1. Legislative Perspectives Unite and Look Forward MACTA Annual Conference St. Louis Park, Minnesota October 28, 2004 Michael R. Bradley Bradley & Guzzetta, LLC 950 Piper Jaffray Plaza 444 Cedar Street Saint Paul, MN 55101 P/(651) 379-0900 ext. 2 F/(651) 379-0999 bradley@bradleyguzzetta.com ______________ ______________

2. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 2 The Message: Unite and Look Forward Focus on what we can agree upon –Not on what we disagree on Identify what is most important to our agency members Develop MACTA Legislative Policy Speak with all interested parties prior to the session Coordinate with NATOA and the LMC Identify and analyze goals of proposed legislative initiatives Move Forward consistent with MACTA policy

3. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 3 Looking in the Rear View Mirror What Happened Last Year No Legislative Policy Premature support of MTA Bill –238.08 (Level Playing Field) amendment –Lack of Consensus among our Membership –Did not Pass out of a single committee in the House –Did pass out of Senate –Eliminated in Conference Committee Support of Overall 238 Update –Developed over 2 years with Cable Industry –Cable Industry Supports after extensive discussions –Passed and enacted into law –Overall good legislation eliminating many out-of-date provisions such as the transfer of ownership provisions that conflicted with the federal rules

4. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 4 How MACTA is Developing Consensus on Legislation Ascertain Important Membership Interests Develop Franchising Policies Review Policies with Membership Meet with Various Interest Groups –NATOA –Legislators –Department of Commerce –Cable Industry (MCCA) –Minnesota Telephone Association (MTA) –Minnesota League of Cities Develop Legislative Approach consistent with policies

5. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 5 MACTAs Important Interests Maintaining Franchising Authority to regulate use of its PROW Continued PEG Funding – to meet communitys needs and interests Institutional Networks Encouraging Competition – lower prices/better services for consumers Fair Competition – No economic or racial redlining –Treat all PROW users providing video services fairly Fair and Flexible franchising requirements –Area Served and PEG

6. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 6 MACTAs Franchising Policy MACTA has developed and formally adopted a franchising policy –Consistent with Membership Interests –Cooperative Effort by Cable Attorneys Bradley, Van Eaton, Herbst, Veith, Vose, and Grogan –Approved by Legislative Committee and MACTA Board Recommended to LMC Cable Attorneys continue to meet on review of 238.08

7. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 7 MACTAs Competitive Franchising Policy LE-____ Franchising Competitive Cable Service Providers Issue: In Minnesota, private sector competition in cable service is coming from broadband service providers (BSPs), Broadband over Power Lines (BPLs), cable operators, local exchange carriers (LECs) or Open Video Systems. Providing cable services works economically for BSPs, BPLs, cable operators and LECs when they can offer their customers multiple services, such as cable, telephone and Internet access, over their infrastructure. Under current state law, municipal cable franchising authorities must franchise competitive providers on terms that are not more favorable or less burdensome as it relates to the area served, public, educational, and governmental (PEG) access, and franchise fees. State and federal case law have interpreted more favorable and less burdensome to mean similar not identical. LECs and Open Video Systems claim that the Minnesota Cable Act does not allow sufficient franchising discretion, which causes municipalities to act as a barrier to entry into the cable service market.

8. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 8 MACTAs Competitive Franchising Policy, cont. Response: Municipal franchising authorities should be allowed, but not be required, to grant cable service franchises to a BSP, BPL, cable operator, LEC or Open Video System seeking to provide cable service for any area, even an area that is smaller than the current franchisee's service area, so long as the franchise is subject to provisions reasonably designed to prevent economic, racial or other discriminatory redlining, or "cherry-picking" that may result in creation of a "digital divide" within a community. The provisions should fully maintain municipal authority to require a cable service provider to meet the municipality's needs and interests including PEG channel capacity, PEG funding and institutional networks consistent with applicable law, but localities should have flexibility to reasonably tailor PEG and I-Net requirements to new entrants.

9. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 9 Expected Legislative Activity Federal –Major cable/telecom reform –Regulatory Treatment of Phone, Internet, and Video Services regardless of method of transmission Define State and Local Govt Authority Define authority to collect franchise fees Define authority over PEG and I-Net Funding Treatment of Competitors –Timeline – NATOA reports that Staff believes the Senate will have a draft by mid-year and the House may have a draft by February/March. Expected to be a 2-year process concluding by end of the 109 th Congress –Work with NATOA on organizing grass roots efforts

10. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 10 Expected Legislative Activity, cont. State –State Regulatory Authority over traditional switched telephone services and new IP based phone services –238.08 – The Level Playing Field Statute Treatment of Competing companies in the Video Market

11. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 11 Background on 238.08 The Current Level Playing Field Statute –Prohibits LFAs from granting additional franchises on terms More favorable or less burdensome pertaining to Area Served PEG access requirements Franchise fees

12. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 12 Background on 238.08 Statutory Interpretation More Favorable or Less Burdensome –Identical v. Similar terms Cable Cos Cities 2003 Litigation – WH Link v. City of Otsego –City must franchise on terms similar to those included in pre-existing franchises Current State of the Law –LFAs have flexibility to grant franchises to competitive operators on different but similar terms as it relates to area served, PEG access and franchise fees

13. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 13 Articulated Issues with 238.08 Cities need discretion to franchise different area served than that of Incumbent Operators –Enhance Competition –Recognize service territories –Recognize where competition is coming from Cities must not be allowed to impose greater burdens on competitors relating to area served, PEG and Franchise fees –Read 238.08 as only applying to incumbent franchises –Ignores logical statutory interpretation

14. Legislative Perspectives: Unite and Look Forward _______________________________ October 28, 2004 Slide # 14 Looking Forward Must be United behind its policy – going into session Must meet with all interested parties Must assess all proposals –MTA, MCCA, Commerce, Legislators Must assess the political environment Must work with NATOA to assess options and possible ramifications to federal efforts –NATOA has expressed interest in assisting MACTA in reviewing options Must work with LMC on clear message Develop message and if necessary legislation consistent with MACTA legislative policy

15. Legislative Perspectives Unite and Look Forward MACTA Annual Conference St. Louis Park, Minnesota October 28, 2004 Michael R. Bradley Bradley & Guzzetta, LLC 950 Piper Jaffray Plaza 444 Cedar Street Saint Paul, MN 55101 P/(651) 379-0900 ext. 2 F/(651) 379-0999 bradley@bradleyguzzetta.com ______________ ______________