Communications Law Newsletter:
Update on Issues of Interest to Municipalities and Public Utilities
FCC Declares Access BPL an Unregulated Information Service; NARUC Endorses State Oversight
As we reported in our last newsletter, the regulatory framework governing Broadband over Power Lines (“BPL”) continues to evolve and become clearer. The FCC in late August issued an Order acknowledging the significant benefits of BPL and largely reaffirming its prior technical rules. Texas last year enacted legislation to formally enable the deployment of BPL systems, and the state utility commissions in New York and California provided guidance on their regulatory treatment of BPL.
In November, the Federal Communications Commission (“FCC”) provided further clarification, issuing an Order declaring BPL-enabled Internet access service to be an “information service” for purposes of the federal communications statutes. This ruling places BPL-enabled Internet access service on the same regulatory footing as DSL and cable modem services, and exempts it from the extensive regulatory requirements applicable to “telecommunications” services under federal law. Nonetheless, voice communication services (such as VoIP) and video programming services (such as cable television) provided via BPL will remain subject to the federal laws and regulations governing those services. State regulation of BPL-related matters that are not under FCC jurisdiction also will continue to apply.
The National Association of Regulatory Utility Commissioners (“NARUC”) in November adopted a resolution addressing the relationship between federal and state BPL regulation. The NARUC resolution recognizes that “[t]he FCC has primary jurisdiction over radiofrequency spectrum issues, but States have jurisdiction over other regulatory issues that may affect the feasibility of, and incentives for, BPL deployment (e.g., affiliate transactions, cost allocation)…..” Therefore, the NARUC resolution “encourages States to adopt competitively neutral policies and rules that facilitate deployment of BPL, provide assurances for protecting the electric distribution system and interconnections, ensure appropriate protection of ratepayers’ economic interests, and avoid harmful radio interference….” NARUC also “encourages the electric utility industry to consider the potential benefits of offering BPL services and to explore ways to use the technology to improve electric distribution operations and to promote alternative consumer communications services.”
Cable Competition Saves Consumers Money, the FCC Finds
According to the FCC’s annual report on cable industry prices, released in late December, the presence of a second cable provider in local markets saves consumers substantial sums. Cable prices were shown to be 17% lower in communities with competition than in those without. The availability of satellite television (DirecTV or Dish Network) did not have the same beneficial effect. Over 100 municipal utility broadband providers currently offer video programming services to their customers.
FCC Approves Order Reducing Local Authority over Cable Franchising
At its December 20, 2006 meeting, the FCC voted on party lines to narrowly approve an order significantly limiting local control over the franchising of new cable operators. Although the Order has not yet been released, it is expected to limit to 90 days the time for franchise approval; restrict buildout obligations; limit PEG support and I-Nets; and preempt local “level playing field” laws. State cable franchising requirements will remain in place.
APPA Submits Comments to FCC Noting Unfair Competition Faced by Municipal Utility Broadband Systems
The American Public Power Association (“APPA”) late last month filed comments in the FCC’s annual proceeding to assess the status of competition in markets for video programming. The comments state that municipal utility broadband systems face the same discriminatory and anticompetitive practices by incumbent providers that have hampered private competitors. The comments report that, in response to the FCC’s request for data, APPA conducted a survey of member utilities that offer video services. “The survey confirmed that, in virtually every instance, the incumbent cable operator significantly lowered its prices and/or offered additional services in response to the competition introduced by the municipal utility,” to the benefit of consumers. However, “in a growing number of communities, abusive and discriminatory practices by incumbent operators and cable program providers threaten to erode these gains.” The APPA comments report that municipal utility networks, like other broadband service providers (“BSPs”), and their customers are harmed by the so-called “terrestrial loophole,” which allows incumbent cable companies to avoid the FCC’s rules requiring them to allow competitors access to vital local sports programming; the retransmission consent rules, which allow broadcasters to demand large and unfair payments to show broadcast channels (ABC, NBC, CBS and Fox) on local cable; and exclusive contracts with owners of multiple dwelling units (condominiums and apartments), which preclude competitors from offering cable service to residents. APPA and the BSPs urge the FCC to address these anticompetitive practices through its rules and in Congress.
Communications Agenda for the New Congress Still Unclear
Although late last year Congress seemed poised to enact communications legislation that would have dramatically overhauled the Telecommunications Act of 1996, the agenda for the new, Democrat-controlled Congress is far unclear. It now appears unlikely that comprehensive communications legislation will be enacted in 2007. Rather, it is anticipated that we may see bills on specific topics, including net neutrality and universal service funding. Such legislation is likely to originate in the House Telecommunications Subcommittee led by Congressman Ed Markey of Massachusetts, who has taken the lead in advocating net neutrality and regulatory changes to promote diversity and localism.
Broadband Providers Must File FCC Form 477 by March 1, 2007
All facilities-based providers of wired or wireless broadband connections to end user locations, all local exchange carriers, and certain CMRS providers are required to file FCC Form 477 semi-annually. The next filing is due on or before March 1, 2007, for information about broadband connections and local telephone service as of December 31, 2006. The FCC recently announced that Form 477, together with instructions for filing, is now available electronically at http://www.fcc.gov/formpage.html#477
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