National Franchising: Whats In It or Not

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National Franchising Whats In It (or Not)

• Nicholas P. Miller

March 28, 2006 SEATOA Seminar Asheville, N.C.
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Overview

• Industry Developments
• State/Federal Efforts
• Legislation
• FCC
• Some Perspective

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The Milieu
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RBOC Wing Walking to the Future

• Obsolescence of Circuit Switch Voice
• Short Term Revenue Gains
• Major Long Term Gains
• No fiber unbundling
• Reconstituted ATT
• Price and Service Discrimination

5
Cable Still Dwarfed by RBOC

• Size
• Political Clout
• See, e.g. Mr. Icahns plans for Time Warner vs.
  Mr. Whiteacres plans for ATT

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RBOC 3-D Chess Local/State/Federal

• Play All Forums Simultaneously
• Move to the One with Earliest Relief
• Use FCC as Trump Card to win no matter the hand
  dealt
• If No federal legislation FCC defines IPTV as
  non-cable service
• If federal legislation FCC threat of preemption
  puts pressure on locals to accept the deal
• If anti-RBOC state legislation FCC preempts

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Federal Legislation-

• Comprehensive Rewrite Unlikely
• No BITS III? ATT opposes
• Net Neutrality? RBOCs and Cable oppose
• Universal Service? Basic telephone is priority
• Ensign-style deregulation? Large enterprises
  oppose

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Federal Video Franchising Easier to PassOnly 3
Players

• Cable vs. Telco vs. LFAs
• Where are the consumers?
• Inouye/Burns vs. Ensign/Rockefeller
• Barton vs. Dingell
• Election year complexities

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Highlights of Barton (3/28)

• Keeps LFAs whole (kind of)
• Good definition of Gross revenues
• Up to 5 franchise fee
• 1 PEG support for all
• Existing PEG channels and INets are protected -
• increased 10 every 10 years
• FCC defines for other LFAs
• Municipal Provisioning
• VoIP 911 requirements

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Highlights Not

• IPTV not defined as cable service
• The MOST IMPORTANT Issue of all
• No Buildout Requirement
• Telco can withdraw at will
• Preempts local consumer protection authority
• LFAs to enforce (without teeth) the FCCs rules
• No New INets

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Highlights Not (cont)

• 10 year term in name only
• The incumbent can abandon the existing franchise
• as soon as a new cable operator offers service
  to one subscriber
• The enforcement mechanisms wont work
• revocation the nuclear option
• Revocation is a sham affiliate can take over
  the revoked facilities without review or
  restriction

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Highlights Not (cont)

• Shifts from Contract to Ordinance
• Enforcement mechanisms?
• No unique deals based on community needs
• Confuses LFAs with PROW Managers
• Inadequate Registration/Certification
• No control over transfers/sales
• No renewal review
• Eliminates explicit LFA buy-out authority

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State Legislation - Lessons Learned

• The Law of Unintended Consequences.
• Can incumbent abandon
• the franchise?
• current service obligations?
• Cash is Not an adequate substitute for in-kind.
• 2. Need forward-looking PEG
• 3. VA and TX bills DO NOT keep LFAs whole
• The process issues
• Right-of-way problems and catastrophes

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WHATS MISSING IN STATE LEGIS TO DATE?

• 1. Termination or abandonment?
• 2. Sell out to the other?
• 3. No consumer rebates, refunds and credits.
• 4. No construction and repair notices.
• 5. No RF interference restrictions or other non
  ROW safety issues.
• 6. No stand-by power.
• 7. No CPE and cable-ready TV compatibility.
• 8. No mention of disabled community.
• 9. No record of customer service complaints.

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WHATS MISSING IN VA AND TX?

• 10. No emergency alert system.
• 11. No upstream connections for PEG signals.
• 12. No signal testing or performance
  evaluations.
• 13. No restrictions on operator editorial
  control of PEG.
• 14. No reference to non-standard
  installations.
• 15. No consumer rights re
• a. Availability of CSRs
• b. Billing and late fees
• c. Notice of service offerings, prices and
  changes, policies
• 16. No privacy rights and disclosures.
• 17. No EEO and Small Business Procurement
  practices.
• 18. No prohibition of anti-competitive pricing
  within the franchise area.

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FCC Hey Dont Forget Us!

• Cable Franchise NPRM
• Preemption of IP (IPTV?) Service Regulation
• E911?
• CALEA?
• Consumer Recourse?
• Net Neutrality?
• Interconnection?
• Non-Discrimination?

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Conclusion

• RBOCs are Coming to Video this time
• Core Debate over Video Franchising
• LFA v. Telco v. Cable Operators
• RBOCs can win without Congress but can We?

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Contact Information
Nicholas Miller nmiller_at_millervaneaton.com Miller
Van Eaton, P.L.L.C. 1155 Connecticut Avenue,
N.W. Suite 1000 Washington, D.C.
20036-4301 phone [phone] fax [phone] www
.millervaneaton.com