A BILL TO BE ENTITLED
AN ACT TO REGULATE COMPETITION BETWEEN LOCAL GOVERNMENT AND PRIVATE BUSINESS BY REQUIRing CITIES THAT PROVIDE COMMUNICATIONS SERVICE TO THE PUBLIC TO COMPLY WITH LAWS APPLICABLE TO PRIVATE PROVIDERS, TO ESTABLISH SEPARATE ENTERPRISE FUNDS, TO NOT CROSS‑SUBSIDIZE COMMUNICATIONS SERVICE WITH OTHER GOVERNMENTAL FUNDS, TO IMPUTE THE COSTS THAT WOULD BE INCURRED BY PRIVATE PROVIDERS, TO ANNUALLY REMIT TO THE CITY'S GENERAL FUND THE COSTS THAT WOULD BE INCURRED BY PRIVATE PROVIDERS, and to prepare an annual audit of competitive activities.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 16 of Chapter 160A of the General Statutes is amended by adding a new section to read as follows:
"§ 160A‑329.  City owned or operated communications service.
(a)	Definitions. – The following definitions apply in this section:
(1)	Communications network. – A wired or wireless network for the provision of communications service.
(2)	Communications service. – The provision of cable, telephone, broadband, or Internet access service to the public or any sector of the public, regardless of the technology used to deliver the service.
(3)	High‑speed Internet. – Internet access with transmission speeds that are consistent with requirements for high‑speed broadband Internet access as defined by the Federal Communications Commission from time to time.
(b)	Requirements. – A city that operates a public enterprise under G.S. 160A‑311 that provides communications service to the public for a fee over a communications network that is directly or indirectly owned or operated by or provides a financial benefit to the city or another city shall meet the following conditions with respect to the provision of communications service:
(1)	Comply with all local, State, and federal laws, regulations, or other requirements that would apply to the communications service if provided by a private communications service provider.
(2)	Establish a separate enterprise fund for communications service and shall use this fund to separately account for revenues, expenses, property, and source of investment dollars associated with the provision of communications service.
(3)	Shall not subsidize the cost of providing communications service with funds from any other noncommunications service, operation, or other revenue source, including any funds or revenue generated from electric, gas, water, sewer, or garbage services, but excluding funds from State or federal grants and other governmental stimulus programs. In complying with this requirement, a city owned communications service provider shall not price any communications service below the cost of providing the service.
(4)	Shall, in calculating the cost incurred and in the rates to be charged for the provision of communications service, impute: (i) the cost of the capital component that is equivalent to the cost of capital available to private communications service providers in the same locality; and (ii) an amount equal to all taxes, including property taxes, licenses, fees, and other assessments that would apply to a private communications service provider including federal, State, and local taxes; rights‑of‑way, franchise, consent, or administrative fees; and pole attachment fees.
(5)	Shall annually remit to the general fund of the city an amount equivalent to all taxes or fees a private communications service provider would be required to pay the city or county in which the city is located, including any applicable tax refunds received by the city owned communications service provider because of its government status and a sum equal to the amount of property tax that would have been due if the city owned communications service provider were a private communications service provider.
(6)	Shall prepare and publish an independent annual audit in accordance with generally accepted accounting principles that reflect the fully allocated cost of providing the communications service, including all direct and indirect costs. The indirect costs shall include amounts for rights‑of‑way, franchise, consent, or administrative fees, regulatory fees, occupation taxes, pole attachment fees, and ad valorem taxes. The annual accounting shall reflect any direct or indirect subsidies received by the city owned communications service provider, and any buildings, equipment, vehicles, and personnel that are jointly used with other city departments shall be fully allocated to the city owned communications service. The North Carolina Utilities Commission may adopt rules and regulations to ensure compliance with the provisions of this subdivision, and all records demonstrating compliance shall be filed with the North Carolina Utilities Commission and made available for public inspection and copying.
(c)	Exemptions. – 
(1)	The provisions of this section shall not apply to:
a.	The purchase, lease, construction, or operation of facilities by a city to provide communications service within the city's boundaries for the city's internal governmental purposes.
b.	Any city whose jurisdiction is not served by a private provider of high‑speed Internet service or whose jurisdiction does not have access to high‑speed Internet service. For purposes of this subsection, a city shall be determined to have access to high‑speed Internet service if high‑speed Internet service is available to at least eighty percent (80%) of the households in the city. 
c.	The provision of communications service by a city to the extent the service is limited to areas of the city that are not served by any private communications service provider.
(2)	The provisions of subdivisions (b)(3) through (b)(6) of this section shall not apply to communications service duly authorized by a city on or before March 1, 2009."
SECTION 2.  G.S. 62‑3(23) is amended by adding the following new sub‑subdivision to read:
"l.	The term "public utility" shall include any city providing service as defined in G.S. 62‑3(23)a.6. and subject to regulation under G.S. 160A‑329."
SECTION 3.  Any city that is designated as a public utility under Chapter 62 of the General Statutes when this act becomes law shall not be subject to the provisions of this act with respect to any of its operations that are authorized by that Chapter.
SECTION 4.  If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and to that end the provisions of this act are declared to be severable.
SECTION 5.  This act is effective when it becomes law and applies to the provision of communications service by a city owned communications service provider after that date.