American Public Power Association Community Broadband Conference Municipal Wi-Fi Systems

1. American Public Power Association Community Broadband Conference Municipal Wi-Fi Systems Nicholas MillerSt. Louis, MO October 24, 2006

2. Introduction • What’s happening • The Argument—Pro & Con • The major legal issues • Legislative Developments • Keys to Doing Deals

3. What’s Happening? • How many/what size communities? • Large metropolitan areas • Philadelphia—140 sq mi • Houston—largest city in nation, and possibly extend to surrounding • Riverside—at&t claims “largest”; 90 sq mi • Portland—denser population, many obstructions • Middle • Corpus Christi TX • Arlington County VA • Small • Fairfax City VA • Alexandria VA

4. What’s Happening? • Operating Models • Non-Profit Model • Cooperative Model • Contracting Out Model • Public-Private Partnership Model • Municipal Model • Government Loan-Grant Model

5. What’s Happening? • Major Wireless Internet Technologies • Wireless internet standards using unlicensed radio band spectrum. • Wireless internet standards using licensed radio band spectrum. • 3G • 700mhz • Satellite technologies. • Broadband over power lines.

6. What’s Happening? • How intrusive is the Equipment? • “shoe box size antennas” • Power (metered?) from poles—about a 60 w bulb • Rates between $30 and $100/pole/year • Occasional “base stations” with • fiber or • micro-wave or • WI-MAX connection to control point

7. What’s Happening? • What services are being offered? • Internet Access (Primary) • For monthly fee • For one time use fee • For “digital divide” purposes • VoIP (Possible) • Issue: sufficient capacity? • City “Anchor Tenant” services • Meter reading • Public safety mobile broadband • Mobile/home city workers • ITS • Traditional and 3G cellular (not “wi-fi”) • No Television?

8. Arguments in Favor of Municipal Wireless Internet • Incumbents won’t serve certain areas • Municipal provision increases competition. • Improves efficiency of other municipal services. • More cost-effective than private provision. • Positive externalities. • Political accountability.

9. Arguments Against Municipal Wireless Internet • No incentive to be efficient • Risk of anticompetitive conduct. • Below-cost pricing. • Raising rivals’ costs • Predation through government processes. • Government intervention in the Marketplace not justified. • Technological obsolescence or lock-in.

10. The Major Legal Issues • Fundamental Legal Question: What Service Is Offered? • “Telecommunications Service”? • “Cable Service”? • “Information Service”? • “Private Service”?

11. The Major Legal Issues (con’t) • “information service” Defined: • offering a “capability for. . . making available information” • “via telecommunications” • not including management, control, or operation of a telecommunications system

12. So You want to be an “Information Service”? • No state PUC or local regulation • FCC actively considering • CALEA • 911 • Other requirements • No rights against “carriers” for • Interconnection • Non-discrimination • Revenue sharing • No IP rights of CATV • No 224 (pole attachment) rights of CATV or “Telecomm Service”

13. The Major Legal Issues (con’t) • WiFi spectrum is “unlicensed”—no protection against interference

14. The Major Legal Issues (con’t) • 253 non-discrimination issues • No “Prohibition” of “telecomm services” • Bans exclusivity? • If “may prohibit”, then non-discrimination • Right of access to same poles? • Right of access to same financing? • Service preferences? • Qwest argues (against Portland’s IRNE) – any “preference” is discrimination.

15. The Major Legal Issues (con’t) • Scope of Public Authority • Do you Have Authority? • City Charter • State Authority • Bond Limitations • Abilene • State can prohibit municipal participation

16. Major Legislative Developments • RBOCs Succeed in PA • Phil “grandfathered” • All other communities Prohibited from Providing Broadband • Campaign Moves to Many Other States • Kansas, Indiana, South Carolina, Missouri prohibit • But Texas, California, New Jersey, Virginia reject prohibition

17. Major Legislative Developments (con’t) • Major Backlash Against RBOCs— • Coalition of Vendors, Public Interest Advocates, Local Governments, APPA • Stopped or moderated in all states after mid-year • Stimulated Congressional interest in possible preemption of states. • Louisiana Compromise • Proposed ALEC Model • Major Improvements through Muni Lobbying • Final Result –reasonable compromise • Useful Example to show your state legislator

18. Major Legislative Developments (con’t) • Federal efforts to preempt state prohibitions • Lautenberg/McCain • COPE • ATOR

19. Major Legislative Developments (con’t) • McCain/Lautenberg Community Broadband Act of 2005 • Bars states from prohibiting “public providers” offerings of advanced telecom capability • Public providers may not favor themselves if they compete with private entities

20. Major Legislative Developments (con’t) • Several other bills introduced • House passed “COPE” bill (H.R. 5252) June 8, 2006, by 321-101 vote • Sen. Stevens (R-Alaska) “ATOR” bill (labeled as substitute for H.R. 5252) • accepts Lautenberg language • adopted by Commerce Committee June 28, 2006

21. Major Legislative Developments (con’t) • No action likely this year. • Maybe next year as stand-alone. • Net Neutrality jamming broader legislation. • Issue: does it solve 253 “preference” problem?

22. Keys to Doing Deals • What drives the economics of the project? • Different designs generate different results. • Exclusivity vs. Open network architecture. • OTARD vs. Central antenna systems. • Subsidize or not? If so, construction? Users? Particular services? • Anchor tenant or open competition for local government usage?

23. Keys to Doing Deals (con’t) • Three Distinct “Markets” • Traditional, commercial services: internet access • Government Services: public safety; e-government; internal networks • Digital Divide Services: universal internet access; service to unserved

24. Keys to Doing Deals (Con’t) • Don’t garble concepts through careless drafting. • Network is Landlord–Tenant relationship. • Services are Vendor--Subscriber relationship. • Keep separate and allow creative solution to 224 and 253 simultaneously. • If public funding required, then need to consider structure carefully.

25. Keys to Doing Deals (Con’t) • Don’t lose sight of important local priorities. • Indemnification for activities in PROW. • Control of transfers of PROW and other rights. • Wi-Fi is NOT protected spectrum • DAS systems are coming – use coordinated planning.

26. Hidden Prohibitions on Local Authority • Adequate Charter authority? (Is it a permitted function?) • Adequate Constitutional authority? (Is it a proprietary v. governmental function?) • Adequate funding authority? (revenue bonds available?)

27. Miller & Van Eaton: We Assist Local Governments In AchievingThe Full Benefits Of The Communications Age For Their Communities Nicholas P. Miller nmiller@millervaneaton.com Miller & Van Eaton, P.L.L.C. 1155 Connecticut Avenue, N.W. Suite 1000 Washington, D.C. 20036-4301 Phone: 202-785-0600 Fax: 202-785-1234