Control Number : Item Number : 59. Addendum StartPage : 0

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1 Control Number : Item Number : 59 Addendum StartPage : 0

2 ^^ SOAH DOCKET No PUC DOCKET NO Pa 2: 4 4 COMPLAINT OF EXTENET 1+LE.3 ^ l l ^:i; NETWORKS SYSTEMS INC. AGAINST BEFORE THE THE CITY OF HOUSTON FOR PUBLIC UTILITY COMMISSION IMPOSITION OF FEES FOR USE OF OF TEXAS PUBLIC RIGHT-OF-WAY AMICUS CURIAE BRIEF OF ZAYO GROUP, LLC Zayo Group, LLC ("Zayo") respectfully submits this Amicus Curiae Brief in support of Extenet Systems, Inc. ("Extenet") on the threshold legal/policy issue identified by the Commission in the above-captioned matter. 1. INTRODUCTION Zayo provides bandwidth infrastructure solutions, offering telecommunications services to carrier and enterprise customers over a fiber-optic network in metropolitan markets from coast-to-coast and is certificated by the State of Texas to provide, among other things, local exchange and toll-free service including Optical, T-1 Private Line and Ethernet Services, pursuant to its facilities-based and resale SPCOA No for the exchanges of all Incumbent Local Exchange Carriers (ILECs) and Interexchange Carrier (IXC) Registration No. IXI Zayo's fiber is attached to private utility poles and it operates hundreds of miles of underground network in Texas, and has plans to build hundreds more miles across the state. In the Commission's Order Requesting Briefing on Threshold Legal/Policy Issue, the Commission invited interested parties to file a brief addressing the following issue: Does Texas Local Government Code chapter 283 apply to an entity that is a certified telecommunications providers when it is providing services that do ' Application of Zayo Group, LLCfor Amendment to a Service Provide Certificate of Operating Authority, Docket No , Notice of Approval (September 10, 2014); Application of Zayo Bandwidth, LLCfor a Service Provider Certificate of Operating Authority, Docket No , Notice of Approval (May 26, 2009).

3 not require the entity have a certificate under the Public Utility Regulatory Act (PURA)? Specifically, does chapter 283 apply when a certificated telecommunications provider has installed, or proposes to install, in the public right of way a wireless distributed antenna system, including fiber optic cables and an antenna? Zayo is an interested party because it is a certificated telecommunications provider that installs distributed antenna systems ("DAS") and other wireless service systems such as microcells as a turnkey service to wireless carriers in Texas. Currently, Zayo plans to continue expanding its telecommunications network, including the installation of DAS systems in Texas. When Zayo is building a business case to determine whether to enter into or expand further within a given market, the cost of installing and maintaining the new network is one of its primary considerations. The Commission's decision regarding the above questions will significantly impact Zayo's ability to continue its expansion and investment in Texas. matter. Therefore, Zayo submits this Brief in support of the Extenet in the above-captioned II. DISCUSSION A. Chapter 283 applies to an entity that is a CTP regardless of whether that entity is currently providing services that do not require the entity to have a certificate under the Public Utility Regulatory Act ("PURA"). Chapter 283 of the Texas Local Government Code defines a CTP as an entity certificated "to offer local exchange telephone service or a person who provides voice service." TEX LOC. GOVT CODE (2) (emphasis added). Chapter 283 also provides that a CTP "(1) may erect poles or construct conduit, cable, switches, and related appurtenances and facilities and excavate within a public right of way to provide telecommunications service; and (2) is not subject to municipal franchise requirements." Id (a). The provision of local telephone service is notably not a requirement in order for a CTP to install "cable...and related -2-

4 appurtenances" in a public right of way in order to provide "telecommunications." Similarly, also prohibits a municipality from charging fees or requiring a CTP to provide services for "the right to use a public right-of-way to provide telecommunications services in the municipality." TEX LOC. GOV'T CODE (a)(1); Id (a)(2). Thus, the City of Houston's apparent focus on whether an entity is providing local telephone exchange service and/or solely wireline service is misplaced. The threshold question is whether that entity is a regulated CTP. If the answer is yes, then Chapter 283 applies. This interpretation of Chapter 283 is entirely consistent with Commission precedent. In the Order adopting amendments to Section of the Texas Administrative Code, several Texas cities argued that CTPs that did not provide local exchange service were not subject to Chapter 283 and therefore not exempt from the obligation to pay municipal fees.2 The Commission properly rejected these arguments and clarified that services that do not terminate at an end-use customer premises are nonetheless covered by Chapter The Commission adopted a similar interpretation when it ruled on a complaint brought by Metromedia Fiber Network Services ("MFN") against the City of Carrollton for refusing to issue permits to MFN until the company executed a license agreement and paid certain non-statutory annual fees.4 MFN sought relief from the Commission, arguing that an entity certificated by the Commission through the issuance of a SPCOA, COA, or CCN need not provide local exchange service to be entitled to the benefits and protections afforded to a CTP under Chapter 283. The 2 Rulemaking Relating to Outstanding HB 1777 Implementation Issues, Order Adopting Amendments to as Approved at the September 5, 2001 Open Meeting, Project No , (Sept. 25, 2001). 3 Id. at 45. Zayo acquired MFN's successor Abovenet Communications, Inc. ("Abovenet") in 2012, and Zayo also operates under the Abovenet SPCOA No Complaint of Metromedia Fiber Network Services, Inc. Against the City of Carrollton, Texas Under the Public Utility Regulatory Act and HB 1777, Docket No , Order on Certified Issue (Sept. 28, 2001). -3-

5 City argued that because MFN was not providing local exchange service, it was not a CTP and entitled to the protections of Chapter 283. The Commission properly rejected the City's argument. In correctly ruling in favor of MFN, the Commission clarified that "the definition of CTP in Chapter 283 requires only that a person is a certificate holder with the authority to provide LETS and not upon the actual provision of services by a certificate holder as the City contended."5 More importantly, the Commission also held that the fact that MFN did not provide local exchange service was "irrelevant to this issue because MFN possesses the authority to offer [local exchange service] by virtue of its SPCOA."6 Therefore, an SPCOA holder providing only nonswitched services (but who is authorized to offer local exchange service) satisfies the statutory definition of a CTP under Chapter 283. The Commission should reaffirm this longstanding precedent and determine that a CTP is covered by Chapter 283, regardless of the services that it is providing. B. Chapter 283 applies when a CTP has installed, or proposes to install a DAS, including fiber optic cables and an antenna in the public right-of-way. There is no substantive difference between DAS and those "traditional" wireline services for which providers obtain CTPs is a matter of form over substance. DAS is a fiber optic cable system that delivers traffic over small nodes that are typically installed in the public rights-of-way. The nodes are composed of antennas, optronics, and electronics that convert radio frequency signals to optical signals, allowing those signals to be transported over the fiber network. Just like wireline facilities, the DAS delivers the signals to 5 Id. at 4 6 Id. -4-

6 both mobile devices and landlines. The services provided by CTPs that use "traditional" wirelines and those that use DAS technology perform the same function. Preferential regulatory treatment of one technology over others in the telecom industry has a history of causing market distortions. One example is the history of pole attachment fees related to aerially installed network. For many years, attachments by telecommunications providers and cable providers were treated differently under the regulatory frameworks of the Federal Communications Commission ("FCC") and many state regulations. The decades of disparate treatment lead to much slower deployment of new networks by the telecommunications providers as the relatively high cost of maintaining such network acted as a financial disincentive, thus creating a barrier to entry into the market. In its 2011 Order, the Federal Communications Commission ("FCC") acknowledged its mandate to encourage the deployment of these services to all Americans.7 The FCC noted that "the record here demonstrates that pole rental rates play a significant role in the deployment and availability" of broadband infrastructure.$ In 2011, and again in 2015, the FCC issued new rules requiring similar fee treatment of cable and telecom network attachments, removing disincentives to the telecommunications industry's investment in such infrastructure to ensure that the public has access to service at affordable prices.9 This is an instructive example of how preferential treatment of one technology over another can lead to market distortions that work against established public policy goals. Zayo urges the Commission not to give preferential treatment to wireline networks at the expense of wireless networks, since both serve important public policy goals in a similar way. ' Implementation of Section 224 of the Act; A National Broadband Plan for Our Future, Report and Order and Order on Reconsideration, 26 FCC Red 5240 (2011). $ Id. at See Implementation of Section 224 of the Act; A National Broadband Plan for Our Future, Order on Reconsideration, WC Docket No , GN Docket No , FCC (rel. Nov. 24, 2015). -5-

7 Under Chapter 283's definition of a CTP, it is clear that DAS facilities providing backhaul services are covered. Chapter 283 enables a CTP to "erect...cable...and related appurtenances and facilities." TEXAS LOC. GOV'T CODE Zayo's fiber-optic cable is clearly "cable" that falls within this definition. In addition, Zayo's nodes, antennas, and associated equipment are "related appurtenances and facilities." The Commission's proposal to differentiate wireless DAS and wirelines systems would not only run contrary to the plain language of Chapter 283, but it would also result in a regulatory regime that favors one technology over another. The Commission should maintain its current technology-neutral approach and recognize that backhaul services provided by DAS facilities are telecommunications services covered by Chapter 283. It is also important for the Commission to consider the real world consequence of answering "no" to whether Chapter 283 applies when a certificated telecommunications provider has installed, or proposes to install, in the public right of way a wireless distributed antenna system, including fiber optic cables and an antenna: it would mean that while wireline services enjoy the protections of Chapter 283, wireless services (such as DAS) would not, despite the fact that its very existence relies on and supplements that wireline service. Telecom providers would be forced to take completely different procedural steps and encounter time-consuming and costly negotiations with each municipality in which it sought to place DAS equipment. Not only illogical, such a result would create a disincentive for providers to deploy new technologies simply because they fall outside of this narrow - and incorrect - application of Chapter 283. Such a system would severely impede a providers' ability to install innovative technologies designed to improve and supplement the existing wireline services which are subject to Chapter 283. These disincentives to invest in new technology will thwart competition in the State's -6-

8 telecommunications market. As a result, consumers end up with service that is at the same time more costly and yet inadequate to meet current and future demand. Indeed, the very nature of DAS and related technology is that they are most efficient and beneficial where networks are critically congested. C. Adopting the City of Houston's Position would decrease competition, increase barriers to entry, and inhibit growth and expansion of the telecommunication services that Texans rely on at an increasing rate. Communities, schools, and businesses today require advanced broadband infrastructure in order to thrive. Although the examples are numerous, a list of just a few of the constituencies that depend on modern broadband infrastructure include: businesses seeking enhanced connectivity to meet the challenges of growth in technology-driven environments, consumers making purchases and conducting financial transactions online, hospitals and educational institutions needing to connect to each other and to share data, municipalities requiring more bandwidth to connect traffic lights, police and fire stations, and students preparing to enter the workforce in a connected world. In the last decade, the explosive growth of mobile technologies has placed a tremendous burden on networks already experiencing constrained bandwidth capacity. DAS needs to be an integral part of the infrastructure used to meet that increased need for bandwidth. It is often the exurban and rural areas that are most often at risk of being left out due to the difficulty and expense inherent in executing underground installation in remote areas. By ensuring that DAS technologies are covered under Chapter 283, large swaths of the public will benefit from faster and more efficient growth in advanced broadband services. The costs of deployment and maintenance are some of the paramount considerations any industry participant makes when considering a network expansion. The ability to install and maintain facilities on a cost effective basis enables and provides incentives for more and faster -7-

9 deployment, including new participants to enter a given market. This increased competition will drive down costs to end users. Additionally, even in markets where investment incentives exist despite high costs, those costs are often passed through to consumers. Adopting a narrow reading of Chapter 283 would ultimately increase prices to consumers through reduced competition and increase pass-through costs that result from the increased transactional costs of obtaining individual authorizations in each municipality (in addition to the resulting increased fees). In addition, forcing CTPs to negotiate with each municipality for an individual license significantly slows down network deployment. Indeed, Zayo first approached the City of Houston with its DAS project in the Summer of 2014 and did not obtain a license agreement until February The Chapter 283 process adopted by the Texas legislature prevents these massive delays with respect to wireline installation. Wireless installation should be treated the same because incentivizing wireless deployment serves the same policy objectives as wireline deployment. -8-

10 CONCLUSION For the foregoing reasons, Zayo asks that the Commission answer "yes" to the questions set forth in the Commission's February 2, 2016 Order Requesting Briefing on Threshold Legal/Policy Issue. ^^.^^..! k ^ ^ Abbi Dayton Senior Corporate Counsel Zayo Group, LLC th Street Boulder, CO (720)