MUNICIPAL COMMUNICATIONS LAW UPDATE

NOVEMBER 2006

 

MOSS & BARNETT DRAFTS

MINNEAPOLIS WIFI CONTRACT

On November 1, 2006, the City of Minneapolis signed a 10-year contract with USI Wireless, Inc. (“USI”) to build, own and operate a $20 million wireless network covering all 59 square miles of Minneapolis.  Minneapolis will become an anchor tenant on the network committing $1.2 million per year for services ranging from remote cameras, emergency radio services, remote meter reading and a variety of other applications.  The network will provide residents, businesses and visitors with wireless broadband access anywhere in the City; and allow the City to deliver services more efficiently and effective than ever before.

Highlights of the contract include:

·       A 10-year fixed rate of $19.95 for 1-3 megabit residential service.

·       USI will provide $500,000 to create a Digital Inclusion Fund (“DIF”) that will be used to promote affordable Internet access, low-cost hardware, local content and training. 

·       USI will direct a minimum of 5% of the network’s net profits to the DIF for ongoing digital inclusion efforts.  In total, an estimated $11 million will be provided to the DIF over the 10 year term of the contract.

·       Free service will be available in specified public locations, such as parks and plazas in Minneapolis.

·       A free “walled garden” level of service will be available to people throughout the City for neighborhood, government and community services information.

·       Designated community technology centers will receive free wireless access.

·       Minimum service levels must be maintained on the network or USI will be subject to enforcement penalties from the City.

·       Mandatory wholesale requirements and pricing to encourage open access to the network.

·       Completion of the Minneapolis network is expected by the end of 2007.

Brian Grogan of Moss & Barnett served a lead legal counsel for the City of Minneapolis in negotiating the 84 page contract.  The contract contains specifications regarding the build-out of the system, pricing, performance and service level obligations, enforcement provisions, fiber construction obligations, pole and asset use requirements and fees, and related matters.  For more information please contact Moss & Barnett.

IMPACT OF MID-TERM ELECTION

ON PENDING LEGISLATION

Local franchising authorities have been actively lobbying members of Congress throughout 2006 in an attempt to preserve local franchising.  Major telecommunications companies, including Verizon and AT&T have been aggressively pursuing federal legislation that would create a streamlined application process for entry into the video services market.  On June 8, 2006, the U.S. House passed the Communications Opportunity Promotion Enhancement Act (“COPE”) which focused primarily on federalizing the cable television franchising process.  On June 29, 2006, the U.S. Senate passed legislation (S.2686) out of committee which also addressed the concept of national video franchising among a variety of other telecommunications issues.  Leading up to the mid-term elections the Senate was unable to secure floor time for consideration of the legislation and most observers assumed that S.2686 would be acted upon during the lame duck session following the mid-term election.

The results of the mid-term election and the change in control of Congress, however, will likely spell doom for telecommunications legislation in this session.  The key chairman-in-waiting at both the House and Senate will likely pursue drastically different legislation in 2007.  Representative John Dingell (D., Mich.) will chair the House Energy and Commerce Committee while Daniel Inouye (D. Hawaii) will chair the Senate Commerce, Science, and Transportation Committee.  Membership of both the House and Senate committees will also change as a result of the mid-term elections with the Senate Commerce Committee losing Senators Burns and Allen, and the House Energy and Commerce Committee losing Representatives Bass, Wilson and Cubin.

Many industry observers estimate that not only is the pending federal legislation dead for 2006 but many of the issues addressed in the 2006 proposed legislation will move a completely different direction under the new Congress.  The focus will now likely shift to public safety interoperability, funding for first responders, homeland security communications issues and related matters.

As industry observers shift their focus away from congressional legislation attention now is directed at a variety of pending FCC proceedings which could have an impact on local cable franchising and issues related to competition among the telephone and cable industries.  Whether the FCC will take aggressive action in light of the shift in power following the mid-term elections remains to be seen.

FCC NOTICE OF INQUIRY REGARDING COMPETITION IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING

The FCC is requesting information, comments, and analyses that will allow it to evaluate the status of competition in the video marketplace, changes in the marketplace since the 2005 report, prospects for new entrants, factors that have facilitated or impeded competition, and the effect these factors are having on consumers’ access to video programming.  (FCC 06-154)

 

The FCC is specifically interested in receiving the following data and information:

 

·       The number of homes that have a choice of multichannel video programming distributor (“MVPD”) services;

·       How many households can receive service from one or more providers (e.g., DBS, wireless cable, private cable operators) as well as an incumbent cable provider;

·       The number of consumers with access to wireline overbuilders, such as the number of homes passed by more than one wireline MVPD, and why the availability is low relative to wireless alternatives;

·       Identify markets where wireline competition exists, where entry is likely in the near future, and where wireline competition once existed but failed;

·       What market characteristics affect competition between MVPDs;

·       What effect has competition between MVPDs had on prices, programming choices, quality of service, and the introduction of more advanced services (both video and non-video); and

·       What effect does bundling have on head-to-head competition, and what effect does it have on MVPDs that do not offer bundled services due to technical or other limitations.

Municipalities are encouraged to provide any relevant data related to these issues particularly as it relates to the granting of competitive franchises for the provision of video services.

 

Comment Due Date:  November 29, 2006

Reply Comment Due Date:  December 29, 2006

Moss & Barnett will be submitting comments on behalf of a number of municipal clients in this proceeding.

 

♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Brian T. Grogan is a shareholder with the Minneapolis law firm of Moss & Barnett practicing in the firm’s communications law and energy practice group.  Brian represents local units of government throughout the country on a variety of communications issues including cable and telecommunications franchising, right-of-way management, municipal wireless communications, tower leasing, pole attachment negotiations, public safety communications and litigation.  He is a frequent presenter at state and national conferences regarding communications law and he is a member of the American Bar Association (Forum Committee on Communications Law), National Association of Telecommunications Officers and Advisors, International Municipal Lawyers Association (Contracts, Franchises and Technology Section), and is past chair of the Communications Law Section of the Minnesota State Bar Association.

 

Brian T. Grogan, Esq.

Moss & Barnett,  A Professional Association

4800 Wells Fargo Center, 90 South Seventh Street

Minneapolis, MN 55402-4129

Telephone: (612) 877-5340    Facsimile: (612) 877-5999

Email:  groganb@moss-barnett.com

Web site: www.municipalcommunicationslaw.com

 

The materials in this Municipal Communications Law Update have been complied from a variety of sources and address only a portion of the relevant issues contained within hundreds of pages of regulations and decisions.  We have not addressed many important points that may apply to your situation.  You should consult with legal counsel before taking any action on matters covered by this Municipal Communications Law Update.

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