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Overview: Increasing Competition to Cable Incumbents and the Future of Cable Video, Voice and Data R

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6th Circuit wins 'lottery' and Oral Argument set for Feb. 6, 2008. FCC 1st Report & Order ... Reasonable compromise in IL. The villain: at&t ... – PowerPoint PPT presentation

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Title: Overview: Increasing Competition to Cable Incumbents and the Future of Cable Video, Voice and Data R


1
Overview Increasing Competition to Cable
Incumbents and the Future of Cable Video, Voice
and Data Regulation
  • Nicholas Miller
  • Practicing Law Institute
  • January 28, 2008
  • Download this presentation at
  • http//www.millervaneaton.com/content.agent?page_n
    ameFIRMEVENTS

2
Summary
  • The View from Local Government
  • 2007--A Tough Year for both Cable Ops and for
    LFAs
  • Rogue Federal Agency
  • 1st 2d RO on Franchising
  • State Legislation
  • Telco Entry and Incumbents Response
  • Promises Made but not Delivered
  • Squeezing costs out of PEG?
  • Whats ahead in DC

3
The View from Local Government
  • My personal views
  • Deep Frustration with
  • State legislatures
  • FCC processes
  • Behavior of both new entrants and incumbents
  • Unable to focus real political power on the
    fulcrum policy makers

4
2007--A Tough Year for both Cable Ops and for
LFAs
  • FCCs 1st and 2d RO re Franchising
  • FCCs unrelenting attack on Cable
  • Atts remarkable success with state
    legislation
  • MSOs shortsighted response re PEG

5
2007NCTA Can We Please Move On?
  • Thanks to Multichannel News for the following
    summary
  • February Cable must-carry rights for certain
    digital TV stations'
  • April Cable a la carte recommended to Congress
  • June House bill (endorsed by Martin) to give
    rebates to customers who blocked channels in a
    tier.
  • September cable must-carry TV stations in both
    analog and digital form for three years after
    Feb. 2009. Also
  • The America Channel granted RSN status
  • Comcast's CN8 local news channel fined 20,000
    for alleged violations of sponsorship ID rules.
  • Comcast set-top box appeal denied
  • October Program access rules extended five
    years and exclusive cable contracts with
    landlords banned. Also
  • Forced wholesale a la carte rulemaking launched.
  • Compulsory arbitration to settle program
    carriage disputes proposed.
  • November Cable leased access rates cut 75.
  • December 30 cable ownership cap revived.

6
FCC Local Franchising 1st Report Order
  • FCC wants to be Mayor
  • Let us tell you how Local Franchising of local
    public property should work.
  • Decision in December 2006, text not released
    until March 5, 2007. (90 days, but who is
    counting?)
  • Implementation of Section 621(a)(1) of the Cable
    Communications Policy Act of 1984 as amended by
    the Cable Television Consumer Protection and
    Competition Act of 1992, MB Docket No. 05-311,
    Report and Order and Further Notice of Proposed
    Rulemaking, FCC 06-180 (March 5, 2007) (FCC
    Order). The FCC Order was officially published
    in the Federal Register on March 21, 2007, and
    took effect April 20, 2007.

7
FCC 1st Report Order
  • Major Joint Effort within LFAs to coordinate
    challenge and appeal
  • Decision to not seek reconwould delay appellate
    review
  • Effort to get into a favorable Circuitappeals
    filed in 3d, 4th, 6th and 11th
  • Two major briefs and several others
  • National Associations
  • Tampa, Montgomery County, Chicago, Los Angeles,
    St Louis, Anne Arundel County, Wilmington, et al
  • New York City, Fairfax County, New Jersey Office
    of the Rate Payer Advocate, filed individually
  • Many others join in amicus
  • NCTA files separate appeal
  • 6th Circuit wins lottery and Oral Argument set
    for Feb. 6, 2008

8
FCC 1st Report Order
  • Major Joint Effort within LFAs to coordinate
    challenge and appeal
  • Decision to not seek reconwould delay appellate
    review
  • Effort to get into a favorable Circuitappeals
    filed in 3d, 4th, 6th and 11th
  • Two major briefs and several others
  • National Associations
  • Tampa, Montgomery County, Chicago, Los Angeles,
    St Louis, Anne Arundel County, Wilmington, et al
  • New York City, Fairfax County, New Jersey Office
    of the Rate Payer Advocate, filed individually
  • Many others join in amicus
  • NCTA files separate appeal
  • 6th Circuit wins lottery and Oral Argument set
    for Feb. 6, 2008

9
FCC 1st Report Order
  • FCC Held
  • Local franchising authorities have acted
    unreasonably and delayed competitive entry.
  • FCC pre-empts local cable franchising authority
    and process in dealing with new franchise
    applications, including the following
  • limitations on the franchise fee authority of
    local governments
  • reductions in PEG and institutional network
    (I-Net) support
  • prohibitions on some types of build-out and
    service extension requirements
  • unrealistically short time limits for negotiation
    of new agreements and
  • prohibitions on local authority over non-cable
    services and mixed-use facilities.
  • Not applicable to states with state laws
    controlling franchising
  • FNPRM should findings be extended to existing
    cable operators at renewal?

10
FCC 1st Report Order
  • Major Legal Problems with FCC Decision
  • Cable Act (Sec 621) makes no provision for FCC
    authority over franchise process
  • Shot Clock compels a franchise grant by FCC
    action.
  • FCC ignores Cable Act language that local
    community defines needs and interests in PEG
  • FCC rewrites franchise fee language of the Cable
    Act
  • FCC relied on false statements by telcos
  • No justification for different treatment of state
    vs. local franchises
  • NCTA points to
  • Lack of statutory authority
  • Discriminatory treatment of new entrant vs.
    incumbent

11
FCC 2nd Report Order
  • OverallNot as damaging to LFA interests as
    expected
  • Real Problem Opens the door on FCC direct
    regulation of franchising.
  • Released January , 2008 and now effective.
  • Procedural Problemfindings rely on 1st RO,
    whats the effect of reversal or remand of 1st
    RO?
  • Decision by LFAs to seek Recon and Stay
  • 6th Cir has the appeal
  • Recon should delay 6th Cir consideration until
    after 1st RO decision
  • Stay motion can be taken to 6th shortly
  • Major Process error by FCC RFA analysis wrong
    on its face
  • Refers to rules
  • Refers to effective only at renewal

12
FCC 2nd Report Order
  • Applies to incumbents immediately
  • And everywhere (throughout the nation)..
  • case-by-case whether our statutory
    interpretation alter the incumbents existing
    franchise agreement
  • no retrospective relief.
  • no new process is specified we encourage LFAs
    and incumbents to work cooperatively to address
    those issues.
  • Underlying rationale of First RO barrier to
    entry inapplicable.

13
FCC 2nd Report Order Applicable to Incumbents
  • no cable franchise fees on non-cable services
  • incidental means only the items enumerated in
    the statute
  • Count against franchise fees
  • In-kind municipal projects. . . unrelated to the
    provision of cable services
  • payments made to support the operation of PEG
    access facilities except for capital costs.
  • Mixed-use networks applies equally.

14
FCC 2nd Report OrderNot applicable to
incumbents
  • Time limits for renewal negotiations
  • Build-out.
  • PEG and I-NetsOK to impose greater burdens on
    incumbents.
  • The new entrant can have lesser burdens, but not
    greater.
  • duplicative networks and payments for I-Nets
  • LFA requirements not frozen
  • Customer Service
  • Cable Act prohibits FCC preemption of state or
    local laws that exceed the FCCs standards.
  • LFAs may have independent authority to impose
    customer service requirements on non-cable
    activities.

15
State Legislation
  • Disappointing results last year
  • LFAs defeated legislation in WA, TN, CO
  • Lost in MI, MO, OH, GA, SC, NC, OK, KN, IA, WI
  • Reasonable compromise in IL
  • The villain att
  • Att strongly committed to legislation in its
    territories (including Bell South)
  • Preemptive strike to avoid FTTH buildout
    requirements
  • U-Verse looks like a 1990s technology that wont
    work commercially
  • Att misrepresenting its PEG and non-commercial
    channel deployments see IL and CA requirements
  • Why were LFAs/PEG largely ineffective in state
    capitols?

16
State Legislation
  • Expect Better results this year
  • Qwest withdrawal from U Verse
  • A few states like TN still in play, but most of
    the West seems quiet
  • Verizon is focusing on franchisingLess interest
    in legis in W Va, MD, PA, DE, NY, MA

17
Telecommunication Rollouts
  • ATTs U-Verse mess
  • Technology working?
  • Exploding boxes
  • Latent channel shifting
  • Limited TVs in a home
  • PEG that isnt, and that doesnt comply with
    state law requirements
  • SAP
  • Data speeds
  • Inadequate program guides
  • Upstream connections

18
Telecommunication Rollouts
  • Verizon is doing it right
  • Getting franchisesas many as our capital plans
    will support
  • Usually agrees to match terms of incumbent and
    reasonable buildout plans
  • Getting the results in the consumer market, with
    variations on the quality of the incumbent
  • Wall Street is waking up to the long-term value
    of FTTH

19
Telecommunications Rollouts
  • Growing Interest in Public Financed Broadband
    Networks
  • Muni Wi-Fi is NOT dead
  • 700 mhz D Block auction, combined with the public
    safety natl operator?
  • More FTTH local projects
  • VT telecommunications initiative
  • MI-Connection (Charlotte area)
  • APPA member interest continues
  • Ashland OR, UTOPIA wholesale models
  • Major drivers on the horizon
  • ITS
  • Universal broadband
  • IP uses by E-Government

20
Telecommunication Rollouts
  • Consensus
  • FTTH is the answer, but when?
  • Incumbent problem
  • Upgrades yield higher short term return on
    investment
  • 80 of potential revenues of FTTH with only 20
    of the capital costs.
  • Unlimited fiber capacity risks reseller
    competition if
  • Net Neutrality
  • Open Access

21
Cable Incumbents Response to Telecommunication
Competition
  • Cutting costs in the wrong places
  • Reduced capital investment
  • Squeezing customer service
  • Nickel and dime customer bills
  • Inappropriate fights huge blackeye for no real
    economic gain
  • Meridian/Michigan PEG
  • Charlotte/MI Connection Adelphia takeover

22
Cable Incumbents Response to Telecommunication
Competition
  • Is it a surprise no one is defending Cable when
    hammered by the FCC?

23
This Coming Year in DC
  • Little legislation or regulation
  • Much noise
  • Watch the 700 MHz auction
  • Policy Trend
  • Let Government build the backbone, and let the
    private sector provide the services over that
    backbone
  • See the Republican and Democratic candidates
    positionsat www.millervaneaton.com
  • See the New America Foundation efforts and other
    progressive think tanks.
  • 3 FCC seats for the new President to fill.

24
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 202-785-0600 Fax 202-785-1234 W
ebsite www.millervaneaton.com
Download this presentation at http//www.millerva
neaton.com/content.agent?page_nameFIRMEVENTS
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