appa community broadband conference broadband service issues mdu challenges presented by charles a....

APPA Community Broadband ConferenceBroadband Service Issues

MDU Challenges

Presented By

Charles A. RoheOctober 12, 2004

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OVERVIEW

For competitive providers, gaining access to the “Last 100

Feet” to serve customers in Multi Tenant Environments has

been an intractable problem.

Two means to access tenants of MDUs:

Building Access Strategy

Inside Wiring Strategy

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OVERVIEW

Building Access Strategy

Install new wiring, from your distribution trunk in the

street to the end user.

This strategy requires a lease or license from the

property owner, who may demand unreasonable and

discriminatory compensation.

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OVERVIEW

Inside Wiring Strategy

Buy or lease existing wiring within the building.

This may involve the new entrant in a difficult negotiation

with the present owner of the wiring, who is usually the

entrenched service provider and a principal competitor, or

perhaps a 3-way negotiation with the competitor and the

property owner.

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OVERVIEW

Inside Wiring Strategy (cont’d)

In the telecom realm, there’s a variation of the Inside Wiring

Strategy, which is to take advantage of the unbundling rules

to purchase inside wiring subloops from the local exchange

carrier.

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OVERVIEW

Whether you are interested in the Building Access Strategy or

Inside Wiring Strategy, there are two regulatory schemes.

One for video (cable wiring) and another for telecom wiring.

Both video and telecom wiring are subject to Federal (and to

a lesser extent) state law.

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VIDEO SERVICE

Where are we, and how did we get here?

Loretto v. Teleprompter

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VIDEO SERVICE


U.S. Supreme Court case from 1982, arose from a NY

statute that tried to facilitate tenant access to cable

television.

Statute prohibited landlords from interfering with installation

of cable TV facilities, and limited the landlords’ fees to $1.00.

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Loretto v. Teleprompter Held: Installation of cable TV wire on a landowner’s

property is a permanent occupation of the land, and whether it is to serve tenants of the building or just to “cross over.” The property owner has a “historically rooted” expectation of compensation. When the government compels the landlord to allow that occupation, it is a taking, for which just compensation is required under the 5th & 14th amendments of the U.S. Constitution.

How much compensation is due is a matter for state courts to decide

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VIDEO SERVICE



“Mandatory Access Laws”

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“Mandatory Access Laws”

Sixteen States and the District of Columbia have enacted

laws similar to the one that was at issue in Loretto, and

which have now been amended to conform with the

Supreme Court’s decision.

Intended to prevent a landlord from charging unreasonable

fees or interfering with the installation of cable TV wiring in

MDUs.

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Mandatory Access Laws Examples: New York’s law is essentially the same as prior to

Loretto, but the $1.00 limit on fees has been removed. The Public Service Commission now sets, by regulation, a fee determined to be reasonable.

Virginia prohibits a landlord from charging fees for mere access to tenants, but allows fees for the reasonable value of the property being used, and allows the cable TV company to pay landlords for marketing assistance, etc. Discrimination between video service providers is prohibited.

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Citations to Mandatory Access Statutes:

Connecticut--Conn. Gen. Stat. § 16-333a (2003) Delaware--26 Del. Code Ann. tit. 26 § 613 (2001) (only if utility easements also exist) District of Columbia--D.C. Code Ann. § 34-1244.01 (Lexis 2001) Florida -- Fla. Stat. ch. 718.1232 (2003) (condos only) Illinois -- 55 Ill. Comp. Stat. 5/5-1096 (2004) (county franchisees only); 65 Ill. Comp.

Stat. 5/11-42-11.1 (2004) (municipal franchisees only) Kansas -- Kan. Stat. Ann. § 58-2553) (2003) Maine -- 14 Me. Rev. Stat. Ann. tit. 14 § 6041 (2003) Massachusetts -- Mass. Gen. Laws ch. 166A, § 22) (2003) Minnesota -- Minn. Stat. § 238.23) (2003) Nevada -- (Nev. Rev. Stat. 711.255)(2003) New Jersey -- (N.J. Stat. Ann. § 48:5A-49)(2004) New York -- N.Y. Pub. Ser. Law § 228 (McKinney 2004 supp.) Pennsylvania -- 68 Pa. Cons. Stat. Ann. §§ 250.502-B & 250.504-B) (West 2004) Rhode Island -- R. I. Gen. Laws, § 39-19-10)(1993) Virginia -- Va. Code Ann. § 55.248.13:2 (2003) West Virginia -- W. Va. Code § 24D-2-3 (1999) Wisconsin -- Wis. Stat. § 66.0421)(2003)

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VIDEO SERVICE



Mandatory Access Law

Exclusive Agreements

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Exclusive agreements are valid in most states. The FCC has determined that exclusive agreements

between MVPD providers and landlords might actually enhance competition, and has refused to prohibit them.

Incumbent cable companies have offered to pay building owners a fee for new exclusive agreements, or have made an exclusive agreement one of their conditions for upgrading facilities in the building.

A state mandatory access law may override the FCC’s refusal to outlaw exclusive agreements, depending on its actual language.

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What a Video Provider Should Expect:

The landlord has a right to compensation, but the fee should not

be more than a reasonable amount for use of the property;

You may be able to obtain an exclusive agreement, for which

the lease payments will probably be more significant;

If another carrier has already obtained an exclusive agreement,

that agreement may be enforceable against you, and prevent

you from gaining access to that building; but

If your state has a mandatory access law, it will probably trump

the exclusive agreement (yours or anyone else’s).

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SUMMARYVideo Provider Building Access Strategy

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SUMMARYVideo Provider Building Access Strategy

New Wire

Propose a reasonable agreement to the property owner.

Prepare to negotiate a reasonable and non-discriminatory

fee for use of the landlord’s property.

If negotiations fail, consider Mandatory Access Statute (if

any).

Consider an “Inside Wiring Strategy”.

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If a Video Provider has an Inside Wiring Strategy, how does it go about getting access?

Existing Wiring

Identify the wiring you desire to use

Cable Home Wiring

Home Run Wiring

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Cable Home Wiring

The internal video wiring, within the subscriber’s premises,

beginning at the demarcation point and running to the

subscriber’s television set or other customer premises

equipment.[1]

[1] Matter of Telecommunications Services Inside Wiring, First Order on Reconsideration and

Second Report and Order, CS Docket No. 95-184, FCC 09-9, n. 3 (rel. Jan. 29, 2003).

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Home Run Wiring

The wiring from the demarc to the point at which the service

provider’s wiring becomes devoted to an individual subscriber or

individual loop. [1]

[1] 47 CFR 76.800(d).

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Cable Home Wiring: If the subscriber has voluntarily cancelled

the previous service provider, the subscriber must be given the

first opportunity to purchase the Cable Home Wiring. If the

subscriber declines, the building owner may purchase the Cable

Home Wiring, or may authorize the MVPD newcomer to

purchase it. Cost is to be based on replacement cost, per foot.

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Home Run Wiring: The incumbent MVPD may elect not to sell,

and instead abandon or remove Home Run Wiring, but the

alternative of sale is a more likely choice. If the MVPD elects to

sell, then it is a question of whether the sale is building-by-

building or unit-by-unit.

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Building by Building

This occurs when the incumbent MVPD’s authority to serve

the building is terminated by the landlord, and the MVPD

does not have an enforceable right to remain.

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Building by Building (cont’d) Incumbent has 30 days to decide whether to sell or remove

wiring. If property owner declines to purchase, the new MVPD may elect to do so.

Parties have 30 days to negotiate a price. If unable to agree, parties have 7 days to agree on an

arbitrator. Arbitrator must have a reasonable price determined by the

end of a 90 day period commencing when the incumbent MVPD is notified of its termination.

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The Building-by-Building Timeline

TerminationAnnounced

Electionto Sell

Price Negotiation ends

Expert(s) Chosen by Parties

Third Expert Chosen by Designated Experts

Notice Period Ends

90 days 60 days 30 days 23 days 16 days 0 days

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Unit by Unit

When the incumbent MVPD owns the Home Run Wiring but

does not have a legally enforceable right to maintain that

particular wiring, the MDU owner may permit competition in

the building.

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Unit by Unit

As with building-by-building, the MVPD incumbent may

refuse to play, and may remove its wiring and restore the

building, although it seems unlikely.

If the incumbent elects to sell, a convoluted process

commences, under which the incumbent and the new

MVPD transfer the wiring back and forth, as they gain and

lose customers.

The process seems intended to encourage the incumbent

and the new entrants to arrive at some sort of

accommodation.

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Unit-by-Unit Timeline

TerminationAnnounced

Election to Sell and Purchase

Price Negotiation ends

Expert Chosen by Parties

Expert Chosen by Designated Experts ORPrice Decided

Price Decided

60 days 30 days 0 days -7 days -14 days -21 days

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TELECOM SERVICE


In general, the FCC is hamstrung by a lack of jurisdiction

over property owners.

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TELECOM SERVICE


In general, FCC is hamstrung by a lack of jurisdiction over

property owners.

Absence of any building access language in the 1996

Telecom Act.

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TELECOM SERVICE


In general, FCC is hamstrung by a lack of jurisdiction over

property owners.

Absence of any building access language in the 1996

Telecom Act.

Pole Attachment Statute.

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Pole Attachment Statute

The FCC has addressed the matter of building access in a

limited fashion, relying on its right to regulate access to poles,

conduits and rights-of-way (47 U.S.C. §§ 224 and 251(b)(4)).

A “utility” (which includes both telephone and electric

utilities, among others) must allow access to its poles,

ducts, conduits and rights-of-way at “just and reasonable”

rates. In 2000, the FCC concluded that this obligation

encompassed in-building facilities, such as riser conduits,

that are owned or controlled by utilities.

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Eminent Domain

Telecom providers have various rights under some state laws to

acquire property by condemnation, although it is a slow and

costly process

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State Telecom Access Laws

Six states have enacted laws or regulations that provide various

building access rights to competitive telecom providers.

Connecticut

Texas

Nebraska

California

Ohio

Kansas

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FCC Telecom Access Rules

The FCC’s 2000 order in the “Competitive Networks

Rulemaking”[1] made some progress.

Follow-up order in the Competitive Networks Rulemaking failed

to accomplish anything new, due to insufficient comments by

carriers.

[1] In re Promotion of Competitive Networks in Local Telecommunications Markets, 66 Fed.

Reg. 232-01 (Jan. 11, 2004) (codified at 47 CFR §§ 64.2500 et seq.).

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If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are:

The Telecom Provider may be required to pay the landlord for

access, and there is no Federal law limiting the amount.

State laws in Connecticut and Texas impose a limit on the

fees charged by landlords;

State laws in Connecticut and Texas may prevent the

landlord from charging a new entrant more than is charged

to the ILEC .

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In residential buildings, a Telecom Provider may enter into an

exclusive agreement with the property owner, except in

California, Connecticut, Nebraska, Ohio or Texas, where state

law prohibitions against exclusive agreements have been

extended to residential buildings.

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Access may be prevented by an exclusive agreement between

a landlord and another carrier, if the building is residential, or if

the exclusive agreement for a commercial building pre-dated

March 12, 2001.

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If you are the one trying to enforce an exclusive agreement,

don’t expect the ILEC to go quietly, as it will inevitably resist on

the basis of its “carrier of last resort” obligation.

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If you know of available conduits in a building that are owned or

controlled by a utility (telephone, electric, gas or steam), you are

entitled under Section 224 to lease those facilities at fair and

reasonable rates.

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SUMMARY

The Telecom Provider with a Building Access Strategy may be required to pay the landlord for access, and there is no Federal law limiting the amount. State laws in Connecticut and Texas impose a limit on the

amount; State laws in Connecticut and Texas may prevent the

landlord from charging you (the competitor) more than is charged to the ILEC .

If all else fails, you should consider if your company has the right of eminent domain, and whether it provides a possible solution.

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TELECOM

If the Telecom Provider has an Inside Wiring Strategy, how do

you go about getting access?

Under telecom regulations, options exist to use the wiring

owned by other entities.

Determine the location of the demarc, which allows you to

determine who owns or controls the wiring.

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Determine the location of the Demarc.

In California, and in the mid-Atlantic states that formerly

comprised Bell Atlantic before its merger with NYNEX, the

demarc should always be at the MPOE.

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Elsewhere, the demarc will usually be at the MPOE if the

building was constructed after August of 1990, although the

ILECs were still allowed to place the demarc in accordance with

their own non-discriminatory policy.

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In pre-1990 buildings, the demarc is probably NOT at the

MPOE. Rather, there will probably be multiple demarcs,

throughout the building.

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A Possible Strategy

In any building, the property owner has the right to require the

ILEC to move its demarc back to the MPOE, which effectively

transfers control of the inside wiring from the ILEC to the

property owner.

Expect the ILEC to resist aggressively.

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The Competitive Networks First Report and Order requires

ILECs to negotiate with the building owner for moving the

demarc to the MPOE, which entails transferring house and

rising cabling to the building owner. Parties must come to

agreeable terms within 45 days of a request to move the

demarc, and engage in binding arbitration if unable agree.

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Another Possible Strategy

Telecommunications Wiring that extends from the MPOE to the

Demarc.

Inside Wiring Subloops are part of the telephone company’s

network, and are available for lease from the ILEC as

unbundled network elements.

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CONCLUSION

The Last 100 Feet is a formidable Problem.

The law provides no silver bullet.

Video franchisees and certificated telecom providers have some

legal recourse.

Actual strategy may depend on the State in which business is

conducted.

Telecom Providers possibly overcome obstacles by access to

the incumbent’s inside wiring.

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