HomeMy WebLinkAbout2006-06-13 - AGENDA REPORTS - AB 2987 TELECOMMUNICATIONS (2)Agenda Item: ( 3 yr
CITY OF SANTA CLARITA
AGENDA REPORT
Y, ZZ, C 1
Michael P. Murph
SUBSEQUENT NEED ITEM City Manager Approval:
Item to be presented by:
DATE: June 13, 2006
SUBJECT: STATE LEGISLATION: ASSEMBLY BILL 2987
DEPARTMENT: City Manager's Office
RECOMMENDED ACTION
City Council adopt "opposed" position to Assembly Bill 2987 (Nunez) and transmit statements of
position to Assembly Speaker Nunez, Assembly Member Richman, Senator McClintock, Senator
Runner, members of appropriate legislative committees, Governor Schwarzenegger and the
League of California Cities. ,
SUBSEQUENT NEED
This item is brought to the City Council as a subsequent need, as the necessity for immediate
action arose after the posting of the agenda on June 8, 2006. After the agenda was posted, City
staff became aware that on June 8, 2006, the Senate Energy, Utilities and Communication
Committee set the next hearing for the bill on June 20, 2006, prior to the next regularly
scheduled City Council meeting of June 27, 2006. In order for the City of Santa Clarita's
position to be considered by the state legislative committee, action must occur at the City
Council's June 13, 2006 meeting.
BACKGROUND
Earlier this year, Assembly Speaker Fabian Nufiez (D46 -Los Angeles) introduced Assembly Bill
2987, which is designed to establish a statewide franchise for new entrants into the
telecommunications market. In recent years, technological advances in telecommunications
services have created a more competitive environment where video, internet and voice
communication services are now available through a variety of service providers. As these
technological advances are spreading throughout California and the nation, it is clear that the
existing federal and state government regulatory framework is becoming outdated.
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Currently, there are legislative efforts in Congress and in state legislatures throughout the nation
to establish new regulatory frameworks. Depending upon one's perspective, these efforts are
alternately viewed as attempts to create equitable regulatory frameworks for companies that do
business throughout wide service areas or attempts to bypass local government oversight.
Clearly, within the next few years, there will be new statewide and/or national regulatory
frameworks established for the telecommunications arena. There continues, however, to be
strong debate over the role which local governments should play in any new regulatory structure.
Traditionally, the federal government has outlined the role for local governments and cable
providers through the establishment of a franchise framework administered at the local
government level. At the same time, in the State of California, state law has occupied the field
under which the telephone companies have operated as the primary voice communication
providers. As historical cable television providers and voice communication providers step into
each others' traditional service areas, the existing regulatory frameworks clearly do not address
the cross over service issues. Local governments are seeking to ensure that their important role
in the overall process is not obliterated by either the federal or state government.
Without question, all parties engaged in the telecommunications debate agree that competition
and consumer choice are good and should lead to lower prices for telecommunications services.
At the same time, however, local governments have sought to protect local authority which
translates into enhanced local consumer protections.
For the past several months, the League of California Cities has taken a lead role in attempting to
negotiate with Speaker Nunez important local government protections, which must be an integral
part of any bill which cities would ultimately support. League representatives had hoped that the
issues of concern to municipalities would be fully addressed in the May 31, 2006 amended
version of AB 2987. Unfortunately, the clear and strong bill language which the League
advocated was not included in the bill, which was passed by the Assembly on May 31, 2006, the
same day that the substantive bill amendments occurred.
The League has identified several issues that must be addressed in AB 2987 to secure the
endorsement of local municipalities:
1. Discrimination: Even though AB 2987 contains legislative intent language for widespread
community build -out, the bill's provisions permit new entrants into the video service industry to
be selective about which neighborhoods they will serve, even within the same community.
Existing video service rules for cable companies require that all residential neighborhoods in a
community be served. New telecommunication providers should be required to work with local
governments and consumer groups in the establishment of reasonable standards to enable service
deployment throughout each community where service will be provided.
2. Public, Education and Government (PEG) Channels. AB 2987 does not currently provide
adequate protections for a community s PEG channel(s), which would ensure that community
events, governmental deliberations, such as televising City Council meetings, and educational
opportunities continue to be fully available. The bill's language continues to be vague on who
will pay for PEG service. Local governments should continue to have the ability to participate in
the decisions relating to the number of PEG channels necessary to meet a community's needs and
the funding mechanism necessary to meet those needs.
3. Creation of a New State Bureaucracy. AB 2987 provides that the California Department of
Consumer Affairs shall administer the new state franchise created under the bill. Customer
service standards should be a function of local governments. Furthermore, local governments
already administer local cable franchises and the creation of a new statewide franchise oversight
responsibility is a redundant government function which erodes local authority.
4. State Preemption of Local Authority. Under AB 2987, the State of California would
prescribe the parameters for telecom companies to access local streets. The State of California
would now administer local streets, rather than the affected local governments, through decisions
on the deployment of new telecommunications services. Again, this is an erosion of local
authority by the state. AB 2987 must contain provisions which clearly preserves the ability of
local governments to retain full control over access to local rights-of-way.
5. Loss of Local Revenues. While AB 2987 does provide for local agencies to receive a
franchise fee, up to 5% of gross revenues, the bill needs more clarity as current language narrows
the definitions of "gross revenues" upon which franchise fees are calculated. There is also a state
tax in the bill which could be construed as preempting the local franchise free. These confusing
provisions of the bill must be rewritten with greater clarity for local governments.
The League of California Cities continues to negotiate with Speaker Nunez and the
telecommunications industry. In order to maximize the League's ability to negotiate a
compromise which works best for cities, it is recommended that the City of Santa Clarita
"oppose" Assembly Bill 2987.
Assembly Bill 2987 has been approved by the Assembly and is currently slated to be heard on
June 20, 2006 by the Senate Committee on Energy, Utilities and Communications.
ALTERNATIVE ACTIONS
1. Support Assembly Bill 2987
2. Take no position on Assembly Bill 2987
I Other action as determined by the City Council
FISCAL IMPACT
Adoption of the recommended action can be accomplished within the existing resources provided
by the adopted City budget. No additional resources are required.
ATTACHMENTS
Assembly Bill 2987
AB 2987 Assembly Bill - AMENDED
BILL NUMBER: AB 2987 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 31, 2006
AMENDED IN ASSEMBLY MAY 26, 2006
AMENDEDINASSEMBLY APRIL 6, 2006
AMENDED IN ASSEMBLY MARCH 30, 2006
INTRODUCED BY Assembly Members Nunez .and Levine
(Principal coauthors: Assembly Members McCarthy and Plescia)
FEBRUARY 24, 2006
An act to add Article 3.7 (commencing with Section 53058) to
Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code,
relating to cable and video service.
LEGISLATIVE COUNSEL'S DIGEST
AB 2987, as amended, Nunez Cable and video service.
Existing law provides that any city, county, or city and county
may authorize by franchise or license the construction and operation
of a community antenna television system and prescribe rules and
regulations to protect the subscribers. Existing law provides that
cable and video service providers comply with specified customer
service standards and performance standards.
This bill would establish a procedure for the issuance of state
franchises for the provision of video service, which would be defined
to include cable service and open -video systems, that would be
administered by the Department of Consumer Affairs. The department
would be the sole franchising authority for state franchises to
provide video services. The bill would require any person who seeks
to provide video service in this state to file an application with
the department for a state franchise. Cities, counties, or cities and
counties would receive state franchise fees for video services
provided within their jurisdictions, based on gross revenues,
pursuant to specified procedures. The bill would also authorize
local entities to establish a fee to support the capital costs of
public, educational, and governmental access channel facilities, in
the amount of either 18 of gross revenues or a preexisting fee,
whichever is lower. The bill would require these local agencies
to permit the installation of networks by holders of state
franchises and would preclude enforcement of standards by the local
agencies. The bill would prescribe the extent of the obligation of
state franchise holders to provide public, educational, and
government channels. The bill would prescribe certain customer
service and protection standards and penalties for material breaches
of those standards. The bill would require any state franchise holder
employing more than 750 employees to make an annual report of
specified information to the department.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State -mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 3.7 (commencing with Section 53058) is added to
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Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code,
to read:
Article 3.7. The Digital Infrastructure and Video Competition
Act of 2006
53058. This act shall be known and may be cited as the Digital
Infrastructure and Video Competition Act of 2006.
53058.1. (a) This article shall be known and may be cited as the
Digital Infrastructure and Video Competition Act of 2006.
(b) The Legislature finds and declares all of the following:
(1) Video and cable services provide numerous benefits to all
Californians including access to a variety of news, public
information, education, and entertainment programming.
(2) Increased competition in the cable and video service sector
provides consumers with more choice, lowers prices, speeds the
deployment of new communication and broadband technologies, creates
jobs, and benefits the California economy.
(3) To promote competition, the state should establish a
state -issued franchise authorization process that allows market
participants to use their networks and systems to provide video,
voice, and broadband services to all residents of the state.
(4) Legislation to develop this new process should adhere to the
following principles.
(i) Create a fair and level playing field for all market
competitors that does not disadvantage or advantage one service
provider or technology over another.
(ii) Promote the widespread access to the most technologically
advanced cable and video services to all California communities in a
nondiscriminatory manner regardless of socioeconomic status.
(iii) Protect local government revenues and their control of
public rights of way.
(iv) Require market participants to comply with all applicable
consumer protection laws.
(v) Complement efforts to increase investment in broadband
infrastructure and close the digital divide.
(vi) Continue access to and maintenance of the public, education,
and government (PEG) channels.
(5) Telephone corporations providing video service pursuant to
this article shall not subsidize the cost of deploying network that
is used to provide video service and other costs necessary to offer
video service with revenue derived from the offering of basic
telephone services.
53058.2. For purposes of this article, the following words have
the following meanings:
(a) "Cable operator" means any person or group of persons that
either provides cable service over a cable system and directly, or
through one or more affiliates, owns a significant interest in a
cable system; or that otherwise controls or is responsible for,
through any arrangement, the management and operation of a cable
system, as set forth in Section 522(5) of Title 47 of the United
States Code.
(b) "Cable service" is defined as the one-way transmission to
subscribers of either video programming, or other programming
service, and subscriber interaction, if any, that is required for the
selection or use of video programming or other programming service,
as set forth in Section 522(6) of Title 47 of the United States Code.
(c) "Cable system" is defined as set forth in Section 522(7) of
Title 47 of the United States Code.
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(d) "Department" means the Department of Consumer Affairs.
(e) "Franchise" means an initial authorization, or renewal of an
authorization, issued by a franchising entity, 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 in public
rights-of-way.
(f) "Franchising entity" means the city, county, or city and
county entitled to require franchises and impose fees on cable
operators, as set forth in Section 53066.
(g) "Incumbent cable operator" means the cable operator serving
the largest number of cable subscribers in a particular city, county,
or city and county franchise area on the effective date of this
article.
(h) "Local entity" means any city, county, or city and county
within the state within whose jurisdiction a holder of a state -issued
authorization under this article may provide cable service or video
service.
(i) "Network" means a component of a facility that is wholly or
partly physically located within a public right-of-way and that is
used to provide video service, cable service, or voice or data
services.
(j) "Open -video system" or "OVS" means those services set forth in
Section 573 of Title 47 of the United States Code.
(k) "OVS operator" means any person or group of persons that
either provides cable service over an open -video system directly, or
through one or more affiliates, owns a significant interest in an
open -video system, or that otherwise controls or is responsible for,
through any arrangement, the management of an open -video system.
(1) "Public right-of-way" means the area along and upon any public
road or highway, or along or across any of the waters or lands
within the state.
(m) "State franchise" means a franchise that is issued pursuant to
this article.
(n) "Subscriber" means a person who lawfully receives cable
service or video service from the holder of a state -issued
authorization or franchise for a fee.
(o) "Video programming" means programming provided by, or
generally considered comparable to programming provided by, a
television broadcast station, as set forth in Section 522(20) of
Title 47 of the United States Code.
(p) "Video service" means video programming services, cable
service, or OVS service provided through facilities located at least
in part in public rights-of-way without regard to delivery
technology, including Internet protocol technology. This definition
does not include any video programming provided by a commercial
mobile service provider defined in Section 322(d) of Title 47 of the
United States Code or video programming provided via an Internet
access service as that term is defined in Section 231(e)(4) of Title
47 of the United States Code.
(q) "Video service provider" means an entity providing video
service. This term does not include an incumbent cable operator.
53058.3. (a) The Department of Consumer Affairs is the sole
franchising authority for a state franchise to provide video service
under this article. Neither the department nor any franchising entity
or other local entity of the state may require the holder of a state
franchise to obtain a separate franchise or otherwise impose any fee
or requirement on any holder of a state franchise except as
expressly provided in this article. Sections 53066, 53066.01,
53066.2, and 53066.3 shall not apply to holders of a state franchise.
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(b) The application process described in subdivisions (d) and (e)
and the authority granted to the department under this section shall
not exceed the provisions set forth in this section.
(c) Any person or corporation who seeks to provide cable service
or video service in this state after the effective date of this
article shall file an application for a state franchise with the
department. The department may impose a fee on the applicant that
shall not exceed the actual and reasonable costs of processing the
application and shall not be levied for general revenue purposes.
(d) The application for a state franchise shall be made on a form
prescribed by the department and shall include all of the following:
(1) A sworn affidavit, signed by an officer or another person
authorized to bind the applicant, that affirms all of the following:
(A) That the applicant has filed or will timely file with the
Federal Communications Commission all forms required by the Federal
Communications Commission before offering cable service or video
service in this state.
(B) That the applicant agrees to comply with all federal and state
statutes, rules, and regulations, including, but not limited to, the
following:
(i) A statement that the applicant will not discriminate in the
provision of video or cable services as provided in Section 53058.7.
(ii) A statement that the applicant will abide by all applicable
consumer protection laws and rules as provided in Section 53058.8.
(iii) A statement that the applicant will remit the fee required
by Section 53058.4 to the local entity.
(iv) A statement that the applicant will provide PEG channels as
required by Section 53058.5.
(C) That the applicant agrees to comply with all lawful city,
county, or city and county regulations regarding the time, place, and
manner of using the public rights-of-way, including, but not limited
to, payment of applicable encroachment, permit, and inspection fees.
(D) That the applicant will concurrently deliver a copy of the
application to any local entity where the applicant will provide
service.
(2) The applicant's legal name and any name under which the
applicant does or will do business in this state.
(3) The address and telephone number of the applicant's principal
place of business, along with contact information for the person
responsible for ongoing communications with the department.
(4) The names and titles of the applicant's principal officers.
(5) The legal name, address, and telephone number of the applicant'
s parent company, if any.
(6) A description of the service area footprint to be served
including the socioeconomic information of all residents within the
service area footprint.
(7) If the applicant is a telephone corporation, as defined in
Section 234 of the Public Utilities Code, a description of the
territory in which the company provides telephone service. The
description shall include socioeconomic information of all residents
within in the telephone corporation's service territory.
(8) The expected date for the deployment of video service in each
of the areas identified in paragraph (6).
(9) Adequate assurance that the applicant possesses the financial,
legal, and technical qualifications necessary to construct and
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operate the proposed system and promptly repair any damage to the
public right-of-way caused by the applicant.
(e) (1) The department shall notify an applicant for a state
franchise and any affected local entities whether the applicant's
affidavit described by subdivision (d) is complete or incomplete
before the 30th calendar day after the applicant submits the
affidavit.
(2) If the department finds the affidavit is complete, it shall
issue a state franchise before the 14th calendar day after that
finding.
(3) If the department finds that the application is incomplete, it
shall specify with particularity the items in the application that
are incomplete and permit the applicant to amend the application to
cure any deficiency. The department shall have 30 calendar days from
the date the application is amended to determine its completeness.
(4) The failure of the department to notify the applicant of the
completeness or incompleteness of the applicant's affidavit before
the 44th calendar day after receipt of an affidavit shall be deemed
to constitute issuance of the certificate applied for without further
action on behalf of the applicant.
(f) The state franchise issued by the department shall contain all
of the following:
(1) A grant of authority to provide video service, in exchange for
the franchise fee required in Section 53058.4, in the service area
footprint as requested in the application.
(2) A grant of authority to use the public rights-of-way in the
delivery of video service, subject to the laws of this state.
(3) A statement that the grant of authority is subject to lawful
operation of the cable service or video service by the applicant or
its successor in interest.
(g) The state franchise issued by the department may be terminated
by the video service provider by submitting notice to the
department.
(h) Subject to the notice requirements of this article, a state
franchise may be transferred to any successor in interest of the
holder to which the certificate is originally granted, provided that
the transferee first submits all of the information required of the
applicant by this section to the department.
(i) In connection with, or as a condition of, receiving a state
franchise, the department shall require a holder to notify the
department and any applicable local entity within 14 business days of
.any of the following changes involving the holder or the state
franchise:
(1) Any transaction involving a change in the ownership,
operation, control, or corporate organization of the holder,
including a merger, an acquisition, or a reorganization.
(2) A change in the holder's legal name or the adoption of, or
change to, an assumed business name. The holder shall submit to the
department a certified copy of either of the following:
(A) The amended state franchise.
(B) The certificate of assumed business name.
(3) A change in the holder's principal business address or in the
name of the person authorized to receive notice on behalf of the
holder.
(4) Any transfer of the state franchise to a successor in interest
of the holder. The holder shall identify the successor in interest
to which the transfer is made.
(5) The termination of any state franchise issued under this
article. The holder shall identify both of the following:
(A) The number of customers in the service area covered by the
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state franchise being terminated.
(B)The method by. which the holder's customers were notified of
the termination.
(6) A change in one or more of the service areas of this article
that would increase or decrease the territory within the service
area. The holder shall describe the new boundaries of the affected
service areas after the proposed change is made.
(j) As a condition of receiving a state franchise, the holder
shall notify all applicable local entities that the local entity is
included in the holder's service area under the state franchise being
issued and that the holder intends to provide video service in the
local entity's jurisdiction. The holder shall give the notice
required under this subdivision not later than 10 days before the
holder begins providing video service in the local entity's
jurisdiction.
(k) The department shall develop information guides and other
tools to help educate local entities and other interested parties
about the various provisions of this article.
53058.4. (a) The holder of a state franchise that offers video
service within the jurisdiction of the local entity shall calculate
and remit to the local entity a state franchise fee, as provided in
this section. The obligation to remit the state franchise fee to a
local entity begins immediately upon provision of video service
within that local entity's jurisdiction. However, the remittance
shall not be due until the time of the first quarterly payment
required under subdivision (g) that is at least 180 days after the
provision of service began. The fee remitted to a city or city and
county shall be based on gross revenues earned within that
jurisdiction. The fee remitted to a county shall be based on gross
revenues earned within the unincorporated area of the county. No fee
under this section shall become due unless the local entity provides
documentation to the holder of the state franchise supporting the
percentage paid by the incumbent cable operator serving the area
within the local entity's jurisdiction, as provided below. The fee
shall be calculated as a percentage of the holder's gross revenues,
as defined in subdivision (d).
(b) The state franchise fee shall be a percentage of the holder's
gross revenues, as defined in subdivision (d), as follows:
(1) If there is an incumbent cable operator, the fee shall not be
more than 5 percent of the holder's gross revenues or the percentage
applied by the local entity to the gross revenue of the incumbent
cable operator, whichever is lesser.
(2) If there is no incumbent cable operator or upon the expiration
of the incumbent cable operator's franchise, a local entity may, by
ordinance, set the percentage applied to the gross revenues of all
video service providers, provided that the fee shall not exceed 5
percent of gross revenues and shall be applied equally to all video
service providers in the local entity's jurisdiction.
(c) No local entity or any other political subdivision of this
state may demand any additional fees or charges or other remuneration
of any kind from the holder of a state franchise based solely on its
status as a provider of video or cable services other than as set
forth in this section and may not demand the use of any other
calculation method or definition of gross revenues. However, nothing
in this section shall be construed to limit a local entity's ability
to impose utility user taxes and other generally applicable taxes,
fees, and charges under other applicable provisions of state law that
are applied in a nondiscriminatory and competitively neutral manner.
(d) For purposes of this section, the term °gross revenues" means
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all revenue actually received by the holder of a state franchise, as
determined in accordance with generally accepted accounting
principles, that is derived from the operation of the holder's
network to provide cable or video service within the jurisdiction of
the local entity, including all of the following:
(1) All charges billed to subscribers for any and all cable
service or video service provided by the holder of a state franchise,
including all revenue related to programming provided to the
subscriber, equipment rentals, late fees, and not sufficient fund
fees.
(2) Any fees imposed on the holder of a state franchise by this
section that are passed through to, and paid by, the subscribers.
(3) Compensation received by the holder of a state franchise that
is derived from the operation of the holder's network to provide
cable service or video service with respect to commissions that are
paid to the holder of a state -issued authorization as compensation
for promotion or exhibition of any products or services on the holder'
s network, such as a "home shopping" or similar channel, subject to
paragraph (4) of subdivision (e).
(4) A pro rata portion of all revenue derived by the holder of a
state franchise or its affiliates pursuant to compensation
arrangements for advertising derived from the operation of the holder'
s network to provide video service within the jurisdiction of the
local entity, subject to paragraph (1) of subdivision (e). The
allocation shall be based on the number of subscribers in the local
entity divided by the total number of subscribers in relation to the
relevant regional or national compensation arrangement.
(e) For purposes of this section, the term "gross revenue" set
forth in subdivision (d) does not include any of the following:
(1) Amounts not actually received, even if billed, such as bad
debt; refunds, rebates, or discounts to subscribers or other third
parties; or revenue imputed from the provision of cable services or
video services for free or at reduced rates to any person as required
or allowed by law, including, but not limited to, the provision of
these services to public institutions, public schools, governmental
agencies, or employees other than forgone revenue chosen not to be
received in exchange for trades, barters, services, or other items of
value.
(2) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the holder of a
state franchise to provide cable services or video services. However,
revenue received by an affiliate of the holder from the affiliate's
provision of cable or video service shall be included in gross
revenue as follows:
(A) To the extent that treating the revenue as revenue of the
affiliate, instead of revenue of the holder, would have the effect of
evading the payment of fees that would otherwise be paid to the
local entity.
(B) The revenue is not otherwise subject to fees to be paid to the
local entity.
(3) Revenue derived from services classified as noncable services
or nonvideo services under federal law, including, but not limited
to, revenue derived from telecommunications services and information
services, other than cable services or video services, and any other
revenues attributed by the holder of a state franchise to noncable
services or nonvideo services in accordance with Federal
Communications Commission rules, regulations, standards, or orders.
(4) Revenue paid by subscribers to "home shopping" or similar
networks directly from the sale of merchandise through any home
shopping channel offered as part of the cable services or video
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services. However, commissions or other compensation paid to the
holder of a state franchise by "home shopping" or similar networks
for the promotion or exhibition products or services shall be
included in gross revenue.
(5) Revenue from the sale of cable services or video services for
resale in which the reseller is required to collect a fee similar to
the state franchise fee from the reseller's customers.
(6) Amounts billed to and collected from subscribers to recover
any tax, fee, or surcharge imposed by any governmental entity on the
holder of a state franchise, including, but not limited to, sales and
use taxes, gross receipts taxes, excise taxes, utility users taxes,
public service taxes, communication taxes, and any other fee not
imposed by this section.
(7) Revenue from the sale of capital assets or surplus equipment
not used by the purchaser to receive cable services or video services
from the seller of those assets or surplus equipment.
(8) Revenue from directory or Internet advertising revenue,
including, but not limited to, yellow pages, white pages, banner
advertisement, and electronic publishing.
(9) Revenue received as reimbursement by programmers of marketing
costs incurred by the holder of a state franchise for the
introduction of new programming.
(10) Security deposits received from subscribers, excluding
security deposits applied to the outstanding balance of a subscriber'
s account and thereby taken into revenue.
(f) For purposes of this section, in the case of a video service
that may be bundled or integrated functionally with other services,
capabilities, or applications, the state franchise fee shall be
applied only to the gross revenue, as defined in subdivision (d),
attributable to cable service or video service, as reflected on the
books and records of the holder kept in the regular course of
business in accordance with generally accepted accounting principles
and Federal Communications Commission or Public Utilities Commission
rules, regulations, standards, and orders, as applicable.
(g) The state franchise fee shall be remitted to the applicable
local entity 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 state
franchise fee. If the holder does not pay the franchise fee when due,
the holder shall pay a late payment charge at a rate per year equal
to the highest prime lending rate during the period of delinquency,
plus 1 percent. If the holder has overpaid the franchise fee, it may
deduct the overpayment from its next quarterly payment.
(h) Not more than once annually, a local entity may examine the
business records of a holder of a state franchise to the extent
reasonably necessary to ensure compensation in accordance with
subdivision (a). The holder shall keep all business records
reflecting any gross revenues, even if there is a change in
ownership, for at least four years after those revenues are
recognized by the holder on its books and records. If the examination
discloses that the holder has underpaid franchise fees by more than
5 percent during the examination period, the holder shall pay all of
the reasonable and actual costs of the examination. If the
examination discloses that the holder has not underpaid franchise
fees, the local entity shall pay all of the reasonable and actual
costs of the examination. In every other instance, each party shall
bear its own costs of the examination. Any claims by a local entity
that compensation is not in accordance with subdivision (a), and any
claims for refunds or other corrections to the remittance of the
holder of a state -issued authorization, shall be made within three
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years and 45 days of the end of the Quarter for which compensation is
remitted, or three years from the date of the remittance, whichever
is later. Either a local entity or the holder may, in the event of a
dispute concerning compensation under this section, bring an action
in a court of competent jurisdiction.
(i) The holder of a state franchise may identify and collect the
amount of the state franchise fee as a separate line item on the
regular bill of each subscriber.
53058.5. (a) The holder of a state franchise shall designate a
sufficient amount of capacity on its network to allow the provision
of the same number of PEG channels, that the incumbent cable operator
has activated and provided within the local entity under the terms
of any franchise in effect in the local entity as of the effective
date of this article. For the purposes of this section, a PEG channel
is deemed activated if it is being utilized for PEG programming
within the municipality for at least eight hours per day. The holder
shall have six months from the date the local entity requests the PEG
channels to designate the capacity. However, the six-month period
shall be tolled by any period during which the designation or
provision of PEG channel capacity is technically infeasible,
including any failure or delay of the incumbent cable operator to
make adequate interconnection available, as required by this
subdivision.
(b) The PEG channels shall be for the exclusive use of the local
entity or its designee to provide public, educational, and
governmental channels. PEG channels shall be used only for
noncommercial purposes. However, advertising or sponsorship
recognition may be carried on the channels for the purpose of funding
the operation of the channels. The PEG channels shall all be carried
on the basic service tier. To the extent feasible, PEG channels
shall not be separated numerically from other channels carried on the
basic service tier and the channel numbers for the PEG channels
shall be the same channel numbers used by the incumbent cable
operator unless prohibited by federal law. After the initial
designation of PEG channel numbers, the channel numbers shall
not be changed without the
agreement of the local entity unless the change is required by
federal law. Each channel shall be capable of carrying a National
Television System Committee (NTSC) television signal.
(c) If no PEG channels are activated and provided within the local
entity as of the effective date of this article, a local entity
whose jurisdiction lies within the authorized service area of the
holder of a state franchise may request the holder to designate not
more than a total of three PEG channels.
The holder shall have six months from the date of the request to
designate the capacity. However, the six-month period shall be tolled
by any period during which the designation or provision of PEG
channel capacity is technically infeasible, including any failure or
delay of the incumbent cable operator to make adequate
interconnection available, as required by this subdivision.
(d) The holder shall provide an additional PEG channel when the
locally produced, nonduplicated programming televised on a given
channel exceeds _ hours per week, not including televised public
meetings or classes in an accredited learning institution, as
measured on a quarterly basis. The additional channel shall not be
used for any purpose other than to continue programming additional
government, education, or public access television.
(e) Any PEG channel provided pursuant to this section that is not
utilized by the local entity for at least eight hours per day may no
longer be made available to the local entity, and may be programmed
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AB 2987 Assembly Bill - AMENDED
at the holder's discretion. At the time that the local entity can
certify to the holder a schedule for at least eight hours of daily
programming, the holder of the state franchise shall restore the
channel or channels for the use of the local entity.
(f) The content to be provided over the PEG channel capacity
provided pursuant to this section shall be the responsibility of the
local entity receiving the benefit of that capacity, and the holder
of a state franchise bears only the responsibility for the
transmission of that content, subject to technological restraints.
(g) The local entity shall ensure that all transmissions, content,
or programming to be transmitted by a holder of a state franchise
are provided or submitted in a manner or form that is standard in the
industry. The holder shall be responsible for any changes in the
form of the transmission necessary to make it compatible with the
technology or protocol utilized by the holder to deliver services.
The provision of those transmissions, content, or programming to the
holder of a state franchise shall constitute authorization for the
holder to carry those transmissions, content, or programming,
including, at the holder's option, beyond the jurisdictional
boundaries of that local entity.
(h) Where technically feasible, the holder of a state franchise
and an incumbent cable operator shall negotiate in good faith to
interconnect their networks 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 franchise and incumbent cable operators shall
provide interconnection of PEG channels on reasonable terms and
conditions and may not withhold the interconnection. If a holder of a
state franchise and an incumbent cable operator cannot reach a
mutually acceptable interconnection agreement, the local entity may
require the incumbent cable operator to allow the holder to
interconnect its network with the incumbent's network at a
technically feasible point on the holder's network as identified by
the holder. If no technically feasible point for interconnection is
available, the holder of a state franchise shall make an
interconnection available to the channel originator and shall provide
the facilities necessary for the interconnection.
(i) A holder of a state franchise shall not be required to
interconnect for, or otherwise to transmit, PEG content that is
branded with the logo, name, or other identifying marks of another
cable operator or video service provider. For purposes of this
section, PEG content is not branded if it includes only production
credits or other similar information displayed at the conclusion of a
program. The local entity may require a cable operator or video
service provider to remove its logo, name, or other identifying marks
from PEG content that is to be made available through
interconnection to another provider of PEG capacity.
(j) In addition to any provision for PEG channels required under
subdivisions (a) to (k), inclusive, the holder shall reserve,
designate, and activate a channel for carriage of public affairs
programming that includes live and recorded coverage of state
government and state legislative activities originated by the
California Channel and designate and activate a channel for carriage
of public affairs programming originated by C -Span.
(k) After the effective date of this article and until the
expiration of the incumbent cable operator's franchise, if the
incumbent cable operator has existing unsatisfied obligations under
the franchise to remit to the local entity any cash payments for the
ongoing capital costs of public educational and governmental access
channel facilities, the local entity shall divide those cash payments
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AB 2987 Assembly Bill - AMENDED
among all cable or video providers as provided in this section. The
fee shall be the holder's pro rata per subscriber share of the cash
payment required to be paid by the incumbent cable operator to the
local entity for the capital costs of public, educational, and
governmental access channel facilities.
(1) In determining the fee on a pro rata per subscriber basis, all
cable and video service providers shall report, for the period in
question, to the local entity the total number of subscribers served
with the local entity's jurisdiction, which shall be treated as
confidential by the local entity and shall be used only to derive the
per subscriber fee required by this section. The local entity shall
then determine the payment due from each provider based on a per
subscriber basis for the period by multiplying the unsatisfied cash
payments for the ongoing capital costs of public, educational, and
governmental access channel facilities by a ratio of the reported
subscribers of each provider to the total subscribers within the
local entity as of the end of the period. The local entity shall
notify the respective providers, in writing, of the resulting pro
rata amount. After the notice, any fees required by this section
shall be remitted to the applicable local entity quarterly, within 45
days after the end of the quarter for the preceding calendar
quarter, and may only be used by the local entity as authorized under
federal law.
(m) If there is no incumbent cable operator, or upon the
expiration of the incumbent cable operator's franchise, a local
entity may, by ordinance, establish a fee to support the capital
costs of public, educational, and governmental access channel
facilities and to support institutional network facilities. The fee
shall not exceed the per subscriber fee paid under subdivision (k),
if such a fee was paid, or 1
percent of the holder's gross revenues, as defined in Section
53058.4, earned in the local entity, whichever is lower. —Ziac
For purposes of administration, the fee shall
be deposited in a special fund established by the local entity to be
used ,.,,,,.,.. F.._ «..
for purposes allowed under federal law.
(n) The following services shall continue to be provided by the
incumbent cable operator that was furnishing servicgs pursuant to a
franchise until January 1, 2008, or until the term of the franchise
expires, whichever is later:
(1) PEG production or studio facilities.
(2) Institutional network capacity, however defined or referred to
in the incumbent cable operator's franchise, but generally referring
to a private line data network capacity for use by the local entity
for noncommercial purposes.
(3) Cable services to community public buildings, such as
municipal buildings and public schools.
(o) The holder of a state franchise may recover the amount of any
fee remitted to a local entity under this section by billing a
recovery fee as a separate line item on the regular bill of each
subscriber.
(p) A court of competent jurisdiction shall have exclusive
jurisdiction to enforce any requirement under this section or resolve
any dispute regarding the requirements set forth in this section,
and no provider may by barred from the provision of service or be
required to terminate service as a result of that dispute or
enforcement action.
53058.6. Holders of state franchises shall comply with the
Emergency Alert System requirements of the Federal Communications
Commission in order that emergency messages may be distributed over
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AB 2987 Assembly Bill - AMENDED
the holder's network.
53058.7. (a) The local entity shall allow the holder of a state
franchise under this article to install, construct, and maintain a
network within public rights-of-way under the same terms and
conditions as applicable to telephone corporations, as defined under
Section 234 of the Public Utilities Code, under applicable state and
federal law.
(b) A local entity may not enforce against the holder of a state
franchise any rule, regulation, or ordinance that purports to allow
the local entity to purchase or force the sale of a network.
53058.8. (a) A cable operator or video service provider that has
been granted a state franchise under this article may not
discriminate against or deny access to service to any group of
potential residential subscribers because of the income of the
residents in the local area in which the group resides, as required
by Section 541(a)(3) of Title 47 of the United States Code.
(b) It is the intent of the Legislature that the principles for
competition in the provision of video service will require a level
playing field to assure that competition is fair, will require
widespread build -out of state-of-the-art services so that competition
can benefit the greatest number of customers, and will prohibit
discrimination, redlining, and service abandonment so that a lack of
competition will not be detrimental to customers.
53058.9. (a) The holder.of a state franchise shall comply with
the provisions of Sections 53055, 53055.1, 53055.2 and 53088.2, and
any other customer service standards pertaining to the provision of
video service required to be enforced by federal law, adopted by the
department pursuant to subdivision (q) of Section 53088.2, or adopted
by subsequent enactment of the Legislature.
(b) The local entity shall enforce all of the customer service and
protection standards of this section with respect to complaints
received from residents within the local entity's jurisdiction, but
it may not adopt or seek to enforce any additional or different
customer service or other performance standards under Section
53055.3, subdivision (q), (r), or (s) of Section 53088.2, or any
other authority or provision of law.
(c) The local entity may, by ordinance, provide a schedule of
penalties for the material breach by a holder of a state franchise of
this section. No monetary penalties shall be assessed for a material
breach if the breach is out of the reasonable control of the holder.
Further, no monetary penalties may be imposed prior to the effective
date of this section. Any schedule of monetary penalties adopted
pursuant to this section shall in no event exceed two hundred dollars
($200) for each day of each material breach, not to exceed six
hundred dollars ($600) for each occurrence of material breach.
However, if a material breach of this section has occurred and the
city, county, or city and county has provided notice and a fine or
penalty has been assessed, in a subsequent material breach of the
same nature occurring within 12 months, the penalties may be
increased by the city, county, or city and county to a maximum of
four hundred dollars ($400) for each day of each material breach, not
to exceed one thousand two hundred dollars ($1,200) for each
occurrence of the material breach. If a third or further material
breach of the same nature occurs within those same 12 months, and the
city, county, or city and county has provided notice and a fine or
penalty has been assessed, the penalties may be increased to a
maximum of one thousand dollars ($1,000) for each day of each
material breach, not to exceed three thousand dollars ($3,000) for
each occurrence of the material breach. With respect to video
providers subject to a franchise or license, any monetary penalties
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AB 2987 Assembly Bill - AMENDED
assessed under this section shall be reduced dollar for dollar to the
extent any liquidated damage or penalty provision of a current cable
television ordinance, franchise contract, or license agreement
imposes a monetary obligation upon a video provider for the same
customer service failures, and no other monetary damages may be
assessed.
(d) If the local entity adopts a schedule of monetary penalties,
the following procedures shall be followed:
(1) The local entity shall give the video provider written notice
of any alleged material breaches of the consumer service standards of
this division and allow the video provider at least 30 days from
receipt of the notice to remedy the specified breach.
(2) A material breach for the purposes of assessing penalties
shall be deemed to have occurred for each day, following the
expiration of the period specified in paragraph (1), that any
material breach has not been remedied by the video provider,
irrespective of the number of customers affected.
(e) This section shall not preclude a party affected by this
section from utilizing any judicial remedy available to that party
without regard to this section. Actions taken by a local legislative
body, including a franchising authority, pursuant to this section
shall not be binding upon a court of law. For this purpose, a court
of law may conduct de novo review of any issues presented.
53058.10. (a) The holder of a state franchise shall perform
background checks of applicants for employment, according to current
business practices.
(b) A background check equivalent to that performed by the holder
shall also be conducted on all of the following:
(1) Persons hired by a holder under a personal service contract.
(2) Independent contractors and their employees.
(3) Vendors and their employees.
(c) Independent contractors and vendors shall certify that they
have obtained the background checks required pursuant to subdivision
(f), and shall make the background checks available to the holder
upon request.
(d) Except as otherwise provided by contract, the holder of a
state franchise shall not be responsible for administering the
background checks and shall not assume the costs of the background
checks of individuals who are not applicants for employment of the
holder.
(e) (1) Subdivision (a) only applies to applicants for employment
for positions that would allow the applicant to have direct contact
with or access to the holder's network, central office, or customer
premises, and perform activities that involve the installation,
service, or repair of the holder's network or equipment.
(2) Subdivision (b) only applies to person that have direct
contact with or access to the holder's network, central office, or
customer premises, and perform activities that involve the
installation, service, or repair of the holder's network or
equipment.
(f) This section does not apply to temporary workers performing
emergency functions to restore the network of a holder to its normal
state in the event of a natural disaster or an emergency that
threatens or results in the loss of service.
53058.11. (a) A holder of a state franchise employing more than
750 total employees shall annually report to the department all of
the following:
(1) The number of California residents employed by the holder,
calculated on a full-time or full-time equivalent basis.
(2) The percentage of the holder's total domestic workforce,
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AB 2987 Assembly Bill - AMENDED
calculated on a full-time or full-time equivalent basis.
(3) The types and numbers of jobs by occupational classification
held by residents of California employed by holders of state
franchises and the average pay and benefits of those jobs and,
separately, the number of corporations headquartered outside of
California.
(4) The number of California and separately, the number of
out-of-state residents employed by independent contractors,
companies, and consultants hired by the holder, calculated on a
full-time or full-time equivalent basis, when the holder has obtained
this information upon requesting it from the independent contractor,
company, or consultant, and the holder is not contractually
prohibited from disclosing the information to the public. This
paragraph applies only to those employees of an independent
contractor or consultant that are personally providing services to
the holder, and does not apply to employees of an independent
contractor or consultant not personally performing services for the
holder.
(5) The holder of net new positions proposed to be created
directly by the holder of a state franchise during the upcoming year
by occupational classifications and by category of full-time,
part-time, temporary, and contract employees.
(b) The department shall annually report the information required
to be reported by holders of state franchises pursuant to subdivision
(a), to the Assembly Committee on Utilities and Commerce and the
Senate Committee on Energy, Utilities and Communications, or their
successor committees, and within a reasonable time thereafter, shall
make the information available to the public on its Internet Web
site.
53058.12. (a) The provisions of this article are intended to be
consistent with the Federal Cable Act (47 U.S.C. Sec. 521 et seq.).
(b) Nothing in this section shall be interpreted to prevent a
voice provider, cable operator or video service provider, or local
entity from seeking clarification of its rights and obligations under
federal law or from exercising any right or authority under federal
or state law.
_ CORRECTIONS Text -- Page 15.
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