRI shapefiles, at the ninety-eight decibel-milliwatts propagation level that is generally sufficient to carry an indoor wireless signal for each carrier. (d) In determining whether an individual or household has access to a wireline or wireless provider, the commission shall request appropriate data from all wireline and wireless facilities-based voice providers doing business in Colorado. For providers subject to part 4 of this article, including VoIP, IP-enabled, and wireless voice providers, the provision of such data is optional. Data submitted in response to a commission request is deemed a trade secret and confidential commercial data under section 24-72-204 (3) (a) (IV), C.R.S., and highly confidential information under the commission's administrative rules. SECTION 9. In Colorado Revised Statutes, 40-15-208, amend (2) (a) (III) introductory portion and (3) (a) as follows: 40-15-208. High cost support mechanism - Colorado high cost administration fund - creation - purpose - operation - rules - report - repeal. (2) (a) (III) The commission, at its regularly scheduled meetings to establish the high cost support mechanism surcharge and surcharge rate, shall reduce the amount of the high cost support mechanism surcharge by the following percentages of the new broadband funds allocated in that year pursuant to section 40-15-509.5 (3) from the high cost support mechanism to the broadband fund support mechanism, created in section 40-15-509.5 (4): (3) (a) There is hereby created, in the state treasury, the Colorado high cost administration fund, referred to in this section as the "fund", which shall be used to reimburse the commission and its contractors for reasonable expenses incurred in the administration of the high cost support mechanism, including administrative costs incurred in association with broadband service as determined by rules of the commission. The general assembly shall appropriate annually the moneys money in the fund that are is to be used for the direct and indirect administrative costs incurred by the commission and its contractors. At the end of any fiscal year, all unexpended and unencumbered moneys money in the fund remain remains in the fund and shall not be credited or transferred to the general fund or any other fund. Based upon the high cost support mechanism, the balance remaining in the fund, and the amount appropriated annually by the general assembly for use by the commission, each year the commission shall determine the nondiscriminatory, competitively neutral assessment on all telecommunications service providers in Colorado that will be necessary to cover the cost of implementing and administering the high cost support mechanism and the broadband support mechanism created in section 40-15-509.5 (4) (a). Only the moneys money from the portion of the assessment for administering the high cost support mechanism shall be transmitted to the state treasurer, who shall credit the same that portion of the assessment to the fund. All interest derived from the deposit and investment of moneys money in the fund remain remains in the fund and do does not revert to the general fund. SECTION 10. In Colorado Revised Statutes, 40-15-502, amend (5) (a); and add (5) (a.5) as follows: 40-15-502. Expressions of state policy. (5) Universal service support mechanisms. (a) In order to accomplish the goals of universal basic service, universal access to advanced service under section 40-15-509.5, and any revision of the definition of basic service under subsection (2) of this section, the commission shall create a system of support mechanisms to assist in the provision of basic service in high-cost areas that are without effective competition for basic service, applying the factors stated in section 40-15-207; except that support provided in a particular geographic support area for any individual household or business is not affected until the commission makes a finding applying the factors listed in determination of effective competition under section 40-15-207 (1) (b). The commission shall fund these support mechanisms equitably and on a nondiscriminatory, competitively neutral basis through assessments, which may include a rate element, on all telecommunications service providers in Colorado, and the commission shall distribute the funds equitably and on a nondiscriminatory, competitively neutral basis. For purposes of administering the support mechanisms, the commission shall divide the state into reasonably compact, competitively neutral geographic support areas. A provider's eligibility to receive support under the support mechanisms is conditioned upon the provider's offering basic service throughout an entire support area. The commission shall review the costs of basic service and shall administer the support mechanisms. (a.5) (I) Notwithstanding any other provision of this article, a support mechanism created by the commission shall not be used to support more than one wireline and wireless line at any individual household or individual business. (II) The high cost support mechanism shall not be used to support more than one wireline or more than one wireless line at any individual household or business. (III) This paragraph (a.5) does not apply to an area served by a rural telecommunications provider. SECTION 11. In Colorado Revised Statutes, 40-15-509.5, amend (1), (3), (4), (5) (a), (6), (7), (8) introductory portion, (8) (k) introductory portion, and (11); and add (8.5) and (10.5) as follows: 40-15-509.5. Broadband service - report - broadband deployment board - broadband support mechanism - creation - repeal. (1) Short title. The short title of this section shall be known and may be cited as is the "Connect Colorado to Enhance Economic Development, Telehealth, Education, and Safety Act". (3) The commission may shall allocate the Colorado high cost support mechanism, established under section 40-15-208 and referred to in this section as the "HCSM", for the deployment of broadband service in unserved areas of the state. pursuant to this section only. The commission may fund the deployment of broadband service in unserved areas of the state through use of the HCSM surcharge and surcharge rate in effect on May 10, 2014. Pursuant to subsection (4) of this section and consistent with section 40-15-208 (2) (a) (III), the commission may transfer to the broadband deployment board only the moneys money that it determines are is no longer required by the HCSM to support universal basic service through an effective competition determination. A reasonable reserve of money, as determined by the commission, must remain in the HCSM. After each transfer to the broadband deployment board, the commission shall use the moneys money remaining in the HCSM to support basic service. Nothing in this section increases any surcharge rate charged to help fund the HCSM. (4) (a) There is hereby created in the state treasury the broadband fund support mechanism, referred to in this section as the "fund" "mechanism". The fund mechanism consists of all moneys money allocated from the HCSM to provide access to broadband services through broadband networks in unserved areas pursuant to section 40-15-208 (2) (a) (I) (B), which moneys money shall be transferred to the fund mechanism upon allocation. and all moneys that the general assembly may appropriate to the fund. The moneys money in the fund are appropriated to mechanism must operate in accordance with rules adopted by the commission, which rules must require that the broadband deployment board, created in subsection (5) of this section, contract with a third party to administer the money in the mechanism to award grants, as determined by the broadband deployment board for the purposes set forth in this section. All interest earned from the investment of moneys in the fund is credited to the fund. All moneys not expended at the end of the fiscal year remain in the fund and do not revert to the general fund or any other fund. (b) (I) The broadband deployment board shall dedicate two hundred thousand dollars of the moneys in the fund to cover the direct and indirect costs incurred by the board, its employees, and its contractors in funding the deployment of broadband service in unserved areas of the state. There is hereby created in the state treasury the broadband administration fund, into which fund the general assembly may annually appropriate money to reimburse the broadband deployment board, its employees, and its contractors for the reasonable direct and indirect expenses incurred in the administration of the broadband support mechanism. (II) On July 1, 2016, the state treasurer shall transfer any money remaining in the broadband fund to the broadband administration fund. (III) Only the money from the portion of the assessment calculated by the commission pursuant to section 40-15-208 (3) (a) to be used for administering the mechanism shall be transmitted to the state treasurer, who shall credit that portion of the assessment to the broadband administration fund. (IV) At the end of a fiscal year, all unexpended and unencumbered money in the fund remains in the fund and shall not be transferred to the general fund or any other fund. All interest derived from the deposit and investment of money in the broadband administration fund remains in the fund and shall not be transferred to the general fund or any other fund. (5) (a) There is hereby created in the department of regulatory agencies the broadband deployment board, referred to in this section as the "board". The board is an independent board created to implement and administer the deployment of broadband service in unserved areas from the fund mechanism. The department of regulatory agencies shall staff the board. The board has the powers and duties specified in this section. (6) The board's powers and duties commence three months after moneys are money is first allocated from the HCSM to the fund mechanism. (7) For a period of at least six months before accepting applications for proposed projects, the board shall provide notice to and requests for proposals from incumbent providers and local entities about the broadband fund mechanism and its purpose to deploy broadband service in unserved areas. The board shall ensure that both the manner and amount of notice provided under this subsection (7) are adequate and equitable for all potentially eligible applicants. (8) The board, through its third-party contractor, shall award moneys from the fund mechanism and, in connection therewith, shall develop criteria for awarding moneys money from the fund mechanism for new projects expanding broadband networks into unserved areas, including: (k) Establishing reporting and accountability requirements for a project receiving financial support from the fund mechanism, including contractual requirements that: (8.5) The board's decision on an appeal of its award or denial of grant money pursuant to subparagraph (III) of paragraph (j) of subsection (8) of this section is a final agency action that may be appealed to a district court in accordance with section 24-4-106, C.R.S., of the "State Administrative Procedure Act". (10.5) (a) The executive director of the department of local affairs shall notify the board of any application the department of local affairs receives for a broadband grant or loan. (b) The executive director of the department of local affairs and the chief information officer of the office of information technology shall, on a quarterly basis, report to the board to ensure nonduplication of state funding between the three entities. (11) This section is repealed, effective September 1, 2024. Before the repeal, the department of regulatory agencies shall review the powers, duties, and functions of the board regarding the administration of the broadband fund support mechanism in accordance with section 24-34-104, C.R.S. SECTION 12. In Colorado Revised Statutes, 24-34-104, amend (55) (f) as follows: 24-34-104. General assembly review of regulatory agencies and functions for termination, continuation, or reestablishment. (55) The following agencies, functions, or both, terminate on September 1, 2024: (f) The functions of the broadband deployment board, created in section 40-15-509.5, C.R.S., regarding the administration of the broadband fund support mechanism, created in section 40-15-509.5, C.R.S.; SECTION 13. Applicability. This act applies to reviews of effective competition by the public utilities commission commenced and broadband deployment grants administered on or after the effective date of this act. SECTION 14. 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.