Brief (1)
Sub. for SB 306 would remove local exchange telecommunication providers from the franchise system. Under the bill, certificated local exchange service providers would need no additional authorization or franchise from a city to conduct business in a given area. The bill would also establish a system for compensating cities for the right to construct and operate telecommunications facilities necessary for local exchange service. Under this system, the city would establish either an access line fee or a gross receipts fee and the local exchange provider would collect these fees.
Access Line Fee. The bill provides for an access line fee of up to $1.81 per access line per month. Under the bill, a city could require that local exchange telecommunications providers collect and remit a monthly access line fee, which would be done on a quarterly basis. The rate of the access line fee would be established by the city with a cap of $1.81 per access line per month. The access line fee would be based on the number of access lines served by the local exchange telecommunications provider within the city. Access lines would include the following:
The bill specifically excludes from the definition of "access line" interoffice transport or other transmission media that do not terminate at an end-use customer's premises, wireless telecommunications services, unbundled loop facilities, special access services, lines providing only data service. The bill does not permit duplicate or multiple assessment of access line rates on the provision of a single service or on the multiple communications paths derived from a billed and collected access line. The city would have the right to examine those access line count records necessary to verify the correctness of the access line count no more than four times per year after written notification to the telecommunications provider. If the access line fee is found to be in error, the telecommunications provider would revise the access line fees accordingly and payment would be made based on the corrected access line count.
Gross Receipts Fee. As an alternative to the access line fee, cities may impose a gross receipts fee on the following telecommunications services:
Services which are not wholly local in nature could not be included in the definition of gross receipts. The telecommunications provider could retain up to 2 percent of the fees collected as an administrative collection fee. The city would have the right to examine those records necessary to verify the correctness of the gross receipts fee no more than four times per year after written notification to the telecommunications provider. If the gross receipts fee is found to be in error, the telecommunications provider would revise the gross receipts fee accordingly and payment would be made based on the corrected access line count.
Fees on Resold Lines. A city could require a telecommunications provider to collect or remit an access line fee or a gross receipts fee on access lines that have been resold to another telecommunications provider. However, in this case, the city would not collect an access line fee or gross receipts fee from the reseller telecommunications provider.
Access to Public Right-of-Way. The bill provides a right for any certificated telecommunications provider to construct, maintain and operate poles, conduit, cable, switches, and related appurtenances and facilities along, across, upon, and under any public highway, roadway, or street in Kansas. Cities would not be permitted to create, enact or erect any unreasonable condition, requirement or barrier for a provider's entry into or use of the public rights-of-way in providing telecommunications services.
Instituting a New Fee. The city would be required to adhere to a set of notification procedures when instituting an access line fee or gross receipts fee. During the notification period, a special election would be called if a protest petition was presented by 20 percent of the qualified voters. Cities would be required to renew the fee every three years beginning on January 1, 2004.
Current Franchise Agreements. The bill would not void franchise agreements executed prior to the effective date of the act. However, the telecommunications provider or city could elect to terminate a franchise agreement or obligations under an existing contract ordinance after the law is enacted.
Construction Permits. Cities would be allowed to require a construction permit for a telecommunications provider locating facilities in or on public rights-of-way within the city to provide local exchange services. The terms of the permit would need to be consistent with and no more restrictive than construction permits issued to other parties excavating in a public right-of-way. The city would be required to process within 30 days each valid and administratively complete application of a telecommunications provider for any permit, license or consent to excavate, set poles, locate lines, construct facilities, make repairs, affect traffic flow, obtain zoning or subdivision regulation approvals or for other similar approvals. A fee could be charged for the permit, so long as the fee recovers only the actual costs the city reasonably incurs in managing the construction of the fixtures and so long as the fee is applicable to all users of the right-of-way in a nondiscriminatory, competitively neutral manner. The costs which could be recovered include those for issuing, processing and verifying the permit application, inspecting the construction site and restoration project, and determining the adequacy of the right-of-way restoration.
Prohibitions. Cities receiving an access line fee or gross receipts fee could not require a telecommunications provider to pay any compensation other than the access line fee, gross receipts fee, or a one-time construction permit fee; or provide services, facilities, equipment or goods in-kind for use by the city, political subdivision or any other telecommunications provider.
Home Rule and City Regulations. Cities would be permitted to exercise their home rule powers in the administration and regulation of the activities of telecommunications providers within a public right-of-way only to the extent the exercise of these powers is reasonably necessary to protect the health, safety and welfare of the public. Under the bill, any home rule based regulation would have to be competitively neutral and could not be unreasonable or discriminatory. The bill lists the following specific requirements which cities could not impose:
Repair of Public Right-of-Way. A city could require a telecommunications provider to repair all damage to a public right-of-way caused by the activities of that provider or an agent affiliate, employee, or subcontractor of the provider while installing repairing or maintaining facilities in a public right-of-way and to return the right-of-way to its functional equivalence before the damage. If the provider failed to make the necessary repairs, the city could arrange for them and charge the provider accordingly. If the city incurs damages due to a failure of the provider to repair the public right-of-way, the city would have a cause of action against the provider and could recover damages, including reasonable attorney fees, if the provider is found liable by a court of competent jurisdiction.
Liability/Indemnification. Under the bill, telecommunications providers would indemnify and hold the city harmless against any and all claims, lawsuits, judgments, costs, liens, losses, expenses, fees (including reasonable attorney fees and costs of defense), proceedings, actions, demands, causes of action, liability and suits of any kind and nature caused by the negligence of the telecommunications provider. This indemnity would not apply if the negligence was on the part of the city. If the telecommunications provider and city were found to be jointly liable, liability would be apportioned comparatively according to state law. This provision would not create any third party rights or causes.
Background
The Senate Committee held hearings on SB 306, at which time a number of representatives of the telecommunications industry and Kansas municipalities offered testimony regarding the bill.
Proponents of the bill noted that the current franchise system has resulted in unequal treatment of telecommunications providers while opponents of the bill expressed concern over the municipalities' loss of control over the public rights-of-way.
The Senate Committee appointed a subcommittee to study the bill further. The Subcommittee met three times and recommended amendments to the bill designed to make the bill more acceptable to the municipalities.
Due to the many significant amendments to SB 306, the Senate Committee recommended a substitute bill. One of the most significant differences between the original bill and the substitute is the addition of an alternative to the access line fee in the form of a gross receipts fee.
A fiscal note was not available for SB 306 upon publication of this supplemental note. However, the changes contemplated by the bill are local in nature and would not be anticipated to have a fiscal impact on the state.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi