Introduced Version






HOUSE BILL No. 1131

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 8-1-34.

Synopsis: Video service franchise fees. Provides that a provider of video service to Indiana customers under: (1) a certificate of franchise authority issued by the utility regulatory commission (IURC); or (2) an unexpired local franchise issued by a local unit before July 1, 2006; may not be required to pay a franchise fee to any local unit with respect to any calendar quarter or other reporting period that begins after June 30, 2012. Provides for the expiration of a definition that becomes obsolete upon the expiration of the statutes in which the definition is used. Amends incorrect references to federal telecommunications law. Amends an incorrect reference to a date in the state's video service franchising law.

Effective: July 1, 2011.





Koch




    January 6, 2011, read first time and referred to Committee on Utilities and Energy.







Introduced

First Regular Session 117th General Assembly (2011)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2010 Regular Session of the General Assembly.

HOUSE BILL No. 1131



    A BILL FOR AN ACT to amend the Indiana Code concerning utilities.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 8-1-34-5; (11)IN1131.1.1. -->     SECTION 1. IC 8-1-34-5, AS ADDED BY P.L.27-2006, SECTION 58, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 5. (a) As used in this chapter, "gross revenue" means all consideration of any kind or nature, including cash, credits, property, and in kind contributions:
        (1) received by a holder from the operation of a video service system in a particular unit in Indiana; and
        (2) calculated by the holder under section 23 of this chapter.
     (b) This section expires January 1, 2014.
SOURCE: IC 8-1-34-17; (11)IN1131.1.2. -->     SECTION 2. IC 8-1-34-17, AS AMENDED BY P.L.1-2007, SECTION 77, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 17. (a) Not later than fifteen (15) business days after the commission receives an application under section 16 of this chapter, the commission shall determine whether the application is complete and properly verified. If the commission determines that the application is incomplete or is not properly verified, the commission shall notify the applicant of the deficiency and allow the applicant to

resubmit the application after correcting the deficiency. If the commission determines that the application is complete and properly verified, the commission shall issue the applicant a certificate of franchise authority. A certificate issued under this section must contain:
        (1) a grant of authority to provide the video service requested in the application;
        (2) a grant of authority to use and occupy public rights-of-way in the delivery of the video service, subject to:
            (A) state and local laws and regulations governing the use and occupancy of public rights-of-way; and
            (B) the police powers of local units to enforce local ordinances and regulations governing the use and occupancy of public rights-of-way; and
        (3) a statement that the authority granted under subdivisions (1) and (2) is subject to the holder's lawful provision and operation of the video service.
    (b) Except as provided in subsection (c) and sections 16(c) and 28 of this chapter, the commission may not require a provider to:
        (1) satisfy any build-out requirements;
        (2) deploy, or make investments in, any infrastructure, facilities, or equipment; or
        (3) pay:
             (A) an application fee;
             (B) a document fee;
             (C) a state franchise fee;
             (D) a local franchise fee under section 24 of this chapter (before its expiration on January 1, 2014) with respect to any calendar quarter that begins after June 30, 2012;
             (E) a service charge; or
             (F) any fee other than the a franchise fee paid owed to a local unit under section 24 of this chapter (before its expiration on January 1, 2014) for a calendar quarter that begins before July 1, 2012;
as a condition of receiving or holding a certificate under this chapter.
    (c) This section does not limit the commission's right to enforce any obligation described in subsection (b) that a provider is subject to under the terms of a settlement agreement approved by the commission before July 29, 2004.
    (d) The general assembly, a state agency, or a unit may not adopt a law, rule, ordinance, or regulation governing the use and occupancy of public rights-of-way that:


        (1) discriminates against any provider, or is unduly burdensome with respect to any provider, based on the particular facilities or technology used by the provider to deliver video service; or
        (2) allows a video service system owned or operated by a unit to use or occupy public rights-of-way on terms or conditions more favorable or less burdensome than those that apply to other providers.
A law, a rule, an ordinance, or a regulation that violates this subsection is void.
SOURCE: IC 8-1-34-21; (11)IN1131.1.3. -->     SECTION 3. IC 8-1-34-21, AS ADDED BY P.L.27-2006, SECTION 58, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 21. (a) For purposes of this section, a provider is considered to be a holder of a local franchise on June 30, 2006, if:
        (1) the provider; or
        (2) any affiliate or successor entity of the provider;
holds a local franchise to provide video service in a unit on June 30, 2006.
    (b) After June 30, 2006, a provider that is the holder of a local franchise on June 30, 2006, regardless of whether the provider is the incumbent provider in the local franchise service area, may elect to:
        (1) continue providing video service under the local franchise until the local franchise expires; or
        (2) subject to section 22 of this chapter, terminate the local franchise and apply to the commission for a certificate under this chapter.
    (c) A provider that elects to terminate a local franchise under subsection (b) must provide written notice of the provider's election to:
        (1) the commission; and
        (2) the affected unit;
not later than November 1, 2006. The local franchise is terminated on the date the commission issues a certificate to the provider under this chapter.
    (d) Not later than ninety (90) days after a local franchise is terminated under subsection (c), the provider that terminated the local franchise shall remit to the affected unit any accrued but unpaid franchise fees due under the local franchise. If the provider has credit remaining from any prepaid franchise fees, the provider may deduct the amount of the credit from any future fees or taxes owed to the affected unit.
     (e) A provider that elects under subsection (b)(1) to continue providing video service under a local franchise:
        (1) is not required to pay the franchise fee prescribed under

section 24 of this chapter (before its expiration on January 1, 2014); and
        (2) shall pay any franchise fee that:
            (A) is imposed under the terms of the local franchise; and
             (B) is due and owing with respect to any:
                (i) calendar quarter; or
                (ii) other reporting period specified under the terms of the local franchise;
            that begins before July 1, 2012.
A provider that elects under subsection (b)(1) to continue providing video service under a local franchise may not be required to pay a franchise fee to any unit for a calendar quarter or other reporting period that begins after June 30, 2012, regardless of the terms of the local franchise.
If the provider has credit remaining from any prepaid franchise fees, the provider may deduct the amount of the credit from any future fees or taxes owed to the affected unit.

SOURCE: IC 8-1-34-23; (11)IN1131.1.4. -->     SECTION 4. IC 8-1-34-23, AS AMENDED BY P.L.1-2007, SECTION 78, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 23. (a) Except as provided in subsection (b), the holder of a certificate under this chapter shall, at the end of each calendar quarter that begins before July 1, 2012, determine under subsections (c) and (d) the gross revenue received during that quarter from the holder's provision of video service in each unit included in the holder's service area under the certificate.
    (b) This subsection applies to a holder or other provider providing video service in a unit in which a provider of video service is required on June 30, 2006, to pay a franchise fee based on a percentage of gross revenues. The holder's or provider's gross revenue shall be determined as follows:
        (1) If only one (1) local franchise is in effect on June 30, 2006, the holder or provider shall determine gross revenue as the term is defined in the local franchise in effect on June 30, 2006.
        (2) If:
            (A) more than one (1) local franchise is in effect on June 30, 2006; and
            (B) the holder or provider is subject to a local franchise in the unit on June 30, 2006;
        the holder or provider shall determine gross revenue as the term is defined in the local franchise to which the holder or provider is subject on June 30, 2006.
        (3) If:
            (A) more than one (1) local franchise is in effect on June 30, 2006; and
            (B) the holder is not subject to a local franchise in the unit on June 30, 2006;
        the holder shall determine gross revenue as the term is defined in the local franchise in effect on June 30, 2006, that is most favorable to the unit.
    (c) This subsection does not apply to a holder that is required to determine gross revenue under subsection (b). The holder shall include the following in determining the gross revenue received during the quarter with respect to a particular unit:
        (1) Fees and charges charged to subscribers for video service provided by the holder. Fees and charges under this subdivision include the following:
            (A) Recurring monthly charges for video service.
            (B) Event based charges for video service, including pay per view and video on demand charges.
            (C) Charges for the rental of set top boxes and other equipment.
            (D) Service charges related to the provision of video service, including activation, installation, repair, and maintenance charges.
            (E) Administrative charges related to the provision of video service, including service order and service termination charges.
        (2) Revenue received by an affiliate of the holder from the affiliate's provision of video service, to the extent that treating the revenue as revenue of the affiliate, instead of revenue of the holder, would have the effect of evading the payment of fees that would otherwise be paid to the unit. However, revenue of an affiliate may not be considered revenue of the holder if the revenue is otherwise subject to fees to be paid to the unit.
    (d) This subsection does not apply to a holder that is required to determine gross revenue under subsection (b). The holder shall not include the following in determining the gross revenue received during the quarter with respect to a particular unit:
        (1) Revenue not actually received, regardless of whether it is billed. Revenue described in this subdivision includes bad debt.
        (2) Revenue received by an affiliate or any other person in exchange for supplying goods and services used by the holder to provide video service under the holder's certificate.
        (3) Refunds, rebates, or discounts made to subscribers,

advertisers, the unit, or other providers leasing access to the holder's facilities.
        (4) Revenue from providing service other than video service, including revenue from providing:
            (A) telecommunications service (as defined in 47 U.S.C. 153(46));
            (B) information service (as defined in 47 U.S.C. 153(20)), other than video service; or
            (C) any other service not classified as cable service or video programming by the Federal Communications Commission.
        (5) Any fee imposed on the holder under this chapter that is passed through to and paid by subscribers, including the franchise fee:
            (A) imposed under section 24 of this chapter for the quarter immediately preceding the quarter for which gross revenue is being computed; and
            (B) passed through to and paid by subscribers during the quarter for which gross revenue is being computed.
        (6) Revenue from the sale of video service for resale in which the purchaser collects a franchise fee under:
            (A) this chapter; or
            (B) a local franchise agreement in effect on July 1, 2006;
        from the purchaser's customers. This subdivision does not limit the authority of a unit, or the commission on behalf of a unit, to impose a tax, fee, or other assessment upon the purchaser under 42 47 U.S.C. 542(h).
        (7) Any tax of general applicability:
            (A) imposed on the holder or on subscribers by a federal, state, or local governmental entity; and
            (B) required to be collected by the holder and remitted to the taxing entity;
        including the state gross retail and use taxes (IC 6-2.5) and the utility receipts tax (IC 6-2.3).
        (8) Any forgone revenue from providing free or reduced cost cable video service to any person, including:
            (A) employees of the holder;
            (B) the unit; or
            (C) public institutions, public schools, or other governmental entities, as required or permitted by this chapter or by federal law.
        However, any revenue that the holder chooses to forgo in exchange for goods or services through a trade or barter

arrangement shall be included in gross revenue.
        (9) Revenue from the sale of:
            (A) capital assets; or
            (B) surplus equipment that is not used by the purchaser to receive video service from the holder.
        (10) Reimbursements that:
            (A) are made by programmers to the holder for marketing costs incurred by the holder for the introduction of new programming; and
            (B) exceed the actual costs incurred by the holder.
        (11) Late payment fees collected from customers.
        (12) Charges, other than those described in subsection (c)(1), that are aggregated or bundled with charges described in subsection (c)(1) on a customer's bill, if the holder can reasonably identify the charges on the books and records by the holder in the regular course of business.
    (e) If, under the terms of the holder's certificate, the holder provides video service to any unincorporated area in Indiana, the holder shall calculate the holder's gross income received from each unincorporated area served in accordance with:
        (1) subsection (b); or
        (2) subsections (c) and (d);
whichever is applicable.
    (f) If a unit served by the holder under a certificate annexes any territory after the certificate is issued or renewed under this chapter, the holder shall:
        (1) include in the calculation of gross revenue for the annexing unit any revenue generated by the holder from providing video service to the annexed territory; and
        (2) subtract from the calculation of gross revenue for any unit or unincorporated area:
            (A) of which the annexed territory was formerly a part; and
            (B) served by the holder before the effective date of the annexation;
        the amount of gross revenue determined under subdivision (1);
beginning with the calculation of gross revenue for the calendar quarter in which the annexation becomes effective. The holder shall notify the commission of the new boundaries of the affected service areas as required under section 20(a)(7) of this chapter.
     (g) This section expires January 1, 2014.

SOURCE: IC 8-1-34-24; (11)IN1131.1.5. -->     SECTION 5. IC 8-1-34-24, AS ADDED BY P.L.27-2006, SECTION 58, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

JULY 1, 2011]: Sec. 24. (a) Subject to subsection (e), not later than forty-five (45) days after the end of each calendar quarter that begins before July 1, 2012, the holder shall pay to each unit included in the holder's service area under a certificate issued under this chapter a franchise fee equal to:
        (1) the amount of gross revenue received from providing video service in the unit during the most recent calendar quarter, as determined under section 23 of this chapter; multiplied by
        (2) a percentage equal to one (1) of the following:
            (A) If a local franchise has never been in effect in the unit before July 1, 2006, five percent (5%).
            (B) If no local franchise is in effect in the unit on July 1, 2006, but one (1) or more local franchises have been in effect in the unit before July 1, 2006, the percentage of gross revenue paid by the holder of the most recent local franchise in effect in the unit, unless the unit elects to impose a different percentage, which may not exceed five percent (5%).
            (C) If there is one (1) local franchise in effect in the unit on July 1, 2006, the percentage of gross revenue paid by the holder of that local franchise as a franchise fee to the unit, unless the unit elects to impose a different percentage, which may not exceed five percent (5%). Upon the expiration of a local franchise described in this clause, the percentage shall be determined by the unit but may not exceed five percent (5%).
            (D) If there is more than one (1) local franchise in effect with respect to the unit on July 1, 2006, a percentage determined by the unit, which may not exceed the greater of:
                (i) five percent (5%); or
                (ii) the percentage paid by a holder of any local franchise in effect in the unit on July 1, 2006.
    (b) If the holder provides video service to an unincorporated area in Indiana, as described in section 23(e) of this chapter, the holder shall:
        (1) calculate the franchise fee with respect to the unincorporated area in accordance with subsection (a); and
        (2) remit the franchise fee to the county in which the unincorporated area is located.
If an unincorporated area served by the provider is located in one (1) or more contiguous counties, the provider shall remit part of the franchise fee calculated under subdivision (1) to each county having territory in the unincorporated area served. The part of the franchise fee remitted to a county must bear the same proportion to the total franchise fee for the area, as calculated under subdivision (1), that the

number of subscribers in the county bears to the total number of subscribers in the unincorporated area served.
    (c) With each payment of a franchise fee to a unit under this section, the holder shall include a statement explaining the basis for the calculation of the franchise fee. A unit may review the books and records of:
        (1) the holder; or
        (2) an affiliate of the holder, if appropriate;
to the extent necessary to ensure the holder's compliance with section 23 of this chapter in calculating the gross revenue upon which the remitted franchise fee is based. Each party shall bear the party's own costs of an examination under this subsection. If the holder and the unit cannot agree on the amount of gross revenue on which the franchise fee should be based, either party may petition the commission to determine the amount of gross revenue on which the franchise fee should be based. A determination of the commission under this subsection is final, subject to the right of direct appeal by either party.
    (d) A franchise fee owed by a holder to a unit under this section may be passed through to, and collected from, the holder's subscribers in the unit. To the extent allowed under 43 47 U.S.C. 542(c), the holder may identify as a separate line item on each regular bill issued to a subscriber:
        (1) the amount of the total bill assessed as a franchise fee under this section; and
        (2) the identity of the unit to which the franchise fee is paid.
    (e) A holder provider that elects under section 21(b)(1) of this chapter to continue providing video service under a local franchise is not required to pay the franchise fee prescribed under this section, but shall pay any franchise fee imposed under the terms of the local franchise.
     (f) This section expires January 1, 2014.

SOURCE: IC 8-1-34-25; (11)IN1131.1.6. -->     SECTION 6. IC 8-1-34-25, AS ADDED BY P.L.27-2006, SECTION 58, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 25. (a) This section applies in a unit that:
        (1) is included in the service area of a holder of a certificate issued under this chapter; and
        (2) requires a provider described in section 21(a) of this chapter to provide PEG channel capacity, facilities, or financial support under a local franchise issued to the provider by the unit before July 1, 2006, regardless of whether the provider elects to:
            (A) continue the local franchise under section 21(b)(1) of this chapter; or
            (B) terminate the local franchise under section 21(b)(2) of this chapter and continue providing video service in the unit under a certificate issued under this chapter.
    (b) As used in this section, "PEG channel" refers to a channel made available by a provider on the provider's video service system for public, educational, and governmental programming.
    (c) The holder of a certificate under this chapter shall provide in the unit at least the number of PEG channels that the provider described in section 21(a) of this chapter is required to provide in the unit under the terms of the local franchise described in subsection (a)(2).
    (d) If the local franchise described in subsection (a)(2) requires the provider described in section 21(a) of this chapter to provide financial support for public, educational, or governmental programming in the unit, the holder of a certificate under this chapter shall pay the unit the same cash payments on a per subscriber basis that the provider described in section 21(a) of this chapter is required to pay the unit under the terms of the local franchise. The holder shall remit payments under this subsection to the unit on a quarterly basis for each calendar quarter that begins after the certificate under this chapter takes effect. For a calendar quarter that begins before July 1, 2012, the holder shall remit the payments under this subsection along with the franchise fee paid to the unit under section 24 of this chapter (before its expiration on January 1, 2014). For each calendar quarter, the holder shall remit to the unit an amount equal to:
        (1) the cash payment for the quarter due from the provider described in section 21(a) of this chapter; multiplied by
        (2) a fraction, the numerator of which equals the number of subscribers served by the holder in the unit, and the denominator of which equals the total number of subscribers served by all providers in the unit.
    (e) Any payments remitted to a unit under subsection (d):
        (1) are made:
            (A) for the purposes set forth in 47 U.S.C. 531; and
            (B) under the unit's authority under 47 U.S.C. 541(a)(4)(B); and
        (2) may not be credited against the franchise fee payable to the unit under section 24 of this chapter (before its expiration on January 1, 2014).
SOURCE: IC 8-1-34-29; (11)IN1131.1.7. -->     SECTION 7. IC 8-1-34-29, AS ADDED BY P.L.27-2006, SECTION 58, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 29. (a) This section applies to a provider that holds a local franchise to provide video service in a unit at any time

before July 1, 2009, regardless of whether:
        (1) the provider elects:
            (A) under section 21(b)(1) of this chapter, to continue providing video service under the local franchise; or
            (B) under section 21(b)(2) of this chapter, to terminate the local franchise and provide video service in the unit under a certificate issued under this chapter;
        if the local franchise is in effect on June 30, 2009; 2006; or
        (2) the provider will provide video service in the unit under a certificate issued under this chapter, if the local franchise expires before July 1, 2009.
    (b) As used in this section, "local franchise" refers to:
        (1) the existing local franchise, if subsection (a)(1)(A) applies;
        (2) the terminated local franchise, if subsection (a)(1)(B) applies; or
        (3) the most recent local franchise held by the provider in the unit, if subsection (a)(2) applies.
    (c) A holder to which this section applies shall continue to provide the following services under the terms of the local franchise until January 1, 2009, or until the local franchise will expire or would have expired, whichever is later:
        (1) Institutional network capacity, however defined or referenced in the local franchise, but generally including private line data network capacity for use by the unit for noncommercial purposes. Institutional network capacity provided under this subdivision shall continue to be provided at the same capacity as required under the terms of the local franchise.
        (2) Video service to community public buildings, such as municipal buildings and public schools, however defined or referenced in the local franchise, but generally including cable drop connections to the buildings and a particular tier of video service provided to the buildings. Video service provided under this subdivision shall continue to be provided to the same extent as required under the terms of the local franchise.
Beginning January 1, 2009, or upon the date on which the local franchise will expire or would have expired, whichever is later, a provider that provides services under this subsection shall continue to provide the services under this subsection if the unit requests that the services continue after December 31, 2008, or after the date the local franchise will expire or would have expired, whichever is later.
    (d) This subsection applies to services described in subsection (c) that are provided after December 31, 2008, or after the date the local

franchise will expire or would have expired, whichever is later. The incremental costs of the services shall be apportioned among all holders of a franchise to provide video service within the unit. The amount of the incremental costs borne by a particular holder is equal to the total cost of providing the services multiplied by a fraction calculated as follows:
        (1) The numerator of the fraction equals the number of subscribers to whom the holder provides video service in the unit.
        (2) The denominator of the fraction equals the total number of subscribers to whom all holders provide video service in the unit.