Law:Title 2. Public Utility Regulatory Act. Subtitle C. Telecommunications Utilities from Chapter 65. Deregulation Of Certain Incumbent Local Exchange Company Markets (Texas)

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Subtitle C. Telecommunications Utilities

Contents

Chapter 65. Deregulation Of Certain Incumbent Local Exchange Company Markets

Subchapter A. General Provisions

Section 65.001.  Statement Of Policy.

It is the policy of this state to provide for full rate and service competition in the telecommunications market of this state so that customers may benefit from innovations in service quality and market-based pricing.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.002.  Definitions.

In this chapter:

(1)  "Deregulated company" means an incumbent local exchange company for which all of the company's markets have been deregulated.

(2)  "Market" means an exchange in which an incumbent local exchange company provides residential local exchange telephone service.

(3)  "Regulated company" means an incumbent local exchange company for which none of the company's markets have been deregulated.

(4)  "Stand-alone residential local exchange voice service" means:

(A)  residential tone dialing service;

(B)  services and functionalities supported under the lifeline program;

(C)  access for all residential end users to 911 service provided by a local authority and access to dual party relay service;

(D)  at the election of the incumbent local exchange company, mandatory residential extended area service arrangements, mandatory residential extended metropolitan service or other mandatory residential toll-free calling arrangements, mandatory expanded local calling service arrangements, or another service that a company is required under a tariff to provide to a customer who subscribes or may subscribe to basic network services;

(E)  flat rate residential local exchange telephone service delivered by landline, but only if the service is ordered and received independent of:

(i)  a service classified as a nonbasic service under Section 58.151 or residential call waiting service;

(ii)  a package of services that includes a service classified as a nonbasic service under Section 58.151; or

(iii)  another flat rate residential local exchange service delivered by landline; and

(F)  residential caller identification services if the customer to whom the service is billed is at least 65 years of age.

(5)  "Transitioning company" means an incumbent local exchange company for which at least one, but not all, of the company's markets has been deregulated.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.003.  Commission Authority.

(a) Notwithstanding any other provisions of this title, the commission has authority to implement and enforce this chapter.

(b)  The commission may adopt rules and conduct proceedings necessary to administer and enforce this chapter, including rules to determine whether a market should remain regulated, should be deregulated, or should be reregulated.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.004.  Information.

(a) The commission may collect and compile information from all telecommunications providers as necessary to implement and enforce this chapter.

(b)  The commission shall maintain the confidentiality of information collected under this chapter that is claimed to be confidential for competitive purposes.  Information that is claimed to be confidential is exempt from disclosure under Chapter 552, Government Code.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.005.  Customer Protection.

This chapter does not affect a customer's right to complain to the commission regarding a telecommunications provider.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Subchapter B. Determination Of Whether Market Should Be Regulated

Section 65.051.  Markets Deregulated.

(a) Except as provided by Subsection (b), all markets of all incumbent local exchange companies are deregulated on January 1, 2006, unless the commission determines under Section 65.052(a) that a market or markets should remain regulated.

(b)  A market of an incumbent local exchange company in which the population in the area included in the market is less than 30,000 is deregulated on January 1, 2007, unless the commission determines under Section 65.052(f) that the market should remain regulated.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.052.  Determination Of Whether A Market Should Remain Regulated.

(a) Except as provided by Subsection (f), the commission shall:

(1)  determine whether each market of an incumbent local exchange company should remain regulated on and after January 1, 2006; and

(2)  issue a final order classifying the company in accordance with this section effective January 1, 2006.

(b)  In making a determination under Subsection (a), the commission may not determine that a market should remain regulated if:

(1)  the population in the area included in the market is at least 100,000; or

(2)  the population in the area included in the market is at least 30,000 but less than 100,000 and, in addition to the incumbent local exchange company, there are at least three competitors of which:

(A)  at least one is a telecommunications provider that holds a certificate of operating authority or service provider certificate of operating authority and provides residential local exchange telephone service in the market;

(B)  at least one is an entity providing residential telephone service in the market using facilities that the entity or its affiliate owns; and

(C)  at least one is a provider in that market of commercial mobile service as defined by Section 332(d), Communications Act of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications Commission rules, and the Omnibus Budget Reconciliation Act of 1993 (Pub. L. No. 103-66), that is not affiliated with the incumbent local exchange company.

(c)  The commission shall issue an order classifying an incumbent local exchange company as a deregulated company that is subject to Subchapter C if:

(1)  the company does not have any markets in which the population in the area included in the market is less than 30,000; and

(2)  the commission does not determine that a market of the company should remain regulated on and after January 1, 2006.

(d)  Regardless of the population in the area included in an incumbent local exchange company's markets, the commission shall issue an order classifying the company as a transitioning company that is subject to Subchapter D if the commission determines that one or more, but not all, of the markets of the company should remain regulated on and after January 1, 2006.

(e)  The commission shall issue an order classifying the company as a regulated company that is subject to the provisions of this title that applied to the company on September 1, 2005, if the commission determines that all of the markets of the company in which the population in each area included in the markets is at least 30,000 should remain regulated on and after January 1, 2006.  This subsection does not affect the authority of a regulated company to elect under Chapter 58 or 59 after January 1, 2005, and to be regulated under the chapter under which the company elected.

(f)  Not later than November 30, 2006, the commission shall determine whether a market of an incumbent local exchange company in which the population in the area included in the market is less than 30,000 should remain regulated on or after January 1, 2007.  The commission by rule shall determine the market test to be applied in determining whether the market should remain regulated.  If the commission does not determine that the market should remain regulated on or after January 1, 2007, and the deregulation of that market results in a transitioning or regulated company no longer meeting the definition of a transitioning or regulated company, as appropriate, the commission shall issue an order reclassifying the company appropriately.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.053.  Incumbent Local Exchange Company Markets.

(a) Notwithstanding Section 65.052, an incumbent local exchange company may elect to have all of the company's markets remain regulated on and after January 1, 2006.

(b)  To make an election under Subsection (a), an incumbent local exchange company must file an affidavit with the commission making that election not later than December 1, 2005.

(c)  If an incumbent local exchange company makes an election under this section, the commission shall issue an order classifying the company as a regulated company that is subject to the provisions of this title that applied to the company on September 1, 2005.  This subsection does not affect the authority of a regulated company to elect under Chapter 58 or 59 after January 1, 2005, and to be regulated under the chapter under which the company elected.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.054.  Petition For Deregulation.

(a) After July 1, 2007, a company may petition the commission to deregulate a market that the commission previously determined should remain regulated.

(b)  If the commission deregulates a market under this section and the deregulation results in the transitioning or regulated company no longer meeting the definition of a transitioning or regulated company, as appropriate, the commission shall issue an order reclassifying the company appropriately.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.055.  Commission Authority To Reregulate Certain Markets.

(a) This section applies only to a market of an incumbent local exchange company in which the population in the area included in the market is less than 100,000.

(b)  The commission, on its own motion or on a complaint that the commission considers to have merit, may determine that a market that was previously deregulated should again be subject to regulation.

(c)  The commission by rule shall prescribe the procedures and standards applicable to a determination under this section.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Subchapter C. Deregulated Company

Section 65.101.  Issuance Of Certificate Of Operating Authority.

(a) A deregulated company may petition the commission to relinquish the company's certificate of convenience and necessity and receive a certificate of operating authority.

(b)  The commission shall issue the deregulated company a certificate of operating authority and rescind the deregulated company's certificate of convenience and necessity if the commission finds that all of the company's markets have been deregulated under Subchapter B.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.102.  Requirements.

(a) A deregulated company that holds a certificate of operating authority issued under this subchapter is a nondominant carrier governed in the same manner as a holder of a certificate of operating authority issued under Chapter 54, except that the deregulated company:

(1)  retains the obligations of a provider of last resort under Chapter 54;

(2)  is subject to the following provisions in the same manner as an incumbent local exchange company that is not deregulated:

(A)  Sections 54.156, 54.158, and 54.159;

(B)  Section 55.012; and

(C)  Chapter 60; and

(3)  may not increase the company's rates for stand-alone residential local exchange voice service before the date that the commission has the opportunity to revise the monthly per line support under the Texas High Cost Universal Service Plan pursuant to Section 56.031, regardless of whether the company is an electing company under Chapter 58.

(b)  In each deregulated market, a deregulated company shall make available to all residential customers uniformly throughout that market the same price, terms, and conditions for all basic and non-basic services, consistent with any pricing flexibility available to such company on or before August 31, 2005.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Subchapter D. Transitioning Company

Section 65.151.  Provisions Applicable To Transitioning Company.

A transitioning company is governed by this subchapter and the provisions of this title that applied to the company immediately before the date the company was classified as a transitioning company.  If there is a conflict between this subchapter and the other applicable provisions of this title, this subchapter controls.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.152.  General Requirements.

(a) A transitioning company may:

(1)  exercise pricing flexibility in a market in the manner provided by Section 58.063 one day after providing an informational notice as required by that section; and

(2)  introduce a new service in a market in the manner provided by Section 58.153 one day after providing an informational notice as required by that section.

(b)  A transitioning company may not be required to comply with exchange-specific retail quality of service standards or reporting requirements in a market that is deregulated.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.153.  Rate Requirements.

(a) In a market that remains regulated, a transitioning company shall price the company's retail services in accordance with the provisions that applied to that company immediately before the date the company was classified as a transitioning company.

(b)  In a market that is deregulated, a transitioning company shall price the company's retail services as follows:

(1)  for all services, other than basic local telecommunications service, at any price higher than the service's long run incremental cost; and

(2)  for basic local telecommunications service, at any price higher than the lesser of the service's long run incremental cost or the tariffed price on the date that market was deregulated, provided that the company may not increase the company's rates for stand-alone residential local exchange voice service before the date that the commission has the opportunity to revise the monthly per line support under the Texas High Cost Universal Service Plan pursuant to Section 56.031, regardless of whether the company is an electing company under Chapter 58.

(c)  In each deregulated market, a transitioning company shall make available to all residential customers uniformly throughout that market the same price, terms, and conditions for all basic and non-basic services, consistent with any pricing flexibility available to such company on or before August 31, 2005.

(d)  In any market, regardless of whether regulated or deregulated, the transitioning company may not:

(1)  establish a retail rate, term, or condition that is anticompetitive or unreasonably preferential, prejudicial, or discriminatory;

(2)  establish a retail rate for a basic or non-basic service in a deregulated market that is subsidized either directly or indirectly by a basic or non-basic service provided in an exchange that is not deregulated; or

(3)  engage in predatory pricing or attempt to engage in predatory pricing.

(e)  A rate that meets the pricing requirements in Subsection (b) shall be deemed compliant with Subsection (d)(2).

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Subchapter E. Reduction Of Switched Access Rates

Section 65.201.  Reduction Of Switched Access Rates By Deregulated Company.

(a) On the date the last market of an incumbent local exchange company is deregulated, the company shall reduce both the company's originating and terminating per minute of use switched access rates in each market to parity with the company's respective federal originating and terminating per minute of use switched access rates.

(b)  After reducing the rates under Subsection (a), a deregulated company shall maintain parity with the company's federal originating and terminating per minute of use switched access rates.  If the company's federal originating and terminating per minute of use switched access rates are changed, the company shall change the company's per minute of use switched access rates in each market as necessary to re-achieve parity with the company's federal originating and terminating per minute of use switched access rates.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.202.  Reduction Of Switched Access Rates By Transitioning Company With More Than Three Million Access Lines.

(a) Notwithstanding any other provision of this title, a transitioning company that has more than three million access lines in service in this state on January 1, 2006, shall:

(1)  on July 1, 2006, reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to 33 percent of the difference in the rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates;

(2)  on July 1, 2007, reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to 33 percent of the difference in the rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates; and

(3)  on July 1, 2008, reduce both the company's originating and terminating per minute of use switched access rates in each market to parity with the company's respective federal originating and terminating per minute of use switched access rates.

(b)  After reducing the rates under Subsection (a), a transitioning company shall maintain parity with the company's federal originating and terminating per minute of use switched access rates.  If the company's federal originating and terminating per minute of use switched access rates are changed, the company shall change the company's per minute of use switched access rates in each market as necessary to re-achieve parity with the company's federal originating and terminating per minute of use switched access rates.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.203.  Reduction Of Switched Access Rates By Certain Transitioning Companies With Not More Than Three Million Access Lines.

(a) Notwithstanding any other provision of this title, a company that is classified as a transitioning company effective January 1, 2006, and that has not more than three million access lines in service in this state on that date shall reduce both the company's originating and terminating per minute of use switched access rates in each market in accordance with this section.

(b)  On July 1, 2006, the transitioning company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that are not regulated on July 1, 2006, by the total number of the company's markets on December 30, 2005.

(c)  On July 1, 2007, the transitioning company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005.

(d)  On July 1, 2008, the transitioning company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005.

(e)  On July 1, 2009, and each succeeding year thereafter on July 1, the transitioning company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount derived by multiplying the difference in the company's rates in effect on June 30, 2006, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005, except that a transitioning company shall be required to reduce both the company's originating and terminating per minute of use switched access charges to parity with the company's respective federal originating and terminating per minute of use switched access charges if more than 75 percent of the transitioning company's markets are not regulated on July 1 of 2009 or any succeeding year.

(f)  After reducing the rates under Subsection (e), a transitioning company shall maintain parity with the company's federal originating and terminating per minute of use switched access rates.  If the company's federal originating and terminating per minute of use switched access rates are changed, the company shall change the company's per minute of use switched access rates in each market as necessary to re-achieve parity with the company's federal originating and terminating per minute of use switched access rates.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.204.  Reduction Of Switched Access Rates By Newly Designated Transitioning Company.

(a) Notwithstanding any other provision of this title, a company that is classified as a transitioning company after January 1, 2006, shall reduce both the company's originating and terminating per minute of use switched access rates in each market in accordance with this section.

(b)  On the date the company is classified as a transitioning company, the company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on the day before the date the company was classified, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that are not regulated on the date the company is classified as a transitioning company by the total number of the company's markets on December 30, 2005.

(c)  On the first anniversary of the date the company is classified as a transitioning company, the company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on the day before the date the company was classified, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005.

(d)  On the second anniversary of the date the company is classified as a transitioning company, the company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount equal to the lesser of:

(1)  25 percent of the difference in the company's rates in effect on the day before the date the company was classified, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date; or

(2)  an amount derived by multiplying that difference by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005.

(e)  On the third anniversary of the date the company is classified as a transitioning company and each anniversary thereafter, the company shall reduce both the company's originating and terminating per minute of use switched access rates in each market by an amount derived by multiplying the difference in the company's rates in effect on the day before the date the company was classified as a transitioning company, and the company's respective federal originating and terminating per minute of use switched access rates in effect on that date by a percentage derived by dividing the number of the company's markets that were deregulated in the prior 12 months by the total number of the company's markets on December 30, 2005, except that a transitioning company shall be required to reduce both the company's originating and terminating per minute of use switched access charges to parity with the company's respective federal originating and terminating per minute of use switched access charges if more than 75 percent of the transitioning company's markets are not regulated on July 1 of 2009 or any succeeding year.

(f)  After reducing the rates under Subsection (e), a transitioning company shall maintain parity with the company's federal originating and terminating per minute of use switched access rates.  If the company's federal originating and terminating per minute of use switched access rates are changed, the company shall change the company's per minute of use switched access rates in each market as necessary to re-achieve parity with the company's federal originating and terminating per minute of use switched access rates.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.205.  Maintenance Of Reduction Or Parity.

(a) After a deregulated or transitioning company reduces the company's rates under this subchapter, the company may not increase those rates above the applicable rates prescribed by this subchapter.

(b)  If a transitioning company's federal per minute of use switched access rates are reduced, the company shall reduce the company's per minute of use switched access rates to not more than the applicable rates prescribed by this subchapter.

(c)  Notwithstanding Subsections (a) and (b), a deregulated or transitioning company may decrease the company's per minute of use switched access rates to amounts that are less than the applicable rates prescribed by this subchapter.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Subchapter F. Legislative Oversight Committee

Section 65.251.  Oversight Committee.

(a) In this subchapter, "committee" means the telecommunications competitiveness legislative oversight committee.

(b)  The committee is composed of nine members as follows:

(1)  the chair of the Senate Committee on Business and Commerce;

(2)  the chair of the House Committee on Regulated Industries;

(3)  three members of the senate appointed by the lieutenant governor;

(4)  three members of the house of representatives appointed by the speaker of the house of representatives; and

(5)  the chief executive of the Office of Public Utility Counsel.

(c)  An appointed member of the committee serves at the pleasure of the appointing official.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.



Section 65.252.  Committee Duties.

(a) The committee shall conduct joint public hearings with the commission at least annually regarding the introduction of full competition to telecommunications services in this state.

(b)  The commission shall:

(1)  collect and compile information from all telecommunications providers as necessary to conduct a hearing under this section; and

(2)  maintain the confidentiality of information collected under this section that is claimed to be confidential for competitive purposes.

(c)  Information that is claimed to be confidential under Subsection (b) is exempt from disclosure under Chapter 552, Government Code.

(d)  The commission shall provide to the committee information regarding rules relating to telecommunications deregulation proposed by the commission.  The committee may submit comments to the commission on those proposed rules.

(e)  The committee shall monitor the effectiveness of telecommunications deregulation, including the fairness of rates, the quality of service, and the effect of regulation on the normal forces of competition.

(f)  The committee may request reports and other information from the commission as necessary to carry out this subchapter.

(g)  Not later than November 15 of each even-numbered year, the committee shall report to the governor, lieutenant governor, and speaker of the house of representatives on the committee's activities under this subchapter.  The report must include:

(1)  an analysis of any problems caused by telecommunications deregulation; and

(2)  recommendations for any legislative action necessary to address those problems and to further competition within the telecommunications industry.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 2, Sec. 26, eff. September 7, 2005.


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