II 

109TH CONGRESS 

2D SESSION S. 2989 

To reform the franchise procedure relating to cable service and video service, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2006 

Mrs. HUTCHISON introduced the following bill; which was read twice and 

referred to the Committee on Commerce, Science, and Transportation 

A BILL 

To reform the franchise procedure relating to cable service 

and video service, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Franchise Reform Act 

5 of 2006’’. 

6 SEC. 2. STATE CABLE AND VIDEO FRANCHISING. 

7 Part III of title VI of the Communications Act of 

8 1934 (47 U.S.C. 541 et seq.) is amended by adding at 

9 the end the following new section: 


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1 ‘‘SEC. 630. FRANCHISING AUTHORITY. 

2 ‘‘(a) STATE COMMISSIONS DESIGNATED AS FRAN3 CHISING AUTHORITY.—The State Commission of each 

4 State shall be designated as the franchising authority for 

5 any state-issued franchise for the provision of cable service 

6 or video service in that State. 

7 ‘‘(b) STATE AUTHORIZATION TO PROVIDE CABLE

8 SERVICE OR VIDEO SERVICE.— 

9 ‘‘(1) APPLICATION FOR FRANCHISE.— 

10 ‘‘(A) IN GENERAL.—An entity or person 

11 seeking to provide cable service or video service 

12 in a State shall file an application for a state13 issued certificate of franchise authority with the 

14 State Commission. 

15 ‘‘(B) EXISTING FRANCHISES.—Except as 

16 provided in subsection (c), an entity providing 

17 cable service or video service under an existing 

18 franchise agreement with a municipality shall 

19 not be subject to the requirement under sub20 paragraph (A) with respect to such municipality 

21 until such franchise agreement expires. 

22 ‘‘(2) NOTICE.— 

23 ‘‘(A) IN GENERAL.—Not later than 15 

24 business days after an applicant for a state25 issued certificate of franchise authority submits 

26 an affidavit, a State Commission shall notify 


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1 such applicant whether such affidavit is com2 plete. 

3 ‘‘(3) AFFIDAVIT.—For purposes of this sub4 section the term ‘affidavit’ means an application for 

5 a state-issued certificate of franchise authority— 

6 ‘‘(A) submitted by an entity or person; 

7 ‘‘(B) signed by such person or the officer 

8 or general partner of an entity; and 

9 ‘‘(C) that affirms— 

10 ‘‘(i) that such entity or person has 

11 filed, or will timely file with the Commis12 sion all forms required by the Commission; 

13 ‘‘(ii) that such entity or person agrees 

14 to comply with all applicable Federal and 

15 State statutes and regulations; 

16 ‘‘(iii) that such entity or person 

17 agrees to comply with all applicable munic18 ipal regulations regarding the use and oc19 cupation of public rights-of-way in the de20 livery of cable service or video service, in21 cluding the police powers of the municipali22 ties in which the service is delivered; 

23 ‘‘(iv) a description of the service area 

24 footprint to be served within the munici25 pality, if such description is applicable, 


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1 otherwise the municipality to be served by 

2 such service, including designations of un3 incorporated areas, which description 

4 shall— 

5 ‘‘(I) be updated by such entity or 

6 person prior to the expansion of cable 

7 service or video service to a previously 

8 undesignated service area; and 

9 ‘‘(II) upon such expansion, pro10 vide notice to the State Commission of 

11 the service area to be served by the 

12 applicant; and 

13 ‘‘(v) the location of the principal place 

14 of business of such entity or person and 

15 the names of the principal executive offi16 cers of such entity. 

17 ‘‘(4) ISSUANCE.—Not later than 17 business 

18 days after a State Commission receives a completed 

19 affidavit from an applicant, the State Commission 

20 shall issue a certificate of franchise authority to 

21 such applicant. 

22 ‘‘(5) CONTENTS OF CERTIFICATE OF FRAN23 CHISE AUTHORITY.—A certificate of franchise au24 thority issued by a State Commission shall con25 tain— 


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1 ‘‘(A) a grant of authority to provide cable 

2 service or video service as requested in the ap3 plication; 

4 ‘‘(B) a grant of authority to use and oc5 cupy the public rights-of-way in the delivery of 

6 that service, subject to the laws of the State in 

7 which the State Commission is located, includ8 ing the police powers of the municipalities in 

9 which the service is delivered; and 

10 ‘‘(C) a statement that the grant of author11 ity to operate a franchise under this section 

12 shall be subject to lawful operation of cable 

13 service or video service by any applicant for 

14 such authority, or any successor in interest to 

15 such applicant. 

16 ‘‘(6) TRANSFER.— 

17 ‘‘(A) IN GENERAL.—A certificate of fran18 chise authority issued by a State Commission 

19 under this section shall be fully transferable to 

20 any successor in interest to the applicant to 

21 which such certificate was initially granted. 

22 ‘‘(B) NOTICE.—Not later than 14 business 

23 days after the completion of any transfer under 

24 subparagraph (A), a notice of transfer shall be 

25 filed with each relevant— 


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1 ‘‘(i) State Commission; and 

2 ‘‘(ii) municipality. 

3 ‘‘(7) TERMINATION.—A certificate of franchise 

4 authority issued by a State Commission under this 

5 section may be terminated by a cable service pro6 vider or video service provider by submitting a notice 

7 of termination to such State Commission. 

8 ‘‘(c) ELIGIBILITY FOR UNIFORM STATE-ISSUED

9 FRANCHISE.— 

10 ‘‘(1) PRIOR FRANCHISE AGREEMENT.—Subject 

11 to paragraphs (2) and (3), a cable service provider 

12 or a video service provider that currently has or had 

13 previously received a franchise to provide cable serv14 ice or video service with respect to a municipality 

15 may not be eligible to seek a state-issued certificate 

16 of franchise authority under this section as to such 

17 municipality until the date of expiration of any exist18 ing franchise agreement between such provider and 

19 such municipality. 

20 ‘‘(2) SMALL INCUMBENT CABLE SERVICE PRO21 VIDERS.— 

22 ‘‘(A) IN GENERAL.—A cable service pro23 vider or video service provider that is not an in24 cumbent cable service provider and serves fewer 

25 than 40 percent of the total cable customers in 


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1 a particular local franchise area may elect to 

2 terminate that local franchise and seek a state3 issued certificate of franchise under subsection 

4 (b) by providing written notice to the relevant 

5 State Commission and any affected munici6 pality not later than 120 days after the date of 

7 enactment of the Franchise Reform Act of 

8 2006. 

9 ‘‘(B) TERMINATION DATE.—Any local 

10 franchise terminated in accordance with sub11 paragraph (A) shall terminate on the date a 

12 State Commission issues a state-issued certifi13 cate of franchise authority. 

14 ‘‘(3) REMITTANCE OF UNPAID FRANCHISE

15 FEES.— 

16 ‘‘(A) IN GENERAL.—A cable service pro17 vider that serves fewer than 40 percent of the 

18 total cable customers in a local franchise area 

19 and that elects under paragraph (2) to termi20 nate an existing local franchise shall be respon21 sible for remitting to the affected local fran22 chise authority not later than the 91st day after 

23 the date the local franchise is terminated any 

24 accrued but unpaid franchise fees due under 

25 the terminated franchise. 


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1 ‘‘(B) CREDITS.—If a cable service provider 

2 has credit remaining from prepaid franchise 

3 fees, such provider may deduct the amount of 

4 the remaining credit from any future fees or 

5 taxes such provider is required to pay to the 

6 municipality, either directly or through an ap7 propriate State agency. 

8 ‘‘(4) RULE OF CONSTRUCTION.—For purposes 

9 of this section, a cable service provider or video serv10 ice provider shall be deemed to have or have had a 

11 franchise to provide cable service or video service in 

12 a specific municipality if any affiliates, successor, or 

13 predecessor entity of such cable or video provider 

14 has or had a franchise agreement granted by that 

15 specific municipality. 

16 ‘‘(5) DEFINITION.—For purposes of this sub17 section the terms ‘affiliates, successor, or prede18 cessor entity’ include any entity receiving, obtaining, 

19 or operating under a municipal cable or video fran20 chise through merger, sale, assignment, restruc21 turing, or any other type of transaction. 

22 ‘‘(d) FRANCHISE FEE PAID TO MUNICIPALITIES.— 

23 ‘‘(1) FEES.— 

24 ‘‘(A) IN GENERAL.—A holder of any state25 issued certificate of franchise authority shall 


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1 pay each municipality in which such holder pro2 vides cable service or video service a franchise 

3 fee of 5 percent of the gross revenues of such 

4 holder. 

5 ‘‘(B) UNINCORPORATED AREAS.—The fee 

6 established under subparagraph (A) shall apply 

7 to any unincorporated area that is annexed by 

8 a municipality after the effective date of the 

9 state-issued certificate of franchise authority. 

10 ‘‘(2) FEE STRUCTURE.— 

11 ‘‘(A) TIMING.—A franchise fee payable 

12 under this subsection shall be paid quarterly, 

13 not later than 45 days after the end of the 

14 quarter for the preceding calendar quarter. 

15 ‘‘(B) SUMMARY.—Each payment of a fran16 chise fee under this subsection shall be accom17 panied by a summary explaining the basis for 

18 the calculation of such fee. 

19 ‘‘(C) AUDIT.— 

20 ‘‘(i) IN GENERAL.—A municipality 

21 may review the business records of any 

22 cable service provider or video service pro23 vider to the extent necessary to ensure 

24 compensation in accordance with this sub25 section. 


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1 ‘‘(ii) COST.—Each party to a review 

2 under clause (i) shall bear the party’s own 

3 costs of such examination. 

4 ‘‘(D) CIVIL ACTION.—If a dispute con5 cerning compensation arises under this sub6 section, a municipality may bring an action in 

7 any court of competent jurisdiction. 

8 ‘‘(3) RECOVERY OF FEE.—A holder of a state9 issued certificate of franchise authority may recover 

10 from the customers of such holder any fee imposed 

11 by this subsection. 

12 ‘‘(e) IN-KIND CONTRIBUTIONS TO MUNICIPALITY.— 

13 ‘‘(1) EXISTING FRANCHISES.— 

14 ‘‘(A) IN GENERAL.—Until the expiration of 

15 an incumbent cable service provider’s existing 

16 franchise agreement with a municipality, a 

17 holder of a state-issued certificate of franchise 

18 authority shall pay each municipality in which 

19 such holder is offering cable service or video 

20 service the same cash payments on a per sub21 scriber basis as required by the existing fran22 chise agreement of such incumbent cable service 

23 provider. 

24 ‘‘(B) REPORT REQUIREMENT.—Each cable 

25 service provider and each video service provider 


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1 shall report quarterly to a municipality the total 

2 number of subscribers served by such provider 

3 within that municipality. 

4 ‘‘(C) AMOUNT TO BE PAID.—The amount 

5 paid by a holder of a state-issued certificate of 

6 franchise authority shall be calculated quarterly 

7 by a municipality by multiplying the amount of 

8 cash payments under the incumbent cable serv9 ice provider’s franchise agreement by a number 

10 derived by dividing the number of subscribers 

11 served by a video service provider or cable serv12 ice provider by the total number of video or 

13 cable service subscribers in the municipality. 

14 ‘‘(D) TIMING OF PAYMENTS.—Any pay15 ments required under this paragraph shall be 

16 paid quarterly by a holder of a state-issued cer17 tificate of franchise authority to a municipality 

18 not later than 45 days after the end of the 

19 quarter for the preceding calendar quarter. 

20 ‘‘(2) EXPIRATION OF EXISTING AGREE21 MENTS.— 

22 ‘‘(A) IN GENERAL.—On the expiration of 

23 an incumbent cable service provider’s existing 

24 franchise agreement with a municipality, a 


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1 holder of a state-issued certificate of franchise 

2 authority shall pay— 

3 ‘‘(i) each municipality in which such 

4 holder is offering cable service or video 

5 service 1 percent of the gross revenues of 

6 such holder; or 

7 ‘‘(ii) at the election of a municipality, 

8 the per subscriber fee that was paid to 

9 that municipality under the expired incum10 bent cable service provider’s agreement, in 

11 lieu of in-kind compensation and grants. 

12 ‘‘(B) TIMING.—Any payment under this 

13 paragraph shall be paid in the same manner as 

14 described in paragraph (1)(D). 

15 ‘‘(3) RULES OF CONSTRUCTION.—All fees paid 

16 to a municipality under this subsection— 

17 ‘‘(A) shall be paid in accordance with sec18 tions 531 and 541(a)(4)(B); 

19 ‘‘(B) may be used by the municipality as 

20 allowed by Federal law; and 

21 ‘‘(C) may not be chargeable as a credit 

22 against the franchise fee payments authorized 

23 under this section. 

24 ‘‘(4) CONSTRUCTION OF SERVICE.—Upon the 

25 later of 2 years after the date of enactment of the 


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1 Franchise Reform Act of 2006, or the expiration of 

2 the term of any existing franchise agreement be3 tween a municipality and a cable service provider or 

4 video service provider, the following services shall 

5 continue to be provided by such cable service pro6 vider or video service provider: 

7 ‘‘(A) Institutional network capacity, how8 ever such term is defined or referred to in the 

9 existing franchise agreement but generally re10 ferring to a private line data network capacity 

11 for use by the municipality for noncommercial 

12 purposes, at the same capacity as was provided 

13 to the municipality prior to the date of the ter14 mination, only if the municipality agrees to 

15 compensate the cable service provider or video 

16 service provider for the actual incremental cost 

17 of such capacity. 

18 ‘‘(B) Cable services to community public 

19 buildings, such as municipal buildings and pub20 lic schools, to the same extent such services 

21 were provided immediately prior to the date of 

22 the termination. 

23 ‘‘(5) FUTURE PROVISIONS OF CERTAIN SERV24 ICES.—Upon the expiration of the period described 

25 in paragraph (4), any cable service provider or video 


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1 service provider that provides the services described 

2 in subparagraphs (A) or (B) of paragraph (4) may 

3 deduct from the franchise fee to be paid to a munici4 pality an amount equal to the actual incremental 

5 cost of such services if the municipality requires 

6 such services after that date. 

7 ‘‘(6) DEFINITION OF CABLE SERVICE.—For 

8 purposes of this subsection, the term ‘cable service’ 

9 generally refers to the existing cable drop connec10 tions to public facilities and the tier of cable service 

11 provided pursuant to the franchise agreement at the 

12 time of the termination of such agreement. 

13 ‘‘(f) NO MANDATORY BUILD-OUT PROVISIONS.—A 

14 holder of a state-issued certificate of franchise authority 

15 shall not be required to comply with any mandatory build16 out provisions. 

17 ‘‘(g) CUSTOMER SERVICE STANDARDS.—A holder of 

18 a state-issued certificate of franchise authority shall com19 ply with customer service requirements consistent with 

20 section 76.309(c) of title 47, Code of Federal Regulations, 

21 until there are 2 or more providers offering service in a 

22 municipality, excluding direct-to-home satellite service 

23 providers. 

24 ‘‘(h) PUBLIC, EDUCATIONAL, AND GOVERNMENTAL

25 ACCESS CHANNELS.— 


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1 ‘‘(1) PROVISION OF CAPACITY.—Not later than 

2 120 days after a request by a municipality, a holder 

3 of a state-issued certificate of franchise authority 

4 shall provide such municipality with capacity in the 

5 communications network of such holder to allow 

6 public, educational, and governmental access chan7 nels for noncommercial programming. 

8 ‘‘(2) NUMBER OF PEG CHANNELS.—A holder of 

9 a state-issued certificate of franchise authority shall 

10 provide no fewer than the same number of public, 

11 educational, and governmental access channels to a 

12 municipality than were provided to such municipality 

13 under the incumbent cable service provider’s fran14 chise agreement as of the date of enactment of the 

15 Franchise Reform Act of 2006. 

16 ‘‘(3) MINIMUM NUMBER PEG CHANNELS.—If a 

17 municipality had no public, educational, and govern18 mental access channels as of the date of enactment 

19 of the Franchise Reform Act of 2006, a cable service 

20 provider or video service provider shall furnish— 

21 ‘‘(A) up to 3 public, educational, and gov22 ernmental channels for a municipality with a 

23 population of at least 50,000; and 


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1 ‘‘(B) up to 2 public, educational, and gov2 ernmental channels for a municipality with a 

3 population of less than 50,000. 

4 ‘‘(4) NONUTILIZATION OF PEG CHANNELS.— 

5 ‘‘(A) IN GENERAL.—Any public, edu6 cational, and governmental channel provided 

7 pursuant to this subsection that is not utilized 

8 by a municipality for at least 8 hours a day 

9 shall no longer be made available to such mu10 nicipality, but may be programmed at the dis11 cretion of a cable service provider or video serv12 ice provider. 

13 ‘‘(B) RETURN OF PEG CHANNEL.— 

14 ‘‘(i) IN GENERAL.—At such time as a 

15 municipality can certify to a cable service 

16 provider or video service provider that a 

17 schedule for at least 8 hours of daily pro18 gramming exists, such cable service pro19 vider or video service provider shall restore 

20 any channel previously reprogrammed 

21 under subparagraph (A). 

22 ‘‘(ii) LIMITATION.—A cable service 

23 provider or video service provider shall be 

24 under no obligation to carry on a basic or 


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1 analog tier any channel restored under 

2 clause (i). 

3 ‘‘(5) ADDITIONAL CHANNEL CAPACITY.—In the 

4 event a municipality has not utilized the minimum 

5 number of access channels as permitted by para6 graph (3), access to that additional channel capacity 

7 shall be provided to a municipality not later than 90 

8 days after written notice from such municipality, if 

9 the municipality meets the following standards: 

10 ‘‘(A) If a municipality has 1 active public, 

11 educational, and governmental channel and 

12 wishes to activate an additional public, edu13 cational, and governmental channel, such active 

14 channel must be substantially utilized. A chan15 nel under this subparagraph shall be considered 

16 to be substantially utilized when 12 hours are 

17 programmed on that channel each calendar day. 

18 ‘‘(B) At least 40 percent of the 12 hours 

19 of programming required under subparagraph 

20 (A) for each business day on average over each 

21 calendar quarter shall be non repeat program22 ming. Non repeat programming shall include 

23 the first 3 video-castings of a program. 

24 ‘‘(C)(i) If a municipality is entitled to 3 

25 public, educational, and governmental channels 


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1 under paragraph (3) and has in service 2 active 

2 public, educational, and governmental channels, 

3 each of the 2 active channels must be substan4 tially utilized. 

5 ‘‘(ii) A channel under this subparagraph 

6 shall be considered to be substantially utilized 

7 when— 

8 ‘‘(I) 12 hours are programmed on 

9 each channel each calendar day; and 

10 ‘‘(II) at least 50 percent of the 12 

11 hours of programming for each business 

12 day on average over each calendar quarter 

13 is non repeat programming for 3 consecu14 tive calendar quarters. 

15 ‘‘(6) OPERATIONAL RESPONSIBILITY.— 

16 ‘‘(A) IN GENERAL.—The operation of any 

17 public, educational, and governmental access 

18 channel provided pursuant to this subsection 

19 shall be the responsibility of the municipality 

20 receiving the benefit of such channel, and the 

21 holder of a state-issued certificate of franchise 

22 authority bears only the responsibility for the 

23 transmission of such channel. 

24 ‘‘(B) CONNECTIVITY.—A holder of a state25 issued certificate of franchise authority shall be 


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1 responsible for providing the connectivity to 

2 each public, educational, and governmental ac3 cess channel distribution point up to the first 

4 200 feet. 

5 ‘‘(7) ADDITIONAL RESPONSIBILITIES AND MU6 NICIPALITY.— 

7 ‘‘(A) IN GENERAL.—Each municipality 

8 shall ensure that all transmissions, content, or 

9 programming to be transmitted over a channel 

10 or facility by a holder of a state-issued certifi11 cate of franchise authority is provided or sub12 mitted to the cable service provider or video 

13 service provider in a manner or form that is ca14 pable of being accepted and transmitted by 

15 such provider. 

16 ‘‘(B) OTHER REQUIREMENTS.—Any trans17 mission, content, or programming transmitted 

18 in accordance with the requirements of sub19 paragraph (A) shall be transmitted— 

20 ‘‘(i) without requirement for addi21 tional alteration or change in the content 

22 by a cable service or video service provider 

23 over the particular network of such pro24 vider; and 


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1 ‘‘(ii) in a manner compatible with the 

2 technology or protocol utilized by such pro3 vider to deliver services. 

4 ‘‘(8) INTERCONNECTION.— 

5 ‘‘(A) IN GENERAL.—To the maximum ex6 tent that is technically feasible, a holder of a 

7 state-issued certificate of franchise authority 

8 and an incumbent cable service provider shall 

9 use reasonable efforts to interconnect the cable 

10 or video systems of each for the purpose of pro11 viding public, educational, and governmental 

12 programming. 

13 ‘‘(B) METHODS OF CONNECTION.—Inter14 connection under this paragraph may be accom15 plished by direct cable, microwave link, satellite, 

16 or any other reasonable method of connection. 

17 ‘‘(C) REQUIREMENT OF GOOD FAITH.—A 

18 holder of a state-issued certificate of franchise 

19 authority and incumbent cable service providers 

20 shall each negotiate in good faith with the other 

21 and the incumbent cable service provider may 

22 not withhold interconnection of public, edu23 cational, and governmental channels. 

24 ‘‘(9) JURISDICTION OF COURTS.—A court of 

25 competent jurisdiction shall have exclusive jurisdicVerDate Aug 31 2005 07:16 May 25, 2006 Jkt 049200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S2989.IS S2989

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1 tion to enforce any requirement under this sub2 section. 

3 ‘‘(i) NONDISCRIMINATION BY MUNICIPALITY.— 

4 ‘‘(1) PUBLIC RIGHT-OF-WAY.— 

5 ‘‘(A) IN GENERAL.—A municipality shall— 

6 ‘‘(i) allow a holder of a state-issued 

7 certificate of franchise authority to install, 

8 construct, and maintain a communications 

9 network within a public right-of-way; and 

10 ‘‘(ii) provide such holder with open, 

11 comparable, nondiscriminatory, and com12 petitively neutral access to the public right13 of-way. 

14 ‘‘(B) LIMITATION.—All use of a public 

15 right-of-way by a holder of a state-issued cer16 tificate of franchise authority is nonexclusive 

17 and subject to subsection (j). 

18 ‘‘(2) NONDISCRIMINATION.—A municipality 

19 may not discriminate against a holder of a state20 issued certificate of franchise authority regarding— 

21 ‘‘(A) the authorization or placement of a 

22 communications network in a public right-of23 way; 

24 ‘‘(B) access to a building; or 


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1 ‘‘(C) the term of any municipal utility pole 

2 attachment. 

3 ‘‘(j) MUNICIPAL POLICE POWER; OTHER AUTHOR4 ITY.— 

5 ‘‘(1) POLICE POWERS.— 

6 ‘‘(A) IN GENERAL.—A municipality may 

7 enforce police power-based regulations in the 

8 management of any public right-of-way that ap9 plies to a holder of a state-issued certificate of 

10 franchise authority within the municipality. 

11 ‘‘(B) EXTENT OF PUBLIC POWER.—A mu12 nicipality may enforce police power-based regu13 lations in the management of the activities of 

14 the holder of a state-issued certificate of fran15 chise authority to the extent that such regula16 tions are reasonably necessary to protect the 

17 health, safety, and welfare of the public. 

18 ‘‘(C) COMPETITIVELY NEUTRAL ENFORCE19 MENT.—Any police power-based regulation of a 

20 holder of a state-issued certificate of franchise 

21 authority’s use of the public right-of-way— 

22 ‘‘(i) shall be competitively neutral; and 

23 ‘‘(ii) may not be unreasonable or dis24 criminatory. 


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1 ‘‘(D) OTHER LIMITATIONS.—A munici2 pality may not require that a holder of a state3 issued certificate of franchise authority— 

4 ‘‘(i) locate a business office in the mu5 nicipality; 

6 ‘‘(ii) file reports and documents with 

7 the municipality that are not required by 

8 Federal or State law and that are not re9 lated to the use of the public right-of-way, 

10 except that the municipality may request, 

11 and shall keep confidential, maps and 

12 records maintained by the holder in the or13 dinary course of business for purposes of 

14 locating the portions of the communica15 tions network of such holder that occupy 

16 public rights-of-way; 

17 ‘‘(iii) provide the municipality with 

18 any information concerning the capacity or 

19 technical configuration of the facilities of 

20 such holder; 

21 ‘‘(iv) provide for inspection the busi22 ness records of such holder except to ex23 tent permitted under subsection (d)(2); 

24 ‘‘(v) seek approval of transfers of 

25 ownership or control of the business of 


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1 such holder, except that a municipality 

2 may require that such holder maintain a 

3 current point of contact and provide notice 

4 of a transfer within a reasonable time; 

5 ‘‘(vi) that is self-insured under the 

6 provisions of State law, obtain insurance or 

7 bonding for any activities within the mu8 nicipality, except that a self-insured holder 

9 shall provide substantially the same de10 fense and claims processing as a non self11 insured holder; and 

12 ‘‘(vii) possess a bond for any work 

13 consisting of aerial construction, except 

14 that a reasonable bond may be required of 

15 a holder that cannot demonstrate a record 

16 of at least 4 years’ performance of work in 

17 any municipal public right-of-way free of 

18 currently unsatisfied claims by the munici19 pality for damage to the right-of-way. 

20 ‘‘(2) CONSTRUCTION PERMITS.— 

21 ‘‘(A) IN GENERAL.—A municipality may 

22 require the issuance of a construction permit, 

23 without cost, to a holder of a state-issued cer24 tificate of franchise authority that is locating 


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1 facilities in or on a public right-of-way in that 

2 municipality. 

3 ‘‘(B) TERMS.—The terms of any permit 

4 required under subparagraph (A) shall be con5 sistent with other construction permits issued 

6 by a municipality to other persons excavating in 

7 a public right-of-way. 

8 ‘‘(3) PROCESSING OF REQUESTS.— 

9 ‘‘(A) IN GENERAL.—In the exercise of any 

10 lawful regulatory authority possessed by a mu11 nicipality, such municipality shall promptly 

12 process all valid and administratively complete 

13 applications submitted by a holder of a state14 issued certificate of franchise authority for a 

15 permit, license, or consent to— 

16 ‘‘(i) excavate; 

17 ‘‘(ii) set poles; 

18 ‘‘(iii) locate lines; 

19 ‘‘(iv) construct facilities; 

20 ‘‘(v) make repairs; 

21 ‘‘(vi) affect traffic flow; or 

22 ‘‘(vii) obtain zoning or subdivision 

23 regulation approvals or other similar ap24 provals. 


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1 ‘‘(B) REASONABLE EFFORT REQUIRED.—A 

2 municipality shall make every reasonable effort 

3 not to delay or unduly burden a holder of a 

4 state-issued certificate of franchise authority in 

5 the timely conduct of the business of such hold6 er. 

7 ‘‘(4) EMERGENCY.—If there is an emergency 

8 necessitating response work or repair, a holder of a 

9 state-issued certificate of franchise authority may 

10 begin such repair or emergency response work or 

11 take any other action required under the cir12 cumstances without prior approval from the affected 

13 municipality, if the holder of a state-issued certifi14 cate of franchise authority— 

15 ‘‘(A) notifies the municipality as promptly 

16 as possible after beginning the work; and 

17 ‘‘(B) later obtains any approval required 

18 by a municipal ordinance applicable to emer19 gency response work. 

20 ‘‘(5) NO REVIEW OF POLICE POWERS.—No 

21 State Commission, State agency, or Federal agency 

22 shall have jurisdiction to review any police power23 based regulation or ordinance adopted by a munici24 pality to manage the public rights-of-way in such 

25 municipality. 


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1 ‘‘(k) MUNICIPAL AUTHORITY.— 

2 ‘‘(1) LIMITATION.—In addition to any authority 

3 exercised, permitted, or established under subsection 

4 (j) with respect to public rights-of-way located in a 

5 municipality, the authority of a municipality to regu6 late a holder of a state-issued certificate of franchise 

7 authority is limited to— 

8 ‘‘(A) requiring that any holder who is pro9 viding cable service or video service within the 

10 municipality register with the municipality and 

11 maintain a point of contact; 

12 ‘‘(B) establishing reasonable guidelines re13 garding the use of public, educational, and gov14 ernmental access channels; and 

15 ‘‘(C) requiring a holder to submit reports 

16 to the Commission on the customer service 

17 standards referred to in subsection (g), if such 

18 holder— 

19 ‘‘(i) is subject to such standards; and 

20 ‘‘(ii) has continued and unresolved 

21 customer service complaints indicating a 

22 clear failure on the part of such holder to 

23 comply with such standards. 

24 ‘‘(l) DISCRIMINATION PROHIBITED.— 


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1 ‘‘(1) PURPOSE.—The purpose of this subsection 

2 is to prevent discrimination among potential residen3 tial subscribers by holders of a state-issued certifi4 cate of franchise authority. 

5 ‘‘(2) INCOME NOT A FACTOR.—A cable service 

6 provider or video service provider that is a holder of 

7 a state-issued certificate of franchise authority may 

8 not deny access to cable or video service to any 

9 group of potential residential subscribers because of 

10 the income of the residents in the local area in which 

11 such group resides. 

12 ‘‘(3) ENFORCEMENT.— 

13 ‘‘(A) PROCEEDINGS.—Any person affected 

14 by this subsection may seek enforcement of the 

15 requirements described in paragraph (2) by ini16 tiating a proceeding with the State Commission 

17 in which such person is located. 

18 ‘‘(B) RULE OF CONSTRUCTION.—A mu19 nicipality may be considered an affected person 

20 for purposes of this subsection. 

21 ‘‘(4) SAFE HARBOR.—A holder of a state-issued 

22 certificate of franchise authority— 

23 ‘‘(A) shall be provided a reasonable period 

24 of time to become capable of providing cable 


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1 service or video service to all households within 

2 a designated franchise area; and 

3 ‘‘(B) may satisfy the requirements of this 

4 subsection through the use of an alternative 

5 technology that provides comparable content, 

6 service, and functionality. 

7 ‘‘(5) LIMITATIONS.—Notwithstanding any pro8 vision of this subsection, a State Commission has 

9 the authority— 

10 ‘‘(A) to make the determination regarding 

11 the comparability of the technology and the 

12 service provided under paragraph (4); and 

13 ‘‘(B) to monitor the deployment of cable 

14 services, video services, or alternate technology. 

15 ‘‘(m) COMPLIANCE.— 

16 ‘‘(1) COURT ORDER.— 

17 ‘‘(A) IN GENERAL.—If a holder of a state18 issued certificate of franchise authority is found 

19 by a court of competent jurisdiction to be in 

20 noncompliance with any requirement of this 

21 section, the court shall order such holder, with22 in a specified reasonable period of time, to cure 

23 such noncompliance. 

24 ‘‘(B) FAILURE TO COMPLY.—If a holder of 

25 a state-issued certificate of franchise authority 


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1 fails to comply with any court order issued 

2 under subparagraph (A) such holder shall be 

3 subject to such penalties as the court shall rea4 sonably impose, including revocation of the 

5 state-issued certificate of franchise authority 

6 granted under this section. 

7 ‘‘(2) PARTIES.—A municipality within which a 

8 holder of a state-issued certificate of franchise au9 thority offers cable service or video service shall be 

10 an appropriate party in any civil action brought 

11 under this section. 

12 ‘‘(n) RULES OF CONSTRUCTION.—Nothing in this 

13 section shall be interpreted or construed— 

14 ‘‘(1) to prevent a voice provider, cable service 

15 provider, video service provider, or municipality 

16 from— 

17 ‘‘(A) seeking clarification of any right or 

18 obligation that such voice provider, cable service 

19 provider, video service provider, or municipality 

20 may be entitled to under any other Federal law; 

21 or 

22 ‘‘(B) exercising any right or authority 

23 under any other Federal or State law; or 

24 ‘‘(2) to limit the ability of a municipality under 

25 existing law to receive compensation for use of the 


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1 public rights-of-way from any entity determined not 

2 to be subject to all or part of this section, including 

3 any provider of Internet protocol cable or video serv4 ices, unless such payments are expressly prohibited 

5 by other Federal law. 

6 ‘‘(o) COMMISSION TO ACT IF STATE WILL NOT.— 

7 If a State Commission fails to carry out any of its respon8 sibilities under this section, the Commission shall— 

9 ‘‘(1) issue an order preempting the authority of 

10 the State Commission to carry out such responsibil11 ities; and 

12 ‘‘(2) assume exclusive authority to carry out 

13 such responsibilities. 

14 ‘‘(p) DEFINITIONS.—In this section, the following 

15 definitions shall apply: 

16 ‘‘(1) ACTUAL INCREMENTAL COST.—The term 

17 ‘actual incremental cost’ means only current out-of18 pocket expenses for labor, equipment repair, equip19 ment replacement, and tax expenses directly associ20 ated with the labor or the equipment of a cable or 

21 video service provider that is necessarily and directly 

22 used to provide what were, under a superseded fran23 chise, in-kind services, exclusive of any profit or 

24 overhead such as depreciation, amortization, or ad25 ministrative expense. 


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1 ‘‘(2) CABLE SERVICE.—Except as otherwise 

2 provided in this section, the term ‘cable service’ has 

3 the same meaning as in section 602. 

4 ‘‘(3) CABLE SERVICE PROVIDER.—The term 

5 ‘cable service provider’ means any person who pro6 vides cable service. 

7 ‘‘(4) COMMUNICATIONS NETWORK.—The term 

8 ‘communications network’ means a component or fa9 cility that is— 

10 ‘‘(A) wholly or partly, physically located 

11 within a public right-of-way; and 

12 ‘‘(B) used to provide video programming, 

13 cable, voice, or data services. 

14 ‘‘(5) FRANCHISE.—The term ‘franchise’ means 

15 an initial authorization, or renewal of an authoriza16 tion, issued by a franchising authority, regardless of 

17 whether such authorization is designated as a fran18 chise, permit, license, resolution, contract, certifi19 cate, agreement, or otherwise, that authorizes the 

20 construction and operation of a cable or video serv21 ices network in the public rights-of-way. 

22 ‘‘(6) GROSS REVENUES.— 

23 ‘‘(A) IN GENERAL.—The term ‘gross reve24 nues’— 


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1 ‘‘(i) means all consideration of any 

2 kind or nature including cash, credits, 

3 property, and in-kind contributions (serv4 ices or goods) derived by a holder of a 

5 state-issued certificate of franchise author6 ity from the operation by such holder of 

7 the network of such holder to provide cable 

8 service or video service within a munici9 pality; and 

10 ‘‘(ii) includes all consideration paid to 

11 a holder of a state-issued certificate of 

12 franchise authority and the affiliates of 

13 such holder (to the extent either is acting 

14 as a provider of a cable service or video 

15 service as authorized by this section), in16 cluding— 

17 ‘‘(I) all fees charged to sub18 scribers for any and all cable service 

19 or video service provided by the holder 

20 of a state-issued certificate of fran21 chise authority; 

22 ‘‘(II) any fee imposed on the 

23 holder of a state-issued certificate of 

24 franchise authority by this section 

25 that is passed through and paid by 


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1 subscribers (including the franchise 

2 fee set forth in this section); and 

3 ‘‘(III) compensation received by 

4 the holder of a state-issued certificate 

5 of franchise authority or the affiliates 

6 of such holder that is derived from the 

7 operation of the holder of a state8 issued certificate of franchise 

9 authority’s network to provide cable 

10 service or video service with respect to 

11 commissions that are paid to the hold12 er of a state-issued certificate of fran13 chise authority as compensation for 

14 promotion or exhibition of any prod15 ucts or services on the holder of a 

16 state-issued certificate of franchise 

17 authority’s network, such as a home 

18 shopping or a similar channel, subject 

19 to subparagraph (E)(v); 

20 ‘‘(B) COMPENSATION ARRANGEMENTS.— 

21 ‘‘(i) IN GENERAL.—The term ‘gross 

22 revenue’ also includes a pro rata portion of 

23 all revenue derived by a holder of a state24 issued certificate of franchise authority or 

25 the affiliates of such holder pursuant to 


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1 compensation arrangements for advertising 

2 derived from the operation of the holder of 

3 a state-issued certificate of franchise 

4 authority’s network to provide cable service 

5 or the video service within a municipality, 

6 subject to subparagraph (E)(iii). 

7 ‘‘(ii) ALLOCATION.—Any allocation 

8 made under clause (i) shall be based on 

9 the number of subscribers in a munici10 pality divided by the total number of sub11 scribers in relation to the relevant regional 

12 or national compensation arrangement. 

13 ‘‘(C) ADVERTISING COMMISSIONS.—For 

14 purposes of this paragraph, advertising commis15 sions paid to third parties shall not be netted 

16 against advertising revenue included in gross 

17 revenue. 

18 ‘‘(D) REVENUE FROM AN AFFILIATE.— 

19 ‘‘(i) IN GENERAL.—Revenue of an af20 filiate of a holder of a state-issued certifi21 cate of franchise authority derived from 

22 the affiliate’s provision of cable service or 

23 video service shall be gross revenue to the 

24 extent the treatment of such revenue as 

25 revenue of the affiliate and not of a holder 


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1 of a state-issued certificate of franchise au2 thority has the effect (whether intentional 

3 or unintentional) of evading the payment 

4 of fees which would otherwise be paid to a 

5 municipality. 

6 ‘‘(ii) LIMITATION.—In no event shall 

7 revenue of an affiliate be gross revenue to 

8 a holder of a state-issued certificate of 

9 franchise authority if such revenue is oth10 erwise subject to fees to be paid to a mu11 nicipality. 

12 ‘‘(E) EXCEPTIONS.—The term ‘gross reve13 nues’ does not include— 

14 ‘‘(i) any revenue not actually received, 

15 even if billed, such as bad debt; 

16 ‘‘(ii) non cable services or non video 

17 services revenues received by any affiliate 

18 or any other person in exchange for sup19 plying goods or services used by a holder 

20 of a state-issued certificate of franchise au21 thority to provide cable service or video 

22 service; 

23 ‘‘(iii) refunds, rebates, or discounts 

24 made to subscribers, leased access pro25 viders, advertisers, or a municipality; 


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1 ‘‘(iv) any revenues from services clas2 sified as non cable service or non video 

3 service under any other Federal law, in4 cluding— 

5 ‘‘(I) revenue received from tele6 communications services; 

7 ‘‘(II) revenue received from infor8 mation services (but not excluding 

9 cable services or video services); and 

10 ‘‘(III) any other revenues attrib11 uted by a holder of a state-issued cer12 tificate of franchise authority to non 

13 cable service or non video service in 

14 accordance with any rules, regula15 tions, standards, or orders of the 

16 Commission; 

17 ‘‘(v) any revenue paid by subscribers 

18 to home shopping programmers directly 

19 from the sale of merchandise through any 

20 home shopping channel offered as part of 

21 the cable services or video services, but not 

22 excluding any commissions that are paid to 

23 a holder of a state-issued certificate of 

24 franchise authority as compensation for 

25 promotion or exhibition of any products or 


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1 services on the holder of a state-issued cer2 tificate of franchise authority’s network, 

3 such as a home shopping or a similar 

4 channel; 

5 ‘‘(vi) the sale of cable services or video 

6 services for resale in which the purchaser 

7 is required to collect fees under this section 

8 from the purchase customer; 

9 ‘‘(vii) the provision of cable services or 

10 video services to customers at no charge, 

11 as required or allowed by this section, in12 cluding the provision of cable services or 

13 video services to— 

14 ‘‘(I) public institutions; 

15 ‘‘(II) public schools; or 

16 ‘‘(III) other governmental enti17 ties; 

18 ‘‘(viii) any tax of general applica19 bility— 

20 ‘‘(I) imposed upon a holder of a 

21 state-issued certificate of franchise 

22 authority or upon subscribers by a 

23 city, State, Federal, or any other gov24 ernmental entity; and 


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1 ‘‘(II) required to be collected by 

2 a holder of a state-issued certificate of 

3 franchise authority and remitted to 

4 the taxing entity (including sales and 

5 use tax, gross receipts tax, excise tax, 

6 utility users tax, public service tax, 

7 communication taxes, and fees not im8 posed by this section); 

9 ‘‘(ix) any forgone revenue from a 

10 holder of a state-issued certificate of fran11 chise authority’s provision of free or re12 duced cost cable services or video services 

13 to any person including employees of the 

14 holder of a state-issued certificate of fran15 chise authority, to the municipality, public 

16 institutions, or other institutions as al17 lowed in this section, if, however, the hold18 er of a state-issued certificate of franchise 

19 authority chooses not to receive such fore20 gone revenue in exchange for trades, bar21 ters, services, or other items of value such 

22 foregone revenue shall be included in gross 

23 revenue; 

24 ‘‘(x) sales of capital assets or sales of 

25 surplus equipment that is not used by a 


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1 purchaser to receive cable services or video 

2 services from a holder of a state-issued 

3 certificate of franchise authority; 

4 ‘‘(xi) directory or Internet advertising 

5 revenue, including revenue derived from— 

6 ‘‘(I) yellow pages; 

7 ‘‘(II) white pages; 

8 ‘‘(III) banner advertisement; and 

9 ‘‘(IV) electronic publishing; and 

10 ‘‘(xii) reimbursement by programmers 

11 of marketing costs incurred by a holder of 

12 a state-issued franchise for the introduc13 tion of new programming that exceeds the 

14 actual costs of such programming. 

15 ‘‘(F) RULE OF CONSTRUCTION.—For pur16 poses of this paragraph, a provider’s network 

17 consists solely of the optical spectrum wave18 lengths, bandwidth, or other current or future 

19 technological capacity used for the transmission 

20 of video programming over wireline directly to 

21 subscribers within the geographic area within a 

22 municipality as designated by the provider in its 

23 franchise. 

24 ‘‘(7) INCUMBENT CABLE SERVICE PROVIDER.— 

25 The term ‘incumbent cable service provider’ means 


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1 the cable service provider serving the largest number 

2 of cable subscribers in a particular local franchise 

3 area on the date of enactment of the Franchise Re4 form Act of 2006. 

5 ‘‘(8) PUBLIC RIGHT-OF-WAY.—The term ‘public 

6 right-of-way’ means the area on, below, or above a 

7 public roadway, highway, street, public sidewalk, 

8 alley, waterway, or utility easement in which a mu9 nicipality has an interest. 

10 ‘‘(9) VIDEO PROGRAMMING.—The term ‘video 

11 programming’ means programming provided by, or 

12 generally considered comparable to programming 

13 provided by, a television broadcast station, as set 

14 forth in section 602. 

15 ‘‘(10) VIDEO SERVICE.—The term ‘video serv16 ice’— 

17 ‘‘(A) means video programming services 

18 provided through wireline facilities located at 

19 least in part in the public right-of-way without 

20 regard to delivery technology, including Internet 

21 protocol technology; and 

22 ‘‘(B) does not include any video service 

23 provided by a commercial mobile service pro24 vider. 


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1 ‘‘(11) VIDEO SERVICE PROVIDER.—The term 

2 ‘video service provider’— 

3 ‘‘(A) means a video programming dis4 tributor that distributes video programming 

5 services through wireline facilities located at 

6 least in part in the public right-of-way without 

7 regard to delivery technology; and 

8 ‘‘(B) does not include a cable service pro9 vider.’’. 

Æ 


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