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SB-28 Rural Broadband and Digital Infrastructure Video Competition Reform Act of 2021.(2021-2022)

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Date Published: 05/04/2021 09:00 PM
SB28:v95#DOCUMENT

Amended  IN  Senate  May 04, 2021
Amended  IN  Senate  April 21, 2021
Amended  IN  Senate  April 05, 2021
Amended  IN  Senate  February 10, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 28


Introduced by Senator Caballero
(Coauthor: Senator Wilk)(Coauthors: Assembly Members Arambula and Salas)

December 07, 2020


An act to add the heading of Article 1 (commencing with Section 11545) to, and to add Article 2 (commencing with Section 11548.5) to, Chapter 5.6 of Part 1 of Division 3 of Title 2 of the Government Code, and to amend Sections 914.3, 5820, 5840, 5860, 5870, 5880, 5890, and 5930 of, and to add Section 5895 to, and to repeal and add Section 5960 of, the Public Utilities Code, relating to communications.


LEGISLATIVE COUNSEL'S DIGEST


SB 28, as amended, Caballero. Rural Broadband and Digital Infrastructure Video Competition Reform Act of 2021.
(1) Existing law establishes in state government the Department of Technology and makes it responsible for approval and oversight of information technology projects. Existing law requires the Director of General Services to compile and maintain an inventory of state-owned real property that may be available for lease to providers of wireless telecommunications services for location of wireless telecommunications facilities.
This bill, the Rural Broadband and Digital Infrastructure Video Competition Reform Act of 2021, would similarly require the Department of Technology, in collaboration with other state agencies, to compile an inventory of state-owned resources, as defined, that may be available for use in the deployment of broadband networks in rural, unserved, and underserved communities, except as specified. The bill would require the department to collaborate on the development of a standardized agreement to enable those state-owned resources to be leased or licensed for that purpose. The bill would require the department to post the inventory and agreement on the department’s internet website, update them as necessary, and provide technical assistance related to them to state departments and agencies.
(2) Existing federal law authorizes a governmental entity empowered by state or local law to grant a franchise (franchising authority) to provide cable service and prohibits providing cable service without a franchise. Federal law requires that a franchising authority ensure that access to cable service is not denied to any group or potential residential cable subscribers because of the income of the residents or the local area in which the group resides. Existing federal law prohibits a state or local government from subjecting a cable operator to regulation as a common carrier or utility by reason of providing any cable service, places limits on a state’s authority to regulate the rates of cable operators, and prohibits a franchising authority from establishing requirements for video programing or other information services to be supplied by a cable operator.
Existing law, the Digital Infrastructure and Video Competition Act of 2006, establishes a procedure for the issuance of state franchises for the provision of video service, defined to include cable service and open-video systems, administered by the Public Utilities Commission. The act provides that the holder of a state franchise is not a public utility as a result of providing video service and does not provide the commission with authority to regulate the rates, terms, and conditions of video service except as explicitly set forth in the act. The act authorizes the commission to suspend or revoke a franchise if its holder fails to comply with the act’s provisions, and does not preclude the state from changing the terms of a franchise. The act prohibits a franchise holder from discriminating against or denying access to low-income subscribers, requires certain franchise holders to meet specified deployment standards, and authorizes the commission and a court to impose fines and to revoke a franchise for violations of those provisions. The act requires a franchise holder to annually report to the commission regarding the availability of and subscription to broadband and video service.
This bill would prohibit a franchise holder from discriminating against or denying access to service to any group of potential residential subscribers, regardless of their income, and would authorize the commission to suspend or revoke a franchise for a violation of this prohibition. The bill would require the commission to consult with the local governments within the franchisee’s service territory regarding remedies for the service impacts resulting from violations of these requirements as part of any proceeding to suspend or revoke the franchise. The bill would delete the provision in the act stating that the holder of a state franchise is not a public utility as a result of providing video service and the provision stating that the act does not provide the commission with authority to regulate the rates, terms, and conditions of video service except as explicitly set forth in the act. The bill would require the commission to collect granular data on the actual locations served by the holder of a state franchise, adopt customer service requirements for a holder of a state franchise and adjudicate any customer complaints, and assess the build out obligations of a holder of a state franchise to further competition and expansion of video service, as specified. The bill would repeal the existing reporting requirements applicable to a franchise holder and instead require that a franchise holder report specified information relative to the locations that the holder made broadband service available and that received broadband service and information relative to the locations that the holder made video service available and that received video service. The bill would prohibit the commission from publicly disclosing any personally identifiable information collected pursuant to this reporting requirement.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Rural Broadband and Digital Infrastructure Video Competition Reform Act of 2021.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) The COVID-19 pandemic has put a spotlight on inequality caused by California’s persistent digital divide.
(2) Without adequate broadband access, students struggle with distance learning, rural residents must travel hours to medical appointments, and businesses that can no longer depend on local foot traffic shut down because they are not competing in the digital marketplace.
(3) For years, California’s policymakers and regulators have tried to encourage equal broadband network development across California to eliminate the digital divide.
(4) The COVID-19 pandemic has made clear that the effort to eliminate the digital divide has failed, as an estimated 2.3 million Californians still lack broadband access, according to a recent Little Hoover Commission report.
(5) Rural communities with low population density and low-income residents still lack broadband.
(6) Over 2 million people are struggling to participate in the 21st century way of life - children required to learn remotely, employees required to work from home, and businesses forced to conduct online sales and services – because of inferior or nonexistent broadband.
(7) The reasons for the lack of ubiquitous broadband coverage come down to a few systemic challenges, starting with federal rules that classify broadband differently than other life-sustaining utilities like energy, water, or even telecommunications.
(8) The state has an interest in ensuring that rural, unserved, and underserved communities receive broadband services through private broadband providers, public agencies, public-private partnerships, or any combination thereof.
(b) It is the intent of the Legislature that the Rural Broadband and Digital Infrastructure Video Competition Reform Act of 2021 help rural, unserved, and underserved communities build broadband networks that reach all Californians lacking access to high-speed internet connection and service.

SEC. 3.

 The heading of Article 1 (commencing with Section 11545) is added to Chapter 5.6 of Part 1 of Division 3 of Title 2 of the Government Code, to read:
Article  1. Powers and Duties, Generally

SEC. 4.

 Article 2 (commencing with Section 11548.5) is added to Chapter 5.6 of Part 1 of Division 3 of Title 2 of the Government Code, to read:
Article  2. California Resources for Broadband Networks

11548.5.
 (a) The Department of Technology, in collaboration with the Department of General Services, the State Department of Education, the Department of Transportation, and other relevant state agencies, shall do both of the following:
(1) Compile an inventory of state-owned resources that may be available for use in the deployment of broadband networks in rural, unserved, and underserved communities. The term “state-owned resources,” as used in this section, includes, but is not limited to, state-owned real properties, rights-of-way, spectrums, facilities and structures, infrastructure, programs, and other resources suitable for that purpose. The term does not include any state-owned resources that, if used for that purpose, would be inimical to the public health, safety, or welfare.
(2) Develop a standardized agreement to enable state-owned resources to be leased or licensed for the purpose described in paragraph (1). The agreement shall include, but not be limited to, provisions that ensure the broadband network developer uses the state-owned resource to provide broadband access to rural, unserved, or underserved communities and deploys broadband infrastructure that has the capacity to provide service at a minimum speed of 100 megabits per second (mbps) downstream. The agreement shall not require moneys from the General Fund to be used for the purposes of this article.
(b) The Department of Technology shall post on its internet website the inventory of state-owned resources and the standardized agreement described in subdivision (a) and shall update them as necessary. The department shall provide technical assistance to state departments and agencies for the purposes of this article.

SEC. 5.

 Section 914.3 of the Public Utilities Code is amended to read:

914.3.
 By December 31 of each year, the commission shall submit to the Governor and the Legislature a report that includes, based on yearend data, on an aggregated basis, the information submitted by holders pursuant to Section 5960. All information reported by the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583. No individually identifiable customer or subscriber information shall be subject to public disclosure.

SEC. 6.

 Section 5820 of the Public Utilities Code is amended to read:

5820.
 (a) Nothing in this division shall be deemed as creating a vested right in a state-issued franchise by the franchise holder or its affiliates that would preclude the state from amending the provisions that establish the terms and conditions of a franchise.
(b) Nothing in this division shall be construed to eliminate or reduce a telephone corporation’s or video service provider’s obligations under any applicable state or federal environmental protection laws. The local entity shall serve as the lead agency for any environmental review under this division and may impose conditions to mitigate environmental impacts of the applicant’s use of the public rights-of-way that may be required pursuant to the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).

SEC. 7.

 Section 5840 of the Public Utilities Code is amended to read:

5840.
 (a) The commission is the sole franchising authority for a state franchise to provide video service under this division. Neither the commission nor any local 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 requirement on any holder of a state franchise except as expressly provided in this division. Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code shall not apply to holders of a state franchise.
(b) Any person or corporation who seeks to provide video service in this state for which a franchise has not already been issued, after January 1, 2008, shall file an application for a state franchise with the commission. The commission 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.
(c) No person or corporation shall be eligible for a state-issued franchise, including a franchise obtained from renewal or transfer of an existing franchise, if that person or corporation is in violation of any final nonappealable order relating to either the Cable Television and Video Provider Customer Service and Information Act (Article 3.5 (commencing with Section 53054) of Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code) or the Video Customer Service Act (Article 4.5 (commencing with Section 53088) of Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code).
(d) The application for a state franchise shall be made on a form prescribed by the commission and shall include all of the following:
(1) A sworn affidavit, signed under penalty of perjury 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 or its affiliates 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 5890.
(ii) A statement that the applicant will abide by all applicable consumer protection laws and rules as provided in Section 5900.
(iii) A statement that the applicant will remit the fee required by subdivision (a) of Section 5860 to the local entity.
(iv) A statement that the applicant will provide PEG channels and the required funding as required by Section 5870.
(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 commission.
(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 video service area footprint that is proposed to be served, as identified by a collection of United States Census Bureau Block numbers (13 digit) or a geographic information system digital boundary meeting or exceeding national map accuracy standards. This description shall include the socioeconomic status information of all residents within the service area footprint.
(7) If the applicant is a telephone corporation or an affiliate of a telephone corporation, as defined in Section 234, a description of the territory in which the company provides telephone service. The description shall include socioeconomic status information of all residents within 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 operate the proposed system and promptly repair any damage to the public right-of-way caused by the applicant. To accomplish these requirements, the commission may require a bond.
(e) The commission may require that a corporation with wholly owned subsidiaries or affiliates is eligible only for a single state-issued franchise and prohibit the holding of multiple franchises through separate subsidiaries or affiliates. The commission may establish procedures for a holder of a state-issued franchise to amend its franchise to reflect changes in its service area.
(f) The commission shall commence accepting applications for a state franchise no later than April 1, 2007.
(g) (1) The commission shall notify an applicant for a state franchise and any affected local entities whether the applicant’s application is complete or incomplete before the 30th calendar day after the applicant submits the application.
(2) If the commission finds the application is complete, it shall issue a state franchise before the 14th calendar day after that finding.
(3) If the commission 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 commission shall have 30 calendar days from the date the application is amended to determine its completeness.
(4) The failure of the commission to notify the applicant of the completeness or incompleteness of the application before the 44th calendar day after receipt of an application shall be deemed to constitute issuance of the certificate applied for without further action on behalf of the applicant.
(h) The state franchise issued by the commission shall contain all of the following:
(1) A grant of authority to provide video service in the service area footprint as requested in the application.
(2) A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under subdivision (p), 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.
(i) The state franchise issued by the commission may be terminated by the video service provider by submitting at least 90 days prior written notice to subscribers, local entities, and the commission.
(j) It is unlawful to provide video service without a state or locally issued franchise.
(k) Subject to the notice requirements of this division, 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 commission and is in compliance with Section 5970.
(l) In connection with, or as a condition of, receiving a state franchise, the commission shall require a holder to notify the commission and any applicable local entity within 14 business days of any of the following changes involving the holder of 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 commission a certified copy of either of the following:
(A) The proposed amendment to the 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 division. The holder shall identify both of the following:
(A) The number of subscribers in the service area covered by the state franchise being terminated.
(B) The method by which the holder’s subscribers were notified of the termination.
(6) A change in one or more of the service areas of the holder of a state franchise pursuant to this division 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.
(m) Prior to offering video service in a local entity’s jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entity’s jurisdiction. The notice shall be given at least 10 days, but no more than 60 days, before the video service provider begins to offer service.
(n) Any video service provider that currently holds a franchise with a local franchising entity is entitled to seek a state franchise in the area designated in that franchise upon meeting any of the following conditions:
(1) The expiration, prior to any renewal or extension, of its local franchise.
(2) A mutually agreed upon date set by both the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(3) When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (m) to a local jurisdiction that it intends to initiate providing video service in all or part of that jurisdiction, a video service provider operating under a franchise issued by a local franchising entity may elect to obtain a state franchise to replace its locally issued franchise. The franchise issued by the local franchising entity shall terminate and be replaced by a state franchise when the commission issues a state franchise for the video service provider that includes the entire service area served by the video service provider and the video service provider notifies the local entity that it will begin providing video service in that area under a state franchise.
(o) Notwithstanding any rights to the contrary, an incumbent cable operator opting into a state franchise under this section shall continue to serve all areas as required by its local franchise agreement existing on January 1, 2007, until that local franchise otherwise would have expired. However, an incumbent cable operator that is also a telephone corporation with less than 1,000,000 telephone customers in California and is providing video service in competition with another incumbent cable operator shall not be required to provide service beyond the area in which it is providing video service as of January 1, 2007.
(p) (1) There is hereby adopted a state franchise fee payable as rent or a toll for the use of the public rights-of-way by holders of the state franchise issued pursuant to this division. The amount of the state franchise fee shall be 5 percent of gross revenues, as defined in subdivision (d) of Section 5860, or the percentage applied by the local entity to the gross revenue of the incumbent cable operator, whichever is less. If there is no incumbent cable operator or upon the expiration of the incumbent cable operator’s franchise, the amount of the state franchise fee shall be 5 percent of gross revenues, as defined in subdivision (d) of Section 5860, unless the local entity adopts an ordinance setting the amount of the franchise fee at less than 5 percent.
(2) (A) The state franchise fee shall apply equally to all video service providers in the local entity’s jurisdiction.
(B) Notwithstanding subparagraph (A), if the video service provider is leasing access to a network owned by a local entity, the local entity may set a franchise fee for access to the network different from the franchise fee charged to a video service provider for access to the rights-of-way to install its own network.

SEC. 8.

 Section 5860 of the Public Utilities Code is amended to read:

5860.
 (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, adopted pursuant to subdivision (p) of Section 5840, as provided in this section. The obligation to remit the 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 (h) 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, as defined in subdivision (d), derived from the provision of video service 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. The fee shall be calculated as a percentage of the holder’s gross revenues, as defined in subdivision (d). The fee remitted to the local entity pursuant to this section may be used by the local entity for any lawful purpose.
(b) The state franchise fee shall be a percentage of the holder’s gross revenues, as defined in subdivision (d).
(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 division 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 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 insufficient fund fees.
(2) Franchise 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 franchise 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 except that forgone revenue chosen not to be received in exchange for trades, barters, services, or other items of value shall be included in gross revenue.
(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 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 of 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 franchise fee from the reseller’s subscribers.
(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 specific, identifiable 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 the 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 video service. Where the holder of a state franchise or any affiliate bundles, integrates, ties, or combines video services with nonvideo services creating a bundled package, so that subscribers pay a single fee for more than one class of service or receive a discount on video services, gross revenues shall be determined based on an equal allocation of the package discount, that is, the total price of the individual classes of service at advertised rates compared to the package price, among all classes of service comprising the package. The holder’s offering a bundled package shall not be deemed a promotional activity. If the holder of a state franchise does not offer any component of the bundled package separately, the holder of a state franchise shall declare a stated retail value for each component based on reasonable comparable prices for the product or service for the purpose of determining franchise fees based on the package discount.
(g) For the purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting principals principles as that which the video service provider uses in determining revenues for the purpose of reporting to national and state regulatory agencies.
(h) The state franchise fee shall be remitted to the applicable local entity quarterly, within 45 days after the end of the quarter for that 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.
(i) 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 this section. 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 franchise, shall be made within three 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.
(j) 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.

SEC. 9.

 Section 5870 of the Public Utilities Code is amended to read:

5870.
 (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 public, educational, and governmental access (PEG) channels, as are activated and provided by the incumbent cable operator that has simultaneously activated and provided the greatest number of PEG channels within the local entity under the terms of any franchise in effect in the local entity as of January 1, 2007. For the purposes of this section, a PEG channel is deemed activated if it is being utilized for PEG programming within the local entity’s jurisdiction for at least eight hours per day. The holder shall have three months from the date the local entity requests the PEG channels to designate the capacity. However, the three-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 section.
(b) The PEG channels shall be for the exclusive use of the local entity or its designee to provide public, educational, and governmental channels. The PEG channels shall be used only for noncommercial purposes. However, advertising, underwriting, or sponsorship recognition may be carried on the channels for the purpose of funding PEG-related activities. The PEG channels shall all be carried on the basic service tier. To the extent feasible, the 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) (1) If less than three PEG channels are activated and provided within the local entity as of January 1, 2007, a local entity whose jurisdiction lies within the authorized service area of the holder of a state franchise may initially request the holder to designate not more than a total of three PEG channels.
(2) The holder shall have three months from the date of the request to designate the capacity. However, the three-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 section.
(d) (1) The holder shall provide an additional PEG channel when the nonduplicated locally produced video programming televised on a given channel exceeds 56 hours per week 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.
(2) For the purposes of this section, “locally produced video programming” means programming produced or provided by any local resident, the local entity, or any local public or private agency that provides services to residents of the franchise area; or any transmission of a meeting or proceeding of any local, state, or federal governmental entity.
(e) Any PEG channel provided pursuant to this section that is not utilized by the local entity for at least eight hours per day as measured on a quarterly basis may no longer be made available to the local entity, and may be programmed 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 or its designee 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) (1) 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 compatible with the holder’s network, if the local entity produces or maintains the PEG programming in that manner or form. If the local entity does not produce or maintain PEG programming in that manner or form, then the local entity may submit or provide PEG programming 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. If the holder is required to change the form of the transmission, the local entity shall permit the holder to do so in a manner that is most economical to the holder.
(2) 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. The holder may carry the transmission, content, or programming outside of the local entity’s jurisdiction if the holder agrees to pay the local entity or its designee any incremental licensing costs incurred by the local entity or its designee associated with that transmission. A local entity shall not enter into a licensing agreement that imposes higher proportional costs for transmission to subscribers outside the local entity’s jurisdiction.
(3) The PEG signal shall be receivable by all subscribers, whether they receive digital or analog service, or a combination thereof, without the need for any equipment other than the equipment necessary to receive the lowest cost tier of service. The PEG access capacity provided shall be of similar quality and functionality to that offered by commercial channels on the lowest cost tier of service unless the signal is provided to the holder at a lower quality or with less functionality.
(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 the 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. The cost of any interconnection shall be borne by the holder requesting the interconnection unless otherwise agreed to by the parties.
(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 the PEG channels required under subdivisions (a) to (i), inclusive, the holder shall reserve, designate, and, upon request, activate a channel for carriage of state public affairs programming administered by the state.
(k) All obligations to provide and support PEG channel facilities and institutional networks and to provide cable services to community buildings contained in a locally issued franchise existing on December 31, 2006, shall continue until the local franchise expires, until the term of the franchise would have expired if it had not been terminated pursuant to subdivision (n) of Section 5840, or until January 1, 2009, whichever is later.
(l) After January 1, 2007, 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 costs of public, educational, and government access channel facilities or institutional networks, the local entity shall divide those cash payments 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 costs of PEG channel facilities. All video service providers and the incumbent cable operator shall be subject to the same requirements for recurring payments for the support of PEG channel facilities and institutional networks, whether expressed as a percentage of gross revenue or as an amount per subscriber, per month, or otherwise.
(m) In determining the fee described in subdivision (l) 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 within 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 PEG 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.
(n) A local entity may, by ordinance, establish a fee to support PEG channel facilities consistent with federal law that would become effective subsequent to the expiration of any fee imposed pursuant to subdivision (l). If no such fee exists, the local entity may establish the fee at any time. The fee shall not exceed 1 percent of the holder’s gross revenues, as defined in Section 5860. Notwithstanding this limitation, if, on December 31, 2006, a local entity is imposing a separate fee to support PEG channel facilities that is in excess of 1 percent, that entity may, by ordinance, establish a fee no greater than that separate fee, and in no event greater than 3 percent, to support PEG activities. The ordinance shall expire, and may be reauthorized, upon the expiration of the state franchise.
(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 be barred from the provision of service or be required to terminate service as a result of that dispute or enforcement action.

SEC. 10.

 Section 5880 of the Public Utilities Code is amended to read:

5880.
 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 the holder’s network. Any provision in a locally issued franchise authorizing local entities to provide local emergency notifications shall remain in effect, and shall apply to all holders of a state-issued franchise in the same local area, for the duration of the locally issued franchise, until the term of the franchise would have expired were the franchise not terminated pursuant to subdivision (n) of Section 5840, or until January 1, 2009, whichever is later.

SEC. 11.

 Section 5890 of the Public Utilities Code is amended to read:

5890.
 (a) A holder of a state franchise under this division shall not discriminate against or deny access to service to any group of potential residential subscribers.
(b) (1) Local governments may bring complaints to the state franchising authority that a holder is not offering video service as required by this section, or the state franchising authority may open an investigation on its own motion. The state franchising authority shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with the provisions of this division.
(2) As part of any proceeding to suspend or revoke the franchise pursuant to this section, the commission shall consult with the local governments within the franchisee’s service territory regarding remedies for the service impacts resulting from violations of this section.
(c) As used in this section, the following definitions shall apply:
(1) “Access” means that the holder is capable of providing video service at the household address using any technology, other than direct-to-home satellite service, providing two-way broadband internet capability and video programming, content, and functionality, regardless of whether any customer has ordered service or whether the owner or landlord or other responsible person has granted access to the household. If more than one technology is utilized, the technologies shall provide similar two-way broadband internet accessibility and similar video programming. “Access” requires that the holder is capable of providing these services at the household level to all households in a census block.
(2) “Household” means, consistent with the United States Census Bureau, a house, an apartment, a mobilehome, a group of rooms, or a single room that is intended for occupancy as separate living quarters. Separate living quarters are those in which the occupants live and eat separately from any other persons in the building and which have direct access from the outside of the building or through a common hall.

SEC. 12.

 Section 5895 is added to the Public Utilities Code, to read:

5895.
 (a) The commission shall collect granular data on the actual locations served by the holder of a state franchise pursuant to Section 5960.
(b) The commission shall adopt customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c) The commission shall assess the build out obligations of a holder of a state franchise to further competition and expansion of video service, including all of the following:
(1) Review whether the holder of a state franchise offers service to all locations within their franchise territory.
(2) Review whether the holder of a state franchise may reasonably build out service to areas outside of their franchise territories.
(3) Take into consideration the reasonableness of the build out timelines and costs.

SEC. 13.

 Section 5930 of the Public Utilities Code is amended to read:

5930.
 (a) Notwithstanding any other provision of this division, any video service provider that currently holds a franchise with a local franchising entity in a county that is a party, either alone or in conjunction with any other local franchising entity located in that county, to a stipulation and consent judgment executed by the parties thereto and approved by a federal district court shall neither be entitled to seek a state franchise in any area of that county, including any unincorporated area and any incorporated city of that county, nor abrogate any existing franchise before July 1, 2014. Prior to July 1, 2014, the video service provider shall continue to be exclusively governed by any existing franchise with a local franchising entity for the term of that franchise and any and all issues relating to renewal, transfer, or otherwise in relation to that franchise shall be resolved pursuant to that existing franchise and otherwise applicable federal and local law. This subdivision shall not be deemed to extend any existing franchise beyond its term.
(b) When an incumbent cable operator is providing service under an expired franchise or a franchise that expires before January 2, 2008, the local entity may extend that franchise on the same terms and conditions through January 2, 2008. A state franchise issued to any incumbent cable operator shall not become operative prior to January 2, 2008.
(c) When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (m) of Section 5840 to a local entity, the local franchising entity may require all incumbent cable operators to seek a state franchise and shall terminate the franchise issued by the local franchising entity when the commission issues a state franchise for the video service provider that includes the entire service area served by the video service provider and the video service provider notifies the local entity that it will begin providing video service in that area under a state franchise.

SEC. 14.

 Section 5960 of the Public Utilities Code is repealed.

SEC. 15.

 Section 5960 is added to the Public Utilities Code, to read:

5960.
 (a) A holder of a state franchise shall submit the following to the commission, in the form, and upon the schedule, the commission designates, but at least once, by April 1, each year:
(1) Information relative to the locations that the holder made broadband service available and that received broadband service during the previous year, or other time period designated by the commission. The information may be submitted as shapefiles based on a dataset of the locations of all buildings where broadband service was made available, or a similar reporting method approved by the commission. The commission may require the information to be based on street addresses, assessors’ parcel numbers, latitude and longitude, or other method for designating locations that provides reasonably similar granularity. For each location, the information shall show all of the following:
(A) The upload and download speeds, or combination of upload and download speeds, offered and, for those locations receiving broadband service, the upload and download speeds being provided. The commission may designate ranges of speeds to be included in the information reported to the commission.
(B) The technology or technologies used to provide broadband service at each location.
(C) The price, with and without promotional or bundled service offerings, at which broadband service was offered at each upstream and downstream speed combination.
(2) Information relative to the locations that the holder made video service available and that received video service during the previous year, or other time period designated by the commission. The commission may require the holder to report additional information relative to video services offered or provided by the holder.
(b) The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.

SEC. 16.

 The Legislature finds and declares that Section 15 of this act, which adds Section 5960 of the Public Utilities Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
This act furthers the public interest by requiring the reporting of specific, detailed, granular information to the Public Utilities Commission in order to enable the commission to act in an informed manner to promote advanced communications, while protecting the privacy of individual consumers.