September 12, 2006, Introduced by Reps. Nofs, Proos, Accavitti, Garfield and Hoogendyk and referred to the Committee on Energy and Technology.
A bill to provide for state video service authorization; to
promote competition in providing video services; to ensure local
control of rights-of-way; to provide for fees payable to local
units of government; to provide for local programming; and to
prescribe the powers and duties of certain state and local agencies
and officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Cable operator" means that term as defined in 47 USC
522(5).
(b) "Cable service" means that term as defined in 47 USC
522(6).
(c) "Cable system" means that term as defined in 47 USC
522(7).
(d) "Commission" means the Michigan public service commission.
(e) "Franchising entity" means the local unit of government
that requires a franchise to offer video services.
(f) "Household" means a house, an apartment, a mobile home, or
any other structure or part of a structure intended for residential
occupancy as separate living quarters.
(g) "Incumbent video provider" means a cable operator serving
cable subscribers or a telecommunication provider providing video
services through the provider's existing telephone exchange
boundaries in a particular franchise area within a local unit of
government on the effective date of this act.
(h) "IPTV" means internet protocol television.
(i) "Local unit of government" means a city, village, or
township.
(j) "Low-income household" means a household with an average
annual household income of less than $35,000.00.
(k) "Open video system" or "OVS" means that term as defined in
47 USC 573.
(l) "Person" means an individual, corporation, association,
partnership, governmental entity, or any other legal entity.
(m) "Public rights-of-way" means the area on, below, or above
a public roadway, highway, street, public sidewalk, alley,
waterway, or utility easements dedicated for compatible uses.
(n) "State video service authorization" means the
authorization issued by the commission, regardless of whether the
authorization is designed as a franchise, permit, license,
resolution, contract, certificate, agreement, or otherwise, that
authorizes the providing of video services in the state.
(o) "Video programming" means that term as defined in 47 USC
522(20).
(p) "Video service" means video programming, cable services,
IPTV, or OVS provided through facilities located at least in part
in the public rights-of-way without regard to delivery technology,
including internet protocol technology. This definition does not
include any video programming provided by a commercial mobile
service provider defined in 47 USC 332(d).
(q) "Video service provider" or "provider" means an entity
authorized by a state video service authorization to provide video
service.
(r) "Video service provider fee" means the amount paid by a
competitive video service provider under section 6.
Sec. 2. (1) An incumbent video provider after the expiration
of its franchise shall not provide video services in any local unit
of government without first obtaining a state video service
authorization as provided under this act.
(2) A state video service authorization granted under this act
shall constitute a franchise for purposes of 47 USC 541(b)(1). To
the extent required for purposes of 47 USC 521 to 561 only, the
state shall constitute the exclusive franchising authority for
video service providers in this state.
(3) No local unit of government may require a video service
provider to obtain a separate franchise or otherwise impose any fee
or franchise requirement except as provided under this act. For
purposes of this subsection, a franchise requirement includes,
without limitation, any provision regulating rates charged by video
service providers or requiring video service providers to satisfy
any build-out requirements or deploy any facilities or equipment.
(4) Except as otherwise provided under section 5, an incumbent
video provider with an existing franchise to provide video service
in any local unit of government in this state as of the effective
date of this act is not eligible to use or rely upon a state video
service authorization to provide video service under this act in
any local unit of government where it has an existing franchise
agreement until the expiration date of the existing franchise
agreement.
Sec. 3. (1) On or after 60 days from the effective date of
this act, an entity that seeks to provide video service in this
state shall file with the commission an application for a state
video service authorization.
(2) The application shall be in a form as approved by the
commission and contain a completed affidavit submitted by the
applicant and signed by an officer or general partner of the
applicant affirming all of the following:
(a) That the applicant has filed or will timely file with the
federal communications commission all forms required by that agency
in advance of offering video service in this state.
(b) That the applicant agrees to comply with all applicable
federal and state statutes and regulations.
(c) That the applicant agrees to comply with all valid and
enforceable local regulations regarding the use and occupation of
public rights-of-way in the delivery of the video service,
including the police powers of the local units of government in
which the service is delivered.
(d) An exact description of the video service area footprint
to be served, as identified by a geographic information system
digital boundary meeting or exceeding national map accuracy
standards.
(e) The address and telephone number of the applicant's
principal place of business.
(f) The names of the applicant's principal executive officers
and any other persons authorized to represent the applicant before
the commission.
(g) The date on which the applicant expects to provide video
services within the area identified under subdivision (d).
(3) The commission shall notify an applicant for a state video
service authorization as to whether the applicant's application and
affidavit are complete within 15 business days after the date that
the application is filed. If the application or affidavit is not
complete, the commission shall state in its notice the reasons the
application or affidavit, or both, is incomplete. If the
application and affidavit are complete, the commission shall have
60 days after the submission date of a complete application and
affidavit to issue the state video service authorization. If the
commission does not notify the applicant regarding the completeness
of the application and affidavit or issue the video service
authorization within the time periods required under this
subsection, the application and affidavit shall be considered
complete and the state service authorization issued.
(4) The state video service authorization shall be in a form
approved by the commission and contain all of the following:
(a) A grant of authority to provide video service in the
service area footprint as provided in the application.
(b) A grant of authority to use and occupy the public rights-
of-way in the delivery of the video service, subject to the laws of
this state, including the police powers of the local unit of
government in which the service is delivered.
(c) A statement that the grant of authority is subject to
lawful operation of the video service by the applicant or its
successor in interest.
(5) The state video service authorization issued by the
commission is fully transferable to any successor in interest to
the applicant to which is it initially granted. A notice of
transfer shall be filed with the commission and the relevant local
unit of government within 15 business days of the completion of the
transfer.
(6) The state video service authorization issued by the
commission may be terminated or the video service area footprint
may be modified by the provider by submitting notice to the
commission and the relevant local unit of government.
(7) If any of the information contained in the application
changes, the provider shall notify the commission and the relevant
local units of government within 30 days from the date the change
occurs.
(8) The state video service authorization shall be for a
period of 10 years from the date it is issued. Before the
expiration of the initial authorization or any subsequent renewals,
the provider may apply for an additional 10-year authorization
under this section.
(9) The commission's authority to administer this act is
limited to the powers and duties explicitly provided for under this
act.
Sec. 4. (1) A video service provider shall designate a
sufficient amount of capacity on its network to provide for the
same number of public, educational, and governmental access
channels as are activated and provided within a local unit of
government by an incumbent video provider under the terms of any
franchise in effect as of the effective date of this act. For the
purposes of this section, a public, educational, or governmental
channel is deemed activated if it is being utilized for public,
educational, or governmental programming within the local unit of
government for at least 8 hours per day.
(2) In the event that no public, educational, and governmental
channel is provided within a local unit of government not receiving
any video services on the effective date of this act, a new video
service provider to the local unit of government shall designate a
sufficient amount of capacity on its network to provide for 1 or
more public, educational, and governmental channels.
(3) Any public, educational, or governmental channel provided
under this section that is not utilized by the local unit of
government for at least 8 hours per day for 3 consecutive months
may no longer be made available to the local unit of government and
may be programmed at the provider's discretion. At such time as the
local unit of government can certify a schedule for at least 8
hours of daily programming for a period of 3 consecutive months,
the provider shall restore the previously reallocated channel.
(4) The public, educational, and governmental channels shall
be carried on the basic or lowest service tier. To the extent
feasible, the public, educational, and governmental channels shall
not be separated numerically from other channels carried on the
basic or lowest service tier and the channel number shall be the
same as those used by the incumbent video provider unless
prohibited by federal law.
(5) The local unit of government shall ensure that all
transmissions, content, or programming to be retransmitted by a
video service provider is provided in a manner or form that is
capable of being accepted and retransmitted by a provider, without
requirement for additional alteration or change in the content by
the provider, over the particular network of the provider, which is
compatible with the technology or protocol utilized by the provider
to deliver services.
(6) Where technically feasible, a video service provider under
this act and an incumbent video provider shall interconnect their
video systems for the purpose of providing applicable programming
for the respective services areas. Interconnection may be
accomplished by direct cable, microwave link, satellite, or other
reasonable method of connection. Video service providers and
incumbent video providers shall negotiate in good faith, and
incumbent video providers may not withhold interconnection.
(7) The local unit of government is solely responsible for all
content provided over designated public, educational, or
governmental channels. A video service provider shall not exercise
any editorial control over any programming on any channel designed
for public, educational, or governmental use or on any other
channel required by law or a binding agreement with the local unit
of government.
(8) A video service provider is not subject to any civil or
criminal liability for any program carried on any channel
designated for public, educational, or governmental use or on any
other channel.
(9) Except as otherwise provided in subsection (10), a
provider shall provide subscribers access to the signals of the
local broadcast television licensed by the federal communications
commission to serve those subscribers over the air. This section
does not apply to a low power station unless the station is a
qualified low power station as defined under 47 USC 534(h)(2). A
provider is required to only carry digital broadcast signals to the
extent that a broadcast television station has the right under
federal law or regulation to demand carriage of the digital
broadcast signals by a cable operator on a cable system.
(10) To facilitate access by subscribers of a video service
provider to the signals of local broadcast stations under this
section, a station either shall be granted mandatory carriage or
may request retransmission consent with the provider.
(11) A provider shall transmit, without degradation, the
signals a local broadcast station delivers to the provider. A
provider is not required to provide a television or radio station
valuable consideration in exchange for carriage.
(12) A provider shall not do either of the following:
(a) Discriminate among or between broadcast stations and
programming providers with respect to transmission of their
signals, taking into account any consideration afforded the
provider by the programming provider or broadcast station. In no
event shall the signal quality as retransmitted by the provider be
required to be superior to the signal quality of the broadcast
stations as received by the provider from the broadcast television
station.
(b) Delete, change, or alter a copyright identification
transmitted as part of a broadcast station's signal.
(13) A provider shall not be required to utilize the same or
similar reception technology as the broadcast stations or
programming providers.
(14) A provider that delivers audio or video programming to
its subscribers shall include all programming providers in a
subscriber programming guide, if any, that lists program schedules.
(15) A video service provider shall comply with all federal
communications commission requirements including the distribution
and notification of emergency messages over the emergency alert
system.
Sec. 5. (1) No existing franchise agreement with a franchising
entity shall be renewed or extended upon the expiration date of the
agreement as of the effective date of this act.
(2) An incumbent video provider that holds a franchise with a
franchising entity is entitled to seek a state video service
authorization in the area designated in the existing franchise
under either of the following conditions:
(a) Upon the expiration of the existing franchise.
(b) Upon both the incumbent video provider and the franchising
entity agreeing to terminate the franchise prior to the expiration
date of the agreement.
Sec. 6. (1) Not less than 30 days before the construction or
placement of equipment or the infrastructure necessary to provide
video services to a local unit of government under a state video
service authorization, the provider shall notify in writing the
local unit of government that the provider will be offering video
services within the footprint submitted to the commission under
section 3(2)(d).
(2) Except as otherwise provided in this section, a video
service provider shall calculate and pay an annual video service
provider fee to each local unit of government. The fee shall be
equal to 1 of the following, whichever is less:
(a) A percentage of gross revenues established by the local
unit of government, not to exceed 5%, that has been filed with the
commission under subsection (4).
(b) The lowest percentage of gross revenues paid to the local
unit of government by any incumbent video provider.
(3) All fees due under this section shall be due on a
quarterly basis and paid within 45 days after the close of the
quarter. Each payment shall include a statement explaining the
basis for the calculation of the fee.
(4) The commission shall annually request from each local unit
of government in the state the percentage of gross revenues sought
under this section for the fee required under subsection (2)(a).
For jurisdictions not responding, the amount shall be set at 5%.
(5) No fee is due under subsection (2) until the local unit of
government provides supporting documentation to the commission of
the percentages paid by each incumbent video provider.
(6) The local unit of government shall not demand any
additional fees or charges from a provider and shall not demand the
use of any other calculation method other than allowed under this
act.
(7) Except as otherwise provided under subsection (8), if an
incumbent video provider continues to provide video services after
the expiration of an existing franchise as provided under section
5, the operator shall be subject to the fees required under
subsection (2)(a) or (b).
(8) If an incumbent video provider requests to terminate a
franchise under section 5(2)(b) and the local unit of government
does not consent to the termination, upon the expiration of the
franchise, if the provider continues to provide video services as
allowed under section 5(2)(a), the annual video service provider
fee shall be as follows:
(a) The first 3% of gross revenues payable to the commission
to be deposited in the general fund to be credited to the
commission to offset the cost of administering this act.
(b) Any additional percentage over the amount required under
subdivision (a) not to exceed 2% payable to the local unit of
government. The fee required under this subdivision and subdivision
(a) shall not exceed the percentage established under subsection
(4).
(c) The fee for public, educational, and governmental channels
required under subsection (13) shall be payable to the local unit
of government.
(9) For purposes of this section, "gross revenues" means all
consideration of any kind or nature, including, without limitation,
cash, credits, property, and in-kind contributions received by the
provider from subscribers for the provision of video service by the
video service provider within the jurisdiction of the local unit of
government. Gross revenues shall include all of the following:
(a) All charges and fees paid by subscribers for the provision
of video service, including equipment rental, late fees,
insufficient funds fees, fees attributable to video service when
sold individually or as part of a package or bundle, or
functionally integrated, with services other than video service.
(b) Any franchise fee imposed on the provider that is passed
on to subscribers.
(c) Compensation received by the provider for promotion or
exhibition of any products or services over the video service.
(d) Revenue received by the provider as compensation for
carriage of video programming on that provider's video service.
(e) All revenue derived from compensation arrangements for
advertising attributable to the local franchise area.
(f) Any advertising commissions paid to an affiliated third
party for video service advertising.
(10) Gross revenues do not include any of the following:
(a) Any revenue not actually received, even if billed, such as
bad debt net of any recoveries of bad debt.
(b) Refunds, rebates, credits, or discounts to subscribers or
a municipality to the extent not already offset by subdivision (a)
and to the extent the refund, rebate, credit, or discount is
attributable to the video service.
(c) Any revenues received by the provider or its affiliates
from the provision of services or capabilities other than video
service, including telecommunications services, information
services, and services, capabilities, and applications that may be
sold as part of a package or bundle, or functionally integrated,
with video service.
(d) Any revenues received by the provider or its affiliates
for the provision of directory or internet advertising, including
yellow pages, white pages, banner advertisement, and electronic
publishing.
(e) Any amounts attributable to the provision of video service
to customers at no charge, including the provision of such service
to public institutions without charge.
(f) Any tax, fee, or assessment of general applicability
imposed on the customer or the transaction by a federal, state, or
local government or any other governmental entity, collected by the
provider, and required to be remitted to the taxing entity,
including sales and use taxes.
(g) Any forgone revenue from the provision of video service at
no charge to any person, except that any forgone revenue exchanged
for trades, barters, services, or other items of value shall be
included in gross revenue.
(h) Sales of capital assets or surplus equipment.
(i) Reimbursement by programmers of marketing costs actually
incurred by the provider for the introduction of new programming.
(j) The sale of video service for resale to the extent the
purchaser certifies in writing that it will resell the service and
pay a franchise fee with respect to the service.
(11) In the case of a video service that is bundled or
integrated functionally with other services, capabilities, or
applications, the portion of the video provider's revenue
attributable to the other services, capabilities, or applications
shall be included in gross revenue unless the provider can
reasonably identify the division or exclusion of the revenue from
its books and records that are kept in the regular course of
business.
(12) Revenue of an affiliate shall be included in the
calculation of gross revenues to the extent the treatment of the
revenue as revenue of the affiliate has the effect of evading the
payment of franchise fees which would otherwise be paid for video
service.
(13) A video service provider shall pay to the local unit of
government as support for public, education, and government
programming an annual fee equal to the lesser of 1% of gross
revenues, the percentage of gross revenues required of an incumbent
video provider by a local unit of government, or the amount paid on
a cash basis per subscriber for support for public, education, and
government programming to the local unit of government by the
incumbent video provider with the largest number of cable service
subscribers in the local unit of government. The fee shall be due
on a quarterly basis, not more than 45 days after the close of the
quarter for gross revenues received during the calendar quarter.
The local unit of government shall provide data to the video
service provider necessary to calculate the fees due under this
subsection no less than 30 days before the payments of the fees are
due.
(14) A video service provider is entitled to a credit applied
toward the fees due under subsection (2) or (8) for all funds
allocated to the local unit of government from annual maintenance
fees paid by the provider for use of public rights-of-way under
section 8 of the metropolitan extension telecommunications rights-
of-way oversight act, 2002 PA 48, MCL 484.3108. The credits shall
be applied on a monthly pro rata basis beginning in the first month
of each calendar year in which the local unit of government
receives its allocation of funds.
Sec. 7. (1) No more than every 24 months, a local unit of
government may perform reasonable audits of the video service
provider's calculation of the fees paid to the local unit of
government during the preceding 24-month period only. All records
reasonably necessary for the audits shall be made available by the
provider at the location where the records are kept in the ordinary
course of business. The local unit of government and the video
service provider shall each be responsible for their respective
costs of the audit. Any additional amount due verified by the local
unit of government shall be paid by the provider within 30 days of
the local unit of government's submission of an invoice for the
sum. If the sum exceeds 5% of the total fees which the audit
determines should have been paid for the 24-month period, the
provider shall pay the local unit of government's reasonable costs
of the audit. If the audit finds that the provider has not
underpaid the video service provider fee, the local unit of
government shall pay the provider's reasonable costs of the audit.
(2) Any claims by a local unit of government that fees have
not been paid as required under section 6, and any claims for
refunds or other corrections to the remittance of the provider,
shall be made within 3 years from the date the compensation is
remitted.
(3) Any video service provider may identify and collect the
amount of the video service provider fee as a separate line item on
the regular bill of each subscriber.
(4) A video service provider may identify and collect the
amount of the public, educational, and government programming
support fee as a separate line item on the regular bill of a
subscriber.
Sec. 8. (1) A local unit of government shall allow a state
video service provider to install, construct, and maintain a
communications network within a public right-of-way and shall
provide the provider with open, comparable, nondiscriminatory, and
competitively neutral access to the public right-of-way.
(2) A local unit of government may not discriminate against a
video service provider to provide video service for any of the
following:
(a) The authorization or placement of a communications network
in public rights-of-way.
(b) Access to a building.
(c) A municipal utility pole attachment.
(3) A local unit of government may impose on a video service
provider a permit fee only to the extent it imposes such a fee on
incumbent video providers, and any fee shall not exceed the actual,
direct costs incurred by the local unit of government for issuing
the relevant permit. A fee under this section shall not be levied
if the video service provider already has paid a permit fee of any
kind in connection with the same activity that would otherwise be
covered by the permit fee under this section or is otherwise
authorized by law or contract to place the facilities used by the
video service provider in the public rights-of-way or for general
revenue purposes.
Sec. 9. (1) A video service provider that has been granted a
state video service authorization may not deny access to service to
any group of potential residential subscribers because of the
income of the residents in the local area in which the group
resides.
(2) A provider is considered to have complied with subsection
(1) if the following conditions are met:
(a) Within 3 years of the date it began providing video
service under this act, at least 25% of households with access to
the provider's video service are low-income households.
(b) Within 5 years of the date it began providing video
service under this act and from that point forward, at least 30% of
the households with access to the provider's video service are low-
income households.
(3) A video services provider that has been granted a state
video services authorization under this act shall provide access to
its video service to a number of households equal to at least 35%
of the households in the provider's service area within 3 years of
the date it began providing video service under this act and to a
number not less than 50% of these households within 5 years. The
provider shall file a report with the commission no later than the
5 years required by this subsection demonstrating compliance with
this subsection and subsection (2).
(4) A video service provider may satisfy the requirements of
this section through the use of alternative technology that offers
service, functionality, and content, which is demonstrably similar
to that provided through the provider’s video service system and
may include a technology that does not require the use of any
public right-of-way. The technology utilized to comply with the
requirements of this section shall include local public,
educational, and governmental channels and messages over the
emergency alert system as required under section 4.
(5) A video service provider may apply to the commission for a
waiver of or for an extension of time to meet the requirements of
this section if 1 or more of the following apply:
(a) The inability to obtain access to public and private
rights-of-way under reasonable terms and conditions.
(b) Developments or buildings not being subject to competition
because of existing exclusive service arrangements.
(c) Developments or buildings being inaccessible using
reasonable technical solutions under commercial reasonable terms
and conditions.
(d) Natural disasters.
(e) Factors beyond the control of the holder.
(6) The commission may grant the waiver or extension only if
the provider has made substantial and continuous effort to meet the
requirements of this section. If an extension is granted, the
commission shall establish a new compliance deadline. If a waiver
is granted, the commission shall specify the requirement or
requirements waived.
(7) Notwithstanding any other provision of this act, a video
service provider using telephone facilities to provide video
service is not obligated to provide such service outside the
provider's existing telephone exchange boundaries.
(8) Notwithstanding any other provision of this act, a video
service provider shall not be required to comply with, and a local
unit of government may not impose or enforce, any mandatory build-
out or deployment provisions, schedules, or requirements.
Sec. 10. (1) Each provider authorized to provide video service
under this act shall establish a dispute resolution process for its
customers. Each provider shall maintain a local or toll-free
telephone number for customer service contact.
(2) The commission shall establish a process to review
disputes which are not resolved under subsection (1), disputes
between a provider and a local unit of government, and disputes
between providers.
(3) Each provider shall notify its customers of the resolution
dispute process created under this section.
Sec. 11. (1) Except under the terms of a mandatory protective
order, trade secrets and commercial or financial information
submitted under this act to the commission or a local unit of
government are exempt from the freedom of information act, 1976 PA
442, MCL 15.231 to 15.246.
(2) If information is disclosed under a mandatory protective
order, then the commission or local unit of government may use the
information for the purpose for which it is required, but shall
remain confidential.
(3) There is a rebuttable presumption that costs studies,
customer usage data, marketing studies and plans, and contracts are
trade secrets or commercial or financial information protected
under subsection (1). The burden of removing the presumption under
this subsection is with the party seeking to have the information
disclosed.
Sec. 12. The commission shall file a report with the governor
and legislature by February 1 of each year that shall include all
of the following:
(a) The status of competition for video services in this
state.
(b) Recommendations for legislation, if any.
(c) Actions taken by the commission to implement the
provisions of this act.
(d) Information regarding all state video service
authorizations granted under this act.
Sec. 13. (1) After notice and hearing, if the commission finds
that a person has violated this act, the commission shall order
remedies and penalties to protect and make whole persons who have
suffered damages as a result of the violation, including, but not
limited to, 1 or more of the following:
(a) Order the person to pay a fine for the first offense of
not less than $20,000.00 or more than $30,000.00. For a second and
any subsequent offense, the commission shall order the person to
pay a fine of not less than $30,000.00 or more than $50,000.00.
(b) If the person has received a state video service
authorization, revoke the authorization.
(c) Issue cease and desist orders.
(2) Notwithstanding subsection (1), a fine shall not be
imposed for a violation of this act if the provider has otherwise
fully complied with this act and shows that the violation was an
unintentional and bona fide error notwithstanding the maintenance
of procedures reasonably adopted to avoid the error. Examples of a
bona fide error include clerical, calculation, computer
malfunction, programming, or printing errors. An error in legal
judgment with respect to a person's obligations under this act is
not a bona fide error. The burden of proving that a violation was
an unintentional and bona fide error is on the provider.
(3) If the commission finds that a party's complaint or
defense filed under this section is frivolous, the commission shall
award to the prevailing party costs, including reasonable attorney
fees, against the nonprevailing party and their attorney.