BILL REQ. #:  H-1218.2 

Read first time 02/02/2007.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to promoting competition for video services; amending RCW 35.21.860, 35.99.020, 35.102.020, and 80.36.370; and adding a new chapter to Title 80 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The Legislature finds and declares all of the following:
     (1) Washington's economy would be enhanced by investment in new communications and video programming infrastructure, including fiber optic and internet protocol technologies.
     (2) Cable services and video services bring important daily benefits to Washington by providing news, education, and entertainment.
     (3) Competitive cable service providers and video service providers are capable of providing new video programming services and competition to consumers in Washington and have stated their desire to do so.
     (4) There has been only minimal competitive entry into the facilities-based video programming market since Washington's franchising requirements were first enacted.
     (5) The cable franchise requirements and associated build-out requirements have acted as a barrier to entry to many new facilities-based entrants, because time-to-market and reasonable cost of entry are critical for new entrants seeking to compete with the cable incumbents.
     (6) Under both federal and state law, there is considerable uncertainty concerning whether and to what degree the cable franchise requirements apply to various competitive cable service providers and competitive video service providers, especially to the extent those new entrants are already subject to public right-of-way management under other state regulatory schemes.
     (7) To remove legal uncertainty under state law with respect to the authority of competitive cable service providers and video service providers to use the public rights-of-way to the extent the cable franchise requirements do not apply, and to promote competitive entry by all competitive cable service providers and video service providers, the state of Washington can and should provide a state-issued authorization for competitive cable service providers and video service providers to deploy their systems and provide cable service and video service to residents of the state. This state-issued grant will allow all competitive cable service providers and video service providers to move forward in making the significant investments required to provide new services and competition for video programming.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Cable operator" means any person or group of persons who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in the cable system, or who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system.
     (2) "Cable service" means the one-way transmission to subscribers of video or other programming service, and subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service.
     (3) "Cable system" means a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service that includes video programming and that is provided to multiple subscribers within a community. "Cable system" does not include:
     (a) A facility that serves only to retransmit the television signals of one or more television broadcast stations;
     (b) A facility that serves subscribers without using any public right-of-way;
     (c) A facility of a common carrier, except that such a facility is considered a cable system to the extent the facility is used in the transmission of video programming directly to subscribers, unless the extent of use is solely to provide interactive on-demand services;
     (d) An open video system; or
     (e) Any facilities of any electric utility used solely for operating its electric utility system.
     (4) "Commission" means the utilities and transportation commission.
     (5) "Competitive cable service provider" means:
     (a) A person authorized by this chapter to provide cable service over a cable system other than the incumbent cable operator providing service in the area to be served by the competitive cable service provider; or
     (b) A cable operator authorized by this chapter to provide cable services over a cable system in areas where it currently does not have an existing franchise agreement as of the effective date of this section.
     (6) "Competitive cable service provider fee" means the amount paid by a competitive cable service provider under section 4 of this act.
     (7) "Competitive video service provider" means a person authorized by this chapter to provide video service. "Competitive video service provider" does not include a cable operator, and a competitive video service provider is not considered a cable operator, and the facilities of a competitive video service provider is not considered a cable system.
     (8) "Competitive video service provider fee" means the amount paid by a competitive video service provider under section 4 of this act.
     (9) "Franchise" means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designed as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of a cable system or video service provider's network in the public rights-of-way.
     (10) "Franchising entity" means the city or county entitled to require franchises and impose fees under local ordinances.
     (11) "Public rights-of-way" means the area on, below, or above a public roadway, highway, street, public sidewalk, alley, or waterway, or utility easements dedicated for compatible uses.
     (12) "Video programming" means programming provided by, or generally considered comparable to programming provided by, a television broadcast station.
     (l3) "Video service" means video programming services provided through wireline facilities located at least in part in the public rights-of-way without regard to delivery technology, including internet protocol technology. "Video service" does not include any video programming provided by a commercial mobile service provider or cable service provided by a competitive cable service provider.

NEW SECTION.  Sec. 3   (1) Any entity certificated to provide local exchange service in the state that seeks to operate or operates as a competitive cable service provider or competitive video service provider in its local exchange service area automatically possesses authorization upon the effective date of this section.
     (2) Any other competitive cable service provider or competitive video service provider possesses authorization upon securing permission from the commission.
     (3) The commission shall adopt rules to govern the cable service or video service authorization application process for competitive cable service providers and competitive video service providers included in this subsection. To the extent required by applicable law, any cable or video service authorization granted by this chapter or the commission constitutes a franchise for purposes of 47 U.S.C. Sec. 541(b)(1). To the extent required for purposes of 47 U.S.C. Secs. 521-561, only the state of Washington holds the exclusive franchising authority for competitive cable service providers and competitive video service providers in this state.
     (4) No franchising entity or other political entity of the state may:
     (a) Require a competitive cable service provider or competitive video service provider to obtain a separate franchise; or
     (b) Otherwise impose any fee or franchise requirement on any competitive cable service provider or competitive video service provider, except as provided in this chapter. For purposes of this subsection, a franchise requirement includes, without limitation, any provision regulating rates charged by competitive cable service providers or competitive video service providers or requiring competitive cable service providers or competitive video service providers to satisfy any build-out requirements or deploy any facilities or equipment.
     (5) A cable operator with an existing franchise to provide cable service in any municipality in the state as of the effective date of this section is not eligible to seek a state authorization to provide cable service or video service under this chapter as to such a municipality until the expiration date of the existing franchise agreement.
     (6)(a) No later than one hundred eighty days after a request by a municipality or county in which the competitive cable service provider or the competitive video service provider is providing cable service or video service, the holder of a state authorization to provide cable service or video service shall designate a sufficient amount of capacity on its communications network to allow the provision of a comparable number of channels or capacity of public, educational, and governmental noncommercial programming provided by the incumbent cable operator.
     (b) The content to be provided over the public, educational, and governmental noncommercial programming access under this section is the responsibility of the municipality or county receiving the benefit of the capacity. The holder of a state authorization to provide cable service or video service bears only the responsibility for the transmission of the content, subject to technological restraints.
     (7) The municipality or county shall ensure that all transmissions, content, or programming to be transmitted by a holder of a state authorization to provide cable service or video service are provided or submitted to the competitive cable service provider or competitive video service provider in a manner or form that is capable of being accepted and transmitted by a provider, without requirement for additional alteration or change in the content by the provider, over the particular network of the competitive cable service provider or competitive video service provider, that is compatible with the technology or protocol utilized by the competitive cable service provider or competitive video service provider to deliver services.
     (8) When technically feasible, the holder of a state authorization to provide cable service or video service and an incumbent cable service provider shall use reasonable efforts to interconnect their cable or video systems for the purpose of providing public, educational, and governmental noncommercial programming. Interconnection may be accomplished by direct cable, microwave link, satellite, or other reasonable method of connection. Holders of a state authorization to provide cable service or video service and incumbent cable service providers shall negotiate in good faith and incumbent cable service providers may not withhold interconnection of public, educational, and governmental noncommercial programming channels.
     (9) Except as provided in subsections (1) through (3) of this section, competitive cable service providers and competitive video service providers enjoy the same rights under the laws of the state of Washington as incumbent cable operators and other providers of video programming.
     (10) The commission is solely responsible for enforcing this chapter and may do so by filing a complaint in superior court.

NEW SECTION.  Sec. 4   (1) A competitive cable service provider or competitive video service provider shall provide notice to each franchising entity with jurisdiction in any locality in which a competitive cable service provider or competitive video service provider begins to offer cable service or video service.
     (2) In any locality in which a competitive cable service provider offers cable service or a competitive video service provider offers video service, the competitive cable service provider or competitive video service provider shall calculate and pay the competitive cable service provider or competitive video service provider fee to the franchising entity with jurisdiction in that locality upon the franchising entity's written request. If the franchising entity makes such a request, the competitive cable service provider or competitive video service provider fee is due on a quarterly basis, forty-five days after the close of the quarter, and is calculated as a percentage of gross revenues. The franchising entity may not demand any additional fees or charges from the competitive cable service provider or competitive video service provider, and may not demand the use of any other calculation method.
     (3) The percentage to be applied against gross revenues pursuant to subsection (2) of this section is set by the franchising entity and identified in its written request equal to the percentage paid by the incumbent cable operator or five percent, whichever is less.
     (4)(a) For purposes of this section, "gross revenues" means all consideration of any kind or nature including, without limitation, cash, credits, property, and in-kind contributions received by the provider from subscribers for the provision of cable service over a cable system by a competitive cable provider or video service by a competitive video service provider within the franchising entity's jurisdiction. Competitive cable service providers and competitive video service providers are subject to and required to pay either the competitive cable service provider fee or the competitive video service provider fee, but never both the competitive cable service provider and competitive video service provider fees.
     (b) For purposes of this section, "gross revenues" does not include:
     (i) Revenues not actually received, even if billed, such as bad debt;
     (ii) Revenues received by any affiliate or any other person in exchange for supplying goods or services used by the provider to provide cable service or video service;
     (iii) Refunds, rebates, or discounts made to subscribers, leased access providers, advertisers, or any municipality or other unit of local government;
     (iv) Any revenues from services not classified as cable service or video service including, without limitation, revenue received from telecommunications services, revenue received from information services, revenue received in connection with advertising, revenue received in connection with home shopping services, or any other revenues attributed by the competitive cable service provider or competitive video service provider to noncable service or nonvideo service in accordance with any applicable laws, rules, regulations, standards, or orders;
     (v) Any revenue paid by subscribers to home shopping programmers directly from the sale of merchandise through any home shopping channel offered as part of the cable services or video services;
     (vi) The sale of cable services or video services for resale in which the purchaser is required to collect the five percent fee from the purchaser's customer;
     (vii) Any tax of general applicability imposed upon the competitive cable service provider or competitive video service provider or upon subscribers by a city, state, federal, or any other governmental entity and required to be collected by the competitive cable service provider or competitive video service provider and remitted to the taxing entity including, but not limited to, sales and use tax, gross receipts tax, excise tax, utility users tax, public service tax, and telecommunications taxes, and including the five percent fee specified in this section;
     (viii) The provision of cable services or video services to public institutions, public schools, or governmental entities at no charge;
     (ix) Any foregone revenue from the competitive cable service provider's or competitive video service provider's provision of free or reduced-cost video service to any person including, without limitation, any municipality and other public institutions or other institutions;
     (x) Sales of capital assets or sales of surplus equipment;
     (xi) Reimbursement by programmers of marketing costs incurred by the competitive cable service provider or competitive video service provider for the introduction or promotion of new programming;
     (xii) Directory or internet advertising revenue including, but not limited to, yellow pages, white pages, banner advertisement, and electronic publishing; or
     (xiii) Copyright fees paid to the United States copyright office.
     (5) At the request of a franchising entity, no more than once per year, the commission may perform reasonable audits of the competitive cable service provider's or competitive video service provider's calculation of the competitive cable service provider or competitive video service provider fee.
     (6) Any competitive cable service provider or competitive video service provider may identify and collect the amount of the competitive cable service provider fee or competitive video service provider fee as a separate line item on the regular bill of each subscriber.

NEW SECTION.  Sec. 5   (1) A franchising entity shall allow the holder of a state authorization to provide cable service or video service to install, construct, and maintain a communications network within a public right-of-way and shall provide the holder of a state authorization to provide cable service or video service with open, comparable, nondiscriminatory, and competitively neutral access to the public right-of-way.
     (2) A franchising entity may not discriminate against the holder of a state authorization to provide cable service or video service by denying any of the following:
     (a) The authorization or placement of a communications network in public rights-of-way;
     (b) Access to a building; or
     (c) A municipal utility pole attachment term.
     (3) A franchising entity may impose on a competitive cable service provider or competitive video service provider a permitting fee only to the extent it imposes such a fee on incumbent cable operators, and any fee may not exceed the actual, direct costs incurred by the franchising entity for issuing the relevant permit. In no event may a fee under this subsection be levied under the following circumstances: (a) If the competitive cable service provider or competitive video service provider already has paid a permit fee of any kind in connection with the same activity that would otherwise be covered by the permit fee under this subsection or is otherwise authorized by law or contract to place the facilities used by the competitive cable service provider or competitive video service provider in the public rights-of-way; or (b) for general revenue purposes.

NEW SECTION.  Sec. 6   (1) A competitive cable service provider or competitive video service provider that has been granted a state authorization to provide cable service or video service may not 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.
     (2) The holder of a state authorization to provide cable service or video service may use direct-to-home satellite service or another alternative technology that provides comparable content, service, and functionality to satisfy the requirements of this section.

NEW SECTION.  Sec. 7   (1) This chapter is intended to be consistent with the federal cable act, 47 U.S.C. Sec. 521 et seq.
     (2) Except as otherwise provided in sections 2 through 6 of this act, this chapter does not prevent a competitive cable service provider, competitive video service provider, cable operator, or franchising entity from seeking clarification of its rights and obligations under federal law or to exercise any right or authority under federal or state law.

Sec. 8   RCW 35.21.860 and 2000 c 83 s 8 are each amended to read as follows:
     (1) No city or town may impose a franchise fee or any other fee or charge of whatever nature or description upon the light and power, or gas distribution businesses, as defined in RCW 82.16.010, or telephone business, as defined in RCW 82.04.065, or service provider for use of the right of way, except:
     (a) A tax authorized by RCW 35.21.865 may be imposed;
     (b) A fee may be charged to such businesses or service providers that recovers actual administrative expenses incurred by a city or town that are directly related to receiving and approving a permit, license, and franchise, to inspecting plans and construction, or to the preparation of a detailed statement pursuant to chapter 43.21C RCW;
     (c) Taxes permitted by state law on service providers; and
     (d) ((Franchise requirements and fees for cable television services as allowed by federal law; and
     (e))) A site-specific charge pursuant to an agreement between the city or town and a service provider of personal wireless services acceptable to the parties for:
     (i) The placement of new structures in the right of way regardless of height, unless the new structure is the result of a mandated relocation in which case no charge will be imposed if the previous location was not charged;
     (ii) The placement of replacement structures when the replacement is necessary for the installation or attachment of wireless facilities, and the overall height of the replacement structure and the wireless facility is more than sixty feet; or
     (iii) The placement of personal wireless facilities on structures owned by the city or town located in the right of way. However, a site-specific charge shall not apply to the placement of personal wireless facilities on existing structures, unless the structure is owned by the city or town.
     A city or town is not required to approve the use permit for the placement of a facility for personal wireless services that meets one of the criteria in this subsection absent such an agreement. If the parties are unable to agree on the amount of the charge, the service provider may submit the amount of the charge to binding arbitration by serving notice on the city or town. Within thirty days of receipt of the initial notice, each party shall furnish a list of acceptable arbitrators. The parties shall select an arbitrator; failing to agree on an arbitrator, each party shall select one arbitrator and the two arbitrators shall select a third arbitrator for an arbitration panel. The arbitrator or arbitrators shall determine the charge based on comparable siting agreements involving public land and rights of way. The arbitrator or arbitrators shall not decide any other disputed issues, including but not limited to size, location, and zoning requirements. Costs of the arbitration, including compensation for the arbitrator's services, must be borne equally by the parties participating in the arbitration and each party shall bear its own costs and expenses, including legal fees and witness expenses, in connection with the arbitration proceeding.
     (2) Subsection (1) of this section does not prohibit franchise fees imposed on an electrical energy, natural gas, or telephone business, by contract existing on April 20, 1982, with a city or town, for the duration of the contract, but the franchise fees shall be considered taxes for the purposes of the limitations established in RCW 35.21.865 and 35.21.870 to the extent the fees exceed the costs allowable under subsection (1) of this section.

Sec. 9   RCW 35.99.020 and 2000 c 83 s 2 are each amended to read as follows:
     A city or town may grant, issue, or deny permits for the use of the right of way by a service provider for installing, maintaining, repairing, or removing facilities for telecommunications services ((or cable television services)) pursuant to ordinances, consistent with chapter 83, Laws of 2000.

Sec. 10   RCW 35.102.020 and 2003 c 79 s 2 are each amended to read as follows:
     Chapter 79, Laws of 2003 does not apply to taxes on any service that historically or traditionally has been taxed as a utility business for municipal tax purposes, such as:
     (1) A light and power business or a natural gas distribution business, as defined in RCW 82.16.010;
     (2) A telephone business, as defined in RCW 82.04.065;
     (3) ((Cable television services;
     (4))) Sewer or water services;
     (((5))) (4) Drainage services;
     (((6))) (5) Solid waste services; or
     (((7))) (6) Steam services.

Sec. 11   RCW 80.36.370 and 1990 c 118 s 1 are each amended to read as follows:
     The commission shall not regulate the following:
     (1) ((One way broadcast or cable television transmission of television or radio signals;
     (2))) Private telecommunications systems;
     (((3))) (2) Telegraph services;
     (((4))) (3) Any sale, lease, or use of customer premises equipment except such equipment as is regulated on July 28, 1985;
     (((5))) (4) Private shared telecommunications services, unless the commission finds, upon notice and investigation, that customers of such services have no alternative access to local exchange telecommunications companies. If the commission makes such a finding, it may require the private shared telecommunications services provider to make alternative facilities or conduit space available on reasonable terms and conditions at reasonable prices;
     (((6))) (5) Radio communications services provided by a regulated telecommunications company, except that when those services are the only voice grade, local exchange telecommunications service available to a customer of the company the commission may regulate the radio communication service of that company.

NEW SECTION.  Sec. 12   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 13   Sections 1 through 7 of this act constitute a new chapter in Title 80 RCW.