©2003 By THELEN REID & PRIEST LLP 1 NRECA/NRTC Joint Conference July James A. Stenger Regulatory Impacts on BPL What ’s Happening at the FCC And In Congress

©2003 By THELEN REID & PRIEST LLP 2 FCC issues: FCC issues:  Technical standards for BPL equipment - the Office of Engineering and Technology (OET).  Regulatory classification of BPL - the Wireline Competition Bureau (DSL model) or the Media Bureau (cable modem model).  Pole attachments, interconnection and access to network elements - Enforcement Bureau, MDRD. State Commissions will consider whether electric rate payers will receive a fair price for electric line (and other asset) sharing. State Commissions will consider whether electric rate payers will receive a fair price for electric line (and other asset) sharing. Local jurisdictions (and landowners) will consider whether franchises and easements include BPL communications services. Local jurisdictions (and landowners) will consider whether franchises and easements include BPL communications services. What are the legal issues facing PLC & how & when will they be resolved?

©2003 By THELEN REID & PRIEST LLP 3 What the NOI addresses:  Devices that comply with existing carrier current system rules.  Characteristics and environment of access/in-house BPL, interoperability between them, and Int’l standards.  Interference potential/mitigation methods.  Field test data from experimental licenses.  Measurement methods - representative, consistent, repeatable.  Other revisions to Part 15 that would promote BPL.  Addresses technical not policy (cross-subsidy, USF, pole attachment, ROW) issues at this early stage. The NOI must be followed by an NPRM. The FCC’s April 23, 2003 NOI on Technical Standards

©2003 By THELEN REID & PRIEST LLP 4 Comments In Support of BPL Only Five Electric Utilities filed Comments Supporting BPL. Only Five Electric Utilities filed Comments Supporting BPL. In the US there are over 30 electric utilities with more than 1 million electric households and another 17 with over 300,000 households. In the US there are over 30 electric utilities with more than 1 million electric households and another 17 with over 300,000 households. All of the vendors filed Comments. All of the vendors filed Comments. Discussion of status of utility/vendor trials. Discussion of status of utility/vendor trials. Alternative models for delivering BPL. Alternative models for delivering BPL. Responses to FCC technical questions. Responses to FCC technical questions.  Frequency selection  Emissions limits  Measurement methods

©2003 By THELEN REID & PRIEST LLP 5 Opposition Comments Amatuer Radio Association Amatuer Radio Association  Don’t allow at all  Public interest claims Short Wave Radio Association Short Wave Radio Association  Confine to MHz  Public interest claims Broadcasters Broadcasters  Confine below 54 MHz Cable Television Cable Television  Overlashing Qwest and Sprint Qwest and Sprint  Regulatory Parity Information Technology Council, and Others Information Technology Council, and Others

©2003 By THELEN REID & PRIEST LLP 6 The FCC Needs To Show That It Weighed the Public Interest and Made a Rational Decision Technical Considerations - are interference concerns overblown? Technical Considerations - are interference concerns overblown?  Single point source emissions  Lack of band pass filters  Wideband/narrow receiver frequency range  Radiated emissions tests results on file Public Interest Benefits - if some services may be adversely affect, what is the cost-benefit analysis? Public Interest Benefits - if some services may be adversely affect, what is the cost-benefit analysis?  Countervailing public benefits of PLC.  Rural users, developing areas.  NRECA and NRTC Should Reply on August 6.

©2003 By THELEN REID & PRIEST LLP 7 Regulatory classification: Title I Information Service; Title II common carrier service; or Title VI cable service? Regulatory classification: Title I Information Service; Title II common carrier service; or Title VI cable service? Interconnection rights - What are the rights of BPL providers to interconnect with or obtain network elements from other carriers? Interconnection rights - What are the rights of BPL providers to interconnect with or obtain network elements from other carriers? Interconnection obligation - What are the obligations of BPL providers to interconnect with or provide network elements/access to other carriers? Interconnection obligation - What are the obligations of BPL providers to interconnect with or provide network elements/access to other carriers? Preemption - The FCC can influence State and local rules and decisions on BPL. Preemption - The FCC can influence State and local rules and decisions on BPL. The FCC in a future NOI/NPRM may address the service rules for PLC.

©2003 By THELEN REID & PRIEST LLP 8 State Commissions regulate affiliate transactions between utility “OpCo” and utility “BPL Co.” PA issued what may be the first BPL line sharing approval. State Commissions regulate affiliate transactions between utility “OpCo” and utility “BPL Co.” PA issued what may be the first BPL line sharing approval. State Commissions regulate CLEC certificate issuance, either to utility “BPL Co.” or more likely to “Backhaul Co.” State Commissions regulate CLEC certificate issuance, either to utility “BPL Co.” or more likely to “Backhaul Co.” Local jurisdictions grant franchises to use the public rights-of-way and collect franchise fees and other consideration from new entrants. Local jurisdictions grant franchises to use the public rights-of-way and collect franchise fees and other consideration from new entrants. Landowners grant easements and rights-of-way and access to buildings. Landowners grant easements and rights-of-way and access to buildings. State and Local Issues

©2003 By THELEN REID & PRIEST LLP 9 Yes - competition from a third wire is good. Yes - competition from a third wire is good. Yes - redundancy from a third wire is good. Yes - redundancy from a third wire is good. Yes - intelligent electric distribution is good. Yes - intelligent electric distribution is good. But what really sets BPL apart is the potential to link chips in virtually every device connected to the electric grid. But what really sets BPL apart is the potential to link chips in virtually every device connected to the electric grid. We can solve virtually any problem that can be written on a silicon chip. We can solve virtually any problem that can be written on a silicon chip. But many solutions can’t work unless and until the chips can communicate. But many solutions can’t work unless and until the chips can communicate. Why the regulators should decide to help BPL roll-out quickly.

©2003 By THELEN REID & PRIEST LLP 10 Pending In Congress The Agriculture and Rural Development Approp. Bill for Fiscal Year passed the House, awaiting action in the Senate before the August recess. The Rural Utilities Services FY2003 funding level was $ million. The Agriculture and Rural Development Approp. Bill for Fiscal Year passed the House, awaiting action in the Senate before the August recess. The Rural Utilities Services FY2003 funding level was $ million. Commerce Approp bill for Fiscal Year 2004, expected on the House floor week of July 21. Economic Development Administration (EDA) FY2003 funding level $290 million. National Telecommunications and Information Administration (NTIA) FY2003 funding for Info/Infra Grants, $ million; FY2003 Public Telecom Facilities, $ million. Commerce Approp bill for Fiscal Year 2004, expected on the House floor week of July 21. Economic Development Administration (EDA) FY2003 funding level $290 million. National Telecommunications and Information Administration (NTIA) FY2003 funding for Info/Infra Grants, $ million; FY2003 Public Telecom Facilities, $ million. Fiscal Year 2004 to be at or slightly below the above. Fiscal Year 2004 to be at or slightly below the above.

©2003 By THELEN REID & PRIEST LLP 11 b NY # v1 / Questions? James A. Stenger Tele: Feedback and Discussion