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Statutes > Texas > Utilities-code > Title-2-public-utility-regulatory-act > Chapter-65-deregulation-of-certain-incumbent-local-exchange-company-markets
UTILITIES CODE
TITLE 2. PUBLIC UTILITY REGULATORY ACT
SUBTITLE C. TELECOMMUNICATIONS UTILITIES
CHAPTER 65. DEREGULATION OF CERTAIN INCUMBENT LOCAL EXCHANGE
COMPANY MARKETS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 65.001. STATEMENT OF POLICY. It is the policy of this
state to provide for full rate and service competition in the
telecommunications market of this state so that customers may
benefit from innovations in service quality and market-based
pricing.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.002. DEFINITIONS. In this chapter:
(1) "Deregulated company" means an incumbent local exchange
company for which all of the company's markets have been
deregulated.
(2) "Market" means an exchange in which an incumbent local
exchange company provides residential local exchange telephone
service.
(3) "Regulated company" means an incumbent local exchange
company for which none of the company's markets have been
deregulated.
(4) "Stand-alone residential local exchange voice service"
means:
(A) residential tone dialing service;
(B) services and functionalities supported under the lifeline
program;
(C) access for all residential end users to 911 service provided
by a local authority and access to dual party relay service;
(D) at the election of the incumbent local exchange company,
mandatory residential extended area service arrangements,
mandatory residential extended metropolitan service or other
mandatory residential toll-free calling arrangements, mandatory
expanded local calling service arrangements, or another service
that a company is required under a tariff to provide to a
customer who subscribes or may subscribe to basic network
services;
(E) flat rate residential local exchange telephone service
delivered by landline, but only if the service is ordered and
received independent of:
(i) a service classified as a nonbasic service under Section
58.151 or residential call waiting service;
(ii) a package of services that includes a service classified as
a nonbasic service under Section 58.151; or
(iii) another flat rate residential local exchange service
delivered by landline; and
(F) residential caller identification services if the customer
to whom the service is billed is at least 65 years of age.
(5) "Transitioning company" means an incumbent local exchange
company for which at least one, but not all, of the company's
markets has been deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.003. COMMISSION AUTHORITY. (a) Notwithstanding any
other provisions of this title, the commission has authority to
implement and enforce this chapter.
(b) The commission may adopt rules and conduct proceedings
necessary to administer and enforce this chapter, including rules
to determine whether a market should remain regulated, should be
deregulated, or should be reregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.004. INFORMATION. (a) The commission may collect and
compile information from all telecommunications providers as
necessary to implement and enforce this chapter.
(b) The commission shall maintain the confidentiality of
information collected under this chapter that is claimed to be
confidential for competitive purposes. Information that is
claimed to be confidential is exempt from disclosure under
Chapter 552, Government Code.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.005. CUSTOMER PROTECTION. This chapter does not affect
a customer's right to complain to the commission regarding a
telecommunications provider.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER B. DETERMINATION OF WHETHER MARKET SHOULD BE REGULATED
Sec. 65.051. MARKETS DEREGULATED. (a) Except as provided by
Subsection (b), all markets of all incumbent local exchange
companies are deregulated on January 1, 2006, unless the
commission determines under Section 65.052(a) that a market or
markets should remain regulated.
(b) A market of an incumbent local exchange company in which the
population in the area included in the market is less than 30,000
is deregulated on January 1, 2007, unless the commission
determines under Section 65.052(f) that the market should remain
regulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.052. DETERMINATION OF WHETHER A MARKET SHOULD REMAIN
REGULATED. (a) Except as provided by Subsection (f), the
commission shall:
(1) determine whether each market of an incumbent local exchange
company should remain regulated on and after January 1, 2006; and
(2) issue a final order classifying the company in accordance
with this section effective January 1, 2006.
(b) In making a determination under Subsection (a), the
commission may not determine that a market should remain
regulated if:
(1) the population in the area included in the market is at
least 100,000; or
(2) the population in the area included in the market is at
least 30,000 but less than 100,000 and, in addition to the
incumbent local exchange company, there are at least three
competitors of which:
(A) at least one is a telecommunications provider that holds a
certificate of operating authority or service provider
certificate of operating authority and provides residential local
exchange telephone service in the market;
(B) at least one is an entity providing residential telephone
service in the market using facilities that the entity or its
affiliate owns; and
(C) at least one is a provider in that market of commercial
mobile service as defined by Section 332(d), Communications Act
of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications
Commission rules, and the Omnibus Budget Reconciliation Act of
1993 (Pub. L. No. 103-66), that is not affiliated with the
incumbent local exchange company.
(c) The commission shall issue an order classifying an incumbent
local exchange company as a deregulated company that is subject
to Subchapter C if:
(1) the company does not have any markets in which the
population in the area included in the market is less than
30,000; and
(2) the commission does not determine that a market of the
company should remain regulated on and after January 1, 2006.
(d) Regardless of the population in the area included in an
incumbent local exchange company's markets, the commission shall
issue an order classifying the company as a transitioning company
that is subject to Subchapter D if the commission determines that
one or more, but not all, of the markets of the company should
remain regulated on and after January 1, 2006.
(e) The commission shall issue an order classifying the company
as a regulated company that is subject to the provisions of this
title that applied to the company on September 1, 2005, if the
commission determines that all of the markets of the company in
which the population in each area included in the markets is at
least 30,000 should remain regulated on and after January 1,
2006. This subsection does not affect the authority of a
regulated company to elect under Chapter 58 or 59 after January
1, 2005, and to be regulated under the chapter under which the
company elected.
(f) Not later than November 30, 2006, the commission shall
determine whether a market of an incumbent local exchange company
in which the population in the area included in the market is
less than 30,000 should remain regulated on or after January 1,
2007. The commission by rule shall determine the market test to
be applied in determining whether the market should remain
regulated. If the commission does not determine that the market
should remain regulated on or after January 1, 2007, and the
deregulation of that market results in a transitioning or
regulated company no longer meeting the definition of a
transitioning or regulated company, as appropriate, the
commission shall issue an order reclassifying the company
appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.053. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS. (a)
Notwithstanding Section 65.052, an incumbent local exchange
company may elect to have all of the company's markets remain
regulated on and after January 1, 2006.
(b) To make an election under Subsection (a), an incumbent local
exchange company must file an affidavit with the commission
making that election not later than December 1, 2005.
(c) If an incumbent local exchange company makes an election
under this section, the commission shall issue an order
classifying the company as a regulated company that is subject to
the provisions of this title that applied to the company on
September 1, 2005. This subsection does not affect the authority
of a regulated company to elect under Chapter 58 or 59 after
January 1, 2005, and to be regulated under the chapter under
which the company elected.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.054. PETITION FOR DEREGULATION. (a) After July 1,
2007, a company may petition the commission to deregulate a
market that the commission previously determined should remain
regulated.
(b) If the commission deregulates a market under this section
and the deregulation results in the transitioning or regulated
company no longer meeting the definition of a transitioning or
regulated company, as appropriate, the commission shall issue an
order reclassifying the company appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.055. COMMISSION AUTHORITY TO REREGULATE CERTAIN MARKETS.
(a) This section applies only to a market of an incumbent local
exchange company in which the population in the area included in
the market is less than 100,000.
(b) The commission, on its own motion or on a complaint that the
commission considers to have merit, may determine that a market
that was previously deregulated should again be subject to
regulation.
(c) The commission by rule shall prescribe the procedures and
standards applicable to a determination under this section.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER C. DEREGULATED COMPANY
Sec. 65.101. ISSUANCE OF CERTIFICATE OF OPERATING AUTHORITY.
(a) A deregulated company may petition the commission to
relinquish the company's certificate of convenience and necessity
and receive a certificate of operating authority.
(b) The commission shall issue the deregulated company a
certificate of operating authority and rescind the deregulated
company's certificate of convenience and necessity if the
commission finds that all of the company's markets have been
deregulated under Subchapter B.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.102. REQUIREMENTS. (a) A deregulated company that
holds a certificate of operating authority issued under this
subchapter is a nondominant carrier governed in the same manner
as a holder of a certificate of operating authority issued under
Chapter 54, except that the deregulated company:
(1) retains the obligations of a provider of last resort under
Chapter 54;
(2) is subject to the following provisions in the same manner as
an incumbent local exchange company that is not deregulated:
(A) Sections 54.156, 54.158, and 54.159;
(B) Section 55.012; and
(C) Chapter 60; and
(3) may not increase the company's rates for stand-alone
residential local exchange voice service before the date that the
commission has the opportunity to revise the monthly per line
support under the Texas High Cost Universal Service Plan pursuant
to Section 56.031, regardless of whether the company is an
electing company under Chapter 58.
(b) In each deregulated market, a deregulated company shall make
available to all residential customers uniformly throughout that
market the same price, terms, and conditions for all basic and
non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER D. TRANSITIONING COMPANY
Sec. 65.151. PROVISIONS APPLICABLE TO TRANSITIONING COMPANY. A
transitioning company is governed by this subchapter and the
provisions of this title that applied to the company immediately
before the date the company was classified as a transitioning
company. If there is a conflict between this subchapter and the
other applicable provisions of this title, this subchapter
controls.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.152. GENERAL REQUIREMENTS. (a) A transitioning company
may:
(1) exercise pricing flexibility in a market in the manner
provided by Section 58.063 one day after providing an
informational notice as required by that section; and
(2) introduce a new service in a market in the manner provided
by Section 58.153 one day after providing an informational notice
as required by that section.
(b) A transitioning company may not be required to comply with
exchange-specific retail quality of service standards or
reporting requirements in a market that is deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.153. RATE REQUIREMENTS. (a) In a market that remains
regulated, a transitioning company shall price the company's
retail services in accordance with the provisions that applied to
that company immediately before the date the company was
classified as a transitioning company.
(b) In a market that is deregulated, a transitioning company
shall price the company's retail services as follows:
(1) for all services, other than basic local telecommunications
service, at any price higher than the service's long run
incremental cost; and
(2) for basic local telecommunications service, at any price
higher than the lesser of the service's long run incremental cost
or the tariffed price on the date that market was deregulated,
provided that the company may not increase the company's rates
for stand-alone residential local exchange voice service before
the date that the commission has the opportunity to revise the
monthly per line support under the Texas High Cost Universal
Service Plan pursuant to Section 56.031, regardless of whether
the company is an electing company under Chapter 58.
(c) In each deregulated market, a transitioning company shall
make available to all residential customers uniformly throughout
that market the same price, terms, and conditions for all basic
and non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
(d) In any market, regardless of whether regulated or
deregulated, the transitioning company may not:
(1) establish a retail rate, term, or condition that is
anticompetitive or unreasonably preferential, prejudicial, or
discriminatory;
(2) establish a retail rate for a basic or non-basic service in
a deregulated market that is subsidized either directly or
indirectly by a basic or non-basic service provided in an
exchange that is not deregulated; or
(3) engage in predatory pricing or attempt to engage in
predatory pricing.
(e) A rate that meets the pricing requirements in Subsection (b)
shall be deemed compliant with Subsection (d)(2).
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER E. REDUCTION OF SWITCHED ACCESS RATES
Sec. 65.201. REDUCTION OF SWITCHED ACCESS RATES BY DEREGULATED
COMPANY. (a) On the date the last market of an incumbent local
exchange company is deregulated, the company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market to parity with the company's
respective federal originating and terminating per minute of use
switched access rates.
(b) After reducing the rates under Subsection (a), a deregulated
company shall maintain parity with the company's federal
originating and terminating per minute of use switched access
rates. If the company's federal originating and terminating per
minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access
rates in each market as necessary to re-achieve parity with the
company's federal originating and terminating per minute of use
switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.202. REDUCTION OF SWITCHED ACCESS RATES BY TRANSITIONING
COMPANY WITH MORE THAN THREE MILLION ACCESS LINES. (a)
Notwithstanding any other provision of this title, a
transitioning company that has more than three million access
lines in service in this state on January 1, 2006, shall:
(1) on July 1, 2006, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates;
(2) on July 1, 2007, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates; and
(3) on July 1, 2008, reduce both the company's originating and
terminating per minute of use switched access rates in each
market to parity with the company's respective federal
originating and terminating per minute of use switched access
rates.
(b) After reducing the rates under Subsection (a), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.203. REDUCTION OF SWITCHED ACCESS RATES BY CERTAIN
TRANSITIONING COMPANIES WITH NOT MORE THAN THREE MILLION ACCESS
LINES. (a) Notwithstanding any other provision of this title, a
company that is classified as a transitioning company effective
January 1, 2006, and that has not more than three million access
lines in service in this state on that date shall reduce both the
company's originating and terminating per minute of use switched
access rates in each market in accordance with this section.
(b) On July 1, 2006, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on July 1, 2006, by the total
number of the company's markets on December 30, 2005.
(c) On July 1, 2007, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On July 1, 2008, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On July 1, 2009, and each succeeding year thereafter on July
1, the transitioning company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on June 30, 2006, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.204. REDUCTION OF SWITCHED ACCESS RATES BY NEWLY
DESIGNATED TRANSITIONING COMPANY. (a) Notwithstanding any other
provision of this title, a company that is classified as a
transitioning company after January 1, 2006, shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market in accordance with this
section.
(b) On the date the company is classified as a transitioning
company, the company shall reduce both the company's originating
and terminating per minute of use switched access rates in each
market by an amount equal to the lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on the date the company is
classified as a transitioning company by the total number of the
company's markets on December 30, 2005.
(c) On the first anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On the second anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On the third anniversary of the date the company is
classified as a transitioning company and each anniversary
thereafter, the company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on the day before the
date the company was classified as a transitioning company, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.205. MAINTENANCE OF REDUCTION OR PARITY. (a) After a
deregulated or transitioning company reduces the company's rates
under this subchapter, the company may not increase those rates
above the applicable rates prescribed by this subchapter.
(b) If a transitioning company's federal per minute of use
switched access rates are reduced, the company shall reduce the
company's per minute of use switched access rates to not more
than the applicable rates prescribed by this subchapter.
(c) Notwithstanding Subsections (a) and (b), a deregulated or
transitioning company may decrease the company's per minute of
use switched access rates to amounts that are less than the
applicable rates prescribed by this subchapter.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER F. LEGISLATIVE OVERSIGHT COMMITTEE
Sec. 65.251. OVERSIGHT COMMITTEE. (a) In this subchapter,
"committee" means the telecommunications competitiveness
legislative oversight committee.
(b) The committee is composed of nine members as follows:
(1) the chair of the Senate Committee on Business and Commerce;
(2) the chair of the House Committee on Regulated Industries;
(3) three members of the senate appointed by the lieutenant
governor;
(4) three members of the house of representatives appointed by
the speaker of the house of representatives; and
(5) the chief executive of the Office of Public Utility Counsel.
(c) An appointed member of the committee serves at the pleasure
of the appointing official.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.252. COMMITTEE DUTIES. (a) The committee shall conduct
joint public hearings with the commission at least annually
regarding the introduction of full competition to
telecommunications services in this state.
(b) The commission shall:
(1) collect and compile information from all telecommunications
providers as necessary to conduct a hearing under this section;
and
(2) maintain the confidentiality of information collected under
this section that is claimed to be confidential for competitive
purposes.
(c) Information that is claimed to be confidential under
Subsection (b) is exempt from disclosure under Chapter 552,
Government Code.
(d) The commission shall provide to the committee information
regarding rules relating to telecommunications deregulation
proposed by the commission. The committee may submit comments to
the commission on those proposed rules.
(e) The committee shall monitor the effectiveness of
telecommunications deregulation, including the fairness of rates,
the quality of service, and the effect of regulation on the
normal forces of competition.
(f) The committee may request reports and other information from
the commission as necessary to carry out this subchapter.
(g) Not later than November 15 of each even-numbered year, the
committee shall report to the governor, lieutenant governor, and
speaker of the house of representatives on the committee's
activities under this subchapter. The report must include:
(1) an analysis of any problems caused by telecommunications
deregulation; and
(2) recommendations for any legislative action necessary to
address those problems and to further competition within the
telecommunications industry.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
State Codes and Statutes
Statutes > Texas > Utilities-code > Title-2-public-utility-regulatory-act > Chapter-65-deregulation-of-certain-incumbent-local-exchange-company-markets
UTILITIES CODE
TITLE 2. PUBLIC UTILITY REGULATORY ACT
SUBTITLE C. TELECOMMUNICATIONS UTILITIES
CHAPTER 65. DEREGULATION OF CERTAIN INCUMBENT LOCAL EXCHANGE
COMPANY MARKETS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 65.001. STATEMENT OF POLICY. It is the policy of this
state to provide for full rate and service competition in the
telecommunications market of this state so that customers may
benefit from innovations in service quality and market-based
pricing.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.002. DEFINITIONS. In this chapter:
(1) "Deregulated company" means an incumbent local exchange
company for which all of the company's markets have been
deregulated.
(2) "Market" means an exchange in which an incumbent local
exchange company provides residential local exchange telephone
service.
(3) "Regulated company" means an incumbent local exchange
company for which none of the company's markets have been
deregulated.
(4) "Stand-alone residential local exchange voice service"
means:
(A) residential tone dialing service;
(B) services and functionalities supported under the lifeline
program;
(C) access for all residential end users to 911 service provided
by a local authority and access to dual party relay service;
(D) at the election of the incumbent local exchange company,
mandatory residential extended area service arrangements,
mandatory residential extended metropolitan service or other
mandatory residential toll-free calling arrangements, mandatory
expanded local calling service arrangements, or another service
that a company is required under a tariff to provide to a
customer who subscribes or may subscribe to basic network
services;
(E) flat rate residential local exchange telephone service
delivered by landline, but only if the service is ordered and
received independent of:
(i) a service classified as a nonbasic service under Section
58.151 or residential call waiting service;
(ii) a package of services that includes a service classified as
a nonbasic service under Section 58.151; or
(iii) another flat rate residential local exchange service
delivered by landline; and
(F) residential caller identification services if the customer
to whom the service is billed is at least 65 years of age.
(5) "Transitioning company" means an incumbent local exchange
company for which at least one, but not all, of the company's
markets has been deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.003. COMMISSION AUTHORITY. (a) Notwithstanding any
other provisions of this title, the commission has authority to
implement and enforce this chapter.
(b) The commission may adopt rules and conduct proceedings
necessary to administer and enforce this chapter, including rules
to determine whether a market should remain regulated, should be
deregulated, or should be reregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.004. INFORMATION. (a) The commission may collect and
compile information from all telecommunications providers as
necessary to implement and enforce this chapter.
(b) The commission shall maintain the confidentiality of
information collected under this chapter that is claimed to be
confidential for competitive purposes. Information that is
claimed to be confidential is exempt from disclosure under
Chapter 552, Government Code.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.005. CUSTOMER PROTECTION. This chapter does not affect
a customer's right to complain to the commission regarding a
telecommunications provider.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER B. DETERMINATION OF WHETHER MARKET SHOULD BE REGULATED
Sec. 65.051. MARKETS DEREGULATED. (a) Except as provided by
Subsection (b), all markets of all incumbent local exchange
companies are deregulated on January 1, 2006, unless the
commission determines under Section 65.052(a) that a market or
markets should remain regulated.
(b) A market of an incumbent local exchange company in which the
population in the area included in the market is less than 30,000
is deregulated on January 1, 2007, unless the commission
determines under Section 65.052(f) that the market should remain
regulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.052. DETERMINATION OF WHETHER A MARKET SHOULD REMAIN
REGULATED. (a) Except as provided by Subsection (f), the
commission shall:
(1) determine whether each market of an incumbent local exchange
company should remain regulated on and after January 1, 2006; and
(2) issue a final order classifying the company in accordance
with this section effective January 1, 2006.
(b) In making a determination under Subsection (a), the
commission may not determine that a market should remain
regulated if:
(1) the population in the area included in the market is at
least 100,000; or
(2) the population in the area included in the market is at
least 30,000 but less than 100,000 and, in addition to the
incumbent local exchange company, there are at least three
competitors of which:
(A) at least one is a telecommunications provider that holds a
certificate of operating authority or service provider
certificate of operating authority and provides residential local
exchange telephone service in the market;
(B) at least one is an entity providing residential telephone
service in the market using facilities that the entity or its
affiliate owns; and
(C) at least one is a provider in that market of commercial
mobile service as defined by Section 332(d), Communications Act
of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications
Commission rules, and the Omnibus Budget Reconciliation Act of
1993 (Pub. L. No. 103-66), that is not affiliated with the
incumbent local exchange company.
(c) The commission shall issue an order classifying an incumbent
local exchange company as a deregulated company that is subject
to Subchapter C if:
(1) the company does not have any markets in which the
population in the area included in the market is less than
30,000; and
(2) the commission does not determine that a market of the
company should remain regulated on and after January 1, 2006.
(d) Regardless of the population in the area included in an
incumbent local exchange company's markets, the commission shall
issue an order classifying the company as a transitioning company
that is subject to Subchapter D if the commission determines that
one or more, but not all, of the markets of the company should
remain regulated on and after January 1, 2006.
(e) The commission shall issue an order classifying the company
as a regulated company that is subject to the provisions of this
title that applied to the company on September 1, 2005, if the
commission determines that all of the markets of the company in
which the population in each area included in the markets is at
least 30,000 should remain regulated on and after January 1,
2006. This subsection does not affect the authority of a
regulated company to elect under Chapter 58 or 59 after January
1, 2005, and to be regulated under the chapter under which the
company elected.
(f) Not later than November 30, 2006, the commission shall
determine whether a market of an incumbent local exchange company
in which the population in the area included in the market is
less than 30,000 should remain regulated on or after January 1,
2007. The commission by rule shall determine the market test to
be applied in determining whether the market should remain
regulated. If the commission does not determine that the market
should remain regulated on or after January 1, 2007, and the
deregulation of that market results in a transitioning or
regulated company no longer meeting the definition of a
transitioning or regulated company, as appropriate, the
commission shall issue an order reclassifying the company
appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.053. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS. (a)
Notwithstanding Section 65.052, an incumbent local exchange
company may elect to have all of the company's markets remain
regulated on and after January 1, 2006.
(b) To make an election under Subsection (a), an incumbent local
exchange company must file an affidavit with the commission
making that election not later than December 1, 2005.
(c) If an incumbent local exchange company makes an election
under this section, the commission shall issue an order
classifying the company as a regulated company that is subject to
the provisions of this title that applied to the company on
September 1, 2005. This subsection does not affect the authority
of a regulated company to elect under Chapter 58 or 59 after
January 1, 2005, and to be regulated under the chapter under
which the company elected.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.054. PETITION FOR DEREGULATION. (a) After July 1,
2007, a company may petition the commission to deregulate a
market that the commission previously determined should remain
regulated.
(b) If the commission deregulates a market under this section
and the deregulation results in the transitioning or regulated
company no longer meeting the definition of a transitioning or
regulated company, as appropriate, the commission shall issue an
order reclassifying the company appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.055. COMMISSION AUTHORITY TO REREGULATE CERTAIN MARKETS.
(a) This section applies only to a market of an incumbent local
exchange company in which the population in the area included in
the market is less than 100,000.
(b) The commission, on its own motion or on a complaint that the
commission considers to have merit, may determine that a market
that was previously deregulated should again be subject to
regulation.
(c) The commission by rule shall prescribe the procedures and
standards applicable to a determination under this section.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER C. DEREGULATED COMPANY
Sec. 65.101. ISSUANCE OF CERTIFICATE OF OPERATING AUTHORITY.
(a) A deregulated company may petition the commission to
relinquish the company's certificate of convenience and necessity
and receive a certificate of operating authority.
(b) The commission shall issue the deregulated company a
certificate of operating authority and rescind the deregulated
company's certificate of convenience and necessity if the
commission finds that all of the company's markets have been
deregulated under Subchapter B.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.102. REQUIREMENTS. (a) A deregulated company that
holds a certificate of operating authority issued under this
subchapter is a nondominant carrier governed in the same manner
as a holder of a certificate of operating authority issued under
Chapter 54, except that the deregulated company:
(1) retains the obligations of a provider of last resort under
Chapter 54;
(2) is subject to the following provisions in the same manner as
an incumbent local exchange company that is not deregulated:
(A) Sections 54.156, 54.158, and 54.159;
(B) Section 55.012; and
(C) Chapter 60; and
(3) may not increase the company's rates for stand-alone
residential local exchange voice service before the date that the
commission has the opportunity to revise the monthly per line
support under the Texas High Cost Universal Service Plan pursuant
to Section 56.031, regardless of whether the company is an
electing company under Chapter 58.
(b) In each deregulated market, a deregulated company shall make
available to all residential customers uniformly throughout that
market the same price, terms, and conditions for all basic and
non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER D. TRANSITIONING COMPANY
Sec. 65.151. PROVISIONS APPLICABLE TO TRANSITIONING COMPANY. A
transitioning company is governed by this subchapter and the
provisions of this title that applied to the company immediately
before the date the company was classified as a transitioning
company. If there is a conflict between this subchapter and the
other applicable provisions of this title, this subchapter
controls.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.152. GENERAL REQUIREMENTS. (a) A transitioning company
may:
(1) exercise pricing flexibility in a market in the manner
provided by Section 58.063 one day after providing an
informational notice as required by that section; and
(2) introduce a new service in a market in the manner provided
by Section 58.153 one day after providing an informational notice
as required by that section.
(b) A transitioning company may not be required to comply with
exchange-specific retail quality of service standards or
reporting requirements in a market that is deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.153. RATE REQUIREMENTS. (a) In a market that remains
regulated, a transitioning company shall price the company's
retail services in accordance with the provisions that applied to
that company immediately before the date the company was
classified as a transitioning company.
(b) In a market that is deregulated, a transitioning company
shall price the company's retail services as follows:
(1) for all services, other than basic local telecommunications
service, at any price higher than the service's long run
incremental cost; and
(2) for basic local telecommunications service, at any price
higher than the lesser of the service's long run incremental cost
or the tariffed price on the date that market was deregulated,
provided that the company may not increase the company's rates
for stand-alone residential local exchange voice service before
the date that the commission has the opportunity to revise the
monthly per line support under the Texas High Cost Universal
Service Plan pursuant to Section 56.031, regardless of whether
the company is an electing company under Chapter 58.
(c) In each deregulated market, a transitioning company shall
make available to all residential customers uniformly throughout
that market the same price, terms, and conditions for all basic
and non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
(d) In any market, regardless of whether regulated or
deregulated, the transitioning company may not:
(1) establish a retail rate, term, or condition that is
anticompetitive or unreasonably preferential, prejudicial, or
discriminatory;
(2) establish a retail rate for a basic or non-basic service in
a deregulated market that is subsidized either directly or
indirectly by a basic or non-basic service provided in an
exchange that is not deregulated; or
(3) engage in predatory pricing or attempt to engage in
predatory pricing.
(e) A rate that meets the pricing requirements in Subsection (b)
shall be deemed compliant with Subsection (d)(2).
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER E. REDUCTION OF SWITCHED ACCESS RATES
Sec. 65.201. REDUCTION OF SWITCHED ACCESS RATES BY DEREGULATED
COMPANY. (a) On the date the last market of an incumbent local
exchange company is deregulated, the company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market to parity with the company's
respective federal originating and terminating per minute of use
switched access rates.
(b) After reducing the rates under Subsection (a), a deregulated
company shall maintain parity with the company's federal
originating and terminating per minute of use switched access
rates. If the company's federal originating and terminating per
minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access
rates in each market as necessary to re-achieve parity with the
company's federal originating and terminating per minute of use
switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.202. REDUCTION OF SWITCHED ACCESS RATES BY TRANSITIONING
COMPANY WITH MORE THAN THREE MILLION ACCESS LINES. (a)
Notwithstanding any other provision of this title, a
transitioning company that has more than three million access
lines in service in this state on January 1, 2006, shall:
(1) on July 1, 2006, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates;
(2) on July 1, 2007, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates; and
(3) on July 1, 2008, reduce both the company's originating and
terminating per minute of use switched access rates in each
market to parity with the company's respective federal
originating and terminating per minute of use switched access
rates.
(b) After reducing the rates under Subsection (a), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.203. REDUCTION OF SWITCHED ACCESS RATES BY CERTAIN
TRANSITIONING COMPANIES WITH NOT MORE THAN THREE MILLION ACCESS
LINES. (a) Notwithstanding any other provision of this title, a
company that is classified as a transitioning company effective
January 1, 2006, and that has not more than three million access
lines in service in this state on that date shall reduce both the
company's originating and terminating per minute of use switched
access rates in each market in accordance with this section.
(b) On July 1, 2006, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on July 1, 2006, by the total
number of the company's markets on December 30, 2005.
(c) On July 1, 2007, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On July 1, 2008, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On July 1, 2009, and each succeeding year thereafter on July
1, the transitioning company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on June 30, 2006, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.204. REDUCTION OF SWITCHED ACCESS RATES BY NEWLY
DESIGNATED TRANSITIONING COMPANY. (a) Notwithstanding any other
provision of this title, a company that is classified as a
transitioning company after January 1, 2006, shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market in accordance with this
section.
(b) On the date the company is classified as a transitioning
company, the company shall reduce both the company's originating
and terminating per minute of use switched access rates in each
market by an amount equal to the lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on the date the company is
classified as a transitioning company by the total number of the
company's markets on December 30, 2005.
(c) On the first anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On the second anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On the third anniversary of the date the company is
classified as a transitioning company and each anniversary
thereafter, the company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on the day before the
date the company was classified as a transitioning company, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.205. MAINTENANCE OF REDUCTION OR PARITY. (a) After a
deregulated or transitioning company reduces the company's rates
under this subchapter, the company may not increase those rates
above the applicable rates prescribed by this subchapter.
(b) If a transitioning company's federal per minute of use
switched access rates are reduced, the company shall reduce the
company's per minute of use switched access rates to not more
than the applicable rates prescribed by this subchapter.
(c) Notwithstanding Subsections (a) and (b), a deregulated or
transitioning company may decrease the company's per minute of
use switched access rates to amounts that are less than the
applicable rates prescribed by this subchapter.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER F. LEGISLATIVE OVERSIGHT COMMITTEE
Sec. 65.251. OVERSIGHT COMMITTEE. (a) In this subchapter,
"committee" means the telecommunications competitiveness
legislative oversight committee.
(b) The committee is composed of nine members as follows:
(1) the chair of the Senate Committee on Business and Commerce;
(2) the chair of the House Committee on Regulated Industries;
(3) three members of the senate appointed by the lieutenant
governor;
(4) three members of the house of representatives appointed by
the speaker of the house of representatives; and
(5) the chief executive of the Office of Public Utility Counsel.
(c) An appointed member of the committee serves at the pleasure
of the appointing official.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.252. COMMITTEE DUTIES. (a) The committee shall conduct
joint public hearings with the commission at least annually
regarding the introduction of full competition to
telecommunications services in this state.
(b) The commission shall:
(1) collect and compile information from all telecommunications
providers as necessary to conduct a hearing under this section;
and
(2) maintain the confidentiality of information collected under
this section that is claimed to be confidential for competitive
purposes.
(c) Information that is claimed to be confidential under
Subsection (b) is exempt from disclosure under Chapter 552,
Government Code.
(d) The commission shall provide to the committee information
regarding rules relating to telecommunications deregulation
proposed by the commission. The committee may submit comments to
the commission on those proposed rules.
(e) The committee shall monitor the effectiveness of
telecommunications deregulation, including the fairness of rates,
the quality of service, and the effect of regulation on the
normal forces of competition.
(f) The committee may request reports and other information from
the commission as necessary to carry out this subchapter.
(g) Not later than November 15 of each even-numbered year, the
committee shall report to the governor, lieutenant governor, and
speaker of the house of representatives on the committee's
activities under this subchapter. The report must include:
(1) an analysis of any problems caused by telecommunications
deregulation; and
(2) recommendations for any legislative action necessary to
address those problems and to further competition within the
telecommunications industry.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
State Codes and Statutes
Statutes >
Texas >
Utilities-code >
Title-2-public-utility-regulatory-act >
Chapter-65-deregulation-of-certain-incumbent-local-exchange-company-markets UTILITIES CODE
TITLE 2. PUBLIC UTILITY REGULATORY ACT
SUBTITLE C. TELECOMMUNICATIONS UTILITIES
CHAPTER 65. DEREGULATION OF CERTAIN INCUMBENT LOCAL EXCHANGE
COMPANY MARKETS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 65.001. STATEMENT OF POLICY. It is the policy of this
state to provide for full rate and service competition in the
telecommunications market of this state so that customers may
benefit from innovations in service quality and market-based
pricing.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.002. DEFINITIONS. In this chapter:
(1) "Deregulated company" means an incumbent local exchange
company for which all of the company's markets have been
deregulated.
(2) "Market" means an exchange in which an incumbent local
exchange company provides residential local exchange telephone
service.
(3) "Regulated company" means an incumbent local exchange
company for which none of the company's markets have been
deregulated.
(4) "Stand-alone residential local exchange voice service"
means:
(A) residential tone dialing service;
(B) services and functionalities supported under the lifeline
program;
(C) access for all residential end users to 911 service provided
by a local authority and access to dual party relay service;
(D) at the election of the incumbent local exchange company,
mandatory residential extended area service arrangements,
mandatory residential extended metropolitan service or other
mandatory residential toll-free calling arrangements, mandatory
expanded local calling service arrangements, or another service
that a company is required under a tariff to provide to a
customer who subscribes or may subscribe to basic network
services;
(E) flat rate residential local exchange telephone service
delivered by landline, but only if the service is ordered and
received independent of:
(i) a service classified as a nonbasic service under Section
58.151 or residential call waiting service;
(ii) a package of services that includes a service classified as
a nonbasic service under Section 58.151; or
(iii) another flat rate residential local exchange service
delivered by landline; and
(F) residential caller identification services if the customer
to whom the service is billed is at least 65 years of age.
(5) "Transitioning company" means an incumbent local exchange
company for which at least one, but not all, of the company's
markets has been deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.003. COMMISSION AUTHORITY. (a) Notwithstanding any
other provisions of this title, the commission has authority to
implement and enforce this chapter.
(b) The commission may adopt rules and conduct proceedings
necessary to administer and enforce this chapter, including rules
to determine whether a market should remain regulated, should be
deregulated, or should be reregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.004. INFORMATION. (a) The commission may collect and
compile information from all telecommunications providers as
necessary to implement and enforce this chapter.
(b) The commission shall maintain the confidentiality of
information collected under this chapter that is claimed to be
confidential for competitive purposes. Information that is
claimed to be confidential is exempt from disclosure under
Chapter 552, Government Code.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.005. CUSTOMER PROTECTION. This chapter does not affect
a customer's right to complain to the commission regarding a
telecommunications provider.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER B. DETERMINATION OF WHETHER MARKET SHOULD BE REGULATED
Sec. 65.051. MARKETS DEREGULATED. (a) Except as provided by
Subsection (b), all markets of all incumbent local exchange
companies are deregulated on January 1, 2006, unless the
commission determines under Section 65.052(a) that a market or
markets should remain regulated.
(b) A market of an incumbent local exchange company in which the
population in the area included in the market is less than 30,000
is deregulated on January 1, 2007, unless the commission
determines under Section 65.052(f) that the market should remain
regulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.052. DETERMINATION OF WHETHER A MARKET SHOULD REMAIN
REGULATED. (a) Except as provided by Subsection (f), the
commission shall:
(1) determine whether each market of an incumbent local exchange
company should remain regulated on and after January 1, 2006; and
(2) issue a final order classifying the company in accordance
with this section effective January 1, 2006.
(b) In making a determination under Subsection (a), the
commission may not determine that a market should remain
regulated if:
(1) the population in the area included in the market is at
least 100,000; or
(2) the population in the area included in the market is at
least 30,000 but less than 100,000 and, in addition to the
incumbent local exchange company, there are at least three
competitors of which:
(A) at least one is a telecommunications provider that holds a
certificate of operating authority or service provider
certificate of operating authority and provides residential local
exchange telephone service in the market;
(B) at least one is an entity providing residential telephone
service in the market using facilities that the entity or its
affiliate owns; and
(C) at least one is a provider in that market of commercial
mobile service as defined by Section 332(d), Communications Act
of 1934 (47 U.S.C. Section 151 et seq.), Federal Communications
Commission rules, and the Omnibus Budget Reconciliation Act of
1993 (Pub. L. No. 103-66), that is not affiliated with the
incumbent local exchange company.
(c) The commission shall issue an order classifying an incumbent
local exchange company as a deregulated company that is subject
to Subchapter C if:
(1) the company does not have any markets in which the
population in the area included in the market is less than
30,000; and
(2) the commission does not determine that a market of the
company should remain regulated on and after January 1, 2006.
(d) Regardless of the population in the area included in an
incumbent local exchange company's markets, the commission shall
issue an order classifying the company as a transitioning company
that is subject to Subchapter D if the commission determines that
one or more, but not all, of the markets of the company should
remain regulated on and after January 1, 2006.
(e) The commission shall issue an order classifying the company
as a regulated company that is subject to the provisions of this
title that applied to the company on September 1, 2005, if the
commission determines that all of the markets of the company in
which the population in each area included in the markets is at
least 30,000 should remain regulated on and after January 1,
2006. This subsection does not affect the authority of a
regulated company to elect under Chapter 58 or 59 after January
1, 2005, and to be regulated under the chapter under which the
company elected.
(f) Not later than November 30, 2006, the commission shall
determine whether a market of an incumbent local exchange company
in which the population in the area included in the market is
less than 30,000 should remain regulated on or after January 1,
2007. The commission by rule shall determine the market test to
be applied in determining whether the market should remain
regulated. If the commission does not determine that the market
should remain regulated on or after January 1, 2007, and the
deregulation of that market results in a transitioning or
regulated company no longer meeting the definition of a
transitioning or regulated company, as appropriate, the
commission shall issue an order reclassifying the company
appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.053. INCUMBENT LOCAL EXCHANGE COMPANY MARKETS. (a)
Notwithstanding Section 65.052, an incumbent local exchange
company may elect to have all of the company's markets remain
regulated on and after January 1, 2006.
(b) To make an election under Subsection (a), an incumbent local
exchange company must file an affidavit with the commission
making that election not later than December 1, 2005.
(c) If an incumbent local exchange company makes an election
under this section, the commission shall issue an order
classifying the company as a regulated company that is subject to
the provisions of this title that applied to the company on
September 1, 2005. This subsection does not affect the authority
of a regulated company to elect under Chapter 58 or 59 after
January 1, 2005, and to be regulated under the chapter under
which the company elected.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.054. PETITION FOR DEREGULATION. (a) After July 1,
2007, a company may petition the commission to deregulate a
market that the commission previously determined should remain
regulated.
(b) If the commission deregulates a market under this section
and the deregulation results in the transitioning or regulated
company no longer meeting the definition of a transitioning or
regulated company, as appropriate, the commission shall issue an
order reclassifying the company appropriately.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.055. COMMISSION AUTHORITY TO REREGULATE CERTAIN MARKETS.
(a) This section applies only to a market of an incumbent local
exchange company in which the population in the area included in
the market is less than 100,000.
(b) The commission, on its own motion or on a complaint that the
commission considers to have merit, may determine that a market
that was previously deregulated should again be subject to
regulation.
(c) The commission by rule shall prescribe the procedures and
standards applicable to a determination under this section.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER C. DEREGULATED COMPANY
Sec. 65.101. ISSUANCE OF CERTIFICATE OF OPERATING AUTHORITY.
(a) A deregulated company may petition the commission to
relinquish the company's certificate of convenience and necessity
and receive a certificate of operating authority.
(b) The commission shall issue the deregulated company a
certificate of operating authority and rescind the deregulated
company's certificate of convenience and necessity if the
commission finds that all of the company's markets have been
deregulated under Subchapter B.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.102. REQUIREMENTS. (a) A deregulated company that
holds a certificate of operating authority issued under this
subchapter is a nondominant carrier governed in the same manner
as a holder of a certificate of operating authority issued under
Chapter 54, except that the deregulated company:
(1) retains the obligations of a provider of last resort under
Chapter 54;
(2) is subject to the following provisions in the same manner as
an incumbent local exchange company that is not deregulated:
(A) Sections 54.156, 54.158, and 54.159;
(B) Section 55.012; and
(C) Chapter 60; and
(3) may not increase the company's rates for stand-alone
residential local exchange voice service before the date that the
commission has the opportunity to revise the monthly per line
support under the Texas High Cost Universal Service Plan pursuant
to Section 56.031, regardless of whether the company is an
electing company under Chapter 58.
(b) In each deregulated market, a deregulated company shall make
available to all residential customers uniformly throughout that
market the same price, terms, and conditions for all basic and
non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER D. TRANSITIONING COMPANY
Sec. 65.151. PROVISIONS APPLICABLE TO TRANSITIONING COMPANY. A
transitioning company is governed by this subchapter and the
provisions of this title that applied to the company immediately
before the date the company was classified as a transitioning
company. If there is a conflict between this subchapter and the
other applicable provisions of this title, this subchapter
controls.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.152. GENERAL REQUIREMENTS. (a) A transitioning company
may:
(1) exercise pricing flexibility in a market in the manner
provided by Section 58.063 one day after providing an
informational notice as required by that section; and
(2) introduce a new service in a market in the manner provided
by Section 58.153 one day after providing an informational notice
as required by that section.
(b) A transitioning company may not be required to comply with
exchange-specific retail quality of service standards or
reporting requirements in a market that is deregulated.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.153. RATE REQUIREMENTS. (a) In a market that remains
regulated, a transitioning company shall price the company's
retail services in accordance with the provisions that applied to
that company immediately before the date the company was
classified as a transitioning company.
(b) In a market that is deregulated, a transitioning company
shall price the company's retail services as follows:
(1) for all services, other than basic local telecommunications
service, at any price higher than the service's long run
incremental cost; and
(2) for basic local telecommunications service, at any price
higher than the lesser of the service's long run incremental cost
or the tariffed price on the date that market was deregulated,
provided that the company may not increase the company's rates
for stand-alone residential local exchange voice service before
the date that the commission has the opportunity to revise the
monthly per line support under the Texas High Cost Universal
Service Plan pursuant to Section 56.031, regardless of whether
the company is an electing company under Chapter 58.
(c) In each deregulated market, a transitioning company shall
make available to all residential customers uniformly throughout
that market the same price, terms, and conditions for all basic
and non-basic services, consistent with any pricing flexibility
available to such company on or before August 31, 2005.
(d) In any market, regardless of whether regulated or
deregulated, the transitioning company may not:
(1) establish a retail rate, term, or condition that is
anticompetitive or unreasonably preferential, prejudicial, or
discriminatory;
(2) establish a retail rate for a basic or non-basic service in
a deregulated market that is subsidized either directly or
indirectly by a basic or non-basic service provided in an
exchange that is not deregulated; or
(3) engage in predatory pricing or attempt to engage in
predatory pricing.
(e) A rate that meets the pricing requirements in Subsection (b)
shall be deemed compliant with Subsection (d)(2).
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER E. REDUCTION OF SWITCHED ACCESS RATES
Sec. 65.201. REDUCTION OF SWITCHED ACCESS RATES BY DEREGULATED
COMPANY. (a) On the date the last market of an incumbent local
exchange company is deregulated, the company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market to parity with the company's
respective federal originating and terminating per minute of use
switched access rates.
(b) After reducing the rates under Subsection (a), a deregulated
company shall maintain parity with the company's federal
originating and terminating per minute of use switched access
rates. If the company's federal originating and terminating per
minute of use switched access rates are changed, the company
shall change the company's per minute of use switched access
rates in each market as necessary to re-achieve parity with the
company's federal originating and terminating per minute of use
switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.202. REDUCTION OF SWITCHED ACCESS RATES BY TRANSITIONING
COMPANY WITH MORE THAN THREE MILLION ACCESS LINES. (a)
Notwithstanding any other provision of this title, a
transitioning company that has more than three million access
lines in service in this state on January 1, 2006, shall:
(1) on July 1, 2006, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates;
(2) on July 1, 2007, reduce both the company's originating and
terminating per minute of use switched access rates in each
market by an amount equal to 33 percent of the difference in the
rates in effect on June 30, 2006, and the company's respective
federal originating and terminating per minute of use switched
access rates; and
(3) on July 1, 2008, reduce both the company's originating and
terminating per minute of use switched access rates in each
market to parity with the company's respective federal
originating and terminating per minute of use switched access
rates.
(b) After reducing the rates under Subsection (a), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.203. REDUCTION OF SWITCHED ACCESS RATES BY CERTAIN
TRANSITIONING COMPANIES WITH NOT MORE THAN THREE MILLION ACCESS
LINES. (a) Notwithstanding any other provision of this title, a
company that is classified as a transitioning company effective
January 1, 2006, and that has not more than three million access
lines in service in this state on that date shall reduce both the
company's originating and terminating per minute of use switched
access rates in each market in accordance with this section.
(b) On July 1, 2006, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on July 1, 2006, by the total
number of the company's markets on December 30, 2005.
(c) On July 1, 2007, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On July 1, 2008, the transitioning company shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on June 30, 2006, and the company's respective federal
originating and terminating per minute of use switched access
rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On July 1, 2009, and each succeeding year thereafter on July
1, the transitioning company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on June 30, 2006, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.204. REDUCTION OF SWITCHED ACCESS RATES BY NEWLY
DESIGNATED TRANSITIONING COMPANY. (a) Notwithstanding any other
provision of this title, a company that is classified as a
transitioning company after January 1, 2006, shall reduce both
the company's originating and terminating per minute of use
switched access rates in each market in accordance with this
section.
(b) On the date the company is classified as a transitioning
company, the company shall reduce both the company's originating
and terminating per minute of use switched access rates in each
market by an amount equal to the lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that are not regulated on the date the company is
classified as a transitioning company by the total number of the
company's markets on December 30, 2005.
(c) On the first anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(d) On the second anniversary of the date the company is
classified as a transitioning company, the company shall reduce
both the company's originating and terminating per minute of use
switched access rates in each market by an amount equal to the
lesser of:
(1) 25 percent of the difference in the company's rates in
effect on the day before the date the company was classified, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date; or
(2) an amount derived by multiplying that difference by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005.
(e) On the third anniversary of the date the company is
classified as a transitioning company and each anniversary
thereafter, the company shall reduce both the company's
originating and terminating per minute of use switched access
rates in each market by an amount derived by multiplying the
difference in the company's rates in effect on the day before the
date the company was classified as a transitioning company, and
the company's respective federal originating and terminating per
minute of use switched access rates in effect on that date by a
percentage derived by dividing the number of the company's
markets that were deregulated in the prior 12 months by the total
number of the company's markets on December 30, 2005, except that
a transitioning company shall be required to reduce both the
company's originating and terminating per minute of use switched
access charges to parity with the company's respective federal
originating and terminating per minute of use switched access
charges if more than 75 percent of the transitioning company's
markets are not regulated on July 1 of 2009 or any succeeding
year.
(f) After reducing the rates under Subsection (e), a
transitioning company shall maintain parity with the company's
federal originating and terminating per minute of use switched
access rates. If the company's federal originating and
terminating per minute of use switched access rates are changed,
the company shall change the company's per minute of use switched
access rates in each market as necessary to re-achieve parity
with the company's federal originating and terminating per minute
of use switched access rates.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.205. MAINTENANCE OF REDUCTION OR PARITY. (a) After a
deregulated or transitioning company reduces the company's rates
under this subchapter, the company may not increase those rates
above the applicable rates prescribed by this subchapter.
(b) If a transitioning company's federal per minute of use
switched access rates are reduced, the company shall reduce the
company's per minute of use switched access rates to not more
than the applicable rates prescribed by this subchapter.
(c) Notwithstanding Subsections (a) and (b), a deregulated or
transitioning company may decrease the company's per minute of
use switched access rates to amounts that are less than the
applicable rates prescribed by this subchapter.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
SUBCHAPTER F. LEGISLATIVE OVERSIGHT COMMITTEE
Sec. 65.251. OVERSIGHT COMMITTEE. (a) In this subchapter,
"committee" means the telecommunications competitiveness
legislative oversight committee.
(b) The committee is composed of nine members as follows:
(1) the chair of the Senate Committee on Business and Commerce;
(2) the chair of the House Committee on Regulated Industries;
(3) three members of the senate appointed by the lieutenant
governor;
(4) three members of the house of representatives appointed by
the speaker of the house of representatives; and
(5) the chief executive of the Office of Public Utility Counsel.
(c) An appointed member of the committee serves at the pleasure
of the appointing official.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
Sec. 65.252. COMMITTEE DUTIES. (a) The committee shall conduct
joint public hearings with the commission at least annually
regarding the introduction of full competition to
telecommunications services in this state.
(b) The commission shall:
(1) collect and compile information from all telecommunications
providers as necessary to conduct a hearing under this section;
and
(2) maintain the confidentiality of information collected under
this section that is claimed to be confidential for competitive
purposes.
(c) Information that is claimed to be confidential under
Subsection (b) is exempt from disclosure under Chapter 552,
Government Code.
(d) The commission shall provide to the committee information
regarding rules relating to telecommunications deregulation
proposed by the commission. The committee may submit comments to
the commission on those proposed rules.
(e) The committee shall monitor the effectiveness of
telecommunications deregulation, including the fairness of rates,
the quality of service, and the effect of regulation on the
normal forces of competition.
(f) The committee may request reports and other information from
the commission as necessary to carry out this subchapter.
(g) Not later than November 15 of each even-numbered year, the
committee shall report to the governor, lieutenant governor, and
speaker of the house of representatives on the committee's
activities under this subchapter. The report must include:
(1) an analysis of any problems caused by telecommunications
deregulation; and
(2) recommendations for any legislative action necessary to
address those problems and to further competition within the
telecommunications industry.
Added by Acts 2005, 79th Leg., 2nd C.S., Ch.
2, Sec. 26, eff. September 7, 2005.
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