Transcript APPA Community Broadband Conference Broadband Service

APPA Community Broadband Conference
Broadband Service Issues
MDU Challenges
Presented By
Charles A. Rohe
October 12, 2004
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:
2

Building Access Strategy

Inside Wiring Strategy
OVERVIEW

3
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.
OVERVIEW

4
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.
OVERVIEW

Inside Wiring Strategy (cont’d)

5
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.
OVERVIEW

6
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.
VIDEO SERVICE

Where are we, and how did we get here?

7
Loretto v. Teleprompter
VIDEO SERVICE

8
Loretto v. Teleprompter

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.

9
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
VIDEO SERVICE

10
Where are we, and how did we get here?

Loretto v. Teleprompter

“Mandatory Access Laws”

11
“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.

12
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.

13
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)
VIDEO SERVICE

14
Where are we, and how did we get here?

Loretto v. Teleprompter

Mandatory Access Law

Exclusive Agreements

15
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.
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).
16
SUMMARY
Video Provider Building Access Strategy
17
SUMMARY
Video Provider Building Access Strategy

18
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”.
If a Video Provider has an Inside Wiring Strategy,
how does it go about getting access?

Existing Wiring

19
Identify the wiring you desire to use

Cable Home Wiring

Home Run Wiring
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).
20
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).
21
If a Video Provider has an Inside Wiring Strategy,
how does it go about getting access?

22
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.
If a Video Provider has an Inside Wiring Strategy,
how does it go about getting access?

23
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-bybuilding or unit-by-unit.
If a Video Provider has an Inside Wiring Strategy,
how does it go about getting access?

Building by Building

24
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.

25
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.
The Building-by-Building Timeline
Termination
Announced
Election
to 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
26
If a Video Provider has an Inside Wiring Strategy,
how does it go about getting access?

Unit by Unit

27
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.

28
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.
Unit-by-Unit Timeline
Termination
Announced
Election to
Sell and
Purchase
Price
Negotiation
ends
Expert
Chosen by
Parties
Expert
Chosen by
Designated
Experts OR
Price
Decided
Price
Decided
60 days
30 days
0 days
-7 days
-14 days
-21 days
29
TELECOM SERVICE

Where are we, and how did we get here?

30
In general, the FCC is hamstrung by a lack of jurisdiction
over property owners.
TELECOM SERVICE

31
Where are we, and how did we get here?

In general, FCC is hamstrung by a lack of jurisdiction over
property owners.

Absence of any building access language in the 1996
Telecom Act.
TELECOM SERVICE

32
Where are we, and how did we get here?

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.
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)).

33
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.
Eminent Domain

34
Telecom providers have various rights under some state laws to
acquire property by condemnation, although it is a slow and
costly process
State Telecom Access Laws

35
Six states have enacted laws or regulations that provide various
building access rights to competitive telecom providers.

Connecticut

Texas

Nebraska

California

Ohio

Kansas
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.).
36
If a Telecom Provider has a Building Access Strategy, and
intends to install its own wiring, its rights are:

37
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 .
If a Telecom Provider has a Building Access Strategy, and
intends to install its own wiring, its rights are:

38
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.
If a Telecom Provider has a Building Access Strategy, and
intends to install its own wiring, its rights are:

39
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.
If a Telecom Provider has a Building Access Strategy, and
intends to install its own wiring, its rights are:

40
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.
If a Telecom Provider has a Building Access Strategy, and
intends to install its own wiring, its rights are:

41
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.
SUMMARY


42
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.
TELECOM

43
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.
Determine the location of the Demarc.

44
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.
Determine the location of the Demarc.

45
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.
Determine the location of the Demarc.

46
In pre-1990 buildings, the demarc is probably NOT at the
MPOE. Rather, there will probably be multiple demarcs,
throughout the building.
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.
47

48
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.
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.
49
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.
50