First Regular Session Sixty-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 05-0176.01 Gregg Fraser SENATE BILL 05-152 SENATE SPONSORSHIP Veiga, HOUSE SPONSORSHIP Jahn, Senate Committees House Committees Local Government A BILL FOR AN ACT Concerning local government competition in the provision of specified communications services. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Prohibits a local government from providing cable television service, telecommunications service, and high speed internet access (advanced) service to subscribers, as well as taking specified actions related to providing such services, except in specified circumstances. Allows such services to be provided if a local government:  Holds a preliminary public hearing before providing a service with notice to the public and any private provider of the service within the boundaries of the local government;  Conducts at least 2 public hearings in accordance with specified notice and other requirements for the purpose of informing the public of the local government's intent to provide the service; and  Holds an election in accordance with specified requirements on whether the local government shall provide the proposed service. Prohibits a local government from cross subsidizing its cable television, telecommunications, or advanced services with tax revenues, below-market rate loans, or other sources. Specifies requirements to account for operations of the services and provides that the books and records for the services shall be subject to audit by the state auditor. Authorizes the governing body of a local government to issue bonds to finance the capital costs for facilities necessary to provide cable television, telecommunications, or advanced service. Specifies requirements for the payment of the bonds and costs associated with the bonds. Requires a local government that provides cable television, telecommunications, or advance service to comply with all state and federal laws applicable to providing the service. Prohibits a local government from providing a service outside the boundaries of the local government, from receiving distributions from the high cost fund, and from exercising the power of eminent domain to provide a service. Specifies enforcement and appeal provisions. Specifies that local governments shall not be afforded immunity from antitrust liability with respect to cable television, telecommunications, or advanced services provided by the local government. Defines terms. Makes legislative findings and declarations. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Title 29, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW ARTICLE to read: ARTICLE 27 Competition in Utility and Entertainment Services PART 1 COMPETITION IN UTILITY AND ENTERTAINMENT SERVICES 29-27-101. Legislative declaration. (1) The general assembly hereby finds and declares that it is the policy of this state to: (a) Ensure that cable television service, telecommunications service, and high speed internet access, otherwise known as advanced service, are each provided within a consistent, comprehensive, and nondiscriminatory federal, state, and local government framework; and (b) Ensure that when a local government provides cable television service, telecommunications service, or advanced service to its inhabitants and competes with private providers whose activities are regulated by the local government, the local government does not discriminate against the competing providers of the same service. (2) The general assembly further finds and declares that: (a) There is a need for statewide uniformity in the regulation of all public and private entities that provide cable television service, telecommunications service, and advanced service. (b) Municipal ordinances, rules, and other regulations governing the provision of cable television service, telecommunications service, and advanced service by a local government impact persons living outside the municipality. (c) Regulating the provision of cable television service, telecommunications service, and advanced service by a local government is a matter of statewide concern. 29-27-102. Definitions. As used in this article, unless the context otherwise requires: (1) "Advanced service" means high-speed internet access capability in excess of one hundred forty-four kilobits per second both upstream and downstream. (2) "Cable television service" means the one-way transmission to subscribers of video programming or other programming service, as well as subscriber interaction, if any, that is required for the selection or use of the video programming or other programming service. (3) "Capital costs" means all costs of providing cable television service, telecommunications service, or advance service that are capitalized in accordance with generally accepted accounting principles. (4) "Cross subsidization" means: (a) Any cable television service, telecommunications service, or advanced service provided pursuant to this article that is priced below cost by the use of revenues of the local government other than revenues the local government generates from the cable television service, telecommunications service, or advanced service it provides; or (b) Any cable television service, telecommunications service, or advanced service provided pursuant to this article that derives any benefit from any other service the local government provides, without the local government receiving from its cable television service, telecommunications service, or advanced service operations reasonable compensation for the benefit provided. (5) "Direct costs" means those expenses of a local government that are directly attributable to providing cable television service, telecommunications service, or advanced service and that would be eliminated if the cable television service, telecommunications service, or advanced service were not provided by the local government. (6) "Local government" means any city, county, city and county, special district, or other political subdivision of this state. (7) "Private provider" means a private entity that provides cable television service, telecommunications service, or advanced service. (8) "Subscriber" means a person that lawfully receives cable television service, telecommunications service, or advanced service. (9) "Telecommunications service" has the same meaning as set forth in section 40-15-102 (29), C.R.S. 29-27-103. Limitations on providing cable television, telecommunications, and advanced services. (1) Except as provided in part 2 of this article, a local government shall not: (a) Provide to one or more subscribers cable television service, telecommunications service, or advanced service; or (b) Purchase, lease, construct, maintain, or operate any facility for the purpose of providing cable television service, telecommunications service, or advanced service to one or more subscribers. (2) For purposes of this article, a local government provides cable television service, telecommunications service, or advanced service if the local government provides the cable television service, telecommunications service, or advanced service: (a) Directly or indirectly; (b) Through an authority or instrumentality acting on behalf of the local government or for the benefit of the local government by itself; (c) Through a partnership or joint venture; (d) By contract, including a contract whereby the local government leases, sells capacity in, or grants other similar rights to a private provider to use local governmental facilities in connection with a private provider's offering of cable television service, telecommunications service, or advanced service; (e) Through the sale or purchase of resale cable television service, telecommunications service, or advanced service; or (f) Through the sale or purchase of wholesale cable television service, telecommunications service, or advanced service. PART 2 CONDITIONS FOR PROVIDING SERVICES 29-27-201. Required action before a local government may provide cable television, telecommunications, or advanced services. (1) Before a local government may engage or offer to engage in providing cable television service, telecommunications service, or advanced service, the governing body of the local government shall: (a) Hold a preliminary public hearing; and (b) Provide notice of the preliminary public hearing at least sixty days in advance to the public and to any private provider currently offering cable television service, telecommunications service, or advanced service within the boundaries of the local government. (2) If the conditions of subsection (1) of this section are met, public hearings shall be held as required by section 29-27-202. 29-27-202. Public hearings. (1) The governing body of a local government shall schedule at least two public hearings to be held within sixty days of the meeting at which the public hearings are scheduled. The two public hearings shall be scheduled at least seven days apart. The public hearings shall be held for the purpose of informing the public of the local government's intent to engage in providing cable television service, telecommunications service, or advanced service and considering any relevant input presented by the public at the hearings. (2) The local government shall publish notice of the public hearings required under subsection (1) of this section at least once a week for three consecutive weeks in a newspaper of general circulation within the boundaries of the local government. The last publication of the notice shall be at least three days before the first public hearing required under subsection (1) of this section. (3) If there is no newspaper of general circulation within the boundaries of the local government, for each one thousand residents, the local government shall post at least one notice of the hearings in a separate conspicuous place within the boundaries of the local government that is likely to give notice of the hearings to the greatest number of people residing within the boundaries of the local government. The local government shall post the notices at least seven days before the first public hearing is held. 29-27-203. Vote - referendum. (1) After a local government has complied with all of the requirements set forth in sections 29-27-201 and 29-27-202, an election shall be called on whether or not the local government shall provide the proposed cable television service, telecommunications service, or advanced service. (2) The election shall be held at the next general election or at a local special election, the purpose of which is authorized by this section in accordance with the provisions of articles 1 to 13 of title 1, C.R.S., except as provided in this section. (3) The notice of the election shall include, with any other information required by law, a summary of the cable television service, telecommunications service, or advanced service that the governing body of the local government proposes to provide to subscribers residing within the boundaries of the local government. (4) The ballot at an election conducted pursuant to this section shall pose the question substantially as follows: "Shall the [name of the local government] provide [cable television service, telecommunications service, or advanced service] to the inhabitants of the [local government]?" The ballot proposition shall not take effect until submitted to the electors and approved by the majority of those voting on the ballot. PART 3 PROHIBITIONS ON ANTICOMPETITIVE CROSS-SUBSIDIES 29-27-301. General provisions. A local government shall not engage in cross subsidization of any cable television service, telecommunications service, or advanced service with tax revenues, income from other local government or utility services, below-market rate loans from the local government, or any other means. 29-27-302. Enterprise funds for cable television, telecommunications, or advanced services. (1) A local government that provides cable television service, telecommunications service, or advanced service under this article shall: (a) Establish an enterprise fund to account for the local government's operations of the cable television service, telecommunications service, or advanced service; (b) Adopt separate operating and capital budgets for the local government's cable television service, telecommunications service, or advanced service; and (c) Not transfer any moneys, appropriations, or balances into an enterprise fund established under this section except as otherwise provided in this section. (2) A local government shall keep accurate books and records for any cable television service, telecommunications service, or advanced service provided by the local government. The books and records required to be kept under this subsection (2) shall be subject to audit by the state auditor or the auditor's designee to verify the local government's compliance with the requirements of this article. The cost of the audit, whether performed by the state auditor or the auditor's designee, shall be borne by the local government. 29-27-303. Bonding authority. (1) The governing body of a local government may by resolution determine to issue one or more bonds to finance the capital costs for the purchase, lease, construction, operation, or maintenance of the facilities necessary to provide to subscribers cable television service, telecommunications service, or advanced service. (2) The resolution described in subsection (1) of this section shall set forth the purpose for which the indebtedness is to be created and specify the dollar amount of the bonds proposed to be issued. (3) A bond issued under this section shall be secured and paid for solely from the revenues generated by the local government from: (a) Cable television service with respect to bonds issued to finance facilities for a local government's cable television service; (b) Telecommunications service with respect to bonds issued to finance facilities for the local government's telecommunications service; and (c) Advanced service with respect to bonds issued to finance facilities for the local government's advanced service. (4) A local government shall not pay any origination, financing, or other carrying costs associated with any bonds issued under this section from the general fund or any other enterprise fund or source of moneys of the local government. PART 4 COMPLIANCE WITH LOCAL, STATE, AND FEDERAL REGULATIONS 29-27-401. General operating limitations. (1) A local government that provides cable television service, telecommunications service, or advanced service under this article shall comply with all state and federal laws, rules, and regulations applicable to a private provider of cable television service, telecommunications service, or advanced service. (2) (a) A local government shall not make or grant any undue or unreasonable preference or advantage to itself or to any private provider of cable television services, telecommunications services, or advanced services. (b) A local government shall apply without discrimination as to itself and to any private provider the local government's ordinances, rules, and policies, including those relating to: (I) Obligation to serve; (II) Access to public rights-of-way; (III) Permitting; (IV) Performance bonding; (V) Reporting; and (VI) Quality of service. (3) In calculating the rates charged by a local government for a cable television service, telecommunications service, or advanced service, the local government: (a) Shall include within its rates an amount equal to all taxes, fees, and other assessments that would be applicable to a similarly situated private provider of the same services, including: (I) Federal, state, and local taxes; (II) Franchise fees; (III) Permit fees; (IV) Public education or government access fees; (V) Pole attachment fees; and (VI) Any other tax, fee, or assessment similar to those described in subparagraphs (I) to (V) of this paragraph (a). (b) Shall not price any cable television service, telecommunications service, or advanced service at a level that is less than the sum of: (I) The actual direct costs of providing the service; (II) The actual indirect costs of providing the service; and (III) The amount included under paragraph (a) of this subsection (3). (c) Notwithstanding any other provision of this subsection (3), a local government may engage in promotional pricing on the same terms and conditions as a similarly situated private provider. (4) A local government shall not provide or offer to provide cable television service, telecommunications service, or advanced service to a subscriber that does not reside within the geographic boundaries of the local government. (5) A local government shall not receive distributions from the high cost fund referenced in section 40-15-208 (1), C.R.S. 29-27-402. Eminent domain. A local government shall not exercise its power of eminent domain to condemn a facility or the equipment of a private provider for the purpose of providing to a subscriber cable television service, telecommunications service, or advanced service. 29-27-403. Antitrust immunity. No immunity from state or federal antitrust liability shall be afforded to a local government that is offering or providing cable television service, telecommunications service, or advanced service. 29-27-404. Scope of article. (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) Nothing in this article shall be construed to apply to a local government purchasing, leasing, constructing, or equipping facilities that are designed to provide cable television service, telecommunications service, or advanced service within the local government that the local government uses for internal governmental purposes. 29-27-405. Enforcement and appeal. (1) Before an individual subscriber or a private provider that competes with a local government in the geographic boundaries 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. (2) An appeal of an adverse decision from the local government may be taken to the district court for a de novo proceeding. SECTION 2. Applicability. This act shall apply to cable television service, telecommunications service, and advanced service first provided by a local government on or after the effective date of this act. SECTION 3. 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.