March 21, 2006, Introduced by Reps. Hoogendyk, Accavitti, Sheen, Drolet, Gosselin, Gaffney, Garfield, Brandenburg, Ball, Acciavatti, Hildenbrand, Cushingberry and Pastor and referred to the Committee on Energy and Technology.
A bill to provide for state authority to provide cable and
video services; to provide for competition in providing cable and
video services; and to prescribe the powers and duties of certain
state and local agencies and officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) This act shall be known and may be cited as the
"cable and video competition act".
(2) The legislature finds and declares all of the following:
(a) The state's economy would be enhanced by investment in new
communications and video programming infrastructure, including
broadband facilities, fiber optic, and internet protocol
technologies.
(b) Cable services and video services bring important daily
benefits to this state by providing news, education, and
entertainment.
(c) Competitive cable service providers and competitive video
service providers are capable of providing new video programming
services and competition to consumers in this state.
(d) There has been only minimal competitive entry into the
facilities-based video programming market since current franchising
requirements in this state were enacted.
(e) The cable franchise requirements and associated build-out
requirements have acted as a barrier to entry to many new
facilities-based entrants, because time to market and reasonable
cost of entry are critical for new entrants seeking to compete with
the cable incumbents.
(f) Under both federal and state law, there is considerable
uncertainty concerning whether and to what degree the cable
franchise requirements apply to various competitive cable service
providers and competitive video service providers, especially to
the extent those new entrants are already subject to public right-
of-way management under other state regulatory schemes.
(g) To remove legal uncertainty with respect to the authority
of competitive cable service providers and competitive video
service providers to use the public rights-of-way to the extent the
cable franchise requirements do not apply, and to promote
competitive entry by all competitive cable service providers and
competitive video service providers, this state should provide a
state-issued authorization for competitive cable service providers
and competitive video service providers to deploy their systems and
provide cable service and video service to residents of this state.
This state-issued grant will allow all competitive cable service
providers and video service providers to move forward in making the
significant investments required to provide new services and
competition for video programming.
Sec. 2. As used in this act:
(a) "Cable operator" means that term as defined in 47 USC
522(5).
(b) "Cable service" means that term as defined in 47 USC
522(6).
(c) "Cable service or video service authorization" means an
initial authorization issued by the department, regardless of
whether the authorization is designed as a franchise, permit,
license, resolution, contract, certificate, agreement, or
otherwise, that authorizes the construction and operation of a
cable system or video service provider's network in the public
rights-of-way to offer cable service or video service to any
subscriber in the state.
(d) "Cable system" means that term as defined in 47 USC
522(7).
(e) "Competitive cable service provider" means a person
authorized by this act to provide cable service over a cable system
other than the incumbent cable operator providing service in the
area to be served by the competitive cable service provider or a
cable operator authorized by this act to provide cable service over
a cable system in areas where it currently does not have an
existing franchise agreement as of the effective date of this act.
(f) "Competitive cable service provider fee" means the amount
paid by a competitive cable service provider under section 7.
(g) "Competitive video service provider" means a person
authorized by this act to provide video service. This term does not
include a cable operator, and a competitive video service provider
shall not be considered a cable operator and the facilities of a
competitive video service provider shall not be considered a cable
system.
(h) "Competitive video service provider fee" means the amount
paid by a competitive video service provider under section 7.
(i) "Department" means the department of state.
(j) "Franchising entity" means the local unit of government
that requires a franchise to offer cable or video services.
(k) "Incumbent cable operator" means a cable operator serving
cable subscribers in a particular franchise area within a local
unit of government on the effective date of this act.
(l) "Local unit of government" means a city, village, or
township.
(m) "Public rights-of-way" means the area on, below, or above
a public roadway, highway, street, public sidewalk, alley,
waterway, or utility easements dedicated for compatible uses.
(n) "Video programming" means programming provided by, or
generally considered comparable to programming provided by, a
television broadcast station, as defined in 47 USC 522.
(o) "Video service" means video programming services provided
through wireline facilities located at least in part in the public
rights-of-way without regard to delivery technology, including
internet protocol technology. This definition does not include any
video programming provided by a commercial mobile service provider
defined in 47 USC 332(d) or cable service provided by a competitive
cable service provider.
Sec. 3. (1) The following entities shall possess a cable
service or video service authorization:
(a) Any entity certificated by the department to provide local
exchange service in this state that seeks to operate or operates as
a competitive cable service provider or competitive video service
provider in its local exchange service area.
(b) Any other entity that seeks to operate as a competitive
cable service provider or competitive video service provider.
(c) Any incumbent cable operator, after the expiration of its
franchise, desiring to provide cable or video service in any local
unit of government where it had a franchise to provide cable
service.
(2) To the extent elected by the entity receiving the cable
service or video service authorization and required by applicable
law, any cable or video service authorization granted by this act
or the department shall constitute a franchise for purposes of 47
USC 541(b)(1). To the extent required for purposes of 47 USC 521 to
561 only, this state shall constitute the exclusive franchising
authority for competitive cable service providers and competitive
video service providers in this state.
(3) No franchising entity may require a competitive cable
service provider or competitive video service provider to obtain a
separate franchise or otherwise impose any fee or franchise
requirement except as provided under this act. For purposes of this
subsection, a franchise requirement includes, without limitation,
any provision regulating rates charged by competitive cable service
providers or competitive video service providers or requiring
competitive cable service providers or competitive video service
providers to satisfy any build-out requirements or deploy any
facilities or equipment.
(4) An incumbent cable operator with an existing franchise to
provide cable service in any local unit of government in this state
as of the effective date of this act is not eligible to use or rely
upon a state authorization to provide cable service or video
service under this act in any local unit of government where it has
an existing franchise agreement until the expiration date of the
existing franchise agreement.
(5) Except as otherwise provided under this act, competitive
cable service providers and competitive video service providers
shall possess and enjoy the same rights as incumbent cable
operators and other providers of video programming.
Sec. 4. (1) An entity that seeks to provide cable service or
video service in this state after the effective date of this act
shall file an application for cable service or video service
authorization with the department as required by this section. An
entity providing cable service or video service under an existing
franchise agreement with a franchising entity is not subject to
this section with respect to the franchising entity until the
franchise agreement expires.
(2) The application shall contain a completed affidavit
submitted by the applicant and signed by an officer or general
partner of the applicant affirming all of the following:
(a) That the applicant has filed or will timely file with the
federal communications commission all forms required by that agency
in advance of offering cable service or video service in this
state.
(b) That the applicant agrees to comply with all applicable
federal and state statutes and regulations.
(c) That the applicant agrees to comply with all valid and
enforceable municipal regulations regarding the use and occupation
of public rights-of-way in the delivery of the cable service or
video service, including the police powers of the municipalities in
which the service is delivered.
(d) A general description of the cable or video service area
footprint to be served.
(e) The location of the applicant's principal place of
business and the names of the applicant's principal executive
officers.
(3) The department shall notify an applicant for a cable or
video service authorization whether the applicant's application and
affidavit are complete before the fifteenth business day after the
applicant submits the application. If the application and affidavit
are complete, the department shall have 30 business days after
submission by the applicant to issue the service authorization. If
the department does not notify the applicant regarding the
completeness of the application and affidavit or issue the service
authorization within the time periods required under this
subsection, the application and affidavit shall be considered
complete and the service authorization issued upon the expiration
of the thirtieth day.
(4) The cable service or video service authorization issued by
the department shall contain all of the following:
(a) A grant of authority to provide cable service or video
service in the service area footprint as requested in the
application.
(b) A grant of authority to use and occupy the public rights-
of-way in the delivery of that service, subject to the laws of this
state, including the police powers of the municipalities in which
the service is delivered.
(c) 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.
(5) The cable service or video service authorization issued by
the department is fully transferable to any successor in interest
to the applicant to which is it initially granted. A notice of
transfer shall be filed with the department and the relevant local
unit of government within 15 business days of the completion of the
transfer.
(6) The cable service or video service authorization issued by
the department may be terminated or its cable or video service area
footprint may be modified by the cable service provider or video
service provider by submitting notice to the department and the
relevant local unit of government.
Sec. 5. (1) A competitive video service provider and
competitive cable service provider shall provide distribution
capacity and make reasonable, technically feasible efforts to
retransmit community programming, but shall not be subject to any
requirements under 47 USC 531. An incumbent cable operator that
elects to obtain a video service authorization at the expiration of
its existing franchise shall continue to comply with all community
programming obligations of its franchise and be subject to 47 USC
531.
(2) The local unit of government shall ensure that all
transmissions, content, or programming to be retransmitted by a
holder of a state authorization to provide cable service or video
service is provided or submitted to the competitive cable service
provider or competitive video service provider in a manner or form
that is capable of being accepted and retransmitted by a provider,
without requirement for additional alteration or change in the
content by the provider, over the particular network of the
competitive cable service provider or competitive video service
provider, which is compatible with the technology or protocol
utilized by the competitive cable service provider or competitive
video service provider to deliver services.
(3) Where technically feasible, the holder of a service
authorization under this act and an incumbent cable operator shall
interconnect their cable or video systems for the purpose of
providing applicable programming for the respective services areas.
Interconnection may be accomplished by direct cable, microwave
link, satellite, or other reasonable method of connection. Holders
of a service authorization and incumbent cable operators shall
negotiate in good faith, and incumbent cable operators may not
withhold interconnection.
(4) The local unit of government is solely responsible for all
content provided over designated public, educational, or
governmental channels. A competitive video service provider and
competitive cable service provider shall not exercise any editorial
control over any programming on any channel designed for public,
educational, or governmental use or on any other channel required
by law or a binding agreement with the local franchising authority.
(5) A competitive video service provider and competitive cable
service provider are not subject to any civil or criminal liability
for any program carried on any channel designated for public,
educational, or governmental use or on any other channel.
Sec. 6. (1) As used in this section, "provider" means a
provider of competitive video services or a provider of basic local
exchange service as defined in section 102(b) of the Michigan
telecommunication act, 1991 PA 179, MCL 484.2102, that has more
than 500,000 access lines in service in this state and that
delivers audio programming with localized content or video
programming to its subscribers in those service areas where the
provider is not regulated as a cable system operator of a cable
system under federal law. Provider does not include a programming
provider.
(2) Except as otherwise provided in subsection (3), a provider
shall provide subscribers access to the signals of the local
broadcast television and radio stations licensed by the federal
communications commission to serve those subscribers over the air.
This section does not apply to a low power station unless the
station is a qualified low power station as defined under 47 USC
534(h)(2). A provider is required to only carry digital broadcast
signals to the extent that a broadcast television station has the
right under federal law or regulation to demand carriage of the
digital broadcast signals by a cable operator on a cable system.
(3) To facilitate access by subscribers of a provider of
competitive video services or basic local exchange service to the
signals of local broadcast stations under this section, a station
either shall be granted mandatory carriage or may request
retransmission consent with the provider.
(4) A provider shall transmit, without degradation, the
signals a local broadcast station delivers to the provider. A
provider is not required to provide a television or radio station
valuable consideration in exchange for carriage.
(5) A provider shall not do either of the following:
(a) Discriminate among or between broadcast stations and
programming providers with respect to transmission of their
signals, taking into account any consideration afforded the
provider by the programming provider or broadcast station. In no
event shall the signal quality as retransmitted by the provider be
required to be superior to the signal quality of the broadcast
stations as received by the provider from the broadcast television
station.
(b) Delete, change, or alter a copyright identification
transmitted as part of a broadcast station's signal.
(6) A provider shall not be required to utilize the same or
similar reception technology as the broadcast stations or
programming providers.
(7) A provider that delivers audio or video programming to its
subscribers shall include all programming providers in a subscriber
programming guide, if any, that lists program schedules.
Sec. 7. (1) A competitive cable service provider or
competitive video service provider shall provide notice to each
franchising entity with jurisdiction in any locality in which a
competitive cable service provider or competitive video service
provider begins to offer cable service or video service.
(2) In any locality in which a competitive cable service
provider offers cable service or a competitive video service
provider offers video service on a commercial basis, the
competitive cable service provider or competitive video service
provider shall calculate and pay the competitive cable service
provider or competitive video service provider fee to the
franchising entity with jurisdiction in that locality upon the
franchising entity's written request. The fee shall be equal to the
lesser of 5% of gross revenues or the lowest percentage of gross
revenues paid to the franchising entity by any incumbent cable
operator providing cable service. If the franchising entity makes a
request, the competitive cable service provider or competitive
video service provider fee shall be due on a quarterly basis, 45
days after the close of the quarter. If mailed, the fee is
considered paid on the date it is postmarked. The franchising
entity may not demand any additional fees or charges from the
competitive cable service provider or competitive video service
provider and may not demand the use of any other calculation method
other than allowed under this act. No fee is due under this section
until the franchising entity certifies and provides supporting
documentation of the percentages of gross revenues paid by each
incumbent cable operator.
(3) For purposes of this section, "gross revenues" means all
consideration of any kind or nature, including, without limitation,
cash, credits, property, and in-kind contributions received by the
provider from subscribers for the provision of cable service over a
cable system by a competitive cable provider or video service by a
competitive video service provider within the franchising entity's
jurisdiction. Competitive cable service providers and competitive
video service providers shall be subject to and only be required to
pay either the competitive cable service provider fee or the
competitive video service provider fee but in no event will a
provider be subject to both the competitive cable service and
competitive video service provider fees. Gross revenues do not
include any of the following:
(a) Revenues not actually received, even if billed, such as
bad debt.
(b) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the provider to
provide cable service or video service.
(c) Refunds, rebates, or discounts or other price adjustments
made to subscribers, leased access providers, advertisers, or any
other local unit of government that reduce the amount of gross
revenues received by a competitive video service provider or
competitive cable service provider. This subdivision does not
include any discounts, refunds, and other price adjustments that
are allocated to the video or cable service segment of the
provider's services for the purpose of decreasing the amount of the
competitive video service provider fee.
(d) Regardless of whether the services are bundled, packaged,
or functionally integrated with cable service or video service, any
revenues from services not classified as cable service or video
service, including, without limitation, revenue received from
telecommunications services, revenue received from information
services, revenue received in connection with advertising, revenue
received in connection with home shopping services, or any other
revenues attributed by the competitive cable service provider or
competitive video service provider to noncable service or nonvideo
service in accordance with the provider's books and records kept in
the regular course of business and any applicable laws, rules,
regulations, standards, or orders.
(e) Any revenue paid by subscribers to home shopping
programmers directly from the sale of merchandise through any home
shopping channel offered as part of the cable services or video
services.
(f) The sale of cable services or video services for resale in
which the purchaser is required to collect the service provider fee
from the purchaser's subscriber.
(g) Any tax or fee of general applicability imposed upon the
competitive cable service provider or competitive video service
provider or upon subscribers by a city, state, federal, or any
other governmental entity and required to be collected by the
competitive cable service provider or competitive video service
provider and remitted to the taxing entity and including the fees
specified in this section.
(h) The provision of cable services or video services to
public institutions, public schools, or governmental entities at no
charge.
(i) Any forgone revenue from the competitive cable service
provider's or competitive video service provider's provision of
free or reduced-cost video service to any subscriber, including a
governmental, educational, or health care institution.
(j) Sales of real property, capital assets, or surplus
equipment.
(k) Reimbursement by programmers of marketing costs incurred
by the competitive cable service provider or competitive video
service provider for the introduction or promotion of new
programming.
(l) Directory, internet, or video services advertising revenue,
including, but not limited to, yellow page, white page, banner
advertisement, and electronic publishing.
(m) Copyright fees.
(n) Security deposits collected from subscribers.
(o) Late payment fees or charges, insufficient funds check
charges, and other charges assessed to recover the costs of
collecting delinquent payments.
(p) Revenues received from the installation, repair,
maintenance, sale, or lease of equipment.
(4) A competitive provider of cable service or a competitive
provider of video service shall pay to the franchising entity as
support for public, education, and government programming a fee
equal to the lesser of 1% of gross revenues or the amount paid on a
cash basis per subscriber for support for public, education, and
government programming to the franchising entity by the incumbent
cable operator with the largest number of cable service subscribers
in the franchising entity. The fee shall be due on a quarterly
basis, not more than 45 days after the close of the quarter for
gross revenues received during the calendar quarter. If mailed, the
fee is considered paid on the date it is postmarked. The
franchising entity shall provide data to the competitive cable
service provider or competitive video service provider necessary to
calculate the fees due under this subsection no less than 30 days
before the payments of the fees are due.
(5) The competitive cable service provider or competitive
video service provider is entitled to a credit applied toward the
fees due under this section for all funds allocated to the local
unit of government from annual maintenance fees paid by the
provider for use of public rights-of-way under section 8 of the
metropolitan extension telecommunications rights-of-way oversight
act, 2002 PA 48, MCL 484.3108. The credits shall be applied on a
monthly pro rata basis beginning in the first month of each
calendar year in which the local unit of government receives its
allocation of funds.
Sec. 8. (1) No more than once per year, a franchising entity
may perform reasonable audits of the competitive cable service
provider's or competitive video service provider's calculation of
the fees paid to the franchising entity under section 7 during the
preceding 12-month period only. All records reasonably necessary
for the audits shall be made available by the holder of
authorization at the location where the records are kept in the
ordinary course of business. The franchising entity and the
competitive cable service provider or competitive video service
provider shall each be responsible for their respective costs of
the audit. Any additional amount due verified by the holder of an
authorization and the franchising entity shall be paid within 30
days of the franchising entity's submission of an invoice for the
sum. If the sum exceeds 5% of the total fees which the audit
determines should have been paid for the 12-month period, the
holder shall pay the franchising entity's reasonable costs of the
audit.
(2) Any claims by a franchising entity that fees have not been
paid as required under section 7, and any claims for refunds or
other corrections to the remittance of the holder, shall be made
within 3 years and 45 days of the end of the quarter for which
compensation is remitted.
(3) Any competitive cable service provider or competitive
video service provider may identify and collect the amount of the
competitive cable service provider or competitive video service
provider fee as a separate line item on the regular bill of each
subscriber.
(4) A competitive cable service provider or competitive video
service provider may identify and collect the amount of the public,
educational, and government programming support fee as a separate
line item on the regular bill of a subscriber.
Sec. 9. (1) A local unit of government shall allow the holder
of a state authorization to provide cable service or video service
to install, construct, and maintain a communications network within
a public right-of-way and shall provide the holder of a state
authorization to provide cable service or video service with open,
comparable, nondiscriminatory, and competitively neutral access to
the public right-of-way.
(2) A local unit of government may not discriminate against
the holder of a state authorization to provide cable service or
video service for any of the following:
(a) The authorization or placement of a communications network
in public rights-of-way.
(b) Access to a building.
(c) A municipal utility pole attachment.
(3) A local unit of government may impose on a competitive
cable service provider or competitive video service provider a
permit fee only to the extent it imposes such a fee on incumbent
cable operators, and any fee may not exceed the actual, direct
costs incurred by the franchising entity for issuing the relevant
permit. In no event may a fee under this section be levied if the
competitive cable service provider or competitive video service
provider already has paid a permit fee of any kind in connection
with the same activity that would otherwise be covered by the
permit fee under this section or is otherwise authorized by law or
contract to place the facilities used by the competitive cable
service provider or competitive video service provider in the
public rights-of-way or for general revenue purposes.
Sec. 10. (1) A competitive cable service provider or
competitive video service provider that has been granted a state
authorization to provide cable service or video service may not
deny access to service to any group of potential residential
subscribers because of the income of the residents in the local
area in which such group resides. A provider does not violate this
section if it schedules the construction of its network and
deployment of its services based on good faith projections of
anticipated revenues and rates of subscription to provide cable.
(2) The holder of a state authorization to provide cable
service or video service may use direct-to-home satellite service
or another alternative technology that provides comparable content,
service, and functionality to satisfy the requirements of this
section.
(3) Notwithstanding any other provision of this act, the
holder of a cable service or video service authorization shall not
be required to comply with, and a local unit of government may not
impose or enforce, any mandatory build-out or deployment
provisions, schedules, or requirements.
Sec. 11. The department shall file a report with the governor
and legislature by February 1 of each year that shall include all
of the following:
(a) The status of competition for cable and video services in
this state.
(b) Recommendations for legislation, if any.
(c) Actions taken by the commission to implement the
provisions of this act.
(d) Information regarding all state authorization grants under
this act.
Sec. 12. This act shall only be enforced by a court of
competent jurisdiction.