Telecom and Cable TV Entities Poised to Take Advantage of SB 1152

By Georgia N. Crump

While cities are still coming to terms with Senate Bill (“SB”) 1004 from the 85th Texas Legislative Session, drastically reducing the right-of-way rental revenues received by cities from wireless providers occupying the public right-of-way, they are now faced with losing even more revenues as a result of SB 1152. This bill, effective on September 1, 2019, amends Texas Local Government Code § 283.051 and Texas Utilities Code § 66.005. These statutory provisions require telecommunications providers and cable television providers to pay access line fees and cable franchise fees, respectively, to municipalities for the privilege of occupying the public rights-of-way for the conduct of their businesses.

Also known as the “Pay Me Once” statute, SB 1152 allows entities that are members of an “affiliated group” to avoid paying cities either a cable franchise fee or access line fees. An “affiliated group” is defined in § 171.0001(1) of the Texas Tax Code as: “a group of one or more entities in which a controlling interest is owned by a common owner or owners, either corporate or non-corporate, or by one or more of the member entities. A “controlling interest” is defined generally as ownership of more than 50% of the stock or interest in the entity. Texas Tax Code § 171.0001(8). As a result of SB 1152, cities stand to lose either access line fees or cable franchise fees from these companies.

As cities look ahead to their budgets and possible reduction in franchise fee and access line fee revenues, they may not know whether the provider of cable services in their city might also be the holder of a Service Provider Certificate of Operating Authority (“SPCOA”) and provide telecommunications services in other parts of the state, and vice versa. The Public Utility Commission maintains market directories identifying those entities that hold a State-Issued Certificate of Franchise Authority (“SICFA”) for the provision of cable television services and an SPCOA for the provision of local telephone services. The following is a list of the entities who appear to be members of affiliated groups whose members hold SICFAs and SPCOAs, and are thus likely to qualify under the provisions of SB 1152:

As noted above, the law went into effect on September 1, 2019, and will apply to payments made on or after January 1, 2020, based on the amounts actually paid between July 1, 2018, and June 30, 2019. Qualifying entities have already calculated the amounts they paid state-wide for this period, and are currently providing notices to cities as to which revenue stream the cities will do without in 2020.

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Georgia Crump is the Chair of the Firm’s Energy and Utility Practice Group. Georgia assists cities with developing and implementing right-of-way management practices relating to telecommunications, gas, and electricity If you would like additional information, please contact Georgia at 512.322.5832 or gcrump@lglawfirm.com.