Congress, States and FCC on Video Franchising

1. Congress, States and FCC on Video Franchising Nicholas Miller February 22, 2007 Tampa, FL

2. Program Destabilizers Congressional Efforts State Action FCC Intrusion

3. 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?

4. Brand X�The Legal De-stabilizer National Cable & Telecommunications Ass�n v. Brand X Internet Servs., 125 S. Ct. 2688 (2005). FCC has authority under Title I to set appropriate regulations for Internet Protocol transmissions as an information service. FCC is entitled to deference in its Title I information service actions. NOTE: There is NO statutory guidance in Title I to the FCC other than �protect the public interest�.

5. 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.

6. Pressures for Congress To Act New Rules to Limit FCC Discretion? Universal Service in a Digital Age? Role for State/Local Regulation? Local Right-of-Way Rent?

7. Local Governments� Position Enthusiastic about the benefits IP. Feds must respect local govt property rights and police powers, including: right-of-way ownership and management, zoning, and Consumer protection. Regulate Non-competitive Facilities owners Don�t undermine local taxing authority.

8. Local Governments� Position (cont.) Pay fair prices for the use of public property. Non-commercial speech must have a future in IP video. Localism open government public participation in community affairs.

9. Federal LegislationSeveral bills Last Congress House passed �COPE� bill (H.R. 5252) June 8, 2006, by 321-101 vote Sen. Stevens (R-Alaska) �ATOR� bill (labeled as substitute for H.R. 5252) adopted by Commerce Committee June 28, 2006

10. H.R. 5252 (House) � video facilities provider�: Negotiate with state or local government. Or take federal grant of use of local public rights-of-way Federal franchises would be administered by FCC. State legislation would remain in place & operator chooses regime.

11. S. 2686 (Senate �ATOR�) FCC franchise application form to locals. Locality fills in four blanks: franchise fee percentage (to 5%) number of PEG channels PEG support: 1% or match existing operator point of contact for franchising authority

12. Under ATOR Once a national franchisee �commences� service in franchise area, same form to Other new entrants incumbents No build-out requirements (House or Senate) Redlining � prohibited�--but provider can choose its service area

13. Under ATOR Customer service: FCC rules; local authorities enforce Public, educational and governmental (�PEG�) access Channels: match incumbent�s (3 if none) Can increase by one channel every 15 yrs. Funding: 1% of gross revenues, or match incumbent�s cash and in-kind support

14. Under ATOR Institutional network (I-Net): existing obligations continue; no new I-Nets Municipal Provisioning: (circumscribed) rights to enter market RoW management and police powers theoretically protected local law must be reasonable be competitively neutral be nondiscriminatory be consistent with State police powers any fees must be cost-based

15. What Stopped ATOR? Ans: Other Issues Internet access taxation Wireless taxation Preemption of state and local oversight of wireless practices Net neutrality

16. The State of the States

18. Outlook for 2007

19. ALEC Model State Franchising Requirements fixed by state law Tied to today�s requirements Renewal almost automatic Enforcement weak or cumbersome at state and local level No or limited control of facilities No explicit RoW control

20. What�s Being Lost in State Legislation Time-limited franchises Change terms over time. Enforcement at local level; penalties plus revocation of franchise; Required upgrades RoW Control

21. What�s Being Lost in State Legislation? Universal, uniform service based on local needs PEG channels defined by local needs; connections to local PEG facilities; support for facilities and equipment; advanced services No standards or significant loopholes PEG often limited No clear way to place a high-quality signal on the network

22. FCC Threatens Coup de Grace Cable Franchise NPRM MB Dkt No. 05-311; FCC 05-189 Decision 12-20-06 Text released this week? Issue: Is LFA RBOC Negotiation for Franchise �per se unreasonable� under 621(a)(1)?

23. Highlights of FCC Action Shot-clock Build-out Limits Any Revenues above 5%? Restrictions on PEG and Inets

24. Questions re Further Notice Retroactive? Effect on Incumbents? Effect on State laws? Effect on at&t claim not a �cable service�?

25. Some Perspective Do RBOCs need relief? Few problems exist with local franchising Locals are not slowing deployment Verizon has franchises it wants to build At&t still hasn�t rolled out U-Verse Or Do RBOC�s really just need an excuse? To avoid 2/3 of households? To suck the oxygen out of the unbundling argument? To delay digital divide debate

26. Be Wary of the �Deal� Congress wants to please everyone Currently proposed �deal� : 5% Franchise Fee Right of Way Management PEG Capacity Must articulate why this �deal� is unacceptable.

27. Miller & Van Eaton: We Assist Local Governments In AchievingThe Full Benefits Of The Communications Age For Their Communities