1	The FCC’s Cable Franchising Order
2	Introduction FCC adopts Cable Franchising Order – 12/20/06 FCC Releases text of Order – 03/05/07 Order impacts “local” franchising decisions Order does not preempt state franchise requirements Order has no impact in Michigan Order does not address whether IPTV is a “cable service”
3	FCC Authority Section 541(a)(1) An LFA may not unreasonably refuse to award an additional competitive franchise This is the sole basis of authority for the FCC Order
4	Time Frame for Negotiations In the spirit of March madness FCC imposes a “shot clock” 90 day time frame for existing ROW users 180 day time frame for new entities LFA and applicant may agree to extend the time frames Can a franchise be granted in 90 days?
5	Interim Franchise v. Negotiated Franchise If shot clock expires = change of possession applicant automatically granted an “interim franchise” negotiations continue to reach “negotiated franchise” shot clock – tolled if LFA requests information not provided by applicant how much leverage does LFA have if interim franchise is already granted? how much motivation does provider have to agree to reasonable provisions?
6	Build-out Cable Act – Section 541(a)(4)(A): an LFA shall allow the applicant’s cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area Order does not prescribe build-out criteria 7 unreasonable build-out mandates 2 reasonable build-out mandates Does little to resolve question of build-outs Order references Section 541 anti-redlining
7	Franchise Fees 4 issues emphasized in Order: Franchise fee revenue base non-cable services not included broadband data services Charges incidental to the award of a franchise Section 542(g)(2)(D) Five charges which are not “incidental” application/processing fees acceptance fees free or discounted services service to schools and public buildings? requirements to lease or purchase equipment from LFA in-kind payments (not clear)
8	Franchise Fees Classification of in-kind payments Examples = mandatory payments to LFA not related to PEG Contributions in support of PEG services and equipment - Section 542(g)(2)(C) capital v. operational costs capital – depreciable life equipment buildings, etc. operational = salaries Order implies a limit to costs “incurred or associated with the construction of PEG access facilities”
9	PEG/I-Net PEG LFA can’t impose: more burdensome PEG obligations than imposed on incumbent operator pro rata cost sharing approach = reasonable does this include: upfront grants in-kind obligations operator supplied equipment/personnel I-Net Order is not particularly harmful nothing limiting LFA rights
10	Mixed-Use Networks AT&T provision can’t block system improvements and construction if they are for “non-cable” services also applies to boxes housing infrastructure to be used for cable and non-cable services No customer service regulations on non-cable services
11	Level Playing Field (LPF) State LPF provisions remain enforceable All local LPF provisions “preempted” Most favored nations (MFN) clause may still be contractually enforceable could be a problem with incumbent issue to be addressed in FCC NPRM
12	Further FCC Rulemaking FCC “tentatively concludes” that provisions of the Order should apply to incumbents at time of renewal Seeks comment on this conclusion Also seeks comment on impact of MFN clauses FCC “tentatively concludes” it lacks authority to preempt state/local customer service laws that exceed FCC regulations Comments due 30 days from date of publication in Federal Register Reply comments due 15 days later
13	THANK YOU!