AB 41: Telecommunications: The Digital Equity in Video Franchising Act of 2023.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-09-12
Current Status:
Failed
(2024-02-01: Consideration of Governor's veto stricken from file.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
This bill rewrites California’s video franchising law to promote digital equity by giving the Public Utilities Commission stronger review and enforcement powers over companies that hold state video franchises and by creating a default state franchise fee of 5 percent of gross revenues (or a lower local incumbent rate). It bans providers from denying or limiting equal access to service based on neighborhood income, requires providers to report exact service locations and follow customer service rules, and lets the commission and local governments suspend franchises or impose fines for violations.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides, as specified. The act limits the maximum amount of a penalty that a local entity is authorized to assess on a holder of a state franchise for a material breach of certain customer service and consumer protection standards, as specified.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, require the commission to conduct any hearings and issue a state franchise or a reject each application for a state franchise not more than 120 days after the commission has deemed the application complete, and extend deadlines related to the commissions review of applications for state franchises.
This bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, and expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include denial of equal access, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise and would increase the maximum amount of a penalty that a local entity is authorized to assess on a holder of a state franchise for a material breach of certain customer service and consumer protection standards, as specified.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides, as specified. The act limits the maximum amount of a penalty that a local entity is authorized to assess on a holder of a state franchise for a material breach of certain customer service and consumer protection standards, as specified.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, require the commission to conduct any hearings and issue a state franchise or a reject each application for a state franchise not more than 120 days after the commission has deemed the application complete, and extend deadlines related to the commissions review of applications for state franchises.
This bill would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, and expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include denial of equal access, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise. franchise and would increase the maximum amount of a penalty that a local entity is authorized to assess on a holder of a state franchise for a material breach of certain customer service and consumer protection standards, as specified.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement. resides, as specified.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, provide that the act does not authorize the commission to regulate the rates of video services, and authorize the commission to exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law, as specified. The bill would require the commission to hold a public hearing related to each application for renewal of a state franchise, require the commission to conduct any hearings and issue a state franchise or a reject each application for a state franchise not more than 90 120 days after the public hearing, if required, or after the commission has deemed the application is deemed complete, as specified, require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve, and extend deadlines related to the commissions review of applications for state franchises.
This bill also would require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal, except as specified, and would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides, and increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement, access, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise and would increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards. franchise.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, provide that the act does not authorize the commission to regulate the rates of video services, and authorize the commission to exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law, as specified. The bill would require the commission to hold a public hearing related to each application for renewal of a state franchise, require the commission to issue a state franchise or a reject each application for a state franchise not more than 90 days after the public hearing, if required, or after the application is deemed complete, as specified, require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve, and extend deadlines related to the commissions review of applications for state franchises.
This bill also would require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal, except as specified, and would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides, and increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise and would increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, provide that the act does not authorize the commission to regulate the rates of video services, and authorize the commission to exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law, as specified. The bill would require the commission to hold a public hearing related to each application for renewal of a state franchise, require the commission to issue a state franchise or a reject each application for a state franchise not more than 90 days after the public hearing, if required, or after the application is deemed complete, as specified, require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve, and extend deadlines related to the commissions review of applications for state franchises.
This bill also would require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal, except as specified, and would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides, and increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise and would increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law law, or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, provide that the act does not authorize the commission to regulate the rates of video services, and authorize the commission to exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law, as specified. The bill would require the commission to hold a public hearing related to each application for renewal of a state franchise, require the commission to issue a state franchise or a reject each application for a state franchise not more than 90 days after the public hearing, if required, or after the application is deemed complete, as specified, require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve, and extend deadlines related to the commissions review of applications for state franchises.
This bill also would require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal, except as specified, and would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides, and increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise and would increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things: (1) things, rename the act as the Digital Equity in Video Franchising Act of 2023; (2) 2023, provide that the act does not authorize the commission to regulate the rates of video services; (3) services, and authorize the commission to exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law; (4) law, as specified. The bill would require the commission to hold a public hearing related to each application to renew for renewal of a state franchise and to franchise, require the commission to issue the a state franchise or a reject the each application for renewal a state franchise not more than 90 days after the public hearing; (5) hearing, if required, or after the application is deemed complete, as specified, require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that the applicant; applicant proposes to serve; (6) serve, and extend deadlines related to the commissions review of applications for state franchises; (7) franchises.
This bill also would require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal; (8) renewal, and would revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction; (9) jurisdiction. The bill would establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, as specified; (10) expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides, as specified; (11) and increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement; (12) requirement, as specified. The bill would require the commission to enforce customer service requirements for a holder of a state franchise; franchise and (13) would increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things: (1) rename the act as the Digital Equity in Video Franchising Act of 2023; (2) provide that the act does not authorize the commission to regulate the rates of video services; (3) authorize the commission to exercise all the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law; (4) require the commission to hold a public hearing related to each application to renew a state franchise and to issue the state franchise or a reject the application for renewal not more than 90 days after the public hearing; (5) require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that is proposed by the applicant; (5) proposes to serve; (6) extend deadlines related to the commissions review of applications for state franchises; (7) require the commission to require video service providers to make video service available to all residences in its service area within 5 years of the issuance of a state-issued franchise renewal; (8) revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction; (6) (9) establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area, as specified; (7) (10) expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides; (8) repeal resides, as specified; (11) increase the maximum amount of a fine that could be assessed for a violation of the equal access requirement; and (9) (12) require the commission to enforce customer service requirements for a holder of a state franchise. franchise; and (13) increase the maximum amount of a penalty that a local entity may assess against a holder of a state franchise that materially breaches specified video service customer service and consumer protection standards.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things: (1) rename the act as the Digital Equity in Video Franchising Act of 2023; (2) expand the definition of video service to include video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet; (3) provide that the act does not authorize the commission to regulate the rates of video services; (4) (3) authorize the commission to exercise all authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law; (5) (4) require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that is proposed by the applicant; (6) (5) revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction; (7) (6) establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the service area, as specified; (8) (7) expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides; (9) (8) repeal the maximum amount of a fine that could be assessed for a violation of the equal access requirement; and (10) authorize (9) require the commission to enforce customer standards and conditions. service requirements for a holder of a state franchise.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Digital Infrastructure and Video Competition Act of 2006 establishes a procedure for the Public Utilities Commission to issue state franchises for the provision of video service, defined as video programming services, cable service, or open-video system service, except any video programming provided by a commercial mobile service provider, as defined in federal law or video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. The act provides that the holder of a state franchise is not a public utility as a result of providing video services and that the act does not authorize the commission to regulate the rates, terms, and conditions of video service, except as explicitly set forth in the act. The act establishes a state franchise fee to be remitted to a local entity based on the franchiseholders gross revenues, as defined, derived from the provision of cable or video service within that jurisdiction. The act prohibits a cable operator or video service provider that has been granted a state franchise from discriminating against, or denying access to service to, any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. The act limits the maximum fine that could be assessed for a violation of the access requirement.
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things: (1) rename the act as the Digital Equity in Video Franchising Act of 2023; (2) expand the definition of video service to include video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet; (3) provide that the act does not authorize the commission to regulate the rates of video services; (4) authorize the commission to exercise all authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law; (5) require a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that is proposed by the applicant; (6) revise the revenues excluded from the definition of gross revenue for purposes of calculating the franchise fee for a local jurisdiction; (7) establish a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to service within the service area, as specified; (8) expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include discrimination or denial of equal access because of any rationale, rather than only because of the income of the residents in the local area in which the group resides; (9) repeal the maximum amount of a fine that could be assessed for a violation of the equal access requirement; and (10) authorize the commission to enforce customer standards and conditions.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)Competition in the video- and broadband-service market should promote equal opportunities for low-income households to subscribe to services offered by multiple state video franchiseholders.
(C)Under federal law, state video franchiseholders are prohibited from discriminating against low-income communities in providing access to video and cable services.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(H)Affirm the existing authority of the commission to offer several remedies to ensure that franchiseholders remedy any case of discrimination.
(6)The public interest is best served when sufficient funds are appropriated to the commission to provide adequate staff and resources to appropriately and timely process applications of video service providers and to ensure full compliance with the requirements of this division. It is the intent of the Legislature that, although video service providers are not public utilities or common carriers, the commission shall collect any fees authorized by this division in the same manner and under the same terms as it collects fees from common carriers, electrical corporations, gas corporations, telephone corporations, telegraph corporations, water corporations, and every other public utility providing service directly to customers or subscribers subject to its jurisdiction such that it does not discriminate against video service providers or their subscribers.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
(e)It is the intent of the Legislature that the new requirements enacted through the Digital Equity in Video Franchising Act of 2023 be applied prospectively only and with a reasonable implementation period.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates, terms, and conditions of video services, except as explicitly set forth in this division.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The application process described in this section and the authority granted to the commission under this section shall not exceed the provisions set forth in this section.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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 corporations 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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)For purposes of an application for renewal of a state franchise and issuance of a new state franchise, if the applicant has complied with subdivision (f), the commission shall conduct any hearings and issue the state franchise or reject the application not more than 120 days after the commission has deemed that application complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including proposed upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 9.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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 or video services for free or at reduced rates to any person as required or authorized by law, including, but not limited to, the provision of cable or video 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 10.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers based on the income of the area in which the group resides.
(c)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters or force majeure.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(7)The need to deploy facilities for the purpose of connecting a military facility or enterprise customer.
(d)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings and provide parties with adequate notice before issuing a decision.
(e)The commission may suspend or revoke a franchise if the franchiseholder is found to have violated this section. Before suspending or revoking a franchise pursuant to this section, the commission shall offer the franchiseholder an opportunity to cure the violation. In addition to any other remedies provided by law, the commission may impose a fine not to exceed 1 percent of the holders total monthly gross revenue received from provision of video service in the state each month from the date of the decision until the date that compliance is achieved. The commission may offer multiple options to cure violations identified pursuant to this section, including, but not limited to, providing the franchiseholder an opportunity to offer video service within a specified geographic area.
(f)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine not to exceed 1 percent of the holders total gross revenue of its entire cable and service footprint in the state in the full calendar month immediately before the decision.
(g)This section does not require a holder to provide video service outside its service territory or to match the existing service area of any cable operator.
(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service in a given area for comparable terms and conditions.
SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
(e)For purposes of this section, actual locations includes addresses.
SEC. 12.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction, but it shall not adopt or seek to enforce any additional or different customer service or other performance standards under Section 53055.3 of, or subdivision (q), (r), or (s) of Section 53088.2 of, the Government Code, or any other authority or law.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed seven hundred fifty dollars ($750) for each day of each material breach, not to exceed two thousand dollars ($2,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of one thousand five hundred dollars ($1,500) for each day of each material breach, not to exceed four thousand five hundred dollars ($4,500) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of four thousand dollars ($4,000) for each day of each material breach, not to exceed ten thousand dollars ($10,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity, which shall submit one-half of the penalty to the Digital Divide Account established in Section 280.5.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission may advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.(C)The lack of competition(B)Competition in the video video- and broadband service broadband-service market contributes to exorbitant prices that prevent should promote equal opportunities for low-income households from subscribing to service from a to subscribe to services offered by multiple state video franchiseholder. franchiseholders.
(D)There is evidence to suggest that some(C)Under federal law, state video franchiseholders discriminate are prohibited from discriminating against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California. cable services.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(H)Affirm the existing authority of the commission to offer several remedies to ensure that franchiseholders remedy any case of discrimination.
(6)The public interest is best served when sufficient funds are appropriated to the commission to provide adequate staff and resources to appropriately and timely process applications of video service providers and to ensure full compliance with the requirements of this division. It is the intent of the Legislature that, although video service providers are not public utilities or common carriers, the commission shall collect any fees authorized by this division in the same manner and under the same terms as it collects fees from common carriers, electrical corporations, gas corporations, telephone corporations, telegraph corporations, water corporations, and every other public utility providing service directly to customers or subscribers subject to its jurisdiction such that it does not discriminate against video service providers or their subscribers.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
(e)It is the intent of the Legislature that the new requirements enacted through the Digital Equity in Video Franchising Act of 2023 be applied prospectively only and with a reasonable implementation period.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates, terms, and conditions of video services, except as explicitly set forth in this division.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The application process described in this section and the authority granted to the commission under this section shall not exceed the provisions set forth in this section.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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 corporations 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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)For purposes of an application for renewal of a state franchise and issuance of a new state franchise, if the applicant has complied with subdivision (f), the commission shall conduct any hearings and issue the state franchise or reject the application not more than 120 days after the commission has deemed that application complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required proposed upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 9.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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 or video services for free or at reduced rates to any person as required or authorized by law, including, but not limited to, the provision of cable or video 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 10.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers based on the income of the area in which the group resides.
(c)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters. disasters or force majeure.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(7)The need to deploy facilities for the purpose of connecting a military facility or enterprise customer.
(d)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings and provide parties with adequate notice before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(e)If the commission finds that the holder is in violation of this section, it may, in(e)The commission may suspend or revoke a franchise if the franchiseholder is found to have violated this section. Before suspending or revoking a franchise pursuant to this section, the commission shall offer the franchiseholder an opportunity to cure the violation. In addition to any other remedies provided by law, the commission may impose a fine not to exceed 1 percent of the holders total monthly gross revenue received from provision of video service in the state each month from the date of the decision until the date that compliance is achieved. The commission may offer multiple options to cure violations identified pursuant to this section, including, but not limited to, providing the franchiseholder an opportunity to offer video service within a specified geographic area.
(f)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine not to exceed 1 percent of the holders total gross revenue of its entire cable and service footprint in the state in the full calendar month immediately before the decision.
(g)This section does not require a holder to provide video service outside its wireline footprint service territory or to match the existing service area of any cable operator.
(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service in a given area for comparable terms and conditions.
SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
(e)For purposes of this section, actual locations includes addresses.
SEC. 12.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction, but it shall not adopt or seek to enforce any additional or different customer service or other performance standards under Section 53055.3 of, or subdivision (q), (r), or (s) of Section 53088.2 of, the Government Code, or any other authority or law.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed five seven hundred fifty dollars ($500) ($750) for each day of each material breach, not to exceed one two thousand five hundred dollars ($1,500) ($2,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of one thousand five hundred dollars ($1,000) ($1,500) for each day of each material breach, not to exceed three four thousand five hundred dollars ($3,000) ($4,500) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of two four thousand five hundred dollars ($2,500) ($4,000) for each day of each material breach, not to exceed seven ten thousand five hundred dollars ($7,500) ($10,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity, which shall submit one-half of the penalty to the Digital Divide Account established in Section 280.5.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to may advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates rates, terms, and conditions of video services. services, except as explicitly set forth in this division.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code. The commissions authorization to exercise that authority, jurisdiction, and powers pursuant to this subdivision shall not exceed the authority, jurisdiction, and powers necessary to enforce this division.(b)The application process described in this section and the authority granted to the commission under this section shall not exceed the provisions set forth in this section.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.(8)(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 corporations service territory.
(9)(8)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)(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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)(A)Not more than 120 days after an application for renewal of a state franchise is deemed complete, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.(B)A public hearing is not required for a new application for a state franchise.(5)(A)(4)For purposes of an application for renewal of a state franchise and issuance of a new state franchise, if the applicant has complied with subdivision (f), the commission shall conduct any hearings and issue a the state franchise or reject the application not more than 90 120 days after the public hearing required pursuant to paragraph (4). commission has deemed that application complete.
(B)For purposes of a new application for a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the application is deemed complete.(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Except as specified in subdivision (b) or (c), consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:(1)Within three years of the issuance of a state-issued franchise renewal, make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.(2)Within five years of the issuance of a state-issued franchise renewal, make video service available to all residences in its service area.(b)Notwithstanding subdivision (a), a franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.(c)Notwithstanding subdivision (a), if the commission determines that it is unreasonable for a franchiseholder to provide service to a portion of its service area due to the number of residences that would be served, the franchiseholder shall not be required to provide service to that portion of its service area. The commission shall establish a process by which a franchiseholder may request the commission to make that determination and, upon receiving such a request, shall timely make that determination.SEC. 9.SEC. 8.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 10.SEC. 9.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 11.SEC. 10.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers. subscribers based on the income of the area in which the group resides.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:(A)Within three years after it begins providing video service under this division, at least 50 percent of households in low-income communities within its service territory have access to the holders video service.(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of households in low-income communities within its service territory have access to the holders video service.(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.(d)(c)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(e)(d)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(f)(1)(e)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation. not to exceed 1 percent of the holders total monthly gross revenue received from provision of video service in the state each month from the date of the decision until the date that compliance is achieved.
(2)The commission may only impose a fine within one year of the violation occurring.(g)(f)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine. fine not to exceed 1 percent of the holders total gross revenue of its entire cable and service footprint in the state in the full calendar month immediately before the decision.
(g)This section does not require a holder to provide video service outside its wireline footprint or to match the existing service area of any cable operator.
(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics accessibility and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.(4)Low-income community means a census block group with a median household income at or below either 80 percent of the statewide median income or the income limit for lower income households described in Section 50079.5 of the Health and Safety Code.SEC. 12.SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
(e)For purposes of this section, actual locations includes addresses.
SEC. 13.SEC. 12.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction. jurisdiction, but it shall not adopt or seek to enforce any additional or different customer service or other performance standards under Section 53055.3 of, or subdivision (q), (r), or (s) of Section 53088.2 of, the Government Code, or any other authority or law.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed one thousand five hundred dollars ($1,000) ($500) for each day of each material breach, not to exceed fifty one thousand five hundred dollars ($50,000) ($1,500) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of five one thousand dollars ($5,000) ($1,000) for each day of each material breach, not to exceed three hundred thousand dollars ($300,000) ($3,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of ten two thousand five hundred dollars ($10,000) ($2,500) for each day of each material breach, not to exceed seven hundred thousand five hundred dollars ($700,000) ($7,500) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity. entity, which shall submit one-half of the penalty to the Digital Divide Account established in Section 280.5.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 14.SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code. The commissions authorization to exercise that authority, jurisdiction, and powers pursuant to this subdivision shall not exceed the authority, jurisdiction, and powers necessary to enforce this division.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)(A)Not more than 120 days after an application for renewal of a state franchise is deemed complete, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.
(B)A public hearing is not required for a new application for a state franchise.
(5)(A)For purposes of an application for renewal of a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the public hearing required pursuant to paragraph (4).
(B)For purposes of a new application for a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the application is deemed complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Except as specified in subdivision (b) or (c), consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:
(1)Within three years of the issuance of a state-issued franchise renewal, make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.
(2)Within five years of the issuance of a state-issued franchise renewal, make video service available to all residences in its service area.
(b)Notwithstanding subdivision (a), a franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.
(c)Notwithstanding subdivision (a), if the commission determines that it is unreasonable for a franchiseholder to provide service to a portion of its service area due to the number of residences that would be served, the franchiseholder shall not be required to provide service to that portion of its service area. The commission shall establish a process by which a franchiseholder may request the commission to make that determination and, upon receiving such a request, shall timely make that determination.
SEC. 9.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 10.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 11.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level, ethnicity, race, religion, or national origin. level.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:
(A)Within three years after it begins providing video service under this division, at least 50 percent of households in low-income communities within its service territory have access to the holders video service.
(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of households in low-income communities within its service territory have access to the holders video service.
(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.
(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.
(d)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(e)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(f)(1)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation.
(2)The commission may only impose a fine within one year of the violation occurring.
(g)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.
(4)Low-income community means a census block group with a median household income at or below either 80 percent of the statewide median income or the income limit for lower income households described in Section 50079.5 of the Health and Safety Code.
SEC. 12.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 13.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed one thousand dollars ($1,000) for each day of each material breach, not to exceed fifty thousand dollars ($50,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of five thousand dollars ($5,000) for each day of each material breach, not to exceed three hundred thousand dollars ($300,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of ten thousand dollars ($10,000) for each day of each material breach, not to exceed seven hundred thousand dollars ($700,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code. The commissions authorization to exercise that authority, jurisdiction, and powers pursuant to this subdivision shall not exceed the authority, jurisdiction, and powers necessary to enforce this division.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)(A)Not more than 120 days after an application for renewal of a state franchise is deemed complete, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.
(B)A public hearing is not required for a new application for a state franchise.
(5)(A)For purposes of an application for renewal of a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the public hearing required pursuant to paragraph (4).
(B)For purposes of a new application for a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the application is deemed complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Except as specified in subdivision (b) or (c), consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:
(1)Within three years of the issuance of a state-issued franchise renewal, make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.
(2)Within five years of the issuance of a state-issued franchise renewal, make video service available to all residences in its service area.
(b)Notwithstanding subdivision (a), a franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.
(c)Notwithstanding subdivision (a), if the commission determines that it is unreasonable for a franchiseholder to provide service to a portion of its service area due to the number of residences that would be served, the franchiseholder shall not be required to provide service to that portion of its service area. The commission shall establish a process by which a franchiseholder may request the commission to make that determination and, upon receiving such a request, shall timely make that determination.
SEC. 9.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 10.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 11.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level, ethnicity, race, religion, or national origin.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:
(A)Within three years after it begins providing video service under this division, at least 50 percent of households in low-income households communities within its service territory have access to the holders video service.
(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of households in low-income households communities within its service territory have access to the holders video service.
(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.
(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.
(d)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(e)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(f)(1)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation.
(2)The commission may only impose a fine within one year of the violation occurring.
(g)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(h)For purposes of this section, the commission may collect data to ensure a cable operator or video service provider that has been granted a state franchise under this division does not discriminate against or deny equal access to service to low-income households.(i)(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.
(4)Low-income household means a household with a household income at 50 percent or less of the areas median income. community means a census block group with a median household income at or below either 80 percent of the statewide median income or the income limit for lower income households described in Section 50079.5 of the Health and Safety Code.
SEC. 12.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 13.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed one thousand dollars ($1,000) for each day of each material breach, not to exceed fifty thousand dollars ($50,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of five thousand dollars ($5,000) for each day of each material breach, not to exceed three hundred thousand dollars ($300,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of ten thousand dollars ($10,000) for each day of each material breach, not to exceed seven hundred thousand dollars ($700,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal.App.3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code. The commissions authorization to exercise that authority, jurisdiction, and powers pursuant to this subdivision shall not exceed the authority, jurisdiction, and powers necessary to enforce this division.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 60th 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.
(4)(A)Not more than 120 days after an application for renewal of a state franchise is deemed complete, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.
(B)A public hearing is not required for a new application for a state franchise.
(5)(A)For purposes of an application for renewal of a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the public hearing required pursuant to paragraph (4).
(B)For purposes of a new application for a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the application is deemed complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Consistent Except as specified in subdivision (b) or (c), consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:
(1)Within three years of the issuance of a state-issued franchise renewal, make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.
(2)Within five years of the issuance of a state-issued franchise renewal, make video service available to all residences in its service area.
(b)A Notwithstanding subdivision (a), a franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.
(c)Notwithstanding subdivision (a), if the commission determines that it is unreasonable for a franchiseholder to provide service to a portion of its service area due to the number of residences that would be served, the franchiseholder shall not be required to provide service to that portion of its service area. The commission shall establish a process by which a franchiseholder may request the commission to make that determination and, upon receiving such a request, shall timely make that determination.
SEC. 9.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 10.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 11.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level, ethnicity, race, religion, or national origin.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:
(A)Within three years after it begins providing video service under this division, at least 50 percent of low-income households within its service territory have access to the holders video service.
(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of low-income households within its service territory have access to the holders video service.
(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.
(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.
(d)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(e)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(f)(1)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation.
(2)The commission may only impose a fine within one year of the violation occurring.
(g)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(h)For purposes of this section, the commission may collect data to ensure a cable operator or video service provider that has been granted a state franchise under this division does not discriminate against or deny equal access to service to low-income households.
(h)(i)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.
(4)Low-income household means a household with a household income at 50 percent or less of the areas median income.
SEC. 12.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 13.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed one thousand dollars ($1,000) for each day of each material breach, not to exceed fifty thousand dollars ($50,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of five thousand dollars ($5,000) for each day of each material breach, not to exceed three hundred thousand dollars ($300,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of ten thousand dollars ($10,000) for each day of each material breach, not to exceed seven hundred thousand dollars ($700,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code. The commissions authorization to exercise that authority, jurisdiction, and powers pursuant to this subdivision shall not exceed the authority, jurisdiction, and powers necessary to enforce this division.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(3)Not more than 120 days after the submission of an application for renewal of a state franchise, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.(4)If the franchiseholder has complied with subdivision (f), not more than 90 days after the public hearing, the commission shall issue a state franchise or reject the application for renewal.(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of 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.
(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 applicants legal name, any name under which the applicant does or will do business in this state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 180th 60th 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.
(4)(A)Not more than 120 days after an application for renewal of a state franchise is deemed complete, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.
(B)A public hearing is not required for a new application for a state franchise.
(5)(A)For purposes of an application for renewal of a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the public hearing required pursuant to paragraph (4).
(B)For purposes of a new application for a state franchise, if the applicant has complied with subdivision (f), the commission shall issue a state franchise or reject the application not more than 90 days after the application is deemed complete.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:
(1)Within three years of the issuance of a state-issued franchise renewal, a video service provider shall make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.
(2)Within five years of the issuance of a state-issued franchise renewal, a video service provider shall make video service available to all residences in its service area.
(b)A franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.
SEC. 9.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 10.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 11.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area, regardless of income level, ethnicity, race, religion, or national origin.
(b)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:
(A)Within three years after it begins providing video service under this division, at least 50 percent of low-income households within its service territory have access to the holders video service.
(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of low-income households within its service territory have access to the holders video service.
(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.
(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.
(d)In reviewing an alleged violation of subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(4)Natural disasters.
(5)The need to access private property for which access could not be obtained.
(6)Whether the holder owns or controls the facilities used to deliver video services.
(e)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(f)(1)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation.
(2)The commission may only impose a fine within one year of the violation occurring.
(g)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(h)For purposes of this section, the following definitions 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.
(4)Low-income household means a household with a household income at 50 percent or less of the areas median income.
SEC. 12.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 13.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed one thousand dollars ($1,000) for each day of each material breach, not to exceed fifty thousand dollars ($50,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of five thousand dollars ($5,000) for each day of each material breach, not to exceed three hundred thousand dollars ($300,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of ten thousand dollars ($10,000) for each day of each material breach, not to exceed seven hundred thousand dollars ($700,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise all the authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)(A)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(B)The commission may use the alternative renewal procedures described in Section 546 of Title 47 of the United States Code to review each submitted application.(3)Not more than 120 days after the submission of an application for renewal of a state franchise, the commission shall hold a public hearing to identify unserved households in the service area proposed to be served, proposed upgrades to the cable system, and service quality and reliability information.
(4)If the franchiseholder has complied with subdivision (f), not more than 90 days after the public hearing, the commission shall issue a state franchise or reject the application for renewal.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of the following:
(i)A statement that the applicant will not discriminate in the provision of video or cable service. services as provided in Section 5890.
(ii)A statement that the applicant will abide by all applicable consumer protection laws and rules.
(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 applicants legal name and name, any name under which the applicant does or will do business in this state. state, and contact information for the individual responsible for ongoing communications between the commission and the applicant.
(3)The address and telephone number of the applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)The commission shall commence accepting applications for a state franchise no later than April 1, 2007.(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants application is complete or incomplete before the 60th calendar day after the applicant submits the application.
(2)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.
(3)The failure of the commission to notify the applicant of the completeness of the application before the 180th 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.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(4)Terms imposed on the franchiseholder as a condition of holding the state franchise, including required upgrades to the cable system.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5842 is added to the Public Utilities Code, to read:5842.(a)Consistent with Section 543 of Title 47 of the United States Code, the commission shall require a video service provider, if its application for renewal is issued, to do both of the following:
(1)Within three years of the issuance of a state-issued franchise renewal, a video service provider shall make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the providers closest technologically feasible tie-in point that is actively delivering video service.
(2)Within five years of the issuance of a state-issued franchise renewal, a video service provider shall make video service available to all residences in its service area.
(b)A franchiseholder shall not be required to provide service due to factors that are beyond its control as described in subdivision (d) of Section 5890.
SEC. 8.SEC. 9.Section 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 9.SEC. 10.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 10.SEC. 11.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the franchise service area. area, regardless of income level, ethnicity, race, religion, or national origin.
(b)(1)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(c)(1)Holders or their affiliates satisfy subdivision (b) if both of the following conditions are met:
(A)Within three years after it begins providing video service under this division, at least 50 percent of low-income households within its service territory have access to the holders video service.
(B)Within five years after it begins providing video service under this division and continuing thereafter, 100 percent of low-income households within its service territory have access to the holders video service.
(2)Holders or their affiliates with fewer than 250,000 telephone customers in California satisfy the requirements of this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission.
(3)After two years of providing service pursuant to this division, a holder may apply to the commission for an extension to meet the requirements of this subdivision. Notice of this application shall also be provided to the customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly.
(2)(d)In reviewing an alleged violation of paragraph (1), subdivision (b), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(A)(1)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(B)(2)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(C)(3)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(D)(4)Natural disasters.
(E)(5)The need to access private property for which access could not be obtained.
(F)(6)Whether the holder owns or controls the facilities used to deliver video services.
(c)(e)Local entities and customers may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(d)(f)(1)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine. fine of not more than one hundred thousand dollars ($100,000) per day that the violation occurred, not to exceed a total of 5 percent of the holders annual revenue derived from providing service within its franchise service area per violation.
(2)The commission may only impose a fine within one year of the violation occurring.
(e)(g)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(f)As used in(h)For purposes of this section, equal access the following definitions apply:
(1)Access means the equal opportunity to subscribe to an offered service that provides comparable capacities and other quality-of-service metrics in a given area for comparable terms and conditions. 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 used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
(2)Equal means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
(3)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 that have direct access from the outside of the building or through a common hall.
(4)Low-income household means a household with a household income at 50 percent or less of the areas median income.
SEC. 11.SEC. 12.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 12.SEC. 13.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed five hundred dollars ($500) one thousand dollars ($1,000) for each day of each material breach, not to exceed one fifty thousand five hundred dollars ($1,500) ($50,000) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of one five thousand dollars ($1,000) ($5,000) for each day of each material breach, not to exceed three hundred thousand dollars ($3,000) ($300,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of two ten thousand five hundred dollars ($2,500) ($10,000) for each day of each material breach, not to exceed seven hundred thousand five hundred dollars ($7,500) ($700,000) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 13.SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known, and may be cited, as the Digital Equity in Video Franchising Act of 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure to for unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(5)Legislation to accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider over another.
(B)Promote widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Affirm the existing authority of the commission as established in state and federal law.
(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity to provide service.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their level of revenue from franchise fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)This division does not create a vested right in a state-issued franchise by the franchiseholder or its affiliates that precludes the state from amending the terms and conditions of a franchise.
(b)This division does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)As provided in federal law, the holder of a state franchise is not a public utility as a result of providing video service under this division. This division does not grant the commission authority to regulate the rates of video services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service means both of the following:
(1)The one-way transmission to subscribers of either video programming or other programming service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(f)Franchise fee means the fee adopted pursuant to Section 5841.
(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice service, or data services.
(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(m)OVS operator means any person or group of persons that does either of the following:
(1)Provides cable service over an open-video system directly or, through one or more affiliates, owns a significant interest in an open-video system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(o)State franchise means a franchise that is issued pursuant to this division.
(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including internet protocol or other technology. This definition does not include any (1) video programming provided by a provider of commercial mobile service, as defined in Section 332(d) of Title 47 of the United States Code. Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet.
(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(2)A local franchising entity or other local entity of the state shall not 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.
(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise all authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code.
(c)A 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.
(d)A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)(A)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(B)The commission may use the alternative renewal procedures described in Section 546 of Title 47 of the United States Code to review each submitted application.
(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include, at a minimum, 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, all of the following:
(i)A statement that the applicant will not discriminate in the provision of video or cable service.
(ii)A statement that the applicant will abide by all applicable consumer protection laws and rules.
(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 applicants 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 applicants principal place of business, and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(8)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 corporations service territory.
(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(10)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.
(g)The commission may require a corporation with wholly owned subsidiaries or affiliates to be 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.
(h)The commission shall commence accepting applications for a state franchise no later than April 1, 2007.
(i)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 requested in the application.
(2)A grant of authority to use the public rights-of-way, in exchange for the franchise fee adopted under Section 5841, in the delivery of video service, subject to state law.
(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.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to a successor in interest of the holder to which the certificate is originally granted if the transferee first submits all of the information required of the applicant by this section to the commission and complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)A video service provider that holds a franchise with a local franchising entity as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting either of the following conditions:
(1)The expiration, before any renewal or extension, of its local franchise.
(2)A mutually agreed upon date set by the local franchising entity and video service provider to terminate the franchise provided in writing by both parties to the commission.
(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local entity that it intends to initiate providing video service in all or part of the local entitys 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 service area under a state franchise.
(q)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.
SEC. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period to continue to provide video services in the area covered by the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is violating any final nonappealable court order issued pursuant to this division.
SEC. 9.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 Section 5841, 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 entitys 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 video 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. A fee under this section shall not become due unless the local entity provides documentation to the holder of a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. 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 holders gross revenues, as defined in subdivision (d).
(c)A local entity or any other political subdivision of this state shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, this section does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable state laws 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 holders 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 holders 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 holders 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 holders 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, 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 affiliates 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 resellers 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 subscribers account and thereby taken into revenue.
(f)For purposes of this section, in the case of a video service that may be bundled or integrated functionally with other services, capabilities, or applications, the state franchise fee shall be applied only to the gross revenue, as defined in subdivision (d), attributable to 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 holders 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 purposes of determining gross revenue under this division, a video service provider shall use the same method of determining revenues under generally accepted accounting 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. 10.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to video service within the service area.
(b)(1)A cable operator or video service provider that has been granted a state franchise under this division shall not discriminate against or deny equal access to service to any group of potential residential subscribers.
(2)In reviewing an alleged violation of paragraph (1), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(A)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(B)The degree to which developments or buildings are not subject to competition because of exclusive arrangements.
(C)The degree to which developments or buildings are inaccessible using reasonable technical solutions.
(D)Natural disasters.
(E)The need to access private property for which access could not be obtained.
(F)Whether the holder owns or controls the facilities used to deliver video services.
(c)Local entities may bring complaints to the commission that a holder is not offering video service as required by this section, or the commission may open an investigation on its own motion. The commission shall hold public hearings before issuing a decision. The commission may suspend or revoke the franchise if the holder fails to comply with this division.
(d)If the commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine.
(e)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine.
(f)As used in this section, equal access means the equal opportunity to subscribe to an offered service that provides comparable capacities and other quality-of-service metrics in a given area for comparable terms and conditions.
SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by a holder of a state franchise.(b)The commission shall adopt customer service requirements for a holder of a state franchise and adjudicate any customer complaints.(c)The commission may enforce customer standards and conditions.(d)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.(e)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the holder of a state franchise.
(b)The commission shall adopt and enforce customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
(e)For purposes of this section, actual locations include addresses.SEC. 12.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Any schedule of monetary penalties adopted pursuant to this section shall not exceed five hundred dollars ($500) for each day of each material breach, not to exceed one thousand five hundred dollars ($1,500) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of one thousand dollars ($1,000) for each day of each material breach, not to exceed three thousand dollars ($3,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of two thousand five hundred dollars ($2,500) for each day of each material breach, not to exceed seven thousand five hundred dollars ($7,500) for each occurrence of the material breach. For video providers subject to a franchise or license, monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation on a video provider for the same customer service failures, and other monetary damages shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
This act shall be known known, and may be cited cited, as the Digital Infrastructure and Equity in Video Competition Franchising Act of 2006. 2023.
SEC. 3.Section 5810 of the Public Utilities Code is amended to read:5810.(a)The Legislature finds and declares all of the following:
(1)Increasing competition for video and broadband services is a matter of statewide concern for all of the following reasons:(A)Video and cable services provide numerous benefits to all Californians including access to a variety of news, public information, education, and entertainment programming.(B)Increased competition in the cable and video service sector provides consumers with more choice, lowers prices, speeds the deployment of new communication and broadband technologies, creates jobs, and benefits the California economy.(C)To promote competition, the state should establish a state-issued franchise authorization process that allows market participants to use their networks and systems to provide video, voice, and broadband services to all residents of the state.(D)Competition for video service should increase opportunities for programming that appeals to Californias diverse population and many cultural communities.(1)The Digital Infrastructure and Video Competition Act of 2006 (DIVCA), as enacted by Chapter 700 of the Statutes of 2006, drastically changed the cable and video service market in California by, among other things, granting the commission sole video franchising authority in the state, a power previously held by local governments.
(2)The monumental changes to public policy in DIVCA were intended to increase competition in the cable and video service sector, speed the deployment of new communications and broadband technologies, and provide consumers with more choices and lower prices on cable video and broadband services.
(3)DIVCA has fallen short of its intended outcomes, as demonstrated by all of the following:
(A)Thousands of California households still lack access to video or broadband service, including households that are within the existing service territories of state video franchiseholders.
(B)About 87 percent of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market, according to independent analysis of state broadband availability data published by Valley Vision.
(C)The lack of competition in the video and broadband service market contributes to exorbitant prices that prevent low-income households from subscribing to service from a state video franchiseholder.
(D)There is evidence to suggest that some state video franchiseholders discriminate against low-income communities in providing access to video and broadband services, according to research published in conjunction with the Annenberg School for Communication and Journalism at the University of Southern California.
(E)Despite the state and federal governments making monetary incentives available to construct broadband infrastructure to unserved households, some state video franchiseholders choose not to participate, leaving households in their service territories without access to video or broadband service.
(4)Updates to DIVCA are needed to ensure both of the following:
(A)The commission can exercise its full legal authority to regulate the video service market, as the sole franchising authority in the state.
(B)State video franchiseholders are held to the highest legal and customer service standards as a condition of being granted the privilege of a state video franchise.
(2)(5)Legislation to develop this new process accomplish the goals described in this subdivision should adhere to all of the following principles:
(A)Create a fair and level playing field for all market competitors that does not disadvantage or advantage one service provider or technology over another.
(B)Promote the widespread access to the most technologically advanced cable and video services to all California communities in a nondiscriminatory manner and equitable manner, regardless of socioeconomic status.
(C)Protect local government revenues and control of public rights-of-way.
(D)Require market participants to comply with all applicable consumer protection laws.
(E)Complement efforts to increase investment in broadband infrastructure and close the digital divide.
(F)Continue access to and maintenance of the public, education, and government (PEG) channels.
(G)Maintain all Affirm the existing authority of the California Public Utilities Commission commission as established in state and federal statutes. law.
(3)The public interest is best served when sufficient funds are appropriated to the commission to provide adequate staff and resources to appropriately and timely process applications of video service providers and to ensure full compliance with the requirements of this division. It is the intent of the Legislature that, although video service providers are not public utilities or common carriers, the commission shall collect any fees authorized by this division in the same manner and under the same terms as it collects fees from common carriers, electrical corporations, gas corporations, telephone corporations, telegraph corporations, water corporations, and every other public utility providing service directly to customers or subscribers subject to its jurisdiction such that it does not discriminate against video service providers or their subscribers.(4)Providing an incumbent cable operator the option to secure a state-issued franchise through the preemption of an existing cable franchise between a cable operator and any political subdivision of the state, including, but not limited to, a charter city, county, or city and county, is an essential element of the new regulatory framework established by this act as a matter of statewide concern to best ensure equal protection and parity among providers and technologies, as well as to achieve the goals stated by the Legislature in enacting this act.(b)It is the intent of the Legislature that a video service provider shall pay as rent a franchise fee to the local entity in whose jurisdiction service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity in order to provide service. The Legislature recognizes that local entities should be compensated for the use of the public rights-of-way and that the franchise fee is intended to compensate them in the form of rent or a toll, similar to that which the court found to be appropriate in Santa Barbara County Taxpayers Association v. Board of Supervisors for the County of Santa Barbara (1989) 209 Cal. App. 3d 940.
(c)It is the intent of the Legislature that collective bargaining agreements be respected.
(d)It is the intent of the Legislature that the definition of gross revenues in this division shall result in local entities maintaining their existing level of revenue from franchise fees. fees existing as of January 1, 2007.
SEC. 4.Section 5820 of the Public Utilities Code is amended to read:5820.(a)Nothing in this This division shall not be deemed as creating does not create a vested right in a state-issued franchise by the franchise holder franchiseholder or its affiliates that would preclude precludes the state from amending the provisions that establish the terms and conditions of a franchise.
(b)Nothing in this This division shall not be construed to does not eliminate or reduce a telephone corporations or video service providers 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 applicants 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).
(c)The As provided in federal law, the holder of a state franchise shall not be deemed is not a public utility as a result of providing video service under this division. This division shall not be construed as granting does not grant the commission authority to the commission to regulate the rates, terms, and conditions rates of video services, except as explicitly set forth in this division. services.
SEC. 5.Section 5830 of the Public Utilities Code is amended to read:5830.For purposes of this division, the following words have the following meanings: definitions apply:
(a)Broadband means any service defined as broadband in the most recent Federal Communications Commission inquiry pursuant to Section 706 of the Telecommunications Act of 1996 (P.L. (Public Law 104-104).
(b)Cable operator means any person or group of persons that does either provides of the following:
(1)Provides cable service over a cable system and directly, or through one or more affiliates, owns a significant interest in a cable system; or that otherwise system.
(2)Otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, as set forth in Section 522(5) of Title 47 of the United States Code.
(c)Cable service is defined as the means both of the following:
(1)The one-way transmission to subscribers of either video programming, programming or other programming service, and subscriber service.
(2)Subscriber interaction, if any, that is required for the selection or use of video programming or other programming service, as set forth in Section 522(6) of Title 47 of the United States Code.
(d)Cable system is defined as set forth in Section 522(7) of Title 47 of the United States Code.
(e)Commission means the Public Utilities Commission.(f)(e)Franchise means an initial authorization, or renewal of an authorization, issued by a franchising entity, regardless of whether the authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction and operation of any network in the right-of-way capable of providing video service to subscribers.
(g)(f)Franchise fee means the fee adopted pursuant to Section 5840. 5841.
(h)(g)Holder or holder of a state franchise means a person or group of persons that has been issued a state franchise from the commission pursuant to this division.
(i)(h)Incumbent cable operator means a cable operator or OVS operator serving subscribers under a franchise in a particular city, county, or city and county franchise area on January 1, 2007.
(j)(i)Local entity means any city, county, city and county, or joint powers authority within the state within whose jurisdiction a holder of a state franchise under this division may provide cable service or video service.
(k)(j)Local franchising entity means the city, county, city and county, or joint powers authority entitled to require franchises and impose fees on cable operators, as set forth in Section 53066 of the Government Code.
(l)(k)Network means a component of a facility that is wholly or partly physically located within a public right-of-way and that is used to provide video service, cable service, voice, voice service, or data services.
(m)(l)Open-video system or OVS means those services set forth in Section 573 of Title 47 of the United States Code.
(n)(m)OVS operator means any person or group of persons that does either provides of the following:
(1)Provides cable service over an open-video system directly, or directly or, through one or more affiliates, owns a significant interest in an open-video system, or that otherwise system.
(2)Otherwise controls or is responsible for, through any arrangement, the management of an open-video system.
(o)(n)Public rights-of-way means the area along and upon any public road or highway, or along or across any of the waters or lands within the state.
(p)(o)State franchise means a franchise that is issued pursuant to this division.
(q)(p)Subscriber means a person who lawfully receives video service from the holder of a state franchise for a fee.
(r)(q)Video programming means programming provided by, or generally considered comparable to programming provided by, a television broadcast station, as set forth in Section 522(20) of Title 47 of the United States Code.
(s)(r)Video service means video programming services, cable service, or OVS service provided through facilities located at least in part in public rights-of-way without regard to delivery technology, including Internet internet protocol or other technology. This definition does not include (1) any video programming provided by a provider of commercial mobile service provider service, as defined in Section 332(d) of Title 47 of the United States Code, or (2) video programming provided as part of, and via, a service that enables users to access content, information, electronic mail, or other services offered over the public Internet. Code.
(t)(s)Video service provider means an entity providing video service.
SEC. 6.Section 5840 of the Public Utilities Code is amended to read:5840.(a)(1)The commission is the sole franchising authority for a state franchise to provide video service under this division.
(a)The commission is the sole franchising authority for a state franchise to provide video service under this division. Neither the commission nor any(2)A local franchising entity or other local entity of the state may shall not require the holder of a state franchise to obtain a separate franchise or otherwise impose any requirement on any holder of a state franchise 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)The application process described in this section and the authority granted to the commission under this section shall not exceed the provisions set forth in this section.(3)Sections 53066, 53066.01, 53066.2, and 53066.3 of the Government Code do not apply to a holder of a state franchise.
(b)The commission may exercise all authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to Subchapter V-A (commencing with Section 521) of Chapter 5 of Title 47 of the United States Code.
(c)Any A 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.
(d)No A person or corporation shall not 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 violating 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).
(e)(1)A holder of a state franchise that is seeking a renewal of its state franchise shall submit an application to the commission requesting renewal of its state franchise.
(2)(A)The commission shall review each submitted application consistent with Section 546 of Title 47 of the United States Code.
(B)The commission may use the alternative renewal procedures described in Section 546 of Title 47 of the United States Code to review each submitted application.
(e)(f)The application for a state franchise shall be made on a form prescribed by the commission and shall include include, at a minimum, 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, all of the following:
(i)A statement that the applicant will not discriminate in the provision of video or cable services as provided in Section 5890. service.
(ii)A statement that the applicant will abide by all applicable consumer protection laws and rules as provided in Section 5900. rules.
(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 applicants 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 applicants principal place of business, along with and the contact information for the person responsible for ongoing communications with the commission.
(4)The names and titles of the applicants principal officers.
(5)The legal name, address, and telephone number of the applicants 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)A description of the households that are known to be unserved in the video service area footprint that the applicant proposes to serve.
(7)(8)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 corporations service territory.
(8)(9)The expected date for the deployment of video service in each of the areas identified in paragraph (6).
(9)(10)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.
(f)(g)The commission may require that a corporation with wholly owned subsidiaries or affiliates is to be 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.
(g)(h)The commission shall commence accepting applications for a state franchise no later than April 1, 2007.
(h)(1)The commission shall notify an applicant for a state franchise and any affected local entities whether the applicants 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.(i)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 (q), Section 5841, in the delivery of video service, subject to the laws of this state. state law.
(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.
(j)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.
(k)It is unlawful to provide video service without a state or locally issued franchise.
(l)Subject to the notice requirements of this division, a state franchise may be transferred to any a successor in interest of the holder to which the certificate is originally granted, provided that granted if the transferee first submits all of the information required of the applicant by this section to the commission and is in compliance complies with Section 5970.
(m)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 holders 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 holders 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 holders 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. division. The holder shall describe the new boundaries of the affected service areas after the proposed change is made.
(n)Prior to Before offering video service in a local entitys jurisdiction, the holder of a state franchise shall notify the local entity that the video service provider will provide video service in the local entitys 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.
(o)Any A video service provider that currently holds a franchise with a local franchising entity is entitled to as of January 1, 2007, may seek a state franchise in the service area designated in that franchise upon meeting any either of the following conditions:
(1)The expiration, prior to before 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)(p)When a video service provider that holds a state franchise provides the notice required pursuant to subdivision (n) to a local jurisdiction entity that it intends to initiate providing video service in all or part of that the local entitys 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 service area under a state franchise.
(p)(q)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.
(q)(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 operators 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 entitys 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. 7.Section 5841 is added to the Public Utilities Code, to read:5841.(a)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 a 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 operators 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.
(b)(1)The state franchise fee shall apply equally to all video service providers in the local entitys jurisdiction.
(2)Notwithstanding paragraph (1), 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 5850 of the Public Utilities Code is amended to read:5850.(a)A state-issued franchise shall only be valid for 10 years after the date of issuance, and the holder shall issuance. The holder may apply for a renewal of the state franchise for an additional 10-year period if it wishes to continue to provide video services in the area covered by the franchise after the expiration of the franchise.
(b)Except as provided in this section, the criteria and process described in Section 5840 shall apply to a renewal registration, and the commission shall not impose any additional or different criteria. registration.
(c)Renewal of a state franchise shall be consistent with federal law and regulations.
(d)The commission shall not renew the franchise if the video service provider is in violation of violating any final nonappealable court order issued pursuant to this division.
SEC. 9.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 (q) of Section 5840, 5841, 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 entitys 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 video 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 A fee under this section shall not become due unless the local entity provides documentation to the holder of the a state franchise supporting the percentage paid by the incumbent cable operator serving the area within the local entitys jurisdiction. The fee shall be calculated as a percentage of the holders 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 holders gross revenues, as defined in subdivision (d).
(c)No A local entity or any other political subdivision of this state may shall not 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 shall not demand the use of any other calculation method or definition of gross revenues. However, nothing in this section shall be construed to does not limit a local entitys ability to impose utility user taxes and other generally applicable taxes, fees, and charges under other applicable provisions of state law laws 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 holders 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 holders 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 holders 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 holders 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; 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 parties, 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 affiliates 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 resellers 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 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 subscribers 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 holders 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. 10.Section 5890 of the Public Utilities Code is amended to read:5890.(a)It is the policy of the State of California that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access to service within the service area.
(a)(b)(1)A cable operator or video service provider that has been granted a state franchise under this division may shall not discriminate against or deny equal access to service to any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. subscribers.
(b)Holders or their affiliates with more than 1,000,000 telephone customers in California satisfy subdivision (a) if all of the following conditions are met: (1)Within three years after it begins providing video service under this division, at least 25 percent of households with access to the holders video service are low-income households. (2)Within five years after it begins providing video service under this division and continuing thereafter, at least 30 percent of the households with access to the holders video service are low-income households. (3)Holders provide service to community centers in underserved areas, as determined by the holder, without charge, at a ratio of one community center for every 10,000 video subscribers. The holder shall not be required to take its facilities beyond the appropriate demarcation point outside the community center building or perform any inside wiring. The community center may not receive service from more than one state franchise holder at a time under this section. For purposes of this section, community center means any facility operated by an organization that has qualified for the California Teleconnect Fund, as established in Section 280 and that will make the holders service available to the community. (c)Holders or their affiliates with fewer than 1,000,000 telephone customers in California satisfy this section if they offer video service to all customers within their telephone service area within a reasonable time, as determined by the commission. However, the commission shall not require the holder to offer video service if the cost to provide video service is substantially above the average cost of providing video service in that telephone service area. (d)When a holder provides video service outside of its telephone service area, is not a telephone corporation, or offers video service in an area where no other video service is being offered, other than direct-to-home satellite service, there is a rebuttable presumption that discrimination in providing service has not occurred within those areas. The commission may review the holders proposed video service area to ensure that the area is not drawn in a discriminatory manner. (e)For holders or their affiliates with more than 1,000,000 telephone customers in California, either of the following shall apply: (1)If the holder is predominantly deploying fiber optic facilities to the customers premise, the holder shall provide access to its video service to a number of households at least equal to 25 percent of the customer households in the holders telephone service area within two years after it begins providing video service under this division, and to a number at least equal to 40 percent of those households within five years. (2)If the holder is not predominantly deploying fiber optic facilities to the customers premises, the holder shall provide access to its video service to a number of households at least equal to 35 percent of the households in the holders telephone service area within three years after it begins providing video service under this division, and to a number at least equal to 50 percent of these households within five years. (3)A holder shall not be required to meet the 40-percent requirement in paragraph (1) or the 50-percent requirement in paragraph (2) until two years after at least 30 percent of the households with access to the holders video service subscribe to it for six consecutive months. (4)If 30 percent of the households with access to the holders video service have not subscribed to the holders video service for six consecutive months within three years after it begins providing video service, the holder may submit validating documentation to the commission. If the commission finds that the documentation validates the holders claim, then the commission shall permit a delay in meeting the 40-percent requirement in paragraph (1) or the 50-percent requirement in paragraph (2) until the time that the holder does provide service to 30 percent of the households for six consecutive months. (f)(1)After two years of providing service under this division, the holder may apply to the state franchising authority for an extension to meet the requirements of subdivision (b), (c), or (e). Notice of this application shall also be provided to the telephone customers of the holder, the Secretary of the Senate, and the Chief Clerk of the Assembly. (2)Upon application, the franchising authority shall hold public hearings in the telephone service area of the applicant. (3)(2)In reviewing the failure to satisfy the obligations contained in subdivision (b), (c), or (e), the franchising authority an alleged violation of paragraph (1), the commission shall consider any factors that are beyond the control of the holder, including, but not limited to, all of the following:
(A)The ability of the holder to obtain access to rights-of-way under reasonable terms and conditions.
(B)The degree to which developments or buildings are not subject to competition because of existing exclusive arrangements.
(C)The degree to which developments or buildings are inaccessible using reasonable technical solutions under commercially reasonable terms and conditions. solutions.
(D)Natural disasters.
(4)The franchising authority may grant the extension only if the holder has made substantial and continuous effort to meet the requirements of subdivision (b), (c), or (e). If an extension is granted the franchising authority shall establish a new compliance deadline.(E)The need to access private property for which access could not be obtained.
(F)Whether the holder owns or controls the facilities used to deliver video services.
(g)(c)Local governments entities may bring complaints to the state franchising authority commission that a holder is not offering video service as required by this section, or the state franchising authority commission may open an investigation on its own motion. The state franchising authority commission 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.
(h)(d)If the state franchising authority commission finds that the holder is in violation of this section, it may, in addition to any other remedies provided by law, impose a fine not to exceed 1 percent of the holders total monthly gross revenue received from provision of video service in the state each month from the date of the decision until the date that compliance is achieved. fine.
(i)(e)If a court finds that the holder of the state franchise is in violation of this section, the court may immediately terminate the holders state franchise, and the court shall, in addition to any other remedies provided by law, impose a fine not to exceed 1 percent of the holders total gross revenue of its entire cable and service footprint in the state in the full calendar month immediately prior to the decision. fine.
(j)(f)As used in this section, the following definitions shall apply: equal access means the equal opportunity to subscribe to an offered service that provides comparable capacities and other quality-of-service metrics in a given area for comparable terms and conditions.
(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. (2)Customers household means those residential households located within the holders existing telephone service area that are customers of the service by which that telephone service area is defined.(3)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. (4)Low-income household means those residential households located within the holders existing telephone service area where the average annual household income is less than thirty-five thousand dollars ($35,000) based on the United States Census Bureau estimates adjusted annually to reflect rates of change and distribution through January 1, 2007. (k)Nothing in this section shall be construed to require a holder to provide video service outside its wireline footprint or to match the existing service area of any cable operator. SEC. 11.Section 5895 of the Public Utilities Code is amended to read:5895.(a)The commission shall collect granular data on the actual locations served by the a holder of a state franchise.
(b)The commission shall adopt customer service requirements for a holder of a state franchise and adjudicate any customer complaints.
(c)The commission may enforce customer standards and conditions.
(c)(d)The commission shall not publicly disclose any personally identifiable information collected pursuant to this section.
(d)(e)All information submitted to the commission pursuant to this section shall be disclosed to the public only as provided for pursuant to Section 583.
SEC. 12.Section 5900 of the Public Utilities Code is amended to read:5900.(a)The holder of a state franchise shall comply with the provisions of Sections 53055, 53055.1, 53055.2, and 53088.2 of the Government Code, and any other customer service standards pertaining to the provision of video service established by federal law or regulation or adopted by subsequent enactment of the Legislature. All customer service and consumer protection standards under this section shall be interpreted and applied to accommodate newer or different technologies while meeting or exceeding the goals of the standards.
(b)The holder of a state franchise shall comply with provisions of Section 637.5 of the Penal Code and the privacy standards contained in Section 551 and following of Title 47 of the United States Code.
(c)The local entity shall may enforce all of the customer service and protection standards of this section with respect to complaints received from residents within the local entitys jurisdiction, but it may not adopt or seek to enforce any additional or different customer service or other performance standards under Section 53055.3 or subdivision (q), (r), or (s) of Section 53088.2 of the Government Code, or any other authority or provision of law. jurisdiction.
(d)The local entity shall, by ordinance or resolution, provide a schedule of penalties for any material breach by a holder of a state franchise of this section. No monetary Monetary penalties shall not be assessed for a material breach if it is out of the reasonable control of the holder. Further, no monetary penalties may be imposed prior to January 1, 2007. Any schedule of monetary penalties adopted pursuant to this section shall in no event not exceed five hundred dollars ($500) for each day of each material breach, not to exceed one thousand five hundred dollars ($1,500) for each occurrence of a material breach. However, if a material breach of this section has occurred, and the local entity has provided notice and a fine or penalty has been assessed, and if a subsequent material breach of the same nature occurs within 12 months, the penalties may be increased by the local entity to a maximum of one thousand dollars ($1,000) for each day of each material breach, not to exceed three thousand dollars ($3,000) for each occurrence of the material breach. If a third or further material breach of the same nature occurs within those same 12 months, and the local entity has provided notice and a fine or penalty has been assessed, the penalties may be increased to a maximum of two thousand five hundred dollars ($2,500) for each day of each material breach, not to exceed seven thousand five hundred dollars ($7,500) for each occurrence of the material breach. With respect to For video providers subject to a franchise or license, any monetary penalties assessed under this section shall be reduced dollar-for-dollar to the extent any liquidated damage or penalty provision of a current cable television ordinance, franchise contract, or license agreement in effect as of January 1, 2007, imposes a monetary obligation upon on a video provider for the same customer service failures, and no other monetary damages may shall not be assessed.
(e)The local entity shall give the video service provider written notice of any alleged material breach of the customer service standards of this division and allow the video provider at least 30 days from receipt of the notice to remedy the specified material breach.
(f)A material breach for the purposes of assessing penalties shall be deemed to have occurred for each day within the jurisdiction of each local entity, following the expiration of the period specified in subdivision (e), that any material breach has not been remedied by the video service provider, irrespective of the number of customers or subscribers affected.
(g)Any penalty assessed pursuant to this section shall be remitted to the local entity, which shall submit one-half of the penalty to the Digital Divide Account established in Section 280.5. entity.
(h)Any interested person may seek judicial review of a decision of the local entity in a court of appropriate jurisdiction. For this purpose, a court of law shall conduct a de novo review of any issues presented.
(i)This section shall not preclude a party affected by this section from utilizing using any judicial remedy available to that party without regard to this section. Actions taken by a local legislative body, including a local franchising entity, pursuant to this section shall not be binding upon on a court of law. For this purpose, a court of law shall conduct de novo review of any issues presented.
(j)For purposes of this section, material breach means any substantial and repeated failure of a video service provider to comply with service quality and other standards specified in subdivision (a).
(k)The Public Advocates Office of the Public Utilities Commission commission shall have the authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise and enforcement of this section, section and Sections 5890 and 5950. For this purpose, the office shall have access to any information in the possession of the commission subject to all restrictions on disclosure of that information that are applicable to the commission.
SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
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Date
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Status
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| Feb 1, 2024 | Consideration of Governor's veto stricken from file. |
| Jan 3, 2024 | Consideration of Governor's veto pending. |
| Oct 8, 2023 | Vetoed by Governor. |
| Sep 15, 2023 | Enrolled and presented to the Governor at 4 p.m. |
| Sep 11, 2023 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 73. Noes 1. Page 3186.). |
| Sep 7, 2023 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 9 pursuant to Assembly Rule 77. |
| Sep 7, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 2484.). |
| Sep 5, 2023 | Read second time. Ordered to third reading. |
| Sep 1, 2023 | Read second time and amended. Ordered returned to second reading. |
| Sep 1, 2023 | From committee: Amend, and do pass as amended. (Ayes 5. Noes 0.) (September 1). |
| Aug 21, 2023 | In committee: Referred to APPR suspense file. |
| Jul 13, 2023 | Withdrawn from committee. |
| Jul 13, 2023 | Read second time and amended. Re-referred to Com. on JUD. |
| Jul 13, 2023 | Re-referred to Com. on APPR. |
| Jul 12, 2023 | From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 12. Noes 2.) (July 10). |
| Jun 29, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on E., U. & C. |
| Jun 21, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on E., U. & C. |
| Jun 14, 2023 | Referred to Coms. on E., U. & C. and JUD. |
| Jun 1, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 31, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 48. Noes 18. Page 1995.) |
| May 22, 2023 | Read second time. Ordered to third reading. |
| May 18, 2023 | Read second time and amended. Ordered returned to second reading. |
| May 18, 2023 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 3.) (May 18). |
| May 10, 2023 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 27, 2023 | Re-referred to Com. on APPR. |
| Apr 26, 2023 | Read second time and amended. |
| Apr 25, 2023 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 2.) (April 19). |
| Apr 10, 2023 | Re-referred to Com. on C. & C. |
| Apr 7, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on C. & C. Read second time and amended. |
| Mar 15, 2023 | Re-referred to Com. on C. & C. |
| Mar 14, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on C. & C. Read second time and amended. |
| Jan 26, 2023 | Referred to Com. on C. & C. |
| Dec 6, 2022 | From printer. May be heard in committee January 5. |
| Dec 5, 2022 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 11, 2023 | AB 41 Holden Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Sep 7, 2023 | Assembly 3rd Reading AB41 Holden et al. By Bradford | Senate Floor |
Passed |
|
| Sep 1, 2023 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| Aug 21, 2023 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 10, 2023 | Do pass as amended, but first amend, and re-refer to the Committee on [Judiciary] | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
|
| May 31, 2023 | AB 41 Holden Assembly Third Reading | Assembly Floor |
Passed |
|
| May 18, 2023 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 19, 2023 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Communications and Conveyance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| #OaklandUndivided | ** Against | |
| Access Humboldt | ** Against | |
| Active San Gabriel Valley | ** Against | |
| Alliance for A Better Community | ** Against | |
| Alliance for Community Media - Western Region | ** Support | |
| Altadena Library District | ** Support | |
| AltaMed Health Services | ** Support | |
| Arts for LA | ** Against | |
| CalCom | * Support | Apr 19, 2023 |
| California Black Health Network | ** Support | |
| California Broadband & Video Association | ** Against | |
| California Chamber Of Commerce | ** Against | |
| California Community Foundation | ** Against | |
| California Emerging Technology Fund | * Support | Apr 19, 2023 |
| California Native Vote Project | ** Against | |
| California State Association Of Counties | ** Support | |
| California Workforce Association | ** Support | |
| Center For Powerful Public Schools | ** Support | |
| City Of Pleasanton | ** Support | |
| Common Sense Media | ** Against | |
| Communications Workers of America - District 9 | ** Against | |
| Communities and Schools of Los Angeles | * Against | Aug 21, 2023 |
| Communities in Schools of Los Angeles | ** Against | |
| Community Clinic Association of Los Angeles County | ** Support | |
| Community Coalition of The Antelope Valley | ** Against | |
| County Of San Diego | ** Support | |
| County of Santa Clara | ** Support | |
| Destination Crenshaw | ** Against | |
| Digital Equity Initiative | * Support | Apr 19, 2023 |
| Digital Equity LA | * Against | Aug 21, 2023 |
| Downtown Los Angeles Chamber of Commerce | ** Against | |
| Dtla Chamber of Commerce | ** Support | |
| Electronic Frontier Foundation | ** Against | |
| EveryoneOn | ** Support | |
| GPSN | ** Against | |
| Healing and Justice Center | ** Against | |
| Inner City Struggle | ** Against | |
| Innovate Public Schools | ** Support | |
| Institute for Local Self-Reliance | ** Against | |
| Kid City Hope Place | ** Against | |
| LA-Tech.org | ** Against | |
| latino equality alliance | ** Support | |
| Latino Equity Alliance | ** Support | |
| League Of California Cities | ** Support | |
| Livable California | ** Support | |
| Long Beach Area Chamber of Commerce | ** Against | |
| Los Angeles Coalition for Excellent Public Schools | ** Support | |
| Los Angeles Unified School District | ** Support | |
| Lynwood Unified School District | ** Support | |
| Media Alliance | ** Against | |
| Mediajustice | ** Against | |
| Michelson Center For Public Policy | ** Against | |
| NextGen California | ** Against | |
| Orange County Business Council | ** Against | |
| Our Voice: Communities for Quality Education | ** Against | |
| Pacoima Beautiful | ** Against | |
| Para Los Niños | ** Against | |
| Royal County Representatives of California | * Support | Apr 19, 2023 |
| Rural County Representatives of California | ** Against | |
| San Diego County Of | ** Support | |
| San Gabriel Valley Economic Partnership | ** Against | |
| Small Business Majority | ** Support | |
| Southeast Community Development Corporation | ** Against | |
| The Childrens Partnership | ** Against | |
| The Utility Reform Network | ** Against | |
| Unite-LA | ** Against | |
| United Parents and Students | ** Against | |
| US Telecom | * Against | Jul 10, 2023 |
| YMCA of Metropolitan LA | ** Support | |
| YMCA of Metropolitan Los Angeles | ** Support |
GOVERNOR'S VETO
GV Bill Id:AB 41
Author:(Holden)
As Enrolled Ver:September 12, 2023
2/3 vote
SUMMARY
This bill would have made various changes to California's cable video franchise regulation laws, including, but not limited to, clarifying the California Public Utilities Commission's (CPUC) cable franchise regulatory authority, extending timelines for the franchise renewal process at the CPUC, prohibiting franchises from denying potential subscribers equal access to services based on the community income of those subscribers, and updating certain maximum fines for customer service violations to reflect inflation rates.
Senate Amendments
- Remove references to terms related to broadband service from the bill's definition of equal access.
- Delete the bill's anti-discrimination safe harbors.
- Removes franchise buildout requirements.
- Delete modifications to state and local fines.
- Clarify the renewal process to conform to CPUC rules of practice and procedure and require the CPUC to approve or reject a franchise renewal within 120 days of deeming an application complete.
- Reinstate provisions of existing law that support collection of household broadband access data, and make other technical and conforming changes.
- Adds additional factors the CPUC must consider in reviewing alleged violation of the bill's anti-discrimination provisions.
- Provides a franchise holder with an opportunity to cure a violation before the CPUC may revoke or suspend a state franchise for violations of anti-discrimination requirements.
- Clarifies that this bill does not require a franchise holder to provide video service outside of its service territory.
- Increases the limits on fines for franchise holders for violations of customer service standards.
Governor's Veto Message
This bill makes minor changes to the Digital Infrastructure and Video Competition Act (DIVCA). Two years ago, I signed SB 28 (2021) [Caballero], which made minor changes to DIVCA. In signing that bill, I encouraged the Legislature to go further on DIVCA reform. Unfortunately, this bill does not go far enough.
While I greatly value and appreciate the efforts made by the author, the changes this bill makes will not meaningfully increase digital equity in California. I deeply committed to providing access to broadband services to ALL Californians. So much so that in 2021, I worked with the Legislature to pass a historic $6 billion broadband infrastructure investment to bridge the Digital Divide.
If we are going to close the Digital Divide once and for all, we must build on these efforts and consider strategic reforms to the policy tools at our disposal. To that end, I look forward to partnering with the Legislature to further our broadband access and affordability efforts.
COMMENTS
- This bill would have established a stronger anti-discrimination standard for cable franchises. Existing law prohibits cable franchises from discriminating against potential customers based on the income of the residents in the community. However, existing law also establishes various “safe-harbors” by which a cable franchise is deemed to comply with anti-discrimination requirements. These safe harbors have limited the CPUC's ability to pursue allegations of income discrimination as many franchises may meet the existing safe harbor criteria. This bill would eliminated existing safe harbors and updated cable franchise anti-discrimination requirements to prohibit franchises from denying potential subscribers equal access to service based on the income of the community in which the potential subscribers reside. This bill also would have prohibited, through its equal access standards, providers from denying service or offering inferior services to a community based on the community's income. The bill's removal of existing safe harbors arguably could have enabled the CPUC to investigate and remedy any potential cases of income discrimination and denial of equal access.
- This bill would have expanded stakeholder engagement opportunities during CPUC franchise reviews. Existing law establishes a state franchise application review process that is essentially ministerial, with deadlines that limit opportunities for stakeholder input on franchise issuances and renewals. Existing law requires the CPUC to determine whether a cable franchise application is complete within 30 days of receiving that application. Once the CPUC determines that an application is complete, existing law requires the CPUC to approve the franchise within 14 days. While these deadlines help ensure a speedy approval process for an applicant, they also serve to prevent stakeholders from engaging with the CPUC and submitting comments about franchises during the renewal process. These deadlines are also not sufficient to enable the CPUC to hold any hearings on a franchise's application, which prevents nearly all public participation in the franchise renewal process. To address this issue, this bill would have extended the timeline for the CPUC to process franchise applications and renewals from 44 days to 6 months. Specifically, this bill would have extended the deadline for the CPUC's completeness review from 30 days to 60 days, and extended the timeline for the CPUC to approve or reject a complete application from 14 days to 120 days. This bill proposed to require the CPUC to hold any hearings on a franchise application during the 120 day period after the CPUC verified that an application is complete. The extension of deadlines proposed by this bill could have helped improve stakeholder engagement on cable franchise renewals while ensuring that the CPUC acts on franchise applications in a timely manner.
- This bill would have clarified the CPUC's authority to pursue remedies for franchise violations. Existing law allows avenues for the CPUC, local entities, and the courts to terminate a cable franchise or impose fines if a franchise holder violates the terms of its franchise requirements, including existing anti-discrimination provisions. Under existing law, if the CPUC finds that a franchise has violated franchise requirements, the CPUC may offer opportunities for the franchise to remedy its violation to prevent a termination of the franchise. Under specified circumstances, the CPUC or a court may also revoke or suspend a franchise agreements. Other remedies may include many negotiated terms, including fines and opportunities to offer service. This bill would have clarified that that the CPUC can seek remedies that include the ability to cure a violation through the offer of video service within a specified geographic area. This bill also proposed to increase the level of fines that may be imposed on a franchise holder, which had not been previously updated since 2006.
- This bill applied to video service, but could have helped improve broadband connectivity. Many cable franchise holders are also internet service providers, using their facilities and infrastructure to deliver both video and broadband service to subscriber's home. While consumers may not distinguish between their cable video service and broadband service, federal law classifies broadband service as a distinct legal category from video service. For example, under federal law broadband is considered as an "information service," and it prohibits cable franchise regulators, such as the CPUC, from using their cable regulatory powers to regulate broadband services – even when both services use the same facilities. Existing federal statute (Title 47 United States Code Section 544) expressly prohibits franchise regulators from using their franchise powers to set requirements for video programming or information services, except for establishing requirements related to changes in channel offerings. Federal Communications Commission (FCC) orders and regulations have affirmed those limitations. Federal regulation (Title 47 Code of Federal Regulations Section 76.43) states, "A franchising authority may not regulate the provision of any services other than cable services offered over the cable system of a cable operator, with the exception of channel capacity on institutional networks." As a result, local and state franchise regulators are generally pre-empted from using cable franchise powers to set requirements for broadband services. Nonetheless, because this bill could have lead to improvements in the cable system overall, which delivers both broadband and video services, this bill may have led to improvement in broadband connectivity as an inherent consequence too. Additionally, while this bill does not require the CPUC to regulate broadband services using its cable franchise powers, this bill may better enable the CPUC to ensure that communities within existing service territories can obtain equal access to cable services.
According to the Author
"The Digital Infrastructure in Video and Cable Act of 2006 (DIVCA) has fallen short of its promises through the limitation of the CPUC's authority as well as little incentive for providers to ensure equal access of video services to low-income households. AB 41 will rename DIVCA to DEVFA or the Digital Equity in Video Franchising Act of 2023 and prioritize the right to equal access of broadband capable infrastructure for all Californian's and strengthen the anti-discrimination standards."
Arguments in Support
According to supporters of this bill, AB 41 would have advanced long overdue reforms to the Digital Infrastructure and Video Competition Act of 2006.
Arguments in Opposition
According to a coalition of consumer organizations opposed to this bill, it fell short of its potential and therefore would fail to produce the more competitive, consumer-friendly, thriving market for broadband services it initially promised. The opposition claims that the final version of this bill diminished equity and protected the status quo at the expense of California communities.
FISCAL COMMENTS
According to the Assembly Appropriations Committee, this bill would have created significant new workload at the CPUC, the costs of which are likely in the low millions of dollars annually.
VOTES
ASM COMMUNICATIONS AND CONVEYANCE: 10-2-1
YES: Boerner Horvath, Connolly, Holden, Low, Maienschein, Papan, Luz Rivas, Rodriguez, Schiavo, Weber
NO: Davies, Hoover
ABS, ABST OR NV: Jim Patterson
ASM APPROPRIATIONS: 11-3-2
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega
NO: Dixon, Mathis, Sanchez
ABS, ABST OR NV: Megan Dahle, Robert Rivas
ASSEMBLY FLOOR: 48-18-14
YES: Addis, Aguiar-Curry, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pellerin, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Low, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
ABS, ABST OR NV: Alvarez, Bains, Cervantes, Grayson, Mathis, Stephanie Nguyen, Pacheco, Papan, Petrie-Norris, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua
SENATE FLOOR: 38-0-2
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ABS, ABST OR NV: Gonzalez, Newman
ASSEMBLY FLOOR: 73-1-6
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Davies, Dixon, Mike Fong, Vince Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO: Megan Dahle
ABS, ABST OR NV: Bonta, Essayli, Flora, Friedman, Papan, Jim Patterson
UPDATED
VERSION: September 12, 2023
CONSULTANT: Emilio Perez / C. & C. / (916) 319-2637 FN: 0002549
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 41
Author:(Holden)
As Amended Ver:September 1, 2023
Majority vote
SUMMARY
This bill makes various changes to California's cable video franchise regulation laws, including, but not limited to, clarifying the California Public Utilities Commission's (CPUC) cable franchise regulatory authority, extending timelines for the franchise renewal process at the CPUC, prohibiting franchises from denying potential subscribers equal access to services based on the community income of those subscribers, and updating certain maximum fines for customer service violations to reflect inflation rates.
Senate Amendments
- Remove references to terms related to broadband service from the bill's definition of equal access.
- Delete this bill's anti-discrimination safe harbors.
- Removes franchise buildout requirements.
- Delete modifications to state and local fines.
- Clarify the renewal process to conform to CPUC rules of practice and procedure and require the CPUC to approve or reject a franchise renewal within 120 days of deeming an application complete.
- Reinstate provisions of existing law that support collection of household broadband access data, and make other technical and conforming changes.
- Adds additional factors the CPUC must consider in reviewing alleged violation of the bill's anti-discrimination provisions.
- Provides a franchise holder with an opportunity to cure a violation before the CPUC may revoke or suspend a state franchise for violations of anti-discrimination requirements.
- Clarifies that this bill does not require a franchise holder to provide video service outside of its service territory.
- Increases the limits on fines for franchise holders for violations of customer service standards.
COMMENTS
- This bill establishes a new, higher anti-discrimination standard for cable franchises. Existing law prohibits cable franchises from discriminating against potential customers based on the income of the residents in the community. However, existing law also establishes various "safe-harbors" by which a cable franchise is deemed to comply with anti-discrimination requirements. These safe harbors have limited the CPUC's ability to pursue allegations of income discrimination as many franchises may meet the existing safe harbor criteria. This bill eliminates these existing safe harbors and updates cable franchise anti-discrimination requirements to prohibit franchises from denying potential subscribers equal access to service based on the income of the community in which the potential subscribers reside. This bill also prohibits, through its equal access standards, providers from denying service or offering inferior services to a community based on the community's income. This bill's removal of existing safe harbors may also better enable the CPUC to investigate and remedy any potential cases of income discrimination and denial of equal access.
- This bill expands stakeholder engagement opportunities during CPUC franchise reviews. Existing law establishes a state franchise application review process that is essentially ministerial, with deadlines that limit opportunities for stakeholder input on franchise issuances and renewals. Existing law requires the CPUC to determine whether a cable franchise application is complete within 30 days of receiving that application. Once the CPUC determines that an application is complete, existing law requires the CPUC to approve the franchise within 14 days. While these deadlines help ensure a speedy approval process for an applicant, they also serve to prevent stakeholders from engaging with the CPUC and submitting comments about franchises during the renewal process. These deadlines are also not sufficient to enable the CPUC to hold any hearings on a franchise's application, which prevents nearly all public participation in the franchise renewal process. To address this issue, this bill would extend the timeline for the CPUC to process franchise applications and renewals from 44 days to 6 months. Specifically, this bill extends the deadline for the CPUC's completeness review from 30 days to 60 days, and it extends the timeline for the CPUC to approve or reject a complete application from 14 days to 120 days. This bill requires the CPUC to hold any hearings on a franchise application during the 120 day period after the CPUC has verified that an application is complete. The extension of these deadlines may help improve stakeholder engagement on cable franchise renewals while ensuring that the CPUC acts on franchise applications in a timely manner.
- This bill clarifies the CPUC's authority to pursue remedies for franchise violations. This bill and existing law allow avenues for the CPUC, local entities, and the courts to terminate a cable franchise or impose fines if a franchise holder violates the terms of its franchise requirements, including existing anti-discrimination provisions. Under existing law, if the CPUC finds that a franchise has violated franchise requirements, the CPUC may offer opportunities for the franchise to remedy its violation to prevent a termination of the franchise. Under specified circumstances, the CPUC or a court may also revoke or suspend a franchise agreements. Other remedies may include many negotiated terms, including fines and opportunities to offer service. This bill clarifies that that the CPUC can seek remedies that include the ability to cure a violation through the offer of video service within a specified geographic area. This bill also increases the level of fines that may be imposed on a franchise holder, which had not been previously updated since 2006.
- This bill is applies to video service, but may help improve broadband connectivity. Many cable franchise holders are also internet service providers, using their facilities and infrastructure to deliver both video and broadband service to subscriber's home. While consumers may not distinguish between their cable video service and broadband service, federal law classifies broadband service as a distinct legal category from video service. For example, under federal law broadband is considered as an "information service," and it prohibits cable franchise regulators, such as the CPUC, from using their cable regulatory powers to regulate broadband services – even when both services use the same facilities. Existing federal statute (Title 47 United States Code Section 544) expressly prohibits franchise regulators from using their franchise powers to set requirements for video programming or information services, except for establishing requirements related to changes in channel offerings. FCC orders and regulations have affirmed those limitations. Federal regulation (Title 47 Code of Federal Regulations Section 76.43) states, "A franchising authority may not regulate the provision of any services other than cable services offered over the cable system of a cable operator, with the exception of channel capacity on institutional networks." As a result, local and state franchise regulators are generally pre-empted from using cable franchise powers to set requirements for broadband services. Nonetheless, because this bill may lead to improvements in the cable system overall, which delivers both broadband and video services, this bill may lead to improvement in broadband connectivity as an inherent consequence too. Additionally, while this bill does not require the CPUC to regulate broadband services using its cable franchise powers, this bill may better enable the CPUC to ensure that communities within existing service territories can obtain equal access to cable services.
According to the Author
"The Digital Infrastructure in Video and Cable Act of 2006 (DIVCA) has fallen short of its promises through the limitation of the CPUC's authority as well as little incentive for providers to ensure equal access of video services to low-income households. AB 41 will rename DIVCA to DEVFA or the Digital Equity in Video Franchising Act of 2023 and prioritize the right to equal access of broadband capable infrastructure for all Californian's and strengthen the anti-discrimination standards."
Arguments in Support
According to supporters of this bill, AB 41 would advance long overdue reforms to the Digital Infrastructure and Video Competition Act of 2006.
Arguments in Opposition
According to a coalition of consumer organizations opposed to this bill, it falls short of its potential and therefore will fail to produce the more competitive, consumer-friendly, thriving market for broadband services it initially promised. The opposition claims that the final version of this bill diminishes equity and protects the status quo at the expense of California communities.
FISCAL COMMENTS
According to the Assembly Appropriations Committee, this bill creates significant new workload at the CPUC, the costs of which are likely in the low millions of dollars annually.
VOTES:
ASM COMMUNICATIONS AND CONVEYANCE: 10-2-1
YES: Boerner Horvath, Connolly, Holden, Low, Maienschein, Papan, Luz Rivas, Rodriguez, Schiavo, Weber
NO: Davies, Hoover
ABS, ABST OR NV: Jim Patterson
ASM APPROPRIATIONS: 11-3-2
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega
NO: Dixon, Mathis, Sanchez
ABS, ABST OR NV: Megan Dahle, Robert Rivas
ASSEMBLY FLOOR: 48-18-14
YES: Addis, Aguiar-Curry, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pellerin, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Low, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
ABS, ABST OR NV: Alvarez, Bains, Cervantes, Grayson, Mathis, Stephanie Nguyen, Pacheco, Papan, Petrie-Norris, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua
SENATE FLOOR: 38-0-2
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ABS, ABST OR NV: Gonzalez, Newman
UPDATED
VERSION: September 1, 2023
CONSULTANT: Emilio Perez / C. & C. / (916) 319-2637 FN: 0002014
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 41 |
THIRD READING
Bill No: AB 41
Author: Holden (D), et al.
Amended: 9/1/23 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 12-2, 7/10/23
AYES: Bradford, Ashby, Dodd, Durazo, Eggman, Grove, McGuire, Min, Newman, Rubio, Skinner, Stern
NOES: Seyarto, Wilk
NO VOTE RECORDED: Dahle, Becker, Caballero, Gonzalez
SENATE APPROPRIATIONS COMMITTEE: 5-0, 9/1/23
AYES: Portantino, Ashby, Bradford, Wahab, Wiener
NO VOTE RECORDED: Jones, Seyarto
SENATE APPROPRIATIONS COMMITTEE: 5-0, 9/1/23
AYES: Portantino, Ashby, Bradford, Wahab, Wiener
NO VOTE RECORDED: Jones, Seyarto
ASSEMBLY FLOOR: 48-18, 5/31/23 - See last page for vote
SUBJECT: Telecommunications: The Digital Equity in Video Franchising Act of 2023
SOURCE: Author
DIGEST:
This bill makes various changes to California’s cable video franchise regulation laws, including, but not limited to, clarifying the California Public Utilities Commission’S (CPUC) cable franchise regulatory authority, extending timelines for the franchise renewal process at the CPUC, prohibiting franchises from denying potential subscribers equal access to services based on the community income of those subscribers, and updating certain maximum fines for customer service violations to reflect inflation rates.
ANALYSIS:
Existing law:
- Establishes a 10-year state license for cable video service providers and gives the CPUC sole authority for approving cable video franchises in the state. (Public Utilities Code §5800 et. seq.)
- Prohibits the state from designating a franchisee as a public utility because it obtains a state video service license. Existing law prohibits the CPUC from using its state franchise authority as an authority to regulate the rates, terms, and conditions of video services beyond statutory requirements for issuing franchises. (Public Utilities Code §5820)
- Establishes requirements for video service providers applying for a state franchise and specifies the information franchise holders must provide to the CPUC to obtain and retain a state franchise. (Public Utilities Code §5840 et. seq.)
- Prohibits franchised video providers from discriminating against or denying access to their services on the basis of a potential subscriber’s income. Existing law establishes various safe harbors by which cable franchises are presumed to comply with anti-discrimination requirements. (Public Utilities Code §5890 (a-f))
- Requires the CPUC to consider the following criteria when determining if a franchise holder has violated prohibitions against discrimination for providing video service:
- The franchisee’s ability to obtain access to rights-of-way under reasonable terms and conditions.
- The extent to which developments or buildings are not subject to competition because of exclusive arrangements.
- The degree to which developments or buildings are inaccessible using reasonable technical solutions under commercially reasonable terms.
- Natural disasters. (Public Utilities Code §5890 (f))
- Allows local governments to bring complaints to the CPUC regarding cable franchises that are not offering video service required by this section. Existing law authorizes the CPUC to initiate an investigation on its own, regardless of whether it has received a complaint from a local government. Existing law provides that the CPUC may suspend or revoke the license of a video service provider that fails to comply with the requirements for its franchise. Existing law also specifies fines that the CPUC or a court may assess on violating franchisees. (Public Utilities Code §5890 (g-i))
- Authorizes local governments to enforce certain consumer service and protection requirements. Existing law requires local governments to adopt a schedule of fines for any cable franchise that violates these customer service and protection requirements. Existing law also establishes caps on the amount of those fines. (Public Utilities Code §5900)
This bill:
- Clarifies the CPUC’s authority to establish certain requirements for cable franchises during the issuance of a new franchise or the renewal of an existing franchise.
- Extends the deadline for the CPUC to approve or deny a cable franchise application from 44 days to six months and requires the CPUC to do all of the following as part of its application review process:
- The CPUC must notify an applicant about an application’s completeness within 60 days of the application’s submission.
- The CPUC must hold hearings regarding a franchise application and approve or reject a franchise application within 120 days of deeming an application complete.
- Updates the Digital Infrastructure and Video Competition Act of 2006’s (DIVCA) anti-discrimination prohibition to a higher standard by prohibiting providers from denying potential residential subscribers equal access to cable service, regardless of the income of the community in which those subscribers live.
- Deletes safe harbors in existing law under which cable franchises are presumed to comply with DIVCA’s prohibition against income discrimination. Instead, this bill requires the CPUC to consider the following factors when determining whether a cable franchise has violated the bill’s anti-discrimination requirements:
- The ability of a franchise holder to obtain reasonable access to rights-of-way.
- The degree to which certain buildings or developments are inaccessible due to exclusive arrangements or cannot be served with reasonable technical solutions.
- Disasters and other acts that could not have been reasonably anticipated, such as acts of terrorism.
- The inability to obtain permission to access private property.
- The extent to which a franchise holder does not own or control the communications facilities used to deliver video services.
- The need to deploy facilities for the purpose of connecting a military facility or enterprise customer.
- Clarifies the CPUC’s authority to negotiate options to remedy anti-discrimination violations in lieu of terminating a cable franchise, including allowing a provider to remedy a violation by offering service to a specific community.
- Updates local government fines for franchises violating certain customer service requirements to reflect increases in the consumer price index since 2006.
Background
This bill establishes a new, higher anti-discrimination standard for cable franchises. Existing law prohibits cable franchises from discriminating against potential customers based on the income of the residents in the community. However, existing law also establishes various safe harbors by which a cable franchise is deemed to comply with anti-discrimination requirements. These safe harbors may limit the CPUC’s ability to pursue allegations of income discrimination as many franchises may meet the existing safe harbor criteria. This bill eliminates these existing safe harbors and updates cable franchise anti-discrimination requirements to prohibit franchises from denying potential subscribers equal access to service based on the income of the community in which the potential subscribers reside. This bill prohibits, through it’s equal access standards, providers from denying service or offering inferior services to a community based on the community’s income. This bill’s removal of existing safe harbors may also better enable the CPUC to investigate and remedy any potential cases of income discrimination.
This bill expands stakeholder engagement opportunities during CPUC franchise reviews. Nothing in existing law prohibits the CPUC from using its existing proceeding authority to hold hearings and obtain stakeholder input on cable franchise applications. However, existing law establishes franchise application review deadlines that limit opportunities for stakeholder input on franchise issuances and renewals. Existing law requires the CPUC to determine whether a cable franchise application is complete within 30 days of receiving that application. Once the CPUC determines that an application is complete, existing law requires the CPUC to approve the franchise within 14 days. While these deadlines may help ensure a speedy renewal process, they also largely prevent stakeholders from engaging with the CPUC and submitting comments about franchises during the renewal process. These deadlines are also not sufficient to enable the CPUC to hold any hearings on a franchise’s application. This bill extends the timeline for the CPUC to process franchise applications and renewals from 44 days to 6 months. Specifically, the bill extends the deadline for the CPUC’s completeness review from 30 days to 60 days, and it extends the timeline for the CPUC to approve or reject a complete application from 14 days to 120 days. This bill requires the CPUC to hold any hearings on a franchise application during the 120 day period after the CPUC has verified that an application is complete. The extension of these deadlines may help improve stakeholder engagement on cable franchise renewals while ensuring that the CPUC acts on franchise applications in a timely manner.
This bill clarifies the CPUC’s authority to offer certain remedies for franchise violations. Both this bill and existing law allows the CPUC to terminate a cable franchise if a franchise holder violates the terms of its franchise requirements. Under existing law, if the CPUC finds that a franchise has violated these requirements, the CPUC may offer opportunities for the franchise to remedy its violation to prevent a termination of the franchise. Remedies may include many negotiated terms, including fines and opportunities to offer service. While both existing law and this bill requires franchises to expand their service territories, this bill clarifies that that the CPUC can seek remedies that include the ability to cure a violation through the offer of video service within a specified geographic area.
The proxy war: using cable franchise powers to regulate broadband access. Many cable franchise holders are also internet service providers, using their facilities to deliver both video and broadband service. While consumers may not distinguish between their cable video service and broadband service, federal law classifies broadband as an “information service,” and it prohibits cable franchise regulators from using their cable regulatory powers to regulate broadband services – even when both services use the same facilities. Existing federal statute (Title 47 U.S.C. §544) expressly prohibits franchise regulators from using their franchise powers to set requirements for video programming or information services, except for establishing requirements related to changes in channel offerings. FCC orders and regulations have affirmed those limitations. Federal regulation (Title 47 Code of Federal Regulations §76.43) states, “A franchising authority may not regulate the provision of any services other than cable services offered over the cable system of a cable operator, with the exception of channel capacity on institutional networks.” As a result, local and state franchise regulators are generally pre-empted from using cable franchise powers to set requirements for broadband services. While this bill does not require the CPUC to regulate broadband services using its cable franchise powers, this bill may better enable the CPUC to ensure that communities within existing service territories can obtain equal access to cable services.
Related/Prior Legislation
AB 414 (Reyes, 2023) defines equal access to broadband service and establishes a state policy of supporting subscribers’ equal access to broadband services. The bill’s definition of equal access is substantially similar to the one included in this bill. The bill is currently pending before the full Senate.
AB 2752 (Wood, Chapter 801, Statutes of 2022) clarified that the CPUC can collect data from broadband providers at the address level for the purposes of mapping access to broadband services and prohibited the CPUC from disclosing personal consumer information protected by existing telecommunications consumer privacy laws.
AB 2748 (Holden, 2022) would have contained provisions substantially similar to certain portions of this bill. The bill would have revised DIVCA’s requirements, including requiring the CPUC to use its cable franchise powers to regulate the provision of broadband services. The bill died in the Senate.
SB 28 (Caballero, Chapter 673, Statutes of 2021) required the CPUC to collect granular data on actual locations served by state cable franchises and required the CPUC to adopt customer service requirements for cable franchises and adjudicate customer complaints. The bill prohibited the CPUC from disclosing personally identifiable information collected under the bill.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Committee on Appropriations, the CPUC estimates one-time costs of about $1.7 million and ongoing costs of $2.3 million annually (ratepayer funds) to hold public hearings for renewing franchises, conduct investigations, perform enforcement actions, monitor and enforce equal access provisions, regulate terms and conditions of video services, and conduct regulatory proceedings, among other things.
SUPPORT: (Verified 9/6/23)
Alliance for Community Media, Western Region
Altadena Library District
AltaMed Health Services
California Black Health Network
California Workforce Association
Center for Powerful Public Schools
City of Pleasanton
Community Clinic Association of Los Angeles County
County of San Diego
County of Santa Clara
EveryoneOn
Innovate Public Schools
Latino Equity Alliance
League of California Cities
Livable California
Los Angeles Coalition for Excellent Public Schools
Los Angeles Unified School District
Lynwood Unified School District
Small Business Majority
YMCA of Metropolitan LA
OPPOSITION: (Verified 9/6/23)
#OaklandUndivided
Access Humboldt
Active San Gabriel Valley
Alliance for a Better Community
Arts for LA
California Community Foundation
California Native Vote Project
Common Sense Media
Communications Workers of America-District 9
Communities in Schools of Los Angeles
Community Coalition of the Antelope Valley
Destination Crenshaw
Downtown Los Angeles Chamber of Commerce
Electronic Frontier Foundation
GPSN
Healing and Justice Center
Inner City Struggle
Institute for Local Self-Reliance
Kid City Hope Place
LA-Tech.org
Long Beach Area Chamber of Commerce
Media Alliance
MediaJustice
Michelson Center for Public Policy
NextGen California
Orange County Business Council
Our Voice: Communities for Quality Education
Pacoima Beautiful
Para Los Niños
Rural County Representatives of California
San Gabriel Valley Economic Partnership
Southeast Community Development Corporation
The Children’s Partnership
The Utility Reform Network
UNITE-LA
United Parents and Students
ARGUMENTS IN SUPPORT: According to the author:
The Digital Infrastructure in Video and Cable Act of 2006 (DIVCA) was passed with the intention of opening the video and cable market to new emerging providers to drive down costs for consumers while promoting the expansion of services. According to Connect California, 3 million California residents live in single-provider monopolies. Over 17 years later and DIVCA has fallen short of its promises largely due to outdated anti-discrimination statutes, a lack of focus for digital equity issues, and little incentive generated through existing law for providers to give equal access to low-income and unserved areas. Inspired by the Federal Digital Equity Act, this bill will rename DIVCA to the Digital Equity in Video Franchising Act and refocus efforts to prioritizing the right to equal access to broadband capable infrastructure for all Californian's and strengthening anti-discrimination statutes.
ARGUMENTS IN OPPOSITION: Opponents largely oppose this bill because this bill does not contain certain requirements, including provisions requiring the CPUC to use its cable franchise powers to build-out broadband infrastructure to unserved locations in the state. In opposition, The Utility Reform Network states:
The COVID-19 pandemic has demonstrated the need to support efforts to expand the availability of high-quality, reliable, and affordable broadband for all Californians and throughout the nation. AB 41 does not help the state take important and needed steps to address complex digital divide issues.
ASSEMBLY FLOOR: 48-18, 5/31/23
AYES: Addis, Aguiar-Curry, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pellerin, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NOES: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Low, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
NO VOTE RECORDED: Alvarez, Bains, Cervantes, Grayson, Mathis, Stephanie Nguyen, Pacheco, Papan, Petrie-Norris, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua
Prepared by: Sarah Smith / E., U. & C. / (916) 651-4107
9/6/23 16:25:44
SENATE COMMITTEE ON
Senator Anthony Portantino, Chair
2023 - 2024 Regular Session
AB 41 (Holden) - Telecommunications: The Digital Equity in Video Franchising Act of 2023
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, require the California Public Utilities Commission (CPUC) to conduct hearings and issue a state franchise or reject each application for a state franchise not more than 120 days after the CPUC has deemed the application complete, and extend deadlines related to the CPUC’s review of applications for state franchises.
Fiscal Impact:
- The CPUC estimates one-time costs of about $1.7 million and ongoing costs of $2.3 million annually (ratepayer funds) to hold public hearings for renewing franchises, conduct investigations, perform enforcement actions, monitor and enforce equal access provisions, regulate terms and conditions of video services, and conduct regulatory proceedings, among other things.
Background:
The federal government, through the Federal Communications Commission (FCC), regulates cable operators and requires a cable operator to receive a cable franchise before offering cable service. FCC regulations allow state and local governments to act as local franchise authorities (LFAs) that issue franchises to cable operators and that regulate cable operators and cable television services. FCC regulations circumscribe the regulatory authority of LFAs, specifically by capping the fees such an authority may charge a cable operator and restricting an LFA from regulating the provision of most non-cable services, including broadband internet access service offered over a cable system by an incumbent cable operator. However, FCC regulations assert that build-out requirements and customer service requirements are lawful and separate from the franchise fees that are restricted by the FCC order.
In California, prior to 2006, local governments acted as LFAs for cable operators and other providers of video service. In 2006, state law, known as DIVCA, designated the CPUC as the sole LFA in the state, thereby displacing the role of cities and counties as LFAs. (See AB 2987 (Nunez), Chapter 700, Statutes of 2006.) DIVCA limited the CPUC’s authority to regulate providers of video service by explicitly stating that DIVCA not be construed as granting authority to the CPUC to regulate the rates, terms and conditions of video services, except as explicitly set forth in DIVCA. In addition, DIVCA prohibited a franchise holder from discriminating against or denying access to service to any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. And, DIVCA laid out specific criteria—such as that, within three years of beginning to provide services, at least 25% of households with access to the holder’s video service be low-income households— completion of which satisfy a franchisee’s obligation to not discriminate on the basis of income.
DIVCA franchise holders provide more than just video services. For example, many also provide broadband service through use of the same infrastructure used to provide video service. According to information provided by the CPUC in 2022, based on third-party data (MediaCensus, a subsidiary of S&P Global Market Intelligence), 97% of broadband subscribers in California receive service from one of only five companies— AT&T, Charter, Comcast, Cox and Frontier —all of which hold DIVCA franchises.
Proposed Law:
This bill would revise and recast the Digital Infrastructure and Video Competition Act of 2006 to, among other things, rename the act as the Digital Equity in Video Franchising Act of 2023, require the CPUC to conduct hearings and issue a state franchise or reject each application for a state franchise not more than 120 days after the CPUC has deemed the application complete, and extend deadlines related to the CPUC’s review of applications for state franchises. Specifically, this bill would:
- Rename the Digital Infrastructure and Video Competition Act of 2006 as the Digital Equity in Video Franchising Act of 2023.
- Require the CPUC to conduct any hearings and issue a state franchise or a reject each application for a state franchise not more than 120 days after the CPUC has deemed the application complete.
- Extend deadlines related to the CPUC’s review of applications for state franchises.
- Revise the revenues excluded from the definition of “gross revenue” for purposes of calculating the franchise fee for a local jurisdiction.
- Establish as a policy of the state that subscribers and potential subscribers of a state video franchiseholder should benefit from equal access, as defined, to video service within the franchise service area.
Expand the prohibition on certain cable operators or video service providers from discriminating against, or denying access to service to, any group of potential residential subscribers to include denial of equal access, as specified. - Require the CPUC to enforce customer service requirements for a holder of a state franchise.
- Provide that no state reimbursement is required because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
Related Legislation:
AB 414 (Reyes, 2023) would define equal access to broadband service and establishes a state policy of supporting subscribers’ equal access to broadband services. The bill’s definition of equal access is substantially similar to the one included in this bill.
AB 2748 (Holden, 2022) contained provisions substantially similar to those in this bill. This bill would establish build-out obligations, anti-discrimination prohibitions, and maximum fines that differ from the provisions in AB 2748. The bill died in the Senate.
AB 2752 (Wood, Chapter 801, Statutes of 2022) clarified that the CPUC can collect data from broadband providers at the address level for the purposes of mapping access to broadband services and prohibited the CPUC from disclosing personal consumer information protected by existing telecommunications consumer privacy laws.
SB 28 (Caballero, Chapter 673, Statutes of 2021) required the CPUC to collect granular data on actual locations served by state cable franchises and required the CPUC to adopt customer service requirements for cable franchises and adjudicate customer complaints. The bill prohibited the CPUC from disclosing personally identifiable information collected under the bill.
Staff Comments:
The CPUC projects it will receive 15 applications for renewing franchises in the next five fiscal years. Currently, there are 27 franchise holders, so within the next ten fiscal years, the CPUC estimates receiving an application to renew the existing franchise from each franchise holder. In Decision 21-02-029, the CPUC indicated the existence of at least 26,000 wireline related facilities (i.e., central offices, headends, hubs, and nodes) in Tier 2 and 3 high fire-threat districts. Depending on the equal access requirements the CPUC adopts to implement the bill, the CPUC estimates, at minimum, the potential need to evaluate tens of thousands of facilities related to a cable system. Evaluating the cable system will enable the CPUC to better understand whether or not the franchise holder or company has offered video services in comparable terms and conditions. The condition of the service could be impacted by the cable system’s upgrades and reliability information.
-- END --
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Steven Bradford, Chair
2023 - 2024 Regular
Bill No: AB 41 Hearing Date: 7/10/2023
Author: | Holden | ||
Version: | 6/29/2023 Amended | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Sarah Smith | ||
SUBJECT: Telecommunications: The Digital Equity in Video Franchising Act of 2023
DIGEST: This bill modifies state cable franchising requirements, including establishing a new renewal process for existing franchises, prohibiting franchises from denying any potential subscriber equal access to services, establishing build-out requirements for franchises seeking renewal, and requires all subscribers to have equal access to services offered by a cable franchise.
ANALYSIS:
Existing law:
- Establishes a 10-year state license for cable video service providers and gives the California Public Utilities Commission (CPUC) sole authority for approving cable video franchises in the state. (Public Utilities Code §5800 et. seq.)
- Prohibits the state from designating a franchisee as a public utility because it obtains a state video service license. Existing law prohibits the CPUC from using its state franchise authority as an authority to regulate the rates, terms, and conditions of video services beyond statutory requirements for issuing franchises. (Public Utilities Code §5820)
- Establishes requirements for video service providers applying for a state franchise and specifies the information franchise holders must provide to the CPUC to obtain and retain a state franchise. (Public Utilities Code §5840 et. seq.)
- Prohibits franchised video providers from discriminating against or denying access to their services on the basis of a potential subscriber’s income. Existing law establishes criteria for determining whether a video service provider has discriminated against residential subscribers. Existing law establishes different criteria for demonstrating compliance with non-discrimination prohibitions for franchise holders providing telephone service to more than one million Californians and those franchise holders providing telephone service to less than one million Californians. (Public Utilities Code §5890 (a-f))
- Requires the CPUC to consider the following criteria when determining if a franchise holder has violated prohibitions against discrimination for providing video service:
- The franchisee’s ability to obtain access to rights-of-way under reasonable terms and conditions.
- The extent to which developments or buildings are not subject to competition because of exclusive arrangements.
- The degree to which developments or buildings are inaccessible using reasonable technical solutions under commercially reasonable terms.
- Natural disasters. (Public Utilities Code §5890 (f))
- Allows local governments to bring complaints to the CPUC regarding cable franchises that are not offering video service required by this section. Existing law authorizes the CPUC to initiate an investigation on its own, regardless of whether it has received a complaint from a local government. The CPUC may suspend or revoke the license of a video service provider that fails to comply with the requirements for its franchise. Existing law also specifies fines that the CPUC or a court may assess on violating franchisees. (Public Utilities Code §5890 (g-i))
- Requires the CPUC to collect granular data on actual locations served by a cable franchise in the state. The CPUC must adopt customer service requirements for cable franchises and adjudicate customer complaints. Existing law prohibits the CPUC from disclosing personally identifiable information and prohibits the CPUC from publicly disclosing any of the data reported by franchise holders unless the CPUC orders the disclosure of the data through a proceeding. Any current or former CPUC employee or officer who discloses data outside of an order is guilty of a misdemeanor under existing law. (Public Utilities Code §5895 and §583)
This bill:
- Establishes a new proceeding process for each cable franchise renewal and sets deadlines for the CPUC to complete its review of a cable franchise renewal application. This bill requires the CPUC to notify an applicant about an application’s completeness within 60 days of the application’s submission. If the CPUC does not provide an applicant with this notice within 60 days of an application’s submission, this bill specifies that the franchise certificate will be deemed issued.
- Requires the CPUC to hold a public hearing for each cable franchise renewal application within 120 days of deeming an application complete. These hearings must identify unserved households in the franchise’s proposed service territory, proposed upgrades to the cable system, and service quality and reliability information. This bill requires the CPUC to reject or approve a cable franchise renewal application within 90 days of deeming the application complete.
- Exempts applications to create new cable franchises from this bill’s public hearing requirements and requires the CPUC to reject or approve a new cable franchise application within 90 days of deeming the application complete.
- Establishes a buildout obligation as a condition for renewal of a cable franchise by requiring the CPUC to direct each cable franchise to expand its facilities to serve all its residential customers in areas where there is at least 25 residences per linear mile of cable within three years. This bill also requires the CPUC to direct a cable franchise to make video service available to all residences within its service area within five years of renewing a franchise. This bill establishes a process by which the CPUC can determine that mandatory build out to a specific portion of a service territory is unreasonable. This bill specifies that cable franchises are not obligated to provide service due to factors beyond the provider’s control.
- Expands the information that cable franchises must include in their renewal applications, including requiring applications to include the following:
- A statement that the cable franchise will abide by all applicable consumer protection laws and rules.
- Contact information for the individual responsible for communications between the cable franchise and the CPUC.
- A description of unserved households in the applicant’s existing service territory.
- Expands the CPUC’s authority to regulate the terms, conditions, and service requirements for cable franchises. This bill authorizes the CPUC to take action to regulate cable service beyond those activities expressly authorized in statute.
- Replaces Digital Infrastructure and Video Competition Act of 2006’s (DIVCA’s) existing prohibition on income discrimination with a prohibition on denying equal access to any type of subscriber in its service territory.
- Defines various terms, including the following:
- “Access” means the franchise 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. If more than one technology is used, the technologies shall provide similar two-way broadband internet accessibility, speeds, capacities, latency, and other quality-of-service metrics and similar video programming.
- “Equal” means the opportunity to subscribe to an offered service that provides comparable speeds, and other quality-of-service metrics in a given area for comparable terms and conditions.
- “Low-income household” means a household with a household income at 50 percent or less of the area’s median income.
- Deletes existing safe harbors under which cable franchises are presumed to comply with DIVCA’s prohibition against income discrimination and establishes new safe harbor provisions. This bill specifies that a franchise is presumed to comply with this bill’s anti-discrimination prohibitions if the franchise provides access to cable services to at least 50 percent of the low-income households in its service territory within three years and provides all low-income households in its service territory access to cable within five years. This bill gives the CPUC the authority to determine an appropriate time for cable franchises with fewer than 250,000 telephone customers to offer video service to all customers within their telephone service area to comply with the bill’s non-discrimination prohibitions.
- Increases maximum fines for cable franchises violating various provisions of the bill’s provisions, including increasing the maximum local fines that may be assessed for violations of specified consumer protection requirements and maximum fines for violating the state-level anti-discrimination prohibitions.
Background
The proxy war: using cable franchise powers to regulate broadband access. While this bill does not expressly require the CPUC to use its cable franchise powers to regulate the offer of broadband services, this bill makes a number of findings about DIVCA’s failure to ensure broader access to broadband service and implies that expanding access to broadband services is a goal of this bill. Several of this bill’s provisions that would require universal cable build-out obligations as a condition of maintaining a cable franchise may also be interpreted as requiring cable franchises to provide universal broadband access.
While federal and state law distinguishes cable service from broadband service, cable franchises under DIVCA also frequently provide broadband service through the same infrastructure they use for cable service, and technological advances in streaming video may limit the degree to which consumers distinguish between their cable and broadband services. Data from the CPUC’s 2021 annual DIVCA report shows that approximately 95 percent of California households with access to broadband meeting 100 megabits per second speeds have that access from an internet service provider that is also a DIVCA franchise. The use of cable systems to deliver broadband services is generally known as “mixed-use,” and rules regarding regulating mixed-use cable systems have generated conflicts over regulators’ franchise powers. A number of cities have attempted to use their cable franchise powers to regulate streaming video services and other internet-based services. Thus far, the Federal Communications Commission (FCC) has asserted that franchise authorities are preempted from using their franchising powers to regulate other non-video services offered by cable franchises, and courts have largely concurred with the FCC’s position.
Existing federal law authorizes franchise issuers to regulate service quality of cable service; however, federal law also limits the extent to cable franchise regulators can regulate non-cable services delivered by cable franchises. Existing federal statute (Title 47 U.S.C. §544) expressly prohibits franchise regulators from regulating the “…services, facilities, and equipment provided by a cable operator except to the extent consistent with this subchapter.” Federal statutes subsequently clarify that franchise regulators’ power only extends to cable services, and FCC orders have affirmed those limitations. Federal regulation (Title 47 Code of Federal Regulations §76.43) states, “A franchising authority may not regulate the provision of any services other than cable services offered over the cable system of a cable operator, with the exception of channel capacity on institutional networks.” To the extent that the intent of this bill is interpreted as expanding CPUC regulatory authority over cable services to regulate the provision of broadband service, this bill may be federally pre-empted.
Bill would expand CPUC proceedings for cable franchise applications. This bill establishes a new application review process for applications to establish a cable franchise or renew an existing franchise. This bill requires the CPUC to hold a public hearing and make a number of determinations impacting a franchise’s services and footprint as part of each cable franchise renewal application.
While this bill specifies that an application for a new cable franchise does not require a hearing, existing CPUC rules of practice and procedure indicate that the CPUC does not permit the use of an advice letter process to approve the expansion of existing service or the operation of new services without a formal proceeding. Under the CPUC rules of practice and procedure, the advice letter process is generally reserved for noncontroversial matters that do not require hearings or modifications of existing CPUC enforcement requirements. Since this bill requires the CPUC to hold a public hearing on each cable franchise renewal, this bill would likely require the CPUC conduct a formal proceeding for the renewal of each cable franchise. To-date, the CPUC has issued 30 different cable franchises. Each cable franchise is renewed on a different timeline. As a result, this bill may require the CPUC to conduct a formal proceeding for each of these 30 franchises when they seek renewal.
Some of the application review requirements in this bill also appear to conflict with each other. While this bill requires the CPUC to hold a hearing on conditions of a franchise’s approval within 120 days after determining that an application is complete, this bill does not specify when that hearing process must end or whether the hearing may occur as part of the CPUC’s existing proceeding process. This bill also specifies that a franchise certificate will be deemed issued if the CPUC fails to notify an applicant about the completeness of an application within 60 days of the application’s receipt. It is unclear how the CPUC can hold a public hearing as a condition of renewing a franchise if the franchise’s certificate is already deemed issued.
Bill’s build-out obligations are likely infeasible and may constitute an unreasonable franchise requirement. This bill establishes a buildout obligation as a condition of maintaining a cable franchise. This bill requires the CPUC to direct each cable franchise to expand its facilities to all residential households within its service territory where there are at least 25 residences per linear mile of cable, as measured by the provider’s closest technologically feasible tie-in point actively delivering video service. This bill also requires cable franchises to make video service available to all residences in its service area within five years. No existing information exists to indicate which communities would fall within the category of having at least 25 residences per linear mile of cable. This bill would likely require the CPUC to collect data and measure the density of residences based on their proximity to cable facilities to identify build-out needs for each cable franchise.
While this bill gives the CPUC the authority to determine whether these build out obligations are unreasonable, this authorization may not be sufficient to prevent the bill’s buildout obligations from constituting an unreasonable franchise requirement under federal law. Existing federal law prohibits cable franchise authorities from imposing “unreasonable” conditions for cable franchising. The FCC has adopted rules to ensure that build-out obligations balance community needs with operator costs. In its First Report and Order, the FCC adopted rules to implement provisions of the Communications Act of 1934 related to cable franchise requirements imposed by local franchise authorities (LFAs). The FCC’s order states the following regarding build-out requirements:
In sum, we find, based on the record as a whole, that build-out requirements imposed by LFAs can operate as unreasonable barriers to competitive entry. The Commission has broad authority under Section 621(a)(1) to determine whether particular LFA conditions on entry are unreasonable. Exercising that authority, we find that Section 621(a)(1) prohibits LFAs from refusing to award a competitive franchise because the applicant will not agree to unreasonable build-out requirements.
A utility by any other name? This bill contains a number of provisions that would substantially change the process of obtaining and maintaining a cable franchise, including establishing buildout obligations and anti-discrimination provisions that may have the practical effect of giving the CPUC the authority to designate an incumbent cable provider for each residential address in the state and regulate the terms and conditions of that service. While this bill does not provide the CPUC with the authority to regulate the rates of cable services, this bill would establish requirements on cable providers and provide the CPUC with regulatory enforcement in a manner that may have the practical effect of converting cable franchises into utilities. Federal statute (47 U.S.C. §541) prohibits the regulation of cable systems as common carriers or utilities. Generally, a common carrier is distinguished from other carriers through requirements to provide its service to any consumer willing to pay, unless the carrier has grounds for refusal. By requiring cable franchises to provide all residents with equal access to cable services unless the CPUC determines that such a requirement is unreasonable, this bill may have the effect of treating cable franchises as common carriers. Designating incumbent providers for certain locations may have the practical effect of discouraging new entrants to the cable market from serving those locations, limiting potential competition.
Bill appears to position DIVCA as a tool to address digital discrimination. This bill’s prohibition on denying “equal access” to services offered by cable franchises is substantially similar to the definition included in the federal Infrastructure Investment and Jobs Act (IIJA) provisions regarding preventing digital discrimination. The IIJA defined equal access for the purposes of broadband services and requires the FCC to adopt rules to facilitate equal access to broadband service while accounting for technical and economic feasibility. While the FCC has convened a task force and initiated a rulemaking, the FCC has not yet provided the states with guidance on steps to prevent digital discrimination. To the extent that California adopts requirements that directly conflict with FCC orders, state actions may be federally preempted. Additionally, taking action prior to receiving federal guidance on how to implement these provisions of the IIJA increases the likelihood that California will adopt requirements that are inconsistent with other states and federal policy.
Bill’s anti-discrimination provisions may not be enforceable. DIVCA’s existing prohibitions on discrimination against subscribers largely mirror prohibitions in federal statute. This bill broadens these provisions to prohibit cable franchises from refusing to offer any potential subscriber equal access to video and broadband services, regardless of that subscriber’s location. This bill replaces existing safe harbors under which cable franchises would be presumed to comply with DIVCA’s antidiscrimination provisions with safe harbors that largely require universal buildout. By broadening this bill’s anti-discrimination provisions to any potential subscriber, it is unclear if such refusals of service would constitute discrimination or build-out challenges. While this bill would broaden DIVCA’s discrimination prohibitions, it only authorizes the CPUC to collect information to assess whether cable franchises are discriminating against potential subscribers on the basis of income. As a result, it is unclear if the CPUC will be able to substantiate cases of discrimination on the basis of any characteristic other than income.
Need for Amendments. As currently written, portions of this bill could be interpreted to require the CPUC to exercise its cable franchise powers to regulate broadband services, which is federally preempted. This bill establishes a new franchise renewal process, including a public hearing requirement that may be duplicative of existing CPUC rules of practice and procedure. This bill specifies the timeline in which this hearing most start, but this bill does not specify when the hearing must end. As a result, this bill could require the CPUC to conduct lengthy proceedings for each franchise renewal, for which the CPUC may have insufficient resources. This bill would also establish buildout requirements for cable franchises that would likely be considered an unreasonable franchise requirement under FCC rules. This bill also establishes new safe harbors for anti-discrimination provisions that duplicate build-out obligations. This bill makes a number of changes to state and local fines; however, it is unclear why those changes are needed. This bill also deletes recently enacted provisions of law aimed at improving data collection about household access to broadband services. For these reasons, the author and committee may wish to amend this bill to do the following:
- Remove references to terms related to broadband service from the bill’s definition of equal access.
- Delete the bill’s anti-discrimination safe harbors.
- Remove franchise buildout requirements.
- Delete modifications to state and local fines.
- Clarify the renewal process to conform to CPUC rules of practice and procedure and require the CPUC to approve or reject a franchise renewal within 120 days of deeming an application complete.
- Reinstate provisions of existing law that support collection of household broadband access data, and make other technical and conforming changes.
Double Referral. Should this bill be approved by this committee, it will be re-referred to the Senate Committee on Judiciary.
Prior/Related Legislation
AB 414 (Reyes, 2023) defines equal access to broadband service and establishes a state policy of supporting subscribers’ equal access to broadband services. The bill’s definition of equal access is substantially similar to the one included in this bill. The bill is currently pending before the full Senate.
AB 2748 (Holden, 2022) contained provisions substantially similar to those in this bill. This bill would establish build-out obligations, anti-discrimination prohibitions, and maximum fines that differ from the provisions in AB 2748. The bill died in the Senate.
AB 2752 (Wood, Chapter 801, Statutes of 2022) clarified that the CPUC can collect data from broadband providers at the address level for the purposes of mapping access to broadband services and prohibited the CPUC from disclosing personal consumer information protected by existing telecommunications consumer privacy laws.
SB 28 (Caballero, Chapter 673, Statutes of 2021) required the CPUC to collect granular data on actual locations served by state cable franchises and required the CPUC to adopt customer service requirements for cable franchises and adjudicate customer complaints. The bill prohibited the CPUC from disclosing personally identifiable information collected under the bill.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT:
California Community Foundation, Co-sponsor
Common Sense Media, Co-sponsor
Nextgen California, Co-sponsor
#OaklandUndivided
Access Humboldt
Active San Gabriel Valley
Alliance for a Better Community
Alliance for Community Media, Western Region
Altadena Library District
AltaMed Health Services
Arts for LA
California Black Health Network
California Native Vote Project
California State Association of Counties
California Workforce Association
Center for Powerful Public Schools
City of Pleasanton
Communities in Schools of Los Angeles
Community Clinic Association of Los Angeles County
Community Coalition of the Antelope Valley
County of San Diego
County of Santa Clara
Destination Crenshaw
DTLA Chamber of Commerce
Electronic Frontier Foundation
EveryoneOn
GPSN
Healing and Justice Center
InnerCity Struggle
Innovate Public Schools
Institute for Local Self-Reliance
Kid City Hope Place
Latino Equity Alliance
League of California Cities
Livable California
Los Angeles Coalition for Excellent Public Schools
Los Angeles Unified School District
Lynwood Unified School District
Media Alliance
MediaJustice
Michelson Center for Public Policy
Our Voice: Communities for Quality Education
Pacoima Beautiful
Para Los Niños
Small Business Majority
Southeast Community Development Corporation
The Children’s Partnership
UNITE LA
United Parents and Students
YMCA of Metropolitan LA
OPPOSITION:
California Broadband & Video Association
California Chamber of Commerce
Long Beach Area Chamber of Commerce
Orange County Business Council
San Gabriel Valley Economic Partnership
USTelecom - the Broadband Association
ARGUMENTS IN SUPPORT: According to the author:
The Digital Infrastructure in Video and Cable Act of 2006 (DIVCA) was passed with the intention of opening the video and cable market to new emerging providers to drive down costs for consumers while promoting the expansion of services. According to Connect California, 3 million California residents live in single-provider monopolies. Over 17 years later and DIVCA has fallen short of its promises largely due to outdated anti-discrimination statutes, a lack of focus for digital equity issues, and little incentive generated through existing law for providers to give equal access to low-income and unserved areas. Inspired by the Federal Digital Equity Act, this bill will rename DIVCA to the Digital Equity in Video Franchising Act and refocus efforts to prioritizing the right to equal access to broadband capable infrastructure for all Californian's and strengthening anti-discrimination statutes.
ARGUMENTS IN OPPOSITION: Opponents argue that this bill would encourage existing franchise holders to cease offering cable video services in all or some of the state. Opponents also state that this bill would not provide any substantial improvement to broadband access or affordability because federal law preempts franchising authorities from using their franchise powers to regulate the provision of broadband services. In opposition, the California Broadband and Video Association (CalBroadband) states:
Federal law authorizes a state franchising authority to regulate only video service. There have been some misconceptions regarding DIVCA and its role in expanding broadband. This is misleading. Because of DIVCA’s limited application to video service franchises, any subsequent obligations imposed through DIVCA will only affect a portion of the broadband marketplace. Any attempt to expand the broadband marketplace through DIVCA would run counter to principles of competitive neutrality, and efforts aimed at expansion should instead be pursued through the CPUC’s CASF program, FFA program, or the upcoming federal BEAD Program.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 41
Author:(Holden)
As Amended Ver:May 18, 2023
Majority vote
SUMMARY
This bill makes comprehensive changes to state law pertaining to cable operators and state video franchising including revising the renewal process for a state-issued video franchise, strengthening anti-discrimination requirements, requiring holders of a video franchise ("holders") to provide equal access to service, requiring holders to build-out their network to more households, and increasing the limit on penalties for violations.
Major Provisions
- Strikes existing law prohibiting the California Public Utilities Commission (CPUC) from regulating the terms and conditions of video service.
- Authorizes the CPUC to exercise the authority, jurisdiction, and powers granted to it by the Federal Cable Communications Policy Act of 1984, only to the extent necessary to enforce the bill.
- Revises and recasts the timelines by which the CPUC must review and dispense of applications for a state franchise.
- Requires that a public hearing must be held for renewals of a state franchise.
- Authorizes the CPUC to impose additional terms on a franchise holder as a condition of holding the state franchise, including requiring upgrades to the cable system.
- Requires that within five years of issuance of a state-issued franchise renewal, a holder shall make video service available to all residences in its service area.
- Establishes an exception that a franchise holder shall not be required to provide service due to factors that are beyond its control, as specified.
- Establishes an exception providing that the CPUC may relieve a franchise holder of this obligation, through a process established by the CPUC, if the CPUC finds that it would be an unreasonable requirement due to the number of residences that would be served.
- Establishes the policy of the state that subscribers and potential subscribers of a state video franchise holder should benefit from equal access to service within the service area.
- Strengthens existing law related to prohibitions on income discrimination by holders.
- Requires that within five years 100 percent of low-income households within the service territory have access to the holder's video service.
- Authorizes the CPUC to collect the data necessary to enforce this provision.
- Increases the limits on various penalties for violations.
- Strikes existing law requiring any penalty assessed to be remitted to the local entity, which shall remit half to the Digital Divide Account.
- Authorizes the CPUC to enforce customer service requirements for holders of a state franchise.
COMMENTS
- DIVCA Background. The Digital Infrastructure and Video Competition Act (DIVCA) Act of 2006 established process and procedures by which cable television providers were granted authorization, via a state video franchise, to operate in California. Prior to DIVCA, cable television providers were franchised at the local level by cities and counties ("Local Entities"). DIVCA shifted this responsibility away from Local Entities, and established a ministerial review process with CPUC as the sole franchising authority. DIVCA required the CPUC to grant a franchise upon determination that an application for a video franchise was "complete". Further, DIVCA required the CPUC to renew a franchise upon receipt of a completed renewal application unless the applicant had been found by a final court decision to have violated consumer protection rules (in suits brought by Local Entities) and had failed to cure its violation. However, DIVCA also established weak anti-discrimination requirements, which made it difficult to make a showing that a cable operator might be violating their obligation not to discriminate based on income. At the time DIVCA was passed, the rationale was that reducing regulatory barriers and oversight would naturally increase competition and the expansion of service to new areas of the state. In hindsight, it is clear that DIVCA's intentions have fallen short.
- The complicated relationship between cable operators, state franchising, video service, and broadband service. This bill is fundamentally about the state franchising process cable companies must seek approval under to become authorized to offer video service within this state, not broadband. Historically cable companies' legacy service was strictly video programming, or cable television. As technology progressed, their networks were upgraded to support and offer broadband service to meet consumer demands. Under existing federal law, broadband service is exempt from the same regulatory structure that governs video service. However, this legal distinction is complicated by the fact that both services are offered over the same physical infrastructure. For example, the physical cable that enters a subscriber's home is capable of delivering broadband service and video service simultaneously without apparent distinction. Although subscriptions for cable video programming has become less popular over time, the demand for broadband service has skyrocketed. While the intention of this bill is to significantly change existing law to encourage and require cable companies to expand access to their video service, an indirect benefit of this legislation would be to expand broadband access too because video service is offered over the same broadband capable infrastructure.
- DIVCA constrained the CPUC's ability to effectively regulate cable companies, this bill expands their authority only to the extent necessary to enforce its new provisions. Under existing law, the CPUC (the sole franchising authority) has limited authority over cable operators on a multitude of issues. As referenced above, the approval of applications for a franchise is essentially a ministerial process. The CPUC is prohibited from requiring additional information from applicants in order to evaluate their applications, and the CPUC has no authority to require upgrades to the cable system, such as build-out to unserved households, under any circumstance. The strict limitations in DIVCA are not aligned with federal law, which envisions a negotiation between the franchising authority and the applicant to find a balance between the public's interest in expanded service and the economic interest of the franchise holder. By expanding the CPUC's authority and imposing new mandates on franchise holders, this bill attempts to strike a better balance than current law in order to advance the goals of digital equity and connect more households to service.
- This bill strengthens existing anti-discrimination requirements. Both federal and state law prohibit cable operators from discriminating against any group of potential residential subscribers because of their income. The DIVCA anti-discrimination statute sets a floor for holders to meet to show they are not discriminating, which is exceedingly low. Because DIVCA established an easily attainable metric for franchise holders, it does not serve to encourage providers to expand their infrastructure to low-income households. To address the issue described above, this bill would strengthen the existing anti-discrimination statute by requiring that 100% of low-income households within a franchise holder's service territory have access to service. Under current law the upper threshold is 30% of low-income households. Opponents of the bill have raised serious concerns about the ability of franchise holders to meet 100% service availability for low-income households, the potential exorbitant cost of this mandate, and the CPUC's ability to identify all low-income households to ensure compliance. While this bill sets a very high metric for low-income access, it also lists factors outside of a franchise holder's control that the CPUC must consider when reviewing an alleged violation. For example, when evaluating the 100% service availability requirement the CPUC would need to consider six factors including whether a building was accessible, natural disasters, or if permission to access private property was able to be obtained. Considering these factors, it's possible that a franchise holder might not be found to violate the 100% service availability mandate for low-income households if not every household is connected.
- This bill imposes a universal service build-out requirement following a franchise renewal. Under current law a state video franchise is valid for a period of ten years. In advance of the tenth year, a franchise holder may apply for a renewal for another ten year period. Pursuant to this bill, five years after a renewal is issued a franchise holder must make service available to 100% of households within that holder's service territory. The obligation to serve 100% of households within a holder's service territory is unprecedented in existing law, as franchise holders are not considered a public utility and therefore have had no obligation to provide universal service like telephone or electrical corporations. Opponents of the bill have raised concern about the timeline, the financial burden this mandate imposes, and the reasonableness of a 100% service availability requirement. Proponents have argued that a 100% service availability requirement is reasonable given the exceptions in the bill and because the franchise holders designate their own service territories. Unlike a public utility, which has an obligation to serve an entire area, a cable operator self-designates the areas of the state they wish to serve at the census-block level. Put another way, a franchise holder would be required to serve 100% of the households only in the census-blocks they self-designate as their service territories. This requirement would not obligate a franchise holder to build and extend their networks beyond the areas they intended to serve, but require universal service within the census-blocks they self-designated as their service territories.
Additionally, recent amendments adopted in the Assembly Appropriations Committee would grant the CPUC the discretion to relieve a franchise holder of the obligation to make service available to 100% of households within their service territory. The language would require the CPUC to establish a process to make a finding that requirement is unreasonable due to the number of residences that would be served. The intention is that the CPUC would be authorized to relieve a franchise holder of their obligation in areas where there is low population density and would therefore be more costly to build.
- This bill increases the limits fines and penalties on franchise holders for violations. Current law establishes limitations on civil penalties for violations of existing anti-discrimination requirements and other breaches of a state franchise. Depending on the violation, the civil penalties are capped at either 1% of the holder's monthly gross revenue or a certain dollar amount per day. This bill would increase the penalties to up to 5% of the holder's annual revenue, which is a very significant increase. For civil penalties that can be assessed by a local entity, the dollar amount increases vary but are also significant. Historically, there have not been widespread allegations of violations; however, recent changes under recent legislation and this bill would raise the standards of operation.
According to the Author
"DIVCA was passed with the intention of opening the video and cable market to new emerging providers to drive down costs for consumers while promoting the expansion of services. According to Connect California, 3 million California residents live in single-provider monopolies. Over 15 years later and DIVCA has fallen short of its promises largely due to outdated anti-discrimination statutes, a lack of focus for digital equity issues, and little incentive generated through existing law for providers to give equal access to low-income and unserved areas. Inspired by the Federal Digital Equity Act, this bill will rename DIVCA to the Digital Equity in Video Franchising Act and refocus efforts to prioritizing the right to equal access to cable and broadband for all Californian's and strengthening anti-discrimination statutes to be consistent with Federal standards."
Arguments in Support
This bill is supported by a coalition of digital equity advocates, including the California Alliance for Digital Equity. The supporters write that "AB 41 addresses critical issues with equitable access to services offered by holders of state franchises, creates a transparent and fair process for once-a-decade franchise renewals, and establishes a mechanism for California customers to make the commission aware of service quality issues."
Arguments in Opposition
This bill is opposed by various industry-aligned organizations, including the California Broadband & Video Association (CalBroadband). CalBroadband writes that this bill "would impose arbitrary and complex new requirements on video service providers and remove video service providers' incentives to expand their service areas." CalBroadband also asserts that this bill contains technically and financially infeasible requirements for franchise holders.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- This bill creates significant new workload at the CPUC, costs of which are likely in the low millions of dollars annually (Public Utilities Reimbursement Account or other special fund).
- The CPUC provided a cost estimate of $2.2 million dollars in ongoing annual costs, $380,000 in annual costs for each of three years and $542,600 in one-time costs. According to CPUC, ongoing costs include 11 positions—two administrative law judges, two attorneys, two regulatory analysts, two telecommunications engineers, two information technology specialists and one research specialist—as well as $134,000 in ongoing equipment costs. The limited-time costs are for equipment, licensing, training and related costs.
VOTES
ASM COMMUNICATIONS AND CONVEYANCE: 10-2-1
YES: Boerner Horvath, Connolly, Holden, Low, Maienschein, Papan, Luz Rivas, Rodriguez, Schiavo, Weber
NO: Davies, Hoover
ABS, ABST OR NV: Jim Patterson
ASM APPROPRIATIONS: 11-3-2
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega
NO: Dixon, Mathis, Sanchez
ABS, ABST OR NV: Megan Dahle, Robert Rivas
UPDATED
VERSION: May 18, 2023
CONSULTANT: Emilio Perez / C. & C. / (916) 319-2637 FN: 0000957
Date of Hearing: May 10, 2023
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Chris Holden, Chair
ABPCA Bill Id:AB 41
Author:(Holden) – As Amended Ver:April 26, 2023
Policy Committee: | Communications and Conveyance | Vote: | 10 - 2 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill makes comprehensive changes to existing state law enacted by the Digital Infrastructure and Video Competition Act of 2006 (DIVCA), which this bill renames the Digital Equity in Video Franchising Act of 2023 (DEVFA).
Specifically, this bill, among other things, establishes the policy of the state that subscribers and potential subscribers of a state video franchise holder should benefit from equal access to service within the service area, regardless of income level, ethnicity, race, religion or national origin. The bill requires, among other things, the CPUC to require a video service provider for which the CPUC has renewed a video service franchise to, except to the extent factors are beyond its control:
- Within three years of the issuance of a state-issued franchise renewal, make service available to all residences in its service area where there is a minimum density of at least 25 residences per linear mile of cable as measured from the provider’s closest technologically feasible tie-in point that is actively delivering video service.
- Within five years of the issuance of a state-issued franchise renewal, make video service available to all residences in its service area.
In addition, the bill significantly increases the fine the CPUC may impose on a franchise holder who fails to provide equal access to video service, from not more than 1% of the holder’s total monthly gross revenue received from provision of video service in the state each month from the date of the decision until the date that compliance is achieved to not more than $100,000 per day that the violation occurred. The bill limits the fine, however, to not more than 5% of the franchise holder’s annual revenue derived from providing service within its franchise service area per violation.
In addition, this bill strikes existing law that prohibits the California Public Utilities Commission (CPUC) from regulating the terms and conditions of video service and that prohibits the CPUC, and any local franchising authority, from imposing any requirement on any holder beyond what is explicitly authorized in DIVCA. Instead, this bill authorizes the CPUC to exercise all authority, jurisdiction and powers granted to it by the federal Cable Communications Policy Act of 1984.
FISCAL EFFECT:
This bill creates significant new workload at the CPUC, costs of which are likely in the low millions of dollars annually (Public Utilities Reimbursement Account or other special fund).
The CPUC describes workload created by this bill as conducting hearings regarding video franchise renewals and regulating terms of service, conducting investigations and enforcement actions, monitoring franchisee service, and other related activities.
The CPUC provided a cost estimate of $2.2 million dollars in ongoing annual costs, $380,000 in annual costs for each of three years and $542,600 in one-time costs. According to CPUC, ongoing costs include 11 positions—two administrative law judges, two attorneys, two regulatory analysts, two telecommunications engineers, two information technology specialists and one research specialist—as well as $134,000 in ongoing equipment costs. The limited-time costs are for equipment, licensing, training and related costs.
COMMENTS:
- Purpose. The author intends this bill to update anti-discrimination requirements applicable to video service providers and to better ensure holders of video service providers give equal access to video service. According to the author:
Existing law, the Digital Infrastructure and Video Competition Act (DIVCA) was passed in 2006 to encourage competition in the cable market with the intent of benefitting consumers by lowering prices and promoting the expansion of services, including broadband. Over 18 years later, it is clear that DIVCA has fallen short of its promises given the amount of households that still lack access to broadband services…existing outdated anti-discrimination statutes and a lack of focus for digital equity issues reflected in the existing law generates little incentive for providers to give equal service to low-income underserved and, unserved areas…AB 41 will update and address persistent issues with the Digital Infrastructure and Video Competition Act.
- Background. The federal government, through the Federal Communications Commission (FCC), regulates cable operators and requires a cable operator to receive a cable franchise before offering cable service. FCC regulations allow state and local governments to act as local franchise authorities (LFAs) that issue franchises to cable operators and that regulate cable operators and cable television services. FCC regulations circumscribe the regulatory authority of LFAs, specifically by capping the fees such an authority may charge a cable operator and restricting an LFA from regulating the provision of most non-cable services, including broadband internet access service offered over a cable system by an incumbent cable operator. However, FCC regulations assert that build-out requirements and customer service requirements are lawful and separate from the franchise fees that are restricted by the FCC order.
In California, prior to 2006, local governments acted as LFAs for cable operators and other providers of video service. In 2006, state law, known as DIVCA, designated the CPUC as the sole LFA in the state, thereby displacing the role of cities and counties as LFAs. (See AB 2987 (Nunez), Chapter 700, Statutes of 2006.) DIVCA limited the CPUC’s authority to regulate providers of video service by explicitly stating that DIVCA not be construed as granting authority to the CPUC to regulate the rates, terms and conditions of video services, except as explicitly set forth in DIVCA. In addition, DIVCA prohibited a franchise holder from discriminating against or denying access to service to any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. And, DIVCA laid out specific criteria—such as that, within three years of beginning to provide services, at least 25% of households with access to the holder’s video service be low-income households— completion of which satisfy a franchisee’s obligation to not discriminate on the basis of income.
DIVCA franchise holders provide more than just video services. For example, many also provide broadband service through use of the same infrastructure used to provide video service. According to information provided by the CPUC in 2022, based on third-party data (MediaCensus, a subsidiary of S&P Global Market Intelligence), 97% of broadband subscribers in California receive service from one of only five companies— AT&T, Charter, Comcast, Cox and Frontier —all of which hold DIVCA franchises.
- Support and Opposition. This bill is supported by a long list of diverse organizations—describing themselves as “educators, health care providers, economic opportunity engines, community leaders, and above all, service providers and advocates for Californians that have too often been left behind,” who contend DIVCA has fallen far short of its goal of encouraging competition in the cable market with the intent of benefiting consumers with lower prices and better services. These bill supporters assert (a) competition has decreased in the years since DIVCA went into effect, (2) prices for California cable service have increased since the advent of DIVCA and (3) hundreds of thousands of families across California lack access to service, most of them within the service areas of state franchise holders.
This bill is opposed by industry and business organizations, including the California Broadband and Video Association (Cal Broadband), who describe the bill as imposing “arbitrary and complex” new requirements on service providers and removing incentives to expand service areas. Cal Broadband continues that the bill removes:
Streamlined DIVCA franchise application and renewal processes based on objective standards and instead proposes a new and lengthy application and renewal process that creates delay, cost, and uncertainty…without a structured, tenable timeline or parameters regarding a franchise holder’s ability to obtain or retain a franchise.
- Prior Legislation. This bill is very similar to AB 2748 (Holden), of the 2021-22 Legislative Session, which was referred to but not heard in the Senate Committee on Energy, Utilities and Communications.
Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081
Date of Hearing: April 19, 2023
ASSEMBLY COMMITTEE ON COMMUNICATIONS AND CONVEYANCE
Tasha Boerner Horvath, Chair
ABPCA Bill Id:AB 41 (
Author:Holden) – As Amended Ver:April 7, 2023
SUBJECT: Telecommunications: The Digital Equity in Video Franchising Act of 2023
SUMMARY: This bill makes comprehensive changes to state law pertaining to cable operators and state video franchising including revising the renewal process for a state-issued video franchise, updating anti-discrimination requirements, requiring holders of a video franchise (“holders”) to provide equal access to service, and increasing the limit on penalties. Specifically, this bill:
- Renames existing law, The Digital Infrastructure and Video Competition Act of 2006, to the Digital Equity in Video Franchising Act (DEVFA) of 2023.
- Makes various findings and declarations regarding the purpose of DIVCA, evidence why it has fallen short, and the need for further legislation to accomplish state goals.
- Strikes existing law prohibiting the California Public Utilities Commission (CPUC) from regulating the terms and conditions of video service.
- Strikes existing law that prohibits the CPUC from imposing any requirement on any holder of a state franchise beyond what is explicitly authorized in DIVCA.
- Authorizes the CPUC to exercise the authority, jurisdiction, and powers granted to it by the Federal Cable Communications Policy Act of 1984.
- Authorizes CPUC to require supplementary information on applications for a state franchise.
- Revises and recasts the timelines by which the CPUC must review and dispense of applications for a state franchise.
- Adds a requirement that a public hearing must be held for renewals of a state franchise.
- Authorizes the CPUC to impose additional terms on a franchise holder as a condition of holding the state franchise, including requiring upgrades to the cable system.
- Establishes standards for the residences within a service area where a video service provider must make service available.
- Establishes the policy of the state that subscribers and potential subscribers of a state video franchise holder should benefit from equal access to service within the service area.
- Revises existing law related to prohibitions on income discrimination by holders.
- Increases the limits on various penalties for violations.
- Strikes existing law requiring any penalty assessed to be remitted to the local entity, which shall remit half to the Digital Divide Account.
- Authorizes the CPUC to enforce customer service requirements for holders of a state franchise.
EXISTING LAW:
- Defines “franchise” as an authorization, issued by a franchising authority, which permits the construction or operation of a cable system. [47 United States Code (US Code) § 522(9)]
- Provides that a state-issued franchise is valid for a period of 10 years, and requires a holder to apply for a renewal every 10 years if they wish to continue providing service.
- Defines “franchising authorities” as any governmental entity empowered by Federal, State, or local law to grant a franchise. Existing state provides that the CPUC is the sole franchising authority in California. [47 USC § 522(10); Pub. Util. Code § 5840(a)]
- Provides that franchise terms may require cable operators to build their systems to cover certain localities in a franchise area and that those costs are borne by the operator or subscribers. [47 US Code §541(a)(2)-(3)]
- Requires that a local franchising authority must allow a cable operator a reasonable period of time to build out cable service to all households in the franchise areas. [47 US Code §541(a)(4)(A)]
- Prohibits discrimination against potential residential cable subscribers because of the income of the residents in that local area. [47 USC § 541(a)(3); Pub. Util. Code § 5890(a)]
- Establishes criteria for determining whether a video service provider has discriminated against residential subscribers. Existing law establishes different criteria for demonstrating compliance with non-discrimination prohibitions for franchise holders providing telephone service to more than one million Californians and those franchise holders providing telephone service to less than one million Californians. [Pub. Util. Code § 5890 (a-f)]
- Prohibits any cable system or cable operator from being subject to regulation as a common carrier or utility as a result of providing video service. [47 USC § 541(c); Pub. Util. Code § 5810(a)(3); PUC § 5820(c)]
- Clarifies that federal law does not prohibit a local franchising authority from prohibiting discrimination among subscribers and potential subscribers to cable service. [ 47 USC § 543(e)]
- Expressly preempts any provision of state law that is inconsistent with the terms of federal law concerning cable service. [47 USC § 556(c)].
- Requires every cable franchise holder to submit specified data to the CPUC by April 1st each year. Existing law requires franchisees to submit specified broadband, video, telephone, and low-income service metrics to the CPUC on a census tract basis. Existing law permits a franchise holder to “reasonably estimate” the number of households to which it provides broadband service in the state if the provider does not maintain broadband service information on a census tract basis. Existing law prohibits the CPUC from publicly disclosing any of the data reported by franchise holders unless the CPUC orders the disclosure of the data through a proceeding. Any current or former CPUC employee or officer who discloses data outside of an order is guilty of a misdemeanor under existing law. (Pub. Util. Code §5960 & Pub. Util. Code § 583)
- Prohibits the CPUC from exercising authority over cable operators beyond what is explicitly provided for in state law, and establishes the particular requirements for video service providers applying for a state franchise, and specifies the information franchise holders must provide to the CPUC to obtain and retain a state franchise. [Pub. Util. Code § 5840 et. seq.]
- Allows local governments to bring complaints to the CPUC regarding cable franchises that are not offering video service required by this section. Existing law authorizes the CPUC to initiate an investigation on its own, regardless of whether it has received a complaint from a local government. The CPUC may suspend or revoke the license of a video service provider that fails to comply with the requirements for its franchise. Existing law also specifies fines that the CPUC or court may assess on violating franchisees. [Pub. Util. Code § 5890 (g-i)]
- Requires the CPUC to adopt customer service requirements for a holder of a state and adjudicate any customer complaints. (Pub. Util. Code § 5895)
FISCAL EFFECT: Unknown.
COMMENTS:
- DIVCA Background. The Digital Infrastructure and Video Competition Act (DIVCA) established the process and procedures by which cable television providers were granted authorization, via a state video franchise, to operate. Prior to DIVCA, cable television providers were franchised at the local level by cities and counties (“Local Entities”). DIVCA shifted this responsibility away from Local Entities, and established a ministerial review process with CPUC as the sole franchising authority. Although existing local franchises were allowed to remain in effect until their expiration, companies with locally-issued franchises were allowed to opt out of them and procure a state-issued franchise if another state-issued franchisee began to compete with them, or if the Local Entity agreed.
DIVCA was enacted at a time when the incumbent local telephone companies (primarily AT&T and Verizon) wanted to begin to offer video services and compete with traditional cable companies, which had begun to provide competitive local telephone service. By establishing ministerial process with low-barriers to entry into the market, DIVCA was intended to provide for rapid entry into the video business by the incumbent telephone companies through a single, state-issued franchise. The DIVCA processed replaced the need to negotiate and secure hundreds of franchises from Local Entities. DIVCA also required video service connections to provide the ability to receive internet access service. Thus, DIVCA was intended both to foster competition in the provision of video services and to promote the deployment of broadband capable infrastructure.
In addition to its provisions requiring state video franchises, DIVCA required franchise holders to submit certain data to the CPUC each year, on a census tract basis. That information included the number of households offered video and broadband services; the number subscribing to broadband services; as well as the number of low-income households in the video service area and the number of low-income households that were offered video service. DIVCA required this information to be aggregated and reported by the CPUC to the Governor and Legislature on an annual basis. DIVCA also contained certain deployment obligations, including a provision that holders may not discriminate against or deny access to service to any group of potential residential subscribers because of the income of the residents in the local area in which the group resides. However, the deployment obligations created a low bar for holders to meet, and thusly reduced their incentive to expand service in low-income areas.
- DIVCA separated the franchising task from consideration of performance issues. A key construct of DIVCA video franchising was the separation of the franchising task from the consideration of network performance issues. Under local franchising, performance was regulated by Local Entities, and acceptable levels of past performance were required for franchise renewals. DIVCA transferred franchising authority to the CPUC, while Local Entities remained in the role of adopting and enforcing customer service-related performance by state video franchise holders. DIVCA required the CPUC to grant a franchise upon determination that an application for a video franchise was “complete”. Further, DIVCA required the CPUC to renew a franchise upon receipt of a completed renewal application unless the applicant had been found by a final court decision to have violated consumer protection rules (in suits brought by Local Entities) and had failed to cure its violation. To date, no enforcement action has been brought against any franchise holders
The lack of sufficient oversight by Local Entities is likely explained by the transition of local franchising to state franchising. Prior to DIVCA, many Local Entities had dedicated staff to carry out cable franchising, enforce customer service standards contained in local franchises, and adjudicate customer complains. After DIVCA shifted franchising responsibilities to the CPUC, Local Entities generally disbanded their staff dedicated to cable television matters, and enforcement activities generally ceased. Nonetheless, holders continued to pay Local Entities a franchise fee require by state law which could have continued to pay those staff salaries. More recently, SB 28 (Caballero. Chapter 673, Statutes of 2021) authorized the CPUC to set customer service requirements for cable providers. The CPUC recently opened a proceeding to implement SB 28. While SB 28 only provided explicit authorization for the CPUC to adopt customer service requirement, this bill would specify that the CPUC has the authority to enforce those customer service requirements.
- Federal law protects holders from unfair denials of their applications. In 1984 Congress passed the Cable Communication Act which aimed to delineate the jurisdictional boundaries between federal, state, and local governments regarding the regulation of cable operators. Another key tenet of the Act, as expressly stated in federal law, was to protect cable operators against unfair denials of renewal. Congress updated the Act in 1992, by passing the Cable Television Consumer Protection and Competition Act of 1992. Under the 1992 law, while local authorities retained the power to grant cable franchises, the law provided that “a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise.”
The federal Cable Act reflects the free-market political philosophy of Republican administrations. Not coincidentally, it was originally signed into law by President Ronald Regan and updated in 1992 under President George H. W. Bush. The logic underpinning most of its provisions validate the belief that that a light-touch regulatory approach would improve service for consumers through increased competition in the marketplace. In the case of California law, DIVCA was also signed by a Republican Governor and it goes a step further than federal law by placing additional restrictions on the CPUC’s authority beyond what is required by the Cable Act. For example, under DIVCA the CPUC is required to review and approve renewal applications within 44 days, which primarily advantages the interests of the applicant. The CPUC is also prohibited from requiring cable operators to expand their infrastructure footprint to unserved households, which the Cable Act does not prohibit. As a result, the regulatory scheme set-up by DIVCA leaves little opportunity for the CPUC - the sole franchising in the state – to exercise oversight this industry.
Has the light-touch regulatory approach inherent in DIVCA helped the state reach any of its goals regarding access? The evidence suggests it has not. For example, in most service territories of existing franchise holders there is little to no competition for video service and the companies operate essentially as a monopoly on video service. There are more options for broadband service in some areas, but according to a recent report based on state data about 87% of California households only have access to two or fewer choices of internet service providers, which indicates a concentrated and noncompetitive market.
- This bill strengthens existing anti-discrimination provisions. Both federal and state law prohibit cable operators from discriminating against any group of potential residential subscribers because of the income. In the Cable Act, the prohibition on income discrimination is stated quite plainly. However, under DIVCA the anti-discrimination statute includes several qualifiers and sets a floor for holders to meet to show they are not discriminating. For example, holders with more than 1,000,000 telephone customers are required to meet a lower threshold of service accessibility to low-income households than companies with less 1,000,000 telephone customers. The standards based on telephone customers is reflective of DIVCA’s intention at the time it was passed, which was make it easier for incumbent telephone companies to enter the market and compete with incumbent cable providers. Regardless of which standard is used though, both are easily attainable metrics for current franchise holders and thus do not encourage providers to expand their infrastructure to low-income households.
To address the issue described above, this bill would strengthen the existing anti-discrimination statute by increasing the percent of low-income households that must have access to the holder’s service. Under current law the upper threshold is 30% of low-income households, and under this bill the upper threshold would be 100% of low-income households.
- This bill would require equal access to service. Existing law requires that franchise holders may not deny access to any group of potential subscribers because of income. This bill would expand that requirement, and establish that subscribers and potential subscribers of a state video franchise holder should benefit from equal access to service within the service area. The requirement to provide equal access to service would address inequities within a holder’s existing service territories such “donut holes” of service. A “donut hole” is a colloquial term used to describe an area with no service which is completely surrounded by areas that do have access to service. An example of a “donut hole” would be a trailer park or public housing development in an urban area that lacks access to service, despite service being made available the surrounding and likely higher-income communities. Based on CPUC data of broadband availability, there are potentially thousands of households in donut holes within the existing service territories of state franchise holders. Additionally, a requirement to provide equal access to service would likely serve to encourage franchise holders to upgrade existing infrastructure in low-income areas.
Requiring equal access to service is aligned with ongoing federal efforts to address digital discrimination. For example, pursuant to the federal Infrastructure Investment and Jobs Act (IIJA) the Federal Communications Commission (FCC) is considering rules to eliminate digital discrimination and ensure that all Americans have equal access to broadband internet access service. It is worth noting that broadband service is a distinct category from video service, with different regulatory considerations. Nonetheless, holders of a state video franchise are among the largest internet service providers in the state. To the extent that franchise holders, under changes made by this bill, would be required to provide equal access to service within their service territories then some households would also benefit from expanded access to broadband since the two services are provided over the same infrastructure.
- This bill establishes a build-out mandate on holders of a state franchise. Under existing law, the CPUC (the sole franchising authority) has no authority to require upgrades to the cable system, such as build-out to unserved households, under any circumstance. The strict limitations in DIVCA are not aligned with federal law, which envisions a negotiation between the franchising authority and the applicant to find a balance between the public’s interest and the economic interest of the franchise holder. This bill would cut right into any potential negotiation by mandating build-out to households within the franchise holder’s service territory, but not outside of it. Notably, franchise holders designate their own service territory and in that regard decide what areas they wish to serve. This bill would mandate that holders eventually build out to all households within their self-designated service territories within five years, with some exceptions.
The build-out mandate in this bill would likely be very expensive for the franchise holders to comply with, as there are thousands of households within franchise holder’s service territories that do not have access to service. The bill does include a threshold that specifies build-out is only required where there is a minimum density of 25 residences per linear mile of cable, except the exception is only applicable for three years. It might be reasonable to consider a density requirement for all areas for the duration of the franchise term. Without a density threshold, some franchise holders may decide that it is more cost-effective to pull out of rural areas because of the cost of the mandate to serve that area. In turn, the mandate may have an unintended consequence of providers pulling out of existing areas.
- This bill increases the limits fines and penalties on franchise holders for violations. Current law establishes limitations on civil penalties for violations of existing anti-discrimination requirements and other breaches of a state franchise. Depending on the violation, the civil penalties are capped at either 1% of the holder’s monthly gross revenue or a certain dollar amount per day. This bill would increase the penalties to up to 5% of the holder’s annual revenue, which is a very significant increase. For civil penalties that can be assessed by a local entity, the dollar amount increases vary but are also significant. Historically, there have not been widespread allegations of violations; however, recent changes under recent legislation and this bill would raise the standards of operation.
- Arguments in support. The bill is supported by a coalition of digital equity advocates, including the California Alliance for Digital Equity. The supporters write that “AB 41 addresses critical issues with equitable access to services offered by holders of state franchises, creates a transparent and fair process for once-a-decade franchise renewals, and establishes a mechanism for California customers to make the commission aware of service quality issues.”
- Arguments in opposition. The bill is opposed by various industry-aligned organizations, including the California Broadband & Video Association (CalBroadband). CalBroadband writes that the bill “would impose arbitrary and complex new requirements on video service providers and remove video service providers’ incentives to expand their service areas.” CalBroadband also asserts that the bill contains technically and financially infeasible requirements for franchise holders.
- Related/similar legislation.
- SB 28 (Caballero. Chapter 673, Statutes of 2021) expanded the authority of the CPUC to collect data to enforce requirements for cable franchises and authorizes the CPUC to set customer service requirements for cable providers.
- Committee amendments. The author may wish to consider the following amendments:
- In Section 5840, clarify that the CPUC’s expanded authority under this bill may not exceed what is necessary to enforce this Act.
- In Section 5840, revise and recast the timelines for the CPUC to determine whether an application is complete or incomplete and revise the timeline such that the CPUC must issue the franchise within 60 days if no determination is made.
REGISTERED SUPPORT / OPPOSITION:
Support
#oaklandundivided Coalition
Access Humboldt
Active San Gabriel Valley
Alliance for A Better Community
Alliance for Community Media - Western Region
Altadena Library District
Altamed Health Services
Arts for La
California Black Health Network
California Community Foundation
California Native Vote Project
California Workforce Association
Center for Powerful Public Schools
Common Sense Media
Communities in Schools of Los Angeles (CISLA)
Community Clinic Association of Los Angeles County (CCALAC)
Community Coalition of The Antelope Valley
Destination Crenshaw
Dtla Chamber of Commerce
Electronic Frontier Foundation
Everyoneon
Gpsn
Healing and Justice Center
Inner City Struggle
Innovate Public Schools
Institute for Local Self-reliance
Kid City Hope Place
L.a. Coalition for Excellent Public Schools
Latino Equality Alliance
League of California Cities
Lynwood Unified School District
Media Alliance
Mediajustice
Michelson Center for Public Policy
New Livable California Dba Livable California
Nextgen California
Nextgen Policy
Our Voice: Communities for Quality Education
Pacoima Beautiful
Para Los Niños
San Diego; County of
Small Business Majority
Southeast Community Development Corporation
The Children's Partnership
Unite-la
United Parents and Students
YMCA of Metropolitan Los Angeles
Opposition
Calchamber
California Broadband & Video Association
Orange County Business Council
San Gabriel Valley Economic Partnership
United States Telecom Association Dba Ustelecom - the Broadband Association
Analysis Prepared by: Emilio Perez / C. & C. / (916) 319-2637
Discussed in Hearing
1MIN
Assembly Floor
3MIN
Senate Floor
3MIN
Senate Standing Committee on Appropriations
38MIN
Senate Standing Committee on Energy, Utilities and Communications
3MIN
Assembly Floor
18MIN
Assembly Standing Committee on Communications and Conveyance
Bill Author
