S.F. 2113 Section 1. Section 476.55, subsection 2, Code 2009, is 1 amended by striking the subsection. 2 Sec. 2. Section 477A.2, subsection 4, Code 2009, is amended 3 to read as follows: 4 4. A competitive cable service provider or competitive 5 video service provider shall provide at least thirty days’ 6 notice to each municipality with authority to grant a franchise 7 in the service area, and to the incumbent cable provider, in 8 which the competitive cable service provider or competitive 9 video service provider is granted authority to provide service 10 under a certificate of franchise authority that the competitive 11 cable service provider or competitive video service provider 12 will offer cable services or video services within the 13 jurisdiction of the municipality, and shall not provide service 14 without having provided such thirty days’ notice. A copy of 15 the notice shall be filed with the board on the date that the 16 notice is provided. 17 Sec. 3. Section 477A.3, Code 2009, is amended to read as 18 follows: 19 477A.3 Application requirements —— certificate of franchise 20 authority. 21 1. The board shall issue a certificate of franchise 22 authority under this chapter within fifteen thirty business 23 days after receipt of a completed application and affidavit 24 submitted by the applicant and signed by an officer or general 25 partner of the applicant. The application and affidavit shall 26 provide all of the following information: 27 a. That the applicant has filed or will timely file with 28 the federal communications commission all forms required by 29 the commission in advance of offering cable service or video 30 service in this state. 31 b. That the applicant agrees to comply with all applicable 32 federal and state statutes, regulations, and rules. 33 c. That the applicant agrees to comply with all applicable 34 state laws and nondiscriminatory municipal ordinances and 35 -1- LSB 5662XS (3) 83 rn/rj 1/ 12

S.F. 2113 regulations regarding the use and occupation of a public 1 right-of-way in the delivery of the cable service or video 2 service, to the extent consistent with this chapter, including 3 the police powers of the municipalities in which the service 4 is delivered. 5 d. A description of the service area to be served and the 6 municipalities to be served by the applicant which may include 7 certain designations of unincorporated areas. This description 8 shall be updated by the applicant prior to the expansion of 9 cable service or video service to a previously undesignated 10 service area and, upon such expansion, notice shall be given to 11 the board of the service area to be served by the applicant. 12 e. The address of the applicant’s principal place of 13 business and the names of the applicant’s principal executive 14 officers. 15 f. Documentation that the applicant possesses sufficient 16 managerial, technical, and financial capability to provide the 17 cable service or video service proposed in the service area. 18 g. Copies of advertisements or news releases announcing the 19 applicant’s intent to provide cable service or video service 20 in the service area intended for release if the certificate of 21 franchise authority is granted. 22 h. A date certain by which the cable system or video service 23 network shall commence operation. 24 2. The failure of the board to notify the applicant 25 of the completeness of the applicant’s affidavit or 26 issue a certificate of franchise authority before the 27 fifteenth thirtieth business day after receipt of a completed 28 affidavit shall constitute issuance of the certificate of 29 franchise authority applied for by the applicant without 30 further action by the applicant. 31 3. The certificate of franchise authority issued by the 32 board shall contain all of the following: 33 a. A grant of authority to provide cable service or video 34 service in the service area designated in the application. 35 -2- LSB 5662XS (3) 83 rn/rj 2/ 12

S.F. 2113 b. A grant of authority to use and occupy the public 1 right-of-way in the delivery of cable service or video service, 2 subject to the laws of this state, including the police powers 3 of the municipalities in which the service is delivered. 4 c. A statement that the grant of authority provided by the 5 certificate is subject to the lawful operation of the cable 6 service or video service by the applicant or the applicant’s 7 successor. 8 d. A statement that the franchise is for a term of ten 9 years, is renewable under the terms of this section, and is 10 nonexclusive. 11 e. Such other conditions, restrictions, or requirements as 12 deemed necessary or appropriate by the board after review of 13 the application and affidavit submitted pursuant to subsection 14 1. 15 4. A certificate of franchise authority issued by the 16 board is fully transferable to any successor of the applicant 17 to which the certificate was initially issued. A notice of 18 transfer shall be filed by the holder of the certificate 19 of franchise authority with the board and the affected 20 municipality and shall be effective fourteen business days 21 after submission. The notice of transfer shall include the 22 address of the successor’s principal place of business and 23 the names of the successor’s principal executive officers. 24 The successor shall assume all regulatory rights and 25 responsibilities of the holder of the certificate. Neither 26 the board nor an affected municipality shall have authority to 27 review or require approval of such transfer. 28 5. The certificate of franchise authority issued by the 29 board may be terminated by a person providing cable service or 30 video service by submitting written notice to the board and 31 any affected municipality. Neither the board nor an affected 32 municipality shall have authority to review or require approval 33 of such termination. 34 6. a. A holder of a certificate of franchise authority 35 -3- LSB 5662XS (3) 83 rn/rj 3/ 12

S.F. 2113 shall provide status reports to the board every three months 1 regarding progress toward completion of construction and 2 commencement of operation of the cable system or video service 3 network. The status reports shall be required during the 4 period beginning with issuance of the certificate of franchise 5 authority and ending on the date that construction is completed 6 and operation commences. 7 b. If a holder of a certificate of franchise authority fails 8 to complete construction and commence operation of a cable 9 system or video service network by the date specified in the 10 application and affidavit submitted pursuant to subsection 11 1, or two years from the date of issuance for a certificate 12 of franchise authority issued prior to the effective date of 13 this Act, or if any conditions, restrictions, or requirements 14 included in the certificate by the board are not adhered to, 15 the board may revoke the certificate of franchise authority, 16 and the franchise agreement in effect between an incumbent 17 cable provider wishing to reinstate the franchise agreement 18 and the municipality prior to issuance of the certificate of 19 franchise authority shall be reinstated. 20 6. 7. a. The board shall only have the authorization to 21 issue a certificate of franchise authority as provided in this 22 section, and shall not impose any additional requirements or 23 regulations upon an applicant. 24 b. The board may assess a holder of a certificate of 25 franchise authority for the costs incurred by the board during 26 review of the application and affidavit submitted pursuant to 27 subsection 1, and any additional costs incurred resulting from 28 a contested case proceeding requested pursuant to chapter 17A. 29 Sec. 4. Section 477A.8, subsection 2, Code 2009, is amended 30 to read as follows: 31 2. The holder of a certificate of franchise authority 32 shall implement an informal process for handling inquiries 33 from municipalities and customers concerning billing events, 34 service issues, and other complaints. If an issue is not 35 -4- LSB 5662XS (3) 83 rn/rj 4/ 12

S.F. 2113 resolved through this informal process, a municipality may 1 request a confidential nonbinding mediation with the holder of 2 a certificate of franchise authority, with the costs of such 3 mediation to be shared equally between the municipality and the 4 holder of a certificate of franchise authority or a customer 5 may, as an exclusive and final remedy, request a confidential 6 binding arbitration by an arbitrator selected by the parties, 7 with the costs of arbitration assessed as determined by the 8 arbitrator . 9 Sec. 5. Section 477A.8, Code 2009, is amended by adding the 10 following new subsection: 11 NEW SUBSECTION . 3. The board shall compile and maintain on 12 its internet site in an easy-to-read format a chart providing a 13 comparison of costs and services provided for every provider of 14 cable service and video service in this state. The information 15 shall include the name, address, telephone number, and internet 16 site address for each provider and each provider’s parent 17 company, if applicable; and available service packages, the 18 cost of each service package, and any other information deemed 19 appropriate or significant by the board. 20 Sec. 6. Section 477A.10, subsection 3, Code 2009, is amended 21 by striking the subsection and inserting in lieu thereof the 22 following: 23 3. A cable service provider or video service provider 24 operating under a certificate of franchise authority that is 25 using a cable system to provide cable services or that is using 26 telecommunication facilities to provide video services shall, 27 commencing five years after initially obtaining a certificate 28 of franchise authority, and every three years thereafter, 29 increase by twenty percent the number of households in any 30 municipality in its franchise service area to which it offers 31 cable service or video service by the beginning of the next 32 three-year period, if it has in the preceding three-year period 33 offered cable service or video service to at least fifteen 34 percent of the households in the municipality, until such 35 -5- LSB 5662XS (3) 83 rn/rj 5/ 12

S.F. 2113 cable service provider or video service provider is capable of 1 providing cable service or video service to all households in 2 the municipality. 3 Sec. 7. Section 477A.10, Code 2009, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 4. A cable service provider or video 6 service provider shall not engage in unlawful discrimination in 7 relation to the establishment of rates. 8 a. A cable service provider or video service provider shall 9 be prohibited from subsidizing its lower rate offerings with 10 rates paid by customers in higher rate exchange areas. Any 11 person who provides cable service pursuant to a franchise 12 granted under this chapter shall be prohibited from selling 13 such service or a bundle of services that includes cable 14 service or video service at a price that is more than two 15 hundred percent of the lowest price that provider charges for 16 a functionally equivalent service or bundle of services to 17 another customer in this state. A cable service provider or 18 video service provider that offers a price to a customer in the 19 franchised area in violation of this subsection shall be deemed 20 to have engaged in predatory pricing. If the lowest price 21 meets a bona fide price offered to a customer in the franchised 22 area by an unrelated or unaffiliated competitor, such price 23 shall not be used to determine a violation of this subsection. 24 b. A cable service provider or video service provider 25 found by a court of competent jurisdiction to have failed to 26 materially comply with this subsection shall be subject to the 27 following: 28 (1) An injunction ordering compliance with this subsection. 29 (2) For each franchised area in which a violation occurs, a 30 civil penalty in an amount not exceeding ten thousand dollars. 31 c. If the court finds that the noncompliance with this 32 subsection has resulted in a loss of customers to a competitive 33 provider, the injured provider may bring a civil action 34 on behalf of the customer or customers seeking recovery of 35 -6- LSB 5662XS (3) 83 rn/rj 6/ 12

S.F. 2113 damages. 1 d. If the court finds that noncompliance with this 2 subsection has resulted in a loss of customers to a competitive 3 cable service provider or competitive video service provider, 4 the injured competitive cable service provider or competitive 5 video service provider may bring a civil action to recover the 6 consequential damages of economic loss suffered by the injured 7 provider as a result of the loss of customers who changed to a 8 noncompliant competitive cable service provider or noncompliant 9 competitive video service provider while that noncompliant 10 provider was in violation of this subsection. 11 Sec. 8. NEW SECTION . 477A.11A Consumer protection study —— 12 annual report. 13 The office of consumer advocate shall conduct an assessment 14 of the consumer impact of this chapter. The assessment shall 15 include but not be limited to the number and nature of consumer 16 complaints received by the office of consumer advocate, the 17 office of the attorney general, and other agencies or political 18 subdivisions; an analysis of the impact on competition in the 19 provision of cable service and video service across the state; 20 and conclusions regarding impact on rates or pricing for the 21 provision of cable service and video service. The office of 22 consumer advocate shall solicit public input in conducting 23 the assessment. The assessment shall include recommendations 24 for changes in this chapter which would benefit consumers. 25 The first assessment shall be provided to the members of 26 the general assembly by January 1, 2011, with subsequent 27 assessments provided by January 1 annually through January 1, 28 2014. 29 Sec. 9. NEW SECTION . 551.1A Unfair discrimination in local 30 exchange rates. 31 1. A telecommunications provider holding a certificate 32 of public convenience and necessity for providing local 33 telecommunications services under section 476.29 and offering 34 local exchange services in this state shall be prohibited from 35 -7- LSB 5662XS (3) 83 rn/rj 7/ 12

S.F. 2113 selling such services or a bundle of services including such 1 services at a price that is more than two hundred percent 2 of the lowest price that provider charges for functionally 3 equivalent services or a bundle of services including 4 equivalent services to another customer in this state. A 5 telecommunications provider that offers a price to a customer 6 in violation of this subsection shall be deemed to have 7 engaged in predatory pricing. If the lowest price meets a bona 8 fide price offered to a customer in the local exchange by an 9 unrelated or unaffiliated competitor, such price shall not be 10 used to determine a violation of this subsection. 11 2. A telecommunications provider found by a court of 12 competent jurisdiction to have failed to materially comply with 13 this section shall be subject to the following: 14 a. An injunction ordering compliance with this section. 15 b. For each area in which a violation occurs, a civil 16 penalty in an amount not exceeding ten thousand dollars. 17 3. If the court finds that the noncompliance with this 18 section has resulted in a loss or damage to a customer or 19 customers, a person or class of persons may bring a civil 20 action on behalf of the customer or customers seeking recovery 21 of damages. 22 4. If the court finds that noncompliance with this 23 section has resulted in a loss of customers to a competitive 24 telecommunications provider, the injured telecommunications 25 provider may bring a civil action to recover the consequential 26 damages of economic loss suffered by the injured provider as a 27 result of the loss of customers who changed to a noncompliant 28 telecommunications provider while that noncompliant provider 29 was in violation of this section. 30 Sec. 10. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 31 APPLICABILITY. This Act, being deemed of immediate importance, 32 takes effect upon enactment and the applicable provisions of 33 the section of this Act enacting section 477A.3, subsection 34 6, apply retroactively to certificates of franchise authority 35 -8- LSB 5662XS (3) 83 rn/rj 8/ 12

S.F. 2113 issued prior to the effective date of this Act. 1 EXPLANATION 2 This bill modifies provisions relating to franchises for the 3 provision of cable service or video service. 4 The bill makes several changes to requirements concerning 5 providing notice of an intent to offer cable services or 6 video services, contents of applications to the utilities 7 board within the department of commerce for the issuance of a 8 certificate of franchise authority for the provision of such 9 services, and certificate issuance procedures. 10 The bill provides that a copy of the notice which a 11 competitive cable service provider or competitive video service 12 provider is required to provide to each municipality with 13 authority to grant a franchise in the service area, and to the 14 service area’s incumbent cable provider, regarding an intent 15 to provide services in the service area must be filed with the 16 board on the date that the notice is provided. A requirement 17 that the board issue a certificate within 15 business days is 18 modified in the bill to 30 business days. The bill adds to 19 information requirements to be included in an application and 20 affidavit for a franchise, submission of documentation that 21 the applicant possesses sufficient managerial, technical, and 22 financial capability to provide the cable service or video 23 service proposed, copies of advertisements or news releases 24 announcing the applicant’s intent to provide cable service or 25 video service in the service area intended for release if the 26 certificate is granted, and a date certain by which the cable 27 system or video service network will commence operation. 28 The bill provides that when issuing a certificate the board 29 may impose conditions, restrictions, or requirements as it 30 deems necessary or appropriate after reviewing the application 31 and affidavit. A holder of a certificate of franchise 32 authority will be required to provide status reports to the 33 board every three months regarding progress toward completion 34 of construction and commencement of operation, during the 35 -9- LSB 5662XS (3) 83 rn/rj 9/ 12

S.F. 2113 interval between issuance of the certificate and the date that 1 construction is completed and operation commences. The bill 2 provides that if a holder of a certificate fails to complete 3 construction and commence operation of a cable system or video 4 service network by the date specified in the application and 5 affidavit, or within two years from the date of issuance for 6 certificates issued prior to the effective date of this bill, 7 or if any conditions, restrictions, or requirements included 8 in the certificate are not adhered to, the board may revoke 9 the certificate. In this event, the bill provides that the 10 previous franchise agreement in effect between an incumbent 11 cable provider wishing to reinstate that agreement and the 12 municipality shall be reinstated. The bill also authorizes 13 the board to assess holders of certificates of franchise 14 authority for the costs incurred by the board during reviews 15 of applications and affidavits or pursuant to contested case 16 proceedings. 17 Additionally, the bill provides that if an informal 18 complaint process fails to resolve an issue, current provisions 19 involving a confidential nonbinding mediation and sharing of 20 costs between a municipality and a certificate holder shall be 21 changed to, as an exclusive and final remedy, a confidential 22 binding arbitration by an arbitrator selected by the parties, 23 with the costs assessed as determined by the arbitrator. 24 The bill directs the board to compile and maintain on its 25 internet site in an easy-to-read format a chart providing a 26 comparison of costs and services for every provider of cable 27 service and video service in the state. 28 The bill replaces a provision currently authorizing 29 expansion to potential subscribers under specified 30 circumstances by a video service provider using 31 telecommunication facilities to provide video services 32 with more than 500,000 access lines and servicing more than 33 50 percent subscribers in a service area. In its place, the 34 bill provides that both a cable service and video service 35 -10- LSB 5662XS (3) 83 rn/rj 10/ 12

S.F. 2113 provider shall, beginning five years after having obtained 1 a certificate, and every three years thereafter, increase 2 by 20 percent the number of households in any municipality 3 in its service area by the beginning of the next three-year 4 period, provided that in the preceding three-year period it has 5 provided service to at least 15 percent of the households in 6 the municipality, until it is capable of providing service to 7 all households in the municipality. 8 The bill also deletes a provision which permitted the board 9 to receive a complaint from a local exchange carrier that 10 another local exchange carrier has engaged in an activity that 11 is inconsistent with antitrust laws and the policies which 12 underlie them, and prescribing remedies in the event such an 13 inconsistency was determined by the board to be occurring. 14 The bill provides a new unlawful discrimination and predatory 15 pricing provision regarding the establishment of rates by a 16 cable service provider or video service provider, prohibiting 17 subsidizing lower rate offerings with rates paid in higher rate 18 exchange areas, and selling services at a price which exceeds 19 200 percent of the lowest price charged for a functionally 20 equivalent service to another customer in the state. Penalty 21 provisions in the form of injunctive relief, a civil penalty 22 of up to $10,000, and consequential damages are prescribed. 23 The bill applies the provisions regarding prices exceeding 24 200 percent constituting predatory pricing, and prescribing 25 penalties therefor, to local telecomunications service 26 providers under Code section 476.29. 27 In addition, the bill directs the office of consumer 28 advocate to conduct an assessment of the consumer impact of 29 Code chapter 477A. The study is to include but not be limited 30 to assessing the number of consumer complaints prompted by the 31 chapter, and the impact of the Code chapter on competition in 32 the provision of cable service and video service. The office 33 is directed to provide recommendations for changes in the Code 34 chapter’s provisions which would benefit consumers by January 35 -11- LSB 5662XS (3) 83 rn/rj 11/ 12

S.F. 2113 1, 2011, and each year thereafter through January 1, 2014. 1 The bill takes effect upon enactment. Provisions in the bill 2 regarding required status reports by holders of a certificate 3 of franchise authority, and franchise revocation for failure 4 to complete construction and commence operation within two 5 years for certificates issued prior to the effective date of 6 the bill, are retroactively applicable to the holders of such 7 certificates. 8 -12- LSB 5662XS (3) 83 rn/rj 12/ 12