State Telecom Legislation: Broken Promises NATOA 2012 Annual Conference New Orleans, Louisiana

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1 State Telecom Legislation: Broken Promises NATOA 2012 Annual Conference New Orleans, Louisiana Javan N. Rad Acting Chief Assistant City Attorney SCAN NATOA Immediate Past President

2 AT&T U-Verse > Formerly Project Lightspeed Announced in October 2004 > IP-based network > TV, internet, and voice

3 AT&T (cont.) January 2005 > SBC announces purchase of AT&T > SBC later adopts AT&T name March 2006 > AT&T purchases BellSouth Includes Cingular Wireless

4 Walnut Creek litigation City required AT&T to obtain a local cable franchise or open video system franchise AT&T sued in federal court (Pac. Bell Tel. Co. v. City of Walnut Creek, C ) > April 2006 order -- even if AT&T s video programming is not a cable service within the meaning of the Cable Act, the Cable Act does not preclude local regulation of non-cable video programming

5 Back to AT&T 5

6 Statewide Video Franchising September Digital Infrastructure and Video Competition Act of 2006 (DIVCA) Stated purposes > Fair and level playing field > Access to video services > Promote local ROW management > Consumer protection > Increase investment

7 From the CPUC Website Q: What is the main benefit of a state video franchise program? A: This state video program facilitates market entry of those companies that are most eager to compete against existing cable and satellite video companies. Under current law, absent a state video franchise program, a company that wants to provide video service must obtain local cable franchises from each local city or town. This new law means that new video competitors may greatly speed up their deployment of state-ofthe-art infrastructure that will deliver video and broadband services to Californians.

8 Franchise Fees Five percent franchise fee > CPUC video franchisee user fee is it a franchise fee under the Cable Act? ( franchise fee defined by section 542(g) as fee imposed by franchising authority ) > CPUC decision (2007) user fees are not franchise fees as defined by the Cable Act Additional one percent of gross revenues for PEG if agency adopts ordinance

9 PEG Access similar quality and functionality to basic cable Video provider violates PEG requirements? > Still keep franchise

10 Customer service standards Limited to enforcing Cable Act and DIVCA > Fines only if ordinance establishing fine schedule No more than $1,500 for each occurrence of material breach and other requirements Half of penalty goes to Digital Divide Account > De novo review of fines in court No discretion to agency s decision to fine 10

11 Effect of Statewide Video Franchising Local agency can no longer terminate a (state) franchise 11

12 CPUC Annual Report on DIVCA Discusses growth in video and broadband deployment > The number of households offered video by all state issued video franchise holders and their local affiliates increased 2.9% (540,916) to 19.1 million during 2010, up from 18.5 million during AT&T and Verizon, combined, more than quintupled the number of households to which they offer video between 2007 and 2010 and now cover almost 5.4 million households. Accordingly, both AT&T and Verizon have exceeded their statutory 3 year build out obligations, as defined in DIVCA. No data on subscriber cost trends 12

13 Back to the AT&T Cabinets Environmental review over the equipment cabinets in ROW Agencies have found cabinets categorically exempt from environmental review in CA Resident lawsuit in San Francisco challenging decision to approve U-Verse equipment cabinets (4 x 4 x 2 ) > July 2012 court OK d San Francisco s decision to approve the cabinets 13

14 On the Wireless Front 2007 SB 1627 requires that co-located wireless facilities be subject to ministerial permit > Senate staff analysis August 2006 stated the bill is intended to eliminate obstacles to the deployment of... technology > Provisions of SB 1627 may be affected, in part, by Section 6409 of the Middle Class Tax Relief and Job Creation Act of 2012 Regulates permitting over existing wireless towers and base stations 14

15 CPUC General Order 170 December 2010 > CPUC issues order stating it has sole authority over environmental review of various wireless projects our primary objective... Has been to create an orderly process with clear requirements» Local agencies process many covered projects» GO 170 projects processed through Energy Division -- electric and gas utilities > SCAN and city and county leagues sought rehearing 15

16 CPUC General Order 170 (cont.) December 2011 > CPUC issues order granting rehearing > But CPUC states it might only grant rehearing to develop greater explanation than we provided 16

17 The Take-Away What can agencies to do > Ensure sufficient local authority to Regulate video/cable franchisees Regulate land uses Regulate environmental impacts > Yet Avoid being viewed as an obstacle or barrier to entry 17