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Presentation to: Chicago Chapter Federal Communications Bar Association April 18, 2008 Michael Morris Video Franchising

STATE VIDEO FRANCHISING AND BROADBAND DEPLOYMENT INITIATIVES. Presentation to: Chicago Chapter Federal Communications Bar Association April 18, 2008 Michael Morris Video Franchising & Broadband Deployment Communications Division California Public Utilities Commission.

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Presentation to: Chicago Chapter Federal Communications Bar Association April 18, 2008 Michael Morris Video Franchising

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  1. STATE VIDEO FRANCHISING AND BROADBAND DEPLOYMENT INITIATIVES Presentation to: Chicago Chapter Federal Communications Bar Association April 18, 2008 Michael Morris Video Franchising & Broadband Deployment Communications Division California Public Utilities Commission

  2. DIVCACALIFORNIA’SDIGITAL INFRASTRUCTUREANDVIDEO COMPETITION ACT

  3. DIVCA • CPUC’s Responsibilities • Issue and renew 10-year state franchises • Enforce build out and nondiscrimination requirements • Annual reports to legislature and governor • Protect against cross-subsidization • Local Entity Responsibilities • Franchise fees • Customer service standards • ½ of fines to Digital Divide Account • CEQA review • Encroachment permits • Emergency alert • PEG channels/support

  4. STATE FRANCHISING AUTHORITY FRANCHISING PROCESS • Application • $2000 application fee • Confirm Technical, Managerial, Financial Qualifications • Affidavit re lawful operation • Definition of franchise territory • Demographic information re households/low income by census block group • List of affected local entities • Approval • Ministerial process • Within 30 days – determine if application is complete • If incomplete – notify applicant • Restart 30-day clock • If complete – issue franchise within 14 days or it is deemed issued • Notify affected local entities

  5. STATE FRANCHISING AUTHORITYFRANCHISING PROCESS • Build-out Requirements • Holders may not discriminate against low income households • Holders or their affiliates with fewer than 1,000,000 telephone customers must offer video service to all customers within their telephone service area within a reasonable time, as determined by the Commission • Holders or their affiliates with more than 1,000,000 telephone customers shall provide access to its video service 25-35 percent of the customer households in the holder’s telephone service area within two years after it begins providing video service, and to a number at least equal to 40-50 percent of those households within five years(see fine print) • Enforcement • Local governments may bring complaints alleging violations of the build out or nondiscrimination requirements • The Commission may suspend or revoke the franchise • The Commission may impose a fine not to exceed 1 percent of the holder’s total monthly gross revenue

  6. CPUC’S DIVCA RULES AREAS OF CONTROVERSY • Applications for Rehearing /Appeals • Public Interest Groups • No opportunity to participate in the franchise application process • Intervenor compensation within the video context. • Cities of Oakland/Carlsbad • Automatic extension of local franchises • Conclusion that the Commission is the only government entity that may grant a video service provider a franchise to operate within CA • Providers • Requirement to report video subscriber data • Requirement to report data speeds

  7. DIVCA – AREAS OF CONTROVERSY • Ability of local entities to continue to issue franchises highlighted by Oakland franchise granted 1/2/2008 • AT&T provision of PEG channels • “Similar” to commercial channels?

  8. IS STATE FRANCHISING WORKING?NATOA DOESN’T THINK SO • NATOA members were given a series of 54 questions about the impact of new state legislation on video services in their communities • The 14 studied states included: Arizona, California, Florida, Georgia, Indiana, Illinois, Iowa, Michigan, Missouri, North Carolina, Nevada, Ohio, Texas and Virginia. • 17% report an increase in revenues, 19% report a decrease in franchise fee and tax revenue • 97% indicated that the number of PEG channels had stayed the same since state video legislation passed. • 82% do not believe that state video legislation is having a positive impact on their community.

  9. State Franchises Granted under DIVCA Video Franchise Statistics as of January 2, 2008 Average Time To Process Applications

  10. Broadband Deployment

  11. BROADBAND IS A ‘CIVIL RIGHTS’ ISSUE FOR THIS CENTURY, LAWMAKER SAYS Broadband holds so much promise as an economic, political, and social engine for all that it must be considered a major shortcoming when minority populations cannot access it, and one that needs to be overcome, Rep. Sheila Jackson Lee (D., Texas) said today. The member of the House subcommittee on courts, the Internet, and intellectual property told those gathered at a Joint Center for Political and Economic Studies discussion of broadband, new media, and minorities that advanced telecom services represent “the civil rights [issue] of the 21st century. . . . When you speak of civil rights, then the . . . utilization of the Internet has to be there.”

  12. USIIA SAYS RURAL BROADBAND DEPLOYMENT IS ROBUST The U.S. Internet Industry Association today criticized “the accepted political dogma that America has in some way failed in its efforts to deploy broadband,” saying that such judgments confuse deployment with adoption and compare data from different countries that isn’t adjusted for differences in population density. USIIA President and Chief Executive Officer David McLure professed himself “surprised” by the findings of “Deployment of Broadband to Rural America,” a report released by the organization today. “I was surprised by how robust deployment of broadband has been to rural America,” he told reporters during a conference call.” In fact, he said, “We’ve pulled off a deployment coup [with] the fastest deployment [of new technology] in human history.”

  13. NY Times Article Raises Questions About Government Broadband Deployment Policies October 3, 2007 Unlike U.S., Japanese Push Fiber Over Profit By KEN BELSON TOKYO — The United States may be the world’s largest economy, but when it comes to Internet connections at home, many Americans still live in the slow lane. By contrast, Japan is a broadband paradise with the fastest and cheapest Internet connections in the world. Nearly eight million Japanese have a fiber optic line at home that is as much as 30 times speedier than a typical DSL line. But while that speed is a boon for Japanese users, industry analysts and some companies question whether the push to install fiber is worth the effort, given the high cost of installation, affordable alternatives and lack of services that take advantage of the fast connections. Indeed, the stock price of Nippon Telegraph and Telephone, which has two-thirds of the fiber-to-the-home market, has sunk because of concerns about heavy investments and the deep discounts it has showered on customers. Other carriers have gotten out of the business entirely, even though it is supported by government tax breaks and other incentives.

  14. Federal and State Grants and Loans for Broadband Deployment Multiplying • CA PUC $100,000,000 grant program • Joint Board proposes $300,000,000 in Universal Service funds for broadband deployment • $267,000,000 RUS Loan

  15. $267,000,000 RUS Loan forBroadband Deployment USDA ANNOUNCES $267 MILLION RURAL BROADBAND LOAN WASHINGTON, March 25, 2008 — USDA Rural Development Under Secretary Thomas C. Dorr today announced that Open Range Communications, headquartered in Denver,Colo., has been approved to receive a $267 million loan from USDA Rural Development to provide broadband service to 518 rural communities in 17 states. This partnership will address the significant need to deploy wireless, portable broadband connectivity to improve service in considerable portions of rural America. The commitment by USDA and Open Range represents one of the largest public-private investments for broadband service by the federal government. This unique set of services will provide cutting-edge Wi-Max technology that transmits wireless data in areas not serviced by cable or DSL technologies. Open Range plans to offer affordable, wireless, high-speed broadband service to underserved and unserved areas.

  16. Broadband DeploymentCalifornia Broadband Task Force • CBTF’s Three Key Goals 1. California must ensure ubiquitous and affordable broadband infrastructure, made available through a variety of technologies to all Californians. 2. California must drive the creation and use of applications that produce the greatest economic, educational, and social benefits for California’s economy and communities. 3.California must construct next-generation broadband infrastructure, positioning California as the global economic leader in a knowledge-based economy.

  17. California Broadband Task Force Findings • 96% of households have access to broadband services • Only half of those with access subscribe

  18. California Advanced Services Fund$100,000,000 In Infrastucture Grants • To promote Broadband deployment to unserved and underserved areas of California • Fund matching program (60%/40%) • .25% fee collected from retail telecommunications consumers’ bills • Offsets High-Cost Fund B • Data submission requirements for funding applicants • June 2, 2008 deadline

  19. Federal LegislationFocuses on Broadband Data, Mapping, Grants • Broadband Data Improvement Act • Requires several federal agencies, including the FCC, to take steps necessary to improve broadband speeds • Connect The Nation Act • Provides for grants to develop and implement statewide initiatives to identify and track the availability and adoption of broadband service within each state • Community Broadband Act of 2007 • Prohibits any state or local government statute, regulation, or other legal requirement from having the effect of prohibiting any public provider from providing advanced communications capability to any person or any public or private entity. • Farm, Nutrition, and Bioenergy Act of 2007 • Rural Utilities Service broadband loans • Rural Broadband Initiative Act of 2007 • Establishes in the Treasury the National Rural Broadband Innovation Fund

  20. Federal Legislation • Universal Service Reform • Expanding the USF to provide financial assistance for the deployment of broadband equipment and infrastructure • Broadband Mapping Bill • Deploying the technology to underserved urban areas and minority groups • Internet Freedom Preservation Act of 2008 • Network Neutrality Issues

  21. FCC Decides to Revamp Broadband Data New Speed Tiers

  22. For more information… www.cpuc.ca.gov Michael Morris mmo@cpuc.ca.gov

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