Newest Anti-Muni State Laws List (as of March 31, 2005).

PROPOSED STATE BARRIERS TO PUBLIC ENTRY (As of March 31, 2005)

Colorado - SB 05-152 (as amended)

As originally proposed, SB 05-152 would have prohibited municipalities from providing telecommunications services, cable services, or advanced services (Internet access with capacity of at least 144 Kb/s in both directions), directly or indirectly, at wholesale or retail, unless the municipalities met various onerous requirements. A municipality intending to provide such services would have been required to hold a preliminary public hearing to inform the public of its intent and would also have had to obtain a majority vote in a referendum on its proposal. The original bill also prohibited municipalities from cross-subsidizing covered services and facilities in any way; required municipalities to secure and pay for bonds used to finance telecommunications, cable, and advanced-service facilities from the revenues of each of these services, taken separately; subjected municipalities to all federal, state and local requirements that apply to private entities; required municipalities to set rates high enough to recover their actual direct and direct costs, plus imputed fees, taxes and other charges that similarly-situated private entities would pay; and removed municipal eminent domain authority and antitrust immunity. The amended bill would remove the cross-subsidization, revenue-bond and price-fixing restrictions. It would also give unserved municipalities the right to invoke a Pennsylvania-like first-refusal process, and it would grandfather local governments that have “entered into an agreement or otherwise taken any substantial action” prior to the effective date of the act.

Florida – SB 1714 and HB 1325

SB 1714 and HB 1325 would permit municipalities that were providing communications or information services of any kind on May 1, 2005, to continue to do so, but they could not extend their service areas, add new subscribers, or add new services. With regard to services omitted by the private sector, municipalities would have to send letters to all non-governmental providers in the area and then wait 240 days to see whether at least one provider stepped forward to provide the service. If none did, the municipality would have to obtain a detailed feasibility study, hold a hearing, and conduct a referendum before providing the service.

Illinois – SB 499 Amendment 1 (Consideration delayed by sponsor)

SB 499 Amendment 1 would add a new subsection to the Illinois statute that governs the Illinois Commerce Commission’s authority to issue certificates of service authority, 220 ILCS 5/13-401. The new provision would read as follows “(c) No political subdivision of this State shall provide or offer for sale, either to the public or to a telecommunications provider, a telecommunications service or telecommunications facility used to provide a telecommunications service for which a Certificate of Service Authority is required pursuant to this Section.” Industry supporters of this bill refer to it as a “place holder” while discussions among stakeholders within the state occur.

Indiana - HB 1148 [Died in committee 2/16/05]

HB 1148 would bar municipalities that are providing communications services on June 30, 2005, from adding new services or extending services to new areas. After that date, the bill would prohibit any municipality from providing any telecommunications service, any cable service, any broadband service, any information service, any application such as Voice over Internet Protocol, or any communications infrastructure or facility, if even a single private-sector entity was already providing the service in question, or claimed that it intended to do so within nine months of the time that the municipality wanted to do so. The bill makes no provision for fundamental differences attributable to data speeds (e.g., 200 kilobits per second versus 100 Megabits per second); symmetry (one direction versus both directions); mobility (wireless versus fixed); price; affordability to particular groups; signal quality; content (e.g., number of channels, categories of programming, local versus regional or national subject matter); quality of customer service and support; or other factors that a community may consider important. The bill also establishes cumbersome administrative procedures for a municipality to use in determining whether a private-sector provider is providing, or intends to provide, on or more of the services in question. The bill also provides that a municipal project could not go forward until any litigation challenging the municipality’s decision to provide a service or facility had run its course (which could take years).

Iowa SSB 1136 and HSB Bill 182

These identical study bills (which means that they will be fine-tuned in committee and may or may not ultimately be introduced in final form) would add significant restrictions to the feasibility study process; would explicitly eliminate voter-approved general revenue bonds and restrict project funding to revenue bonds; would require a municipality to obtain a super-majority vote of 60 percent in a referendum before providing communications services or leasing communications facilities; would require the municipality to repeat the referendum process every time it wanted to expand the project; and would prohibit municipalities from using funds from other city sources to pay start-up costs of the municipal project and arguably even from paying for services provided to other agencies from a telecommunications project. HSB 205 HSB 205 would remove the municipal exemption from property taxes for property used to provide cable service.

Nebraska LB 157

LB 157 would essentially reinstate the Nebraska barrier to municipal entry that the Nebraska Supreme Court struck down based on its broad interpretation of “any entity” in Section 253(a) of the Telecommunications Act. The Nebraska court’s interpretation turned out to be inconsistent with the United States Supreme Court’s ruling in Nixon v. Missouri Municipal League that “any entity” applies only to private entities. LB 157 would prohibit municipalities from providing telecommunications services and severely restrict their ability to lease dark fiber. LB 645 LB 645 would prohibit municipalities from providing communications and information services of all kinds. It would continue to allow municipalities to sell dark fiber or lease dark fiber at rates no lower than the prevailing private-sector rates. If a lessor received revenues in excess of costs, one half of the excess must be paid to the Nebraska Internet Enhancement Fund. LB 136 LB 136 would allow public power suppliers to provide wholesale, and arguably retail, broadband over powerline (BPL) services. LB 722/AM 442 LB 722 would have allowed public power suppliers to provide only wholesale BPL services. The bill has been amended to provide for the establishment of a high-level, broad-based task force to study, for a two-year period, the competitive, level-playing-field and other implications of public BPL services. The amendment would also establish a moratorium for that period on public provision of BPL services.

Ohio – HB 591 [Now lapsed, and not yet introduced new session, but still under discussion]

HB 591 would extend to municipal providers of telecommunications service, as defined in federal law, various requirements previously in effect for municipal providers of cable service. In addition, the bill would add a highly vague prohibition on cross-subsidization.

Oregon - HB 2445 (Hearing held in committee. No further action scheduled at this time)

HB 2445 is essentially the same bill that died in committee in 2003 (HB 2443). HB 2445 would require municipalities to publish a cost-benefit analysis done over an unrealistic three year time frame and then obtain a majority vote in a referendum before providing any communications services or facilities. The language is vague enough to make the election mandate apply to any new product or service on an existing system or any upgrade to an existing system. The bill creates new statutory references to existing open records and open meetings requirements that do not apply to private-sector providers.

Tennessee – HB 1403 and SB 1760

After June 30, 2005, HB 1403 and SB 1760 would prohibit municipalities from obtaining approval to provide communications services, as authorized under current Tennessee law, until such time as the legislature receives and considers the state comptroller’s audit of existing municipal providers and approves the continued authorization of such services. Currently, municipal utilities in Tennessee are authorized to provide cable and Internet services after receiving business plan approval from the State Comptroller. The bills seek to establish a moratorium on the State’s approval of new municipal providers as of June 30, 2005.

Texas - HB 789 (as amended) (dropped from the bill in committee)

HB 789, which would significantly rewrite Texas telecommunications law, contained provisions that would extend and broaden the existing Texas barrier to municipal entry. Under the bill, as amended on March 7, 2005, municipalities and municipal electric utilities would have been prohibited from providing, directly or indirectly, alone or in partnership with other service providers, either “telecommunications” or “information” services as those terms are defined under federal law. The amended bill contained a number of exceptions, including (but not limited to) the following: municipal providers of video or broadband services on January 1, 2005, would be grandfathered; municipalities could provide various governmental functions or services via the Internet; municipal electric utilities could partner with private-sector retailers to provide broadband over power lines; and municipalities would not be limited from engaging in economic development activities that are expressly authorized by statute. The bill would also have allowed only a limited number of small municipal electric utilities, and not all municipalities, to lease dark fiber under certain conditions. The House Committee on Regulated Industries dropped the restrictions from HB 789 on March 17, 2005. Action on the restrictions may now move to the floor of the House.

Virginia - HB 2395 (Died in committee 2/28/05)

Under the Virginia Wireless Service Authority Act, Virginia localities could establish wireless authorities to provide any communications service that was not generally available in functionally equivalent form from at least three private-sector providers in the relevant geographic area. The Act left the determination of whether these conditions were met to the localities in question, subject to certain required, but streamlined, procedures. Also, the Act did not require localities that established wireless authorities to comply with the Virginia barrier to entry that prohibits new public providers of communications services from charging prices lower than those of incumbent providers of functionally equivalent services. (This provision is arguably unenforceable, as it would require localities to engage in price-fixing practices that would be per se violations of the Sherman Act if committed by a private entity.) HB 2395 would subject localities that were not providing wireless services throughout their jurisdictions on July 1, 2005, to substantially more time-consuming, cumbersome and costly procedures before the State Corporation Commission. The bill would also require all localities, including those that were providing wireless services on July 1, 2005, to comply with Virginia’s price-fixing provision for functionally equivalent services.

West Virginia – SB 740

On March 23, 2005, a bill entitled The Electronic Telecommunication Open Infrastructure Act ("ETOPIA") originated in the Senate Committee on Transportation and Infrastructure. As introduced, the bill required a technology infrastructure needs survey to be conducted of all public bodies within the state, set up an Innovation Center within the West Virginia Development Office, and authorized local governments to provide, and issue revenue bonds, for the acquisition, construction and provision of technology infrastructure including: cable service, telecommunications service, information service, advanced services, broadband service, and internet protocol enabled services. Following the bill’s introduction, Verizon proposed amendments that would have eliminated the authority of local governments to provide any technology infrastructure services other than through partnerships with private industry, and then only after there had been a determination by the Public Service Commission that private industry would not provide such services either currently or in the foreseeable future. The bill was later amended to eliminate the involvement of the Public Service Commission. On March 29, the bill was amended further. Currently, the substitute for SB 740, as passed by the Senate, would require a technology infrastructure survey and establish the Innovation Center in the Development Office, but it would not impose limitations on local governments in the provision of infrastructure technology. The bill has been referred to the Industry, Labor, and Economic Development Committee and then to Finance. The 2005 legislative session ends on April 9, 2005 at midnight.