SECTIONS 5800-5970 - California Statutes

PUBLIC UTILITIES CODE

SECTION 5800-5970

5800. This act shall be known and may be cited as the Digital
Infrastructure and Video Competition Act of 2006.

5810. (a) The Legislature finds and declares all of the following:
(1) Increasing competition for video and broadband services is a
matter of statewide concern for all of the following reasons:
(A) Video and cable services provide numerous benefits to all
Californians including access to a variety of news, public
information, education, and entertainment programming.
(B) Increased competition in the cable and video service sector
provides consumers with more choice, lowers prices, speeds the
deployment of new communication and broadband technologies, creates
jobs, and benefits the California economy.
(C) To promote competition, the state should establish a
state-issued franchise authorization process that allows market
participants to use their networks and systems to provide video,
voice, and broadband services to all residents of the state.
(D) Competition for video service should increase opportunities
for programming that appeals to California's diverse population and
many cultural communities.
(2) Legislation to develop this new process should adhere to the
following principles:
(A) Create a fair and level playing field for all market
competitors that does not disadvantage or advantage one service
provider or technology over another.
(B) Promote the widespread access to the most technologically
advanced cable and video services to all California communities in a
nondiscriminatory manner regardless of socioeconomic status.
(C) Protect local government revenues and control of public
rights-of-way.
(D) Require market participants to comply with all applicable
consumer protection laws.
(E) Complement efforts to increase investment in broadband
infrastructure and close the digital divide.
(F) Continue access to and maintenance of the public, education,
and government (PEG) channels.
(G) Maintain all existing authority of the California Public
Utilities Commission as established in state and federal statutes.
(3) The public interest is best served when sufficient funds are
appropriated to the commission to provide adequate staff and
resources to appropriately and timely process applications of video
service providers and to ensure full compliance with the requirements
of this division. It is the intent of the Legislature that, although
video service providers are not public utilities or common carriers,
the commission shall collect any fees authorized by this division in
the same manner and under the same terms as it collects fees from
common carriers, electrical corporations, gas corporations, telephone
corporations, telegraph corporations, water corporations, and every
other public utility providing service directly to customers or
subscribers subject to its jurisdiction such that it does not
discriminate against video service providers or their subscribers.
(4) Providing an incumbent cable operator the option to secure a
state-issued franchise through the preemption of an existing cable
franchise between a cable operator and any political subdivision of
the state, including, but not limited to, a charter city, county, or
city and county, is an essential element of the new regulatory
framework established by this act as a matter of statewide concern to
best ensure equal protection and parity among providers and
technologies, as well as to achieve the goals stated by the
Legislature in enacting this act.
(b) It is the intent of the Legislature that a video service
provider shall pay as rent a franchise fee to the local entity in
whose jurisdiction service is being provided for the continued use of
streets, public facilities, and other rights-of-way of the local
entity in order to provide service. The Legislature recognizes that
local entities should be compensated for the use of the public
rights-of-way and that the franchise fee is intended to compensate
them in the form of rent or a toll, similar to that which the court
found to be appropriate in Santa Barbara County Taxpayers Association
v. Board of Supervisors for the County of Santa Barbara (1989) 209
Cal. App. 3d 940.
(c) It is the intent of the Legislature that collective bargaining
agreements be respected.
(d) It is the intent of the Legislature that the definition of
gross revenues in this division shall result in local entities
maintaining their existing level of revenue from franchise fees.

5820. (a) Nothing in this division shall be deemed as creating a
vested right in a state-issued franchise by the franchise holder or
its affiliates that would preclude the state from amending the
provisions that establish the terms and conditions of a franchise.
(b) Nothing in this division shall be construed to eliminate or
reduce a telephone corporation's or video service provider's
obligations under any applicable state or federal environmental
protection laws. The local entity shall serve as the lead agency for
any environmental review under this division and may impose
conditions to mitigate environmental impacts of the applicant's use
of the public rights-of-way that may be required pursuant to the
California Environmental Quality Act (Division 13 (commencing with
Section 21000) of the Public Resources Code).
(c) The holder of a state franchise shall not be deemed a public
utility as a result of providing video service under this division.
This division shall not be construed as granting authority to the
commission to regulate the rates, terms, and conditions of video
services, except as explicitly set forth in this division.

5830. For purposes of this division, the following words have the
following meanings:
(a) "Broadband" means any service defined as broadband in the most
recent Federal Communications Commission inquiry pursuant to Section
706 of the Telecommunications Act of 1996 (P.L. 104-104).
(b) "Cable operator" means any person or group of persons that
either provides cable service over a cable system and directly, or
through one or more affiliates, owns a significant interest in a
cable system; or that otherwise controls or is responsible for,
through any arrangement, the management and operation of a cable
system, as set forth in Section 522(5) of Title 47 of the United
States Code.
(c) "Cable service" is defined as the one-way transmission to
subscribers of either video programming, or other programming
service, and subscriber interaction, if any, that is required for the
selection or use of video programming or other programming service,
as set forth in Section 522(6) of Title 47 of the United States Code.
(d) "Cable system" is defined as set forth in Section 522(7) of
Title 47 of the United States Code.
(e) "Commission" means the Public Utilities Commission.
(f) "Franchise" means an initial authorization, or renewal of an
authorization, issued by a franchising entity, regardless of whether
the authorization is designated as a franchise, permit, license,
resolution, contract, certificate, agreement, or otherwise, that
authorizes the construction and operation of any network in the
right-of-way capable of providing video service to subscribers.
(g) "Franchise fee" means the fee adopted pursuant to Section
5840.
(h) "Holder" or "holder of a state franchise" means a person or
group of persons that has been issued a state franchise from the
commission pursuant to this division.
(i) "Incumbent cable operator" means a cable operator or OVS
serving subscribers under a franchise in a particular city, county,
or city and county franchise area on January 1, 2007.
(j) "Local entity" means any city, county, city and county, or
joint powers authority within the state within whose jurisdiction a
holder of a state franchise under this division may provide cable
service or video service.
(k) "Local franchising entity" means the city, county, city and
county, or joint powers authority entitled to require franchises and
impose fees on cable operators, as set forth in Section 53066 of the
Government Code.
(l) "Network" means a component of a facility that is wholly or
partly physically located within a public right-of-way and that is
used to provide video service, cable service, voice, or data
services.
(m) "Open-video system" or "OVS" means those services set forth in
Section 573 of Title 47 of the United States Code.
(n) "OVS operator" means any person or group of persons that
either provides cable service over an open-video system directly, or
through one or more affiliates, owns a significant interest in an
open-video system, or that otherwise controls or is responsible for,
through any arrangement, the management of an open-video system.
(o) "Public rights-of-way" means the area along and upon any
public road or highway, or along or across any of the waters or lands
within the state.
(p) "State franchise" means a franchise that is issued pursuant to
this division.
(q) "Subscriber" means a person who lawfully receives video
service from the holder of a state franchise for a fee.
(r) "Video programming" means programming provided by, or
generally considered comparable to programming provided by, a
television broadcast station, as set forth in Section 522(20) of
Title 47 of the United States Code.
(s) "Video service" means video programming services, cable
service, or OVS service provided through facilities located at least
in part in public rights-of-way without regard to delivery
technology, including Internet protocol or other technology. This
definition does not include (1) any video programming provided by a
commercial mobile service provider defined in Section 332(d) of Title
47 of the United States Code, or (2) video programming provided as
part of, and via, a service that enables users to access content,
information, electronic mail, or other services offered over the
public Internet.
(t) "Video service provider" means an entity providing video
service.

5840. (a) The commission is the sole franchising authority for a
state franchise to provide video service under this division. Neither
the commission nor any local franchising entity or other local
entity of the state may require the holder of a state franchise to
obtain a separate franchise or otherwise impose any requirement on
any holder of a state franchise except as expressly provided in this
division. Sections 53066, 53066.01, 53066.2, and 53066.3 of the
Government Code shall not apply to holders of a state franchise.
(b) The application process described in this section and the
authority granted to the commission under this section shall not
exceed the provisions set forth in this section.
(c) Any person or corporation who seeks to provide video service
in this state for which a franchise has not already been issued,
after January 1, 2008, shall file an application for a state
franchise with the commission. The commission may impose a fee on the
applicant that shall not exceed the actual and reasonable costs of
processing the application and shall not be levied for general
revenue purposes.
(d) No person or corporation shall be eligible for a state-issued
franchise, including a franchise obtained from renewal or transfer of
an existing franchise, if that person or corporation is in violation
of any final nonappealable order relating to either the Cable
Television and Video Provider Customer Service and Information Act
(Article 3.5 (commencing with Section 53054) of Chapter 1 of Part 1
of Division 2 of Title 5 of the Government Code) or the Video
Customer Service Act (Article 4.5 (commencing with Section 53088) of
Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code).
(e) The application for a state franchise shall be made on a form
prescribed by the commission and shall include all of the following:
(1) A sworn affidavit, signed under penalty of perjury by an
officer or another person authorized to bind the applicant, that
affirms all of the following:
(A) That the applicant has filed or will timely file with the
Federal Communications Commission all forms required by the Federal
Communications Commission before offering cable service or video
service in this state.
(B) That the applicant or its affiliates agrees to comply with all
federal and state statutes, rules, and regulations, including, but
not limited to, the following:
(i) A statement that the applicant will not discriminate in the
provision of video or cable services as provided in Section 5890.
(ii) A statement that the applicant will abide by all applicable
consumer protection laws and rules as provided in Section 5900.
(iii) A statement that the applicant will remit the fee required
by subdivision (a) of Section 5860 to the local entity.
(iv) A statement that the applicant will provide PEG channels and
the required funding as required by Section 5870.
(C) That the applicant agrees to comply with all lawful city,
county, or city and county regulations regarding the time, place, and
manner of using the public rights-of-way, including, but not limited
to, payment of applicable encroachment, permit, and inspection fees.
(D) That the applicant will concurrently deliver a copy of the
application to any local entity where the applicant will provide
service.
(2) The applicant's legal name and any name under which the
applicant does or will do business in this state.
(3) The address and telephone number of the applicant's principal
place of business, along with contact information for the person
responsible for ongoing communications with the commission.
(4) The names and titles of the applicant's principal officers.
(5) The legal name, address, and telephone number of the applicant'
s parent company, if any.
(6) A description of the video service area footprint that is
proposed to be served, as identified by a collection of United States
Census Bureau Block numbers (13 digit) or a geographic information
system digital boundary meeting or exceeding national map accuracy
standards. This description shall include the socioeconomic status
information of all residents within the service area footprint.
(7) If the applicant is a telephone corporation or an affiliate of
a telephone corporation, as defined in Section 234, a description of
the territory in which the company provides telephone service. The
description shall include socioeconomic status information of all
residents within the telephone corporation's service territory.
(8) The expected date for the deployment of video service in each
of the areas identified in paragraph (6).
(9) Adequate assurance that the applicant possesses the financial,
legal, and technical qualifications necessary to construct and
operate the proposed system and promptly repair any damage to the
public right-of-way caused by the applicant. To accomplish these
requirements, the commission may require a bond.
(f) The commission may require that a corporation with wholly
owned subsidiaries or affiliates is eligible only for a single
state-issued franchise and prohibit the holding of multiple
franchises through separate subsidiaries or affiliates. The
commission may establish procedures for a holder of a state-issued
franchise to amend its franchise to reflect changes in its service
area.
(g) The commission shall commence accepting applications for a
state franchise no later than April 1, 2007.
(h) (1) The commission shall notify an applicant for a state
franchise and any affected local entities whether the applicant's
application is complete or incomplete before the 30th calendar day
after the applicant submits the application.
(2) If the commission finds the application is complete, it shall
issue a state franchise before the 14th calendar day after that
finding.
(3) If the commission finds that the application is incomplete, it
shall specify with particularity the items in the application that
are incomplete and permit the applicant to amend the application to
cure any deficiency. The commission shall have 30 calendar days from
the date the application is amended to determine its completeness.
(4) The failure of the commission to notify the applicant of the
completeness or incompleteness of the application before the 44th
calendar day after receipt of an application shall be deemed to
constitute issuance of the certificate applied for without further
action on behalf of the applicant.
(i) The state franchise issued by the commission shall contain all
of the following:
(1) A grant of authority to provide video service in the service
area footprint as requested in the application.
(2) A grant of authority to use the public rights-of-way, in
exchange for the franchise fee adopted under subdivision (q), in the
delivery of video service, subject to the laws of this state.
(3) A statement that the grant of authority is subject to lawful
operation of the cable service or video service by the applicant or
its successor in interest.
(j) The state franchise issued by the commission may be terminated
by the video service provider by submitting at least 90 days prior
written notice to subscribers, local entities, and the commission.
(k) It is unlawful to provide video service without a state or
locally issued franchise.
(l) Subject to the notice requirements of this division, a state
franchise may be transferred to any successor in interest of the
holder to which the certificate is originally granted, provided that
the transferee first submits all of the information required of the
applicant by this section to the commission and is in compliance with
Section 5970.
(m) In connection with, or as a condition of, receiving a state
franchise, the commission shall require a holder to notify the
commission and any applicable local entity within 14 business days of
any of the following changes involving the holder of the state
franchise:
(1) Any transaction involving a change in the ownership,
operation, control, or corporate organization of the holder,
including a merger, an acquisition, or a reorganization.
(2) A change in the holder's legal name or the adoption of, or
change to, an assumed business name. The holder shall submit to the
commission a certified copy of either of the following:
(A) The proposed amendment to the state franchise.
(B) The certificate of assumed business name.
(3) A change in the holder's principal business address or in the
name of the person authorized to receive notice on behalf of the
holder.
(4) Any transfer of the state franchise to a successor in interest
of the holder. The holder shall identify the successor in interest
to which the transfer is made.
(5) The termination of any state franchise issued under this
division. The holder shall identify both of the following:
(A) The number of subscribers in the service area covered by the
state franchise being terminated.
(B) The method by which the holder's subscribers were notified of
the termination.
(6) A change in one or more of the service areas of the holder of
a state franchise pursuant to this division that would increase or
decrease the territory within the service area. The holder shall
describe the new boundaries of the affected service areas after the
proposed change is made.
(n) Prior to offering video service in a local entity's
jurisdiction, the holder of a state franchise shall notify the local
entity that the video service provider will provide video service in
the local entity's jurisdiction. The notice shall be given at least
10 days, but no more than 60 days, before the video service provider
begins to offer service.
(o) Any video service provider that currently holds a franchise
with a local franchising entity is entitled to seek a state franchise
in the area designated in that franchise upon meeting any of the
following conditions:
(1) The expiration, prior to any renewal or extension, of its
local franchise.
(2) A mutually agreed upon date set by both the local franchising
entity and video service provider to terminate the franchise provided
in writing by both parties to the commission.
(3) When a video service provider that holds a state franchise
provides the notice required pursuant to subdivision (n) to a local
jurisdiction that it intends to initiate providing video service in
all or part of that jurisdiction, a video service provider operating
under a franchise issued by a local franchising entity may elect to
obtain a state franchise to replace its locally issued franchise. The
franchise issued by the local franchising entity shall terminate and
be replaced by a state franchise when the commission issues a state
franchise for the video service provider that includes the entire
service area served by the video service provider and the video
service provider notifies the local entity that it will begin
providing video service in that area under a state franchise.
(p) Notwithstanding any rights to the contrary, an incumbent cable
operator opting into a state franchise under this section shall
continue to serve all areas as required by its local franchise
agreement existing on January 1, 2007, until that local franchise
otherwise would have expired. However, an incumbent cable operator
that is also a telephone corporation with less than 1,000,000
telephone customers in California and is providing video service in
competition with another incumbent cable operator shall not be
required to provide service beyond the area in which it is providing
video service as of January 1, 2007.
(q) (1) There is hereby adopted a state franchise fee payable as
rent or a toll for the use of the public rights-of-way by holders of
the state franchise issued pursuant to this division. The amount of
the state franchise fee shall be 5 percent of gross revenues, as
defined in subdivision (d) of Section 5860, or the percentage applied
by the local entity to the gross revenue of the incumbent cable
operator, whichever is less. If there is no incumbent cable operator
or upon the expiration of the incumbent cable operator's franchise,
the amount of the state franchise fee shall be 5 percent of gross
revenues, as defined in subdivision (d) of Section 5860, unless the
local entity adopts an ordinance setting the amount of the franchise
fee at less than 5 percent.
(2) (A) The state franchise fee shall apply equally to all video
service providers in the local entity's jurisdiction.
(B) Notwithstanding subparagraph (A), if the video service
provider is leasing access to a network owned by a local entity, the
local entity may set a franchise fee for access to the network
different from the franchise fee charged to a video service provider
for access to the rights-of-way to install its own network.

5850. (a) A state-issued franchise shall only be valid for 10 years
after the date of issuance, and the holder shall apply for a renewal
of the state franchise for an additional 10-year period if it wishes
to continue to provide video services in the area covered by the
franchise after the expiration of the franchise.
(b) Except as provided in this section, the criteria and process
described in Section 5840 shall apply to a renewal registration, and
the commission shall not impose any additional or different criteria.
(c) Renewal of a state franchise shall be consistent with federal
law and regulations.
(d) The commission shall not renew the franchise if the video
service provider is in violation of any final nonappealable court
order issued pursuant to this division.

5860. (a) The holder of a state franchise that offers video service
within the jurisdiction of the local entity shall calculate and
remit to the local entity a state franchise fee, adopted pursuant to
subdivision (q) of Section 5840, as provided in this section. The
obligation to remit the franchise fee to a local entity begins
immediately upon provision of video service within that local entity'
s jurisdiction. However, the remittance shall not be due until the
time of the first quarterly payment required under subdivision (h)
that is at least 180 days after the provision of service began. The
fee remitted to a city or city and county shall be based on gross
revenues, as defined in subdivision (d), derived from the provision
of video service within that jurisdiction. The fee remitted to a
county shall be based on gross revenues earned within the
unincorporated area of the county. No fee under this section shall
become due unless the local entity provides documentation to the
holder of the state franchise supporting the percentage paid by the
incumbent cable operator serving the area within the local entity's
jurisdiction. The fee shall be calculated as a percentage of the
holder's gross revenues, as defined in subdivision (d). The fee
remitted to the local entity pursuant to this section may be used by
the local entity for any lawful purpose.
(b) The state franchise fee shall be a percentage of the holder's
gross revenues, as defined in subdivision (d).
(c) No local entity or any other political subdivision of this
state may demand any additional fees or charges or other remuneration
of any kind from the holder of a state franchise based solely on its
status as a provider of video or cable services other than as set
forth in this division and may not demand the use of any other
calculation method or definition of gross revenues. However, nothing
in this section shall be construed to limit a local entity's ability
to impose utility user taxes and other generally applicable taxes,
fees, and charges under other applicable provisions of state law that
are applied in a nondiscriminatory and competitively neutral manner.
(d) For purposes of this section, the term "gross revenues" means
all revenue actually received by the holder of a state franchise, as
determined in accordance with generally accepted accounting
principles, that is derived from the operation of the holder's
network to provide cable or video service within the jurisdiction of
the local entity, including all of the following:
(1) All charges billed to subscribers for any and all cable
service or video service provided by the holder of a state franchise,
including all revenue related to programming provided to the
subscriber, equipment rentals, late fees, and insufficient fund fees.
(2) Franchise fees imposed on the holder of a state franchise by
this section that are passed through to, and paid by, the
subscribers.
(3) Compensation received by the holder of a state franchise that
is derived from the operation of the holder's network to provide
cable service or video service with respect to commissions that are
paid to the holder of a state franchise as compensation for promotion
or exhibition of any products or services on the holder's network,
such as a "home shopping" or similar channel, subject to paragraph
(4) of subdivision (e).
(4) A pro rata portion of all revenue derived by the holder of a
state franchise or its affiliates pursuant to compensation
arrangements for advertising derived from the operation of the holder'
s network to provide video service within the jurisdiction of the
local entity, subject to paragraph (1) of subdivision (e). The
allocation shall be based on the number of subscribers in the local
entity divided by the total number of subscribers in relation to the
relevant regional or national compensation arrangement.
(e) For purposes of this section, the term "gross revenue" set
forth in subdivision (d) does not include any of the following:
(1) Amounts not actually received, even if billed, such as bad
debt; refunds, rebates, or discounts to subscribers or other third
parties; or revenue imputed from the provision of cable services or
video services for free or at reduced rates to any person as required
or allowed by law, including, but not limited to, the provision of
these services to public institutions, public schools, governmental
agencies, or employees except that forgone revenue chosen not to be
received in exchange for trades, barters, services, or other items of
value shall be included in gross revenue.
(2) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the holder of a
state franchise to provide cable services or video services. However,
revenue received by an affiliate of the holder from the affiliate's
provision of cable or video service shall be included in gross
revenue as follows:
(A) 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
local entity.
(B) The revenue is not otherwise subject to fees to be paid to the
local entity.
(3) Revenue derived from services classified as noncable services
or nonvideo services under federal law, including, but not limited
to, revenue derived from telecommunications services and information
services, other than cable services or video services, and any other
revenues attributed by the holder of a state franchise to noncable
services or nonvideo services in accordance with Federal
Communications Commission rules, regulations, standards, or orders.
(4) Revenue paid by subscribers to "home shopping" or similar
networks directly from the sale of merchandise through any home
shopping channel offered as part of the cable services or video
services. However, commissions or other compensation paid to the
holder of a state franchise by "home shopping" or similar networks
for the promotion or exhibition of products or services shall be
included in gross revenue.
(5) Revenue from the sale of cable services or video services for
resale in which the reseller is required to collect a fee similar to
the franchise fee from the reseller's subscribers.
(6) Amounts billed to, and collected from, subscribers to recover
any tax, fee, or surcharge imposed by any governmental entity on the
holder of a state franchise, including, but not limited to, sales and
use taxes, gross receipts taxes, excise taxes, utility users taxes,
public service taxes, communication taxes, and any other fee not
imposed by this section.
(7) Revenue from the sale of capital assets or surplus equipment
not used by the purchaser to receive cable services or video services
from the seller of those assets or surplus equipment.
(8) Revenue from directory or Internet advertising revenue,
including, but not limited to, yellow pages, white pages, banner
advertisement, and electronic publishing.
(9) Revenue received as reimbursement by programmers of specific,
identifiable marketing costs incurred by the holder of a state
franchise for the introduction of new programming.
(10) Security deposits received from subscribers, excluding
security deposits applied to the outstanding balance of a subscriber'
s account and thereby taken into revenue.
(f) For the purposes of this section, in the case of a video
service that may be bundled or integrated functionally with other
services, capabilities, or applications, the state franchise fee
shall be applied only to the gross revenue, as defined in subdivision
(d), attributable to video service. Where the holder of a state
franchise or any affiliate bundles, integrates, ties, or combines
video services with nonvideo services creating a bundled package, so
that subscribers pay a single fee for more than one class of service
or receive a discount on video services, gross revenues shall be
determined based on an equal allocation of the package discount, that
is, the total price of the individual classes of service at
advertised rates compared to the package price, among all classes of
service comprising the package. The holder's offering a bundled
package shall not be deemed a promotional activity. If the holder of
a state franchise does not offer any component of the bundled package
separately, the holder of a state franchise shall declare a stated
retail value for each component based on reasonable comparable prices
for the product or service for the purpose of determining franchise
fees based on the package discount.
(g) For the purposes of determining gross revenue under this
division, a video service provider shall use the same method of
determining revenues under generally accepted accounting principals
as that which the video service provider uses in determining revenues
for the purpose of reporting to national and state regulatory
agencies.
(h) The state franchise fee shall be remitted to the applicable
local entity quarterly, within 45 days after the end of the quarter
for that calendar quarter. Each payment shall be accompanied by a
summary explaining the basis for the calculation of the state
franchise fee. If the holder does not pay the franchise fee when due,
the holder shall pay a late payment charge at a rate per year equal
to the highest prime lending rate during the period of delinquency,
plus 1 percent. If the holder has overpaid the franchise fee, it may
deduct the overpayment from its next quarterly payment.
(i) Not more than once annually, a local entity may examine the
business records of a holder of a state franchise to the extent
reasonably necessary to ensure compensation in accordance with this
section. The holder shall keep all business records reflecting any
gross revenues, even if there is a change in ownership, for at least
four years after those revenues are recognized by the holder on its
books and records. If the examination discloses that the holder has
underpaid franchise fees by more than 5 percent during the
examination period, the holder shall pay all of the reasonable and
actual costs of the examination. If the examination discloses that
the holder has not underpaid franchise fees, the local entity shall
pay all of the reasonable and actual costs of the examination. In
every other instance, each party shall bear its own costs of the
examination. Any claims by a local entity that compensation is not in
accordance with subdivision (a), and any claims for refunds or other
corrections to the remittance of the holder of a state franchise,
shall be made within three years and 45 days of the end of the
quarter for which compensation is remitted, or three years from the
date of the remittance, whichever is later. Either a local entity or
the holder may, in the event of a dispute concerning compensation
under this section, bring an action in a court of competent
jurisdiction.
(j) The holder of a state franchise may identify and collect the
amount of the state franchise fee as a separate line item on the
regular bill of each subscriber.

5870. (a) The holder of a state franchise shall designate a
sufficient amount of capacity on its network to allow the provision
of the same number of public, educational, and governmental access
(PEG) channels, as are activated and provided by the incumbent cable
operator that has simultaneously activated and provided the greatest
number of PEG channels within the local entity under the terms of any
franchise in effect in the local entity as of January 1, 2007. For
the purposes of this section, a PEG channel is deemed activated if it
is being utilized for PEG programming within the local entity's
jurisdiction for at least eight hours per day. The holder shall have
three months from the date the local entity requests the PEG channels
to designate the capacity. However, the three-month period shall be
tolled by any period during which the designation or provision of PEG
channel capacity is technically infeasible, including any failure or
delay of the incumbent cable operator to make adequate
interconnection available, as required by this section.
(b) The PEG channels shall be for the exclusive use of the local
entity or its designee to provide public, educational, and
governmental channels. The PEG channels shall be used only for
noncommercial purposes. However, advertising, underwriting, or
sponsorship recognition may be carried on the channels for the
purpose of funding PEG-related activities. The PEG channels shall all
be carried on the basic service tier. To the extent feasible, the
PEG channels shall not be separated numerically from other channels
carried on the basic service tier and the channel numbers for the PEG
channels shall be the same channel numbers used by the incumbent
cable operator unless prohibited by federal law. After the initial
designation of PEG channel numbers, the channel numbers shall not be
changed without the agreement of the local entity unless the change
is required by federal law. Each channel shall be capable of carrying
a National Television System Committee (NTSC) television signal.
(c) (1) If less than three PEG channels are activated and provided
within the local entity as of January 1, 2007, a local entity whose
jurisdiction lies within the authorized service area of the holder of
a state franchise may initially request the holder to designate not
more than a total of three PEG channels.
(2) The holder shall have three months from the date of the
request to designate the capacity. However, the three-month period
shall be tolled by any period during which the designation or
provision of PEG channel capacity is technically infeasible,
including any failure or delay of the incumbent cable operator to
make adequate interconnection available, as required by this section.
(d) (1) The holder shall provide an additional PEG channel when
the nonduplicated locally produced video programming televised on a
given channel exceeds 56 hours per week as measured on a quarterly
basis. The additional channel shall not be used for any purpose other
than to continue programming additional government, education, or
public access television.
(2) For the purposes of this section, "locally produced video
programming" means programming produced or provided by any local
resident, the local entity, or any local public or private agency
that provides services to residents of the franchise area; or any
transmission of a meeting or proceeding of any local, state, or
federal governmental entity.
(e) Any PEG channel provided pursuant to this section that is not
utilized by the local entity for at least eight hours per day as
measured on a quarterly basis may no longer be made available to the
local entity, and may be programmed at the holder's discretion. At
the time that the local entity can certify to the holder a schedule
for at least eight hours of daily programming, the holder of the
state franchise shall restore the channel or channels for the use of
the local entity.
(f) The content to be provided over the PEG channel capacity
provided pursuant to this section shall be the responsibility of the
local entity or its designee receiving the benefit of that capacity,
and the holder of a state franchise bears only the responsibility for
the transmission of that content, subject to technological
restraints.
(g) (1) The local entity shall ensure that all transmissions,
content, or programming to be transmitted by a holder of a state
franchise are provided or submitted in a manner or form that is
compatible with the holder's network, if the local entity produces or
maintains the PEG programming in that manner or form. If the local
entity does not produce or maintain PEG programming in that manner or
form, then the local entity may submit or provide PEG programming in
a manner or form that is standard in the industry. The holder shall
be responsible for any changes in the form of the transmission
necessary to make it compatible with the technology or protocol
utilized by the holder to deliver services. If the holder is required
to change the form of the transmission, the local entity shall
permit the holder to do so in a manner that is most economical to the
holder.
(2) The provision of those transmissions, content, or programming
to the holder of a state franchise shall constitute authorization for
the holder to carry those transmissions, content, or programming.
The holder may carry the transmission, content, or programming
outside of the local entity's jurisdiction if the holder agrees to
pay the local entity or its designee any incremental licensing costs
incurred by the local entity or its designee associated with that
transmission. A local entity shall not enter into a licensing
agreement that imposes higher proportional costs for transmission to
subscribers outside the local entity's jurisdiction.
(3) The PEG signal shall be receivable by all subscribers, whether
they receive digital or analog service, or a combination thereof,
without the need for any equipment other than the equipment necessary
to receive the lowest cost tier of service. The PEG access capacity
provided shall be of similar quality and functionality to that
offered by commercial channels on the lowest cost tier of service
unless the signal is provided to the holder at a lower quality or
with less functionality.
(h) Where technically feasible, the holder of a state franchise
and an incumbent cable operator shall negotiate in good faith to
interconnect their networks for the purpose of providing PEG
programming. Interconnection may be accomplished by direct cable,
microwave link, satellite, or other reasonable method of connection.
Holders of a state franchise and incumbent cable operators shall
provide interconnection of the PEG channels on reasonable terms and
conditions and may not withhold the interconnection. If a holder of a
state franchise and an incumbent cable operator cannot reach a
mutually acceptable interconnection agreement, the local entity may
require the incumbent cable operator to allow the holder to
interconnect its network with the incumbent's network at a
technically feasible point on the holder's network as identified by
the holder. If no technically feasible point for interconnection is
available, the holder of a state franchise shall make an
interconnection available to the channel originator and shall provide
the facilities necessary for the interconnection. The cost of any
interconnection shall be borne by the holder requesting the
interconnection unless otherwise agreed to by the parties.
(i) A holder of a state franchise shall not be required to
interconnect for, or otherwise to transmit, PEG content that is
branded with the logo, name, or other identifying marks of another
cable operator or video service provider. For purposes of this
section, PEG content is not branded if it includes only production
credits or other similar information displayed at the conclusion of a
program. The local entity may require a cable operator or video
service provider to remove its logo, name, or other identifying marks
from PEG content that is to be made available through
interconnection to another provider of PEG capacity.
(j) In addition to any provision for the PEG channels required
under subdivisions (a) to (i), inclusive, the holder shall reserve,
designate, and, upon request, activate a channel for carriage of
state public affairs programming administered by the state.
(k) All obligations to provide and support PEG channel facilities
and institutional networks and to provide cable services to community
buildings contained in a locally issued franchise existing on
December 31, 2006, shall continue until the local franchise expires,
until the term of the franchise would have expired if it had not been
terminated pursuant to subdivision (o) of Section 5840, or until
January 1, 2009, whichever is later.
(l) After January 1, 2007, and until the expiration of the
incumbent cable operator's franchise, if the incumbent cable operator
has existing unsatisfied obligations under the franchise to remit to
the local entity any cash payments for the ongoing costs of public,
educational, and government access channel facilities or
institutional networks, the local entity shall divide those cash
payments among all cable or video providers as provided in this
section. The fee shall be the holder's pro rata per subscriber share
of the cash payment required to be paid by the incumbent cable
operator to the local entity for the costs of PEG channel facilities.
All video service providers and the incumbent cable operator shall
be subject to the same requirements for recurring payments for the
support of PEG channel facilities and institutional networks, whether
expressed as a percentage of gross revenue or as an amount per
subscriber, per month, or otherwise.
(m) In determining the fee described in subdivision (l) on a pro
rata per subscriber basis, all cable and video service providers
shall report, for the period in question, to the local entity the
total number of subscribers served within the local entity's
jurisdiction, which shall be treated as confidential by the local
entity and shall be used only to derive the per subscriber fee
required by this section. The local entity shall then determine the
payment due from each provider based on a per subscriber basis for
the period by multiplying the unsatisfied cash payments for the
ongoing capital costs of PEG channel facilities by a ratio of the
reported subscribers of each provider to the total subscribers within
the local entity as of the end of the period. The local entity shall
notify the respective providers, in writing, of the resulting pro
rata amount. After the notice, any fees required by this section
shall be remitted to the applicable local entity quarterly, within 45
days after the end of the quarter for the preceding calendar
quarter, and may only be used by the local entity as authorized under
federal law.
(n) A local entity may, by ordinance, establish a fee to support
PEG channel facilities consistent with federal law that would become
effective subsequent to the expiration of any fee imposed pursuant to
subdivision (l). If no such fee exists, the local entity may
establish the fee at any time. The fee shall not exceed 1 percent of
the holder's gross revenues, as defined in Section 5860.
Notwithstanding this limitation, if, on December 31, 2006, a local
entity is imposing a separate fee to support PEG channel facilities
that is in excess of 1 percent, that entity may, by ordinance,
establish a fee no greater than that separate fee, and in no event
greater than 3 percent, to support PEG activities. The ordinance
shall expire, and may be reauthorized, upon the expiration of the
state franchise.
(o) The holder of a state franchise may recover the amount of any
fee remitted to a local entity under this section by billing a
recovery fee as a separate line item on the regular bill of each
subscriber.
(p) A court of competent jurisdiction shall have exclusive
jurisdiction to enforce any requirement under this section or resolve
any dispute regarding the requirements set forth in this section,
and no provider may be barred from the provision of service or be
required to terminate service as a result of that dispute or
enforcement action.

5880. Holders of state franchises shall comply with the Emergency
Alert System requirements of the Federal Communications Commission in
order that emergency messages may be distributed over the holder's
network. Any provision in a locally issued franchise authorizing
local entities to provide local emergency notifications shall remain
in effect, and shall apply to all holders of a state-issued franchise
in the same local area, for the duration of the locally issued
franchise, until the term of the franchise would have expired were
the franchise not terminated pursuant to subdivision (o) of Section
5840, or until January 1, 2009, whichever is later.

5885. (a) The local entity shall allow the holder of a state
franchise under this division to install, construct, and maintain a
network within public rights-of-way under the same time, place, and
manner as the provisions governing telephone corporations under
applicable state and federal law, including, but not limited to, the
provisions of Section 7901.1.
(b) Nothing in this division shall be construed to change existing
law regarding the permitting process or compliance with the
California Environmental Quality Act (Division 13 (commencing with
Section 21000) of the Public Resources Code) for projects by a holder
of a state franchise.
(c) (1) For purposes of this section, an "encroachment permit"
means any permit issued by a local entity relating to construction or
operation of facilities pursuant to this division.
(2) A local entity shall either approve or deny an application
from a holder of a state franchise for an encroachment permit within
60 days of receiving a completed application. An application for an
encroachment permit is complete when the applicant has complied with
all statutory requirements, including the California Environmental
Quality Act (Division 13 (commencing with Section 21000) of the
Public Resources Code).
(3) If the local entity denies an application for an encroachment
permit, it shall, at the time of notifying the applicant of the
denial, furnish to the applicant a detailed explanation of the reason
for the denial.
(4) The local entity shall adopt regulations prescribing
procedures for an applicant to appeal the denial of an encroachment
permit application issued by a department of the local entity to the
governing body of the local entity.
(5) Nothing in this section precludes an applicant and a local
entity from mutually agreeing to an extension of any time limit
provided by this section.
(d) A local entity may not enforce against the holder of a state
franchise any rule, regulation, or ordinance that purports to allow
the local entity to purchase or force the sale of a network.

5890. (a) A cable operator or video service provider that has been
granted a state franchise under this division may not discriminate
against or deny access to service to any group of potential
residential subscribers because of the income of the residents in the
local area in which the group resides.
(b) Holders or their affiliates with more than 1,000,000 telephone
customers in California satisfy subdivision (a) if all of the
following conditions are met:
(1) Within three years after it begins providing video service
under this division, at least 25 percent of households with access to
the holder's video service are low-income households.
(2) Within five years after it begins providing video service
under this division and continuing thereafter, at least 30 percent of
the households with access to the holder's video service are
low-income households.
(3) Holders provide service to community centers in underserved
areas, as determined by the holder, without charge, at a ratio of one
community center for every 10,000 video subscribers. The holder
shall not be required to take its facilities beyond the appropriate
demarcation point outside the community center building or perform
any inside wiring. The community center may not receive service from
more than one state franchise holder at a time under this section.
For purposes of this section, "community center" means any facility
operated by an organization that has qualified for the California
Teleconnect Fund, as established in Section 280 and that will make
the holder's service available to the community.
(c) Holders or their affiliates with fewer than 1,000,000
telephone customers in California satisfy this section if they offer
video service to all customers within their telephone service area
within a reasonable time, as determined by the commission. However,
the commission shall not require the holder to offer video service if
the cost to provide video service is substantially above the average
cost of providing video service in that telephone service area.
(d) When a holder provides video service outside of its telephone
service area, is not a telephone corporation, or offers video service
in an area where no other video service is being offered, other than
direct-to-home satellite service, there is a rebuttable presumption
that discrimination in providing service has not occurred within
those areas. The commission may review the holder's proposed video
service area to ensure that the area is not drawn in a discriminatory
manner.
(e) For holders or their affiliates with more than 1,000,000
telephone customers in California, either of the following shall
apply:
(1) If the holder is predominantly deploying fiber optic
facilities to the customer's premise, the holder shall provide access
to its video service to a number of households at least equal to 25
percent of the customer households in the holder's telephone service
area within two years after it begins providing video service under
this division, and to a number at least equal to 40 percent of those
households within five years.
(2) If the holder is not predominantly deploying fiber optic
facilities to the customer's premises, the holder shall provide
access to its video service to a number of households at least equal
to 35 percent of the households in the holder's telephone service
area within three years after it begins providing video service under
this division, and to a number at least equal to 50 percent of these
households within five years.
(3) A holder shall not be required to meet the 40-percent
requirement in paragraph (1) or the 50-percent requirement in
paragraph (2) until two years after at least 30 percent of the
households with access to the holder's video service subscribe to it
for six consecutive months.
(4) If 30 percent of the households with access to the holder's
video service have not subscribed to the holder's video service for
six consecutive months within three years after it begins providing
video service, the holder may submit validating documentation to the
commission. If the commission finds that the documentation validates
the holder's claim, then the commission shall permit a delay in
meeting the 40-percent requirement in paragraph (1) or the 50-percent
requirement in paragraph (2) until the time that the holder does
provide service to 30 percent of the households for six consecutive
months.
(f) (1) After two years of providing service under this division,
the holder may apply to the state franchising authority for an
extension to meet the requirements of subdivision (b), (c), or (e).
Notice of this application shall also be provided to the telephone
customers of the holder, the Secretary of the Senate, and the Chief
Clerk of the Assembly.
(2) Upon application, the franchising authority shall hold public
hearings in the telephone service area of the applicant.
(3) In reviewing the failure to satisfy the obligations contained
in subdivision (b), (c), or (e), the franchising authority shall
consider factors that are beyond the control of the holder,
including, but not limited to, the following:
(A) The ability of the holder to obtain access to rights-of-way
under reasonable terms and conditions.
(B) The degree to which developments or buildings are not subject
to competition because of existing exclusive arrangements.
(C) The degree to which developments or buildings are inaccessible
using reasonable technical solutions under commercially reasonable
terms and conditions.
(D) Natural disasters.
(4) The franchising authority may grant the extension only if the
holder has made substantial and continuous effort to meet the
requirements of subdivision (b), (c), or (e). If an extension is
granted the franchising authority shall establish a new compliance
deadline.
(g) Local governments may bring complaints to the state
franchising authority that a holder is not offering video service as
required by this section, or the state franchising authority may open
an investigation on its own motion. The state franchising authority
shall hold public hearings before issuing a decision. The commission
may suspend or revoke the franchise if the holder fails to comply
with the provisions of this division.
(h) If the state franchising authority finds that the holder is in
violation of this section, it may, in addition to any other remedies
provided by law, impose a fine not to exceed 1 percent of the holder'
s total monthly gross revenue received from provision of video
service in the state each month from the date of the decision until
the date that compliance is achieved.
(i) If a court finds that the holder of the state franchise is in
violation of this section, the court may immediately terminate the
holder's state franchise, and the court shall, in addition to any
other remedies provided by law, impose a fine not to exceed 1 percent
of the holder's total gross revenue of its entire cable and service
footprint in the state in the full calendar month immediately prior
to the decision.
(j) As used in this section, the following definitions shall
apply:
(1) "Access" means that the holder is capable of providing video
service at the household address using any technology, other than
direct-to-home satellite service, providing two-way broadband
Internet capability and video programming, content, and
functionality, regardless of whether any customer has ordered service
or whether the owner or landlord or other responsible person has
granted access to the household. If more than one technology is
utilized, the technologies shall provide similar two-way broadband
Internet accessibility and similar video programming.
(2) "Customer's household" means those residential households
located within the holder's existing telephone service area that are
customers of the service by which that telephone service area is
defined.
(3) "Household" means, consistent with the United States Census
Bureau, a house, an apartment, a mobilehome, a group of rooms, or a
single room that is intended for occupancy as separate living
quarters. Separate living quarters are those in which the occupants
live and eat separately from any other persons in the building and
which have direct access from the outside of the building or through
a common hall.
(4) "Low-income household" means those residential households
located within the holder's existing telephone service area where the
average annual household income is less than thirty-five thousand
dollars ($35,000) based on the United States Census Bureau estimates
adjusted annually to reflect rates of change and distribution through
January 1, 2007.
(k) Nothing in this section shall be construed to require a holder
to provide video service outside its wireline footprint or to match
the existing service area of any cable operator.

5900. (a) The holder of a state franchise shall comply with the
provisions of Sections 53055, 53055.1, 53055.2, and 53088.2 of the
Government Code, and any other customer service standards pertaining
to the provision of video service established by federal law or
regulation or adopted by subsequent enactment of the Legislature. All
customer service and consumer protection standards under this
section shall be interpreted and applied to accommodate newer or
different technologies while meeting or exceeding the goals of the
standards.
(b) The holder of a state franchise shall comply with provisions
of Section 637.5 of the Penal Code and the privacy standards
contained in Section 551 et seq. of Title 47 of the United States
Code.
(c) The local entity shall enforce all of the customer service and
protection standards of this section with respect to complaints
received from residents within the local entity's jurisdiction, but
it may not adopt or seek to enforce any additional or different
customer service or other performance standards under Section 53055.3
or subdivision (q), (r), or (s) of Section 53088.2 of the Government
Code, or any other authority or provision of law.
(d) The local entity shall, by ordinance or resolution, provide a
schedule of penalties for any material breach by a holder of a state
franchise of this section. No monetary penalties shall be assessed
for a material breach if it is out of the reasonable control of the
holder. Further, no monetary penalties may be imposed prior to
January 1, 2007. Any schedule of monetary penalties adopted pursuant
to this section shall in no event exceed five hundred dollars ($500)
for each day of each material breach, not to exceed one thousand five
hundred dollars ($1,500) for each occurrence of a material breach.
However, if a material breach of this section has occurred, and the
local entity has provided notice and a fine or penalty has been
assessed, and if a subsequent material breach of the same nature
occurs within 12 months, the penalties may be increased by the local
entity to a maximum of one thousand dollars ($1,000) for each day of
each material breach, not to exceed three thousand dollars ($3,000)
for each occurrence of the material breach. If a third or further
material breach of the same nature occurs within those same 12
months, and the local entity has provided notice and a fine or
penalty has been assessed, the penalties may be increased to a
maximum of two thousand five hundred dollars ($2,500) for each day of
each material breach, not to exceed seven thousand five hundred
dollars ($7,500) for each occurrence of the material breach. With
respect to video providers subject to a franchise or license, any
monetary penalties assessed under this section shall be reduced
dollar-for-dollar to the extent any liquidated damage or penalty
provision of a current cable television ordinance, franchise
contract, or license agreement imposes a monetary obligation upon a
video provider for the same customer service failures, and no other
monetary damages may be assessed.
(e) The local entity shall give the video service provider written
notice of any alleged material breach of the customer service
standards of this division and allow the video provider at least 30
days from receipt of the notice to remedy the specified material
breach.
(f) A material breach for the purposes of assessing penalties
shall be deemed to have occurred for each day within the jurisdiction
of each local entity, following the expiration of the period
specified in subdivision (e), that any material breach has not been
remedied by the video service provider, irrespective of the number of
customers or subscribers affected.
(g) Any penalty assessed pursuant to this section shall be
remitted to the local entity, which shall submit one-half of the
penalty to the Digital Divide Account established in Section 280.5.
(h) Any interested person may seek judicial review of a decision
of the local entity in a court of appropriate jurisdiction. For this
purpose, a court of law shall conduct a de novo review of any issues
presented.
(i) This section shall not preclude a party affected by this
section from utilizing any judicial remedy available to that party
without regard to this section. Actions taken by a local legislative
body, including a local franchising entity, pursuant to this section
shall not be binding upon a court of law. For this purpose, a court
of law shall conduct de novo review of any issues presented.
(j) For purposes of this section, "material breach" means any
substantial and repeated failure of a video service provider to
comply with service quality and other standards specified in
subdivision (a).
(k) The Division of Ratepayer Advocates shall have authority to
advocate on behalf of video subscribers regarding renewal of a
state-issued franchise and enforcement of this section, and Sections
5890 and 5950. For this purpose, the division shall have access to
any information in the possession of the commission subject to all
restrictions on disclosure of that information that are applicable to
the commission.

5910. (a) The holder of a state franchise shall perform background
checks of applicants for employment, according to current business
practices.
(b) A background check equivalent to that performed by the holder
shall also be conducted on all of the following:
(1) Persons hired by a holder under a personal service contract.
(2) Independent contractors and their employees.
(3) Vendors and their employees.
(c) Independent contractors and vendors shall certify that they
have obtained the background checks required pursuant to subdivision
(b), and shall make the background checks available to the holder
upon request.
(d) Except as otherwise provided by contract, the holder of a
state franchise shall not be responsible for administering the
background checks and shall not assume the costs of the background
checks of individuals who are not applicants for employment of the
holder.
(e) (1) Subdivision (a) only applies to applicants for employment
for positions that would allow the applicant to have direct contact
with or access to the holder's network, central office, or su