Gabriel Garcia Presentation - NATOA

NATOA 2011 Conference -
Gigabit Communities
San Francisco
September 20-23, 2011
The View from Washington and the State Capitals: A
Legislative and Regulatory Update
Gabriel Garcia
Assistant City Attorney
City of San Antonio

Telecom Policy-Making Has Shifted to
Federal Level
Over the last two decades telecom policy-making
has shifted to federal level.
Key drivers accounting for shift:
• State Deregulation
• Transition to IP/Broadband Networks
• Network Convergence
• Expansion of Wireless Service
Shift has been accompanied by reduction in
municipal franchise fee payments and erosion in
local authority.
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State Deregulation - Texas
Overview of telecom deregulation in Texas:
• 1995: HB 2128 eliminated telecom monopoly regulation
and introduced incentive regulation.
• 1999: HB 1777 eased the entry of new competitors into
telecom market by eliminating authority of cities to grant
telephone franchise agreements.
• 2005: SB 5 facilitated the entry of telecom companies into
the cable industry by eliminating authority of cities to
grant cable franchise agreements.
• 2011: SB 980 eliminates authority of Texas PUC to
regulate all rates, tariffs, terms and conditions of service
for telecom companies under incentive regulation.
Prevents any governmental entity from regulating VoIP
services.
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Transition of IP/Broadband Networks
Telecom companies are in the process of
transitioning to Internet Protocol (IP) networks.
• On 12/1/09, the FCC issued Public Notice, Comments
Sought on Transition from Circuit-Switched Network to
All-IP Network, GN Docket Nos. 09-47, 09-51, 09-137.
• Evolution of Public Switched Telephone Network (PSTN)
to IP Network:
More efficient use of network resources
Intelligence resides on the edge of the network in servers and
computers (not centralized in telephone switches)
Promotes innovation by end-users as evident from creation of web
services, wireless applications, and new hand-held devices
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Network Convergence
The convergence of telecom and information technology has
introduced disruptive communications applications.
• End-use devices can provide multiple services (voice, data and video).
• Computer applications can provide the same services as switched
telephone networks (Voice over Internet Protocol – VoIP).
• Computer ship storage capacity continues to expand exponentially
with dramatic results for consumers:
Hand-held devices are getting smaller and smarter (laptops, cell phones)
Reduced costs for data back-up and network redundancy
Promotes wireless mobility – work anywhere & always in touch
New services do not fall neatly into the old regulatory
structure.
VoIP, Internet access & wireless services fall under FCC
jurisdiction.
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Expansion of Wireless Services
Between 1992-2007, the
annual contribution of
wireless services to Gross
Domestic Product was
16%, compared to 3% for
the rest of the economy.
CDC study found the percentage of U.S.
homes with only wireless services is 24.5%
The explosive growth of
wireless services is leading
residential consumers to
drop landlines.
As consumers migrate to
wireless services, right-ofway
contributions from
providers to cities go down.
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Telecom Industry Reduces Municipal
Franchise Fee Payments
Telecom industry (telephone, wireless & cable) has been
working to reduce municipal franchise fees paid for use of
rights-of-way (ROW).
• Cable Modem: FCC ruled it is not a “cable service,” therefore cable
companies need not pay franchise fees on cable modem revenues.
Service uses municipal ROW.
• DSL Service: FCC ruled it is an “information service” not a
“telecommunications service,” thus telephone companies need not
pay franchise fees on DSL service revenues.
Service uses municipal ROW.
• Over-the-Top VoIP Service: FCC ruled it is an “interstate service”
within its jurisdiction.
Service rides on existing broadband connection (cable modem or DSL).
• ROW NOI: FCC may assert jurisdiction to determine payment for
access to municipal ROW base on maintenance cost methodology.
Proceeding pending at FCC.
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Initial Local Government Reaction to
Industry Changes
Local government reaction to state deregulation,
network convergence, and transition to IP networks:
• Activities previously regulated were transitioned to IT
department.
• Regulatory oversight was eliminated, reduced, or
retargeted elsewhere.
• Lack of regulatory oversight led to reduced interdepartmental
coordination.
• Contracting for converged telecom/information
technology services was approached as technology
procurement.
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Practical Response to Industry
Changes
Practical response to deregulation, network convergence and
transition to IP networks:
• Recognize that “deregulation” does not mean the absence of
regulation, but rather a shift to federal activities.
Participate in advocacy at FCC, Congress and federal courts.
• Procurement of converged telecom and information technology
requires staff to understands service offerings, evolving network
architecture, legal framework, and regulatory landscape.
Staff needs to acquire new skill set through training or new hires.
Contracts need to include quality of service standards (SLAs), consumer
protections and other items previously mandated by state regulation.
• Telecom procurement and deployment requires closer interdepartmental
cooperation.
In response to this new reality, San Antonio created a new governance
structure to prioritize and align IT investments with the needs of the city.
All major IT investments must be approved by governance board.
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Policy Implications and Response to
Industry Changes
Policy implications resulting from industry changes:
• Cities are receiving ROW compensation based on yesterday’s telecom
technology and regulatory definitions.
• City franchise revenues are not benefiting from growth in new
broadband technologies although broadband infrastructure uses
municipal ROW.
Policy response to industry changes:
• Cities should call for new regulatory structure that will allow them to
share in the revenues from tomorrow’s broadband technology that
uses municipal ROW.
• New regulatory structure should recognize that wireless towers use
municipal ROW to connect to central offices and other towers for
which cities should be compensated.
• This will require advocacy before Congress, Capitol Hill and FCC.
• NATOA is poised to take the lead.
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Telecom Industry Erodes Local
Government Authority
Telecom industry has successfully eroded local government
authority:
• State Cable/Video Franchising Laws: Many states, including Texas,
have passed laws eliminating the authority of cities to grant cable
franchise agreements and established statewide licensing processes.
• PEG Funding: Elimination of municipal franchise agreements has
limited the used of PEG funds to capital expenditures.
• FCC Cable Franchising Order: FCC order requiring local governments
to take action on a request for a cable franchise agreement within 90
days for providers with ROW authority (ILECs) and 180 days for
others. Reiterates that cable providers need not pay franchise fees on
non-cable services.
• FCC Tower Siting Order: FCC order requiring cities to take action on a
new tower siting request within 180 days, and collocation application
within 90 days.
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Response to Erosion of Local Authority
Cities’ response to erosion of their local authority:
• Unsuccessfully opposed many state efforts to eliminate local
franchising authority.
• Unsuccessfully challenged FCC Cable Franchising Order in federal
court.
• Supporting Community Access Preservation (CAP) Act in Congress
which would allow PEG funds to be used for operational expenses.
• Currently challenging FCC Tower Siting Order in federal court.
• Engaged in filing comments at FCC in ROW NOI proceeding.
• Prospectively, expect deployment of many more wireless towers and
outdoor Distributed Antenna Systems (DAS).
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Closing Observations
Telecom policy-making has shifted to the federal level as a result of state
deregulation, network convergence and transition to IP networks.
As a result of changes in telecom industry, cities should take a more
comprehensive approach to telecom/IT procurement.
Telecom industry has successfully eliminated franchising payments to
local governments for broadband services that use city ROW.
Telecom industry has successfully eroded local government authority over
cable franchising and tower siting.
Cities are receiving franchise payments based on yesterday’s technology.
Cities should call for new regulatory structure that will allow them to
receive franchise payments based on tomorrow’s technology.
NATOA is poised to take the lead on this issue.
Expect deployment of many more wireless towers and outdoor DAS
systems, and work for new regulatory structure to recognize that these
wireless facilities uses city ROW.
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