                                 CODE OF VIRGINIA

CERTIFICATE TO OPERATE AS A TELEPHONE UTILITY (§ 56-265.4:4)

A. The Commission may grant certificates to competing telephone companies, or
any county, city or town that operates an electric distribution system, for
interexchange service where it finds that such action is justified by public
interest, and is in accordance with such terms, conditions, limitations, and
restrictions as may be prescribed by the Commission for competitive
telecommunications services. A certificate to provide interexchange services
shall not authorize the holder to provide local exchange services. The
Commission may grant a certificate to a carrier, or any county, city or town
that operates an electric distribution system, to furnish local exchange
services as provided in subsection B.

B. 1. After notice to all local exchange carriers certificated in the
Commonwealth and other interested parties and following an opportunity for
hearing, the Commission may grant certificates to any telephone company, or any
county, city or town that operates an electric distribution system, proposing to
furnish local exchange telephone service in the Commonwealth. In determining
whether to grant a certificate under this subsection, the Commission may require
that the applicant show that it possesses sufficient technical, financial, and
managerial resources. Before granting any such certificate, the Commission
shall: (i) consider whether such action reasonably protects the affordability of
basic local exchange telephone service, as such service is defined by the
Commission, and reasonably assures the continuation of quality local exchange
telephone service; and (ii) find that such action will not unreasonably
prejudice or disadvantage any class of telephone company customers or telephone
service providers, including the new entrant and any incumbent local exchange
telephone company, and is in the public interest. Except as provided in
subsection A of § 15.2-2160, all local exchange certificates granted by the
Commission after July 1, 2002, shall be to provide service in any territory in
the Commonwealth unless the applicant specifically requests a different
certificated service territory. The Commission shall amend the certificated
service territory of each local exchange carrier that was previously
certificated to provide service in only part of the Commonwealth to permit such
carrier&#8217;s provision of local exchange service throughout the Commonwealth
beginning on September 1, 2002, unless that local exchange carrier notifies the
Commission prior to September 1, 2002, that it elects to retain its existing
certificated service territory. A local exchange carrier shall only be
considered an incumbent in any certificated service territory in which it was
considered an incumbent prior to July 1, 2002, except that the Commission may
make changes to a local exchange carrier&#8217;s incumbent certificated service
territory at the request of those incumbent local exchange carriers that are
directly involved in a proposed change in the certificated service territory.

   2. A Commission order, including appropriate findings of fact and conclusions
   of law, denying or approving, with or without modification, an application for
   certification of a new entrant shall be entered no more than 180 days from the
   filing of the application, except that the Commission, upon notice to all
   parties in interest, may extend that period in additional 30-day increments
   not to exceed an additional 90 days in all.

   3. The Commission shall (i) promote and seek to assure the provision of
   competitive services to all classes of customers throughout all geographic
   areas of the Commonwealth by a variety of service providers; (ii) require
   equity in the treatment of the certificated local exchange telephone companies
   so as to encourage competition based on service, quality, and price
   differences between alternative providers; (iii) consider the impact on
   competition of any government-imposed restrictions limiting the markets to be
   served or the services offered by any provider; (iv) determine the form of
   rate regulation, if any, for the local exchange services to be provided by the
   applicant and, upon application, the form of rate regulation for the
   comparable services of the incumbent local exchange telephone company provided
   in the geographical area to be served by the applicant; and (v) promulgate
   standards to assure that there is no cross-subsidization of the
   applicant&#8217;s competitive local exchange telephone services by any other
   of its services over which it has a monopoly, whether or not those services
   are telephone services. The Commission shall also adopt safeguards to ensure
   that the prices charged and the revenue received by a county, city or town for
   providing telecommunications services shall not be cross-subsidized from other
   revenues of the county, city or town or affiliated entities, except (i) in
   areas where no offers exist from for-profit providers of such
   telecommunications services, or (ii) as authorized pursuant to subdivision 5.

   4. The Commission shall discharge the responsibilities of state commissions as
   set forth in the federal Telecommunications Act of 1996 (P.L. 104-104) (the
   Act) and applicable law and regulations, including, but not limited to, the
   arbitration of interconnection agreements between local exchange carriers;
   however, the Commission may exercise its discretion to defer selected issues
   under the Act. If the Commission incurs additional costs in arbitrating such
   agreements or resolving related legal actions or disputes that cannot be
   recovered through the maximum levy authorized pursuant to &#xA7; 58.1-2660,
   that levy shall be increased above the levy authorized by that section to the
   extent necessary to recover such additional costs.

   5. Upon the Commission&#8217;s granting of a certificate to a county, city or
   town under this section, such county, city, or town (i) shall be subject to
   regulation by the Commission for intrastate telecommunications services, (ii)
   shall have the same duties and obligations as other certificated providers of
   telecommunications services, (iii) shall separately account for the revenues,
   expenses, property, and source of investment dollars associated with the
   provision of such services, and (iv) to ensure that there is no unreasonable
   advantage gained from a government agency&#8217;s taxing authority and control
   of government-owned land, shall charge an amount for such services that (a)
   does not include any subsidies, unless approved by the Commission, and (b)
   takes into account, by imputation or allocation, equivalent charges for all
   taxes, pole rentals, rights of way, licenses, and similar costs incurred by
   for-profit providers. Each certificated county, city, or town that provides
   telecommunications services regulated by the Commission shall file an annual
   report with the Commission demonstrating that the requirements of clauses
   (iii) and (iv) have been met. The Commission may approve a subsidy under this
   section if deemed to be in the public interest and provided that such subsidy
   does not result in a price for the service lower than the price for the same
   service charged by the incumbent provider in the area.

   6. A locality that has obtained a certificate pursuant to this section shall
   (i) comply with all applicable laws and regulations for the provision of
   telecommunications services; (ii) make a reasonable estimate of the amount of
   all federal, state, and local taxes (including income taxes and consumer
   utility taxes) that would be required to be paid or collected for each fiscal
   year if the locality were a for-profit provider of telecommunications
   services, (iii) prepare reasonable estimates of the amount of any franchise
   fees and other state and local fees (including permit fees and pole rental
   fees), and right-of-way charges that would be incurred in each fiscal year if
   the locality were a for-profit provider of telecommunications services, (iv)
   prepare and publish annually financial statements in accordance with generally
   accepted accounting principles showing the results of operations of its
   provision of telecommunications services, and (v) maintain records
   demonstrating compliance with the provisions of this section that shall be
   made available for inspection and copying pursuant to the Virginia Freedom of
   Information Act (&#xA7; 2.2-3700 et seq.).

   7. Each locality that has obtained a certificate pursuant to this section
   shall provide nondiscriminatory access to for-profit providers of
   telecommunications services on a first-come, first-served basis to
   rights-of-way, poles, conduits or other permanent distribution facilities
   owned, leased or operated by the locality unless the facilities have
   insufficient capacity for such access and additional capacity cannot
   reasonably be added to the facilities.

   8. The prices charged and the revenue received by a locality for providing
   telecommunications services shall not be cross-subsidized by other revenues of
   the locality or affiliated entities, except (i) in areas where no offers exist
   from for-profit providers of such telecommunications services, or (ii) as
   permitted by the provisions of subdivision 5. The provisions of this
   subdivision shall not apply to Internet access, broadband, information, and
   data transmission services provided by any locality providing
   telecommunications services on March 1, 2002, except for an authority created
   pursuant to the BVU Authority Act (&#xA7; 15.2-7200 et seq.).

   9. The Commission shall promulgate rules necessary to implement this section.
   In no event, however, shall the rules necessary to implement clauses (iii) and
   (iv) of subdivision 5, clauses (ii) through (v) of subdivision 6, and
   subdivision 8 impose any obligations on a locality that has obtained a
   certificate pursuant to this section, but is not yet providing
   telecommunications services regulated by the Commission.

   10. Public records of a locality that has obtained a certificate pursuant to
   this section, which records contain confidential proprietary information or
   trade secrets pertaining to the provision of telecommunications service, shall
   be exempt from disclosure under the Freedom of Information Act (&#xA7;
   2.2-3700 et seq.). As used in this subdivision, a public record contains
   confidential proprietary information or trade secrets if its acquisition by a
   competing provider of telecommunications services would provide the competing
   provider with a competitive benefit. However, the exemption provided by this
   subdivision shall not apply to any authority created pursuant to the BVU
   Authority Act (&#xA7; 15.2-7200 et seq.).

C. Article 5.1 (&#xA7; 56-484.7:1 et seq.) of Chapter 15 shall not apply to a
county, city, or town that has obtained a certificate pursuant to this section.

D. Any county, city, or town that has obtained a certificate pursuant to this
section may construct, own, maintain, and operate a fiber optic or
communications infrastructure to provide consumers with Internet services, data
transmission services, and any other communications service that its
infrastructure is capable of delivering; provided, however, nothing in this
subsection shall authorize the provision of cable television services or other
multi-channel video programming service. Furthermore, nothing in this subsection
shall alter the authority of the Commission.

E. Any county, city, or town that has obtained a certificate pursuant to this
section and that had installed a cable television headend prior to December 31,
2002, is authorized to own and operate a cable television system or other
multi-channel video programming service and shall be exempt from the provisions
of &#xA7;&#xA7; 15.2-2108.4 through 15.2-2108.8. Nothing in this subsection
shall authorize the Commission to regulate cable television service.

HISTORY: 1984, c. 382; 1995, cc. 22, 35, 187; 2001, c. 75; 2002, cc. 479, 489;
2003, cc. 677, 711, 720; 2005, c. 258; 2006, cc. 73, 76; 2009, c. 330; 2016, cc.
724, 725.