1. APPA Community Broadband Conference Broadband Service Issues MDU Challenges Presented By Charles A. Rohe October 12, 2004

2. 2 OVERVIEW n For competitive providers, gaining access to the “Last 100 Feet” to serve customers in Multi Tenant Environments has been an intractable problem. n Two means to access tenants of MDUs: n Building Access Strategy n Inside Wiring Strategy

3. 3 OVERVIEW n Building Access Strategy n Install new wiring, from your distribution trunk in the street to the end user. n This strategy requires a lease or license from the property owner, who may demand unreasonable and discriminatory compensation.

4. 4 OVERVIEW n Inside Wiring Strategy n Buy or lease existing wiring within the building. n This may involve the new entrant in a difficult negotiation with the present owner of the wiring, who is usually the entrenched service provider and a principal competitor, or perhaps a 3-way negotiation with the competitor and the property owner.

5. 5 OVERVIEW n Inside Wiring Strategy (cont’d) n In the telecom realm, there’s a variation of the Inside Wiring Strategy, which is to take advantage of the unbundling rules to purchase inside wiring subloops from the local exchange carrier.

6. 6 OVERVIEW n Whether you are interested in the Building Access Strategy or Inside Wiring Strategy, there are two regulatory schemes. n One for video (cable wiring) and another for telecom wiring. n Both video and telecom wiring are subject to Federal (and to a lesser extent) state law.

7. 7 VIDEO SERVICE n Where are we, and how did we get here? n Loretto v. Teleprompter

8. 8 VIDEO SERVICE n Loretto v. Teleprompter n U.S. Supreme Court case from 1982, arose from a NY statute that tried to facilitate tenant access to cable television. n Statute prohibited landlords from interfering with installation of cable TV facilities, and limited the landlords’ fees to $1.00.

9. 9 n Loretto v. Teleprompter n Held: Installation of cable TV wire on a landowner’s property is a permanent occupation of the land, and whether it is to serve tenants of the building or just to “cross over.” The property owner has a “historically rooted” expectation of compensation. When the government compels the landlord to allow that occupation, it is a taking, for which just compensation is required under the 5th & 14th amendments of the U.S. Constitution. n How much compensation is due is a matter for state courts to decide

10. 10 VIDEO SERVICE n Where are we, and how did we get here? n Loretto v. Teleprompter n “Mandatory Access Laws”

11. 11 n “Mandatory Access Laws” n Sixteen States and the District of Columbia have enacted laws similar to the one that was at issue in Loretto, and which have now been amended to conform with the Supreme Court’s decision. n Intended to prevent a landlord from charging unreasonable fees or interfering with the installation of cable TV wiring in MDUs.

12. 12 n Mandatory Access Laws Examples: n New York’s law is essentially the same as prior to Loretto, but the $1.00 limit on fees has been removed. The Public Service Commission now sets, by regulation, a fee determined to be reasonable. n Virginia prohibits a landlord from charging fees for mere access to tenants, but allows fees for the reasonable value of the property being used, and allows the cable TV company to pay landlords for marketing assistance, etc. Discrimination between video service providers is prohibited.

13. 13 n Citations to Mandatory Access Statutes: n Connecticut--Conn. Gen. Stat. § 16-333a (2003) n Delaware--26 Del. Code Ann. tit. 26 § 613 (2001) (only if utility easements also exist) n District of Columbia--D.C. Code Ann. § 34-1244.01 (Lexis 2001) n Florida -- Fla. Stat. ch. 718.1232 (2003) (condos only) n Illinois -- 55 Ill. Comp. Stat. 5/5-1096 (2004) (county franchisees only); 65 Ill. Comp. Stat. 5/11-42-11.1 (2004) (municipal franchisees only) n Kansas -- Kan. Stat. Ann. § 58-2553) (2003) n Maine -- 14 Me. Rev. Stat. Ann. tit. 14 § 6041 (2003) n Massachusetts -- Mass. Gen. Laws ch. 166A, § 22) (2003) n Minnesota -- Minn. Stat. § 238.23) (2003) n Nevada -- (Nev. Rev. Stat. 711.255)(2003) n New Jersey -- (N.J. Stat. Ann. § 48:5A-49)(2004) n New York -- N.Y. Pub. Ser. Law § 228 (McKinney 2004 supp.) n Pennsylvania -- 68 Pa. Cons. Stat. Ann. §§ 250.502-B & 250.504-B) (West 2004) n Rhode Island -- R. I. Gen. Laws, § 39-19-10)(1993) n Virginia -- Va. Code Ann. § 55.248.13:2 (2003) n West Virginia -- W. Va. Code § 24D-2-3 (1999) n Wisconsin -- Wis. Stat. § 66.0421)(2003)

14. 14 VIDEO SERVICE n Where are we, and how did we get here? n Loretto v. Teleprompter n Mandatory Access Law n Exclusive Agreements

15. 15 n Exclusive agreements are valid in most states. n The FCC has determined that exclusive agreements between MVPD providers and landlords might actually enhance competition, and has refused to prohibit them. n Incumbent cable companies have offered to pay building owners a fee for new exclusive agreements, or have made an exclusive agreement one of their conditions for upgrading facilities in the building. n A state mandatory access law may override the FCC’s refusal to outlaw exclusive agreements, depending on its actual language.

16. 16 What a Video Provider Should Expect: n The landlord has a right to compensation, but the fee should not be more than a reasonable amount for use of the property; n You may be able to obtain an exclusive agreement, for which the lease payments will probably be more significant; n If another carrier has already obtained an exclusive agreement, that agreement may be enforceable against you, and prevent you from gaining access to that building; but n If your state has a mandatory access law, it will probably trump the exclusive agreement (yours or anyone else’s).

17. 17 SUMMARY Video Provider Building Access Strategy

18. 18 SUMMARY Video Provider Building Access Strategy n New Wire n Propose a reasonable agreement to the property owner. n Prepare to negotiate a reasonable and non-discriminatory fee for use of the landlord’s property. n If negotiations fail, consider Mandatory Access Statute (if any). n Consider an “Inside Wiring Strategy”.

19. 19 If a Video Provider has an Inside Wiring Strategy, how does it go about getting access? n Existing Wiring n Identify the wiring you desire to use n Cable Home Wiring n Home Run Wiring

20. 20 Cable Home Wiring n The internal video wiring, within the subscriber’s premises, beginning at the demarcation point and running to the subscriber’s television set or other customer premises equipment. [1] [1] [ 1] [ 1] Matter of Telecommunications Services Inside Wiring, First Order on Reconsideration and Second Report and Order, CS Docket No. 95-184, FCC 09-9, n. 3 (rel. Jan. 29, 2003).

21. 21 Home Run Wiring n The wiring from the demarc to the point at which the service provider’s wiring becomes devoted to an individual subscriber or individual loop. [1] [1] [1] 47 CFR 76.800(d).

22. 22 If a Video Provider has an Inside Wiring Strategy, how does it go about getting access? n Cable Home Wiring: If the subscriber has voluntarily cancelled the previous service provider, the subscriber must be given the first opportunity to purchase the Cable Home Wiring. If the subscriber declines, the building owner may purchase the Cable Home Wiring, or may authorize the MVPD newcomer to purchase it. Cost is to be based on replacement cost, per foot.

23. 23 If a Video Provider has an Inside Wiring Strategy, how does it go about getting access? n Home Run Wiring: The incumbent MVPD may elect not to sell, and instead abandon or remove Home Run Wiring, but the alternative of sale is a more likely choice. If the MVPD elects to sell, then it is a question of whether the sale is building-by- building or unit-by-unit.

24. 24 If a Video Provider has an Inside Wiring Strategy, how does it go about getting access? n Building by Building n This occurs when the incumbent MVPD’s authority to serve the building is terminated by the landlord, and the MVPD does not have an enforceable right to remain.

25. 25 n Building by Building (cont’d) n Incumbent has 30 days to decide whether to sell or remove wiring. If property owner declines to purchase, the new MVPD may elect to do so. n Parties have 30 days to negotiate a price. n If unable to agree, parties have 7 days to agree on an arbitrator. n Arbitrator must have a reasonable price determined by the end of a 90 day period commencing when the incumbent MVPD is notified of its termination.

26. 26 The Building-by-Building Timeline Termination Announced Election to Sell Price Negotiation ends Expert(s) Chosen by Parties Third Expert Chosen by Designated Experts Notice Period Ends 90 days60 days30 days23 days16 days0 days

27. 27 If a Video Provider has an Inside Wiring Strategy, how does it go about getting access? n Unit by Unit n When the incumbent MVPD owns the Home Run Wiring but does not have a legally enforceable right to maintain that particular wiring, the MDU owner may permit competition in the building.

28. 28 n Unit by Unit n As with building-by-building, the MVPD incumbent may refuse to play, and may remove its wiring and restore the building, although it seems unlikely. n If the incumbent elects to sell, a convoluted process commences, under which the incumbent and the new MVPD transfer the wiring back and forth, as they gain and lose customers. n The process seems intended to encourage the incumbent and the new entrants to arrive at some sort of accommodation.

29. 29 Unit-by-Unit Timeline Termination Announced Election to Sell and Purchase Price Negotiation ends Expert Chosen by Parties Expert Chosen by Designated Experts OR Price Decided 60 days30 days0 days-7 days-14 days-21 days

30. 30 TELECOM SERVICE n Where are we, and how did we get here? n In general, the FCC is hamstrung by a lack of jurisdiction over property owners.

31. 31 TELECOM SERVICE n Where are we, and how did we get here? n In general, FCC is hamstrung by a lack of jurisdiction over property owners. n Absence of any building access language in the 1996 Telecom Act.

32. 32 TELECOM SERVICE n Where are we, and how did we get here? n In general, FCC is hamstrung by a lack of jurisdiction over property owners. n Absence of any building access language in the 1996 Telecom Act. n Pole Attachment Statute.

33. 33 Pole Attachment Statute n The FCC has addressed the matter of building access in a limited fashion, relying on its right to regulate access to poles, conduits and rights-of-way (47 U.S.C. §§ 224 and 251(b)(4)). n A “utility” (which includes both telephone and electric utilities, among others) must allow access to its poles, ducts, conduits and rights-of-way at “just and reasonable” rates. In 2000, the FCC concluded that this obligation encompassed in-building facilities, such as riser conduits, that are owned or controlled by utilities.

34. 34 Eminent Domain n Telecom providers have various rights under some state laws to acquire property by condemnation, although it is a slow and costly process

35. 35 State Telecom Access Laws n Six states have enacted laws or regulations that provide various building access rights to competitive telecom providers. n Connecticut n Texas n Nebraska n California n Ohio n Kansas

36. 36 FCC Telecom Access Rules n The FCC’s 2000 order in the “Competitive Networks Rulemaking” [1] made some progress. [1] n Follow-up order in the Competitive Networks Rulemaking failed to accomplish anything new, due to insufficient comments by carriers. [1] [1] In re Promotion of Competitive Networks in Local Telecommunications Markets, 66 Fed. Reg. 232-01 (Jan. 11, 2004) (codified at 47 CFR §§ 64.2500 et seq.).

37. 37 If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are: n The Telecom Provider may be required to pay the landlord for access, and there is no Federal law limiting the amount. n State laws in Connecticut and Texas impose a limit on the fees charged by landlords; n State laws in Connecticut and Texas may prevent the landlord from charging a new entrant more than is charged to the ILEC.

38. 38 If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are: n In residential buildings, a Telecom Provider may enter into an exclusive agreement with the property owner, except in California, Connecticut, Nebraska, Ohio or Texas, where state law prohibitions against exclusive agreements have been extended to residential buildings.

39. 39 If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are: n Access may be prevented by an exclusive agreement between a landlord and another carrier, if the building is residential, or if the exclusive agreement for a commercial building pre-dated March 12, 2001.

40. 40 If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are: n If you are the one trying to enforce an exclusive agreement, don’t expect the ILEC to go quietly, as it will inevitably resist on the basis of its “carrier of last resort” obligation.

41. 41 If a Telecom Provider has a Building Access Strategy, and intends to install its own wiring, its rights are: n If you know of available conduits in a building that are owned or controlled by a utility (telephone, electric, gas or steam), you are entitled under Section 224 to lease those facilities at fair and reasonable rates.

42. 42 SUMMARY n The Telecom Provider with a Building Access Strategy may be required to pay the landlord for access, and there is no Federal law limiting the amount. n State laws in Connecticut and Texas impose a limit on the amount; n State laws in Connecticut and Texas may prevent the landlord from charging you (the competitor) more than is charged to the ILEC. n If all else fails, you should consider if your company has the right of eminent domain, and whether it provides a possible solution.

43. 43 TELECOM n If the Telecom Provider has an Inside Wiring Strategy, how do you go about getting access? n Under telecom regulations, options exist to use the wiring owned by other entities. n Determine the location of the demarc, which allows you to determine who owns or controls the wiring.

44. 44 Determine the location of the Demarc. n In California, and in the mid-Atlantic states that formerly comprised Bell Atlantic before its merger with NYNEX, the demarc should always be at the MPOE.

45. 45 Determine the location of the Demarc. n Elsewhere, the demarc will usually be at the MPOE if the building was constructed after August of 1990, although the ILECs were still allowed to place the demarc in accordance with their own non-discriminatory policy.

46. 46 Determine the location of the Demarc. n In pre-1990 buildings, the demarc is probably NOT at the MPOE. Rather, there will probably be multiple demarcs, throughout the building.

47. 47 A Possible Strategy n In any building, the property owner has the right to require the ILEC to move its demarc back to the MPOE, which effectively transfers control of the inside wiring from the ILEC to the property owner. n Expect the ILEC to resist aggressively.

48. 48 n The Competitive Networks First Report and Order requires ILECs to negotiate with the building owner for moving the demarc to the MPOE, which entails transferring house and rising cabling to the building owner. Parties must come to agreeable terms within 45 days of a request to move the demarc, and engage in binding arbitration if unable agree.

49. 49 Another Possible Strategy n Telecommunications Wiring that extends from the MPOE to the Demarc. n Inside Wiring Subloops are part of the telephone company’s network, and are available for lease from the ILEC as unbundled network elements.

50. 50 CONCLUSION n The Last 100 Feet is a formidable Problem. n The law provides no silver bullet. n Video franchisees and certificated telecom providers have some legal recourse. n Actual strategy may depend on the State in which business is conducted. n Telecom Providers possibly overcome obstacles by access to the incumbent’s inside wiring.