APPA LEGISLATIVE UPDATE: Communications Issues in the 109 th Congress Impacting Public Power

1. APPA LEGISLATIVE UPDATE:Communications Issues in the 109th Congress Impacting Public Power Desmarie M. Waterhouse Government Relations Representative APPA COMMUNITY BROADBAND CONFERENCE Monday, October 10, 2005 Boston, MA

2. Presentation Overview • The key players • Overview of major communications issues in the 109th Congress • Discussion of efforts to amend U.S. communications laws to deal with rapid technological changes • House • Senate • Discussion of community broadband legislation in House and Senate • Outlook for communications legislation in 109th Congress

3. Committees with Jurisdiction over Communications Issues • House Energy & Commerce Committee • Telecommunications & Internet Subcommittee • Senate Commerce Committee

4. Key Players on Communications Issues on the House Energy & Commerce Committee • Full Committee Chairman Joe Barton (R-TX) • Ranking Member John Dingell (D-MI) • Telecommunications & Internet Subcommittee Chairman Fred Upton (R-MI) • Telecommunications & Internet Subcommittee Ranking Member Ed Markey (D-MA) • Rep. Chip Pickering (R-MS) • Rep. Rick Boucher (D-VA)

5. Key Players on Communications Issues on the Senate Commerce Committee • Chairman Ted Stevens (R-AK) • Ranking Member Daniel Inouye (D-HI) • Senator John McCain (R-AZ) • Senator Conrad Burns (R-MT) • Senator John Ensign (R-NV) • Senator John Rockefeller (D-WV) • Senator Byron Dorgan (D-ND)

6. Major Communications Issues in the 109th Congress • Digital television transition • Public Safety/First Responders • IP enabled services • Universal service reform • Indecency (broadcast & cable)

7. Efforts in House to Amend U.S. Communications Laws to Deal with Rapid Technological Changes • Series of hearings in 2005 on how Internet Protocol (IP) enabled services are changing the face of communications • A view from technology companies • Competition in the communications marketplace: how technology is changing the structure of the industry • A look at the voice market place • A look at video and data services • A view from government officials

8. Wide Diversity of Witnesses at House Hearings • Technology companies (Motorola, Alcatel, etc.) • Incumbent local exchange carriers (Bells, rural telcos) • Wireless companies (Sprint, Nextel) • Inter-exchange carriers (AT&T, MCI) • CLECs • Cable industry • Broadcasters • Wall Street analysts • Government officials (state and local, including APPA witness) • Consumer groups (CFA)

9. Efforts in Senate to amend U.S. communications laws to deal with rapid technological changes • No hearings held in Senate • Chairman Stevens instead held private listening sessions with invited speakers • Sessions were not open to public or press • Most invitees were from industry • Few public interest invitees

10. Community Broadband: Congress Finally Wakes Up • Prior to 2005, there was little interest on the Hill on the ability of municipalities to provide broadband services. • With the enactment of PA right-of-first-refusal law at end of 2004, increasing national press coverage and awareness of issue. • U.S. broadband penetration rankings continue to drop – now 16th in world according to International Telecommunications Union study

11. Community Broadband Legislation – House • In May 2005, Rep. Pete Sessions (R-TX) introduced H.R. 2726, the Preserving Innovation in Telecom Act of 2005. • The measure would prohibit state and local governments from providing telecommunications, information, and cable services if a private provider is providing substantially similar services. • It also includes a grandfather provision that would exclude state and local governments that are providing such services at the date of enactment of the bill from the prohibition. • The goal of the legislation is to “discourage local governments from wasting taxpayer funds on building duplicative infrastructure while at the same time encouraging private sector companies to offer continually-innovating service in underserved areas by removing the specter of government competition.” • APPA opposes this legislation.

12. Community Broadband Legislation – Senate • On June 23, 2005, Senators Frank Lautenberg (D-NJ) and John McCain (R-AZ) introduced S. 1294, the Community Broadband Act. • The bill amends the section 706 of the Telecommunications Act of 1996 (47 USC 157 note) to preclude state laws and regulations that prohibit or having the effect of prohibiting the ability of a “public provider” from providing advanced telecommunications capability or any service that utilizes advanced telecommunications capability to any person or any public or private entity. • APPA endorsed this legislation.

13. Structure of Community Broadband Act • Preemption provision • Preempts state laws explicitly prohibiting broadband services as well as barrier-to-entry laws. • Anti-discrimination provision • Requires public providers that regulate competing private providers to apply their rules and ordinances in a non-discriminatory manner (cannot favor itself). • Savings clause • Applies all federal and state telecom laws applicable to all private providers of broadband services to public providers. • Definition of public provider • State or political subdivision thereof, any agency, authority, or instrumentality of a state or political subdivision thereof.

14. Broad Communications Legislation That Includes Language on Community Broadband – Senate • On July 26, 2005, Senator John Ensign (R-NV) introduced S. 1504, the Broadband Investment and Consumer Choice Act of 2005. • The measure seeks to further deregulate the telecommunications marketplace by eliminating “government managed competition of existing communications service,” and to provide parity between functionally equivalent services. • The bill also includes language on the ability of municipalities to provide broadband services (section 15), which APPA opposes.

15. S. 1504, the Broadband Investment and Consumer Choice Act of 2005 • Key provisions of legislation • Eliminates franchising requirements for video providers. • Retains 5% franchise fee • Eliminates build out requirements • Prohibits access to video distribution facilities by other video providers • Precludes federal, state, and local governments from regulating rates, terms, price, or quality of any communications service; imposing open access requirements; and regulating rates, terms, or conditions on leasing access to facilities by third parties. • Ensures access to content for subscribers. • Limits the ability of state and local governments to provide communications services (section 15).

16. Structure of Section 15 – Municipally Owned Networks • Provision on Protection Against Undue Government Competition with the Private Sector • Requires state and local governments seeking to provide communications services to “provide conspicuous notice of the proposed scope of the [] service to be provided including: cost; services to be provided; coverage area; term; and architecture.” • Requires detailed accounting of “all proposed accommodations that such government owned communications service would enjoy,” such as below-cost or free right-of-way access; any beneficial or preferential tax treatment; bonds, grants, or other sources of funding unavailable to the private sector; and land, space in buildings, or other considerations.

17. Structure of Section 15 – Municipally Owned Networks • Open Bidding Provisions • Requires governmental entities to open bidding on communications networks to “non-governmental entities” within 90 days of issuing notice on such projects. • This bidding process must be conducted by a “neutral third party” (not defined in bill). • Once all bids have been submitted, preference must be given to “nongovernmental entities” if their bids are identical to that of the local or state government. • Open Access to Non-Governmental Entities Provision • If a governmental entity wins the bid, a “nongovernmental entity… [would] have the ability to place facilities in the same conduit, trenches, and locations as the state or local government for concurrent or future use under the same conditions secured by the state or local government.”

18. Structure of Section 15 – Municipally Owned Networks • Grandfather Clause • Exempts state and local governments providing communications services at the date of enactment from the requirements of section 15. • It would not apply if the municipal or state provider decided to “substantially enter[] a new line of business or substantially expand[] its communications service beyond its current service area, as such service area existed upon the date of enactment” of the bill.

19. Broad Communications Legislation That Includes Language on Community Broadband – House • On September 15, 2005, the House Energy & Commerce Committee released a bipartisan staff draft IP enabled services bill. • The draft bill seeks to amend federal communications law to govern IP enabled services such as broadband Internet transmission, VoIP, and broadband video services. • The measure also includes language, section 409, that allows for “public providers” (i.e. governmental entities) to provide IP voice, video, and data services by preempting the abilities of states to prohibit or effectively prohibit such services. • APPA has not taken a position on the overall draft bill, but does support the language in section 409 excluding the cross-subsidy provision.

20. House Energy & Commerce Committee Bipartisan Staff Draft IP Enabled Services Bill • Key provisions of legislation • Defines new categories of communications services – broadband Internet transmission service (“BITS”), VoIP, and broadband video service -- that are exclusively subject to federal jurisdiction as interstate services (except where provided in the Act). • Requires BITS, VoIP, and broadband video providers to register with FCC and state PUC. • Imposes network neutrality requirements (BITS provider cannot block access to content).

21. House Energy & Commerce Committee Bipartisan Staff Draft IP Enabled Services Bill • Key provisions of legislation (cont’d) • Gives VoIP service providers right and duty to exchange voice communications with other VoIP service providers and telecommunications carriers. • Imposes 911 and E-911 requirements on VoIP providers • Requires FCC to conduct inquiry on whether VoIP service providers should contribute to universal service fund. • Eliminates franchising requirements for broadband video service providers. • Retains 5% franchise fee • Retains PEG channels • Prevents redlining

22. House Energy & Commerce Committee Bipartisan Staff Draft IP Enabled Services Bill • Key provisions of legislation (cont’d) • Imposes certain Communications Act of 1934 requirements such as retransmission consent, must carry, etc. • Preempts states from enacting laws, regulations, or other legal requirements that would prohibit or have the effect of prohibiting “public providers” (i.e. governmental entities) from providing BIT, VoIP, or broadband video services (section 409).

23. Structure of Section 409 – Government Authority to Provide Services • Preemption provision • Prevents states from enacting laws that prohibit or have the effect of prohibiting public providers from providing BITS, VoIP, and broadband video services. • Competition neutrality provision • Prevents governments providing BITS, VoIP, and broadband video services from granting any preference or advantage to itself (anti-discrimination). • Applies to such things as (not exclusive list): • Use of public rights of way • Permitting • Performance bonding • Reporting

24. Structure of Section 409 – Government Authority to Provide Services • Cross-subsidization provision • No language included, just placeholder. • Compliance with other laws provision • Subjects public providers to the same laws and regulations that apply to providers of BITS, VoIP, and broadband video services. • Definition of public provider • State or political subdivision thereof, any agency, authority, or instrumentality of a state or political subdivision thereof.

25. Legislative Outlook on Communications Bills • House Energy & Commerce Committee staff draft IP enabled services bill • Hearing on draft possible later this fall. • Mark up at subcommittee and full committee also possible this fall. • Passage of a bill by the House unlikely in 2005; probable in 2006.

26. Legislative Outlook on Communications Bills • Ensign Bill – S. 1504 • Unlikely to move as a stand alone measure. • Chairman Stevens likely to take parts of Ensign bill when he begins drafting comprehensive communications legislation.

27. Legislative Outlook on Communications Bills • Draft Senate bill by Chairman Stevens • Possible by spring 2006. • It is unclear whether such a bill will follow the approach taken in the House. • May include universal service reform. • Unclear whether it would include language on municipal broadband. • It is unclear whether the Senate will move comprehensive communications legislation in the 109th Congress.

28. Legislative Outlook on Communications Bills • Lautenberg-McCain Bill – S. 1294 • Not likely to move as a stand alone measure. • Likely to be offered as an amendment to a comprehensive communications bill marked up by the Senate Commerce Committee. • There is a small possibility of a hearing on municipal broadband in the Senate at some point in 2006. • Important to get as many cosponsors as possible for the bill to show Chairman Stevens strong support for community broadband.

29. Legislative Outlook on Communications Bills • Predictions • No comprehensive communications bill will be enacted in the 109th Congress. • At a minimum, this is probably a three to four year process. • If such a bill includes universal service reform, it could slow down the process. • The issue of community broadband will be addressed in a comprehensive bill.

30. Wrap Up • Thoughts? Questions? • Feel free to contact me at: • dwaterhouse@appanet.org • 202-467-2975