Federal Efforts to Restrict Local RightofWay Franchising and Franchise Fees

1
Federal Efforts to Restrict Local Right-of-Way
Franchising and Franchise Fees

• Nicholas Miller
• October 19, 2005
• Montgomery County CCAC

2
Program

• De-stabilizers
• Congressional Efforts
• National Organizations Position

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Convergence The Technological De-stabilizer

• Digitalization breaks down the stove pipes of
  separate technologies for separate services
• Regulatory distinctions become market entry
  barriers
• Is fiber/digital changing the traditional
  economies of scale?

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Serious Problem for RBOCs

• Core business voice leaking to competitors
• VoIP works
• Distance and usage insensitive
• deliverable over cable modem and broadband
  wireless (Wi-Fi)
• Current copper not able to deliver Big Broadband
  (more that 3Mbs)
• Future services (and revenues) are bandwidth
  intensive
• Video on demand
• Data file transfers
• Holographics, etc.

5
Brand XThe Legal De-stabilizer

• National Cable Telecommunications Assn v.
  Brand X Internet Servs., 125 S. Ct. 2688 (2005).
• FCC is entitled to deference in its decision
• cable modem is an information service
• Information services fall within Title I
• FCC has authority under Title I to set
  appropriate regulations for information services.

6
Brand XThe Legal De-stabilizer

• There is NO statutory guidance in Title I to the
  FCC other than protect the public interest
• Congress faced with trust FCC discretion? or
  give statutory direction
• Problems with Discretion
• Universal Service is funded under Title II
• Community needs and interests are addressed in
  Title VI
• CALEA, Access by Disabled, 911 are under Title II

7
SBC and Verizon Plan Different Deployments

• Verizon is fiber to the home
• Analog television
• Packet switched (IP) internet access
• Analog voice
• Capacity to greatly expand the packet-switched
  services
• SBC is fiber to the curb
• Similar to Comcast in amount of fiber
• Uses existing telephone twisted wire pair for
  home drops
• Has limited bandwidth into the homeabout 6Mbs

8
Telephone Video Fiber

• Verizon fiber rollout for video Looking for
  quick, truncated franchises.
• SBC argues that its IPTV is an information
  service not needing a local franchise at all.

9
Industry Pushing Congress and State Legislatures
for Relief

• Local governments have won recent state
  legislative battles
• Nevada
• Texas
• Virginia
• Louisiana

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Congress Responds?

• New Rules to Limit FCC Discretion?
• Universal Service in a Digital Age?
• Role for State/Local Regulation?
• Local Right-of-Way Rent?

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Congress Activity To Date

• House Staff Draft
• Ensign Bill (S. 1504)
• Smith/Rockefeller (S. 1349) Blackburn/Wynn
  Bills (H.R. 3146)

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Talking Points Vision

• Preserve local authority to
• Allocate and manage public rights of way for the
  benefit of everyone.
• Design and impose taxes that are consistent with
  local needs and maintain adequate revenue.
• Provision broadband services.
• Expand localism in video services.

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Talking Points Vision (cont.)

• Protect consumers from Market Imperfections.
• Enhance homeland and hometown security.
• Assure nondiscriminatory access to the full range
  of communications services.

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Local Governments Position

• Enthusiastic about the benefits IP.
• The federal government must respect and preserve
  state and local property rights and police
  powers, including
• right-of-way ownership and management,
• zoning, and
• Consumer protection.
• Monopolies should be regulated.
• Preserve local taxing authority.

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Local Governments Position (cont.)

• Dont lessen the effectiveness of
• universal service,
• CALEA,
• 911 services,
• access for persons with disabilities,
• or consumer protections.
• Users of the public rights-of-way should pay fair
  prices for the use of public property.
• PEG access promotes localism, open government,
  free speech, and public participation in
  community affairs.

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S. 1504 (Ensign), In Detail

• Reoeaks existing communications laws
• Creates a regulation-free world for voice and
  video services
• Severely limits local govt provisioning of
  telecommunications services
• Voids all existing franchises

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S.1504, In Detail

• Preserves 5 of gross revenue for video but
  not really
• 1) Limits fee to cost of managing the
  rights-of-way
• 2) Numerous exceptions to gross revenues-- 15
  less than current franchises
• 3) FCC empowered to reduce the franchise fee in
  the name of fairness
• Only 4 PEG channels
• No opportunity to change with technology
• No PEG
• No I-Net
• No Assured Access to broadband
• No build out requirement
• No redlining prohibition
• Does require basic telephone service to all
  residents

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The Federal Cable Franchise bills--Blackburn
(House) Smith (Senate)

• Treats Similar Providers Differently
• Allows SBC to avoid any franchise (state or
  local).
• Incumbent cable operators with state PUC
  certificates (as a CLEC) may no longer need a
  local cable franchise.
• Franchise Fee Problems
• No mechanism to enforce and audit fee.
• PEG Support and Obligations
• No obligation for any financial support for local
  PEG use of the video systems.
• Limits PEG to traditional video PEG channels
  tied to the incumbent operators franchise.
• No mechanism to enforce PEG.
• No provision for adjusting capacity or technology
  enhancements.

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The Federal Cable Franchise Bills --Blackburn
(House) Smith (Senate)

• No I-Nets
• Neither capacity nor financial support.
• Economic Redlining
• No prohibition
• Providers choose where and how to build-out their
  facilities.
• Does prohibit the denial of services based on
  income in an area.
• EEO Rules
• Current FCC EEO rules do not apply.

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House Staff Draftthe BITS Bill

• No change to existing Title II or VI
• Any packet switched service (including
  wireless) falls under new provision
• Network neutrality and interconnection
• No obligation to lease network facilities
• Permits non-discriminatory franchise fees
• Preemption of State Prohibitions on Local
  Government Broadband Service

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House Staff Draft--BVS Provisions

• Federal franchise for Broadband Video Service
  local registration
• FCC sets customer service and signal quality
  rules
• LFA retains right to require
• PEG capacitybut no additional
• I-Net capacity if operator offers I-Net service
• 5 franchise fee for all video related
• Regulation of PROW entry and occupancy

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House Staff Draft--BVS Provisions (cont.)

• No local audit authority.
• LFA may require bond, insurance, and compliance
  with ROW management.
• FCC arbiter of all disputes.
• REDLINING placeholder.

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Be Wary of the Deal

• Offer
• 5 Franchise Fee
• Right of Way Management
• PEG Capacity

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Why this Deal is unacceptable

• Inadequate PROW Authority
• Inadequate Rent for use of public property
• No PEG or new capacity
• No Enforcement Authority
• Ineffective Consumer Protection
• No Buildout requirement

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Ways to Help

• Go to TeleCommunity webpage
• www.telecommunityalliance.org
• Explain the dispute to local media

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Miller Van Eaton We Assist Local Governments
In AchievingThe Full Benefits Of The
Communications Age For Their Communities
Nicholas P. Miller nmiller_at_millervaneaton.com Mill
er Van Eaton, P.L.L.C. 1155 Connecticut Avenue,
N.W. Suite 1000 Washington, D.C.
20036-4301 Phone [phone] Fax [phone] W
ebsite www.millervaneaton.com