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TO ENACT THE "SOUTH CAROLINA COMPETITIVE CABLE SERVICES ACT" INCLUDING PROVISIONS TO ADD SECTION 58-12-5 TO THE CODE OF LAWS OF SOUTH CAROLINA, 1976, SO AS TO PROVIDE FOR A LEGISLATIVE PURPOSE, FINDINGS, AND PREEMPTION IN REGARD TO CABLE SERVICE AND DESIGNATE IT AS ARTICLE 1, CHAPTER 12 OF TITLE 58, TO DESIGNATE SECTIONS 58-12-10 THROUGH 58-12-130 AS ARTICLE 2 OF CHAPTER 12 OF TITLE 58; AND TO AMEND CHAPTER 12 OF TITLE 58 BY ADDING ARTICLE 3 SO AS TO PROVIDE FOR STATE-ISSUED CERTIFICATES OF FRANCHISE AUTHORITY AUTHORIZING THE APPLICANT TO OFFER CABLE SERVICE IN THIS STATE UNDER THE PROCEDURES AND REQUIREMENTS CONTAINED IN THIS ARTICLE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act is known and may be cited as the "South Carolina Competitive Cable Services Act".
SECTION 2. Chapter 12 of Title 58 of the 1976 Code is amended by adding:
Section 58-12-5. (A) Competition between cable television, satellite, and other providers has and continues to promote additional consumer choices for cable service and similar services, and the technology used to provide these services is not constrained or limited by municipal or county boundaries. Accordingly, it is appropriate for the General Assembly to review and update the policy of this State with regard to these services. The General Assembly finds that revising the current system of regulation of these services will relieve consumers of unnecessary costs and burdens, encourage investment, and promote deployment of innovative offerings that provide competitive choices for consumers. The General Assembly further finds that a streamlined policy framework providing statewide uniformity is necessary to allow these functionally equivalent services to compete fairly and to deploy new consumer services more quickly.
(B) This chapter occupies the entire field of franchising or otherwise regulating cable service and pre-empts any ordinance, resolution, or similar matter adopted by a municipality or county that purports to address franchising or otherwise regulating cable service."
SECTION 3. Sections 58-12-10 through 58-12-130 of Chapter 12 of Title 58 of the 1976 Code are designated as Article 2, Franchising by Counties and Municipalities.
SECTION 4. Chapter 12 of Title 58 of the 1976 Code is amended by adding:
Section 58-12-300. As used in this article, the following terms mean:
(1) 'Cable service' is defined as set forth in Section 58-9-2200(4).
(2) 'Cable service provider' means a person or entity who provides cable service over a cable system.
(3) 'Franchise' means an initial authorization, or renewal of an authorization, issued by a franchising authority 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 a cable services network in the public rights-of-way.
(4) 'Franchising authority' means a governmental entity empowered by federal, state, or local law to grant a franchise for cable services. With regard to the holder of a state-issued certificate of franchise authority within the areas covered by the certificate, the Secretary of State is the sole franchising authority. (5) 'Gross revenues' means all revenues received from customers for the provision of cable services. Gross revenues shall not include:
(a) any tax, surcharge, or governmental fee including, but not limited to, the municipal business license tax and any franchise fees;
(b) any revenue not actually received, even if billed, such as bad debt;
(c) any revenue received by any affiliate or any other person in exchange for supplying goods or services used by the provider to provide video programming;
(d) refunds, rebates, or discounts;
(e) late fees, returned check fees, or interest;
(f) sales or rental of property;
(g) installation of services and inside wiring;
(h) any revenues from services provided over the network that are associated with or classified as noncable services under federal law, including without limitation revenues received from telecommunications services, information services, Internet access services, advertising, home-shopping services, and the sale of any type of property. Where the sale of any such noncable service is bundled with the sale of any cable service or services and sold for a single nonitemized price, the term 'gross revenues' shall include only those revenues that are attributable to cable services based on the provider's books and records;
(i) sales for resale with respect to which the purchaser is required to pay a franchise fee;
(j) any reimbursement of costs including, but not limited to, the reimbursements by programmers of marketing costs incurred for the promotion or introduction of video programming.
(6) 'Incumbent cable service provider' means the cable service provider serving the largest number of subscribers in a particular municipality or in the unincorporated area of a county on the effective date of this article.
(7) 'Public right-of-way' means the area on, below, or above a public roadway, highway, street, public sidewalk, alley, or waterway.
(8) 'Video programming' means programming provided by, or generally considered comparable to programming provided by a television broadcast station, as set forth in 47 U.S.C. Section 11 522(20).
Section 58-12-310. (A) A person or entity providing cable service in this State on the effective date of this article under a franchise previously granted by the governing body of a municipality or county is not subject to nor may it avail itself of the state-issued certificate of franchise authority provisions of this article with respect to the municipality or county until the franchise expires. Notwithstanding the foregoing, any such cable service provider may seek authorization to provide service in areas where it currently does not have an existing franchise agreement pursuant to provisions of this article.
(B) Subject to the provisions of subsection (A), a person or entity seeking to provide cable service in this State after the effective date of this article must file an application for a state-issued certificate of franchise authority with the Secretary of State as required by this section. The application must be on a form to be established by the Secretary of State and must be accompanied by a fee, not to exceed fifty dollars, to be established by the Secretary of State. If the person or entity is not authorized by other provisions of law to construct, maintain, or operate any type of facilities in the public rights-of-way, the person or entity shall file such an application before constructing, maintaining, or installing any facilities in the public rights-of-way. If the person or entity is authorized by other provisions of law to construct, maintain, or operate any type of facilities in the public rights of way, the person or entity shall file the application before providing cable service in any given service area. A holder of a state-issued certificate of franchise authority who seeks to amend the certificate to include additional areas to be served shall file an amended application with the Secretary of State that reflects the new service areas to be served.
(C) The Secretary of State shall issue a certificate of franchise authority authorizing the applicant to offer cable service in this State within ten days of receipt of an affidavit submitted by the applicant and signed by an officer or general partner of the applicant affirming the following:
(1) that the applicant agrees to comply with all applicable federal and state laws and regulations;
(2) a description of the municipalities and unincorporated areas of counties to be served, in whole or in part, by the applicant, which description must be amended by the applicant before the provision of cable service within an area not described in a previous application or amendment filed by the applicant;
(3) the location of the principal place of business and the names of the principal executive officers of the applicant.
(D) The certificate of franchise authority issued by the Secretary of State shall contain the following:
(1) a nonexclusive grant of authority to provide cable service in the areas set forth in the application; and
(2) a nonexclusive grant of authority to construct, maintain, and operate facilities along, across, or on public right-of-way in the delivery of that service, subject to the laws of this State including the lawful exercise of police powers of the municipalities and counties in which the service is delivered.
(E) The certificate of franchise authority issued by the Secretary of State is fully transferable to a successor in interest to the applicant to which it is initially granted. A notice of transfer must be filed with the Secretary of State within ten days of the completion of the transfer. The Secretary of State is neither required nor authorized to act upon the notice.
(F) The certificate of state franchise authority issued pursuant to this article may be terminated by the cable service provider by submitting written notice of the termination to the Secretary of State. The Secretary of State is neither required nor authorized to act upon such notice.
(G) The state-issued certificate of franchise authority issued pursuant to this article supersedes and is in lieu of any franchise authority or approval required by Sections 58-12-10 and 58-12-30.
Section 58-12-320. (A) For purposes of this article, a cable service provider is deemed to have or have had a franchise to provide cable service in a specific municipality or unincorporated areas of a county if a predecessor entity of the cable service provider has or, after July 1, 2005, had a cable franchise agreement granted by that specific municipality or county.
(B) The terms 'predecessor or successor entity' in this section shall include, but not be limited to, an entity receiving, obtaining, or operating under a municipal or county cable franchise through merger, sale, assignment, restructuring, or any other type of transaction.
Section 58-12-330. (A) The holder of a state-issued certificate of franchise authority may be required, pursuant to an ordinance or resolution duly adopted by a municipality or county, to pay a franchise fee equal to a specified percentage of the holder's gross revenues received from the provision of cable service to customers located within the municipality or unincorporated areas of the county; provided, however, that the percentage, hereafter referred to as the 'state-issued certificate holder's franchise fee rate,' must not exceed the lesser of the incumbent cable service provider's franchise fee rate imposed by the municipality or county, if any, or five percent of the holder's gross revenues as defined in this article. The ordinance or resolution imposing the franchise fee must set forth the state-issued certificate holder's franchise fee rate. No change to the ordinance is effective earlier than forty-five days after the municipality or county provides each state-issued certificate holder written notice of the change.
(B) The holder of a state-issued certificate of franchise authority must pay the amount of the franchise fees payable under this section quarterly to the affected municipalities and counties. Each quarterly payment must be made within thirty days after the end of the quarter for the preceding calendar quarter. Each payment must be accompanied by a statement showing, for the quarter covered by the payment, the state-issued certificate holder's gross revenues attributable to the municipality or unincorporated areas of the county that imposes a state-issued certificate holder's franchise fee; the applicable state-issued certificate holder's franchise fee rate for the municipality or county, and the portion of the aggregate payment attributable to the municipality or county. Any supporting statements are confidential and are exempt from disclosure under any provision of state law including, without limitation, the Freedom of Information Act.
(C) The holder of a state-issued certificate of franchise authority may designate that portion of a subscriber's bill attributable to a franchise fee imposed pursuant to this article and may recover such amount from the subscriber as a separate item on the bill.
(D) No municipality or county shall levy a tax, license, fee, or other assessment on a cable service provider other than the franchise fee authorized by this section or a cable franchise fee imposed upon a cable service provider before January 1, 2006; provided, that nothing in this article shall restrict the right of a municipality or county to impose ad valorem taxes, service fees, sales taxes, or other taxes and fees lawfully imposed on other businesses within the municipality or county.
(E) The franchise fee allowed by this section is in lieu of a permit fee, encroachment fee, degradation fee, or other fee assessed on a holder of a state-issued certificate of franchise authority for its occupation of or work within the public rights-of-way.
Section 58-12-340. (A) A municipality or county may, upon reasonable written request but no more than once with respect to any given period, review the business records of a cable service provider to the extent necessary to ensure payment of the franchise fee in accordance with Section 58-12-330.
(B) No municipality, county, or holder of a state-issued certificate of franchise authority may bring any suit arising out of or relating to the amounts allegedly due to a municipality or county under Section 58-12-330, unless that entity has first initiated good-faith settlement discussions in accordance with the negotiation and mediation procedures set forth in subsection (C). All negotiations and mediation pursuant to this section must be confidential and must be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and South Carolina Rules of Evidence.
(C) A municipality, county, or holder of a state-issued certificate of franchise authority shall give the other party written notice of any dispute not resolved in the normal course of business. Representatives of both parties, with authority to settle the dispute, must meet at a mutually agreeable time and place within thirty calendar days after receipt of such notice, and thereafter as often as reasonably deemed necessary, to exchange relevant information and attempt to resolve the dispute. If the dispute has not been resolved within sixty calendar days after receipt of the notice, either the municipality, the county, or the holder of a state-issued certificate of franchise authority may initiate nonbinding mediation. The mediation must be conducted in accordance with the South Carolina Circuit Court Alternative Dispute Resolution Rules and must take place at a mutually agreeable time and location.
(D) Any suit with respect to a dispute arising out of or relating to the amount of the franchise fee allegedly due to a municipality or county under Section 58-12-330 must be filed by the municipality or county seeking to recover an additional amount alleged to be due, or by the holder of a state-issued certificate of franchise authority seeking a refund of an alleged overpayment, in a court of competent jurisdiction within three years following the end of the quarter to which the disputed amount relates; provided, however, that the time period may be extended by written agreement between the holder of a state-issued certificate of franchise authority and a municipality or county. Good faith participation in and completion of the negotiation and mediation procedures set forth in subsection (C) shall be a condition precedent to proceeding with the suit beyond its filing to toll the limitations period set forth in this subsection.
(E) Each party shall bear its own costs incurred in connection with any and all of the activities and procedures set forth in this section. A municipality or county may not employ, appoint, or retain any person or entity for compensation that is dependent in any manner upon the outcome of any such audit, including without limitation the audit findings or the recovery of fees or other payment by the municipality or county. A person or entity may not solicit or accept compensation dependent in any manner upon the outcome of any such audit, including without limitation the audit findings or the recovery of fees or other payment by the municipality or county.
Section 58-12-350. No franchising authority, state agency, or political subdivision of the State may impose any cable system construction or cable service deployment build-out requirements on a holder of a state-issued certificate of franchise authority.
Section 58-12-360. The holder of a state-issued certificate of franchise authority must comply with all applicable federal customer service requirements. The South Carolina Office of Consumer Affairs must receive complaints from customers of the holder of a state-issued certificate of franchise authority. The Office of Consumer Affairs must post on its Internet web site each calendar quarter the number and types of complaints made against each holder of a state-issued certificate of franchise authority during each such period. The Office of Consumer Affairs must not enforce or seek the enforcement of any provisions of this article, but it may endeavor to bring about a voluntary resolution of any such complaint.
Section 58-12-370. (A) Not later than one hundred twenty days after a request by a municipality or county, the holder of a state-issued certificate of franchise authority shall provide the municipality or county in which it provides cable service with capacity in its network to allow public, educational, and governmental (PEG) access channels for noncommercial programming consistent with this section.
(B) The holder of a state-issued certificate of franchise authority shall provide the same number of PEG access channels a municipality or county has activated under the incumbent cable service provider's franchise agreement as of the effective date of this article. If a municipality or county did not have PEG access channels as of the date of the holder's application or amended application for a state-issued certificate of franchise authority, the cable service provider shall furnish upon written request up to three PEG channels for a municipality or county with a population of at least fifty thousand and up to two PEG channels for a municipality or county with a population of less than fifty thousand.
(C) Any PEG channel provided pursuant to this section that is not utilized by the municipality or county for at least eight hours a day may no longer be made available to the municipality or county, but may be programmed at the cable service provider's discretion. At such time as the municipality or county can certify to the cable service provider a schedule for at least eight hours of daily programming, the cable service provider must restore the previously lost channel but is under no obligation to carry that channel on a basic or analog tier.
(D) If a municipality or county has not utilized the maximum number of access channels as permitted by subsection (B), access to the additional channel capacity allowed in subsection (B) may be provided upon one hundred twenty days request only if the municipality or county can demonstrate that all activated PEG channels are 'substantially utilized'. PEG channels must be considered 'substantially utilized' when twelve hours are programmed on that channel each calendar day. In addition, at least forty percent of the twelve hours of programming for each business day on average over each calendar quarter must be nonrepeat programming. Nonrepeat programming must include the first three video castings of a program.
(E) The operation of any PEG access channel provided pursuant to this section is the responsibility of the municipality, the county, or the Educational Television Commission receiving the benefit of the channel and the holder of a state-issued certificate of franchise authority bears only the responsibility for the transmission of the channel. The holder of a state-issued certificate of franchise authority must be responsible for providing the connectivity to each PEG access channel distribution point up to the first two hundred feet.
(F) The municipality, the county, or the Educational Television Commission shall ensure that all transmissions of content and programming provided by or arranged by them to be transmitted over a PEG channel by a holder of a state-issued certificate of franchise authority are provided and submitted to the cable service provider in a manner or form that is capable of being accepted and transmitted by the provider over its network without further alteration or change in the content or transmission signal, and which is compatible with the technology or protocol utilized by the cable service provider to deliver its cable services.
(G) Where technically feasible, the holder of a state-issued certificate of franchise authority and an incumbent cable service provider must use reasonable efforts to interconnect their cable systems at no charge to each other 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-issued certificate of franchise authority and incumbent cable service providers shall negotiate in good faith and incumbent cable service providers may not unreasonably withhold interconnection of PEG channels.
(H) A holder of a state-issued certificate of franchise authority is not required to interconnect for, or otherwise to transmit, PEG content that is branded with the logo, name, or other identifying marks of another cable service provider, and a municipality or county may require a cable service provider to remove its logo, name, or other identifying marks from PEG content that is to be made available to another provider.
Section 58-12-380. (A) A cable service provider that has been granted a state-issued certificate of franchise authority may not 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) A potential residential subscriber who has been denied service, or the Secretary of State acting on behalf of a subscriber in the capacity as franchising authority, may seek injunctive relief and enforcement of the requirements of subsection (A) by initiating a proceeding in the circuit courts of this State or in any federal court of competent jurisdiction.
Section 58-12-390. Should the holder of a state-issued certificate of franchise authority be found by a court of competent jurisdiction to be in noncompliance with the requirements of this article, the court must order the holder of the state-issued certificate of franchise authority, within a specified reasonable period of time, to cure the noncompliance.
Section 58-12-400. (A) The following sections of Article 2, Chapter 12 of Title 58 shall apply to a cable service provider who has been granted a state-issued certificate of franchise authority under this article: Sections 58-12-20, 58-12-30(d) and (f), 58-12-60, 58-12-70, 58-12-110, 58-12-130(A) and (C).
(B) In addition to the above, each holder of a state-issued certificate of franchise authority must make available one six megahertz channel if it is using analog transmission technology to deliver local broadcast television programming to subscribers over its network, or one standard digital channel if it is using digital technology for such purpose, for the transmissions of the Educational Television Commission.
(C) The following sections of Article 2, Chapter 12 of Title 58 shall not apply to a cable service provider who has been granted a state-issued certificate of franchise authority: Sections 58-12-10, 58-12-30(a)(b)(c)(e), 58-12-40, 58-12-50, 58-12-80, 58-12-90, 58-12-100, 58-12-120, 58-12-130(B)."
SECTION 5. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 6. This act takes effect upon approval by the Governor.
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