[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2113 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
                                S. 2113

 To promote the widespread availability of communications services and 
the integrity of communication facilities, and to encourage investment 
                       in communication networks.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 15, 2005

  Mr. DeMint introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
 To promote the widespread availability of communications services and 
the integrity of communication facilities, and to encourage investment 
                       in communication networks.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Digital Age 
Communications Act of 2005''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
                     TITLE I--REGULATORY FRAMEWORK

Sec. 101. Findings and policy.
Sec. 102. Prohibition of unfair methods of competition.
Sec. 103. Actions for complaints.
Sec. 104. Time limits on Commission action.
Sec. 105. Additional powers of the Commission.
 TITLE II--TRANSFER OR ASSIGNMENT OF PERMITS, LICENSES, OR CERTIFICATES

Sec. 201. Findings.
Sec. 202. Modification of authority to deny or condition licenses.
                      TITLE III--UNIVERSAL SERVICE

Sec. 301. Applicability of Communications Act of 1934.
Sec. 302. Principles of universal service.
Sec. 303. Definition of basic electronic communications services.
Sec. 304. Contribution mechanism.
Sec. 305. Universal service block grant program.
Sec. 306. Waiver authority.
Sec. 307. State universal service programs not preempted.
Sec. 308. Report to Congress.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Findings and policy regarding allocation of Federal, State, 
                            and local responsibility.
Sec. 402. Rulemaking and delegation of authority.
Sec. 403. Judicial review of decisions.
Sec. 404. Right-of-way authority.
Sec. 405. State regulation of basic local rates.
Sec. 406. Retention of additional State authority.
Sec. 407. Preemption of State authority.
Sec. 408. Transition and sunset of existing agreements.
Sec. 409. Effective date.

SEC. 2. DEFINITIONS.

    (a) In General.--In this Act, the following definitions shall 
apply:
            (1) Antitrust laws.--The term ``antitrust laws'' includes--
                    (A) the Act entitled ``An Act to protect trade and 
                commerce against unlawful restraints and monopolies'', 
                approved July 2, 1890;
                    (B) sections 73 through 76 of an Act entitled ``An 
                Act to reduce taxation, to provide revenue for the 
                Government, and for other purposes'', approved August 
                27, 1894;
                    (C) the Act entitled ``An Act to amend sections 73 
                and 76 of the Act of August 27, 1894, entitled An Act 
                to reduce taxation, to provide revenue for the 
                Government, and for other purposes'', approved February 
                12, 1913; and
                    (D) the Act entitled ``An Act to supplement 
                existing laws against unlawful restraints and 
                monopolies, and for other purposes'', approved October 
                15, 1914.
            (2) Commission.--The term ``Commission'' means the Federal 
        Communications Commission.
            (3) Electronic communications network.--The term 
        ``electronic communications network'' means--
                    (A) a transmission system; and
                    (B) where applicable, switching or routing 
                equipment and other facilities which permit the 
                conveyance of signals by wire, radio, optical, or other 
                electromagnetic means, over satellite, cable, or other 
                facilities, whether fixed or mobile, to the extent that 
                such facilities are used for the purpose of 
                transmitting signals, irrespective of the type of 
                information conveyed.
            (4) Electronic communications service.--The term 
        ``electronic communications service'' means a service normally 
        provided for remuneration which consists wholly or mainly in 
        the conveyance of signals on electronic communications 
        networks.
            (5) Household.--The term ``household'' includes--
                    (A) all the persons who occupy a housing unit; and
                    (B) housing units located in Indian lands (as such 
                term is defined in section 4(4) of the Indian Gaming 
                Regulatory Act (25 U.S.C. 2703)).
            (6) Housing unit.--The term ``housing unit'' means--
                    (A) a house;
                    (B) an apartment;
                    (C) a mobile home;
                    (D) a group of rooms; or
                    (E) a single room that is occupied as separate 
                living quarters.
            (7) Joint board.--The term ``Joint Board'' means the 
        Federal-State Joint Board on universal service required under 
        section 254(a) of the Communications Act of 1934 (47 U.S.C. 
        254(a)).
            (8) Low-income household.--The term ``low-income 
        household'' means a family whose income does not exceed 80 
        percent of the median income for the area, as determined by the 
        Commission, with adjustments for family size, except that the 
        Commission may establish an income ceiling higher or lower than 
        80 percent of the median for the area if the Commission finds 
        that such a variation is necessary because of prevailing levels 
        of construction costs or unusually high or low family incomes.
            (9) Separate living quarters.--
                    (A) In general.--The term ``separate living 
                quarters'' means an area in which the occupants of that 
                area--
                            (i) live and eat separately from any other 
                        person in the building in which the area is 
                        located; and
                            (ii) have direct access to such area--
                                    (I) from the outside of the 
                                building in which the area is located; 
                                or
                                    (II) through a common hall.
                    (B) Occupants.--For purposes of subparagraph (A), 
                the term ``occupants'' includes--
                            (i) a single family;
                            (ii) 1 person living alone;
                            (iii) 2 or more families living together; 
                        or
                            (iv) any other group of related or 
                        unrelated persons who share living 
                        arrangements.
            (10) Unfair methods of competition.--
                    (A) In general.--The term ``unfair methods of 
                competition'' means--
                            (i) practices that present a threat of 
                        abuse of significant and nontransitory market 
                        power as determined by the Commission 
                        consistent with the application of 
                        jurisprudential principles grounded in market-
                        oriented competition analysis such as those 
                        commonly employed by the Federal Trade 
                        Commission and the United States Department of 
                        Justice in enforcing the Federal Trade 
                        Commission Act (15 U.S.C. 41 et seq.) and the 
                        antitrust laws of the United States; and
                            (ii) with respect to interconnection, 
                        practices that pose a substantial and 
                        nontransitory risk to consumer welfare by 
                        materially and substantially impeding the 
                        interconnection of public communications 
                        facilities and services in circumstances in 
                        which the Commission determines that 
                        marketplace competition is not sufficient to 
                        adequately protect consumer welfare.
                    (B) Interconnection determination.--In making any 
                determination under subparagraph (A)(ii), the 
                Commission shall consider whether requiring 
                interconnection will adversely affect investment in 
                facilities and innovation in services.
    (b) Common Terminology.--Except as otherwise provided in subsection 
(a), terms used in this Act shall have the same meaning given to such 
terms under sections 3, 254, and 602 of the Communications Act of 1934 
(47 U.S.C. 153, 254, and 522).

                     TITLE I--REGULATORY FRAMEWORK

SEC. 101. FINDINGS AND POLICY.

    (a) Findings.--Congress finds that--
            (1) in 1996, Congress enacted and the President signed into 
        law the Telecommunications Act of 1996, which was intended to 
        provide a procompetitive, deregulatory framework designed to 
        facilitate the continuing transition to a more competitive 
        communications market;
            (2) since the enactment and implementation of the 
        Telecommunications Act of 1996, rapid advances in technology 
        and marketplace developments have further increased the 
        existence of competition in all communications markets and the 
        likelihood of the continuing existence and increasing intensity 
        of competition;
            (3) competition in a dynamic communications marketplace is 
        the most effective and efficient means for protecting consumers 
        and enhancing the consumer welfare of all the people of the 
        United States in terms of achieving the optimum mix of price, 
        quality, and consumer choice; and
            (4) unnecessary regulation regarding protection of 
        consumers and enhancement of consumer welfare deters--
                    (A) investment in new and advanced communications 
                facilities; and
                    (B) the development of new services and 
                applications.
    (b) Policy.--It shall be the policy of the United States 
Government--
            (1) to promote the widespread availability of 
        communications services for all Americans in order to assure 
        that the American people have access to a diversity of 
        information sources necessary for democratic government;
            (2) to promote the integrity, reliability, and efficiency 
        of communications facilities in a manner consistent with--
                    (A) the encouragement of investment in advanced 
                communications networks; and
                    (B) innovation in communications services and 
                applications;
            (3) that economic regulation of communications markets 
        should be presumed unnecessary absent circumstances that 
        demonstrate the existence of a significant threat of abuse of 
        market power that poses a substantial and nontransitory risk to 
        consumer welfare; and
            (4) that in order to ensure that the actions of the Federal 
        Communications Commission are consistent with the findings in 
        subsection (a), and to effectuate the deregulatory policy 
        declared in this subsection, the decisions of the Commission 
        should be based on jurisprudential principles grounded in 
        market-oriented competition analysis such as those commonly 
        employed by the Federal Trade Commission and the Department of 
        Justice in enforcing the Federal Trade Commission Act (15 
        U.S.C. 41 et seq.) and the antitrust laws of the United States.

SEC. 102. PROHIBITION OF UNFAIR METHODS OF COMPETITION.

    (a) In General.--It shall be unlawful for any provider of 
electronic communications service, including any State, or any general 
purpose political subdivision of a State, to engage or participate, or 
to attempt to engage or participate, in--
            (1) unfair methods of competition in or affecting 
        electronic communications networks and electronic 
        communications services; or
            (2) unfair or deceptive practices in or affecting 
        electronic communications networks and electronic 
        communications services.
    (b) Rulemaking Authority.--
            (1) In general.--The Commission may, by rule, define with 
        specificity, the acts or practices that shall constitute unfair 
        methods of competition or unfair or deceptive acts or practices 
        as described in subsection (a).
            (2) Content of rules.--Rules promulgated under paragraph 
        (1) may include such requirements as the Commission determines 
        necessary to prevent any methods, acts, or practices prohibited 
        by this section.
            (3) Limitation.--
                    (A) In general.--Notwithstanding paragraph (1) and 
                except as provided in subparagraph (B), the Commission 
                shall have no authority to issue rules that declare 
                unlawful an act or practice on the grounds that such 
                act or practice is an unfair method of competition or 
                unfair or deceptive act or practice.
                    (B) Exception.--The Commission may declare an act 
                or practice unlawful if the Commission determines, 
                based on a showing of clear and convincing evidence 
                presented in a rulemaking proceeding, that--
                            (i) marketplace competition is not 
                        sufficient to adequately protect consumer 
                        welfare; and
                            (ii) such act or practice--
                                    (I) causes or is likely to cause 
                                substantial injury to consumers; and
                                    (II) is not--
                                            (aa) avoidable by consumers 
                                        themselves; and
                                            (bb) outweighed by 
                                        countervailing benefits to 
                                        consumers or to competition.
            (4) Sunset of rules.--Any rule promulgated under paragraph 
        (1) shall terminate on the day that is 5 years after the date 
        on which such rule became effective unless the Commission, in a 
        proceeding in which the public is afforded notice and an 
        opportunity to comment, makes an affirmative determination, 
        based on a showing of clear and convincing evidence presented 
        in such proceeding, that the rule continues to be necessary 
        because marketplace competition is not sufficient to adequately 
        protect consumers from substantial injury which is not--
                    (A) avoidable by consumers themselves; and
                    (B) outweighed by countervailing benefits to 
                consumers or to competition.

SEC. 103. ACTIONS FOR COMPLAINTS.

    The Commission shall have authority--
            (1) to hear complaints from any party injured by a 
        violation of the prohibitions established under section 102; 
        and
            (2) to award damages to such injured party if the 
        Commission determines that a violation of that section has 
        occurred.

SEC. 104. TIME LIMITS ON COMMISSION ACTION.

    (a) 120-Day Limit for Applications With Supporting Testimony.--If 
an application is filed with the Commission under this or any other 
Act, and such application is accompanied by supporting testimony from 
the applicant or a detailed summary of that testimony, together with 
exhibits, if any, the Commission shall issue a decision on such 
application not later than 120 days after the application is deemed 
complete (as the Commission shall, by rule, determine).
    (b) 210-Day Limit for Applications Without Supporting Testimony.--
If an application is filed with the Commission under this or any other 
Act, and such application is not accompanied by supporting testimony 
and exhibits, the Commission shall issue a decision on such application 
not later than 210 days after the application is deemed complete (as 
the Commission shall, by rule, determine).
    (c) Waiver.--The time limits specified in subsections (a) and (b)--
            (1) may be waived by an applicant; and
            (2) if so waived, shall not be binding on the Commission.
    (d) Extension of Time.--The Commission, in particular cases, under 
extraordinary conditions, and after notice and a hearing at which the 
existence of such conditions are established, may extend the time 
limits specified in subsections (a) and (b) for a period not to exceed 
an additional 90 days.

SEC. 105. ADDITIONAL POWERS OF THE COMMISSION.

    The Commission shall have authority--
            (1) to research and investigate, from time to time, the 
        organization, business, conduct, or practices of--
                    (A) any person or entity engaged in, or whose 
                business affects, the operation of electronic 
                communications networks; and
                    (B) any provider of electronic communications 
                service;
            (2) to require any person or entity that owns or operates 
        an electronic communications networks, or any class of such 
        persons or entities, to file, in such form, in such manner, and 
        at such time as the Commission may determine, reports or 
        answers to specific questions regarding the organization, 
        business, conduct, or practices of such person or entity, such 
        reports or answers shall be in writing and made under penalty 
        of perjury;
            (3) to make public, from time to time, in such form, and in 
        such manner as the Commission determines--
                    (A) such portions of the information obtained under 
                paragraph (1) as are in the public interest; and
                    (B) the reports and answers described under 
                paragraph (2), except that the Commission--
                            (i) may not make public any trade secret or 
                        any privileged or confidential commercial or 
                        financial information obtained from such 
                        reports or answers; and
                            (ii) may disclose such trade secrets or 
                        information to officers and employees of an 
                        appropriate Federal or State law enforcement 
                        agency upon prior certification by an officer 
                        of that Federal or State law enforcement agency 
                        that such trade secrets or information shall--
                                    (I) be maintained in confidence; 
                                and
                                    (II) be used only for official law 
                                enforcement purposes; and
            (4) to make annual and special reports to Congress and to 
        submit with such reports recommendations for additional 
        legislation.

 TITLE II--TRANSFER OR ASSIGNMENT OF PERMITS, LICENSES, OR CERTIFICATES

SEC. 201. FINDINGS.

    Congress finds the following:
            (1) The process by which the Federal Communications 
        Commission currently reviews, and imposes conditions upon, the 
        transfer or assignment of permits, licenses, or certificates in 
        the context of a merger, or other conveyance of corporate 
        control, is in need of reform.
            (2) Currently, the review of telecommunications industry 
        mergers by the Commission often results in undue delay and 
        introduces uncertainty into the marketplace because of the 
        unpredictability of that review under the nonspecific public 
        interest standard established in the Communications Act of 1934 
        (47 U.S.C. 151 et seq.).
            (3) The Commission has unnecessarily invoked its authority 
        under the nonspecific public interest standard to allow it to 
        impose terms and conditions on the assignment and transfer of 
        permits, licenses, or certificates unrelated to any competitive 
        impacts of the proposed transaction.
            (4) The Department of Justice and the Federal Trade 
        Commission have extensive institutional expertise in analyzing 
        issues relating to industry concentration and its effects on 
        competition.
            (5) It is inefficient, burdensome, and costly to the 
        Federal Government and to the private sector, and unnecessary 
        for the protection of consumers or for the enhancement of 
        consumer welfare, for the Commission in a review of a transfer 
        or assignment of licenses to duplicate the work performed by 
        the Department of Justice or the Federal Trade Commission.
            (6) The Commission should only deny, and should impose only 
        those conditions on, the transfer or assignment of permits, 
        licenses, or certificates as is necessary to ensure that 
        applicants for such transfer and assignment authority are in 
        compliance with existing Commission rules and regulations.

SEC. 202. MODIFICATION OF AUTHORITY TO DENY OR CONDITION LICENSES.

    (a) In General.--In any proceeding under the Communications Act of 
1934 (47 U.S.C. 151 et seq.) to approve an application to assign or 
transfer control of a license, permit, or certificate, the Commission--
            (1) may not deny such application unless--
                    (A) the assignment or transfer of control would 
                result in a violation of the--
                            (i) Communications Act of 1934 (47 U.S.C. 
                        151 et. seq); or
                            (ii) any rule or regulations established by 
                        the Commission in effect on the date such 
                        application is received by the Commission; and
                    (B) a violation described in subparagraph (A) 
                cannot be cured by the conditional approval of the 
                assignment or transfer of control under the provisions 
                of paragraph (2);
            (2) may not condition approval of such application except, 
        to the extent necessary, to--
                    (A) ensure that the assignee or transferee is in 
                compliance with all Commission rules and regulations in 
                effect on the date of such approval; or
                    (B) permit the orderly disposition of assets to 
                comply with such rules and regulations; and
            (3) notwithstanding section 104, shall complete all action 
        on any such application not later than 90 days after the date 
        of receipt by the Commission of the application, unless the 
        applicant requests an extension.
    (b) Effective Date.--Subsection (a) shall apply to any application 
for a transfer of a permit, license, or permit that is pending on, or 
submitted to the Commission on or after, the date of enactment of this 
Act.
    (c) Deadlines for Pending Applications.--If an application for a 
transfer of a permit, license, or permit is pending before the 
Commission for more than 30 days, as of the date of enactment of this 
Act, the Commission shall complete all action on such application not 
later that 60 days after such date of enactment, unless the applicant 
requests an extension.

                      TITLE III--UNIVERSAL SERVICE

SEC. 301. APPLICABILITY OF COMMUNICATIONS ACT OF 1934.

    The provisions of section 214(e) and 254 of the Communications Act 
of 1934 (47 U.S.C. 214(e) and 254) are repealed as of the date that is 
3 years after the date of enactment of this Act.

SEC. 302. PRINCIPLES OF UNIVERSAL SERVICE.

    The policy of the United States Government regarding the 
preservation and advancement of universal service shall be based on the 
following principles:
            (1) Affordability.--Quality basic electronic communications 
        services shall be affordable to--
                    (A) all low-income households; and
                    (B) households in high cost areas of the Nation.
            (2) Efficiency.--Universal service support and contribution 
        mechanisms for the provision of affordable basic electronic 
        communications services shall burden the economy no more than 
        is necessary.
            (3) Neutrality.--Neither the distribution of universal 
        service support for basic electronic communications services 
        nor the collection of universal service contributions shall 
        discriminate in favor of or against any company or technology.
            (4) Transparency.--
                    (A) Rules.--Rules governing universal service 
                mechanisms shall be clear and enforceable.
                    (B) Goals.--The goals of universal service support 
                shall be clearly defined and identified.

SEC. 303. DEFINITION OF BASIC ELECTRONIC COMMUNICATIONS SERVICES.

    (a) In General.--For purposes of this title, the term ``basic 
electronic communications services'' shall have the same meaning as the 
term ``supported services'' in section 54.101(a) of title 47, Code of 
Federal Regulations.
    (b) Modification of Definition.--
            (1) Joint board action.--The Joint Board may, from time to 
        time, recommend to the Commission modifications as to which 
        basic electronic communications services are to be supported by 
        Federal universal service support mechanisms.
            (2) Commission action.--Not later than 1 year after 
        receiving recommendations from the Joint Board under paragraph 
        (1), the Commission shall complete any proceeding to consider 
        whether to implement, in whole or in part, such 
        recommendations.
            (3) Considerations.--The Joint Board in recommending, and 
        the Commission in implementing, any modifications of the basic 
        electronic communications services that are supported by 
        Federal universal service support mechanisms shall--
                    (A) consider the extent to which--
                            (i) basic electronic communications 
                        services have, through the operation of market 
                        choices by customers, been already subscribed 
                        to by a substantial majority of residential 
                        consumers that do not receive any universal 
                        service support;
                            (ii) unaffordable, prevailing basic 
                        electronic communications services relies on 
                        underlying infrastructure located in high cost 
                        areas; and
                            (iii) universal service support under 
                        section 305 is necessary to ensure that the 
                        underlying infrastructure remains available to 
                        provide such basic electronic communications 
                        services; and
                    (B) publish a report in the Federal Register that 
                details the considerations made under subparagraph (A).
            (4) Limitation.--The Commission shall not increase the 
        amount of total universal service support following any 
        modification under this subsection without express 
        Congressional authorization.

SEC. 304. CONTRIBUTION MECHANISM.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Commission shall--
            (1) complete a proceeding to promulgate rules to reform the 
        universal services contribution mechanism; and
            (2) adopt a new mechanism based upon the assignment of 
        numbers in the North American Numbering Plan or any successor 
        methodology.
    (b) Content of Rules.--The rules required under subsection (a) 
shall--
            (1) include an exemption from universal service 
        contributions for low-income households; and
            (2) require that all assigned telephone numbers be assessed 
        an equivalent amount for such contributions on a 
        technologically neutral basis, except that there shall be a 
        discounted contribution rate for paging services.
    (c) Authority to Modify.--The Commission shall, by rule, adopt an 
alternative contribution mechanism to supplement the universal service 
fund if there is evidence of material, inefficient bypass of the 
numbers-based contribution mechanism.

SEC. 305. UNIVERSAL SERVICE BLOCK GRANT PROGRAM.

    (a) Single Universal Service Fund.--
            (1) In general.--Not later than 3 years after the date of 
        enactment of this Act, the Commission shall revise its current 
        universal service fund system to establish a single universal 
        service fund (in this title referred to as the ``Fund'').
            (2) Federal system.--The Fund established under paragraph 
        (1) shall be the exclusive Federal universal service support 
        mechanism.
            (3) Cap on distributions.--The Commission may not award 
        grants out of the Fund in any 1 fiscal year in excess of 
        $3,650,000,000.
            (4) Inflation adjustments.--The limitation under paragraph 
        (3) shall be adjusted annually by an inflation index and by a 
        fixed factor for productivity improvements, as determined by 
        the Commission.
            (5) Other adjustments.--The limitation under paragraph (3) 
        may also be adjusted by the Commission to account for--
                    (A) changes in population size in each eligible 
                State; and
                    (B) exogenous cost changes in the provision of 
                basic electronic communications services directly 
                related to intercarrier compensation reform.
    (b) Grants Authorized.--
            (1) In general.--Not later than 3 years after the date of 
        enactment of this Act, and annually thereafter, the Commission 
        shall grant from the Fund to each eligible State performance-
        based block grants to support the provision of those basic 
        electronic communications services which have been defined 
        under section 303 to be eligible for universal service support.
            (2) Award basis.--
                    (A) In general.--Not later than 18 months after the 
                date of enactment of this Act, the Commission shall 
                initiate a rulemaking proceeding to establish initial 
                guidelines regarding the distribution of performance-
                based block grants from the Fund.
                    (B) Content of guidelines.--The guidelines required 
                under subparagraph (A) shall include--
                            (i) model distribution mechanisms and 
                        regulations for the support of low-income 
                        households and households in high cost areas;
                            (ii) the national performance level, 
                        measured by household subscription to basic 
                        electronic communications services, that is 
                        necessary for each eligible State to retain 
                        unused block grant funds under subsection (g);
                            (iii) the initial amount of block grant 
                        funds that are available for each eligible 
                        State, such amounts to be based upon a 
                        formula--
                                    (I) developed by the Commission 
                                using any appropriate data from the 
                                Census Bureau; and
                                    (II) that reflects a comparative 
                                analysis of affordability of basic 
                                electronic communications services 
                                across States;
                            (iv) rules and regulations, including 
                        quality of service requirements, regarding 
                        the--
                                    (I) designation of a carrier of 
                                last resort; and
                                    (II) relinquishment of basic 
                                electronic communications services by a 
                                carrier eligible to receive such funds 
                                under subsection (e)(4) in high cost 
                                areas; and
                            (v) any other rules or regulations 
                        necessary for the administration, monitoring, 
                        record keeping, reporting, and enforcement of 
                        the performance-based block grant program 
                        established under paragraph (1), including 
                        provisions--
                                    (I) designed to protect against 
                                fraud; and
                                    (II) any additional guidelines to 
                                assist eligible States in implementing 
                                and adopting the guidelines required by 
                                subparagraph (A).
                    (C) Effective date, limitation, and modification.--
                The guidelines required under subparagraph (A)--
                            (i) shall take effect on the date that is 3 
                        years after the date of enactment of this Act;
                            (ii) shall be sufficiently flexible so as 
                        to allow eligible States to experiment with 
                        alternative market-based distribution 
                        mechanisms, including voucher programs and 
                        auctions; and
                            (iii) may be modified by the Commission any 
                        time thereafter subject to the provisions of 
                        this title.
            (3) Definition of eligible state.--
                    (A) In general.--For purposes of this section, the 
                term ``eligible State'' means any State that has 
                certified in writing to the Commission that it has met 
                or will meet the requirements of this section.
                    (B) Failure to submit certification.--If a State 
                fails to submit to the Commission a written 
                certification under subparagraph (A), such State shall 
                not be eligible to receive grants under paragraph (1).
    (c) Transition Period.--
            (1) In general.--For the period beginning on the date of 
        enactment of this Act and ending on the date that is 3 years 
        after the date of enactment of this Act, universal service 
        support for any eligible telecommunications carrier, as such 
        term is defined in section 214(e) of the Communications Act of 
        1934 (47 U.S.C. 214(e)), shall be capped at the per-line 
        support levels in effect on the date of enactment of this Act.
            (2) No new eligible carriers.--During the 3-year period 
        described in paragraph (1), an eligible State may not exercise 
        its authority under section 214(e) of the Communications Act of 
        1934 (47 U.S.C. 214(e)) to designate additional eligible 
        telecommunications carrier, except if such State makes such a 
        designation in accordance with section 54.203(a) of title 47, 
        Code of Federal Regulations.
            (3) Other rules.--During the 3-year period described in 
        paragraph (1), all rules, regulations, and orders of the 
        Commission with respect to the provision of universal service 
        under section 254 of the Communications Act of 1934 (47 U.S.C. 
        254), including the provision of Lifeline and Link-up 
        assistance, shall remain in effect.
    (d) Application.--An eligible State seeking a grant under this 
section shall submit an application to the Commission at such time, in 
such manner, and containing such information as the Commission may 
require.
    (e) Conditions.--Not later than 18 months after the publication of 
the guidelines required under subsection (a)(2), each eligible State 
seeking a grant under this section shall--
            (1) conduct proceedings to identify high cost areas within 
        that State;
            (2) promulgate rules and regulations regarding the 
        distribution of performance-based block grant amounts to low-
        income households;
            (3) establish distribution mechanisms for performance-based 
        block grant amounts received under this section; and
            (4) by rule, determine which carriers are eligible to 
        receive universal support from that eligible State.
    (f) Use of Funds.--
            (1) In general.--A performance-based block grant awarded to 
        an eligible State shall be used to--
                    (A) provide a single connection to basic electronic 
                communications services to all low-income households 
                and households in high cost areas;
                    (B) provide support for households or for the 
                underlying infrastructure used to provide basic 
                electronic communications services in high cost areas; 
                and
                    (C) fund or reimburse carriers eligible to receive 
                such funds under subsection (e)(4) for the provision, 
                maintenance, and upgrading of services of basic 
                electronic communications services to low-income 
                households and households in high cost areas.
            (2) Commission needs.--Consistent with the principles 
        established under section 302 and with the results of audits 
        performed under subsection (i), the Commission may redirect a 
        portion of the amounts in the Fund to meet additional staffing 
        and administrative needs of the Commission.
    (g) Unused Funds.--
            (1) In general.--If an eligible State does not use all of 
        its allotted performance-based block grant funds in a given 
        year, such State shall, in writing, inform the Commission of 
        that unused amount.
            (2) Performance level achievement.--If an eligible State 
        meets the performance level standards established under 
        subsection (b)(2)(B)(ii), such State--
                    (A) may retain any unused block grant funds; and
                    (B) shall direct such unused funds towards--
                            (i) service not designated as basic 
                        electronic communications services; or
                            (ii) public safety infrastructure 
                        improvements, including the upgrading, 
                        maintenance, and support of E911 systems.
            (3) Offset.--If an eligible State does not meet the 
        performance level standards established under subsection 
        (b)(2)(B)(ii), the Commission shall offset any unused funds by 
        that State in a given year against that State's block grant 
        allotment in the following calendar year.
    (h) Commission Authority.--The Commission may withhold performance-
based block grant funds from any eligible State that fails to comply 
with any rule or guideline established by the Commission under this 
section.
    (i) Audits.--
            (1) In general.--The Commission shall, from time to time, 
        conduct audits of the use and distribution performance-based 
        block grant amounts by each eligible State and eligible 
        communications carriers.
            (2) Number of audits to be conducted.--The number of audits 
        conducted by the Commission under paragraph (1) shall be of 
        such number, as determined by the Commission, to allow the 
        Commission, for purposes of the report required under section 
        308, to provide a detailed analysis on the efficiency of 
        universal service distribution mechanisms employed by eligible 
        States.
    (j) Consultation With Joint Board.--
            (1) In general.--The Joint Board based upon the experience 
        of eligible States and consistent with the principles 
        established under section 302 may, from time to time, recommend 
        to the Commission modifications to guidelines required under 
        subsection (b)(2).
            (2) Commission action.--Not later than 1 year after 
        receiving recommendations from the Joint Board under paragraph 
        (1), the Commission shall complete any proceeding to consider 
        whether to implement, in whole or in part, such 
        recommendations.

SEC. 306. WAIVER AUTHORITY.

    (a) In General.--An eligible State may submit a petition to the 
Commission, in such manner and containing such information as the 
Commission may require, to adopt a distribution mechanism that is not 
based on the model distribution mechanisms outlined in the guidelines 
required by section 305(b)(2)(B)(i).
    (b) Timing.--Not later than 90 days after the date that a petition 
is submitted under subsection (a), the Commission shall issue a 
decision on whether to grant or deny such petition.
    (c) Grant of Petition.--The Commission may grant any petition 
submitted under subsection (a), if such petition is consistent with the 
universal service principles established under section 302.

SEC. 307. STATE UNIVERSAL SERVICE PROGRAMS NOT PREEMPTED.

    (a) In General.--Nothing in this title shall preempt or be 
construed to preempt an eligible State from adopting laws, rules, or 
regulations to ensure that quality basic electronic communications 
services are universally available to all low-income households and 
households in high cost areas at affordable rates, so long as such 
laws, rules, or regulations are consistent with, and not in violation 
of, the principles established under section 302 and any other 
applicable provision of this title.
    (b) Federal Review.--The Commission may--
            (1) review any law, rule, or regulation adopted by an 
        eligible State to determine if such law, rule, or regulation is 
        in compliance with the requirements of subsection (a); and
            (2) withhold from any eligible State performance-based 
        block grant funds awarded under section 305, if the Commission 
        determines that such laws, rules, or regulations fail to comply 
        with the requirements of subsection (a).

SEC. 308. REPORT TO CONGRESS.

    Not later than 3 years after the date of enactment of this Act, and 
every 3 years thereafter, the Commission shall report to Congress--
            (1) an analysis of the costs and benefits of the universal 
        service program established under section 305, including an 
        evaluation of whether, and to what extent, such universal 
        service program has caused improvements in affordability;
            (2) a summary of findings from the audits the Commission 
        undertook as required under section 305(i);
            (3) a summary of best practices employed by eligible States 
        which have adopted laws, rules, or regulations regarding 
        universal service in compliance with section 307;
            (4) an evaluation of, and recommendations regarding, the 
        contribution mechanism established under section 304; and
            (5) an analysis of the continuing need for universal 
        service support based upon--
                    (A) the experience of the eligible States; and
                    (B) technological and marketplace developments, 
                including recommendations regarding the limitation on 
                the size of the funding cap under section 305(a).

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. FINDINGS AND POLICY REGARDING ALLOCATION OF FEDERAL, STATE, 
              AND LOCAL RESPONSIBILITY.

    (a) Findings.--Congress finds that--
            (1) technological and market forces are changing the nature 
        and delivery of electronic communications services;
            (2) these technological and market changes have altered the 
        necessary roles for Federal, State, and local authorities in 
        regulating electronic communications services;
            (3) in many cases, responsibility to regulate activities 
        relating to communications has been allocated to a State or 
        local jurisdiction based on whether such activities were deemed 
        to occur within that State or jurisdiction;
            (4) as electronic communications services and technologies 
        become increasingly digital and packet-based, it has become 
        difficult, and often impossible, to rely on jurisdictional 
        boundaries as the basis for allocating regulatory 
        responsibility among jurisdictions;
            (5) a regulatory regime enforced by multiple jurisdictions, 
        based on disparate laws, may result in inconsistent, 
        unpredictable, and onerous rules that inhibit investment, 
        innovation, and competition;
            (6) the Telecommunications Act of 1996, which made 
        substantial changes in the allocation of responsibilities among 
        regulators in different jurisdictions, nonetheless did not 
        adopt a framework that addresses fully the challenges posed by 
        the rapid technological and marketplace evolution of electronic 
        communications networks and services; and
            (7) given these shortcomings, new statutory guidance for 
        allocating Federal, State, and local responsibility is 
        necessary to achieve the purposes of regulating electronic 
        communications networks and services.
    (b) Policy.--It shall be the policy of the United States 
Government--
            (1) to integrate Federal, State, and local regulation of 
        electronic communications networks;
            (2) that electronic communications networks and services be 
        governed by a single, unified, minimally pervasive regulatory 
        regime determined and generally implemented at the Federal 
        level;
            (3) to eliminate rate regulation and rate-setting where 
        market conditions adequately protect the interests of consumers 
        in obtaining reasonable rates;
            (4) to eliminate regulation based on technological or 
        functional distinctions among communications services and 
        networks;
            (5) to avoid extending legacy regulation to additional 
        services, networks, or providers; and
            (6) to create incentives to invest in new technologies and 
        to encourage the deployment of advanced electronic 
        communications services.

SEC. 402. RULEMAKING AND DELEGATION OF AUTHORITY.

    (a) Rulemaking.--Except as otherwise specifically provided in this 
Act, the Commission shall have exclusive jurisdiction and authority to 
adopt or enforce rules, regulations, or obligations, or conduct 
rulemakings or adjudications to implement the provisions of this Act.
    (b) Delegation.--
            (1) In general.--The Commission may delegate to a State, or 
        any general purpose political subdivision of a State, for 
        matters occurring wholly within the jurisdiction of that State 
        or political subdivision, the authority--
                    (A) to enforce any rules, regulations, or 
                obligations adopted under subsection (a); or
                    (B) to adjudicate disputes between providers of 
                electronic communications services that relate to such 
                rules, regulations, or obligations.
            (2) Invalid delegation.--
                    (A) In general.--A delegation of authority under 
                paragraph (1) shall be invalid if a State, or any 
                general purpose political subdivision of a State, does 
                not certify, and the Commission does not concur, that 
                such State or political subdivision is legally and 
                practically competent to execute such authority.
                    (B) No review.--Any determination made by the 
                Commission under subparagraph (A) as to the competence 
                of a State, or any general purpose political 
                subdivision of a State, shall not be subject--
                            (i) to review by any court of competent 
                        jurisdiction;
                            (ii) to collateral attack; or
                            (iii) to interlocutory appeal.
            (3) Reversion of authority.--If a State, or any general 
        purpose political subdivision of a State, declines to accept, 
        lacks authority, or otherwise fails to execute a delegation of 
        authority under paragraph (1), the Commission, upon public 
        notice, shall assume back such authority.
            (4) Clarification of authority.--
                    (A) In general.--A State, or any general purpose 
                political subdivision of a State, may petition the 
                Commission--
                            (i) to clarify the scope of a delegation of 
                        authority under paragraph (1); or
                            (ii) to obtain a waiver from any express or 
                        implied limitations on such delegation.
                    (B) Timing.--
                            (i) In general.--Not later than 120 days 
                        after the date that a petition is submitted 
                        under subparagraph (A), and after affording any 
                        interested party the opportunity for comment, 
                        the Commission shall issue a decision on 
                        whether to grant or deny such petition.
                            (ii) Expiration of 120-day period.--If the 
                        Commission does not issue a decision within the 
                        time-period described in subparagraph (A), the 
                        petition shall be deemed granted.
            (5) Request for delegation.--
                    (A) In general.--In the absence of a delegation of 
                authority under paragraph (1), a State, or any general 
                purpose political subdivision of a State, may, for 
                matters occurring wholly within the jurisdiction of 
                that State or political subdivision, petition the 
                Commission to enforce any rules, regulations, or 
                obligations enacted under subsection (a).
                    (B) Timing.--
                            (i) In general.--Not later than 90 days 
                        after the date that a petition is submitted 
                        under subparagraph (A), and after affording any 
                        interested party the opportunity for comment, 
                        the Commission shall issue a decision on 
                        whether to grant or deny such petition.
                            (ii) Expiration of 90-day period.--If the 
                        Commission does not issue a decision within the 
                        time-period described in subparagraph (A), the 
                        petition shall be deemed denied.

SEC. 403. JUDICIAL REVIEW OF DECISIONS.

    Except as otherwise specifically provided in this Act, any 
interested party may appeal any decision of the Commission or any 
State, or any general purpose political subdivision of a State, made 
under section 402 to the United States Court of Appeals for the 
District of Columbia.

SEC. 404. RIGHT-OF-WAY AUTHORITY.

    A provider of electronic communications services shall be 
authorized to construct or operate an electronic communications 
network--
            (1) over public rights-of-way; and
            (2) through easements within a State, except that in using 
        such easements, such provider shall ensure that--
                    (A) the installation or construction of facilities 
                necessary for the electronic communications network 
                shall not adversely affect--
                            (i) the safety, function, and appearance of 
                        the property described in the easement; and
                            (ii) the convenience and safety of any 
                        person who has a right to use such easement;
                    (B) the cost of installation, construction, 
                operation, or removal of such facilities be borne by--
                            (i) such provider;
                            (ii) the subscriber; or
                            (iii) a combination of both; and
                    (C) the owner of the property described in the 
                easement be justly compensated by such provider for any 
                damages caused by the installation, construction, 
                operation, or removal of such facilities.

SEC. 405. STATE REGULATION OF BASIC LOCAL RATES.

    (a) Grandfather Clause.--Except as provided in subsections (b) 
through (d), a State may continue to regulate the rates for basic 
stand-alone local service, if prior to the date of enactment of this 
Act, such service was--
            (1) offered separately from any other services to customers 
        who are not providers of electronic communications services;
            (2) of the type defined in section 254(c)(1) of the 
        Communications Act of 1934 (47 U.S.C. 254 (c)(1)), as 
        interpreted under section 54.101(a) of title 47, Code of 
        Federal Regulations, as those provisions existed on the date of 
        enactment of this Act;
            (3) provided via a circuit-switched telephone network; and
            (4) lawfully regulated by that State.
    (b) Limitation on State Regulation of Ancillary or Vertical 
Services.--The authority of a State to regulate rates under subsection 
(a) shall not--
            (1) extend to any ancillary or vertical services offered in 
        connection with the provision of basic stand-alone local 
        service; or
            (2) apply to any service bundles that contain basic stand-
        alone local service as a component of such bundle.
    (c) Retail or End-User Services Are to Be Unregulated.--Except as 
provided otherwise in this Act, neither the Commission nor any State 
shall have authority to regulate the rates of any other retail or end-
user electronic communications service.
    (d) Petition to Eliminate Existing State Regulations.--
            (1) In general.--Any interested party may submit a petition 
        to the appropriate State agency, as determined by that State, 
        to modify or eliminate any rate regulations on services 
        grandfathered under subsection (a).
            (2) Timing.--
                    (A) In general.--Not later than 270 days after the 
                date that a petition is submitted under paragraph (1), 
                the appropriate State agency shall issue a decision on 
                whether to grant or deny such petition.
                    (B) Expiration of 270-day period.--If the 
                appropriate State agency does not issue a decision 
                within the time-period described in subparagraph (A), 
                the petition shall be deemed granted.
            (3) Content of decision.--Any decision that denies a 
        petition under paragraph (2) shall include a written 
        explanation of--
                    (A) how the regulation described in the petition 
                satisfies the requirements of subsection (a); and
                    (B) why the economic benefits of such regulation 
                outweigh the economic harms of such regulation.
    (e) Federal Agency Review of State Decisions.--
            (1) In general.--An interested party may submit a petition 
        to the Commission to overturn the denial of a petition by an 
        appropriate State agency under subsection (d).
            (2) Special emphasis for review.--In deciding whether or 
        not to overturn the denial of a petition under paragraph (1), 
        the Commission shall place special emphasis on whether the 
        regulation described in the petition remedies or serves to 
        alleviate methods, acts, or practices deemed unlawful under 
        section 102.
            (3) Timing.--
                    (A) In general.--Not later than 180 days after the 
                date that a petition is submitted under paragraph (1), 
                the Commission shall issue a decision on whether to 
                grant or deny such petition.
                    (B) Expiration of 180-day period.--If the 
                Commission does not issue a decision within the time-
                period described in subparagraph (A), the petition 
                shall be deemed denied.
    (f) Federal Court Review.--An interested party may appeal the grant 
or denial of a petition under subsection (e) directly to the United 
States Court of Appeals for the District of Columbia.

SEC. 406. RETENTION OF ADDITIONAL STATE AUTHORITY.

    (a) In General.--Notwithstanding section 402, a State, or any 
general purpose political subdivision of a State, shall retain 
jurisdiction to enact and implement rules or regulations that such 
State or political subdivision determines, after notice and an 
opportunity for public comment, are minimally and directly necessary--
            (1) to prohibit unfair or deceptive acts or practices that 
        would negatively affect consumers from using electronic 
        communications services, including the concealment of the terms 
        and conditions affecting the price and quality of such 
        services;
            (2) to protect the public safety and homeland security; and
            (3) to manage public rights-of-way and execute traditional 
        police powers with respect to public spaces, provided that any 
        fees imposed by such State or political subdivision for access 
        to rights-of-way shall not exceed the actual direct costs 
        incurred by such State or political subdivision in managing the 
        use of such rights-of-way by electronic communications service 
        providers.
    (b) Rule of Construction.--Nothing in subsection (a) shall be 
construed to grant a State, or any general purpose political 
subdivision of a State, the authority--
            (1) absent a delegation under section 403, to enact or 
        enforce rules, regulations, or obligations, or conduct 
        rulemakings or adjudications to implement the provisions of 
        this Act;
            (2) except as otherwise specifically provided, to enact--
                    (A) regulations relating to--
                            (i) rates; or
                            (ii) quality-of-service; or
                    (B) any other economic regulation; or
            (3) to impose any other requirements on a provider of 
        electronic communications services to the extent that such 
        provider relies on networks that connect to customers primarily 
        through use of electromagnetic spectrum or other non-physical 
        means.

SEC. 407. PREEMPTION OF STATE AUTHORITY.

    Except as provided in sections 405 and 406, or under a delegation 
of authority under section 402, this Act supersedes any provision of a 
statute, regulation, or rule, and any other requirement, prohibition or 
remedy under State law or the law of any general purpose political 
subdivision of a State, if the Commission concludes that--
            (1) such statute, regulation, or rule, requirement, 
        prohibition, or remedy is or would be inconsistent with the 
        provisions of this Act;
            (2) there are substantial and clear efficiencies to be 
        gained by preempting the regulatory approach of such State or 
        political subdivision;
            (3) a single Federal regulatory approach is clearly optimal 
        over all other regulatory approaches;
            (4) there is a clear showing that the costs of abiding by a 
        diverse set of regulatory approaches outweighs the benefits of 
        allowing States or political subdivisions thereof to experiment 
        with innovative regulatory approaches;
            (5) abiding by a diverse set of regulatory approaches 
        materially inhibits any provider of electronic communications 
        services from effectively offering such service; or
            (6) such State or political subdivision has imposed any tax 
        solely on some or all providers of electronic communications 
        services.

SEC. 408. TRANSITION AND SUNSET OF EXISTING AGREEMENTS.

    (a) Existing Franchise Agreements.--Any franchise agreement entered 
into by a franchising authority and a provider of electronic 
communications services under section 621 of the Communications Act of 
1934 (47 U.S.C. 541), as of the date of enactment of this Act, shall be 
exempt from the provisions of this Act until the earlier of--
            (1) the date of expiration of the terms of such agreement; 
        or
            (2) the date that is 4 years after the date of enactment of 
        this Act.
    (b) Limitation.--A State, or any general purpose political 
subdivision of a State, may not renew, extend, or otherwise enforce the 
terms of an any franchise agreement described in subsection (a) beyond 
the time-periods established in that subsection.
    (c) Contributions by Competing Video Services.--Until an existing 
franchise agreement is terminated under subsection (a), a State, or any 
general purpose political subdivision of a State, may require any 
provider of competing video services to contribute an equitable portion 
of costs associated with--
            (1) any fees directly attributable to such agreement; and
            (2) the provision of any public access channels required by 
        such agreement.

SEC. 409. EFFECTIVE DATE.

    Except as otherwise specifically provided, this Act shall take 
effect 2 years after the date of enactment of this Act.
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