The Coalition for Local Internet Choice Community Broadband Legal and Regulatory Barriers, Challenges and Opportunities: A conversation on Where Things Stand at the Federal and State Level -- What’s Working and What’s Not Mountain Connect June 26, 2019 Sean Stokes The Coalition for Local Internet Choice http://www.localnetchoice.org/

Small Print Disclaimer This presentation does not constitute legal advice and should not be interpreted as such. For advice on federal, state or local law, please consult qualified legal counsel.

About CLIC The Coalition for Local Internet Choice – CLIC – represents a wide range of public and private interests who support the authority of local communities to make the broadband Internet choices that are essential for economic competitiveness, democratic discourse, and quality of life in the 21st century. The Internet Is Essential 21st Century Infrastructure: Modern broadband Internet networks are essential infrastructure in the 21st century economy. Access to modern broadband infrastructure is vital in ensuring that all communities – rural, tribal, and urban – can access opportunity and participate fully in community life. Local Communities Are the Lifeblood of America: America is built on its great communities. Towns, counties, and cities are where economic activity and civic engagement live — and communities recognize modern broadband Internet infrastructure as essential to enable such economic and democratic activity. Communities Must Be Able to Make Their Own Choices: Local choice enables local self-reliance and accountability. Local choice enables local innovation, investment, and competition. Local communities, through their elected officials, must have the right and opportunity to choose for themselves the best broadband Internet infrastructure for their businesses, institutions, and residents. Federal broadband policies must prioritize local choice and provide local communities full, unhindered authority to choose their own broadband future.

Community Broadband Authority Issues Federal law encourages, but does not authorize Public entities (including coops) must have state/local authority State laws, interpretations, procedures differ widely Dillion’s Rule v. Home Rule Service-by-service (cuts both ways) For example, in City of Bristol, VA v. Earley, 145 F.Supp.2d 741, 745 (W.D. Va. 2001), the court held that the City has authority to provide telecommunications services, and in Marcus Cable Associates, L.L.C. v. City of Bristol, 237 F.Supp.2d 675, 678-79 (W.D.VA 2002), the same court held that the City does not have authority to provide cable television service. The critical difference was that Virginia’s statute authorizing localities to establish “public utilities” applied to telecommunications services but not to cable television

Federal Law – Does Not Preempt State Barriers Section 253 – Barriers to Entry Section 253 – “No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” Telecom Act § 253(a) (47 U.S.C. § 253(a)) Nixon v. Missouri Municipal League, 541 U.S. 125 (2004): held that “any entity” language in § 253(a) not clear enough to meet Ashcroft “plain statement” standard (Gregory v. Ashcroft , 501 U.S. 542 (1991)) to preempt state laws involving “traditional” or “fundamental” state functions. Section 706 – Broadband Infrastructure (a) In general. The Commission…shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing … other regulating methods that remove barriers to infrastructure investment. -- 47 U.S.C. §1302 2015 -- FCC adopts Order granting Section 706 petitions for preemption filed by the Electric Power Board of Chattanooga, TN and Wilson, NC (WC Dockets No. 14-115 and 14-116) Finds that the TN and NC laws are acting as barriers to broadband infrastructure development 2016 6th Circuit Court of Appeals reverses the FCC finding that Section 706 does not override state control over local jurisdictions

Barriers To Public Entry State “barriers” (not necessarily “prohibitions”): AL, AR, CA, CO, FL, LA, MI, MN, MO, NC, NE, NV, PA, SC, TN, TX, UT, VA, WA, WI (http://www.baller.com/wp-content/uploads/BallerStokesLideStateBarriers3-1-19.pdf) Some barriers to broadband others to telecom, or cable Limitations on service area Death of a thousand cuts Broad based public-private sector support has helped recast the debate away from public v private From 2005-2010 most efforts at barriers defeated, 2011-2016 battles re-emerged with some negative laws enacted but primarily a stalemate 2017-2019 some positive bills introduced

2019 State Bills Arkansas – Enacted slightly better but watered down from what was introduced Georgia – electric coop authority adopted North Carolina – Pending, some improvements around the edges Maine – Negative bill not adopted Michigan – Pending, some improvements around the edges Mississippi – electric coop authority adopted

Federal – The Good, the Bad and the Ugly USDA ReConnect Grant Program -- $600 million in funding designed to help underserved rural communities enhance their broadband services. Specifically includes local governmental entities and coops as eligible FCC – Rural Broadband Experiments and CAF II Funding eligibility includes local governments and coops Community Broadband Act 2019 (H.R. 2785) – would amend Section 706 to preempt state barriers to community broadband and public private partnerships

Federal – The Good, the Bad and the Ugly FCC’s Broadband Deployment Advisory Committee (BDAC) Stated Purpose – To provide advice and recommendations to the FCC on how to accelerate the deployment of high-speed Internet access Despite recent additions, membership heavily industry-oriented. FCC Senior Counsel Nick Degani on appointments to the BDAC: “To be frank, we didn’t want to choose someone from, say, a municipality that needs a blueprint, because they’re not going to be the ones to help design that blueprint.”  BDAC developed model codes for states and municipalities Under model state code local governments must lease dark fiber at cost- based rates to private communications providers Local governments must lease access to communications support structures, buildings, and other vertical assets at cost-based rates BDAC Co-Chair has indicated desire to bring model codes to all states

Federal – Good, the Bad and the Ugly BDAC State Model Code – Rural Municipal Broadband – “Mother May I” approach A rural municipality must solicit bids from private carriers, and then evaluate at least 5 options: (1) Private-led Investment with Public Assistance – Privately-owned entity constructs, maintains, and operates the network, and the municipality assists by facilitating permitting, granting, and customer sign-ups. (2) Balanced Public-Private Partnerships - Municipality provides all or some of the necessary capital funds to construct the network, and one selected service provider is granted an exclusive franchise agreement for a period of time sufficient for the Broadband provider to recover its capital investment. At the end of that period the system is open access.   (3) Public Assets – Open Access -- Broadband providers contract for access to a community-owned infrastructure that is developed through a local improvement district, fee for services, donations, grants, and/or other non-tax revenue sources. (4) Public-Led Contracting -- Community serves as the lead entity and broadband provider by constructing, financing, and owning the network infrastructure with a private sector partner providing crucial network operations or other duties specifically negotiated. (5) Fully Public Funded and Operated Networks. Municipality designs, builds, operates, and manages a community-wide ISP “If, and only if, the Rural municipality receives no reasonable and credible proposal from a private Communications Provider to build a Broadband network and otherwise determines that none of the first three are viable and if, and only if, the Rural municipality makes a positive determination of costs, feasibility, sustainability, and that the action is in the interest of the general public may the Rural municipality invest in a Fully Public Funded and Operated Network and/or engage in Public-Led Contracting.”  Any facilities constructed must be made available to private entities on a non-discriminatory basis.

Federal – Good, the Bad and the Ugly “Alas, no good deed goes unpunished, as you have been under constant attack by those pointy-headed liberal advocacy groups hellbent on driving profit margins to zero—or even worse—and who at the same time promote below-cost, government- sponsored and operated networks to compete against your businesses.” -- FCC Commissioner O’Reilly to the American Cable Association on the evils of overbuilding

Positive State Efforts Vermont – Passed bill H 513 to provide technical assistance as well as grants for communities to do feasibility studies on how to build and finance broadband. Adds money for match grants to internet service providers to expand broadband into underserved area. The bill states: The FCC’s regulatory approach is unlikely to achieve the intended results in Vermont. The policy does little, if anything, to overcome the financial challenges of bringing broadband service to hard- to-reach locations with low population density. However, it may result in degraded broadband quality of service. The State has a compelling interest in preserving and protecting consumer access to high quality broadband service. Reaching the last mile will require a grassroots approach that is founded on input from and support of local communities, whose residents are best situated to decide which broadband solution fits their needs. By developing a toolkit that encompasses numerous innovative approaches to achieving successful broadband buildout and by investing in programs and personnel that can provide local communities with much-needed resources and technical assistance, the State can facilitate and support community efforts to design and implement broadband solutions. Maine – New law that provides municipal; access to utility poles without make-ready costs for any purpose.

Some Barriers Are -- Self-Imposed Charters Local ordinances Non-compete provisions in franchises, pole attachment or lease agreements Most favored nations agreements Barriers may be substantive or process

Public Private Partnership: Authority Issues State Law May not be an issue where there is broad home rule authority About 30 States have P3 laws Some are broad (Maryland) and some are narrow (Florida) Only a few address broadband specifically Limitations on use of tax favored financing for private use

Some Strategic Considerations Recognize and distinguish between your proprietary authority and regulatory authority Learn from others what has and has not worked Realistically understand your core strengths and weaknesses Align all stakeholders Be flexible and understand the Mike Tyson rule of community broadband

Baller Stokes & Lide, PC Washington, DC Questions? Sean Stokes Baller Stokes & Lide, PC Washington, DC (202) 833-0166 sstokes@baller.com www.baller.com