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House Engrossed |
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State of Arizona House of Representatives Fifty-third Legislature Second Regular Session 2018
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HOUSE BILL 2579 |
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AN ACT
amending section 9‑582, Arizona Revised Statutes; amending title 44, Arizona Revised Statutes, by adding chapter 37; relating to video service.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 9-582, Arizona Revised Statutes, is amended to read:
9-582. Taxes and other charges; telecommunications facilities; limitations; definitions
A. A political subdivision shall not levy a tax, rent, fee or charge on a telecommunications corporation, including a telecommunications corporation that provides interstate services as described in section 9‑583, subsection C, for the use of a public highway to provide telecommunications services, or levy a tax, fee or charge on the privilege of engaging in the business of providing telecommunications services within that political subdivision other than:
1. Any transaction privilege tax authorized by law on the business of providing telecommunications services, except that this section does not allow the imposition of a transaction privilege tax on the business of providing interstate telecommunications services. Any transaction privilege tax authorized by law on the business of providing commercial mobile radio service shall not exceed the tax rate levied on the business of providing telecommunications services.
2. A telecommunications application fee for the issuance of a telecommunications license or franchise if the application fee applies on a competitively neutral and nondiscriminatory basis to all telecommunications corporations that use the public highways to provide telecommunications services. A political subdivision may require only one application fee and one license or franchise for each telecommunications corporation whether the telecommunications corporation provides local services only or local and long‑distance services, including intrastate or interstate services. An application fee is not required for a telecommunications corporation described in subsection E of this section.
3. A telecommunications construction permit fee for the issuance of a construction permit to place telecommunications facilities in the public highways if the permit fee applies on a competitively neutral and nondiscriminatory basis to all telecommunications corporations that place telecommunications facilities in the political subdivision's public highways to provide telecommunications services. Political subdivisions shall establish a nonbinding outside arbitration procedure to attempt to resolve disputes over recovery of reasonable, proportionate and attributable costs of construction permit fees pursuant to this paragraph and other fees or costs pursuant to this article before the disputes are submitted to a court for resolution.
4. A fee under section 9‑583, subsection C.
B. All application fees, permit fees and charges levied by a political subdivision on telecommunications corporations pursuant to subsection A, paragraphs 2 and 3 of this section shall be levied on a competitively neutral and nondiscriminatory basis and directly related to the costs incurred by the political subdivision in providing services relating to the granting or administration of applications or permits. These fees and charges also shall be reasonably related in time to the occurrence of the costs.
C. Notwithstanding subsections A and B of this section, a political subdivision may require a telecommunications corporation to bear all of the reasonable costs associated with the repair and restoration of damage to a public highway from construction, maintenance and operation of its facilities in the public highway used to provide telecommunications services, including bearing reasonable costs associated with damage caused to public highways. except that the political subdivision shall both:
1. Bear the costs of repairing and restoring a public highway to meet obligations that are imposed by the political subdivision to the extent that the costs of repair and restoration exceed the costs to restore a public highway to the same condition as before the damage occurred.
2. Reimburse the telecommunications corporation in full for excess costs incurred under paragraph 1 of this subsection within two months after receiving an invoice itemizing the excess costs. A dispute over the excess costs is subject to arbitration under the procedure established pursuant to subsection A, paragraph 3 of this section.
D. Notwithstanding subsections A and B of this section, in a license or franchise, a political subdivision and a telecommunications corporation may agree to in‑kind payments for use of the public highways different from those specified in subsection A or B of this section. The license or franchise shall be structured so that the in‑kind payments made for use of the public highways to provide interstate telecommunications services under the license or franchise are less than or equal to and are offset against any linear foot charge owed pursuant to section 9‑583, subsection C, paragraphs 2 and 3. The license or franchise shall be structured so that the in‑kind payments made under the license or franchise pursuant to subsection A, paragraph 1 of this section are less than or equal to and are offset against any transaction privilege license tax on the business of providing telecommunications services. The valuation of any in‑kind benefits shall be set forth in such agreements. The in‑kind facilities that are used to offset any or all payments in this subsection are limited to the costs of the in‑kind facilities and shall remain in possession and ownership of the political subdivision after the term of the existing license or franchise expires. In‑kind facilities may be offset for either payments of intrastate transaction privilege taxes or for interstate linear foot charges but shall not be offset for any combination of intrastate and interstate charges. However, a political subdivision shall not require a telecommunications corporation to provide in‑kind services, make in‑kind payments or pay a fee in addition to the fees described in subsections A, B and C of this section as a condition of consent to use a highway to provide telecommunications services.
E. Notwithstanding subsection D of this section, any telecommunications corporation that was providing telecommunications service within this state on November 1, 1997 pursuant to a grant made to it or its lawful predecessors before the effective date of the Arizona Constitution may continue to provide telecommunications service pursuant to that state grant until it is lawfully repealed, revoked or amended. Such telecommunications corporation shall require no additional grant from any political subdivision to provide telecommunications services.
F. This article does not affect the terms or conditions of any franchise, license or permit issued by a political subdivision before November 1, 1997, or to release any party from its obligations thereunder. Those franchises, licenses or permits shall remain fully enforceable in accordance with their terms. A political subdivision may lawfully enter into agreements with franchise holders, licensees or permittees to modify or terminate an existing franchise, license or agreement.
G. A political subdivision may not discriminate against a cable operator in its use of its cable system or prevent a cable operator from using its cable system in the public highways to provide telecommunications services and other noncable services if the cable operator complies with applicable federal and state requirements. This subsection does not do either of the following:
1. Limit the authority of any political subdivision to license cable systems and to establish conditions on those licenses that are competitively neutral and nondiscriminatory with conditions applicable to telecommunications corporations and that are consistent with federal and state law.
2. Affect the authority of a political subdivision to manage the public highways within its boundaries or exercise its police powers and land use powers.
H. Subsection C of this section applies to the fullest extent allowed by law to all franchises, licenses and permits issued to a telecommunications corporation by a political subdivision regardless of when the franchises, licenses and permits are issued.
I. For the purposes of this section:
1. "Cable operator" includes a video service provider as defined in section 44‑7901.
2. "Cable system" includes a video service network as defined in section 44‑7901.
Sec. 2. Title 44, Arizona Revised Statutes, is amended by adding chapter 37, to read:
CHAPTER 37
VIDEO SERVICE
ARTICLE 1. GENERAL PROVISIONS
44-7901. Definitions
In this chapter, unless the context otherwise requires:
1. "Affiliate" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with a video service provider.
2. "Agreement" means any agreement or contract.
3. "Boundaries of a local government" or "boundaries" means:
(a) For a city or town, all of the area within the corporate limits of the city or town.
(b) For a county, all of the area of the county that is not within the corporate limits of any city or town, including unincorporated territory that is surrounded on all sides by a combination of one or more cities, towns or Indian reservations.
4. "Cable operator" has the same meaning prescribed in 47 United States code section 522.
5. "Cable service" has the same meaning prescribed in 47 United States code section 522.
6. "Cable system" has the same meaning prescribed in 47 United States code section 522.
7. "Certificate of authority" or "certificate" means a certificate issued by the secretary of state pursuant to this chapter that grants the holder of the certificate a nonexclusive state-issued license to provide video service and to construct and operate a video service network within the service areas designated in the certificate.
8. "Commercial mobile service provider" means a person that provides commercial mobile service as defined in 47 united states code section 332(d) or commercial mobile radio service as described in 47 code of federal regulations section 20.9.
9. "Day" means a calendar day, except a Saturday or Sunday or a holiday prescribed in section 1-301.
(a) Means all cash, credits, property of any kind or nature or other consideration that is received by a video service provider, its affiliates, or any person, firm or corporation in which the video service provider has a financial interest or that has a financial interest in the video service provider and that is directly related to the video service provider's operation of its video service network to provide video service in the service area.
(b) Includes all revenue from charges for video service to subscribers and all charges for installation, removal, connection or reinstatement of equipment necessary for a subscriber to receive video service and any other receipts from subscribers directly related to the video service provider's operation of the video service network to provide video service, including receipts from forfeited deposits, sale or rental of equipment to provide video service, late charges, interest and sale of program guides.
(c) Does not include revenue from commercial advertising on the video service network, the use or lease of studio facilities of the video service network, internet access service, the use or lease of its facilities located in the highways, the use or lease of leased access channels or bandwidth, the use or lease of towers, the production of video programming by the video service provider, the sale, exchange, use or cablecast of any programming by the video service provider in the service area, sales to the video service provider's subscribers by programmers of home shopping services, reimbursements paid by programmers for launch fees or marketing expenses, license fees, taxes or other fees or charges that the video service provider collects and pays to any governmental authority, any increase in the value of any stock, security or asset, or any dividends or other distributions made from any stock or securities or from any other service not directly related to the video service provider's operation of its video service network to provide video service.
11. "Highway" means all roads, streets and alleys and other dedicated public rights-of-way of a local government.
12. "holder" means a video service provider that has been issued a certificate of authority pursuant to this chapter.
13. "Holdover cable operator" means an incumbent cable operator that elects under sections 44-7913 and 44-7914 to continue to operate within its service area pursuant to its local license.
14. "Incumbent cable operator" means a cable operator or other video service provider that on December 31, 2019 is providing video service in this state pursuant to a local license.
15. "Information service" has the same meaning prescribed in 47 United States code section 153.
16. "Interactive computer service" has the same meaning prescribed in 47 united states code section 230(f).
17. "License" means a franchise as defined in 47 united states code section 522.
18. "License fee" means a license fee imposed by a local government on a video service provider for using the highways to provide and for the privilege of providing video service.
19. "Local government" means any city, including a charter city, town or county.
20. "Local law" means any charter, code, ordinance, resolution, regulation or other law of a local government.
21. "Local license" means any license, agreement, permit or similar authorization that meets all of the following:
(a) Allows a person to construct or operate a video service network within the boundaries of a local government.
(b) Is issued, granted, approved, extended or renewed by the local government before January 1, 2020 pursuant to the authority of any federal, state or local law in effect at the time of the issuance, grant, approval, extension or renewal.
(c) Is effective under federal, state or local law on December 31, 2019 for the person to continue to construct or operate a video service network within the boundaries of a local government.
22. "Multichannel video programming distributor" has the same meaning prescribed in 47 united states code section 522.
23. "Service area" means that part of the boundaries of a local government within which a video service provider is authorized to provide video service pursuant to a certificate of authority or a local license.
24. "Subscriber" means any person in this state that purchases video service. Subscriber does not include any person that purchases video service for resale and that, on resale, is required to pay a license fee pursuant to this chapter or the terms of a local license.
25. "Telecommunications" means the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information sent and received, regardless of the facilities, equipment or technology used.
26. "Telecommunications provider" means a person that is required to obtain from the corporation commission a certificate of public convenience and necessity to provide telecommunications service.
27. "Telecommunications service" means the offering of telecommunications for a fee directly to the public, or such classes of users as to be effectively available directly to the public, regardless of the equipment, facilities or technology used.
28. "Video service":
(a) Means the provision of multichannel video programming generally considered comparable to video programming delivered by a television broadcast station, video service or other digital television service, whether provided as part of a tier, on demand or on a per-channel basis, without regard to the technology used to deliver the video service, including internet protocol technology or any successor technology.
(b) Includes cable service.
(c) Does not include any of the following:
(i) Video content provided solely as part of, and through, a service that enables users to access content, information, e‑mail or other services that are offered via the public internet.
(ii) Direct broadcast satellite service.
(iii) Wireless multichannel video programming that is provided by a commercial mobile service provider.
(a) Means a wireline network, or any component of a wireline network, that is located in this state, constructed in whole or in part in, on, under or over any highway and used to provide video service.
(b) Includes a cable system.
(a) Means any person that provides or offers to provide video service over a video service network to subscribers in this state.
(b) Includes an incumbent cable operator that elected pursuant to sections 44-7913 and 44-7914 to terminate its local license and a multichannel video programming distributor.
(c) Does not include a holdover cable operator.
44-7902. State preemption
A. The regulation and use of video service are of statewide concern. Except as otherwise provided in this chapter, the regulation and use of video service providers pursuant to this chapter are not subject to further regulation by a county, city, town or other political subdivision of this state. The regulation of video service pursuant to this chapter is to promote all of the following:
1. Provision of competitive video, telecommunications and information service throughout this state.
2. Uniform regulation of competitive video service throughout this state.
3. Minimal construction and operational interference across boundaries between local governments for video service providers to use the highways in delivering video, telecommunications, information and other services over video service and other networks.
B. To the fullest extent allowed by federal law, this chapter occupies the entire field of licensing and regulation of video service.
C. Except as otherwise provided in sections 44-7913 and 44-7914 and articles 4 and 5 of this chapter, from and after December 31, 2019 this chapter preempts and limits the ability of a local government to regulate or enforce all of the following:
1. The Application of title 9, chapter 5, article 1.1 to video service providers.
2. Any local law and any agreement with a local government that does any of the following:
(a) requires a person to obtain or hold from a local government any license, permit or similar authorization to provide video service or to construct or operate a video service network in the highways within its boundaries, unless the person is a holdover cable operator.
(b) Regulates the provision of video service or the construction or operation of a video service network if the regulation conflicts or is otherwise inconsistent with this chapter or the purposes and objectives of this chapter.
(c) Imposes on a video service provider any office location, institutional network or other build-out, line extension, investment or other requirements relating to infrastructure, facilities or deployment of equipment.
(d) Requires a video service provider to obtain a license or other authorization from the local government to provide telecommunications service, information service, interactive computer service or other service if the video service provider uses its video service network within the boundaries of the local government to provide the service.
(e) Requires a video service provider to place its facilities in ducts or conduits or on poles owned or leased by the local government.
44-7903. Application
This chapter does not:
1. Authorize the secretary of state to regulate or exercise oversight of video service providers except as provided in this chapter.
2. Prevent a telecommunications provider from exercising any rights or authority that the telecommunications provider has as a public utility under federal or state law.
3. Affect any authority of a local government, an agricultural improvement district, any special taxing district or any other person that controls utility poles on the highways to deny, limit, restrict or determine the rates, terms and conditions for the use of or attachment to utility or other poles of the local government or other person by a video service provider.
4. Vest in the corporation commission any authority or jurisdiction over video service, video service providers or video service networks or over the rates, terms and conditions of pole attachments under 47 united states code section 224.
ARTICLE 2. CERTIFICATES OF AUTHORITY
44-7911. Secretary of state
A. From and after December 31, 2019, the secretary of state has the exclusive authority to issue a certificate of authority to a person to provide video service and to construct and operate a video service network in any service area in this state.
B. The secretary of state shall:
1. Administer this chapter.
2. Adopt rules pursuant to title 41, chapter 6 to administer this chapter.
3. Prescribe any forms necessary to implement this chapter.
C. Except as otherwise provided in this chapter, from and after December 31, 2019 a person may not act as a video service provider or construct or operate a video service network within the boundaries of a local government without first having been issued and continuing to hold a certificate of authority with a service area encompassing the boundaries.
44-7912. Fees; video service fees fund
A. The secretary of state shall establish, administer and collect fees for the purpose of administering the duties specified in this chapter, including enforcement through the office of administrative hearings pursuant to article 5 of this chapter.
B. The secretary of state shall adopt rules regarding the method for determining fees, the amount or rate of fees and modifications or exemptions from fees. In adopting rules, the secretary of state may consider any factors necessary for the purpose of carrying out the duties specified in this chapter.
C. Before implementing fees and after the fee setting methodology is modified, the secretary of state shall present the fee setting methodology to the joint legislative budget committee for review.
D. The video service fees fund is established consisting of monies collected pursuant to this chapter. The secretary of state shall administer the fund. The secretary of state shall use fund monies only as necessary for the purpose of administering and enforcing this chapter. Monies in the fund do not revert to the state general fund, are exempt from the provisions of section 35-190 relating to lapsing of appropriations and are continuously appropriated.
E. The secretary of state shall deposit, pursuant to sections 35‑146 and 35‑147, the monies collected pursuant to this chapter in the video service fees fund.
F. A video service provider may not pass the cost of fees onto subscribers of video service. A video service provider shall submit to the secretary of state an attestation that it has not passed on the cost of fees to video service subscribers.
G. If a video service provider does not comply with this section as prescribed by the secretary of state, the secretary of state may suspend or revoke the video service provider's certificate of authority.
44-7913. Incumbent cable operator; election on local license; procedure to obtain certificate and terminate local license
A. From and after December 31, 2019, an incumbent cable operator may elect to do either of the following:
1. Continue to operate within a service area as defined in the local license pursuant to section 44-7914.
2. Terminate the incumbent cable operator's local license for a service area by applying for and obtaining a certificate of authority pursuant to this article.
B. On or before July 1, 2020, to elect to terminate a local license under subsection A of this section, an incumbent cable operator shall apply for a certificate of authority that includes only the service area in the local license in the same manner as any other video service provider. If an incumbent cable operator obtains a certificate for the service area, all of the following apply:
1. The applicant's local license is terminated as to the service area by operation of law from and after the date the secretary of state issues the certificate of authority.
2. Not later than five days after the date that the secretary of state issues the certificate of authority, the incumbent cable operator shall file with the clerk of the local government that granted the local license a statement in the form prescribed by the secretary of state that the incumbent cable operator has obtained a certificate and that the local license for that service area has been terminated by operation of law.
3. The incumbent cable operator shall operate within the service area defined in the local license unless the incumbent cable operator elects under section 44-7915, subsection C to apply for a certificate for a service area that consists of the boundaries of the local government.
44-7914. Incumbent cable operator; procedure to continue operating under local license
A. If an incumbent cable operator does not timely elect to terminate a local license for a service area pursuant to section 44-7913, subsection B, the person shall continue to operate the cable system as a holdover cable operator within the service area defined in the local license and shall comply with the local license for as long as it remains in effect for the service area. The local license is not effective for the service area from and after the date the local license expires by its terms. The local government may not unilaterally renew or extend the term of the local license for the service area. The local government and the holdover cable operator shall comply with all of the following, which shall continue to apply to the local license:
1. Title 9, chapter 5, article 1.1.
2. Section 9-584.
3. Title 9, chapter 5, article 8.
4. Title 11, chapter 13, article 1.
B. To operate within a service area from and after the date the local license expires, the holdover cable operator must apply for and obtain a certificate of authority in the same manner as any other video service provider.
C. If a holdover cable operator is issued a certificate with a service area that includes the service area defined under the local license while operating pursuant to the local license under subsection a of this section, the certificate does not become effective until the local license expires.
D. A holdover cable operator that elects to apply for a certificate shall do so at least one month before the local license expires.
44-7915. Certificate of authority; application; fees; providing information to local governments
A. To obtain a certificate of authority, a person shall do both of the following:
1. File with the secretary of state an application and affidavit that are signed by one of the principal executive officers or general partners of the applicant and that comply with this section.
2. Pay to the secretary of state any fee required by section 44‑7912.
B. The application and affidavit shall be in the form required by the secretary of state and may be required to contain not more than the following:
1. The name of each local government in which the applicant intends to provide video service. Except as provided in section 44-7913, subsection B, paragraph 3, under a certificate the boundaries of the local government named is one service area and the service area consists of all of the territory within the boundaries of that local government.
2. The address and location of the principal place of business of the applicant and the names of the principal executive officers or general partners of the applicant. The holder shall notify the secretary of state and local governments of changes to this information as provided by the rules adopted by the secretary of state.
3. The term of the certificate. The term may not exceed ten years.
4. Certifications that the applicant agrees to do all of the following:
(a) Comply with all applicable federal and state laws.
(b) Comply with all generally applicable, nondiscriminatory local laws, including highway use, mapping, insurance, performance bonds, indemnification or similar requirements that apply to the use and occupation of any highway that are not in conflict or otherwise inconsistent with this chapter or the purposes and objectives of this chapter.
(c) Timely file all forms that the federal communications commission requires before offering video service.
C. An incumbent cable operator described in section 44-7913, subsection B, paragraph 3 may elect to apply for a certificate for a service area that consists of the boundaries of a local government.
D. If the secretary of state determines that the application and affidavit are incomplete or otherwise deficient for failure to comply with this section, the secretary of state shall provide written notice to the applicant not later than fifteen days after the date of filing of the application and affidavit. The written notice shall do both of the following:
1. Explain the incompleteness or deficiency in detail.
2. Specify the information or other items that are necessary for proper completion of the application and affidavit.
E. The applicant shall provide a copy of the application and affidavit to each local government named in the application. The applicant shall file the copy with the clerk of the local government not later than five days after the date the application and affidavit are first filed with the secretary of state. If the applicant files a revised application and affidavit with the secretary of state, the applicant shall file the copy with the clerk not later than five days after the date the revised application and affidavit are filed with the secretary of state.
F. The copy of documents filed by the applicant with the clerk of a local government pursuant to subsection E of this section is for information only. The local government may not do any of the following:
1. Charge a fee of more than twenty dollars for filing the copy.
2. Vote on or take other official action regarding the application and affidavit.
3. Require the applicant to obtain the approval of the local government regarding the document.
44-7916. Authority granted by certificate; conditions and limitations on certificate prohibited; providing video service
A. Not later than twenty days after the date an applicant files a completed application and affidavit pursuant to section 44-7915 and pays any fee required by section 44-7912, the secretary of state shall issue a certificate of authority to the applicant.
B. The certificate issued by the secretary of state is a nonexclusive state-issued license granting the holder of the certificate with the authority for the term requested in the application to do all of the following:
1. Provide video service in each service area designated in the application and affidavit filed with the secretary of state.
2. Construct and operate a video service network in the highways in the service area in compliance with this chapter and all local laws that are not in conflict or otherwise inconsistent with this chapter or the purposes and objectives of this chapter.
3. Operate and maintain facilities installed in the highways in the service area under a local license pursuant to all of the following:
(a) Section 9-506, subsection I.
(b) Section 9-584.
(c) Title 9, chapter 5, article 8 and title 11, chapter 13, article 1.
C. The secretary of state may not condition or limit a certificate of authority by imposing any obligation or requirement that is not authorized by this chapter, including any of the following:
1. Any office location, institutional network or other build-out, line extension, investment or other requirements relating to infrastructure, facilities or deployment of equipment.
2. Any requirements to pay to any person any application, document, license, service or other fee, tax, charge or assessment that is not authorized by this chapter.
D. A holder of a certificate shall provide video service in accordance with the certifications made by the holder in each application and affidavit that the holder files with the secretary of state pursuant to this article.
44-7917. Amendment of certificate to add service area; fees
A. to add one or more new service areas to a certificate, the holder shall file with the secretary of state an application for an amendment to the certificate to add each new service area and pay to the secretary of state the fee required by section 44-7912.
B. The application for an amendment to the certificate shall include the name of each new local government designated by the holder.
C. The holder shall file a copy of the application with the clerk of each local government that is named in the application. The holder shall provide the copy by filing with the clerk not later than five days after the date the notice is first filed with the secretary of state. The application is subject to the same procedures, requirements, limitations and time periods as an application for issuance of a certificate pursuant to sections 44-7915 and 44-7916.
44-7918. Termination of service; fees
A. To terminate the authority to provide video service to an existing service area authorized under the certificate, the holder of the certificate shall file with the secretary of state written notice of the termination and pay to the secretary of state the fee required by section 44-7912.
B. The holder may terminate service on the date that the holder files the written notice with the secretary of state.
C. The holder shall file a copy of the notice with the clerk of each local government whose boundaries contain a terminated service area. The holder shall comply with the same procedures, requirements and limitations as specified in section 44-7917, subsection C.
44-7919. Annexation
If the boundaries of a local government change due to annexation or deannexation, each local government whose boundaries are changed shall promptly notify each video service provider that has filed notice with the local government pursuant to section 44-7915, subsection E or section 44‑7917, subsection C.
44-7920. Transfer of certificate; fees
A. Except as otherwise provided in this section, a certificate of authority is fully transferable to any person whether the transfer arises through merger, sale, assignment, restructuring, change of control or other type of transaction. A transfer does not include an assignment of a certificate for the purpose of securing indebtedness. A transfer may include less than all service areas associated with a certificate.
B. The holder shall file with the secretary of state written notice of the transfer of the certificate and pay to the secretary of state the fee required by section 44-7912 not later than ten days after the date the transfer is completed.
C. The holder shall file a copy of the notice with the clerk of each local government whose boundaries include a service area subject to transfer of the certificate. The holder shall comply with the same procedures, requirements and limitations as specified in section 44-7917, subsection C. On the filing of notice under this subsection the transferee becomes the holder.
44-7921. Extension of certificate; fees
A. To extend the term of a certificate, the holder of the certificate shall file with the secretary of state at least one month before the end of the term of the certificate a notice to extend the term for a specified period not to exceed ten years and pay to the secretary of state any fee required by section 44-7912.
B. On the date the holder files the written notice with the secretary of state, the term is extended for the specified period from and after the date of the end of the then-current term.
C. The holder shall file a copy of the notice with the clerk of each local government whose boundaries include all or part of a service area subject to the certificate. The holder shall comply with the same procedures, requirements and limitations as specified in section 44-7917, subsection C.
D. Transferring, amending or modifying a certificate under other sections of this article does not extend the term of the certificate.
ARTICLE 3. DUTIES
44-7931. Video service; revocation for nonuse
A. Not later than twenty-four months after the date that the secretary of state issues a certificate of authority pursuant to sections 44-7915 and 44-7916 or an amended certificate pursuant to section 44-7917, the holder of the certificate shall offer and provide video service to at least one subscriber within each service area authorized by the certificate or amended certificate.
B. If a holder fails to comply with subsection A of this section, the secretary of state may revoke the holder's certificate under rules adopted pursuant to section 44-7911.
44-7932. Reports; confidentiality; definition
A. A video service provider that is not an incumbent cable operator and that holds a certificate with a service area within the boundaries of a local government shall prepare and submit to the local government a semiannual report that identifies the locations within the boundaries that are able to receive video service from the video service provider. This reporting requirement applies until the video service provider has constructed all of the facilities the video service provider intends to construct within the boundaries of the local government.
B. The video service provider shall file the report with the local government not later than twenty days after the last day of the second and fourth calendar quarters of each year.
C. Information contained in a report that is submitted to a local government pursuant to this section:
1. Is confidential proprietary information of the video service provider.
2. Is not a public record.
3. Must be managed so that any critical infrastructure information contained in the report is protected as provided by law.
4. May not be disclosed to any person who is not an officer or employee of the local government unless the video service provider has consented in writing to the disclosure.
D. For the purposes of this section, "critical infrastructure information" has the same meaning prescribed in section 41‑1801.
44-7933. Nondiscriminatory manner; compliance with standards and federal law
A. A video service provider shall activate and offer video service in a nondiscriminatory manner within each service area and may not deny access to video service to any group of potential residential subscribers within a particular part of a service area because of the income profile of the persons who reside in that part of the service area.
B. In providing video service, a video service provider shall comply with all of the following:
1. 47 united states code section 551.
2. the national electrical safety code, as adopted and as may be amended by the institute of electrical and electronics engineers with regard to the video service provider's construction practices and installation of equipment.
3. Any technical standards governing the design, construction and operation of a video service network required by federal law.
4. 47 code of federal regulations part 11, as adopted and as may be amended by the federal communications commission, to the extent those provisions require a video service provider to participate in the emergency alert system.
5. 47 code of federal regulations sections 76.309, 76.1601, 76.1602, 76.1603, 76.1604, 76.1618, 76.1619, 76.1620, 76.1621 and 76.1622, as adopted and as may be amended by the federal communications commission, on standards governing the quality of video service and subscriber service. A video service provider may not be required to comply with any subscriber service obligations that are more burdensome than those set forth in this paragraph.
ARTICLE 4. LOCAL GOVERNMENTS
44-7941. Management of highways; local governments; permits or licenses
A. In managing a highway, a local government may do all of the following:
1. Require a video service provider that is constructing, installing, working within, maintaining or repairing facilities in, on, under or over any highway to obtain a construction, encroachment or occupancy permit for the work.
2. Inspect the construction, installation, maintenance or repair work performed on such facilities.
B. If a video service provider requests a permit or inspection, the local government shall act on the request not later than ten days after the date the request is made.
C. If emergency response work or repair becomes necessary in, on, under or over any highway, a video service provider may begin that work or repair without prior approval from a local government if the video service provider notifies the local government as promptly as reasonably possible after learning that the work or repair is necessary.
44-7942. Fees and charges; emergency alert; damage; undergrounding; wireless facilities; definitions
A. Except the license fee on gross revenue authorized by section 44-7943 and transaction privilege taxes as provided in subsection B of this section, a local government may not levy a tax, rent, fee or charge, however denominated, on a video service provider for the use of the highways to provide video service or levy a tax, fee or charge on the privilege of engaging in the business of providing video service in the service area. Taxes, rents, fees and charges include all of the following:
1. Access channel support except for in-kind services, goods or payments as provided in subsection C of this section.
2. Rental, application, construction, permit, inspection, inconvenience and other fees and charges related to a video service provider's use of the highways, including the use authorized by subsection D of this section.
B. any transaction privilege taxes otherwise authorized by local law to be levied on the business of providing video service or in relation to use of the highways to provide video service may be levied on a video service provider if the taxes are levied only on gross revenue and the rate of the taxes is subject to this subsection. This subsection does not authorize the imposition of transaction privilege taxes on interstate telecommunications services. The license fee and any transaction privilege taxes levied on gross revenue constitute a franchise fee within the meaning of the term in 47 united states code section 542(g). The total of the rates of the license fee and of any transaction privilege taxes on gross revenue levied or assessed by a local government for the privilege of providing video service and related use of the highways to provide video service may not exceed a rate of five percent. For the purposes of this subsection, gross revenue is reduced by related bad debt and by refunds, rebates, allowances and discounts the video service provider makes to video service subscribers.
C. Subsection A of this section does not prohibit a local government from levying fees and charges on a video service provider or its affiliates pursuant to section 9-584 or pursuant to title 9, chapter 5, article 8 or title 11, chapter 13, article 1 without an offset against license fees.
D. A local government may not require a video service provider to provide in-kind goods or services, make in-kind payments, assessments or obligations or pay a fee in addition to the monetary license fee levied or assessed as provided in section 44-7943, except for any of the following:
1. A local law may impose and enforce obligations equally and uniformly on all video service providers that are operating within the boundaries of a local government and on all holdover cable operators that hold a local license that remains in effect under section 44-7914, subsection A. Under the local law, a local government:
(a) May require all video service providers to provide channel capacity for the video service provider to transmit programming over which the video service provider exercises no editorial control except as authorized by 47 united states code section 531(e). The channel capacity shall be limited to one of the following:
(i) Not more than two channels of public, educational or governmental access programming in the basic service tier of the video service network and not more than two channels of noncommercial governmental programming, at least one of which may be programmed by the federal government, in the digital programming tier of the video service network.
(ii) Not more than two lines of access programming with each line of programming carried on up to two standard definition channels and two switched digital high-definition channels.
(b) Shall specify the programming and the video service provider may require that the channels regularly display an unobtrusive logo or other suitable identifier of the video service provider, if the local government requires channel capacity pursuant to subdivision (a) of this paragraph.
(c) Subject to reduction under subsection F of this section, may require all video service providers to incur costs and expenses to provide, maintain and operate facilities and equipment of the video service network, including facilities and equipment for signal carriage, processing, reformatting and interconnection for all of the following:
(i) To connect the video service network or cable system, as it may be relocated from time to time, to transmit programming to and from existing locations of public, educational or governmental access facilities and to allow monitoring of access programming at the facilities.
(ii) To transmit public, educational and governmental access channels to subscribers with the same prevailing quality, functionality and identification as other channels.
(d) May require all video service providers and incumbent cable operators to provide the signal for the basic service tier of cable service at no recurring service charge to one outlet at one building occupied by the local government.
2. A local government may retain equipment that it owns without charge for the equipment's use at the local government's expense, including equipment previously provided by an incumbent cable operator.
E. A local law may not impose any obligation on a video service provider under subsection D of this section that is more burdensome than the least burdensome requirement under any local license with a service area within the boundaries of the local government that was in effect on February 1, 2019. The in-kind requirements in subsection D of this section shall be reduced as necessary so that the total annual fair market value does not exceed the annual license fees paid to the local government pursuant to section 44-7943.
F. None of the annual fair market value of any channel capacity provided pursuant to subsection D, paragraph 1, subdivision (a), the annual costs and expenses incurred pursuant to subsection D, paragraph 1, subdivision (c) and the annual fair market value of basic service provided pursuant to subsection D, paragraph 1, subdivision (d) may be offset against the license fee levied or assessed under this section.
G. Notwithstanding subsection A of this section, by a nondiscriminatory local law that imposes and enforces the obligations equally and uniformly on all video service providers operating within the boundaries of a local government, a local government may require that a video service provider bear all of the reasonable costs that are associated with repair and restoration of damage caused to highways by construction, maintenance and operation of the video service provider's facilities in the highways and that are imposed on a competitively neutral and nondiscriminatory basis in relation to costs borne by telecommunications corporations under section 9-582, subsection C, except that all of the following apply:
1. The local government shall bear the costs to the video service provider of repairing and restoring a highway to meet obligations that are imposed by the local government to the extent that the costs of repair and restoration exceed the costs to restore a highway to the same condition as before the damage.
2. The local government shall reimburse the video service provider in full for excess costs incurred under paragraph 1 of this subsection within two months after receipt of an invoice itemizing the excess costs. If the local government does not timely pay the invoice in full, the video service provider may deduct the unpaid amount of the itemized invoice from the next succeeding license fee payments due under section 44-7943.
H. The local government shall reimburse the full costs to the video service provider of placing its facilities underground when required by the local government within two months after receipt of an itemized invoice, unless any of the following applies:
1. The local government requires that all electric or communications facilities on the same route are placed underground at the same time in joint trench and at least one other electric or communications facility is located on the same route.
2. The local government is proceeding under title 40, chapter 2, article 6.1 or section 48-620.
I. On application a local government shall issue to a video service provider or its affiliate a permit to attach allowed wi-fi radio equipment to the video service network in the highways within the boundaries of the local government. The permit shall allow installation, operation and maintenance of allowed wi-fi radio equipment. A local government may require that all of the allowed wi-fi radio equipment at a single location fit within a fifteen-inch cube and be contained entirely within a ground‑mounted pedestal or be connected directly to and mounted at the same height as one of the video service provider's aerial horizontal conductors. This subsection does not do any of the following:
1. Prohibit a local government from requiring a video service provider to place underground in compliance with subsection H of this section aerial facilities to which allowed wi-fi equipment is attached.
2. Prohibit the imposition of a tax, rent, fee or charge on revenue from services provided through allowed wi-fi radio equipment.
3. Affect the authority of a local government to manage the highways within its boundaries or to exercise its police powers, including review and approval of an application before issuing a permit.
J. For the purposes of this section:
1. "Allowed wi-fi radio equipment" means radio equipment that uses only unlicensed radio spectrum and that enables wireless communication with a communications network for unlicensed services such as wi-fi service.
2. "Electric or communications facilities" has the same meaning prescribed in section 40-341.
44-7943. License fee; requirements, conditions and limitations; pass through to subscribers
A. For the privilege of a video service provider to occupy or use, in whole or in part, any highway within the boundaries of a local government to provide video service through a video service network, the local government may require a video service provider to pay a license fee to the local government based on the gross revenue that the video service provider receives from its subscribers located within the boundaries of the local government. For the purposes of this subsection, gross revenue is reduced by related bad debt and by refunds, rebates, allowances and discounts the video service provider makes to video service subscribers. The license fee both:
1. Is subject to the limits prescribed by section 44-7942, subsection B.
2. Shall be due no more often than quarterly.
B. If the local government requires a license fee pursuant to subsection A of this section, the local government shall adopt a local law that imposes the license fee equally and uniformly on all of the following that are operating within the boundaries of the local government:
1. Video service providers.
2. Holdover cable operators.
C. A video service provider shall pay the entire amount of the license fee directly to the local government in a check, draft or note or automated clearing house transaction that is payable in legal tender as defined in section 43‑1021.
D. a video service provider may do all of the following:
1. Pass the license fee through to and collect the license fee from its subscribers within the boundaries of the local government.
2. Designate the amount of the license fee collected from each subscriber as a separate line item on the subscriber's bill.
44-7944. Ownership of a video service network
A. A city or town may not acquire an ownership interest in a video service network unless the ownership interest is acquired at not less than fair market value.
B. Except for the purposes of acting as an intermediary in a transfer of a certificate, a county may not own a video service network.
44-7945. Review and audit; bundling discounts; action to recover underpayment or overpayment
A. Not more than once every three years, a local government may on reasonable written notice audit the business books and records of a video service provider to the extent necessary to ensure payment of license fees pursuant to this chapter. The local government may not audit any period that ends more than three years before the date that the notice of audit is received. Any audits of a period of time before issuance of a certificate shall be conducted pursuant to the local laws in effect during the period of time.
B. Except as otherwise provided by federal law, if a video service provider offers video service bundled with other services that are not video service for a single discounted price, both of the following apply:
1. The method that the video service provider uses to determine gross revenues subject to license fees by allocating the single discounted price among the bundle of video service and nonvideo services shall be reasonable and supported by the video service provider's books and records.
2. The local government shall accept as reasonable, for purposes of meeting the video service provider's burden of proof, an allocation based on an objective and verifiable method using the books and records that the video service provider kept in the regular course of business for other purposes, including nontax purposes.
C. The local government and the video service provider shall each pay its own costs and fees relating to each audit performed pursuant to subsection A of this section.
D. A person that performs a review and audit under subsection A of this section may not receive compensation that is based, in whole or in part, on either of the following:
1. Finding a particular result.
2. The amount of any underpayment or overpayment of the license fee that is identified because of the review and audit.
E. A complaint by a local government for underpayment of a license fee from a video service provider or by a video service provider for overpayment of a license fee to a local government shall be made pursuant to article 5 of this chapter. A complaint for a violation of the license fee obligations under this chapter may not be made unless a written demand by a local government for payment of the license fees or a written demand by a video service provider for refund of license fees is made within four months after the local government or video service provider realizes it has been damaged or knows or reasonably should know of the damage caused by the alleged violation. A complaint must be filed pursuant to article 5 of this chapter within two years after the written demand is made but no sooner than four months after the written demand.
ARTICLE 5. ENFORCEMENT
44-7951. Enforcement
A. A local government may file a written complaint against a video service provider and a video service provider may file a written complaint against a local government alleging a violation of this chapter. Unless otherwise provided in section 44-7945, subsection E or this section:
1. All complaints must be filed with the secretary of state.
2. The complainant must serve a copy of the complaint on the party that is the subject of the complaint by personal delivery or certified mail, return receipt requested, or by any other method reasonably calculated to effect actual notice to the secretary of state's last address of record of the party that is the subject of the complaint.
3. The party that is the subject of the complaint may file a response to the complaint with the secretary of state within twenty days after service pursuant to paragraph 1 of this subsection. Responses shall be served pursuant to paragraph 1 of this subsection.
B. Before filing a complaint pursuant to this section all of the following apply:
1. The complainant must provide notice of the alleged violation of this chapter to the party that is the subject of the complaint.
2. The party that is the subject of the complaint must have a period of not less than twenty days after the date it receives the notice to resolve the alleged violation.
C. In addition to the requirements of title 41, chapter 6, article 10, if a complaint that complies with the requirements of this section is filed with the secretary of state, the secretary of state shall request a hearing before the office of administrative hearings. Unless other deadlines are established for a particular complaint, all of the following apply:
1. The hearing shall be held within two months after the date that the secretary of state requests a hearing.
2. The date scheduled for the hearing may be advanced or delayed on the agreement of the parties or on a showing of good cause.
D. In addition to the requirements of title 41, chapter 6, article 10, the secretary of state shall prepare and serve a notice of hearing on all parties at least one month before the hearing. The notice shall include all of the following:
1. A statement of the time, place and nature of the hearing.
2. A statement of the legal authority and jurisdiction under which the hearing is to be held.
3. A reference to the particular sections of the statutes and rules involved.
4. A short and plain statement of the matters asserted in the complaint.
E. A prehearing conference may be held pursuant to section 41‑1092.05.
F. Unless it conflicts with the requirements of this section, the hearing shall be conducted pursuant to section 41-1092.07.
G. The complainant has the burden of persuasion at a hearing under this section.
H. The decision of the administrative law judge is the final administrative decision with respect to the complaint. The office of administrative hearings shall serve a copy of the administrative law judge's decision on all parties and the secretary of state. The final administrative decision may be appealed to the superior court pursuant to title 12, chapter 7, article 6. Notwithstanding section 12-910, the superior court proceeding shall be a trial de novo.
I. A party may move for rehearing pursuant to section 41-1092.09. Moving for rehearing or review is not necessary for the party to seek judicial review of the decision of the administrative law judge under subsection H of this section.
J. Service is complete on personal service or five days after the date that the office of administrative hearings mails the final administrative decision to each party's last known address.
44-7952. Statute of limitations; costs and attorney fees; federal subscriber service requirements
A. Except as provided in section 44-7945, subsection E, a complaint under this article must be filed within two years after the complainant realizes it has been damaged and knows or reasonably should know the cause, source, act, event, instrumentality or condition that caused or contributed to the alleged violation.
B. Each party to a dispute under this chapter shall bear its own attorney fees and costs.
C. This article does not apply to allegations that a video service provider has failed to meet subscriber service requirements under federal law. Complaints alleging violations of federal subscriber service requirements will be resolved pursuant to the procedure established under federal law.
Sec. 3. Legislative intent
Pursuant to section 41-1107, Arizona Revised Statutes, it is the legislature's intent to regulate video service to promote all of the following:
1. Provision of competitive video service throughout this state.
2. Uniform regulation of competitive video service throughout this state.
3. Minimal construction and operational interference across boundaries between local governments for video service providers to use the highways in delivering video, telecommunications, information and other services over video service and other networks.
Sec. 4. Effective date
Section 9‑582, Arizona Revised Statutes, as amended by this act, is effective from and after December 31, 2019.