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national multi housing council 2007 apartment technology ...

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national multi housing council 2007 apartment technology ...

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    1. National Multi Housing Council2007 Apartment Technology Conference Dallas, Texas October 29, 2007 Matthew C. Ames Miller & Van Eaton, P.L.L.C. mames@millervaneaton.com

    3. Industry Review Convergence is finally here. FCC policy: promote broadband competition and penetration. FCC actively deregulating deployment of fiber, favoring phone companies over cable. Are apartments a special case? Why shouldn’t multifamily residents have the same choices as single family residents?

    4. Fiber to the Premises Should presume demand for services will drive fiber to the premises. Verizon approach seems most cost-effective in long-run. At some point AT&T and MSOs have to make additional investment. FCC seeks to limit regulation of “information services.” Will all services migrate to IP platform? What about benefits of bundling?

    5. FCC issued rulemaking notice in response to Verizon’s allegations that cable operators were “locking up” buildings to impede Verizon’s deployment. FCC proposed vague ban on exclusive agreements. NMHC, et al. filed comments July 2, 2007, reply comments August 1, 2007. Cable industry, PCOs, property owners: opposed regulation. Only incumbent telcos, a few others supported. Exclusive Contracts

    6. Real Access Alliance argued: Exclusivity helps small competitors. Owners use exclusivity to allocate costs of infrastructure investment/upgrades. Owners need exclusivity to negotiate service quality, other terms that benefit residents. Telcos don’t need help: no evidence of real problem; plenty of buildings left; they have enormous leverage to get access. FCC has no authority to regulate this kind of agreement. Exclusive Contracts (cont’d)

    7. Verizon asked for 5-year ban on exclusive access, extending from date of entry by new franchised provider. AT&T asked for ban on enforcing exclusive access agreements. Qwest: preserve existing agreements and marketing agreements. Sure West: ban all types of exclusive agreements. Exclusive Contracts (cont’d)

    8. FCC apparently plans to ban enforcement of any provision granting exclusive access – not sure if marketing to be affected. Ban to apply to existing and future agreements. Ban would apply to cable MSOs and ILECs; PCOs still free to enforce exclusivity terms. Exclusive Contracts (cont’d)

    9. Order due out in October. Will need to review carefully. Cable industry would probably appeal: MSO’s biggest objection seems to be retroactive effect, assuming marketing agreements not affected. FCC’s authority highly questionable. Long term concern for apartments: extension of FCC jurisdiction over future disputes. Exclusive Contracts (cont’d)

    10. Inside Wiring Rules Two sets of FCC rules: cable and telecom. Both intended to aid competition by limiting provider control over wiring. Problem: In triple play world, which rules apply? No rules for broadband networks. Not a factor if property owner owns the wiring.

    11. Cable Inside Wiring Cable home wiring rule allows resident to acquire wiring in unit. Cable home run wiring rule allows competitor or property owner to acquire “home run wiring” and “home wiring” under certain conditions. “Home run wiring” runs from demarc point (at unit) to point where wiring splits off to serve just that unit. If operator has legally enforceable right to maintain wire on property, rule doesn’t apply.

    12. Cable Inside Wiring (cont’d) FCC created “unit-by-unit” and “building-by-building” methods. Note issues raised by telco entry: Can telco claim right of access to cable op’s wiring? Can MSO or PCO claim access to telco wiring? Do cable rules apply to use for non-video services? Note also that rule requires provider to address ownership of wiring upon contract termination.

    13. Cable Inside Wiring (cont’d) Home run wiring rules apply to “multichannel video programming distributors:” telco providing video appears to be MPVD. FCC has not considered issue. If telcos object, can assume FCC will side with telcos. Technical compatibility issues may also affect outcome: Verizon/MSOs using coax, AT&T using DSL over twisted pair.

    14. Telecom Inside Wiring In 2004, FCC acted to promote fiber-to-the-home by applying its new unbundling rules to “predominantly residential” buildings. Under new rules, incumbent does not have to unbundle FTTH loops in new construction. Doesn’t matter who owns wire inside the building: LECs do not have to give CLECs access to new fiber, even if fiber extends only to the MPOE.

    15. Telecom Inside Wiring (cont’d) 2004 change not intended to affect treatment of wiring controlled by the property owner. In other words, traditional inside wiring rules still apply – so which take precedence – cable or telephone rules – when provider delivers both services? Does either set apply to new fiber used for triple play?

    16. Telecom Inside Wiring (cont’d) In theory, owners can still set demarc point at MPOE. In practice, telco can make application of telecom inside wiring rule and cable rule impossible, by placing optical network terminal at the unit. Development of multi-unit ONTs may give telco and owners more flexibility. But do telcos want flexibility? Or will they prefer to strengthen competitive position at owners’ expense? Agreements must clearly describe rights in wiring during and after expiration of agreement term.

    17. Telecom Inside Wiring (cont’d) FCC rule 68.105(d)(2) says: “At the time of installation, the provider of wireline telecommunication services shall fully inform the premises owner of its options and rights regarding the placement of the demarcation point or points and shall not attempt to unduly influence that decision for the purpose of obstructing competitive entry.” FCC rule 68.105(d)(3) says: “Premises owners may file complaint with the Commission for resolution of allegations of bad faith bargaining by providers of wireline telecommunications services.”

    18. Cox/Sheetrock Order June 2007: FCC released combined order. Sheetrock: reinstated prior rule saying cable wiring behind sheetrock is “inaccessible,” meaning cable home wiring now extends from unit to cross-connect. Purpose is to promote competitive entry by reducing need for dual wiring by competitor. Concern is that tenant now has right to buy wiring in common area (not likely to happen).

    19. Cox/Sheetrock Order (cont’d) Cox order says CLEC can get access to unbundled subloops at terminal block. Oklahoma had required CLECs to get access through an intermediate cross-connect. Order does not address issue of right of access to buildings.

    20. Local Cable Franchising Verizon and AT&T (SBC) have promoted major changes in local cable franchising laws in many states: CA, NJ, TX, VA, and others. Federal legislation stalled, but FCC adopted order to speed telco entry. Presence of telcos as franchised cable operators may create rights under state mandatory access laws.

    21. CALEA Network operators must be able to give law enforcement access to network to contact surveillance. Includes Internet, not just voice. Stiff penalties for noncompliance if served with warrant. Applies to providers of services: mere ownership of equipment probably not enough. Example: free Wi-Fi in common areas: must comply.

    22. OTARD Rule Owners beginning to install Wi-Fi. Tenants can install antennas in areas under their “exclusive use or control.” FCC ruled against Logan Airport in effort to ban installation of Wi-Fi antenna in frequent flyer lounge. Owners will have limited leverage if tenant Wi-Fi use interferes with owner’s Wi-Fi system.

    23. Mandatory Access No news is good news at FCC: But exclusive contract rulemaking could have other consequences. Some action at state level: Florida COLR decision.

    24. Policy Considerations Government policy remains same: prefer that residents get every service from provider of choice. Property rights often seen as inconvenient obstacle. Property owners still faced with traditional problem: how to deliver high quality services to residents while protecting condition of property? FCC and Congress responsive to providers because they are large, well-known companies with coherent agendas. Harder for real estate industry to develop common strategy. Owners also at mercy of provider of wireline voice services, especially in new construction.

    25. Policy Considerations (cont’d) Logical solution: one set of wires in every building for all services, with cross-connect at MPOE. But most owners not interested in running communications facility. And providers prefer to control own facilities (even if technical compatibility not an issue). Most likely scenario: two sets of wires [?] As fiber is extended to retrofit existing properties – could be three sets of wires. No easy solution.

    26. Conclusion Eternal vigilance is the price of liberty.

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