CHAPTER 58. INCENTIVE REGULATION

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UTILITIES CODE

TITLE 2. PUBLIC UTILITY REGULATORY ACT

SUBTITLE C. TELECOMMUNICATIONS UTILITIES

CHAPTER 58. INCENTIVE REGULATION

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 58.001. POLICY. Considering the status of competition in

the telecommunications industry, it is the policy of this state

to:

(1) provide a framework for an orderly transition from the

traditional regulation of return on invested capital to a fully

competitive telecommunications marketplace in which all

telecommunications providers compete on fair terms;

(2) preserve and enhance universal telecommunications service at

affordable rates;

(3) upgrade the telecommunications infrastructure of this state;

(4) promote network interconnectivity; and

(5) promote diversity in the supply of telecommunications

services and innovative products and services throughout the

entire state, including urban and rural areas.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.002. DEFINITION. In this chapter, "electing company"

means an incumbent local exchange company that elects to be

subject to incentive regulation and to make the corresponding

infrastructure commitment under this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.003. CUSTOMER-SPECIFIC CONTRACTS. (a) Notwithstanding

any other provision of this chapter, but subject to Subsection

(b), an electing company may not offer in an exchange a service,

or an appropriate subset of a service, listed in Sections

58.051(a)(1)-(4) or Sections 58.151(1)-(4) in a manner that

results in a customer-specific contract, unless the other party

to the contract is a federal, state, or local governmental

entity, until the earlier of September 1, 2003, or the date on

which the commission finds that at least 40 percent of the total

access lines for that service or appropriate subset of that

service in that exchange are served by competitive alternative

providers that are not affiliated with the electing company.

(b) The requirements prescribed by Subsection (a) do not apply

to an electing company serving fewer than five million access

lines after the date on which it completes the infrastructure

improvements described in this subsection. The electing company

must also notify the commission of the company's binding

commitment to make the following infrastructure improvements not

later than September 1, 2000:

(1) install Common Channel Signaling 7 capability in each

central office; and

(2) connect all of the company's serving central offices to

their respective LATA tandem central offices with optical fiber

or equivalent facilities.

of services.

(d) An electing company may file with the commission a request

for a finding under this section. The filing must include

information sufficient for the commission to perform a review and

evaluation in relation to the particular exchange and the

particular service or appropriate subset of a service for which

the electing company wants to offer customer-specific contracts.

The commission must grant or deny the request not later than the

60th day after the date the electing company files the request.

(e) The commitments described by Subsection (b) do not apply to

exchanges of the company sold or transferred before, or for which

contracts for sale or transfer are pending on, September 1, 2001.

In the case of exchanges for which contracts for sale or transfer

are pending as of March 1, 2001, where the purchaser withdrew or

defaulted before September 1, 2001, the company shall have one

year from the date of withdrawal or default to comply with the

commitments.

(f) This section does not preclude an electing company from

offering a customer-specific contract to the extent allowed by

this title as of August 31, 1999.

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 33, eff. Sept. 1,

1999.

Sec. 58.004. PACKAGING, TERM AND VOLUME DISCOUNTS, AND

PROMOTIONAL OFFERINGS. (a) Notwithstanding any other provision

of this chapter, an electing company that has more than five

million access lines in this state may not offer in an exchange a

service listed in Sections 58.151(1)-(4) as a component of a

package of services or as a promotional offering until the

company makes the reduction in switched access service rates

required by Section 58.301(2) unless the customer of one of the

pricing flexibility offerings described in this subsection is a

federal, state, or local governmental entity.

(b) Notwithstanding any other provision of this chapter, an

electing company that has more than five million access lines in

this state may not offer a volume or term discount on any service

listed in Sections 58.151(1)-(4) until September 1, 2000, unless

the customer of one of the pricing flexibility offerings

described in this subsection is a federal, state, or local

governmental entity.

electing company that has more than five million access lines in

this state may offer in an exchange a service listed in Sections

58.051(a)(1)-(4) as a component of a package of services, as a

promotional offering, or with a volume or term discount on and

after September 1, 1999.

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 34, eff. Sept. 1,

1999.

SUBCHAPTER B. ELECTION OF INCENTIVE REGULATION

Sec. 58.021. ELECTION. (a) An incumbent local exchange company

may elect to be subject to incentive regulation and to make the

corresponding infrastructure commitment under this chapter by

notifying the commission in writing of its election.

(b) The notice must include a statement that the company agrees

to:

(1) limit until September 1, 2005, any increase in a rate the

company charges for basic network services as prescribed by

Subchapter C; and

(2) fulfill the infrastructure commitment prescribed by

Subchapters F and G.

chapter remains in effect until the legislature eliminates the

incentive regulation authorized by this chapter and Chapter 59.

(d) The commission may allow an electing company serving fewer

than five million access lines to withdraw the company's election

under this chapter:

(1) on application by the company; and

(2) only for good cause.

(e) In this section, "good cause" includes only matters beyond

the control of the company.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 35, eff. Sept. 1,

1999.

Sec. 58.022. CHAPTER CONTROLS. This chapter governs the

regulation of an electing company's telecommunications services

regardless of whether the company is a dominant carrier.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.023. SERVICE CLASSIFICATION. On election, the services

provided by an electing company are classified into two

categories:

(1) basic network services governed by Subchapter C; and

(2) nonbasic services governed by Subchapter E.

(3) Renumbered (2) by Acts 1999, 76th Leg., ch. 1212, Sec. 36,

eff. Sept. 1, 1999

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 36, eff. Sept. 1,

1999.

Sec. 58.024. SERVICE RECLASSIFICATION. (a) The commission may

reclassify a basic network service as a nonbasic service.

(b) The commission shall establish criteria for determining

whether a service should be reclassified. The criteria must

include consideration of the:

(1) availability of the service from other providers;

(2) effect of the reclassification on service subscribers; and

(3) nature of the service.

(1) each competitive safeguard prescribed by Subchapters B-H,

Chapter 60, is fully implemented; or

(2) for a company that serves more than five million access

lines in this state, the date on which the Federal Communications

Commission determines in accordance with 47 U.S.C. Section 271

that the company or any of its affiliates may enter the interLATA

telecommunications market in this state.

(d) The commission may reclassify a service subject to the

following conditions:

(1) the electing company must file a request for a service

reclassification including information sufficient for the

commission to perform a review and evaluation under Subsection

(b);

(2) the commission must grant or deny the request not later than

the 60th day after the date the electing company files the

request for service reclassification; and

(3) there is a rebuttable presumption that the request for

service reclassification by the electing company should be

granted if the commission finds that there is a competitive

alternative provider serving customers through means other than

total service resale.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 18.11, eff. Sept.

1, 1999; Acts 1999, 76th Leg., ch. 1212, Sec. 37, eff. Sept. 1,

1999.

Sec. 58.025. COMPLAINT OR HEARING. (a) An electing company is

not, under any circumstances, subject to a complaint, hearing, or

determination regarding the reasonableness of the company's:

(1) rates;

(2) overall revenues;

(3) return on invested capital; or

(4) net income.

(b) This section does not prohibit a complaint, hearing, or

determination on an electing company's implementation and

enforcement of a competitive safeguard required by Chapter 60.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.026. CONSUMER COMPLAINTS REGARDING TARIFFS. (a) This

chapter does not restrict:

(1) a consumer's right to complain to the commission about the

application of an ambiguous tariff; or

(2) the commission's right to determine:

(A) the proper application of that tariff; or

(B) the proper rate if that tariff does not apply.

(b) This section does not permit the commission to:

(1) lower a tariff rate except as specifically provided by this

title;

(2) change the commission's interpretation of a tariff; or

(3) extend the application of a tariff to a new class of

customers.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.027. CONSUMER COMPLAINTS REGARDING SERVICES; ENFORCEMENT

OF STANDARDS. This chapter does not restrict:

(1) a consumer's right to complain to the commission about

quality of service; or

(2) the commission's right to enforce a quality of service

standard.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER C. BASIC NETWORK SERVICES

Sec. 58.051. SERVICES INCLUDED. (a) Unless reclassified under

Section 58.024, the following services are basic network

services:

(1) flat rate residential local exchange telephone service,

including primary directory listings and the receipt of a

directory and any applicable mileage or zone charges;

(2) residential tone dialing service;

(3) lifeline and tel-assistance service;

(4) service connection for basic residential services;

(5) direct inward dialing service for basic residential

services;

(6) private pay telephone access service;

(7) call trap and trace service;

(8) access for all residential and business end users to 911

service provided by a local authority and access to dual party

relay service;

(9) mandatory residential extended area service arrangements;

and

(10) mandatory residential extended metropolitan service or

other mandatory residential toll-free calling arrangements.

(a-1) Notwithstanding Subsection (a) and Section 58.151, basic

network services include residential caller identification

services if the customer to whom the service is billed is at

least 65 years of age.

(b) Electing companies shall offer each basic network service as

a separately tariffed service in addition to any packages or

other pricing flexibility offerings that include those basic

network services.

company, the price for basic network service shall also include

the fees and charges for any mandatory extended area service

arrangements, mandatory expanded toll-free calling plans, and any

other service included in the definition of basic network

service.

(d) A nonpermanent expanded toll-free local calling service

surcharge established by the commission to recover the costs of

mandatory expanded toll-free local calling service:

(1) is considered a part of basic network service;

(2) may not be aggregated under Subsection (c); and

(3) continues to be transitioned in accordance with commission

orders and substantive rules.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 39, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., 2nd C.S., Ch.

2, Sec. 18, eff. September 7, 2005.

Sec. 58.052. REGULATION OF SERVICES. (a) Except as provided by

Subchapter E, Chapter 52, basic network services of an electing

company are regulated:

(1) in accordance with this chapter; and

(2) to the extent not inconsistent with this chapter, in

accordance with:

(A) Subtitle A;

(B) Chapters 51, 54, 60, 62, and 63;

(D) Subchapters C, D, and E, Chapter 53;

(E) Chapter 55, except for:

(i) Subchapters F and G; and

(ii) Sections 55.001, 55.002, 55.003, and 55.004;

(F) Sections 53.001, 53.003, 53.004, 53.006, 53.065, 55.005,

55.006, 55.009, and 55.010; and

(G) commission rules and procedures.

(b) The commission must approve a change in the terms of the

tariff offering of a basic network service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.053. INVESTMENT LIMITATION ON SERVICE STANDARDS. (a)

The commission may not raise a service standard applicable to the

provision of local exchange telephone service by an electing

company if the increased investment required to comply with the

raised standard in any year exceeds 10 percent of the company's

average annual intrastate additions in capital investment for the

most recent five-year period.

(b) In computing the average under Subsection (a), the company

shall exclude:

(1) extraordinary investments made during the five-year period;

and

(2) investments required by Section 58.203.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.054. RATES CAPPED. (a) As a condition of election

under this chapter, an electing company shall commit to not

increasing a rate for a basic network service on or before the

fourth anniversary of its election date.

(b) The rates an electing company may charge on or before that

fourth anniversary are the rates charged by the company on June

1, 1995, or, for a company that elects under this chapter after

September 1, 1999, the rates charged on the date of its election,

without regard to a proceeding pending under:

(1) Section 15.001;

(2) Subchapter D, Chapter 53; or

(3) Subchapter G, Chapter 2001, Government Code.

rates for basic network services for a company electing under

this chapter may not expire before September 1, 2005.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 40, eff. Sept. 1,

1999.

Sec. 58.055. RATE ADJUSTMENT BY COMPANY. (a) An electing

company may increase a rate for a basic network service during

the election period prescribed by Section 58.054 only:

(1) with commission approval that the proposed change is

included in Section 58.056, 58.057, or 58.058; and

(2) as provided by Sections 58.056, 58.057, 58.058, and 58.059.

(b) Notwithstanding Subchapter F, Chapter 60, an electing

company may, on its own initiative, decrease a rate for a basic

network service during the electing period.

telecommunications service to an amount above the service's

appropriate cost. If the company has been required to perform or

has elected to perform a long run incremental cost study, the

appropriate cost for the service is the service's long run

incremental cost.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 40, eff. Sept. 1,

1999.

Sec. 58.056. RATE ADJUSTMENT FOR CHANGES IN FCC SEPARATIONS.

The commission, on motion of the electing company or on its own

motion, shall proportionally adjust rates for services to reflect

changes in Federal Communications Commission separations that

affect intrastate net income by at least 10 percent.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.057. RATE ADJUSTMENT FOR CERTAIN COMPANIES. (a) An

electing company, after the 42nd month after the date the company

elects incentive regulation under this chapter, may file an

application for a commission review of the company's need for

changes in the rates of its services if the company:

(1) has fewer than five million access lines in this state; and

(2) is complying with:

(A) the company's infrastructure commitment;

(B) each requirement relating to quality of service; and

(b) The company's application may request that the commission

adjust rates, implement new pricing plans, restructure rates, or

rebalance revenues between services to recognize changed market

conditions and the effects of competitive entry.

determining the requested changes.

(d) The commission may not:

(1) order an increase in the rate for residential local exchange

telephone service that would cause the rate to increase by more

than the United States Consumer Price Index in any 12-month

period; or

(2) set the monthly rate for residential local exchange

telephone service in an amount that exceeds the nationwide

average rates for similar local exchange telephone services.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.058. RATE GROUP RECLASSIFICATION. Notwithstanding

Subchapter B, the commission, on request of the electing company,

shall allow a rate group reclassification that results from

access line growth.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.059. COMMISSION RATE ADJUSTMENT PROCEDURE. (a) In

accordance with this section, an electing company may request and

the commission may authorize a rate adjustment under Section

58.056, 58.057, or 58.058.

(b) The electing company must provide to the commission notice

of its intent to adjust rates. The notice must be accompanied by

sufficient documentary evidence to demonstrate that the rate

adjustment is authorized under Section 58.056, 58.057, or 58.058.

The commission by rule or order shall prescribe the documentation

required under this subsection.

customers after providing notice to the commission. The notice to

the customers must:

(1) within a reasonable period after notice to the commission,

be published once in a newspaper of general circulation in the

affected service area;

(2) be included in or printed on each affected consumer's bill

in the first billing that occurs after notice is filed with the

commission;

(3) have a title that includes the name of the company and the

words "NOTICE OF POSSIBLE RATE CHANGE"; and

(4) include:

(A) a statement that the consumer's rate may change;

(B) an estimate of the amount of the annual change for the

typical residential, business, or access consumer if the

commission approves the rate change;

change or who wants additional information regarding the rate

change may call or write the commission and that the information

will be provided without cost to the consumer and at the expense

of the electing company; and

(D) the commission's telephone number and address.

(d) The estimate of the amount of the annual change required by

Subsection (c)(4)(B) must be printed in a type style and size

that is distinct from and larger than the type style and size of

the body of the notice.

(e) The commission shall review the proposed rates to determine

if the rate adjustment is authorized under Section 58.056,

58.057, or 58.058.

(f) The rate adjustment takes effect on the 90th day after the

date the electing company completes the notice required by this

section unless the commission suspends the effective date under

Subsection (g).

(g) At any time before a rate adjustment is scheduled to take

effect, the commission, on its own motion or on complaint by an

affected party, may suspend the effective date of the rate

adjustment and conduct a hearing to review the proposed

adjustment. After the hearing, the commission may issue an order

approving the adjustment, or if it finds that the adjustment is

not authorized under Section 58.056, 58.057, or 58.058, issue an

order modifying or rejecting the adjustment. An order modifying

or rejecting a rate adjustment must specify:

(1) each reason why the proposed adjustment was not authorized

by Section 58.056, 58.057, or 58.058; and

(2) how the proposed adjustment may be changed so that it is

authorized.

(h) Except as provided by this section, a request for a rate

restructure must comply with the notice and hearing requirements

prescribed by Sections 53.101-53.106.

(i) An electing company that has not more than five percent of

the total access lines in this state may adopt as the cost for a

service the cost for the same or substantially similar service

offered by a larger incumbent local exchange company. The

electing company may adopt the larger company's cost only if the

cost was determined based on a long run incremental cost study.

An electing company that adopts a cost under this subsection is

not required to present its own long run incremental cost study

to support the adopted cost.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.060. RATE ADJUSTMENT AFTER CAP EXPIRATION. After the

expiration of the period during which the rates for basic network

services are capped as prescribed by Section 58.054, an electing

company may increase a rate for a basic network service only:

(1) with commission approval subject to this title; and

(2) to the extent consistent with achieving universal affordable

service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 41, eff. Sept. 1,

1999.

Sec. 58.061. EFFECT ON CERTAIN CHARGES. This subchapter does

not affect a charge permitted under:

(1) Section 55.024;

(2) Subchapter C, Chapter 55; or

(3) Subchapter B, Chapter 56.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.063. PRICING AND PACKAGING FLEXIBILITY. (a)

Notwithstanding Section 58.052(b) or Subchapter F, Chapter 60, an

electing company may exercise pricing flexibility for basic

network services, including the packaging of basic network

services with any other regulated or unregulated service or any

service of an affiliate. The company may exercise pricing

flexibility in accordance with this section 10 days after

providing an informational notice to the commission, to the

office, and to any person who holds a certificate of operating

authority in the electing company's certificated area or areas or

who has an effective interconnection agreement with the electing

company.

(b) An electing company shall set the price of a package of

services containing basic network services and nonbasic services

at any level at or above the lesser of:

(1) the sum of the long run incremental costs of any basic

network services and nonbasic services contained in the package;

(2) the sum of the tariffed prices of any basic network services

contained in the package and the long run incremental costs of

nonbasic services contained in the package.

may flexibly price a package that includes a basic network

service in any manner provided by Section 51.002(7).

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 42, eff. Sept. 1,

1999.

SUBCHAPTER E. NONBASIC SERVICES

Sec. 58.151. SERVICES INCLUDED. The following services are

classified as nonbasic services:

(1) flat rate business local exchange telephone service,

including primary directory listings and the receipt of a

directory, and any applicable mileage or zone charges, except

that the prices for this service shall be capped until September

1, 2005, at the prices in effect on September 1, 1999;

(2) business tone dialing service, except that the prices for

this service shall be capped until September 1, 2005, at the

prices in effect on September 1, 1999;

(3) service connection for all business services, except that

the prices for this service shall be capped until September 1,

2005, at the prices in effect on September 1, 1999;

(4) direct inward dialing for basic business services, except

that the prices for this service shall be capped until September

1, 2005, at the prices in effect on September 1, 1999;

(5) "1-plus" intraLATA message toll services;

(6) 0+ and 0- operator services;

(7) call waiting, call forwarding, and custom calling, except

that:

(A) residential call waiting service shall be classified as a

basic network service until July 1, 2006; and

(B) for an electing company subject to Section 58.301, prices

for residential call forwarding and other custom calling services

shall be capped at the prices in effect on September 1, 1999,

until the electing company implements the reduction in switched

access rates described by Section 58.301(2);

(8) call return, caller identification, and call control

options, except that, for an electing company subject to Section

58.301, prices for residential call return, caller

identification, and call control options shall be capped at the

prices in effect on September 1, 1999, until the electing company

implements the reduction in switched access rates described by

Section 58.301(2);

(9) central office based PBX-type services;

(10) billing and collection services, including installment

billing and late payment charges for customers of the electing

company;

(11) integrated services digital network (ISDN) services, except

that prices for Basic Rate Interface (BRI) ISDN services, which

comprise up to two 64 Kbps B-channels and one 16 Kbps D-channel,

shall be capped until September 1, 2005, at the prices in effect

on September 1, 1999;

(12) new services;

(13) directory assistance services, except that an electing

company shall provide to a residential customer the first three

directory assistance inquiries in a monthly billing cycle at no

charge until July 1, 2006;

(14) services described in the WATS tariff as the tariff existed

on January 1, 1995;

(15) 800 and foreign exchange services;

(16) private line service;

(17) special access service;

(18) services from public pay telephones;

(19) paging services and mobile services (IMTS);

(20) 911 services provided to a local authority that are

available from another provider;

(21) speed dialing;

(22) three-way calling; and

(23) all other services subject to the commission's jurisdiction

that are not specifically classified as basic network services in

Section 58.051, except that nothing in this section shall

preclude a customer from subscribing to a local flat rate

residential or business line for a computer modem or a facsimile

machine.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 43, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., 2nd C.S., Ch.

2, Sec. 19, eff. September 7, 2005.

Sec. 58.152. PRICES. (a) An electing company may set the price

for any nonbasic service at any level above the lesser of the:

(1) service's long run incremental cost in accordance with the

imputation rules prescribed by or under Subchapter D, Chapter 60;

(2) price for the service in effect on September 1, 1999.

(b) Subject to Section 51.004, an electing company may use

pricing flexibility for a nonbasic service. Pricing flexibility

includes all pricing arrangements included in the definition of

"pricing flexibility" prescribed by Section 51.002 and includes

packages that include basic network services.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 43, eff. Sept. 1,

1999.

Sec. 58.153. NEW SERVICES. (a) Subject to the pricing

conditions prescribed by Section 58.152(a), an electing company

may introduce a new service 10 days after providing an

informational notice to the commission, to the office, and to any

person who holds a certificate of operating authority in the

electing company's certificated area or areas or who has an

effective interconnection agreement with the electing company.

(b) An electing company serving more than five million access

lines in this state shall provide notice to any person who holds

a certificate of operating authority in the electing company's

certificated area or areas or who has an effective

interconnection agreement with the electing company of any

changes in the generally available prices and terms under which

the electing company offers basic or nonbasic telecommunications

services regulated by the commission at retail rates to

subscribers that are not telecommunications providers. Changes

requiring notice under this subsection include the introduction

of any new nonbasic services, any new features or functions of

basic or nonbasic services, promotional offerings of basic or

nonbasic services, or the discontinuation of then-current

features or services. The electing company shall provide the

notice:

(1) if the electing company is required to give notice to the

commission, at the same time the company provides that notice; or

(2) if the electing company is not required to give notice to

the commission, at least 45 days before the effective date of a

price change or 90 days before the effective date of a change

other than a price change, unless the commission determines that

the notice should not be given.

small commercial customers, or the commission may file a

complaint at the commission challenging whether the pricing by an

incumbent local exchange company of a new service is in

compliance with Section 58.152(a). The commission shall allow the

company to continue to provide the service while the complaint is

pending.

(d) If a complaint is filed under Subsection (c), the electing

company has the burden of proving that the company set the price

for the new service in accordance with Section 58.152(a). If the

complaint is finally resolved in favor of the complainant, the

company:

(1) shall, not later than the 10th day after the date the

complaint is finally resolved, amend the price of the service as

necessary to comply with the final resolution; or

(2) may, at the company's option, discontinue the service.

(e) The notice requirement prescribed by Subsection (b) expires

September 1, 2003.

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 43, eff. Sept. 1,

1999.

Sec. 58.155. INTERCONNECTION. Because interconnection to

competitive providers and interconnection for commercial mobile

service providers are subject to the requirements of Sections 251

and 252, Communications Act of 1934 (47 U.S.C. Sections 251 and

252), as amended, and Federal Communications Commission rules,

including the commission's authority to arbitrate issues,

interconnection is not addressed in this subchapter or Subchapter

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 44, eff. Sept. 1,

1999.

SUBCHAPTER F. GENERAL INFRASTRUCTURE COMMITMENT

Sec. 58.201. STATEMENT OF STATE GOAL. (a) It is the goal of

this state to facilitate and promote the deployment of an

advanced telecommunications infrastructure to spur economic

development throughout this state. This state should be among the

leaders in achieving this objective.

(b) The primary means of achieving this goal is through

encouraging private investment in this state's telecommunications

infrastructure by creating incentives for that investment and

promoting the development of competition.

telecommunications network infrastructure to communities in this

state is through innovation and competition among all the state's

communications providers. Competition will provide residents of

this state with a choice of telecommunications providers and will

drive technology deployment, innovation, service quality, and

cost-based prices as competing firms try to satisfy customer

needs.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.202. POLICY GOALS FOR IMPLEMENTATION. In implementing

this subchapter, the commission shall consider this state's

policy goals to:

(1) ensure the availability of the widest possible range of

competitive choices in the provision of telecommunications

services and facilities;

(2) foster competition and rely on market forces where

competition exists to determine the price, terms, and

availability of service;

(3) ensure the universal availability of basic local

telecommunications services at reasonable rates;

(4) encourage the continued development and deployment of

advanced and reliable capabilities and services in

telecommunications networks;

(5) ensure interconnection and interoperability, based on

uniform technical standards, among telecommunications carriers;

(6) eliminate unnecessary administrative procedures that impose

regulatory barriers to competition and ensure that competitive

entry is fostered on an economically rational basis;

(7) ensure consumer protection and protection against

anticompetitive conduct;

(8) regulate a provider of services only to the extent the

provider has market power to control the price of services to

customers;

(9) encourage cost-based pricing of telecommunications services

so that consumers pay a fair price for services they use; and

(10) subject to Subchapter C, develop appropriate quality of

service standards for local exchange companies so as to place

this state among the leaders in deployment of an advanced

telecommunications infrastructure.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.203. INFRASTRUCTURE GOALS OF ALL ELECTING COMPANIES.

(a) Recognizing that it will take time for competition to

develop in the local exchange market, the commission shall, in

the absence of competition, ensure that each electing company

achieves the infrastructure goals described by this section.

(b) Not later than December 31, 1996, an electing company shall

make available to each customer in the company's territory access

to end-to-end digital connectivity.

company after September 1, 1995, must be digital or technically

equal to or superior to digital. In addition, a switch installed

after September 1, 1997, must, at a minimum, be capable of

providing integrated services digital network (ISDN) services in

a manner consistent with generally accepted national standards.

(d) Not later than January 1, 2000, 50 percent of the local

exchange access lines in each electing company's territory must

be served by a digital central office switch.

(e) Not later than January 1, 2000, an electing company's public

switched network backbone interoffice facilities must employ

broadband facilities capable of 45 or more megabits a second. The

company may employ facilities at a lower bandwidth if technology

permits the delivery of video signal at the lower bandwidth at a

quality level comparable to a television broadcast signal. The

requirements of this subsection do not apply to local loop

facilities.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.204. ADDITIONAL INFRASTRUCTURE COMMITMENT OF CERTAIN

COMPANIES. (a) Not later than December 31, 1998, an electing

company serving more than one million but fewer than five million

access lines shall provide digital switching central offices in

all exchanges.

(b) Not later than January 1, 2000, an electing company serving

more than five million access lines shall:

(1) install Common Channel Signaling 7 capability in each

central office; and

(2) connect all of the company's serving central offices to

their respective LATA tandem central offices with optical fiber

or equivalent facilities.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.205. EXTENSION OR WAIVER OF INFRASTRUCTURE REQUIREMENTS.

(a) For an electing company that serves more than one million

but fewer than two million access lines, the commission may

temporarily extend a deadline prescribed by Section 58.203 if the

company demonstrates that the extension is in the public

interest.

(b) For an electing company that serves fewer than one million

access lines, the commission may waive a requirement prescribed

by Section 58.203 if the company demonstrates that the investment

is not viable economically.

commission must consider the public benefits that would result

from compliance with the requirement.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.206. IMPLEMENTATION COSTS; INCREASE IN RATES AND

UNIVERSAL SERVICE FUNDS. The commission may not consider the

cost of implementing Section 58.203 or 58.204 in determining

whether an electing company is entitled to:

(1) a rate increase under this chapter; or

(2) increased universal service funds under Subchapter B,

Chapter 56.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER G. INFRASTRUCTURE COMMITMENT TO CERTAIN ENTITIES

Sec. 58.251. INTENT AND GOAL OF SUBCHAPTER. (a) It is the

intent of this subchapter to establish a telecommunications

infrastructure that interconnects the public entities described

in this subchapter. The interconnection of these entities

requires ubiquitous, broadband, digital services for voice,

video, and data in the local serving area. The ubiquitous nature

of these connections must allow individual networks of these

entities to interconnect and interoperate across the broadband

digital service infrastructure. The delivery of these advanced

telecommunications services requires collaborations and

partnerships of public, private, and commercial

telecommunications service network providers.

(b) The goal of this subchapter is to interconnect and aggregate

the connections to every entity described in this subchapter, in

the local serving area. It is further intended that the

infrastructure implemented under this subchapter connect each

entity that requests a service offered under this subchapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.252. DEFINITIONS. In this subchapter:

(1) "Educational institution" has the meaning assigned by

Section 57.021.

(2) "Library" means:

(A) a public library or regional library system as those terms

are defined by Section 441.122, Government Code;

(B) a library operated by an institution of higher education or

a school district; or

Section 441.221(3), Government Code.

(3) "Private network services" means:

(A) broadband digital service that is capable of providing

transmission speeds of 45 megabits a second or greater for

customer applications; and

(B) other customized or packaged network services.

(4) "Telemedicine center" means a facility that is equipped to

transmit, by video, data, or voice service, medical information

for the diagnosis or treatment of illness or disease and that is:

(A) owned or operated by a public or not-for-profit hospital,

including an academic health center; or

(B) owned by one or more state-licensed health care

practitioners and operated on a nonprofit basis.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

831, Sec. 11, eff. September 1, 2008.

Sec. 58.253. PRIVATE NETWORK SERVICES FOR CERTAIN ENTITIES. (a)

On customer request, an electing company shall provide private

network services to:

(1) an educational institution;

(2) a library as defined in Section 57.021;

(3) a nonprofit telemedicine center;

(4) a public or not-for-profit hospital; or

(5) a legally constituted consortium or group of entities

listed in this subsection.

(b) Except as provided by Section 58.266, the electing company

shall provide the private network services for the private and

sole use of the receiving entity.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2001, 77th Leg., ch. 959, Sec. 9, eff. June 14,

2001; Acts 2001, 77th Leg., ch. 1220, Sec. 4, eff. Sept. 1, 2001;

Acts 2001, 77th Leg., ch. 1255, Sec. 16, eff. June 15, 2001; Acts

2001, 77th Leg., ch. 1350, Sec. 7, eff. Sept. 1, 2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

831, Sec. 12, eff. September 1, 2008.

Sec. 58.254. PRIORITIES. An electing company shall give

priority to serving:

(1) rural areas;

(2) areas designated as critically underserved either medically

or educationally; and

(3) educational institutions with high percentages of

economically disadvantaged students.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.255. CONTRACTS FOR PRIVATE NETWORK SERVICES. (a) An

electing company shall provide a private network service under a

customer specific contract.

(b) An electing company shall offer private network service

contracts under this subchapter at 105 percent of the long run

incremental cost of providing the private network service,

including installation.

approval of a contract is not required.

(d) Subtitle D, Title 10, Government Code, does not apply to a

contract entered into under this subchapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.256. PREFERRED RATE TREATMENT WARRANTED. An entity

described by Section 58.253(a) warrants preferred rate treatment.

However, a rate charged for a service must cover the service's

long run incremental cost.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.257. ELECTION OF RATE TREATMENT. An educational

institution or a library may elect the rate treatment provided by

this subchapter or the discount provided by Subchapter B, Chapter

57.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.258. PRIVATE NETWORK SERVICES RATES AND TARIFFS. (a)

Notwithstanding the pricing flexibility authorized by this

subtitle, an electing company's rates for private network

services may not be increased before January 1, 2012. However,

an electing company may increase a rate in accordance with the

provisions of a customer specific contract.

(b) An electing company may not charge an entity described by

Section 58.253(a) a special construction or installation charge.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., 2nd C.S., Ch.

2, Sec. 20, eff. September 7, 2005.

Sec. 58.259. TARIFF RATE FOR CERTAIN INTRALATA SERVICE. (a) An

electing company shall file a flat monthly tariff rate for

point-to-point intraLATA 1.544 megabits a second service for the

entities described by Section 58.253(a).

(b) The tariff rate may not be:

(1) distance sensitive; or

(2) higher than 105 percent of the service's statewide average

long run incremental cost, including installation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.260. POINT-TO-POINT 45 MEGABITS A SECOND INTRALATA

SERVICE. (a) On request of an entity described by Section

58.253(a), an electing company shall provide to the entity

point-to-point 45 megabits a second intraLATA services.

(b) The service must be provided under a customer specific

contract except that any interoffice portion of the service must

be recovered on a statewide average basis that is not distance

sensitive.

of the service's long run incremental cost, including

installation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.261. BROADBAND DIGITAL SPECIAL ACCESS SERVICE. (a) An

electing company shall provide to an entity described by Section

58.253(a) broadband digital special access service to

interexchange carriers.

(b) The rate for the service may not be higher than 105 percent

of the service's long run incremental cost, including

installation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.262. EXPANDED INTERCONNECTION. (a) On request of an

entity described by Section 58.253(a), an electing company shall

provide to the entity expanded interconnection (virtual

colocation).

(b) The company shall provide expanded interconnection:

(1) in accordance with commission rules adopted under Subchapter

H, Chapter 60; and

(2) at 105 percent of long run incremental cost, including

installation.

qualify for expanded interconnection if expanded interconnection

is ordered by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.263. INTERNET ACCESS. (a) This section applies only to

an educational institution or library in an exchange of an

electing company serving more than five million access lines in

which toll-free access to the Internet is not available.

(b) On request of the educational institution or library, the

electing company shall make available a toll-free connection or

toll-free dialing arrangement that the institution or library may

use to obtain access to the Internet in an exchange in which

toll-free access to the Internet is available.

arrangement at no charge to the educational institution or

library until Internet access becomes available in the exchange

of the requesting educational institution or library.

(d) The electing company is not required to arrange for Internet

access or to pay Internet charges for the requesting educational

institution or library.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.264. COMPLAINTS LIMITED. (a) Notwithstanding any other

provision of this title, an electing company is subject to a

complaint under this subchapter only by an entity described by

Section 58.253(a).

(b) An entity may only complain that the company provided a

private network service under this subchapter preferentially to a

similarly situated customer.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.265. INTERCONNECTION OF NETWORK SERVICES. The private

network services provided under this subchapter may be

interconnected with other similar networks for distance learning,

telemedicine, and information-sharing purposes.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.266. SHARING OR RESALE OF NETWORK SERVICES. (a) A

private network service may be used by and shared among the

entities described by Section 58.253(a) but may not be otherwise

shared or resold to other customers.

(b) A service provided under this subchapter may not be required

to be resold to another customer at a rate provided by this

subchapter.

of another service that an electing company may offer through the

use of the same facilities used to provide a private network

service offered under this subchapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.267. IMPLEMENTATION COSTS; INCREASE IN RATES AND

UNIVERSAL SERVICE FUNDS. The commission may not consider the

cost of implementing this subchapter in determining whether an

electing company is entitled to:

(1) a rate increase under this chapter; or

(2) increased universal service funds under Subchapter B,

Chapter 56.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 58.268. CONTINUATION OF OBLIGATION. Notwithstanding any

other provision of this title, an electing company shall continue

to comply with this subchapter until January 1, 2012, regardless

of:

(1) the date the company elected under this chapter; or

(2) any action taken in relation to that company under Chapter

65.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch.

2, Sec. 21, eff. September 7, 2005.

SUBCHAPTER H. SWITCHED ACCESS SERVICES

Sec. 58.301. SWITCHED ACCESS RATE REDUCTION. An electing

company with greater than five million access lines in this state

shall reduce its switched access rates on a combined originating

and terminating basis as follows:

(1) the electing company shall reduce switched access rates on a

combined originating and terminating basis in effect on September

1, 1999, by one cent a minute; and

(2) the electing company shall reduce switched access rates on a

combined originating and terminating basis by an additional two

cents a minute on the earlier of:

(A) July 1, 2000; or

(B) the date the electing company, or its affiliate formed in

compliance with 47 U.S.C. Section 272, as amended, actually

begins providing interLATA services in this state in accordance

with the authorization required by 47 U.S.C. Section 271, as

amended.

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 45, eff. Sept. 1,

1999.

Sec. 58.302. SWITCHED ACCESS RATE CAP. (a) An electing company

may not increase the per minute rates for switched access

services on a combined originating and terminating basis above

the lesser of:

(1) the rates for switched access services charged by that

electing company on September 1, 1999, as may be further reduced

on implementation of the universal service fund under Chapter 56;

(2) the applicable rate described by Section 58.301 as may be

further reduced on implementation of the universal service fund

under Chapter 56.

(b) Notwithstanding Subchapter F, Chapter 60, but subject to

Section 60.001, an electing company may, on its own initiative,

decrease a rate charged for switched access service to any amount

above the long run incremental cost of the service.

Added by Acts 1999, 76th Leg., ch. 1212, Sec. 45, eff. Sept. 1,

1999.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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