A. A political subdivision shall not levy a tax, rent, fee or charge on a telecommunications corporation, including a telecommunications corporation that provides interstate services as described in section 9-583, subsection C, for the use of a public highway to provide telecommunications services, or levy a tax, fee or charge on the privilege of engaging in the business of providing telecommunications services within that political subdivision other than:

1. Any transaction privilege tax authorized by law on the business of providing telecommunications services, except that this section does not allow the imposition of a transaction privilege tax on the business of providing interstate telecommunications services. Any transaction privilege tax authorized by law on the business of providing commercial mobile radio service shall not exceed the tax rate levied on the business of providing telecommunications services.

2. A telecommunications application fee for the issuance of a telecommunications license or franchise if the application fee applies on a competitively neutral and nondiscriminatory basis to all telecommunications corporations that use the public highways to provide telecommunications services. A political subdivision may require only one application fee and one license or franchise for each telecommunications corporation whether the telecommunications corporation provides local services only or local and long-distance services, including intrastate or interstate services. An application fee is not required for a telecommunications corporation described in subsection E of this section.

3. A telecommunications construction permit fee for the issuance of a construction permit to place telecommunications facilities in the public highways if the permit fee applies on a competitively neutral and nondiscriminatory basis to all telecommunications corporations that place telecommunications facilities in the political subdivision’s public highways to provide telecommunications services. Political subdivisions shall establish a nonbinding outside arbitration procedure to attempt to resolve disputes over recovery of reasonable, proportionate and attributable costs of construction permit fees pursuant to this paragraph and other fees pursuant to this article before the disputes are submitted to a court for resolution.

4. A fee under section 9-583, subsection C.

B. All application fees, permit fees and charges levied by a political subdivision on telecommunications corporations pursuant to subsection A, paragraphs 2 and 3 of this section shall be levied on a competitively neutral and nondiscriminatory basis and directly related to the costs incurred by the political subdivision in providing services relating to the granting or administration of applications or permits. These fees and charges also shall be reasonably related in time to the occurrence of the costs.

C. Notwithstanding subsections A and B of this section, a political subdivision may require a telecommunications corporation to bear all of the reasonable costs associated with construction, maintenance and operation of its facilities in the public highway used to provide telecommunications services, including bearing reasonable costs associated with damage caused to public highways.

D. Notwithstanding subsections A and B of this section, in a license or franchise, a political subdivision and a telecommunications corporation may agree to in-kind payments for use of the public highways different from those specified in subsection A or B of this section. The license or franchise shall be structured so that the in-kind payments made for use of the public highways to provide interstate telecommunications services under the license or franchise are less than or equal to and are offset against any linear foot charge owed pursuant to section 9-583, subsection C, paragraphs 2 and 3. The license or franchise shall be structured so that the in-kind payments made under the license or franchise pursuant to subsection A, paragraph 1 of this section are less than or equal to and are offset against any transaction privilege license tax on the business of providing telecommunications services. The valuation of any in-kind benefits shall be set forth in such agreements. The in-kind facilities that are used to offset any or all payments in this subsection are limited to the costs of the in-kind facilities and shall remain in possession and ownership of the political subdivision after the term of the existing license or franchise expires. In-kind facilities may be offset for either payments of intrastate transaction privilege taxes or for interstate linear foot charges but shall not be offset for any combination of intrastate and interstate charges. However, a political subdivision shall not require a telecommunications corporation to provide in-kind services, make in-kind payments or pay a fee in addition to the fees described in subsections A, B and C of this section as a condition of consent to use a highway to provide telecommunications services.

E. Notwithstanding subsection D of this section, any telecommunications corporation that was providing telecommunications service within this state on November 1, 1997 pursuant to a grant made to it or its lawful predecessors before the effective date of the Arizona Constitution may continue to provide telecommunications service pursuant to that state grant until it is lawfully repealed, revoked or amended. Such telecommunications corporation shall require no additional grant from any political subdivision to provide telecommunications services.

F. This article does not affect the terms or conditions of any franchise, license or permit issued by a political subdivision before November 1, 1997, or to release any party from its obligations thereunder. Those franchises, licenses or permits shall remain fully enforceable in accordance with their terms. A political subdivision may lawfully enter into agreements with franchise holders, licensees or permittees to modify or terminate an existing franchise, license or agreement.

G. A political subdivision may not discriminate against a cable operator in its use of its cable system or prevent a cable operator from using its cable system in the public highways to provide telecommunications services and other noncable services if the cable operator complies with applicable federal and state requirements. This subsection does not do either of the following:

1. Limit the authority of any political subdivision to license cable systems and to establish conditions on those licenses that are competitively neutral and nondiscriminatory with conditions applicable to telecommunications corporations and that are consistent with federal and state law.

2. Affect the authority of a political subdivision to manage the public highways within its boundaries or exercise its police powers and land use powers.