*Pages 1--194 from Microsoft Word - 22515.doc* NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 1 UNITED STATES OF AMERICA + + + + + FEDERAL COMMUNICATIONS COMMISSION + + + + + PUBLIC FORUM ON RIGHTS- OF- WAY ISSUES + + + + + WEDNESDAY, OCTOBER 16, 2002 + + + + + The Public Forum was held at 445 12 th Street, S. W., Washington, D. C. 20554, at 9: 30 a. m. COMMISSIONERS PRESENT: MICHAEL POWELL, CHAIRMAN KATHLEEN ABERNATHY MICHAEL COPPS KEVIN MARTIN EMCEE: K. DANE SNOWDEN, CHIEF, CONSUMER & GOVERNMENTAL AFFAIRS BUREAU ALSO PRESENT: NANCY VICTORY, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, U. S. DEPARTMENT OF COMMERCE 1 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 2 PANEL I: JANE MAGO, MODERATOR LISA GELB, DEPUTY CITY ATTORNEY, SAN FRANCISCO, CALIFORNIA CHRIS MELCHER, CORPORATE COUNSEL, QWEST COMMUNICATIONS PAM BEERY, PARTNER, BEERY & ELSNER TERESA MARRERO, SENIOR ATTORNEY - FEDERAL ROW ISSUES, AT& T PANEL II: BILL MAHER, MODERATOR SANDY SAKAMOTO, ASSISTANT GENERAL COUNSEL AND ASSISTANT ATTORNEY SBC/ PACIFIC TELESIS DON KNIGHT, ASSISTANT CITY ATTORNEY, DALLAS, TEXAS KELSI REEVES, VICE PRESIDENT, FEDERAL GOVERNMENT RELATIONS, TIME WARNER TELECOM LARRY DOHERTY, DIRECTOR, SITE DEVELOPMENT, WEST REGION, SPRINT PCS BARRY ORTON, PROFESSOR OF TELECOMMUNICATIONS, UNIVERSITY OF WISCONSIN  MADISON PANEL III: KEN FERREE, MODERATOR KEN FELLMAN, MAYOR, ARVADA, COLORADO DORIAN DENBURG, CHIEF RIGHTS- OF- WAY COUNSEL, BELLSOUTH, CORPORATION BOB CHERNOW, CHAIR, REGIONAL TELECOM COMMISSION ALEXANDRA WILSON, VICE PRESIDENT, PUBLIC POLICY, COX ENTERPRISES, INC. BOB NELSON, COMMISSIONER, MICHIGAN PUBLIC SERVICE COMMISSION 2 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 3 C- O- N- T- E- N- T- S Introduction ....................................... 4 Panel One - Jurisdictional Issues Relating to Local and Federal Authority Jane Mago, Moderator .............................. 21 Lisa Gelb ......................................... 24 Chris Melcher ..................................... 29 Pam Beery ......................................... 36 Teresa Marrero .................................... 41 Panel Two - Fair and Reasonable Compensation for the Use of Rights- of- Way Bill Maher, Moderator ............................. 72 Don Knight ........................................ 83 Kelsi Reeves ...................................... 91 Larry Doherty ..................................... 98 Barry Orton ...................................... 104 Panel Three - Managing the Rights- of- Way Ken Ferree, Moderator ............................ 147 Bob Chernow ...................................... 148 Dorian Denburg ................................... 155 Ken Fellman ...................................... 160 Alexandra Wilson ................................. 167 Bob Nelson ....................................... 173 3 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 4 P- R- O- C- E- E- D- I- N- G- S 1 9: 31 a. m. 2 MR. SNOWDEN: Good morning. We appreciate 3 your making your way here through our Nor'easter this 4 morning. I'd like to welcome you to the Commission's 5 Public Forum on Rights- of- Way Issues. My name is Dane 6 Snowden, and I'm the Chief of the Consumer and 7 Governmental Affairs Bureau here at the FCC, and it is 8 my pleasure to be the emcee for the day. 9 As everyone knows, rights- of- way issues 10 have been lurking around for many, many years. They 11 are extremely important issues that often raise 12 considerable emotions among the interested 13 stakeholders. The Commission holds this program today 14 in an effort to facilitate discussion among those 15 interested stakeholders, stakeholders as local 16 authorities, state regulators, and, of course, the 17 industry. 18 Today, we hope to explore where the 19 stakeholders might develop consensus positions and to 20 identify principles and practices that all parties 21 believe can be a model for access to and management of 22 rights- of- way with respect to the communications 23 industry. We are very excited to have a number of 24 distinguished panelists and guests today, and we thank 25 4 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 5 you for taking the time out of your busy schedules to 1 be with us. 2 Our discussion today is divided into three 3 different panels. The first panel will address 4 jurisdictional issues relating to local and federal 5 authority and will be moderated by the Commission's 6 general counsel, Ms. Jane Mago. The second panel will 7 address issues relating to fair and reasonable 8 compensation for the use of rights- of- way. Bill 9 Maher, Chief of the Wireline Competition Bureau, will 10 moderate this panel. Our third panel and final panel 11 will be moderated by Ken Ferree, Chief of the Media 12 Bureau, and this panel will be on looking ahead. 13 We're also extremely pleased to have Nancy Victory, 14 Assistant Secretary for Communications and Information 15 at the Commerce Department, provide us with 16 administration's perspective on rights- of- way issues. 17 As you can see from our agenda, we have a 18 lot of ground to cover today, and we will try hard to 19 abide by the schedule that we have established in 20 order to allow everyone a reasonable opportunity to 21 speak. Time permitting, we will allow questions from 22 the audience at the end of each panel. We ask that 23 you keep your questions brief, so that everyone has an 24 opportunity to participate. A number of you may be 25 5 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 6 flying out this afternoon, so we will try our best to 1 close at the exact time. One final piece of 2 housekeeping: assisted listening devices are available 3 for those that may require one, and should you need 4 one, just let us know. 5 Now it is my pleasure to turn the program 6 over to Chairman Powell, then Commissioners Abernathy, 7 Martin, and Copps, who will each make opening remarks. 8 So without further ado, Chairman Michael Powell. 9 CHAIRMAN POWELL: Good morning to everyone 10 and welcome to the FCC. It's my good fortune and 11 privilege to have you all here. You will make a very 12 critical contribution to continuing policy questions, 13 and I appreciate you taking the time. 14 You know, rights- of- way challenges have 15 been with us forever. I mean, they are ancient in 16 orientation, and there is nothing new about that. 17 They seem to accompany every new iteration of 18 technological progress. Even centuries ago, after the 19 Norman evasion, there was the invention of new forms 20 of agriculture and husbandry, and it was interesting 21 that one of the consequences of that was the rise of 22 hedges used to keep livestock in, and one of the 23 consequences of those hedges, I guess, the 24 foreshadowing of telephone poles they were, in order 25 6 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 7 to keep livestock in was the closing off of what had 1 become common in roots of passage. Ultimately, 2 hundreds of years later, the government had to come up 3 with a balance, a balance between the rights of 4 property holders and farmers and the rights of the 5 public to transgress rights- of- way. 6 More recently, we saw, certainly with the 7 invention of the telephone, the creation of franchise 8 rights in order to facilitate the construction and 9 deployment of telephone poles, lines, and 10 infrastructure, so there is nothing new about that. 11 And here we are today in another period of 12 unprecedented technological development, which, again, 13 calls on the government and stakeholders to find 14 balance in order to protect the historical importance 15 of rights- of- way while simultaneously facilitating the 16 deployment of new and critical infrastructures that 17 our citizens want and demand. 18 So that's why we are here. We have 19 attempted to gather the various constituencies to 20 focus on the kinds of questions that are presented by 21 current rights- of- way challenges but, most 22 importantly, and I want to emphasize, to focus on 23 solutions. Today, given the limits of time, we 24 necessarily don't have the ability to focus on every 25 7 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 8 possible right- of- way question. There are many. Many 1 important questions will not be the subject of today's 2 discussion, but it's important to note this is just 3 one installment, one installment of what I envision to 4 be an ongoing and continuing dialogue among these 5 constituents in search of solutions. 6 So today is just as much a beginning as an 7 end. Our goal is to continue this dialogue with every 8 stakeholder that has an interest. 9 You know, historically, state and local 10 governments have had a primary role in the 11 establishment of policy, which must be understood by 12 all and respected by all. They are a vital part and 13 they will continue to be a vital part of any and all 14 solutions. Similarly, however, the Congress of the 15 United States has established an aggressive 16 development blueprint for new infrastructures and new 17 technologies and has commanded all of us to use the 18 tools at our disposal to advance those objectives. 19 These are challenges that we must balance, 20 but I am 100% confident that we can and will strike 21 the right balance between the sovereign prerogatives 22 of states and the paramount objectives of the federal 23 government in a way that benefits all the citizens of 24 the United States. 25 8 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 9 This is our challenge. I believe it is 1 one that we are up to. I welcome all of you again and 2 look forward to today as a productive installment in 3 that continuing dialogue, as we search for a way to 4 provide new communication services to the citizens of 5 the United States. Thank you. 6 COMMISSIONER ABERNATHY: Thank you, Mr. 7 Chairman. And I'm not as familiar with the historical 8 context around negotiating rights- of- way. I am aware, 9 though, that, for about the past month, I've been 10 negotiating with my daughter for a right- of- way 11 through her bedroom, and I have not been successful 12 yet, but I'm aware of the importance of rights- of- way, 13 and I do want to thank the Chairman for taking a 14 leadership role here, for Dane Snowden and his team 15 for putting this together, for all of the 16 representatives from the states who have taken their 17 time and energy to come together and talk about this 18 very, very important issue. 19 Ensuring rights- of- way access on 20 reasonable terms, clearly, is critical to our effort 21 at the federal level to promote broadband deployment 22 and facilities- based competition. And, at the same 23 time, there is no question that the states and the 24 municipalities, clearly, have a legitimate interest in 25 9 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 10 regulating use of public rights- of- way and ensuring 1 fair compensation for that use. So what we're talking 2 about really is balancing the interest of service 3 providers and local governments, and this balancing 4 effort has, at times, been very contentious, and I'm 5 afraid sometimes there's been more heat than light in 6 the prior discussions, so I'm hopeful that today's 7 forum will help us reach common ground where consensus 8 is possible. And where there are differences of 9 opinion that cannot be bridged, I'm hopeful we will 10 identify those areas, so we an assess whether 11 intervention by this Commission is necessary or not. 12 Now, the panels, as you're aware, 13 scheduled for today address many of the critical 14 issues surrounding the debate. For example, we need 15 to obtain a clearer sense of the scope of federal 16 jurisdiction. In addition, I'm pleased that there's 17 going to be a discussion of what constitutes fair and 18 reasonable compensation for use of rights- of- way. 19 There's been considerable debate over whether the 20 Communications Act requires cost- based compensation or 21 permits other types of fees, such as fees that are 22 based on a percentage of revenues or on profits, and I 23 think that we will all benefit from hearing the 24 different perspectives on that question, as we 25 10 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 11 struggle with where we should ultimately end up. 1 Some other topics that I hope will get 2 discussed by the panelists include the appropriate 3 scope of right- of- way regulation and guidelines for 4 timely processing of applications for permits. It 5 doesn't do you much good to have regulations in place 6 if it takes you two years to negotiate the process. 7 And these are areas that have proved contentious, but 8 it would seem that local governments and industry 9 groups could find common ground in developing best 10 practices, and, based on prior discussions I've had 11 with both parties, it seems like this will be a 12 fruitful area of discussion. 13 So I look forward to hearing from the 14 panelists, and I'll be here at different points 15 throughout the day, and I hope this begins a dialogue 16 that will bring us closer to fulfilling the 17 Congressional goal of encouraging the deployment of 18 advanced telecommunications capabilities to all 19 Americans. Thank you very much. 20 COMMISSIONER COPPS: Well, I, too, want to 21 thank the Chairman for convening this panel, to the 22 Bureau for its hard work in putting it together, and, 23 most of all, to all of you for joining us on this wet 24 Wednesday to bring some new thinking to an old 25 11 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 12 dilemma: how to open rights- of- way for critically- 1 important infrastructure development without upending 2 painstakingly constructive balances among a host of 3 public sector/ private sector interests. It's really, 4 as a chairman, so interestingly depicted in an old 5 kind of problem wrapped in the promise of exciting new 6 technologies, and it cries out for some creative 7 thinking. Maybe we should have called this not the 8 rights- of- way forum but the creative thinking forum. 9 But whatever it is, I'm pleased to see so many people 10 from so many venues here today dedicated to working 11 constructively on solutions. It's a naughty problem; 12 it is not an unsolvable problem. 13 Broadband, I believe, is central to the 14 rebound of the telecom sector. More than that, it 15 represents an infrastructure built out of historic 16 proportions, and its promise for America is only 17 beginning to be understood. That promise is profound 18 and it is transformative, affecting almost every 19 aspect of how we will live, work, play, care for 20 ourselves, probably even how we will govern ourselves. 21 All these things will be changed before broadband is 22 through. So any impediments to the rapid deployment 23 of broadband services and broadband networks need to 24 be addressed, tackled, and resolved. One such barrier 25 12 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 13 highlighted by a variety of providers, incumbents and 1 competitors, cable providers and wireless, as well as 2 by our state colleagues is rights- of- way access. 3 These parties argue that unnecessary constraints on 4 access to public rights- of- way are retarding the 5 deployment of new broadband networks that are integral 6 to America's future. They finger unreasonable fees, 7 unnecessary delays, and even discriminatory treatment 8 of certain competitors in the market as major culprits 9 in broadband's delayed expansion. And there have 10 been, in truth, some horror stories out there. 11 On the other side are governments and, in 12 particular, local governments, emphasizing their 13 historical and legitimate and important role in 14 managing rights- of- way and public lands, as they seek 15 to minimize disruption to their citizens from torn- up 16 streets and the need to obtain appropriate 17 compensation for access to these public resources. 18 This is not a history and a heritage to be lightly 19 considered or to run rough shot over. I believe that 20 the overwhelming majority of local governments are 21 sincerely trying to balance their obligations to 22 manage the public's rights- of- way with their desire to 23 bring new advanced services to their communities. The 24 devil, of course, is in the details, but these thorny 25 13 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 14 rights- of- way issues do strike me as being ripe for 1 some good public sector and private sector 2 collaboration. Hence, this forum. 3 I love these kinds of initiatives and 4 forums. As a matter of fact, I spent most of my eight 5 years at the Department of Commerce during the Clinton 6 Administration trying to put together partnerships 7 like this, where public sector and private sector 8 representations come together to tackle problems where 9 both industry and government have to be involved, and 10 I'm a believer and a true believer in that kind of 11 cooperative endeavor. When we toss aside all the old 12 shibboleths and fears, we begin to realize that 13 government and the private sector can accomplish a 14 whole lot more by working together than by emphasizing 15 our differences. 16 This kind of, perhaps, non- traditional 17 cooperation is especially useful in the world of 18 broadband, as we move from the established legal 19 framework to an unregulated Title I environment, where 20 there is a lack of clarity and jurisdictions, rights, 21 and obligations, and where we don't have a lot of 22 statutory guidance or regulatory precedence to guide 23 us. But we do have some commonalties. I think we all 24 agree that broadband is important, and we need to get 25 14 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 15 it deployed. Local, state, and federal governments, 1 generally, all seem to recognize this. Indeed, some 2 local jurisdictions are building their own broadband 3 systems, where the private sector has been reluctant 4 to go in. Broadband is a national priority. Congress 5 told us exactly that in Section 706, which directs us 6 to promote the deployment of advanced services to all 7 Americans. 8 We're also committed, I trust, to the 9 competition that Congress sought to create in the 1996 10 Act. With competition among multiple providers, 11 consumers reap the many benefits of lower prices, 12 better services, and greater innovation. 13 And we all believe, as Americans, that no 14 problem is unsolvable and that for every great 15 national challenge, there is just about always a 16 reasonable, doable solution. Usually, that solution 17 is fashioned and formed through the art of compromise 18 resulting, first, from a clear statement of the 19 problem and then a discussion of alternatives. So I 20 am pleased to see that collaborative efforts are being 21 undertaken in various fora. 22 At the state level, NARUC has established 23 a study committee on public rights- of- way to develop 24 recommendations on these issues, and their work is a 25 15 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 16 significant contribution to flushing out the issues 1 which must be decided. At the local level, NATOA has 2 played an important role in initiating a dialogue when 3 it convened an advisory counsel to facilitate a 4 cooperative dialogue on rights- of- way issues between 5 municipal governments and service providers. Thanks 6 to them, also. 7 And as for our efforts at the FCC, I first 8 want to commend our local state government advisory 9 committee that has been working with us on these 10 difficult issues. That's a venue of tremendous value 11 for such discussions. Here at the FCC, we have begun 12 to highlight the importance of this issue to the 13 future or broadband deployment on our most recent 14 Section 706 report. We need to keep the spotlight 15 focused on this until the job is done. 16 That brings us to today and this forum. 17 Your challenge is to voice a new thought or, at least, 18 bring consensus to some of the better proposals and 19 practices that have already been deployed or 20 developed. As part of this effort, a good place to 21 begin is to look closely at what diverse communities 22 across this country are doing to tackle the problem, 23 identify lessons learned, and then go on to develop 24 some best practices that can be shared and 25 16 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 17 implemented. Maybe a few such practices could be 1 developed and used even before a more comprehensive 2 solution is found. Maybe, who knows, best practices 3 is the solution. Even if they are not, sometimes 4 milestones along the way and little deliverables along 5 the way make the road to a more comprehensive solution 6 much easier to travel. 7 This is surely not a problem where some 8 simplified theory of government or one- size- fits- all 9 theory of regulation or a particular ideology holds 10 out any promise at all, so I hope and trust that we 11 can all avoid knee- jerk reactions to one another's 12 suggestions. We need to put all that aside and get a 13 handle on meeting one of the most important challenges 14 we face as a country today, a challenge made even more 15 important by our current economic sluggishness. 16 With a collaborative effort, I am 17 optimistic that we can make great strides to ensure 18 that all Americans have access to the best, most 19 accessible and cost- effective telecommunication system 20 in the world. That's a winner for business, that's a 21 winner for governments and, most important of all, a 22 winner for the American people. So I thank you, 23 again, for being with us today, for listening, for 24 working on this, and good luck to all of you as you 25 17 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 18 proceed. 1 CHAIRMAN POWELL: Thank you, Commissioner. 2 Commissioner Martin? 3 COMMISSIONER MARTIN: Good morning, 4 everyone. I, first, would like to express my 5 appreciation and gratitude to the chairmen and to Dean 6 Snowden for organizing this and to all the panelists 7 who will be with us today for taking the time out of 8 their busy schedule to come and share some of their 9 experiences and thoughts on this important topic. 10 The availability of advanced 11 telecommunications and broadband is critical to the 12 economy, and particularly in the current downturn, but 13 the economy in general in the 21st Century, and I 14 think that all of us need to do all that we can to 15 continue to promote the broadband deployment. The 16 topic of today's discussion, rights- of- way and the 17 management of those, is critical to encouraging and 18 facilitating the further deployment of advanced 19 services and broadband facilities. 20 The public rights- of- way are an invaluable 21 resource and create the pathway for the nation's 22 telecommunications network infrastructure, and it is 23 used to reach all of our end users, and the access to 24 these vital arteries is critical to the modernizing 25 18 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 19 and deploying of the distribution and last- mile 1 broadband facilities that will be used throughout the 2 country. 3 Now, I've said many times before that I 4 think it's important that the government, at all 5 levels, should commit itself to trying to exercise 6 self- restraint and placing additional burdens on 7 broadband and then trying to facilitate and streamline 8 all the permeating processes that can sometimes act as 9 a hindrance or deterrents to those deployments. I 10 know that state and local governments and the federal 11 government, to the extent that they're managing 12 federal lands, need to be proactive in trying to 13 facilitate deployment by attempting to streamline 14 those permeating processes, and I, too, look forward 15 to trying to see whether or not there's a series of 16 best practices that can be extracted out of today's 17 meeting that we can try to facilitate and encourage 18 others to adopt. 19 So with that, I particularly look forward 20 to hearing from Nancy Victory this afternoon as she 21 tries to present the administration's proactive 22 efforts on federal rights- of- way policy and, also, 23 particularly pleased and appreciate that Bob Nelson is 24 here with us today. I've been able to see first- hand 25 19 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 20 his effort and his dedicated leadership in trying to 1 promote cooperation through all of his work at NARUC, 2 and I look forward to hearing what experiences and 3 ideas he has as a result of that effort. And I, also, 4 do appreciate Ken Fellman with us today. I know that 5 his work at LSJC has also been critical, as we try to 6 address these issues. 7 So, again, I think the task of identifying 8 and eliminating potential burdens and trying to 9 facilitate easier management of rights- of- way to 10 facilitate deployment is critical and that we can 11 attempt to try to identify some best practices out of 12 this will be important as an opportunity for us. So I 13 will look forward to having some productive 14 discussions as we go through today. Thank you. 15 MR. SNOWDEN: Thank you very much, Mr. 16 Chairman and commissioners. As we get ready for the 17 next panel, we appreciate you all coming down and 18 speaking with us, and I'm sure you'll be watching it 19 from your offices the rest of the day. As we get 20 ready for our next panel, I wanted to let everyone 21 know that this rights- of- way forum is also being 22 simulcast throughout the Commission, on the internet, 23 and also through George Mason University. So without 24 further ado, it is my pleasure to bring to the podium 25 20 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 21 Jane Mago, our general counsel, and her panel on the 1 jurisdictional question. 2 MS. MAGO: Thank you. Can I ask the 3 panelists to please come on up. I think Janice will 4 tell you where you're supposed to sit, right? Thank 5 you very much. My name is Jane Mago. I'm the general 6 counsel of the Federal Communications Commission, and 7 this panel today -  is it not working too well? It's 8 because I'm short, I know. 9 This panel is focused on the scope of the 10 federal authority under Section 253 of the act. We're 11 the lawyers. We're going to talk about the statute 12 and how to figure out, you know, how all of this fits 13 together, just exactly what it is that Congress did in 14 enacting Section 253. And I'm going to start by 15 giving a short, you know, my cast on all of this and 16 then ask each of my panelists to speak for five to 17 seven minutes or so and give their perspective on the 18 issues that we have. And then, hopefully, we're going 19 to open this up to the floor, let you ask a couple of 20 questions. I have some, but I'd like to get some 21 input so that we can focus this on where you, in the 22 audience, are interested in focusing. 23 So let's start. Let me give a quick 24 overview, and I'll start off by saying that Section 25 21 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 22 253, like so many portions of the 1996 Telecom Act, 1 has a few problems in terms of clarity. To quote the 2 Third Circuit opinion that came out earlier this year, 3 Section 253 is quite inartfully drafted and has 4 created a fair amount of confusion. The Third Circuit 5 is known for understatement. 6 The Commission and, for the most part, the 7 courts have interpreted Section 253( a) as a broad 8 prohibition against barriers to entry. The Commission 9 and courts have also interpreted Section 253( b), which 10 states that the states may still have some authority 11 to regulate in the interest of universal services. 12 And Section 253( c), which provides the 13 state and local governments authority to manage the 14 rights- of- way and require fair and reasonable 15 compensation, is safe harbors to this generalized 16 prohibition. Section 253( d) directs the Commission to 17 preempt any statute, regulation, or legal requirement 18 that violates Sections A or B. There is no mention of 19 Section C in there, and since we are lawyers, what 20 that means is that we automatically start saying, so 21 what does that mean? Perhaps, we should turn to the 22 legislative history; perhaps, we shouldn't; and I 23 think that some of the panelists will be talking to us 24 about that. 25 22 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 23 There is some legislative history that 1 makes it clear that the deletion of C from D was 2 intentional. It was a kind of a compromise, and I'll 3 let the panelists speak a little bit more about that. 4 Of course, whenever there is this kind of 5 uncertainty, what that means is that we have differing 6 opinions that come out. Now, the Commission, for its 7 part, has not attempted to resolve any rights- of- way 8 disputes under 253( c), although people have tried to 9 bring those to us. We have taken the position that we 10 have the authority to determine whether a particular 11 contention is a bona fide claim under Section 253( c) 12 that would bring us to that preemption, and I think 13 that that will also be a topic of discussion as we go 14 forward here. 15 So the courts, for their part, are split 16 in their opinions. Some think that there is the 17 jurisdiction of the Commission; other says perhaps 18 not. So with that, let me go ahead and let the 19 panelists do the real discussing because you don't 20 want to hear this from me, we want to hear it from 21 them, and start off by saying that our first panelist 22 is Lisa Gelb. Lisa is the Deputy City Attorney with 23 the city of San Francisco, where she specializes in 24 telecommunications and cable matters. Now, some of 25 23 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 24 you may see Lisa as a familiar face since she spent a 1 fair amount of time here at the Commission. In fact, 2 she was involved in the development of the first local 3 competition rules after the '96 act and also on 4 universal service issues. With that, let me turn this 5 over to Lisa to give us some information. 6 MS. GELB: Thank you, Jane, and I want to 7 thank the FCC, generally, for hosting this forum. I 8 do know from personal experience that a huge amount of 9 work goes into hosting these. I think this is a great 10 opportunity for different views to be aired in one 11 place and one time. I know that the FCC hears 12 frequently from the industry about how things are 13 working or not working regarding industry efforts to 14 enter or continue to provide service in the 15 marketplace. I also know that the FCC hears far less 16 often from local governments about these issues and 17 so, perhaps, is less familiar with all of the concerns 18 and competing interests that local governments are 19 trying to accommodate. 20 The FCC doesn't necessarily understand the 21 impact that local governments face when, for example, 22 a telecom company installing facilities in the rights- 23 of- way hits a water main or a gas pipe or when a 24 telecom company goes bankrupt and abandons its 25 24 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 25 facilities in city streets. This forum is a great 1 opportunity to start drawing a fuller, more balanced 2 picture of the concerns that local governments face. 3 It's also important to bear in mind that 4 there are countless other parties who have a huge 5 stake in the proper management of public rights- of- 6 way, and those people aren't sitting up here today. 7 They include all of us as individual citizens who use 8 the streets and sidewalks to get to work or school or 9 the grocery store. They include businesses, who 10 critically depend on utilities and other services 11 functioning appropriately at all times. And they 12 include the electrical utilities, water, and sewer 13 service providers, subway and trolley services, and 14 all of the other entities that want to use the streets 15 or put facilities on, above, or below the rights- of- 16 way. Local governments have to balance all of these 17 interests when they set the ground rules for companies 18 that want to place facilities in the streets. 19 Thus, the question local governments face 20 is not simply do we want high- speed broadband services 21 for our citizens. Of course we do. The question is 22 how do we balance the desire for those services with 23 all of the other important interests at stake? 24 As Chairman Powell mentioned, it is useful 25 25 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 26 to, in analyzing the Telecom Act, and Section 253 in 1 particular, to consider some of the history of right- 2 of- way regulation. Under the Constitution, all rights 3 not expressly delegated to the federal government are 4 reserved to the states, and states, of course, have 5 broad authority to delegate their powers to local 6 governments. 7 States have long recognized that local 8 governments are in the best position to manage the use 9 of local roads and public rights- of- way. For at least 10 150 years, the Supreme Court has upheld the local 11 governments' authority to set rules for private 12 businesses and individuals who want to use the rights- 13 of- way. 14 In 1893, in the city of St. Louis versus 15 Western Union Telegraph, the Supreme Court said if the 16 city gives a right to use the streets or public 17 grounds, it simply regulates the use when it 18 prescribes the terms and conditions upon which they 19 shall be used. The court also said that the word 20 "regulate" is one of broad import. 21 Subsequent decisions, including Blair 22 versus the City of Chicago in 1903, City of Owensboro 23 in 1913, and New Orleans Public Service in 1930 24 confirmed that cities have broad discretion to manage 25 26 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 27 and regulate public rights- of- way. 1 The kinds of regulations that are being 2 considered right now by courts in Section 253 3 challenges are precisely the kinds of regulations that 4 local governments have been using for years to ensure 5 that rights- of- way are used in a safe and efficient 6 manner and that valuable and limited resources are 7 used in a way that best serves all interested parties. 8 For example, in St. Louis versus Western 9 Union, the Supreme Court found that the city could 10 require a telegraph company to pay compensation as 11 rent for use of the right- of- way and that such 12 requirements simply constituted regulation of the 13 right- of- way. In the city of Owensboro, the Supreme 14 Court recognized that the city's rights to regulate 15 the right- of- way included the right to grant a 16 franchise to the telephone company. 17 In that case, the court also indicated 18 that the city had authority if it chose to exercise it 19 to preclude the company from transferring the 20 franchise to another entity. In Hodge Drive It 21 Yourself Company, a 1932 Supreme Court case, the court 22 held that the city ordinance that required taxi cabs 23 to deposit insurance policies or bonds with the city 24 was also just a mode of the right- of- way regulation. 25 27 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 28 The point is this: the obligations of this 1 sort have been opposed by local governments for 150 2 years. They've been upheld by the Supreme Court as 3 legitimate right- of- way regulation, and Congress must 4 be presumed to have known of these types of 5 requirements when it created a safe harbor for right- 6 of- way regulation through 253( c). Indeed, it was 7 these types of regulations that Congress was intending 8 to preserve. 9 Finally, it's worth noting that Congress 10 only authorized preemption of regulations that 11 prohibit or have the effect of prohibiting the 12 provision of telecom service. This is a very 13 stringent standard to meet. In other places in the 14 Telecom Act, for example in 251( b)( 1) and 15 251( c)( 4)( b), Congress made a distinction between 16 prohibitions unless severe restrictions, such as 17 unreasonable conditions or limitations. And in 18 Section 257, Congress talked about barriers to entry, 19 as opposed to prohibitions. 20 Thus, the courts, generally, have not 21 given the appropriately rigorous review to local 22 requirements. Had they done so, they would have, in 23 most, if not all, cases, have concluded that the 24 regulations at issue did not constitute prohibitions 25 28 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 29 or effective prohibitions on services, and the courts 1 need never have reached the issue of whether the 2 requirements were preserved under Section 253( c). 3 MS. MAGO: An extremely timely 4 presentation, exactly as the red light went on. Truly 5 amazing, Lisa. Our next panelist is Chris Melcher. 6 Chris is the Executive Director for Policy and Law for 7 Qwest Communications, where he is responsible for the 8 municipal relationships and network deployment for the 9 entire Qwest system. As you might guess, he may have 10 a slightly different perspective on this than Lisa, 11 and so let me just turn it over to Chris and let him 12 get started. 13 MR. MELCHER: Thank you, Jane. And I also 14 would like to thank the Commission for having this 15 forum. This is a wonderful opportunity for industry 16 and local, state, and federal government officials and 17 representatives to get together to discuss these 18 issues. These are, as the Chairman and commissioners 19 mentioned, somewhat contentious but extremely 20 important, and I think that today's a great 21 opportunity to find common ground and seek to 22 understand the viewpoints of each side and, hopefully, 23 find that there really aren't two sides, but we're 24 working together on this. 25 29 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 30 I would like to talk about the 1 jurisdiction issues and focus on 253. I do have some 2 views about the comments of Lisa, which I can share 3 later during Q and A. It's something that I think 4 there's been a lively debate on. 5 Historically, jurisdiction to regulate the 6 rights- of- way has vested in local and, to some degree, 7 state governments. The Telecommunications Act of 8 1996, and Section 253 in particular, do not seek to 9 usurp local governments' jurisdiction over the rights- 10 of- way and transfer it to the federal government. 11 Local governments remain responsible for regulating 12 the management of the rights- of- way. The FCC has 13 recognized this in several prior decisions. 14 TCI Cable Vision of Oakland County, 15 Senator Feinstein recognized this in legislative 16 history, and I want to underscore the industry 17 recognizes this and has recognized this ever since 18 there was an industry. Local governments and 19 municipalities have a critical role in managing the 20 right- of- way, and I think the key issue or the key 21 distinction, really, is managing the right- of- way, not 22 managing telecommunication companies. 23 It has been clear and without debate that 24 the appropriate management of telecommunications 25 30 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 31 companies is that the federal level with the 1 Commission and at the state level with the state 2 public utility commissions, and some municipalities 3 have endeavored to regulate telecommunication 4 companies. I think that has led to some of the 5 difficulties. But everyone agrees local 6 municipalities have a very important responsibility to 7 regulate the right- of- way. 8 The 1996 Act, in many respects, seeks to 9 balance respect for traditional areas of local 10 regulation with the recognition by Congress that there 11 is a national interest in ensuring the development of 12 competition in all telecommunications markets, 13 including local markets, and that some degree of 14 federal oversight is required to ensure the 15 realization of that national goal. 16 Section 253 preserves local jurisdiction 17 over rights- of- way but with federal oversight. The 18 language of Section 253 clearly indicates that 19 Congress understood that such authority, if exercised 20 over- broadly, could threaten the national policy of 21 encouraging competition and promoting deployment of 22 facilities. Section 253, accordingly, seeks to define 23 the appropriate balance. The Congressional policy of 24 eliminating barriers to the development of competition 25 31 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 32 is paramount in the Act. 1 Subsection 253( a) bars state and local 2 requirements that prohibit or have the effect of 3 prohibiting the provision of telecom services. I 4 think it's also important to recognize, as the court 5 did in the Ninth Circuit in Auburn and the Second 6 Circuit in White Plains that a Section 253( a) 7 violation does not require that the company is 8 actually completely locked out of the market or has to 9 go bankrupt in order to prove that it is a true 10 barrier. I think the Second Circuit recognized that 11 material limitations on the provision of services do 12 constitute a violation of 253( a), and I think the 13 courts are recognized in that, and I think the 14 Commission has recognized that. 15 Subsection 253( c) creates a safe harbor 16 from the reach of subsection 253( a). While that safe 17 harbor is designed to preserve traditional local 18 jurisdiction of a rights- of- way, it is narrow. A 19 local right- of- way regulation falls within the safe 20 harbor of 253( c) only if it actually relates to 21 management of the public rights- of- way or recovers 22 fair and reasonable compensation for use of the 23 rights- of- way, and it must do so on a competitively 24 neutral and nondiscriminatory basis. 25 32 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 33 The debate has really focused, or one of 1 the debates has focused on the limits in subsection 2 253( c) and what they mean, who should define them, and 3 who should enforce them. Some cities have suggested a 4 broad reading of 253( c) and a narrow reading of 5 subsection 253( a). I believe what should guide the 6 interpretation and application of the whole of Section 7 253 is the overarching purpose of the '96 Act: the 8 development of telecommunications competition and the 9 deployment of a robust national telecommunications 10 infrastructure. The entire '96 Act is an effort to 11 achieve that goal and gives the FCC authority to guide 12 that process. 13 The FCC has been somewhat cautious to 14 exercise what we believe it's full authority under 15 Section 253 has been given to them and rightfully so. 16 There was a concern that it might, if it acted too 17 quickly, tread on areas of traditional local 18 jurisdiction, but the FCC's jurisdiction to interpret 19 and enforce Section 253 is no different from the FCC's 20 dictating the pricing methodology that guides local 21 wireline competition or various other similar issues. 22 In both cases, Congress indicated that the 23 FCC was to be the ultimate arbiter of what was 24 necessary to remove barriers and ease the way to 25 33 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 34 competition. In neither case did Congress suggest 1 that all local authority be entirely usurped, and I 2 think enough time has passed that the FCC, the 3 industry, the localities have had a chance to see how 4 the 1996 Act was intended to be implemented, how 5 Section 253 was intended to be implemented, and what 6 are the issues that really need further leadership and 7 guidance under Section 253. 8 Now, some of the debate has also focused 9 on the jurisdiction of the FCC. I would, without 10 going into too much detail, refer everyone to the 11 Second Circuit's opinion in White Plains. I think, 12 and I think a lot of folks agree, that that was a very 13 reasoned review of the interplay between Section 14 253( c) and A and also D, and I gave quite, I thought, 15 a very informative analysis of the FCC's role. 16 The real key point was it would really be 17 something of an oddity in quite awkward if the FCC 18 were allowed to make determinations that there was a 19 253( a) violation but, yet, not be able to make a 20 determination whether or not 253( c) safe harbor 21 applied, and so we think that, clearly, the FCC does 22 have jurisdiction under 253( c), as well as A, and 23 should exercise that jurisdiction where appropriate. 24 I'll close by simply saying that another 25 34 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 35 key question is how should the FCC meaningfully 1 exercise its jurisdiction under Section 253? As have 2 been recognized by Commissioner Copps and others, 3 there clearly are some abuses. There had been some 4 problems with deployment of facilities around the 5 country. The majority of cities, I think, have worked 6 with the industry quite well, but there are problems, 7 and how do those get handled? The question is when, 8 and we believe the answer is now. The time has gone 9 by, and the economy and the telecommunications 10 industry are very much in need of guidance and need to 11 deploy the broadband facilities necessary for our 12 recovery, and we think the FCC needs to act now on 13 that. 14 How should the FCC act? There are several 15 avenues. The most definitive would be a formal 16 rulemaking. I understand, as the FCC referred to in 17 their brief to the Second Circuit, that there are also 18 certain proceedings going on right now, but we think 19 that the FCC could provide guidance through a policy 20 statement, and that would be extremely useful. The 21 FCC has jurisdiction to do so, and I believe the 22 industry and the localities would benefit if the FCC 23 were to take that opportunity to do so. Thank you 24 very much. 25 35 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 36 MS. MAGO: Thank you, Chris. Our next 1 panelist is Pam Beery. Pam is a partner in the law 2 firm of Beery & Elsner. Ms. Beery represents the 3 Metropolitan Area Communications Commission, which is 4 a coalition of 14 local governments in Washington 5 County and a number of cities in franchise 6 administration. Cellular facility siting, and renewal 7 negotiations with cable providers are some of the 8 topics that she covers. She was appointed by Chairman 9 Powell to the FCC's local and state advisory committee 10 in January of 2002. Thank you for joining us. 11 MS. BEERY: Thank you. I'd like to begin, 12 as everyone else had, by thanking the Chairman the 13 commissioners for this important opportunity to 14 present local government views on this topic. I 15 especially want to add thanks to Jane Mago for her 16 clear and consistent vision and her careful legal work 17 in this area. I think it's been a real benefit to the 18 dialogue. 19 According to this panel's description, it 20 is our responsibility to provide insights into just 21 what authority the FCC has to regulate the areas of 22 state and local government right- of- way management 23 practices. I will look forward, during the question 24 and answer period, to responding to some of Mr. 25 36 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 37 Melcher's comments. I've had the benefit of sharing 1 the podium with him many times. I will look forward 2 to that. 3 What I want to do is present another view 4 of Section 253. I want to add Section 601 to that 5 dialogue. As Ms. Mago described, part of our job this 6 morning is to educate, and so I'm going to start with 7 that foundation. I'm going to quickly cover some FCC 8 and court decisions and then cover my basic theme, 9 which is this: the FCC and the courts are operating 10 effectively, currently, based on a well- reasoned view 11 of the sphere of authority that each occupies. Given 12 the vast changes engendered by the Telecommunications 13 Act, it's not really surprising that it would have 14 taken some time for this clear pattern to emerge, but 15 it has emerged. It may not be fully to the liking of 16 all interests, but I believe a full course, a prudent 17 course has been set, and that we need to stay that 18 course. 19 Other speakers have given a good overview 20 of Section 253. What I would like to call folks' 21 attention to is a recent decision out of New Mexico, 22 where the court, I think, very succinctly and 23 accurately described what 253 is all about. The court 24 said that it represents a carefully- crafted balance 25 37 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 38 between deregulating the telecommunications market at 1 the federal level and preserving state and local 2 authority to regulate in certain prescribed areas. 3 As the other speakers have pointed out, 4 when courts interpret a statute, they first look to 5 its text, and, as Jane has already mentioned, the text 6 leaves some unanswered questions. So, as lawyers, 7 once we get the text in mind, we turn to the 8 legislative history. I have appended to my testimony, 9 which, thanks to NATOA, is available on the public 10 comment table, an exhaustive description of the 11 legislative history. Others have referred to it 12 generally, but I want to make a couple of points about 13 that legislative history. 14 First, it's clear that Congress 15 specifically rejected the notion that local 16 governments needed to travel to Washington, D. C. every 17 time one of their regulations was being disputed, and 18 that's clear in the documents that I've appended to my 19 talk. 20 Second, as Lisa said, it was also clear 21 that Congress intended to leave undisturbed the 22 traditional local authority to manage the rights- of- 23 way. On that topic, we are fortunate, indeed, to 24 have, for the record today, a letter to Chairman 25 38 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 39 Michael Powell dated October 8 from Congressman Bart 1 Stupak, who, as many of you know, is the author of 2 subsection C, the safe harbor. 3 I just want to read a couple of sentences 4 from Congressman Stupak's letter. Of course, he was 5 the author of subsection C. His statement is, Without 6 the amendment, the bill would have raised serious 7 concerns regarding unfounded mandates, federal 8 intrusion into local authority, and unfair taxpayer 9 burden. My amendment passed the house, and provisions 10 on this issue were ultimately included in the Act. 11 Congress has definitively stated its 12 intent that states and municipalities should have 13 authority over these issues, and I do not believe 14 future additional federal regulation is warranted. I 15 don't know how much clearer you could get than from 16 the author of the Section than that. You might wonder 17 why Congressman Stupak is still interested in this 18 issue so many years later. His wife is the mayor of 19 Menominee, Michigan, and so I'm sure he hears about 20 these issues on a regular basis. 21 One thing I want to add to what Chris said 22 about the FCC. He's suggesting that the FCC, in fact, 23 issue something. Well, the FCC did that. Another 24 issue that is often overlooked is that the FCC did 25 39 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 40 issue a guideline in 1998. It's widely available. 1 It's called "Suggested Guidelines for Petitions for 2 Ruling Under Section 253." It's starting to be cited 3 to the courts. In the Qwest v. Portland case that I'm 4 currently litigating at the Ninth Circuit, the court 5 was impressed by that document. The court cited to it 6 and relied upon it, and I think we don't need any 7 further guideline. The FCC took that leadership four 8 years ago. So the point that I want to make clearly 9 is  - actually, I want to back up for a second. 10 I forgot to mention Section 601. 601 is 11 another Section of the Act that I'm kind of surprised 12 doesn't get cited more often. It's starting to appear 13 in some of the decisions. It was enacted at the same 14 time as 253. It provides specifically that the Act 15 will not be construed to modify, impair, or supercede 16 federal, state, or local law, unless expressly so 17 provided; again, a very clear Congressional statement. 18 I would close by saying that I, 19 surprisingly, to some extent, agree with Mr. Melcher 20 on the White Plains decision. I had a little 21 different spin on what I think the court held there 22 that I'll be happy to share, if we get a chance, in 23 questions. And thank you. 24 MS. MAGO: Our final panelist today is 25 40 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 41 Teresa Marrero. Teresa is a Senior Attorney with 1 AT& T. She's been practicing in the field of 2 telecommunications law for over 11 years, and she is 3 responsible for AT& T's work on managing federal 4 rights- of- way issues, as well as certain other local 5 competition issues before the FCC. Thank you very 6 much. 7 MS. MARRERO: AT& T's view that the 8 Commission's authority to issue orders preempting 9 state and federal local laws regarding public rights- 10 of- way is broader than the cities assert, and the 11 Commission's preemption jurisdiction is largely 12 concurrent with the federal courts. More importantly, 13 our focus cannot be narrowly limited, however, to the 14 various provisions of Section 253 of the Act because 15 the Commission has broad rulemaking authority under 16 Section 201( b) that can be evoked to create efficient 17 and uniform national solutions to many of the problems 18 that have arisen over rights- of- way access. 19 The cities, generally, take the position 20 that, to the extent barriers to entry, through a 21 barrier to entry claim brought under Section 253 of 22 the Act raises any right- of- way issue the Commission 23 is precluded from deciding the issue. The basic 24 premise that has been laid out by some of the earlier 25 41 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 42 speakers is that 253 does not expressly address right- 1 of- way management compensation, and 253 reserves 2 certain state and local authority, regardless of 3 253( a). Second, they assert that 253( d) only permits 4 the Commission to preempt state or local requirements 5 that violate 253 A or B but not C. The Commission 6 appears to take a slightly less restrictive position 7 concerning its jurisdictional authority over 253( c). 8 In a supplemental brief filed with the 9 Second Circuit in the White Plains case, the 10 Commission implied that it had concurrent jurisdiction 11 with the courts but only if a 253( c) defense to a 12 claim brought under A does not rise to the level of a 13 bona fide claim to defense. The Commission noted that 14 it had not yet had the occasion to address a bona fide 15 253 defense and, in those instances, believes that it 16 has the discretion to decide not to preempt, even if 17 the action violates Section 253( a). 18 However, the Commission's authority to 19 assert jurisdiction over rights- of- way matters is 20 broader than merely issue a declaratory ruling when C 21 is raised as a defense to A. 22 First, to the extent that rights- of- way 23 issues under 253( c) are presented as defenses to 24 barrier to entry claims under A, the Commission, under 25 42 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 43 D, has express authority to preempt such violations. 1 This is expressly stated in the Prince George County 2 decision. The Ninth Circuit has also opined on this 3 issue. 4 Second, regardless of the scope of the 5 Commission's adjudicatory authority to preempt 6 specific state and local laws under 253( d), the 7 Commission has broad authority over 201( b) to adopt 8 rules carrying out any provision of the Communications 9 Act, as the Supreme Court found in the Iowa Utilities 10 Board case. This necessarily includes 253( c). 11 In the Iowa case, the state's arguments 12 closely paralleled the city's positions concerning 13 rights- of- way. In the Iowa case, the states argued 14 that, because the Act expressly provides that state 15 commissions shall establish the interconnection and 16 network element rates, that the FCC lacked the 17 jurisdiction to issue rules construing the rate- making 18 requirements of the Act. The Supreme Court rejected 19 the state's argument and held that the FCC, indeed, 20 had authority to issue pricing rules that would be 21 binding upon the states and upon federal courts and 22 appeals cases concerning wholesale pricing issues. 23 Specifically, the Supreme Court held that 24 201( b), which broadly provides that, quote, "The 25 43 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 44 Commission may prescribe such rules and regulations as 1 may be necessary in the public interest to carry out 2 the provisions of this Act gives the Commission 3 authority to adopt rules implementing all of the 4 provisions of the '96 Act," which, of course, would 5 include Section 253. 6 The Supreme Court, in the Iowa case, 7 rejected the lower court's holding that the 8 Commission's rulemaking authority applies only to 9 statutory provisions that the Commission directly 10 administers. Under this analysis, the city's position 11 that the Commission has no jurisdiction over rights- 12 of- way issues because 253( a) does not expressly 13 mention rights- of- way would be rejected. The Iowa 14 court further held that, even though the states have 15 the express authority under the Act to set the rates 16 for interconnection on network elements, the 17 Commission still has the authority to adopt the 18 binding interconnection and network element pricing 19 rules. 20 Section 201( b) means what it says and 21 explicitly gives the FCC jurisdiction to make rules 22 governing matters over which the 1986 Act applies. 23 Thus, under Iowa, the Commission has jurisdiction to 24 set rules concerning municipalities' rights- of- way 25 44 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 45 management, regardless of the scope of the 1 Commission's authority under 253( d). The FCC has yet 2 to address the use of Section 201( b) powers in this 3 context, but it should use its authority over rights- 4 of- way issues to set rules that would provide uniform 5 standards by which public rights- of- way may be managed 6 in a competitively neutral and nondiscriminatory 7 manner. These uniform standards should address issues 8 such as what constitutes fair and reasonable fees 9 charged for public rights- of- way, a topic covered by 10 our next panel; the right to gain access to public 11 rights- of- way within a reasonable timeframe; and what 12 constitutes actual use of the rights- of- way. 13 Thank you very much. Thank you for this 14 opportunity, Jane. 15 MS. MAGO: Thank you, Teresa. Well, it 16 sounds like we have some divergent views on the panel, 17 and maybe I should start by taking the lazy moderator 18 approach in saying to the panel does anyone have a 19 specific comment they want to make in response to some 20 of the other comments from the panelists? Lisa, I 21 suspect you have something to say to Teresa about that 22 last point. 23 MS. GELB: Well, actually, I have to 24 confess that there's a certain irony in the Supreme 25 45 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 46 Court decision jurisdiction ruling now being somehow 1 used against me, since I very much supported the 2 Supreme Court decision when it came out when I was 3 working here. You know, I think it's a nice argument; 4 I don't think it works for a couple of quick reasons. 5 First is, I think, what Pam was saying, 6 which is there's 601. I mean, there's a general 7 presumption, a very, very strong presumption, against 8 preemption, and then there's an explicit declaration 9 that nothing shall be deemed to preempt local, state, 10 or federal jurisdiction or law, except to the extent 11 expressly provided. Clearly, subsection C, I mean, 12 there's a big distinction between A and B and then C 13 in Section 253, so the presumption is it's not simply 14 silent. There's a clear statement that 253 is not to 15 be preempted, at least by the FCC. 16 And I think the other problem is you're 17 really mixing two provisions. 251 is a provision that 18 was designed  - you know, I went back to look at it as 19 she was speaking. One thing is it's an affirmative 20 obligation to set up rules of the road that have never 21 been established. Section 253 is a negative. It says 22 there can't be prohibitions or effective prohibitions. 23 There's no directive to the FCC to set up rules here, 24 and that is a distinction. 25 46 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 47 Also, obviously, 251( d) expressly requires 1 the FCC to do a rulemaking proceeding, and, clearly, 2 there's nothing like that in 253. So, you know, I 3 think it's clever, but it doesn't actually hold water. 4 MS. MAGO: Do we have a direct response to 5 that? 6 MS. MARRERO: Yes. I would like to say 7 that the interpretation you're making is if C is 8 brought as a separate violation, then I think your 9 points are well taken. But if C is viewed as a safe 10 harbor, as many of the courts have seen, then it 11 relates back to A, and there is express authority, 12 indeed, for the Commission to preempt A. And I think 13 if you don't take that into account, I think the 14 Second Circuit in the White Plains case saw this very 15 well, that you create a procedural oddity whereby the 16 defense to the claim determines the jurisdiction where 17 the claim will be held. So I think that the 18 difference is whether or not C is brought as an 19 independent claim, where your points would hold up, or 20 whether it's brought as a safe harbor defense to A. 21 MS. MAGO: I think that puts directly into 22 focus the tension of just exactly what is the status 23 of the B and C exemptions. Are they safe harbors? 24 And Pam, I think you had a view on that. Do you want 25 47 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 48 to comment here? 1 MS. BEERY: I do. You know, this forum, I 2 have to preface my comments by saying, is an 3 opportunity, a soapbox if you will, and so you're 4 getting the expected, usual commentary, and I hope 5 that in future opportunities, perhaps hosted by this 6 organization, we'll have an opportunity for more 7 constructive dialogue. 8 But that said, I think one thing that 9 hasn't been talked about, and folks' eyes are glazing 10 over hearing the lawyers quote statutes and so forth, 11 is the policy that we ought to be thinking about, and 12 the last panel today is going to talk about a going 13 forward approach. But I think there are three things 14 that are going on already that dictate against the FCC 15 taking jurisdiction. 16 First is the LSGAC is meeting currently 17 with the Industry Rights- of- Way Working Group, and we 18 are hashing out line- by- line, issue- by- issue right- of- 19 way management issues in great detail. A lot of folks 20 are putting a lot of energy into that. I think that 21 effort should not be overlooked or ignored. Secondly, 22 this forum is a good start and your 706 proceeding. 23 Certainly, it's an opportunity that you have and a 24 legally sufficient one, I think, rather than a formal 25 48 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 49 rulemaking. And finally, I think we need to focus 1 back on what Lisa said, and that is that 253( a) uses 2 the word "prohibit" or had the effect of prohibiting a 3 service and, at least in the district court in Oregon, 4 the case I'm litigating, the court found that that 5 word meant something. It's a high burden. 253( a) is 6 the first step in the analysis, and I think we ought 7 to be mindful of that. 8 MS. MAGO: Chris, do you want to respond 9 to that? I think that that was one of your points, 10 too. 11 MR. MELCHER: Yes. I think there's a 12 couple of points. One is that I think the FCC got it 13 right in their amicus brief to the Second Circuit 14 that, obviously, if C is raised as a defense, it would 15 make no sense whatsoever to first make a declaration 16 that there's a violation of A and then refer C back 17 somewhere else. If the FCC has a claim or a petition 18 making an argument that there's a violation of A, then 19 I think the better view, of course, is that the FCC 20 also has the jurisdiction to determine whether or not 21 there's a safe harbor under C. I just want to throw 22 that out there. 23 As to Pam's point about other forums or 24 addressing this, I have to respectfully disagree. I 25 49 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 50 think there's been, certainly, some dialogue with the 1 LSGAC, but, unfortunately, I don't think that's really 2 going anywhere. We've kind of been bogged down with 3 any agreement on whether or not there's even problems 4 with right- of- way, and I think the Chairman and the 5 commissioners have recognized of course there's been 6 problems. It's not a majority of the cities, it's a 7 minority, but there have been problems. And so 8 everyone has recognized that. NARUC's recognized 9 that, the courts have recognized that. What do we do 10 about those problems? And that's really where this 11 jurisdiction is so important. What do we do about the 12 problems, and where do we go to try to find solution 13 for the problems? 14 I think it's clear that federal courts 15 have jurisdiction, obviously, and that they have been 16 resolving some of these disputes, but there, as well 17 all know, something of an imperfect forum because it 18 takes so long. Litigation is a very drawn out 19 process. It's time- consuming, it drains money, it 20 really is not the best way to resolve this for an 21 industry or for municipalities. 22 We have litigated, and Pam mentioned the 23 magistrate's decision in Portland, which really is 24 quite remarkable, I won't digress, but clearly will be 25 50 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 51 reversed. The magistrate tells the Ninth Circuit that 1 they're wrong, which I haven't quite seen before. It 2 makes an easy appeal brief. But the Second Circuit 3 approvingly cited the Ninth Circuit in Auburn. I 4 think Auburn and White Plains will become the 5 standards on those issues. But we've been in Portland 6 for I don't know how long now in court, and we'll be 7 going to the court of appeals and then we'll go back 8 down. Look at White Plains. AT& T or TCG started in 9 '92, and the court recognized in '97, you know, the 10 ball really got rolling, and here we are five years 11 later with no resolution. 12 So yes, the courts have jurisdiction, but 13 the FCC has concurrent jurisdiction, and it's vital 14 for the FCC to step in, use that concurrent 15 jurisdiction, and try to lead on this issue. And I 16 would suggest that the ways to lead would be through a 17 policy statement or through some of the ongoing 18 proceedings, but Chairman Powell's comments, some of 19 the commissioner comments in different forums around 20 the country have been extremely helpful. The court 21 has noted that. 22 I think there is a national consensus that 23 right- of- way disputes have to be resolved. We have to 24 move on. We can't let folks go out of business, like 25 51 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 52 Velocita and others, go bankrupt due to right- of- way 1 disputes, and we can't see the broadband deployment 2 slow down because, obviously, the industry and the 3 economy are desperate to see it advance. 4 So, jurisdictionally, where does that 5 leave us? It leaves us with the FCC with a leadership 6 opportunity, and I think, with a policy statement, 7 that would be extremely useful. I have comments, 8 obviously, on what that policy statement should say: 9 eliminate third- tier regulation, set up a fair 10 standard on compensation, and a few other issues; but 11 that's for other panels. 12 MS. MAGO: Teresa? 13 MS. MARRERO: I think the courts would 14 welcome the Commission's views on some of the issues 15 that have not been addressed. They have consistently 16 given deference to the Commission's free works set up 17 in the Troy decision and in classic, and the Second 18 Circuit specifically requested a supplemental brief. 19 So I think that, you know, the courts are looking to 20 you to, you know, give them some guidance on some of 21 the issues that Chris has mentioned. 22 MS. BEERY: I'd just like to follow- up, if 23 I could, Jane, on the White Plains issue. I think 24 that the Second Circuit decision, I would agree with 25 52 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 53 Chris, represents a very thoughtful analysis and was 1 informed, as you point out, Teresa, by the 2 supplemental briefing from the FCC. But I think it's 3 important to note that the court drew together the 4 competing interests in its opinion and determined that 5 the FCC should be granted deference in its 6 interpretations. There's no question there. The 7 court did not conclude that the FCC's decisions are 8 controlling, and the court did not seek further FCC 9 formal proceedings. I think the court understood 10 clearly what your position was. And certainly, the 11 other important thing about White Plains, which I know 12 will be talked about in the next sessions, is what it 13 did or didn't do on compensation, which I think will 14 be a very interesting discussion. 15 MS. GELB: One thing I wanted to say about 16 the 253( a)( c) issue is White Plains was right. 17 There's something weird about the statute. I mean, it 18 doesn't make sense. I don't think that they 19 necessarily got the correct decision, you know, once 20 they went through the analysis, but there's no good 21 answer. 22 I mean, one answer is what Chris is 23 saying, which is, if it's before the FCC, if somebody 24 brings a 253( a) action to the FCC, the FCC has 25 53 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 54 jurisdiction. It doesn't then have to throw it away 1 or give it up as soon as somebody raises a 253( c) 2 counterclaim. But if you take that approach, then 3 you're really not giving any deference or meaning to 4 the fact that Congress did eliminate subsection 253( c) 5 in any references in Section 253( d), and what the FCC 6 and the courts and everybody involved is being asked 7 to do is which is the less of two strange results. 8 One is it's a strange jurisdictional thing to say FCC, 9 you get part of this, but if anybody raises the most 10 obvious defense, you no longer have jurisdiction. But 11 that's probably a better and less offensive answer 12 than saying we're just going to read out the fact that 13 Congress has A and B written in D and specifically 14 took out any reference to C with FCC preemption. So 15 there's no good solution; it's a question of which is 16 the best solution. 17 MS. MAGO: Let me respond and ask you a 18 question on that, Lisa, because I think what you're 19 saying is that if the Commission has a case brought to 20 it under the 253( a) saying that there can be no local 21 statutes or no ordinances that create barriers to 22 entry and a defense is raised that this is a right- of- 23 way issue, that raises the issue that, I think, came 24 up here a little bit about do we have to simply say, 25 54 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 55 okay, that's it, that's the end, don't think about 1 this anymore, or does the Commission have a basis for 2 trying to determine whether this is, in fact, a bona 3 fide issue, as we were looking at in the classic case, 4 for example, where the Commission contended that there 5 was merely a general assertion of the right- of- way 6 issue and how do we go about determining that? Can 7 you address that for a moment? 8 MS. GELB: I think then the FCC does lose 9 jurisdiction at that point, and I recognize that's an 10 extremely strange position to be in. I mean, Chris is 11 laughing, but I don't think it's any less strange to 12 say, well, we have extremely strong legislative 13 history from Congress saying whether or not something 14 is a legitimate right- of- way management tool is not 15 for the FCC to review and to read that out of the 16 statute, as well. So yes, I think it goes away from 17 the FCC and it goes to a court. 18 MS. MAGO: Chris? 19 MR. MELCHER: Well, I have to laugh, I 20 think we all have to laugh because Lisa's right. It's 21 a conundrum, it's a dilemma, but I think this happens, 22 I wouldn't say routinely, but it certainly happens in 23 our legal system, and it happens more often than we'd 24 like to admit that the statute is drawn inartfully. 25 55 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 56 So it is left to us, the courts, and to folks affected 1 by the statutes to try to figure out what was the 2 intent of Congress, whatever that means, because 3 Congress, obviously, is a large body and changes year 4 to year or every two years. But what was intended and 5 what makes sense and what is consistent with our legal 6 precedent. I think the Second Circuit got it right, 7 and this applies for the FCC, as well. If you have a 8 violation stated of Section 253( a), logically, you 9 must go to any safe harbor to determine whether or not 10 the harbor invalidates the preemption or invalidates 11 the violation, so it's logically, I guess, 12 incomprehensible to me that you could have one body 13 determine that there's a violation of A and, yet, not 14 let that same body determine that a defense to the 15 violation applies or does not apply. 16 I think the second reason why it just 17 doesn't make sense to have one form for A and one form 18 for C is that of course, you raise the well- pleaded 19 defense rule, where a defendant gets to determine the 20 forum through their pleadings, and that's what the 21 Second Circuit recognized. If the defendant pleads a 22 safe harbor under C, then the defendant gets to yank 23 the dispute out of one forum and bring it to another. 24 I don't think anyone wants to see that, and the 25 56 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 57 Second Circuit recognized that's not appropriate. 1 I think the FCC got it right in the amicus 2 brief. The courts have seen that. Whatever form it's 3 in, when an A violation is brought, that form needs to 4 determine both A and C, and I think that just makes 5 sense, that judicial economy, FCC economy, for all 6 those reasons. 7 MS. GELB: I just wanted to say something 8 quickly, which is it's weird but it's not 9 unprecedented, which is if somebody brought a state 10 and federal claim to a federal court, and the federal 11 claims got dismissed or, in some way, removed, the 12 federal court would not retain jurisdiction. I mean, 13 this isn't an unprecedented event, it's just a 14 different form. 15 MR. MELCHER: They actually might retain 16 jurisdiction if they determine the judicial economy 17 and fairness to the parties mandated that they keep 18 it. There is a doctrine that a federal court can, 19 after dismissing the federal claims that form the 20 basis for federal jurisdiction, retain the action and 21 determine the outcome. 22 MS. MAGO: Pam? 23 MS. BEERY: I would just like to add that, 24 you know, as I mention in my opening remarks, and I'd 25 57 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 58 like to emphasize again that the system is not broken. 1 The matters are being litigated, the courts are being 2 informed by the FCC's guidelines and by your prior 3 interpretations, and in the case of White Plains, they 4 asked additional information from you. To create this 5 bifurcated approach is, I think, dangerous and is 6 going to lead only to more cost and more delay. 7 Again, I have to hearken back to the legislative 8 history and say that these arguments that the industry 9 is making now were made on the hill during the 10 adoption of the act, and they were not successful. 11 The way 253 is written is, you know, they 12 often quoted provision or the statement that I got 13 yesterday from Mr. Orton, Justice Scalia's comment 14 it's not a model of clarity. That's because it's a 15 compromise and subsection D was inserted; everybody 16 recognizes that, and, you know, as lawyers, we like to 17 tie things up in neat bundles and have nice clear 18 jurisdictional flow charts that we can follow. Well, 19 you know, this is an act of Congress, and I just think 20 we have to recognize that, and we have to move on. I 21 think the FCC has provided clear guidance. 22 And I really have to take issue with Mr. 23 Melcher's statement. I am on the LSGAC. Mr. Melcher 24 was not at our last meeting. We are making progress. 25 58 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 59 I know that Mr. Fellman will address that at the end 1 of the day, but I just could not let that remark go 2 by. Sorry. 3 MS. MAGO: Chris, do you want to say 4 anything about this issue before I open the questions 5 up to the floor? 6 MS. MARRERO: Just one more point. If you 7 take the position that Lisa contends and Pam, if 8 you're just looking at the legislative history without 9 looking at the overall intent of the act and the 10 language in A, I think that that interpretation really 11 cuts against the broad prohibition set in A. The 12 Commission is cut out from looking at any safe harbor 13 under C, and I don't think that was the intent of A. 14 MS. MAGO: Thank you. Can I open the 15 questions up to the floor? It looks like maybe there 16 might be a couple here. Why don't we start there? 17 Please take the microphone and speak into that, so 18 that we can have the questions available to everybody. 19 MR. BRILL: My name is Robert Brill. I'm 20 an attorney from New York City. I have two general 21 questions or topics for you to expand on. One is that 22 the Second Circuit's opinion, in part, goes off on the 23 issue of the fact that they found that there was 24 disparity in treatment in the marketplace, that you 25 59 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 60 had the incumbent, in effect, being treated more 1 favorably in their view under the statute than the 2 other competitive providers. So it seems to me, as a 3 bright- line matter for the FCC, shouldn't one of their 4 focuses be look at municipal statutes that do that and 5 say, as a guideline matter, if you're going to treat 6 one party grossly disparate from others, creating 7 competitive imbalances in the marketplace, that 8 regulation, as far as we're concerned, runs afoul of 9 the statute and is a preemptable, and that would send 10 a bright- line test that for every city in the 11 municipality that they better get their acts together. 12 By the way, they get more revenue, probably, that 13 way. 14 The second question has to do with delay 15 to the market. You had two commissioners today, 16 directly, Commissioner Abernathy; and then, 17 indirectly, Commissioner Copps, saying delay to the 18 marketplace, in effect, impinges on competition. I 19 think all providers know that. I'm sure Qwest 20 appreciates that. And it seems to me that if the goal 21 of the FCC is to aid competition, bright- line 22 guidelines saying to municipalities you may not erect 23 barriers in the processing of applications to get to 24 the marketplace in whatever fashion, whether it's in 25 60 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 61 the statute, the rules, the RFP, the way you get a DOT 1 permit, a Department of Transportation permit, they 2 have to go by the board, if you are, in effect, 3 creating an imbalance in the marketplace. The 4 incumbent is there already; what about the 5 competitors? So could you comment on that? 6 MS. MAGO: Does somebody want to take that 7 one on? 8 MS. BEERY: Thank you, Mr. Brill. Those 9 are good questions. On the White Plains 10 discrimination case, you're absolutely right. It's 11 one of the classic bad- facts cases for local 12 government. It took seven years in that case, and TCG 13 was still not in the streets. It's not a good 14 situation. 15 Also, it's true in that case that the 16 incumbent was paying zero in terms of compensation for 17 the right- of- way, while the entrant, the new market 18 entrant, was going to be asked to pay a five- percent 19 based on gross revenue fee. That is probably one of 20 the farthest end of the spectrum situations that you 21 will find, and really, in reality, my contention in 22 having represented local governments for 22 years now 23 and dealt with a lot of these issues for a long time, 24 the bright line isn't there. As Commissioner Copps 25 61 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 62 mentioned this morning, the devil is in the details. 1 There are all kinds of shades of gray, and so for the 2 FCC to, in a vacuum of facts, try to pronounce what 3 that line is, I think, would be impossible. 4 As far as delay to the market goes, I 5 would agree with you. None of us in the government 6 sector want to see delay to the market. It's in our 7 interest, as policymakers and representing our 8 constituents to get broadband deployment, no question 9 about it. I do think that the bad stories are the 10 few. Certainly, we welcome more dialogue on that. 11 Every time we've asked for details, we get a few 12 stories, and I don't know of much more than that. 13 I will say that in industry's comments to 14 the FCC recently, they have acknowledged that delay to 15 the market is only one factor in their problems with 16 deployment in their own testimony to the Chairman, and 17 recent articles from the industry reflect that, in 18 fact, 85 million miles of fiber have been installed 19 since 1980, two- thirds of those since the '96 Act was 20 passed, so I don't think we're having a delay getting 21 into the streets is our main problem in deployment. 22 MS. MAGO: Chris? 23 MR. MELCHER: Well, I would agree that the 24 TCG case did present as bad a set of facts as you 25 62 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 63 could possibly get if you were a city. I would say 1 that bright line and delay really are two good 2 subjects to raise together in this because delay is a 3 significant problem, and, with all due respect to Pam, 4 the industry feels that it's one of the most serious 5 problems we've had. 6 Velocita, which is now no longer in 7 existence, directly attributed delay in deployment of 8 its facilities as a primary cause for its bankruptcy 9 and its demise and did so with NTI, and Nancy Victory, 10 a month or so ago, has done so in other filings with 11 the FCC, and every industry play, whether it's a CLEC, 12 an ILEC, or whoever, has stories about tremendous 13 delay, and those are lessening, I think, now because 14 the cities realize, first of all, that the delay was 15 deadly to a lot of the efforts. 16 Some cities, frankly, just didn't get 17 facilities due to the delay because the time was lost, 18 the window closed, the provider voluntarily or 19 involuntarily went away. But delay is still a major 20 problem, and I think the bright line aspect of that, 21 it could be solved fairly quickly. I think the 22 industry has suggested, and the FCC could act on this 23 to state as a policy or in some other way, that every 24 city should deal with franchise applications or deal 25 63 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 64 with permits within a set period of time, say 60 days, 1 if the application is complete, and the industry 2 certainly understands if you submit an incomplete 3 application, the clock doesn't run, similar to other 4 proceedings, but if the LSGAC wants to take that up 5 and agree that delay is something that we need to 6 solve and work with us on that I'd love to see that; 7 I'd love to see the FCC act on that. 8 MS. MAGO: I think that we're all trying 9 to get to some solutions and maybe we can get there 10 from here. The one other thing is I'll take a little 11 bit of moderator's privilege and point out that the 12 Commission in the White Plains case that we've been 13 talking about did submit a brief to the court, where 14 we pointed out that it was the agency's position that 15 it's required to treat all of the entrants on the same 16 playing field, that you have to have neutral 17 regulations; you can't treat the incumbent differently 18 than the new entrants, and that's been the 19 Commission's position on this. 20 MS. GELB: Even in that decision, the 21 court recognized that there is different types of 22 compensation, and so the question really was why 23 doesn't the FCC come out and set rules saying here's 24 how to do it or here's what you can't do, and I think, 25 64 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 65 actually, if you read that decision, it's not clear, I 1 mean, it's pretty clear from the decision that's not 2 an easy or necessarily appropriate thing for the FCC 3 to do because the court did recognize, look, there are 4 different ways of getting compensation, and it doesn't 5 mean that everybody has to pay dollar- for dollar. You 6 can factor the compensation in different ways without 7 it being discriminatory or unfair, and that's a 8 difficult thing to set a bright- line rule for. 9 Ms. MAGO: And I think we're going to be 10 talking about the compensation issues on the panel 11 later today. Can I get another question from the 12 audience? 13 MR. CHERNOW: Thank you. Bob Chernow from 14 the RTC in Wisconsin. Maybe this is very obvious, but 15 really what you're talking about is regulations on 16 telecommunication companies, not on cable companies. 17 Cable companies don't have problems with right- of- 18 ways. They go through a different system, and as 19 unethical as many of them are, this is not one of the 20 problems that they have. This is not one of the 21 difficulties that they have. They go through cleanly, 22 they cooperate with us, they put their stuff in, and 23 I'm saying this as a financial advisor, someone who 24 controls about $300 million, they probably have won 25 65 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 66 the broadband battle. So what we're doing is talking 1 here about, from our point of view as municipalities, 2 bringing competition. The telecommunication companies 3 are talking about rights- of- way instead of sitting 4 down and cooperating with local communities to get the 5 job done. Why does one system work, and the other one 6 doesn't? Perhaps, you can address that? Thank you. 7 MR. MELCHER: Actually, I'd love to 8 address that. I'm glad you raised that because that 9 has been a common assertion or question, really, why 10 one works and why one doesn't. It's actually pretty 11 simple; one's cable and one's telecom. And what I 12 mean by that is cable made a deal, cable made a 13 bargain back in '92 or the various time periods when 14 the act was amended, and the bargain was we'll pay 15 five- percent of gross receipts, and in exchange for 16 five- percent of gross receipts we'll get a local 17 monopoly with, you know, the ability for entrants to 18 come in. But, in effect, there really is no 19 competition in the cable industry; we can see that. 20 So really, you have a local monopoly that agrees to 21 pay five- percent, has sort of unfettered ability to 22 pass that five- percent on to its customers, so it's a 23 pure pass- through, and, in exchange, gets the permits. 24 I think it's actually interesting to see how easily 25 66 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 67 permits can be issued and how quickly they can be 1 issued when the five- percent is paid, and a lot of the 2 delay has been over negotiations on, unfortunately, 3 dollars. It's really come down to telecom companies 4 are being asked to pay five- percent of gross receipts. 5 They're being asked to pay linear foot charges. 6 They're being asked to pay for this access to the 7 right- of- way, and that's really been the focus of the 8 delay, unfortunately. Cable companies don't have to 9 negotiate. It's already been said, it's already been 10 bargained, they pass it through. They don't have the 11 competitive pressures that telecom companies do of 12 those kind of charges, so that really is the root of 13 it. We'd love to see this move more quickly. 14 MS. MAGO: I don't think Pam's going to 15 let us get away with that. 16 MS. BEERY: No, I won't. Chris, you 17 probably haven't negotiated a cable franchise lately. 18 It takes a long time; it's very difficult, and the 19 cable industry probably would beg to differ with you 20 on many of the assertions you made. The one couple 21 that I can't let go by are that, in fact, we are 22 prohibited from granting exclusive franchise by law, 23 and so they don't exist. Every franchise granted is 24 non- exclusive. And certainly, the cable industry has 25 67 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 68 had to litigate a lot of issues related to what is a 1 pass- through and what isn't. We all do function in 2 that highly- regulated environment, but I would 3 question highly, I'll just leave it at that, your 4 assertion that cable made a deal for five- percent 5 because it is highly regulated, and I'll just leave it 6 at that. 7 MR. MELCHER: Actually, I do represent 8 Qwest on our cable business, so I'm a competitive 9 cable provider, that I know exactly how much 10 competition there is or isn't, unfortunately, from 11 firsthand experience. 12 MS. MAGO: Okay. We'll take another 13 question from over there. 14 MR. SILVERMAN: Rick Silverman from the 15 National Cable and Telecommunications Association. 16 Well, first, I wanted to respond to, well, take 17 umbrage at the comment that cable companies are 18 somehow unethical and, yet, you yourself admitted 19 that, in dealing with rights- of- way issues, everything 20 works very smoothly, so I'm not sure why the cheap 21 shot here today. But I've worked with Qwest quite a 22 bit and agree with him on many things. I do disagree 23 on the competition side because we face lots of 24 competition from the DBS providers, and it's an 25 68 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 69 analogous situation where we are paying, typically 1 five- percent, and don't have any problems with that on 2 the cable side, although, as Pam mentioned, there are 3 some cases about either pass- through or, you know, 4 what's in the gross revenue. But the DBS guys, 5 generally, do not pay a similar fee, so there is a 6 competitive disparity, just as you're raising. And as 7 the most recent video competition report found, DBS is 8 now almost 25% of the multi- channeled video markets. 9 So we do have competition, there is a disparity in 10 terms of the fees paid, and so it's sort of an 11 analogous situation, but I hope we can refrain from 12 the cheap shots at cable for the rest of the day. 13 MS. MAGO: On that, let me, let's see, 14 Ken, did you want to ask one more question and then 15 we'll have to wrap up because we're running out of 16 time here. 17 MR. FELLMAN: Thank you, Jane. Ken 18 Fellman, I'm the mayor of Arvada, Colorado and the 19 chair of the Local and State Government Advisory 20 Committee. This isn't a question. I just wanted to 21 set the record straight on an issue. The entire panel 22 spoke, and I was only shocked at one comment. 23 MS. MAGO: Was it mine? 24 MR. FELLMAN: No, it wasn't yours. Chris 25 69 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 70 knows. Chris made a comment that the discussions 1 between the Local and State Government Advisory 2 Committee and the Industry Rights- of- Way Working Group 3 are not going anywhere. I just want to point out for 4 those who are interested in this process while his 5 company is represented in the working group, he has 6 not been present at the meetings. There are people 7 here today who have been present at the meetings. I 8 hope that off- line, if they really think that the 9 process isn't going anywhere, they will tell me so we 10 can stop wasting their time and our time and the 11 Commission's staff time for coming to those meetings. 12 And the one other thing he said about that 13 process that was inaccurate is that the local 14 government position is that there is no problem. 15 That's not true. The local government's position has 16 been before we talk about a broad national preemptive 17 solution, we need to define the problem, and what we 18 see as a process problem is that the industry, at 19 times, comes to this agency and says we need a federal 20 rule of preemption before we take the necessary time 21 to define the problem. That's really the issue that 22 we've been discussing. These are not easy issues, and 23 I think the discussions have been productive, and I do 24 think they're going somewhere positive. We'll talk 25 70 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 71 about that in a later panel, but I wanted to set the 1 record straight on what those discussions have been. 2 MS. MAGO: Thank you. I want to take the 3 opportunity to thank all of the panelists for coming 4 today and for addressing this important topic with us. 5 I think one of the things that we have tried to bring 6 out of all of this is to get an airing of the 7 different views and, hopefully, facilitate some 8 opportunity for some dialogue off- line, which I think 9 is precisely what we should be having in talking with 10 each other, which is the purpose of the forum that we 11 have today. It's not just to hear the views of the 12 panelists and get the chance for formal interchange 13 but also to have a little bit of informal interchange, 14 so that we can all be working towards what are the 15 best possible solutions for dealing with what we call 16 recognize is something of a bit of a thorny issue that 17 we have to try to address. 18 So with that, I will say does anybody want 19 to make a final comment on the panel today? Hearing 20 none. Oops, Chris? 21 MR. MELCHER: I just want to say thank you 22 again for all your work and your effort and thank the 23 FCC and the commissioners for allowing us to be here. 24 MS. MAGO: Thank you very much. And thank 25 71 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 72 you to all of you. 1 MR. SNOWDEN: We're going to take a 15- 2 minute break. We'll resume back at 11: 15. 3 (Whereupon, the foregoing matter went off 4 the record at 10: 56 a. m. and went back on 5 the record at 11: 15 a. m.) 6 MR. SNOWDEN: I think we're going to go 7 ahead and get started. The joke earlier was that the 8 lawyers were going to start everything off, and I 9 think they set a good tone for keeping us on schedule, 10 so as we go through the next set of panels, that will 11 be our goal moving forward. 12 It is my pleasure to bring to the podium 13 Mr. Bill Maher, who's new to the Commission but not 14 new to this industry or new to these issues. Bill is 15 the Chief of the Wireline Competition Bureau and, on 16 this particular panel, will be talking about 17 compensation in the area of rights- of- ways. Please 18 welcome Mr. Bill Maher. 19 MR. MAHER: Thanks very much, Dane. I'm 20 happy to welcome all of you to this morning's second 21 panel. Our panel will discuss fair and reasonable 22 compensation for the use of the public right- of- ways 23 and, of course, that's key language in Section 253( c). 24 In particular, I think this panel will cover a broad 25 72 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 73 ray of topics having to do with compensation, 1 including, for example, the relationship between 2 compensation issues and competition in local 3 telecommunications markets. 4 We'll also discuss whether it's 5 appropriate for governments and parties to consider 6 the history of services that have been provided to a 7 locality by incumbents when they're considering 8 compensation issues. And the panel will also look at 9 under what circumstances, if any, fair and reasonable 10 compensation may include such types of fees as 11 revenue- based fees and, in kind, compensation. We'll 12 discuss how compensation should be related or could be 13 related to actual costs and how do you define those 14 costs? And I also will be seeking input from the 15 panel, we heard it earlier this morning, on best 16 practices that parties and governments can use in 17 discussing and agreeing upon compensation for use of 18 the public rights- of- way. 19 And with that, I think we'll star the 20 presentations. Our first speaker is Sandy Sakamoto, 21 who is a general attorney and an assistant general 22 counsel who manages the Los Angeles Legal Department 23 for SBC. Her practice focuses on litigation, general 24 business matters, network operations, and issues 25 73 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 74 dealing with rights- of- way. She began her career with 1 Pacific Telephone in 1976 working in network 2 administration and worked onto the legal field. She 3 has been a presenter on right- of- way case law updates 4 at Law Seminars International presentations and is an 5 expert in the field. Sandy? 6 MS. SAKAMOTO: Thank you very much, Bill, 7 and thank you to the Chairman and the commissioners 8 again for allowing the opportunity to speak today and 9 at least start the dialogue, as was mentioned earlier, 10 about this very important issue. We have the 11 unenviable task here on the panel to talk about a very 12 provocative area in this whole right- of- way management 13 subject, and I'm sure that many of the comments that I 14 make and, perhaps, comments made by other panelists 15 will evoke some level of emotion because I think we 16 have some very differing points of view, and so I'm 17 not sure that we will achieve a necessarily short- term 18 compromise on these issues but, perhaps, it will 19 elicit a way to think creatively, as was mentioned 20 earlier by the commissioners, about how to resolve, 21 perhaps how to reach a compromise on some of these 22 issues that sort of keep us apart in terms of working 23 together. 24 I do have a fair amount of ground to 25 74 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 75 cover, and so I'm going to motor through some prepared 1 remarks. As we've heard, Section 253 of the federal 2 act was designed to eliminate barriers to entry that 3 might be erected by state and local governments. The 4 charter of the act was the promotion of robust 5 competition, and, in recognition of such, Congress 6 wanted to ensure that local governments would not 7 create unnecessary obstacles that would effectively 8 limit or, in severe cases, prohibit competition in the 9 deployment of new technologies. 10 At the core of the current debate over 11 access to rights- of- ways is subsection C of that 12 statute, as you've heard, and on the slide, we have 13 what it says, in fact, and it's very simple. It says 14 that nothing in the section affects the authority of a 15 state or local government to manage the public rights- 16 of- way or to require fair and reasonable compensation 17 from telecom providers on a competitively and 18 nondiscriminatory basis for use of public rights- of- 19 way on a nondiscriminatory basis, if the compensation 20 is publicly disclosed. Some local governments have 21 reveled in the notion that this provision is a new 22 grant of authority, something more expansive to charge 23 compensation in excess of what existing, more 24 restrictive state laws allow. This pre- emptive theory 25 75 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 76 is fundamentally betrayed by the very language of 1 subsection C, lacking in any expression of granting 2 authority. And while some have viewed subsection C as 3 a savings clause or a safe harbor for states and local 4 governments, if the outer limits of this subsection 5 provide for the creation of regulation and fees that 6 go beyond the economic realities of what some or most 7 telecom providers may reasonable withstand, Congress 8 has done nothing more than giveth and taketh away, 9 creating no clear path for spurring on the rapid 10 deployment of telecommunications. Certainly, that was 11 not the intent of Congress. 12 So what does subsection C really mean? 13 253( c) was Congress' way of recognizing local 14 governments' traditional existing police power 15 authority to manage the rights- of- way. Local 16 governments were concerned that the sweeping 17 prohibitive language of 253( a) might preempt their 18 authority over the health, safety, and welfare of 19 right- of- way management. Careful not to preempt the 20 status quo, the drafters of 253( c) did not include 21 granting language that would enlarge the existing 22 police power authority held by local governments. 23 They did, however, include language that describes the 24 outer most scope of state and local government 25 76 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 77 control; that is to manage the public rights- of- way to 1 require fair and reasonable compensation on a 2 competitively and nondiscriminatory basis for use of 3 public rights- of- way if publicly disclosed, as the 4 section says. 5 What did Congress mean by fair and 6 reasonable compensation? We believe, in the industry, 7 that it means fees directly related to local 8 government's actual and incremental cost to manage 9 public rights- of- way and for the provider's use of 10 that right- of- way. Compensation means restitution for 11 losses or damages or to restore one to its prior 12 economic position. This entitles a local government 13 to recoup its actual and incremental costs to manage 14 the right- of- way but not to profit from it. 15 Furthermore, compensation under 253( c) 16 must be for the actual use of the right- of- way and may 17 not, therefore, be accessed in unrelated grounds. For 18 the numerous legal and policy reasons, fees based upon 19 gross revenues, construction costs, per linear foot, 20 or in kind services or facilities are not permitted 21 forms of compensation contemplated under 253( c). Fees 22 based upon gross revenues is nothing less than a tax 23 upon the revenue stream of the provider or its 24 business operations, bearing no relationship 25 77 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 78 whatsoever with the management or use of the right- of- 1 way, as this Commission recognized in its amicus brief 2 filed in the White Plains appeal. It is a regulation 3 on the business and has more, frankly, to do with the 4 ability of the provider to market its services than it 5 does with any physical use of the streets or roads. 6 Fees based on a percent of gross costs or 7 construction costs also bear no relationship to the 8 management or use of the right- of- way. How much it 9 costs a provider to build out a network is no measure 10 of how much a city has or will incur to manage it. 11 Fees charged on a per linear- foot basis might appear 12 to be related to use of the right- of- way, but if that 13 is so, municipalities should be able to demonstrate 14 that, for each additional linear foot of construction, 15 the city incurs a set incremental cost. Frankly, I've 16 never seen that sort of cost study documented, and it 17 does seem somewhat doubtful that a city would incur, 18 for example, 500 times the cost to review a permit 19 application, review construction plans or traffic 20 management plans, and do inspections on a 5,000- foot 21 construction project as it would for a 10- foot 22 construction project. More telling is experience, 23 unfortunately, to the opposite. What the industry has 24 seen in some cases is local government imposing 25 78 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 79 arbitrary per linear- foot fees, oftentimes premised on 1 what the last provider was willing to pay and 2 negotiate for and, admittedly, not based on any real 3 study of data or costs. 4 In kind, exactions, whose economic value 5 may vary enormously depending on factors, such as 6 connectivity to other facilities, the ability of the 7 city to operate or use those facilities, or whether 8 the facilities will be used to lease to others also 9 have no relationship to the provider's use of the 10 right- of- way or the city's cost to manage access. 11 Accordingly, in kind exactions are arbitrary and 12 cannot be effectively imposed on a competitively 13 neutral and nondiscriminatory basis. Moreover, 14 dedicating facilities to municipality may be, in fact, 15 benefiting a municipally- owned competitor. 16 What about fees upon fair market rents or 17 value? After all, municipalities have argued long and 18 hard that they should be entitled to the full value of 19 the scarce property asset that they have paid to 20 acquire and maintain. The fallacies in this model 21 abound. 22 First of all, using tax dollars, state and 23 local governments acquire and maintain public rights- 24 of- way in trust for the public's use. More often than 25 79 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 80 not, streets are simply dedicated to the local 1 government at no charge for the public's use as a 2 condition of approval for private development. 3 Regardless of the method by which a local government 4 may acquire or hold title over a street or a road, the 5 role played by the governmental entity is governmental 6 in nature. 7 Managing the right- of- way is not a 8 commercial endeavor, nor is it a proprietary function. 9 The fair market value model has no place in this 10 context. Fair market value is a model for valuation 11 of privately- held property, which fluctuates with 12 market demand and only works when there are free 13 market forces between a willing seller and a willing 14 buyer at play. If a commodity is a public right- of- 15 way, there are at least two essential missing 16 elements: number one, a free market; and number two, 17 demand from similarly- situated buyers. There is no 18 free market forces at work when the local governments 19 are the monopolists standing as guardians over public 20 rights- of- way, which are the only cost effective way 21 for telecommunication providers to deliver their 22 services to the public. In this scenario, without 23 limitations, the monopolists would be free to set fees 24 at the highest price a provider is willing to pay, 25 80 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 81 and, in fact, we've seen this. Those fees, 1 unfortunately, have sometimes become the default floor 2 for the charge of fees to all other subsequent 3 providers. 4 In regards to public rights- of- way, the 5 so- called buyers consist of a number of users, the 6 traveling public, the municipality itself, public 7 utilities, and other public service providers are 8 operating under separate and distinct laws and 9 regulatory regimes. For example, the traveling public 10 and, generally, the municipality are not locally 11 regulated and do not pay fees. And users, such as 12 cable television, gas, and electric companies 13 developed community- based systems, and local 14 governments are granted authority, through the Cable 15 Act and other state laws, to franchise their 16 operations, including access to rights- of- way. Such 17 regulatory schemes are inherently different than the 18 state and federal regulation of telecommunication 19 companies. 20 The delivery of telecommunication services 21 is a public benefit use and compatible with other 22 public uses of the rights- of- way. Compensation for a 23 compatible co- existing public use is in the nature of 24 the incremental loss or cost to that entity. There is 25 81 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 82 no true market, in the truest sense, or rental rate 1 for an asset dedicated for the public use. 2 MR. MAHER: Sandy, it's about time to wrap 3 up. 4 MS. SAKAMOTO: Okay. I do want to say 5 that we believe that the proper model under 253( c) 6 must be based on incremental costs to make the 7 criteria fair and reasonable, and there are a number 8 of reasons why we believe that that's fair, why it is 9 competitively neutral and nondiscriminatory, and why 10 it is reasonable, given the national priority given to 11 telecommunications deployment and the rapid 12 advancement of technologies. And I think that it's 13 very important that that's the common ground that we 14 talk about and talk from in order to come up with 15 creative and/ or compromised solutions to an issue I 16 know that we don't all see eye- to- eye on. 17 MR. MAHER: Our next speaker is Don 18 Knight, who's with the City Attorney's Office in 19 Dallas, Texas. He advises and represents city counsel 20 and city officials on a variety of legal matters, 21 including telecommunications, cable, electric and gas 22 utility regulation, technology acquisitions, and 23 electric supply agreements. He has a number of major 24 projects that include cable cases, 911 agreements, PUC 25 82 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 83 rulemakings, and rights- of- way proceedings. Mr. 1 Knight has a long experience in the field. He was 2 also with the city attorney's office of Irving, Texas. 3 So welcome. 4 MR. KNIGHT: Thank you, Bill. As Bill 5 said, I am an assistant city attorney with the city of 6 Dallas. I also serve as chair of the Texas Coalition 7 of Cities for Utility Issues. It's an organization 8 that includes 110 Texas cities of all sizes. Before I 9 offer my testimony, though, I would like to thank the 10 FCC for your invitation to speak today and, also, your 11 willingness to consider local governments perspective, 12 as demonstrated by the make- up of the various panels. 13 14 While I represent the city of Dallas as an 15 assistant city attorney, the opinions that I share 16 with you today are my own, based on nearly 20 years of 17 experience in local government. Also, if you find 18 yourself wanting to laugh at any of my remarks, go 19 ahead. Some of this is supposed to be humorous. I 20 have to admit right away compensation humor is an 21 oxymoron if I've ever heard one. 22 Okay. So how do I tell the FCC everything 23 you need to know about fair and reasonable 24 compensation in five to seven minutes? I started off 25 83 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 84 by putting together some examples of myths that float 1 around this issue and the corresponding realities. 2 Myth number one: courts have long held 3 right- of- way fees must be cost- based. The reality is 4 this position confuses regulatory fees with fees for 5 use of public property or rent. Regulatory fees, such 6 as fees for inspections, say a building permit fee, 7 should be based on the cost of regulating. However, 8 fees for rental of public property should be based on 9 the value of the property being rented. 10 Myth number two: reductions in right- of- 11 way fees will curb wasteful local government spending. 12 The reality is local budgets are already so lean, if 13 they turned sideways, they'd disappear. That was one 14 of the humorous parts. 15 Myth number three: right- of- way fees are 16 really hidden taxes. The reality: right- of- way fees 17 are rental for the use of public property. They are 18 no more hidden taxes than the fee that is charged to 19 rent a publicly- owned auditorium for a musical 20 concert. Just like telecoms, the concert promoter 21 recovers his cost of renting the facility in the price 22 of the ticket. The only different is the concert 23 promoter doesn't line- item concert hall rental fee on 24 the receipt for your ticket, like the phone company 25 84 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 85 does on your phone bill where it says municipal fee or 1 right- of- way fee. 2 Myth number four: local governments make 3 money on right- of- way fees. The reality is, in most 4 communities, the amount collected in right- of- way fees 5 is less than what they spend on an annual basis on 6 building and maintaining the right- of- way and related 7 infrastructure. 8 Myth number five: fair and reasonable 9 compensation means cost- based fees. Well, the reality 10 is I'd be happy to put everyone believes that to work 11 for me. Of course, I will pay you fair and reasonable 12 compensation, which will only include your out- of- 13 pocket expenses, like the gas it costs you to get to 14 work and your dry- cleaning bill, because if I paid you 15 for the value of your work, I'd be letting you take 16 unfair advantage of me. 17 Myth number six: reducing right- of- way 18 fees will cause telecoms to be profitable and stop the 19 current wave of bankruptcies. The reality is right- 20 of- way fees are a small percentage of the companies' 21 total revenues and are passed through to customers 22 and, therefore, do not affect the companies' bottom 23 line. For one to totally eliminate right- of- way fees, 24 it would not change the fact that the industry 25 85 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 86 currently suffers from a massive over- supply of 1 capacity. It's like suggesting that enough duct tape 2 in the right places could have kept the Titanic from 3 sinking. 4 All right. Myth number seven: Free or at- 5 cost use of the right- of- way will promote faster 6 deployment of advanced services. In the state of 7 Texas, DSL service pays no right- of- way fee. During 8 the entire broadband deployment, up until March of 9 this year, cable modem service paid right- of- way fees; 10 DSL did not. Despite this, in Texas, as in the rest 11 of the country, cable modem services have had a much 12 higher rate of deployment than DSL. The reason for 13 this is that cities have required, as a condition of 14 cable franchise renewal, that cable companies upgrade 15 their cable system. This upgrade is what allows cable 16 modem service to be provided. And unlike DSL service, 17 cable companies are required to provide this upgraded 18 system to every household. That makes cable modem 19 service possible city- wide, once the upgrade is 20 completed. 21 Myth number eight: recent state 22 legislation, such as House Bill 1777 in Texas, has 23 resulted in more uniform compensation schemes and 24 administrative simplicity for companies and cities. 25 86 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 87 The reality is, in Texas, many telecoms, some small, 1 some large, have shown an unwillingness or an 2 inability to comply with House Bill 1777. The staff 3 at the Texas Public Utility Commission recently 4 reported numbers to the Commission that suggest less 5 than half of the 400 or so telecoms certificated in 6 the state were complying with all the requirements of 7 the Act. Staff at the PUC, already working under a 8 heavy workload, now have new enforcement and 9 information- gathering responsibility. Cities, on the 10 other hand, are regularly receiving incorrect 11 compensation reports but, to date, have been unable to 12 audit any of them. 13 Now, for today's final myth: the FCC is a 14 better choice to deal with local right- of- way issues 15 because they are a lot smarter than the people in the 16 35,000 communities across this country that do it now. 17 The reality: FCC staffers have refused to submit to 18 IQ tests until the commissioners and the mayors take 19 them first, so the jury is out on whether that's a 20 myth or reality. 21 So after running through a number of these 22 myths, I realize that what seemed like a daunting task 23 was actually quite simple. All the Commission really 24 needs to know is one thing: it's not your job. 25 87 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 88 Section 253( d) specifically removes FCC jurisdiction 1 over issues of what is fair and reasonable 2 compensation. The industry's argument that the FCC 3 has jurisdiction over the question of what is fair and 4 reasonable compensation if it constitutes a barrier to 5 entry under section 253( a) is merely an attempt to re- 6 write the statute to say what it does not. The fact 7 is local government enjoys a safe harbor if the right- 8 of- way fee is fair and reasonable, and the 9 determination of fair and reasonable is reserved to 10 the federal courts. And you needn't worry, the 11 industry can find its way to federal court, as my city 12 can certainly attest. 13 So the local government may require fair 14 and reasonable compensation, even if it could be 15 argued its actions are barrier to entry. How do we 16 know this? Well, you only need read Section 253( c), 17 which says nothing in this section, referring to all 18 of Section 253, affects the authority of a state or 19 local government to manage the public right- of- ways or 20 require fair and reasonable compensation. Clearly, 21 nothing in this section means that Section A's barrier 22 to entry prescription could never limit the ability to 23 require reasonable compensation, which makes sense if 24 you think about it. How could anyone argue that 25 88 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 89 reasonable compensation is a barrier to entry? 1 Jurisdictional issues aside, and I'll wrap 2 up here, I think a more fundamental question for the 3 FCC is why the heck would you want to get in the 4 middle of this? Why insert yourself into an issue 5 that you have no expertise in or authority to resolve, 6 when there are so many issues out there on your plate 7 right now that do fall within the Commission's 8 expertise and authority? So in light of this, what 9 should the FCC be doing when they hear complaints from 10 the industry about right- of- way fees? Personally, I 11 think it's reasonable to suggest that the answer to 12 that question is nothing. It is literally none of 13 your business, and, believe me, I tried to think of a 14 nicer way to say that, but it just didn't ring true. 15 Congress has not given the FCC authority to act on 16 this issue. In fact, the legislative history of the 17 Act indicates just the opposite. Republican 18 Congressman Joe Barton, co- author of the Barton- Stupak 19 Amendment that added 253( c) language that became law 20 in the House Bill, made the following statement during 21 the Florida debate, where his amendment passed 22 overwhelmingly, 338 to 86. Congressman Barton said, 23 The amendment explicitly guarantees that cities and 24 local governments have the right, not only to control 25 89 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 90 access within their city limits, but also to set the 1 compensation level for the use of right- of- way. The 2 federal government has no business telling state and 3 local government how to price access to their local 4 right- of- way. 5 Now, I realize that it's possible that the 6 FCC, despite all this sees a role as one of 7 establishing dialogue between cities and the industry. 8 And if that's the case, then I have a simple, 9 straightforward plan that imposes little or no 10 additional workload on the FCC, which, with your 11 current workload, should be good news. What the FCC 12 must do is to get to a meaningful dialogue by sending 13 the following message to the industry loudly and 14 clearly: we, the FCC, have no authority over right- of- 15 way compensation and management issues. Do not come 16 crying to us. Go to the local government or other 17 organizations and explain the problem to them. Work 18 out a solution you can both agree to. If this fails, 19 you still have the courts as a last resort. As long 20 as the industry thinks that it has a chance of getting 21 the FCC to impose their preferred solution on local 22 governments, they will have no motivation to settle 23 for anything else, and meaningful dialogue with local 24 government will not succeed. 25 90 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 91 In closing, I want to remind everyone that 1 the natural result of competition is survival of those 2 best equipped to compete in the death, also known as 3 Chapter 7, of those who are not so well equipped. 4 This is the price of competition. However, the price 5 of competition in the telecommunications industry 6 should never include loss of local government 7 services. If the industry's well- orchestrated effort 8 to reduce right- of- way fees from their current levels 9 is successful, a loss of local government services 10 will be the inevitable result. Thank you. 11 MR. MAHER: Thanks, Don. Our next 12 panelist is Kelsi Reeves. She's Vice President, 13 Federal Government Relations, for Time Warner Telecom. 14 She was named to this position in January 2000, and 15 she is responsible for all matters, including rights- 16 of- way issues, affecting Time Warner Telecom in the 17 federal regulatory, legislative, and governmental 18 purviews. Kelsi? 19 MS. REEVES: Thank you. I really 20 appreciate the fact that the FCC is focusing on this. 21 I think there are questions about jurisdiction, 22 obviously, and what the FCC can do. Having worked in 23 and around this issue for the past 10 years, there is 24 no one simple, easy solution. The FCC isn't going to 25 91 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 92 be able to come down and solve all these problems. 1 But I think it is very important that the FCC 2 recognize that it is a significant problem. 3 At Time Warner Telecom, what we do is we 4 go out and we build competitive telecommunications 5 networks. About 80% of the revenues that we earn 6 actually come over our own network. The other 20%, we 7 buy, mostly special access, from the incumbent local 8 exchange company and, essentially, re- sell services. 9 What happens are barriers to entry. We have a 10 different focus. I'm just so happy right now that 11 we're focusing on right- of- way. Maybe someday we'll 12 get to focus on building access. But for a 13 facilities- based company, the two big barriers to 14 competition are access to the right- of- way, access to 15 buildings, and then I say we have three: access, 16 access, access issues. The third one is being able to 17 get special access when we can't go out and build our 18 own facilities. So access, if you really want to see 19 facilities- based competition, access to the right- of- 20 way is critical. There is just no way of getting 21 around the fact that these issues have to be solved. 22 I did an informal survey. We offer 23 service in 44 MSA's in 21 states across the nation, 24 and I did an informal survey of all of the general 25 92 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 93 managers that operate in the different cities. In the 1 21 states that we operate in, I heard back from seven 2 of them that were having significant problems with 3 rights- of- way, so the other states are going okay. 4 But what you're going to see is, in the 5 states where we're not having problems with rights- of- 6 way, we're going to be deploying more facilities, 7 customers are going to have access to more diverse 8 services, and we really do offer diverse services. I 9 mean, a lot of the things that we're trying to do and 10 one of the reasons that we're somewhat successful in 11 today's marketplace is that we offer redundant 12 facilities. You have a lot of state and local 13 governments. We've got Air Force bases, airports, 14 hospitals, public schools that are coming to use 15 because they want alternative facilities into their 16 offices, so that if services goes down, like something 17 happens on 9/ 11, something like that happens, that 18 there are redundant facilities in there. And if you 19 want to put redundant facilities, if you want to have 20 true facilities- based competition, you have to have 21 access to the right- of- way. 22 Well, what we, at Time Warner Telecom, 23 focus on doing is building a long- term, viable plan. 24 I think it's interesting, when you talk about doing 25 93 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 94 something like having a percentage of our revenues go 1 to the city for access to the right- of- way, it really 2 distorts, it distorts our business plan for a number 3 of different reasons. The first is we go out -  I was 4 going to say something; I probably won't. Well, 5 anyway, if you were going to do based on, if we have 6 to put five- percent of our revenue, if we have to pass 7 that through to our customers, what happens quite 8 often is you'll get into a negotiation with a very 9 large contract, and since it's not required, we're not 10 in the cable arena where you have a five- percent that 11 everybody charges and everybody passes through. What 12 you have is just a patchwork of different regulation 13 and different applications. And so we can get into a 14 negotiation for a contract, and the incumbent can 15 decide not to pass franchise fees through. Well, if 16 you're looking at, you know, a million- dollar a month 17 customer, you know, five- percent of a million dollars 18 is real money to a company like mine; we can't eat it, 19 we can't spread it out over a large rate base. So, 20 you know, it will cause us to lose contracts. 21 Another thing is, you know, a lot of our 22 debt covenant, our ability to stay in business right 23 now is dependent on us making a profit. There are a 24 lot of CLEC's that have debt covenants that are 25 94 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 95 dependent on things like revenues. Ours aren't 1 revenues; ours our actually on profits. We can't just 2 go out and sell the service at any price. We have to 3 actually sell the service at a price that recovers its 4 cost, and we have to pass through those franchise 5 fees. 6 So you can put the slide up now and get 7 onto the presentation. What I wanted to talk about 8 was the court cases, and I think what we really can 9 see is that there's not a clear answer out there. We 10 have so many different people involved. We've got the 11 FCC, we've got state jurisdictions, we've got the 12 courts, and we're getting contrary results from all of 13 them. The most recent circuit court's decision 14 interpreting a Section 253 was the TCG New York versus 15 the City of White Plains, and in that decision, the 16 Second Circuit declined to reach the issue of whether 17 or not a franchise fee is based on percentage of the 18 provider's gross revenue or fair and reasonable 19 compensation for the use of the public right- of- way. 20 Instead, the court struck down the city's ordinance on 21 the grounds that it was discriminatory. 22 The fatal point being is, as we've 23 discussed already, is that the incumbent didn't have 24 to pay the franchise fee. Well, when you have the 25 95 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 96 courts addressing these issues, in this situation, 1 they completely get around having to address whether 2 or not what is fair and reasonable compensation. So I 3 think it is just very important that we have some 4 guidance from a regulatory body. There's no question 5 that the states are going to be critical in doing 6 this, but I think it's very important that we get some 7 guidance from the FCC. 8 I was actually a staff member with the 9 Texas Legislature when HB 1777 was negotiated, and the 10 only reason that there was a bill is because somebody 11 with authority, Representative Woolens from the city 12 of Dallas, whose wife happens to be the mayor of 13 Dallas now, you know, sat everybody in a room and 14 said, we're going to do something, I'm passing 15 something, either you work something out or I'm going 16 to do what the cities want to do, was essentially, you 17 know, his position. So we all negotiated, and we got 18 something that is not, by no means, perfect, but Texas 19 is not a place where we're having issues getting into 20 the rights- of- way right now because of the system in 21 place. 22 As you can see, all the panelists up here 23 today talk, I thought your presentation, Don, was very 24 entertaining but very much just the city perspective, 25 96 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 97 and I think it's just critical that we get some 1 guidance from regulators and force this issue to be 2 resolved because, if it's not resolved, you're not 3 going to see facilities- based competition. You had 4 mentioned, Don, that there was a over- capacity in 5 telecommunications facilities. Well, the over- 6 capacity is in the long- haul sector of the market, not 7 in the short- haul. Time Warner Telecom is one of the 8 only companies actually going out and building local 9 facilities, and we do it not just in the major cities 10 but in the suburbs. There is no over- capacity there. 11 In fact, if we could get in and build more, then you 12 would see some of the capacity in the long- haul 13 markets actually utilized effectively. 14 That's essentially what I wanted to say 15 today. 16 MR. MAHER: Thank you, Kelsi. Our next 17 speaker is Larry Doherty, who's Director of National 18 Site Development, the West Region, for Sprint 19 Spectrum. He's a land- use planner. He has 30 years 20 of experience in all related disciplines to land- use 21 planning and project management. He directs the 22 current development of wireless applications within 23 rights- of- way throughout Southern California. This 24 requires the design, permitting, and construction, 25 97 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 98 working with more than 20 state and local 1 jurisdictions, and this has involved, so far, more 2 than 2500 pole attachments. Larry? 3 MR. DOHERTY: Thank you. I'd like to also 4 thank the Commission for the opportunity for wireless 5 to be on this panel today. It's, to some people, 6 might be a bit strange, but we're a new entrant into 7 the right- of- way issue. So before I start, I would 8 like to make one thing clear: I'm not an attorney. 9 There are a few of us up here. But I do have some 10 real experience in the field, and I'd like to share 11 with you today a little bit of that experience. 12 Some of the issues that we face, as a new 13 entrant, into the right- of- way development and 14 deployment of our facilities. 15 Why right- of- way, why wireless? Well, our 16 perspective is a little different. Sprint and other 17 wireless companies are starting to focus on right- of- 18 ways throughout the nation as an essential element to 19 providing the service throughout the country, the 20 service that the public rightfully demands. 21 Traditionally, wireless is built on private 22 properties, and as we have done so, we have provided a 23 pretty darn good service throughout most all the 24 commercial areas, as well as the major thoroughfares. 25 98 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 99 However, we have seen a dramatic shift in 1 the use of wireless by the public to the residential 2 sector. As a matter of fact, as you all probably 3 know, more than half the population currently 4 subscribes to wireless service, and as a Yankee Group 5 report stated, I believe, just last month or so that 6 three- percent of the households throughout the United 7 States disconnected their wireline service to their 8 homes and rely entirely on wireless. 9 Sprint has observed that public is using 10 wireless service more and more in the late evening 11 hours, when most Americans are at home. This is the 12 area where our service is not the best, this is the 13 area where facilities need to go, but it's my 14 experience that local jurisdictions often do 15 everything possible to keep these facilities outside 16 of the residential areas and the suburbs. 17 On one hand, the communities and their 18 citizens demand dependable, uninterruptable, and high- 19 quality wireless service throughout their communities 20 and deep into the residential areas. On the other 21 hand, the industry, the wireless industry is faced 22 with an ever- increasing local requirement and 23 obstacles that delay our deployment into these areas. 24 To me, attaching to the infrastructure within the 25 99 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 100 right- of- ways is a no- brainer. The impact is minimal, 1 the benefits are enormous. 2 Sprint believes in this so strongly that, 3 over the past couple of years, we have developed new 4 technology, equipment, and construction techniques to 5 eliminate or significantly reduce the impact of our 6 facilities on the public right- of- way. As a matter of 7 fact, if I can have the slides now, I thought I'd 8 bring along a couple of photographs of what these 9 facilities look like. 10 This is a wireless facility in the right- 11 of- way in the Los Angeles area, and if you'll take a 12 look at -- there's two poles there, one is being 13 removed, the other one is a new pole, but you can see 14 some cross- arms on the pole and there are antennas 15 hanging from that cross- arm. All the equipment is 16 vaulted below ground, and at the base of that street 17 lamp, there are a couple of ventilation tubes in order 18 to circulate the air through. This is what the 19 sidewalk looks like. We don't impede traffic 20 whatsoever. It's a very innocuous kind of 21 installation. 22 As a matter of fact, we had this open the 23 day I took the pictures, and several neighbors came 24 across and were curious, they had their kids with 25 100 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 101 them. They were really curious about what we put 1 underground, and with Halloween coming up, the father 2 told them, See? There are no spooks in here. I 3 thought that was clever. 4 This is opened up for servicing by 5 technicians. You can see the antenna up on the pole. 6 This is a little different antenna configuration. We 7 left the antennas wide on purpose, so you could see 8 them. We paint them brown, and they pretty much 9 disappear into the existing urban structure there. 10 And in this case, the cabinets are above- ground. This 11 was an early attempt, about five years ago or so, at 12 wireless on a traffic standard and streetlight in a 13 very upscale urban community. I never heard any 14 complaints over this one. Again, antennas are 15 attached to the pole. The equipment is behind the 16 sidewalk and right- of- way. 17 Our problem is access and probably equal 18 access. We're treated much differently than any other 19 user of the right- of- way. We're required to go 20 through exhaustive discretionary processes with the 21 local jurisdiction, and when we do the research in the 22 jurisdictions to determine who else goes through 23 these, we never find any of the other users of the 24 right- of- way applying for condition- use permits. It's 25 101 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 102 only the wireless that has to do this. These 1 processes last anywhere from six months to two years. 2 And, at the same time and shortly after 3 that, then we must negotiate an agreement to use the 4 right- of- way with each and every jurisdiction that we 5 go into, and each and every jurisdiction has a whole 6 different set of criteria, a whole different 7 definition of what reasonable compensation might be. 8 As a matter of fact, I've seen situations 9 where we pay as little as a few hundred dollars a year 10 for one of those facilities that I showed you to 11 $2,000 a month for one of those facilities I showed 12 you, so it's across the board, and it really doesn't 13 make any sense to us. I don't know if it really makes 14 sense to the public either. The wireless industry 15 needs some help in working through the local 16 jurisdictions, not on a one- by- one basis but a basis 17 that sets a level playing field for all the users of 18 the right- of- way. 19 Reasonable compensation, I'm not really 20 sure what that really is. We talk about going back to 21 the jurisdictions and paying them for their out- of- 22 pocket expenses. I think many of us do believe that 23 that's the right thing to do for the right- of- way 24 that's held in trust for the public. But, again, we 25 102 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 103 see it across the board. There is no rhyme and reason 1 to it. We ask jurisdictions what's the basis for 2 their fees or use fees or license fees or whatever 3 they may call them in the agreements, and we just kind 4 of get, well, that's what we charge, and there's no 5 real basis for it that we can find. In fact, in most 6 situations, we have to pay pole owners to attach to 7 the poles, and they're paying local fees, as well. 8 So, in fact, the jurisdictions are getting it from the 9 pole owners, and they're also getting it from us; sort 10 of double- dipping the industry. 11 I'd like to go ahead and close with asking 12 the FCC, at the minimum, and other federal entities to 13 provide general guiding principles that we call can 14 look to. And Sprint would like to endorse or, at 15 least, favor the NTIA administrator, Nancy Victory's 16 principles and those described in PCUS. Thank you 17 very much. 18 MR. MAHER: Thank you. Last, but not 19 least, we have Dr. Barry Orton, who is Professor of 20 Telecommunications in the Department of Professional 21 Development and Applied Studies at the University of 22 Wisconsin  Madison. For 20 years, his primary duty 23 at the University has been to assist Wisconsin 24 municipalities with broadband issues. Dr. Orton is an 25 103 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 104 original founder of NATOA, and he currently serves as 1 president of the Wisconsin chapter of NATOA. He 2 directs the University of Wisconsin  Madison's 3 outreach seminars and local cable franchise 4 administration and is on the board of contributors of 5 several legal newsletters and industry publications. 6 So without further ado, and he has a display, I 7 believe. 8 MR. ORTON: Thank you. Yes, I'm also not 9 a lawyer and also a city planner, and that's maybe a 10 first up here. The title of my presentation is "Local 11 Public Rights- of- way:" and, of course, us academics 12 have to have a colon, "Users Should Pay the Real Value 13 of Very Expensive Public Property (Just Like Rights- 14 of- Way on Federal Land)" and this is the most 15 important part, "It's Not Only Money That Matters." 16 No matter how high- tech the industry, we 17 still have to dig in the dirt, and that's a quote from 18 Ed Coops, Engineering Vice President of Next- Link, 19 who, basically, and I think most of the industry 20 understands there is no one- size- fits- all answer to 21 any of these questions because all communities are 22 different, all geological, geographical situations are 23 different, and, certainly, all rights- of- way are very 24 different. 25 104 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 105 I seek to highlight today just how complex 1 some of these decisions are and how ill- equipped the 2 Commission is to deal with them on a case- by- case 3 basis. Yes, I did bring a prop. I didn't bring it, 4 Leonard Crumb brought it here from Minneapolis and 5 it's, in fact, a model of a street under downtown 6 Minneapolis, and if you could remove the street and 7 the fire truck, we have here, and this is actually an 8 older model with very little telecommunications 9 facilities, Leonard assures me right now it is much 10 more crowded under the street on that particular 11 intersection thanks to increased telecommunications 12 capacity. And each piece of overcrowding or crowding 13 makes the right- of- way more difficult to excavate, it 14 makes the right- of- way more difficult to maintain, and 15 Leonard had some sample pieces of sewer pipe that he 16 was trying to put under the system, digging as if he 17 would be digging through, and the problem is that, as 18 it gets more crowded, the length of the pipe doesn't 19 change any, and you have to squeak it in under the 20 things that are already there. 21 Basically, this is a fairly simple one. I 22 work for the city of Milwaukee, and, in my 23 presentation, I describe what's under the city of 24 Milwaukee streets, and that includes everything here, 25 105 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 106 plus wooden ducts dating back at least a hundred 1 years, in some cases. Some of those wooden ducts 2 contain existing and operable electric power lines. 3 Some of them contain existing and potentially 4 operable, we're not sure until we cut them, 5 telecommunications lines dating back to telegraph. 6 Some of them contain wires that used to support some 7 of the trolley lines, and some of them don't contain 8 anything we really know about yet, and when we cut 9 them or when they get cut, we just find out if they 10 contain anything by how many people call and find out 11 what went out. 12 So to finish that and to show how this 13 one- size- fits- all model doesn't work, the person who 14 knew that system best in the city of Milwaukee retired 15 two years ago, and his replacement has a total of two 16 years experience on the job, so the maps supporting 17 that are literally thousands of them in tens of 18 locations, and there is no one way to understand 19 what's under any individual street at any given point, 20 and that's not a unique situation. 21 So local government's first priority in 22 all this is to really protect the public's safety, and 23 that really is the first priority. And without the 24 right to manage the rights- of- way with a one- size- 25 106 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 107 fits- all uniform priority, where you don't have 1 patchwork systems, you're not vulcanized, and, 2 perhaps, you have some kind of federal mandate. Then 3 should any entity with a state CLEC certificate, a 4 backhoe, and a spool of fiber cable be allowed to open 5 streets' boreholes, interducts, trench through 6 subdivisions, and string wire between poles? Clearly 7 not. 8 When construction is eminent, municipality 9 has to have permits, has to investigate who is going 10 to open the street, what kind of insurance is 11 required, make sure there is indemnification, and I 12 list a lot of those steps; and they are not steps to 13 make the industry suffer, they are not steps to make 14 it more unprofitable for the industry; they are 15 protection steps to protect one of the most valuable 16 pieces of property the local public owns and has 17 developed: the rights- of- way. And this last 18 responsibility on safety is easily understood here in 19 Washington, where, I understand, a year and a half 20 ago, matters got so bad that we had a moratorium, so 21 that we would actually have cars that went on the 22 streets rather than sinking into them. 23 The second thing cities have to do is they 24 have to protect the public property. And attached to 25 107 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 108 my presentation is a list of just some horror stories 1 of gas lines, power lines, water mains, phone lines, 2 steam lines, sewer lines being, in some cases, 3 exploded by wrong locates or the abhorrent backhoe. 4 Local government has to assure that the public 5 property is then restored to an equal or better 6 condition, and that really, again, involves expense on 7 the local side. So the examples of that kind of 8 management are in the bill or in the statute, they're 9 certainly in the legislative history. We don't have 10 to go through that again. 11 Then the next part, which is the part 12 that's getting controversial here, is the reimbursing 13 of the public. Specifics, because they vary from 14 state- to- state; states differ. The jurisdiction's 15 immediate goal is to get its out- of- pockets covered, 16 and that we talked about; I don't think there's any 17 disagreement about that. But it's not just what you 18 paid in advance and what the city has to pay to get 19 you in there. The telecommunication industry tries to 20 seek to limit the public compensation of rights- of- way 21 to these direct costs, labeling them fair and 22 reasonable, and everything else then, by comparison, 23 is unreasonable. I have a technical term for that 24 assertion. It's called "chutzpah." And for those of 25 108 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 109 you who are not familiar with it, the definition of 1 that technical term is the defendant, who upon charged 2 with the murder of his parents, throws himself on the 3 mercy of the court because he's an orphan. That's 4 chutzpah. That's what we have in this case. 5 We have significant real costs here. We 6 have degradation costs of additional users, and every 7 time you dig it up and patch it over again, the useful 8 life decreases. You have a disruption factor, which 9 are serious factors. People have to go around 10 excavations. Businesses lose money while the 11 excavation is going on. These are all real losses. 12 The sales tax loss and the loss of going around 13 construction is only the small part of that. 14 And then lastly and most important, you 15 have rent. I know it's an evil word here, but rent is 16 what it is. If I want to rent space in a shopping 17 mall, I might pay an option fee, I might pay a per- 18 square- footage fee, and I might pay a rent based on 19 the position in the mall based on the economic value 20 of what I am occupying. You cannot ignore those 21 standard economic factors when you look at right- of- 22 way, unless you make the argument that the federal 23 government has declared this so important that we 24 don't compensate anybody and everybody develops 25 109 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 110 anywhere, and we don't do it that way. We certainly 1 don't do it in the private sector, and we don't do it 2 in the federal government either. 3 I went to the Bureau of Land Management 4 and found out when you want rights- of- way on federal 5 property, you pay a processing fee, you pay a 6 monitoring fee, and then you pay a fee called rental, 7 payable before the grant is issued based on the fair 8 market rental value for the rights authorized. The 9 rental values are based roughly on the land values and 10 are sometimes even established by an appraisal. Why 11 would the Congress establish a different or more 12 limited right for local governments? 13 Finally, while all these arguments are 14 proceeding in the courts and the Legislature and the 15 Congress, local officials routinely enforce the safe, 16 basic requirements necessary to ensure the public 17 rights- of- way remain safe and functional with minimal 18 financial burden to the taxpayers. These requirements 19 are enforced daily without fanfare, without debate, as 20 we all use the rights- of- way to heat and light our 21 homes, walk, drive, communicate, access information, 22 bathe, and flush our toilets. Thank you. 23 MR. MAHER: Thank you, and we will start a 24 discussion now. I think the format in the last panel 25 110 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 111 worked very well, so I will open it and start back 1 down at the other end, if anyone has any comments on 2 the other presentations. Sandy, you can lead off. 3 MS. SAKAMOTO: I think our view, from the 4 industry's perspective, is that we do need some 5 guidance from a policy- making body to urge and 6 encourage the national policy on telecommunications. 7 And nobody in the industry disputes that there is 8 legitimate and valid right- of- way management authority 9 that local governments have. They have a very 10 important role, there is no doubt about it. They have 11 a role to make sure that their rights- of- way are 12 managed in a way that is safe for the traveling public 13 and for other users of the right- of- way. And 14 businesses, like telecommunications and other users of 15 the right- of- way, also have that same interest. We 16 have no desire to irresponsibly come into a city 17 because it's not good business, ultimately. So I 18 think there's some common ground there. 19 But what we have seen, unfortunately, are 20 a minority, frankly, of jurisdictions who have taken 21 liberties, sort of, with this notion that they can go 22 beyond those traditional police- power authorities and 23 begin to create what we view as obstacles to proper 24 construction and infuses one area of that. And that's 25 111 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 112 where we, I think, need the help. 1 I will say that, while, you know, there's 2 a lot of dispute as to what the right model is for 3 fees, you know, how do you assess fees and on what 4 basis, I can say that if fees are somehow sanctioned, 5 fair and reasonable compensation under 253( c), is 6 sanctioned either by the courts or this Commission as 7 being something that can be above cost. In other 8 words, revenue- producing or profit- making fees for 9 local governments, that the moment that occurs, quite 10 frankly, and I wouldn't blame them, every local 11 government will certainly come to the well and want 12 their share of that new source of revenue. And I 13 think we need to think very carefully about whether 14 that's the right policy. When we talk about trying to 15 create a very robust, competitive environment for 16 telecommunications, it will, in any given 17 jurisdiction, out- price a certain competitor or many 18 competitors. Not every competitor, perhaps, and that 19 wouldn't be right, and no city would do that, but it 20 will out- price certain sets of competitors, and is 21 that really what Congress desired? 22 MR. MAHER: Don, what about it? 23 MR. KNIGHT: Thank you, Bill. One thing I 24 wanted to respond to is Kelsi's remark that there's no 25 112 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 113 over- capacity in local neighborhoods, and I couldn't 1 agree more with that. One of the reasons that's true 2 is that local governments are powerless to require it, 3 unlike cable, where we can require it and cable 4 extends to every household, you know, in the 5 community. The problem with that scenario is, if 6 we're talking about the kind of disruption that we saw 7 in our major thoroughfares now in every neighborhood 8 in the community, we've got to think about how we're 9 going to deal with that, as well. 10 There has been a lot of discussion about 11 right- of- way management, as well as just the 12 compensation for it, and that cities need to be 13 restricted. It reminds me of a comparison to our 14 traffic laws because there's probably nobody in this 15 room that likes to get a traffic ticket, and there's a 16 lot of people that might want to go a little faster 17 than the posted speed limit at any given time. But, 18 yet, there doesn't seem to be any national movement to 19 do away with traffic enforcement, and the reason for 20 that is because, while we know we're all safe drivers, 21 we're worried about the rest of the guys on the road. 22 Okay. And that's the problem you have here, and it's 23 why you heard Sandy say, you know, they support right- 24 of- way management. That's been my experience. No one 25 113 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 114 in the industry wants the cities to get out of the 1 right- of- way management business. They'd like to see, 2 you know, some things not specifically applied to them 3 but, you know, the other guys, we're glad you're out 4 there to keep them from damaging us. 5 So talking about fair and reasonable 6 compensation, I keep asking myself this because I keep 7 hearing from the industry cost- based, if it's not 8 cost- based, it's not fair. What is unfair, what is 9 unreasonable about asking them to pay what it is 10 worth? We're not hearing it's not worth what cities 11 are asking for it, they're saying that it should be 12 cost- based because if it's more than cost, it's 13 unreasonable and unfair. 14 Now, Sandy referred to new sources of 15 revenue and that cities see the Telecommunications Act 16 is a chance to go out and get more money. I have not 17 seen that. All I have seen is that communities want 18 to be able to collect the compensation that they have 19 collected for the last 100 years. This is nothing 20 new. You know, what's unfair about the same 21 compensation that you've been paying for a hundred 22 years to use the right- of- way? 23 And I realize the law may be different in 24 other states. There's some states where the incumbent 25 114 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 115 doesn't pay a fee because they negotiated a good deal 1 a hundred years ago. That was pretty short- sighted, I 2 think, but, in Texas, we don't suffer from that. So 3 let's not forget that telecommunication companies have 4 been paying usually a percentage of gross revenues 5 since they came into existence, so this is not an 6 argument that started after the Telecommunications Act 7 of 1996 and cities are not going out and saying, oh, 8 boy, we've got a windfall here. We just want to do 9 business the way we always have in the sense of 10 collecting compensation for value. Now there's a lot 11 more people wanting to get in there, and we want to 12 treat them all the same. We want to charge them the 13 same amount. That's all I have. Thanks. 14 MR. MAHER: Okay. Kelsi? 15 MS. REEVES: I wish it was that simple. I 16 mean, I don't think that it is. I don't think that 17 what we're going out and finding is that cities just 18 want to charge us a rent for the value of the property 19 and you get to just do that. But in Texas, what we 20 found is that a bunch of different cities had 21 negotiated flat fees from the incumbents, and it was 22 hard to tell what they were based on, you know, what 23 services and what revenues they were based on. And so 24 when you have to go in with like what you have to do 25 115 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 116 in Texas right now, it's based on access lines, people 1 measure access lines differently. I mean, no wonder 2 Texas is having a hard time implementing that law is 3 because it's hard for, I mean, we do it differently 4 from the way other companies do it, and it's hard for 5 us to file those reports. It's impossible for, I 6 think, the cities to really know whether or not they 7 are getting what they are supposed to be getting, and 8 to try to compare it to what other companies are doing 9 is just a really difficult task. So I don't think it 10 is as simple as just paying rent. If it were, then we 11 wouldn't be here. 12 What you're finding is different things in 13 every, you know, different things in different cities, 14 different things in different states, and what we need 15 is some consistency. I don't think anybody in the 16 industry would argue with the fact that the cities 17 need to manage the right- of- way, and I think that the 18 work that we've been doing on our model ordinances 19 recognize that, and what I hope we can do is recognize 20 that you need to manage the city, your resources 21 should be focused towards that, and get out of these, 22 you know, two and three- year long negotiations over 23 price. I mean, we really are talking about money. If 24 we could resolve that issue, you could spend your 25 116 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 117 time, the cities could spend their time managing the 1 right- of- way instead of negotiating these ridiculous 2 contracts. 3 MR. MAHER: Okay. Larry? 4 MR. DOHERTY: Again, I think, in my view, 5 the real problem is there's absolutely no definition 6 that anybody agrees to. When I worked with the 7 jurisdictions, every jurisdiction has their own idea 8 of what compensation truly is. It's across the board, 9 and it doesn't make any sense. And for telecom to go 10 in and have to negotiate these on a one- by- one basis 11 with virtually no insight as to what they're going to 12 end up, you can't sustain an operation like that. It 13 becomes so cost- prohibitive to go into certain areas. 14 It becomes a barrier to access to areas. 15 It is important to note, too, that all 16 that does is drive up the cost for the consumer, as 17 well, because these costs are being passed through. 18 And so, in effect, we're charging, the jurisdictions 19 are charging their citizens for the use of the right- 20 of- way, as well. So it goes on and on. We're looking 21 for some general principles. I think the industry and 22 local government and the FCC need to come together and 23 devise some common principles that we can all look 24 towards. And I believe it's going to take a lot of 25 117 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 118 work, but I also believe it is possible. 1 MR. ORTON: I want to say that I don't 2 think there's any other situation where the owner of a 3 valuable property is expected to charge only the 4 incremental cost of occupancy and not compensation 5 reflecting the value of the property or the value of 6 the property to the user. I've asked my bagel store 7 to cut back on the price of bagels and let the mall 8 owner only charge the cost of the electricity for the 9 bagel store, but it doesn't work that way. 10 MR. MAHER: I have a question, and it goes 11 back to these revenue- based fees. It's hypothetical, 12 and you can consider me playing a devil's advocate, 13 but aren't there circumstances where these fees really 14 make sense, if you're thinking about 15 telecommunications competition? I mean, to the extent 16 that a new entrant doesn't have to put up a big up- 17 front payment, aren't fees based on ongoing revenues 18 one way to permit entry into telecommunications? Or 19 not? I'd be interested. 20 MR. KNIGHT: Could I respond to that, 21 Bill? Absolutely. You know, the reason we have a 22 percentage of gross revenue fee is because that's what 23 municipalities and the telephone company worked out, 24 and the reason it's a benefit to new entrants is that, 25 118 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 119 until you start getting revenue, you don't pay 1 anything. You can put your facilities in the right- 2 of- way and pay nothing until you start generating 3 revenue, and then you only have to pay a percentage of 4 that revenue. So as you build your business, you pay 5 more, but not until you generate more revenue. And 6 the access line fee statute in Texas is similarly 7 structured so that you only pay for the access lines 8 that you sell to customers. So, again, they can put 9 facilities in the right- of- way at no charge until they 10 start using them to provide a service. 11 MR. MAHER: Any comments from the 12 carriers? 13 MS. SAKAMOTO: Yes, I guess a couple of 14 issues. First of all, while, in fact, that may be one 15 way of gaining compensation, it really is in the form 16 of a tax. What you're talking about is a fee based on 17 the business operations and revenue flow of that 18 particular entity. We're not talking about 19 compensation for use of the right- of- way. They're two 20 very distinct and different things, and I don't think, 21 if we look at 253( c), that that type of fee is 22 contemplated because it has nothing to do with use or 23 management of the right- of- way. I'm not saying that 24 it couldn't be imposed in proper situations or that it 25 119 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 120 couldn't be a proper form of some level of a tax 1 revenue if properly enacted, but I don't believe that 2 it fits within the structure of what local authority 3 can do under its police powers in managing the right- 4 of- way under 253( c). 5 MS. REEVES: And I would just add to that 6 that it would be one thing if that was a federal 7 policy and it was applied across the board. Then 8 people would make it work. But right now what you 9 have is, you know, the pass- through is a significant 10 deal. I mean, if not every competitor is required to 11 pass it through, there are a lot of companies that are 12 in many lines of business, and it's hard to tell what 13 revenues you're actually assessing. Different people 14 offer different types of services. The cities are 15 always in arguments about which services should be 16 taxed and which services shouldn't be taxed, so that's 17 not even a simple fix. 18 MR. MAHER: Okay. I'd like to open it up 19 to the audience right now. Right there. 20 MR. ASHBUM: Hi, my name is Garth Ashbum. 21 I work for local government. Just two comments here. 22 One, I find it difficult to understand how 23 Southwestern Bell or SPC can advocate incremental 24 costs when people are trying to access their system 25 120 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 121 and they have to pay fully- allocated costs. The 1 second thing is that, when we're looking at that this 2 is passed on, that this is a cost increase to the 3 users, I think that you fail to realize that the costs 4 that are there are being borne by taxpayers. And if 5 there are costs that are associated with it and 6 they're going to be paid by taxpayers instead of the 7 user, I don't think that's fair to the folks in the 8 community. 9 MR. MAHER: Any response? 10 MS. SAKAMOTO: Taxpayers are paying for 11 the investment in the public rights- of- way, indeed, 12 and the cost- based model for compensation for use of 13 the right- of- way is to, in fact, reimburse and to make 14 whole the taxpayers loss or cost through the 15 management by the city, who stands as a trustee over 16 those rights- of- way. So the taxpayer isn't losing 17 out. 18 Nobody's suggesting, from the industry's 19 side, that a loss or a cost that's borne or incurred 20 for use of the right- of- way should not be compensated. 21 What we're talking about, I think where the debate 22 really is, is whether or not fees above costs, fees 23 that are really profit- making in nature are 24 appropriate when we talk about use of the right- of- 25 121 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 122 way. 1 Moreover, the right- of- way is dedicated 2 and is there for the public's use. It's dedicated for 3 public use, and that provides an avenue for a number 4 of classes of users. It isn't just the traveling 5 public we're talking about, it is the subway systems 6 and the public utilities and the municipal utilities 7 and the cable television. Everybody that has a public 8 service that they offer that needs that right- of- way 9 to offer and deliver those services is providing the 10 kind of public benefit that that right- of- way was 11 intended to provide. 12 So I think when we talk about, you know, 13 rental or paying for its value, well, it's value is, 14 as a right- of- way, to provide a public benefit. Part 15 of that use, a compatible, co- existing use, is 16 telecom, just like it is with water or just like it is 17 with a trucking firm that uses it or just like it is 18 with any other user of the right- of- way. So why 19 should telecom be singled out or treated differently? 20 Moreover, I have to tell you that everyone 21 of those classes of users have different regulatory 22 regimes. Right or wrong, whether you like it or you 23 don't, they developed in different ways. So, you 24 know, you do have a mixed bag when you talk about the 25 122 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 123 different types of users that take advantage of the 1 public rights- of- way. 2 MR. MAHER: Don? 3 MR. KNIGHT: Thank you, Bill. First of 4 all, if I understand what Sandy's saying. She's 5 saying, you know, the taxpayers pay taxes, the taxes 6 go to maintain the right- of- way. They've already paid 7 for it once, let's not charge them for it again. And 8 if that's what she's saying, I would respond that the 9 reality is that if we do away with right- of- way fees, 10 we're going to be talking about a lot more taxes than 11 they're paying right now. Many cities, 20 to 30% of 12 their revenue comes from right- of- way fees, and that 13 means they don't have to raise tax money for that 20 14 or 30%. Now that's all users of the right- of- way, 15 that's not just telecom. 16 You know, Sandy mentions that a lot of 17 users use the right- of- way, and that's true. 18 Telecommunications companies, gas companies, electric 19 companies, water companies, they all pay to use the 20 right- of- way, and nobody is asking to use it for cost, 21 except for the telecommunications companies. Every 22 other user of the public right- of- way pays the value 23 of that property when they use it. 24 You know, I think the argument that this 25 123 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 124 is dedicated to public use and it's preserved, it's 1 held in trust for the public, therefore, we shouldn't 2 be charging for it. And this is the point that the 3 telecommunication companies are not the public, okay? 4 The public is the citizens within that community, and 5 if the citizens within that community want their local 6 government to subsidize a telecommunications company 7 so they don't have a fee on their bill, they could let 8 their city council know that. But you know something? 9 In all the years that I've been in local government, 10 I have never heard a single citizen tell me that we 11 should be allowing these companies in the right- of- way 12 for free. I've never heard a single citizen complain 13 that they don't want a charge for right- of- way use on 14 their bill. They understand it's the cost of doing 15 business. Citizens are not upset about this, okay? 16 It's the telecommunications companies that are passing 17 those costs to the citizens that, for some reason, 18 have a problem with it. The people that are paying 19 the bills don't. 20 MR. DOHERTY: Just a quick comment on 21 that. I don't think the industry has ever said that 22 we're not willing to pay for the use of the right- of- 23 way. I just want to make that clear. We do expect to 24 pay for the use of the right- of- way. Our position is 25 124 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 125 that unreasonable fees should not be charged. We want 1 fair treatment for the use of the right- of- way, and I 2 think that's what this forum is all about, not to 3 point the finger at one another and simply say that we 4 don't want to pay because that's not the case. 5 MR. MAHER: Okay. Question right here. 6 MR. BRILL: Yes, my name is Robert Brill. 7 I guess, Professor Orton, I have to respond to your 8 use of the chutzpah analogy to say that the question 9 from the telecom perspective is are the cities and 10 localities acting as khazers, which is another 11 response. 12 But, really, what we're talking about is 13 line drawing. I agree that I don't know anyone in 14 telecom who says that there shouldn't be recompense 15 for the reasonable use of the right- of- way, in terms 16 of the cost to the municipality. The real question is 17 what the Professor has pinpointed, which is paying 18 what it's worth. My response is or is it paying all 19 that the traffic will bear? The question is is the 20 public right- of- way a scarce commodity, as it were, 21 that is, in effect, a monopoly control of the 22 locality? And the question is, to foster competition, 23 does that scarce resource have to be regulated and, 24 hence, to draw analogy from telecom before the 1996 25 125 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 126 Act, there has to be someone who either sets some 1 guidelines to what can be charged above the cost, or 2 it should be some type of regulated price, and 3 somebody's got to regulate that? 4 So, I mean, it seems to me the question of 5 your shopping center is there's always a shopping 6 center somewhere else or a store somewhere else that 7 can compete, but how does a telecom provider in a 8 particular city find another access, except for 9 private property which, in wireless, is possible, but 10 if you're a broadband provider, you have to use the 11 ground. 12 MR. MAHER: Barry? 13 MR. ORTON: Well, a couple of responses. 14 I don't want to get into Yiddish too heavily. I think 15 the appropriate word for the industry in this case are 16 gonifs, which they're trying to steal something that 17 doesn't belong to them that the public built, that the 18 public owns, and want it at a bargain price because 19 telecommunications, in the Telecom Act, is something 20 magical. It isn't. It's one part of our economic 21 development, but it's not a magic part. And so we 22 don't douse local government with magic dust so that, 23 all of a sudden, the only thing that costs are their 24 out- of- pockets when you get an application. The cost 25 126 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 127 of building and maintaining a very complex situation, 1 particularly in larger cities, is enormous, and the 2 taxpayers paid for that. So to argue that the real 3 cost is the incremental cost when we get there and 4 when we build is to ignore all the other costs that 5 went into the whole process. 6 And it, also, I think, ignores, and we say 7 it again and again, the legislative history of the 8 Telecom Act that got us here. I really think you 9 should read the detailed legislative history because 10 there were votes on these explicit issues both in the 11 House and in the Senate. I don't have the Senate 12 numbers. I do have the House numbers, and it was 13 something like 338 to 86. The idea that this stuff 14 would only be at out- of- pocket costs was defeated 15 really soundly, was very explicitly argued in both 16 houses and defeated soundly in both houses. You can't 17 go back and say, well, the Congress really meant to 18 put a C in the list of what the FCC did in Section D, 19 but they just ran out of letters or something, so 20 we'll just pretend it was there. You can't do that. 21 The Congress debated this, and it was very explicitly 22 voted on. 23 MR. MAHER: Okay. We have time for one 24 last question. This panel has been going very well, 25 127 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 128 and we'll have to close. 1 MR. PINTO: My name is John Pinto. I'm 2 your right- of- way consultant, and I've dealt with the 3 telecommunications industry and long- line industries 4 for about 20 years, and I just would like to pose to 5 those members of the panel that don't we have here 6 somewhat of a contradiction or an inconsistency when 7 most, if not all, long- access providers over the past 8 10, 15, 20 years ran to piggyback on existing 9 corridors of railways, pipelines, and other types of 10 corridors, didn't care what they had to pay, as long 11 as they could get there ahead of the other guy. And 12 now they get to the gate of communities and say, gee, 13 we don't want to pay what the traffic will bear, we 14 want it, essentially, for a justifiable cost. That 15 question was never posed to those owners of corridors 16 and other avenues to get you to where you are now in 17 the communities, so why do the communities have to 18 bear an inequitable participation in this process? 19 Thank you. 20 MR. MAHER: Reactions from the carriers? 21 MS. SAKAMOTO: Well, I'm no expert on 22 railroad right- of- ways. The right- of- ways, however, 23 that railroads do own, I mean, they own them. Those 24 are their rights- of- way, and they were acquired for 25 128 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 129 purposes of their business for the railroad. 1 Now when those rights- of- way were 2 abandoned because of disuse or other reasons, and they 3 wanted to either lease them out or sell them outright 4 or whatever, like a property owner, they could do that 5 and charge what was fair under some sort of rental, 6 fair- market rental or fair- market price for those 7 rights- of- way. 8 We're talking about public rights- of- way 9 that are streets and roads and highways that were 10 acquired for public use, dedicated for that purpose 11 using taxpayer dollars, for the most part, or 12 dedicated to the city by private developers because of 13 the impact that their development was going to have in 14 the community. So I think there is a difference. 15 MS. REEVES: I would just say that, you 16 know, there's just this false idea there that we are 17 all willing to pay reasonable prices for access to the 18 right- of- way. We just ask that they be reasonable and 19 that they be applied in a nondiscriminatory manner. 20 MR. MAHER: Okay. I'd like to thank the 21 panelists and also the audience for your 22 participation, and we will convene at 2: 00. Thank 23 you. 24 (Whereupon, the foregoing matter went off 25 129 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 130 the record at 12: 30 p. m. and went back on 1 the record at 2: 06 p. m.) 2 MR. SNOWDEN: Don and fellows, can we take 3 our seats? Welcome back from lunch. I hope you 4 enjoyed our fine cuisine in the two of our finest 5 dining facilities in Washington, D. C. 6 It is my privilege to introduce the next 7 speaker. Nancy Victory has the unusual distinction of 8 playing two roles at once in the Bush Administration. 9 As Assistant Secretary of Commerce for Communications 10 and Information, she reports directly to Commerce 11 Secretary Don Evans and oversees the agency within the 12 Commerce Department that manages the federal 13 government's use of spectrum. At the same time, she 14 serves as Administrator of the National 15 Telecommunications and Information Administration, or 16 NTIA, and reports directly to the President on 17 communications policy matters. In her dual role, she 18 has made spectrum management and policy issues a 19 priority. 20 Ms. Victory has also focused her attention 21 on issues related to the delivery of advanced internet 22 services. In each role, Ms. Victory has advocated 23 competition, encouraged innovation, and promoted 24 public safety and security. Prior to her appointment 25 130 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 131 to the Department of Commerce, Ms. Victory was a 1 partner in the Washington, D. C. law firm of Wiley, 2 Rein, & Fielding, where she focused on legal and 3 regulatory issues faced by communications companies. 4 She received her BA from Princeton University and her 5 JD from Georgetown University Law Center. 6 It is my pleasure to welcome a public 7 servant who wears multiple hats and juggles several 8 critical issues at one time, all with grace and ease, 9 Assistant Secretary Victory. 10 MS. VICTORY: Well, thanks for that great 11 introduction, and I thank all of you for coming out on 12 such an awful weather day and for coming back from 13 lunch, too. I very much appreciate that. I saw how 14 crowded it was this morning, I just didn't know who'd 15 be back this afternoon, so good for all of you. 16 I want to thank Chairman Powell and the 17 FCC for convening this rights- of- way forum. I know 18 that you've all been fortunate to hear from state, 19 local, and industry rights- of- way experts today, and 20 I'm pleased to have the opportunity to share the 21 Administration's view with you on this very important 22 issue. 23 Now in the world of telecom policy, we 24 have a natural human tendency to focus our attention 25 131 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 132 on the high- tech, headline- grabbing issues of the day. 1 Whether it's broadband, the growth of Y- FI (phonetic) 2 services, advances in internet protocol, telephony, or 3 something else, we're instinctively drawn to these 4 issues by the potential they hold for new products and 5 services and the threats that they represent to the 6 status quo. That's the challenge for our regulators. 7 So it's understandable that policymakers would devote 8 time and effort to the subjects that are going to 9 shape the future of the telecom industry for a long 10 time to come. 11 But there is another subject that's 12 equally important, perhaps even more important, to 13 telecom's future. Unfortunately, it's not high- tech, 14 it's not particularly sexy, and the press usually 15 doesn't write front- page stories about it; we'll see 16 after this event. That is, unless something goes 17 terribly wrong. Now, of course, I'm talking about 18 rights- of- way. 19 Rights- of- way, the term conjures up 20 distant memories of dusty law books and arcane legal 21 terms like easements, leaseholds, and appurtenances. 22 Simply put, right- of- way is the legal right to pass 23 through the property owned by another. In the telecom 24 arena, rights- of- way is about digging trenches, laying 25 132 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 133 fiber, constructing towers, submerging cables, and all 1 of the other things that are necessary to build out 2 and upgrade of the physical infrastructure for modern 3 telecom networks. Sounds pretty basic, doesn't it? 4 And I can think of no issue more fundamentally 5 important to the widespread deployment of broadband 6 and, really, just about any other network technology 7 than rights- of- way. 8 If fully deployed, broadband, which is 9 also known as high- speed internet access, has the 10 potential to revolutionize commerce, education, 11 healthcare, national security, entertainment, and 12 countless other areas for the American people. As 13 such, broadband is really a key to the future economic 14 growth of the telecom industry and to our economy as a 15 whole. But right now, only a relatively small segment 16 of the American population is enjoying the benefits of 17 broadband. 18 In a report co- authored by NTIA and the 19 Economics and Statistics Administration titled "A 20 Nation Online: How Americans are Expanding Their Use 21 of the Internet," we found that 54% of Americans are 22 currently using the internet. However, of those 23 users, only roughly 20% have broadband access. Now, 24 that's only about 11% of the overall population. 25 133 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 134 Well, data from the FCC and industry sources show that 1 the market for broadband service is continuing to 2 grow. We still have a very long way to go before 3 realizing broadband's full potential, and rights- of- 4 way is a key ingredient in achieving that potential. 5 The Administration clearly recognizes the 6 importance of broadband to America's future. As 7 President Bush has recently emphasized, in order to 8 make sure that the economy grows, we must bring the 9 promise of broadband technology to millions of 10 Americans. Just a few weeks ago, the President's 11 Council of Advisors on Science and Technology, or the 12 PCAST, singled out rights- of- way management as a 13 critical component of broadband deployment. PCAST 14 pointed out that if rights- of- way access is unfairly 15 denied, delayed, or burdened with unjustified costs, 16 broadband deployment is slowed, and our citizens are 17 deprived of access to vital communications facilities. 18 Now, as many of you know, NTIA has been 19 focusing considerable attention on rights- of- way 20 management over this last year. We conducted a 21 broadband forum last fall and launched a broadband 22 deployment proceeding last winter, both of which 23 raised rights- of- way as an issue. We've participated 24 in NARUC's rights- of- way discussions, particularly its 25 134 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 135 Rights- of- Way Study Committee, and NTIA has also met 1 with representatives of cities and their associations, 2 such as the National Association of Telecommunications 3 Officers and Advisors and the National League of 4 Cities, to identify means for improving and 5 simplifying current processes, where needed, while 6 ensuring sufficient flexibility for municipalities to 7 best serve the needs of their citizens. Right now, 8 we're taking an in- depth look at some communities to 9 learn, up close, how they handle rights- of- way 10 management at the state and local level, and, later 11 this year or early next year, we plan to issue a 12 rights- of- way report highlighting what we've learned. 13 Now, while state and local rights- of- way 14 policies will be crucial to widespread broadband 15 deployment, we're also acutely aware that the federal 16 government manages important rights- of- way over 17 millions of acres of federal land. To make sure that 18 we're doing our part to eliminate any unnecessary 19 impediments in this area, the Administration has 20 formed a federal rights- of- way working group headed by 21 NTIA, which includes representatives from all of the 22 federal agencies with major rights- of- way management 23 responsibilities. 24 The mission of the working group is to 25 135 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 136 develop best practices for federal rights- of- way 1 management, particularly as it impacts broadband 2 deployment. Some of the primary participants in the 3 working group include the U. S. Forest Service from the 4 Department of Agriculture, the Bureau of Land 5 management and the Bureau of Indian Affairs from the 6 Department of Interior, the Federal Highway 7 Administration from the Department of Transportation, 8 the National Oceanographic and Atmospheric 9 Administration from the Department of Commerce, the 10 Army, Navy, and Air Force from the Department of 11 Defense, and the General Services Administration. 12 Now, the working group met for the first 13 time in July. We've been pleasantly surprised by the 14 enthusiasm with which the various agency participants 15 approached this effort. This is a group that is 16 excited to compare notes on rights- of- way experiences 17 and eager to streamline and simplify this process. 18 The working group has decided to focus its 19 efforts in four basic areas. First, information 20 collection: broadband providers operating across 21 multiple jurisdictions are often required to supply 22 the same information in different applications to 23 numerous permitting authorities. The working group 24 will be looking at ways to streamline and standardize 25 136 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 137 applications to save time and to reduce costs. 1 Second, timely process: broadband 2 providers have an important need to obtain rights- of- 3 way permits on a timely basis. Otherwise, undue delay 4 can increase the cost of deployment and can sometimes 5 prevent deployment altogether. The working group will 6 be examining rules and procedures that help ensure 7 timely and appropriate action on both rights- of- way 8 application and appeals. 9 Third, fees: this is, perhaps, the most 10 contentious issue in the rights- of- way debate. The 11 nature and amount of fees charged to broadband 12 providers vary widely across different jurisdictions. 13 We'll be scrutinizing various fee structures, looking 14 for approaches that are appropriate and reasonable and 15 that do not unfairly impede the deployment of 16 broadband networks. 17 And finally, remediation and maintenance: 18 we fully recognize that rights- of- way managers have a 19 legitimate interest in ensuring that broadband 20 providers take appropriate action to repair and 21 maintain the rights- of- way that they use. We'll be 22 looking for examples of remediation and maintenance 23 requirements that accomplish these important 24 objectives without placing undue burdens on broadband 25 137 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 138 providers. 1 Now, at the suggestion of the agencies, we 2 recently invited industry representatives, large and 3 small wireline and wireless, terrestrial and marine, 4 to meet with the working group last month and share 5 their points of view as to where, with respect to the 6 federal government agencies, things are working well 7 and where more attention needs to be focused. Next 8 month, we plan to meet with some of the states and 9 localities to get their points of view. We've learned 10 that in some areas, like highway construction and 11 maintenance, state and local actions can play an 12 important role in the success or failure of federal 13 rights- of- way policies. We want to ensure that 14 federal, state, and local land managers all work 15 together to address these common challenges. 16 And in the months ahead, the working group 17 will be closely examining federal rights- of- way 18 practices and policies, looking for ways to improve. 19 We want to see the federal government lead by example 20 and create a model of cooperation that others can 21 emulate. We plan to issue a report with our findings, 22 as well as recommendations for how the federal 23 government can reform its approach to rights- of- way to 24 help bring the promise of broadband to all Americans. 25 138 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 139 Now, while there is much work ahead of us 1 and certainly plenty to learn, I wanted to close by 2 sharing with you some of my initial impressions about 3 rights- of- way. First, there are legitimate arguments 4 on both sides of this debate. On one side, the 5 industry, everyone from Bell Operating Companies, to 6 rural carriers, to CLEC's, to cable companies, to 7 overbuilders, to wireless providers, our concern that 8 restrictions and fees imposed by federal, state, and 9 local land managers on accessing rights- of- way and 10 tower sites might be inhibiting or, at least, delaying 11 broadband network construction. On the other side, 12 land managers at all levels of government are the 13 stewards of public property and must ensure that the 14 rights- of- way are used appropriately. Recognizing 15 that each side has legitimate concerns is an important 16 step in the right direction. 17 Second, to make real lasting progress, the 18 tenor of the relationship between rights- of- way 19 managers and the industry needs to change. Today, 20 federal, state, and local officials sometimes view 21 broadband providers as trespassers who should be kept 22 out, rather than customers who should be invited in. 23 A more responsive customer- oriented approach to 24 rights- of- way management is essential to removing 25 139 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 140 barriers to broadband deployment. But just as 1 storekeepers don't permit inappropriate behavior in 2 their stores, government officials must be allowed to 3 place reasonable limits on broadband providers' 4 activities. 5 Finally, to move forward on rights- of- way, 6 we all need to work cooperatively. One of the great 7 attributes of modern networks is their 8 interconnectedness, which allows communications 9 between individuals across the street and around the 10 world. At the same time, this means the rights- of- way 11 disputes can have a disproportionately adverse affect 12 on the roll- out of regional, statewide, national, or 13 global networks. By working with each other to 14 address common problems, we can achieve common 15 solutions. Your participation in today's forum is a 16 good sign that we can, indeed, make progress on 17 rights- of- way and bring the promise of broadband to 18 all Americans. Thanks, again, for inviting me to 19 speak today, and I'm happy to address any questions 20 you all might have. Yes? 21 AUDIENCE MEMBER: The people that you're 22 talking to, basically, are, basically, either 23 government or the industry. Are you bringing in any 24 of the people in the area whose lives you're 25 140 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 141 affecting, such as people on Indian reservations or 1 the people who live on the military reservations. 2 MS. VICTORY: At this point, I think we 3 would be happy to talk with some of those folks. 4 We're looking at process issues. I think, in most 5 cases, some of the municipalities or the states that 6 we're talking to would be representing some of those 7 interests but, certainly, if there were unique 8 concerns among those populations, we'd certainly be 9 happy to hear from them. Yes, sir? 10 MR. BRILL: Robert Brill from New York. 11 With regard to the working group and its proposals, 12 what is the ultimate form that the Administration 13 feels it would like to see come out of that? Is that 14 proposed legislation, a proposal for rulemaking from 15 the FCC, or what? Thank you. 16 MS. VICTORY: It may take a number of 17 phases. I think, right now, we are anticipating there 18 will be a report with recommendations for 19 administrative changes in the way the federal agencies 20 do their business. Whether that's a common 21 application, a common web portal, articulated 22 processes, or better information exchange, certainly 23 we would expect that that would come out of it. 24 In the course of our considerations, it 25 141 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 142 may be that we identify areas in which Congress can 1 provide assistance in achieving those goals or where 2 the FCC could provide assistance in achieving those 3 goals. I don't know whether that will occur or not, 4 but, certainly, the first items that I mentioned, the 5 report and then recommended changes and affected 6 changes to Administration processes, is what we first 7 anticipate will come out of this. 8 AUDIENCE MEMBER: Hi, may name is Marilyn 9 Praisner (phonetic). I'm a council member in 10 Montgomery County, Maryland and involved with the 11 national organizations. I guess I had some visceral 12 reaction to your comment that local government views 13 the industry as trespassers. I've never heard of 14 local government use that term at all, and I just 15 would like to offer the opportunity to follow- up with 16 you because, if we have some examples of that, then we 17 certainly have to deal with it, but I have never heard 18 any local government use the term "trespasser." 19 MS. VICTORY: Well, and I certainly hope 20 that that's not a widespread view of the 21 communications industry. I think what I was trying to 22 highlight is, often, the debate between the land 23 managers and the industry, on the other hand, can be 24 quite contentious, and I think we should be looking at 25 142 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 143 each other in a cooperative manner in order to foster 1 more of a buy or sell or customer/ storekeeper 2 relationship that can ensure that the result is to the 3 benefit of all. But I am certainly hoping that that 4 is not a widespread view among the federal agencies, 5 the localities, or the states. Clearly, that would be 6 a particular problem. Yes, ma'am? 7 MS. BEERY: Hi, I'm Pam Beery. I'm an 8 attorney in Oregon representing local governments and, 9 first of all, I want to thank you for taking the time 10 to be here today. It's important to us that you are 11 here. I was intrigued by a comment you made about 12 your working group taking an in- depth look at some 13 communities. 14 I had a question about how those were 15 selected and who they are, and the follow- up how could 16 governments across the country, who do cooperate in 17 national associations, get more information about the 18 process that you are involved in? 19 MS. VICTORY: Well, actually, that's not 20 going to be the working group, that's just going to be 21 NTIA that will be taking a look at those, and we've 22 actually solicited suggestions, both when I was at the 23 NARUC meeting from some of the state commissioners. 24 I've certainly solicited it from industry and also 25 143 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 144 from some of the representatives of localities that 1 I've dealt with. We are still gathering information. 2 We do not have a finalized slate of communities at 3 this point. If you have any information you could 4 provide to use with regard to communities or 5 geographic areas that do it right and why that's the 6 case, we'd be very appreciative of the input. And 7 specifics, we very much love specifics. We sometimes 8 get some general nominations, and that's just not 9 enough to base a case study on, but, certainly, it 10 helps to focus our attention. Yes, sir? 11 MR. MELCHER: Good afternoon, Assistant 12 Secretary. I'd also like to thank you for being here 13 and taking the time to spend with us on right- of- way. 14 My name is Chris Melcher. I handle right- of- way 15 issues for Qwest. I was curious, also, if NTIA had 16 begun to look at the nature of right- of- way as a 17 property vis- à- vis other types of property and how 18 that might affect the management of the right- of- way, 19 as well as the charging of fees or addressing the 20 costs of the use of the right- of- way. And what I'm 21 thinking is has NTIA begun to think about whether 22 right- of- ways are held in the proprietary interests of 23 a community or whether they're held in trust for the 24 public and if that affects the analysis. My wife is a 25 144 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 145 financial officer for the Colorado State Land Board, 1 and the state does actually hold land in an ownership 2 interest. I wonder if you have thoughts on that 3 versus right- of- way, and how that might affect the 4 analysis. 5 MS. VICTORY: Certainly, the legal issues 6 surrounding rights- of- way, surrounding Section 253 are 7 very complex and very interesting from a legal 8 scholar's point of view. I think, at this point, with 9 respect to our federal working group, we are trying to 10 focus in on the administrative processes that we can 11 impact quickly. 12 But you are correct, there are very 13 significant legal issues that need to be looked at 14 here. That may be something that we do in time. I 15 think our first order of business is focusing in on 16 some of the processes that we can improve that are 17 already in place, some of the streamlining that can be 18 done. 19 I know that there's a long history of 20 interest on the part of the FCC, on the part of the 21 states and localities, and on the part of the 22 Administration, as well, in looking at some of these 23 issues, but they're not ones that are going to be 24 resolved particularly quickly, and so, therefore, 25 145 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 146 we're trying to focus, very practically, on where we 1 can make a difference quickly, and that tends to be on 2 process and procedure. Yes, sir? 3 MR. ASHBUM: My name is Garth Ashbum. I 4 would hope that, when you're looking at that, it would 5 be in the same way that the government looked at, for 6 example, the auctioning of Spectrum, and how that 7 would, you know, the same type of interests of 8 government would play in there. 9 MS. VICTORY: Well, yes, and I think, if I 10 understand what you're referring to, you need to look 11 at it from a legal point of view and also a policy 12 point of view as to what makes sense. Any other 13 questions? All right. Thank you very much. 14 MR. SNOWDEN: Thank you very much for your 15 remarks and your taking time out of your busy schedule 16 to be with us today. I'd also like to acknowledge the 17 Chairman and the Commissioners Abernathy and Martin 18 for also being with us today. 19 We're ready to start our third and final 20 panel. Ken Ferree, the Bureau Chief for the Media 21 Bureau, will be the moderator of that panel, and 22 they'll be looking at issues related to the policy of 23 rights- of- way management and looking ahead. So 24 without further ado. Again, thank you, Ms. Victory. 25 146 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 147 Thank you, Mr. Chairman and commissioners. We're 1 ready for the third panel. 2 MR. FERREE: Thank you very much, Dane. 3 We are going to start this afternoon's panel, which 4 deals primarily with issues associated with managing 5 the rights- of- way themselves. As Assistant Secretary 6 Victory just noted, we do hear a lot of complaints 7 about this process. Some of the complaints we hear 8 depict rights- of- way management as a cumbersome, time- 9 consuming, confusing, and arbitrary process with 10 burdensome requirements imposed upon telecommunication 11 providers. 12 On the other hand, we hear complaints that 13 companies or their subcontractors are doing careless 14 work, providing inadequate information, doing poor 15 restorations to the streets and roads, and that 16 coordinating projects across multiple jurisdictions is 17 difficult. Often, one side or the other is depicting 18 the other one as not cooperating. Both sides seem to 19 distrust each other. The local citizens are 20 inconvenienced and annoyed. Have I left anything out 21 of this list? Marilyn, have I left anything out of 22 this list? And I can tell you, as a motorcycle rider, 23 the street restoration thing is very important to me. 24 The good news is that, in a lot of places, the 25 147 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 148 process actually works well. Existing facilities are 1 upgraded, new facilities are built, and the public 2 gets new and better service. 3 This afternoon's panel will explore how 4 those who manage rights- of- way and those who use them 5 can and have worked together to make rights- of- way 6 management a success. Our panelists come from local 7 government, state government, and industry, and all 8 have considerable experience with solving problems 9 experienced in the field, and they're here to share 10 some of those experiences with us. 11 So I think my lead- off hitter today is Bob 12 Chernow, a stockbroker for more than 26 years, who's 13 Vice President of RBC Dane Rauscher in Milwaukee, I 14 think I pronounced that correctly. Mr. Chernow chairs 15 the Regional Telecommunications Commission and the 16 North Shore Cable Commission in Southeastern 17 Wisconsin. The RTC has 27 members, and its 18 communities make up about one- third of Wisconsin's 19 population. Mr. Chernow? 20 MR. CHERNOW: Thank you very much. 21 Utilities have changed the way they operate in the 22 last several years. Much of their construction is 23 subcontracted out, and they make it a practice to 24 lease much of their equipment. In addition, 25 148 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 149 competition has changed many of the utilities that we 1 deal with from being protectors of the communities to 2 where they're being very competitive of the utilities. 3 This new approach has been driven by economics and 4 has both positive and negative results. It also 5 appears as if construction has increased over the last 6 few years because of competitive pressures, as well as 7 the advent of new services, such as broadband service. 8 9 Competitive pressures, however, have eased 10 recently because of over- capacity in the industry and 11 also the failure of several industry firms. 12 Nonetheless, we see the future as one where business 13 and consumer demand for high- speed internet will 14 continue to increase dramatically over the next 15 several years. 16 In our community, some 27 municipalities 17 in metropolitan Milwaukee or about one- third of 18 Wisconsin's population, we have a very active 19 commission which handles telecommunications and, also, 20 rights- of- way and restoration issues. The first time 21 I've heard anything discussed on restorations is in 22 the introduction to our meetings here. In general, 23 what we've done here is we make our contracts with 24 utilities, basically, as a group. We band together. 25 149 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 150 We do this, in part, because we're fairly cheap in 1 Wisconsin, and it's fairly expensive to go out and get 2 outside experts and legal services. This is, 3 basically, how we started. We, basically, collect all 4 our assets together and we, collectively, work with 5 the utilities. We have done this very successfully in 6 the past. Importantly, however, each locality, each 7 municipality has to approve what they're doing. I 8 don't think this is necessarily unique throughout the 9 country, but it is very important to us. 10 Where community is somewhat unusual, like 11 the city of Milwaukee, where they own their own 12 conduits where telecommunications and other utilities 13 use their services, it's far different than the normal 14 rights- of- way that you would have in other 15 communities, the base of the contract is used and then 16 they negotiate separately. In principle, again, we 17 negotiate as a group, but we approve contracts 18 individually, and this saves us a great deal of time 19 and, also, the utilities. 20 In creating rights- of- ways and restoration 21 standards, we use the same principle. In the past, 22 one of the problems that we recognize is that 23 utilities coming into our area, we're dealing with all 24 different types of restoration standards and all 25 150 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 151 different types of rights- of- way standards, and what 1 we've done here is we, basically, have made one system 2 that goes throughout our area and, also, one system of 3 restoration, so that all the utilities and their 4 subcontractors are, basically, working on a level 5 plain; they know exactly what to expect; very, very 6 important. It seems like a very small issue. It took 7 us about two years to do this. 8 Our secret to success, however, is that we 9 did not use municipal officials, elected officials, 10 basically, to do this. I was the only elected 11 official on this group. It was made up, basically, of 12 inspectors from the Department of Transportation, 13 engineers, public works supervisors, and other people, 14 basically, who work on this on a day- by- day basis. 15 They are the ones who really know what the problems 16 are, what the real problems are and what the pretend 17 problems are. They are the ones who know, basically, 18 which utilities give us difficulty and which ones 19 don't. And I emphasize that this practical aspect is 20 something that should be utilized in any dealings with 21 the utilities. 22 One of the things that we discovered after 23 we created these rights- of- way and standards and 24 restoration standards was that most of our 25 151 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 152 difficulties came from one utility, SBC Ameritech. 1 And before you think I'm going to be critical over 2 here, I want to be very complimentary to them. 3 What we did, basically, is I picked the 4 phone up, I called the president of SBC Ameritech in 5 Wisconsin, and I asked him if he would like to sit 6 down with a group of our people, basically, our 7 engineers and people from the DOT, and to work out the 8 difficulties that we've been having in the past. 9 About a month and a half later, we set up a meeting, 10 basically. 11 The first thing we did was we had an open 12 and frank conversation of the difficulties that we had 13 on both sides because it's not just a one- way street, 14 it's a two- way street. And the solutions we came up 15 with, I think, were very good and, again, very obvious 16 but rarely used in many places around the country. 17 First, to sign up a line of communications to handle 18 complaints. They had one single person that you could 19 go to who would handle the difficulties of backlog 20 that we had. 21 One of the things here was that SBC had 22 just taken over Ameritech, and they had no real vested 23 interest in the problems that had come in the past. 24 They needed to solve it. Also, capitalism was at 25 152 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 153 work, and they had lost a lot of business in the area. 1 They had a major motivation to solve the problems 2 from the past. 3 The second solution was to have SBC 4 Ameritech agree to put into their contracts a 5 requirement that all their subcontractors meet with 6 the local municipalities to coordinate construction 7 before they started construction. Again, something 8 very obvious but had not been done before. In 9 addition, they agreed to hold money back from the 10 subcontractor until restoration was signed off by the 11 local municipality. 12 Now, what's interesting about this is that 13 many of the subcontractors they're using aren't from a 14 suburb of Milwaukee, Wisconsin. They're from 15 Minnesota, Illinois, Michigan. And once they do their 16 work and had gotten paid, it's hard to go back and get 17 them to do the work, so who do we blame, of course? 18 The local utility. This solved their problem, as well 19 as ours. 20 One area where there was a reluctance for 21 cooperation, with an understandable reason, is when 22 and where future building was to be done. Partly, 23 this is because of the way the utilities plan in a 24 more marketing- like environment and, also, because of 25 153 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 154 competitive reasons. We understand this, and we've 1 not tried to force the issue. Instead, what we've 2 tried to do, and we should have this completed here in 3 the next month or so, two months, is to work out a 4 system so that we can let them know, basically, how we 5 operate, so that we let them know what our plans are 6 in the future so they can work with us. 7 Cooperation means win/ win for all 8 concerned over here. We have a working relationship, 9 also, with municipal electric utilities of Wisconsin. 10 One of their members, Reedsburg, wanted to get a 11 high- speed internet for their communities. They 12 worked out a cooperative agreement with the local 13 telephone company. This is the type of thing where 14 capital can be provided from one group to the other to 15 help out the community that should be utilized. 16 We all want the same thing: good service 17 at reasonable cost for our communities. The Regional 18 Telecommunication Commission has worked with utilities 19 to help accomplish this goal and a work in a win/ win 20 manner for all concerned. And that's the thought I'd 21 like to leave with you. Thank you. 22 MR. FERREE: Thank you, Bob. Our second 23 panelist is Dorian Denburg, Chief Rights- of- Way 24 Counsel for BellSouth Corporation. Ms. Denburg 25 154 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 155 manages public and private rights- of- way issues for 1 BellSouth's nine state regions, overseeing analysis of 2 telecommunications and permitting ordinances, handling 3 rights- of- way litigation at the federal and state 4 level, and participating in the development of 5 legislation pertinent to the telecommunications 6 industry. Ms. Denburg? 7 MS. DENBURG: Thank you very much. I'm 8 very pleased to have an opportunity to come full 9 circle today and close the program where we began. 10 I'd like to commend and thank the Commission for 11 holding this forum, which recognizes that significant 12 problems exist in rights- of- way because I think it 13 presents an opportunity for a new language and a new 14 vocabulary in rights- of- way management: communication, 15 collaboration, and coordination. 16 In order to give force and effect to this 17 new language, I think there's been a lot of discussion 18 today about guidelines, and I believe that the FCC 19 can, in fact, have an instrumental impact on this by 20 promulgating rules that delineate authority to 21 regulate public rights- of- way, to adopt an enforcement 22 mechanism, it sounds like what Bob is talking about at 23 his local level for resolving problems, adopting 24 uniform standards or model regulations for access to 25 155 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 156 rights- of- way, and, of course, in doing so, 1 recognizing the local governments' police powers. 2 There are principles and practices for 3 rights- of- way management in preventing barriers to 4 entry, which we all can and, I think, should accept. 5 It was mentioned earlier that, in the Commission's 706 6 report, four key measures with respect to right- of- way 7 access were noted, and Assistant Commerce Secretary 8 Victory alluded to these, as well. 9 Delay: we should allow right- of- way access 10 to all entities providing services or deploying 11 facilities and issuing permits within a reasonable and 12 fixed time. And in response to Commissioner 13 Abernathy's question, I think that we would suggest 14 that 30 days is, generally, a reasonable time, unless 15 there's an exigency. 16 I was going to speak about unreasonable 17 fees, but I think that there's been enough discussed 18 about compensation and fees, and I'll move on. Third 19 tier of regulation: there is absolutely no question 20 that local governments have police power to regulate 21 and manage use of the rights- of- way. I believe it was 22 mentioned earlier that nobody in the industry doesn't 23 want local governments not to manage the rights- of- 24 way, and, of course, this is true. We're citizens, 25 156 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 157 and we live and work in these communities. Local 1 governments have the right and responsibility to 2 protect the traveling public, to ensure their 3 citizens' health, safety, and welfare. Managing 4 rights- of- way is certainly legitimate, but regulating 5 telecommunications providers is not. 6 And lastly, discriminatory treatment: 7 rights- of- way regulations should be generally 8 applicable to all telecommunications companies in the 9 rights- of- way. These principles are embodied in a 10 concrete example that I would like to address of 11 moving beyond roadblock, and that is the Florida 12 Communications Services Tax Simplification Law. 13 We had numerous court cases in Florida and 14 a plethora of problems. The governor created a 15 telecommunications task force, which worked with a tax 16 work group comprised of approximately 34 private 17 sector companies. The recommendations which came out 18 of these two groups were sent to the governor and the 19 legislature. Florida forged a working coalition of 20 key stakeholders: the Florida Cable TV Association, 21 the Florida League of Cities, the Florida Association 22 of Counties, and the Florida Telecommunications 23 Industry Association. There was clearly created an 24 atmosphere of trust and collaboration. There was 25 157 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 158 strong leadership from key state policymakers, who 1 mobilized to accomplish their goals of fair right- of- 2 way management and equitable taxation. I'm not going 3 to address the equitable taxation aspect of the 4 legislation that was created but, instead, I'm just 5 going to talk about the right- of- way management. 6 The legislation says that no franchise, 7 license, or agreement may be required as a condition 8 to using the right- of- way. Localities may not use 9 their right- of- way authority to assert regulatory 10 control over providers. Rights- of- way regulations 11 must be generally applicable to all rights- of- way 12 users, and rights- of- way regulations must be 13 reasonable and include only those matters necessary to 14 manage rights- of- way. 15 Yes, I am a member of the industry, but I 16 would invite you to speak to any of your colleagues in 17 the municipalities, in the counties, or in the 18 industry in Florida. I believe all of us agree that 19 this legislation has been a tremendous success, and as 20 a result of the legislation, we produced, in 21 collaboration, an ordinance. Do we today have 22 problems? We have isolated problems. They are 23 isolated, they are not everyday problems. And as a 24 result, it has allowed us in the industry and those in 25 158 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 159 local government to focus on their poor business. For 1 us, it's telecommunication services, and in the 2 government, it's tending to the business of everyday 3 government. We have had similar legislation in South 4 Carolina, similarly a success. 5 In conclusion, these are unprecedented 6 times. Industry wants to work with local government 7 to help them protect their interest in managing the 8 rights- of- way and legitimately exercising police 9 powers, while, at the same time, enabling 10 telecommunications providers to respond to the demand 11 for services leading to economic growth. Government 12 and industry are partners in this, whether we want to 13 be or not. And by working together and speaking the 14 same language, communication, collaboration, and 15 coordination, government and industry can become 16 partners in progress and craft a solution that, as 17 Commission Copps said this morning, is a win for 18 government, a win for industry, and, most critically, 19 a win for consumers. Thank you. 20 MR. FERREE: Thank you, Ms. Denburg. Our 21 third panelist is Ken Fellman, who is a partner in the 22 Denver law firm of Kissinger & Fellman, PC. Mr. 23 Fellman works with municipalities in the development 24 of telecommunications policy documents, rights- of- way 25 159 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 160 management, tower and antenna siting, and other 1 related telecommunications and land- use issues. Mr. 2 Fellman was elected as mayor of Arvada, Colorado in 3 November of 1999 and, before that, served two terms on 4 the Arvada City Council. I've had the pleasure of 5 getting to know Ken through his work on the Local and 6 State Government Advisory Committee for the FCC, in 7 which he's served since 1997, of which he is now 8 Chairman of that committee. Mayor Fellman? 9 MR. FELLMAN: Thank you, Ken. And I, too, 10 would like to thank the Commission for giving us the 11 opportunity to have this discussion today. We're 12 supposed to talk on this panel about where do we go 13 from here, and I think before we talk about charting a 14 course for where we're going, we need to examine where 15 we are. 16 I think where we are is the level of 17 discourse between the industry and state, federal, and 18 local government, while some of it has been positive, 19 much of it has been less than stellar. All parties, 20 really, have been too willing to say no. All parties 21 have been willing to complain about another party to a 22 third party. All parties have been too willing to 23 seek solutions in adversarial proceedings, rather than 24 talking and trying to hash out the difficult issues. 25 160 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 161 And if we're going to have discussions that are going 1 to enable us to deal with these very difficult issues, 2 each party must make a real effort to understand the 3 foundational issues of importance to the other. I 4 don't think we've done a very good job of that. 5 On the local government side, management 6 of rights- of- way is, at its core, a local government 7 responsibility. As Lisa Gelb mentioned this morning, 8 local governments have to balance many factors, one of 9 which is telecommunications. It's important, but 10 there are many factors that go into the balancing of 11 how you regulate this asset. 12 Section 253 really does, in our opinion, 13 strike the proper balance, of course, when it's 14 interpreted correctly because it lets the government 15 that's closest to the people manage this very local 16 public asset. It's important to remember, and I agree 17 with one of the industry representatives this morning 18 pointed out that Section 253 doesn't grant any rights- 19 of- way management authority. It doesn't. Rights- of- 20 way management authority pre- dates the 21 Telecommunications Act. It's a function of state and 22 local law. It varies from state to state. And I 23 think if we remember that as part of our discussions, 24 we'll be able to make a lot more progress than we 25 161 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 162 have. 1 Local governments strongly support the 2 deployment of broadband services, and we are committed 3 to working with all interested parties and committed 4 to educating those of our members who need education 5 on these important concepts. Let me give you a couple 6 of examples. Our national associations, NATOA, 7 National League of Cities, National Association of 8 Counties, U. S. Conference of Mayors, and the 9 International Municipal Lawyers Association got 10 together and published this booklet, "Local Officials 11 Guide to Telecommunications and Rights- of- Way." It's 12 got very helpful information about many of the issues 13 that we're talking about. 14 The Local State Government Advisory 15 Committee, despite some of the comments we heard this 16 morning, I think has been having productive talks with 17 the Industry Rights- of- Way Working Group. They're 18 difficult. There are problems that come up that are 19 very frustrating, but I think, personally, those have 20 been productive discussions. I hope they continue, 21 and I think we can get there from here if we do 22 continue. 23 Local government national associations 24 regularly invite industry and state and federal 25 162 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 163 representatives in the field of telecommunications to 1 our national conferences to engage in discussion about 2 these issues. Local governments also regularly 3 request and sometimes bet the opportunity to speak at 4 industry and state and federal panels on these same 5 issues. 6 I think the FCC's role should be to 7 facilitate discussions between the parties, and, 8 actually, the FCC has done that in the past and has 9 done it successfully. With the wireless industry, the 10 FCC facilitated discussions between local governments 11 and the industry on the issue of zoning moratoria, and 12 the result of that was a voluntary withdrawal of a 13 preemption petition and a resolution of that problem. 14 The FCC worked with the LSGAC to come up with the 15 radio frequency emissions guide that is now very well 16 known in local government circles, and you don't see 17 the issue of radio frequency emissions coming up at 18 zoning hearings in the way it did previously. 19 I think through education, cooperation, 20 and respectful negotiation, we're going to get to 21 where we need to go faster than through litigation and 22 legislative lobbying. I want to give you one specific 23 example that we have in Colorado. 24 The Greater Metro Telecommunications 25 163 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 164 Consortium is an agency of 28 counties and cities in 1 the Denver metro area. The consortium got together in 2 the early 90's. In 2000, we decided that it might 3 make sense if we had similar rights- of- way regulations 4 throughout all of our different jurisdictions, so we 5 put together a group to come up with a model right- of- 6 way ordinance. We invited the industry to the table, 7 not just the telecom industry but everyone that's in 8 the right- of- way, gas, electric, water. And some of 9 that worked great and some of it was problematic. 10 What worked good about it was that a number of the 11 folks from the industry who really understood and 12 wanted to respect the local government issue said, We 13 understand where you're going, but if you do it this 14 way, it hurts our business. We think you can do it 15 this way. And it made sense and changes were made, 16 and we ended up with an ordinance that I think has 17 been very successful. One of the ways I judge the 18 success of that is that we haven't seen any litigation 19 over it. 20 Do I recommend that everywhere? You know, 21 we've heard a lot of talk today about best practices. 22 No, I don't, and I think the most important thing we 23 can learn about best practices is that there are no 24 best practices that will work everywhere in the same 25 164 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 165 way. There are good practices, there are success 1 stories that we need to take advantage of and we need 2 to learn from, but what works in Erie, Pennsylvania 3 doesn't necessarily work in Erie, Colorado. 4 I think we need to really focus on what 5 can we learn from these best practices without 6 mandating them on anyone. This forum is part of the 7 process of sharing that information, but I would ask 8 everyone to think a little bit about the difference 9 between disseminating information, which I think we do 10 well, and communicating, which I don't think we do 11 very well. 12 This rights- of- way book that I mentioned 13 earlier has been distributed to industry and the FCC 14 and NARUC, and we haven't heard back. I talked to the 15 principal authors of it. No one has heard back, this 16 is great information, it's bad information, it's 17 accurate, it's inaccurate. We need to take these bits 18 of information that we're sending back and forth and 19 really talk about what works and what doesn't work. 20 Let me close by just making a couple of 21 comments. If we have a better understanding and 22 respect for where each side is coming from, if we take 23 sufficient time to educate each other and ourselves 24 about what we need to get accomplished, if we look at 25 165 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 166 what has worked in other communities and learn from it 1 but don't expect somebody to mandate on you, whether 2 it's a guideline or a best practice or a regulation -- 3 actually, there's always one exception to every rule, 4 so let me make an exception to that one. If 5 Commissioner Abernathy can figure out a way to get a 6 right- of- way across her daughter's room that you 7 talked about this morning, I will mandate that in my 8 household. 9 I think the FCC, and Congress to a lesser 10 extent, can facilitate the cooperative dialogue by 11 sending a message that they will not get involved in 12 adversarial proceedings unless the parties have really 13 taken the time to work these issues out. I think a 14 lot of times we spend too much of our resources 15 responding to adversarial proceedings or responding to 16 FCC questions or notices of inquiry, when we could be 17 sitting at the table trying to work these problems 18 out. 19 The bottom line is, you've heard from a 20 number of speakers this morning, that there's no 21 federal jurisdiction to preempt local rights- of- way 22 practice. I believe that's what the statute says. 23 That being said, local governments are willing to come 24 to the table and discuss ways to streamline the 25 166 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 167 process, but they won't stand for getting steamrolled 1 in that process. Thank you. 2 MR. FERREE: Thank you, Mayor Fellman. 3 Our fourth panelists is Sandy Wilson, the Vice 4 President of Public Policy for Cox Enterprises, Inc. 5 in Washington, D. C. Before joining Cox in 1994, Ms. 6 Wilson had a job that's near and dear to my heart. 7 She was Chief of the Cable Services Bureau here at the 8 FCC. And before that, she served as legal advisor to 9 Chairman Al Sikes. She should bring an interesting 10 perspective of a company that is both a cable operator 11 and a competitive telecommunications carrier. Sandy? 12 MS. WILSON: Thanks very much. I'm happy 13 to be here, and I was even happier to be here after 14 hearing some of the comments said about the cable 15 industry this morning. As many of you know, Cox 16 Communications is the fifth largest cable company in 17 the country. We serve over six million subscribers. 18 What you might not know, though, is that this is our 19 40 th year in the cable business, and that means, of 20 course, that it's our 40 th year of dealing with public 21 rights- of- way issues. And just as the business as 22 evolved over time, so have the many rights- of- way 23 issues that we've had to grapple with. When we first 24 got into the business in 1962, we just offered what I 25 167 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 168 would call POTS, plain old television service. And 1 now 40 years later and six years after passage of the 2 Act, we are a full- service broadband provider. We 3 offer not only a range of video products, but also 4 high- speed internet access and local competitive 5 residential phone service over the same integrated 6 plant. I'm happy to say that all of these new 7 products have been eagerly embraced by our customers. 8 It's fair to say that Cox employees have 9 faced enormous and exhilarating challenges developing 10 and deploying these new services over our upgraded 11 cable networks. Each service is unique and requires 12 its own distinct commitment of capital expertise in 13 human resources. At the same time, each service has 14 to be closely coordinated with the other because we 15 have to provide an integrated seamless experience to 16 our customers. 17 In many ways, I think policymakers face a 18 similar challenge. As the marketplace becomes 19 increasingly competitive and lines between incumbents 20 and new entrants blur, government and industry must 21 develop a coordinated approach to rights- of- way 22 management. It was policymakers who asked us long ago 23 to get out of our old lines of businesses and start 24 competing with other folks, and it's government 25 168 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 169 policymakers who have encouraged us to begin the 1 deployment of broadband services. And the cable 2 industry, I think, has heeded those calls, and we are 3 now at the forefront of offering a range of services. 4 But we do feel a little bit lost in the regulatory 5 woods when it comes to figuring out what the rules of 6 the road are when you're offering different types of 7 services over an integrated infrastructure. 8 So let me tell you a little bit about some 9 of the challenges that we face as cable operators and 10 then give some suggestions on how we can move forward. 11 Although we're not unlike other rights- of- way users 12 in many respects, we are unique, I think, in two 13 important respects. First, the relationship between 14 cable companies and local governments is more 15 extensive than is often the case with other rights- of- 16 way users, such as incumbent telephone companies. In 17 addition to working closely with local governments on 18 rights- of- way management issues, cable television 19 services, traditionally, have been subjected to 20 additional local regulation, and, as a result, the 21 cable industry has forced a unique relationship with 22 local government that is rarely shared by other 23 communication service providers. In fact, most cable 24 operators see themselves as partners with their local 25 169 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 170 communities, and they work extremely hard to foster 1 close and strong relationships. 2 We are also unique, at this point in time, 3 in another critical respect, and that is that we are 4 usually the only facilities- based provider in our 5 communities offering a range of services over one 6 infrastructure. As you all know, our video services 7 or cable services regulated under Title 6. Our local 8 phone services or telecommunication services is 9 regulated under Title 2, and we learned last March 10 that our high- speed internet access services or 11 information services, which are governed by Title 1. 12 And the reality is we know, generally, what the rules 13 of the road are for video services. They're governed 14 under Title 6, and we're starting to get some greater 15 clarity about what the rules of the road are for Title 16 2 service providers, although there's obviously still 17 a lot of debate about that. But once you throw Title 18 1 services into the mix, you get, you know, the 19 regulatory debate gets even hotter. 20 So the result is that we've spent a lot of 21 time over the last six years talking with our local 22 regulators about how to resolve some of these issues, 23 and, in many cases, the discussions are cordial, and 24 we've been able to move forward with very little 25 170 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 171 resistance. 1 And I'd just like to mention quickly our 2 experience in Omaha, Nebraska because I think it's an 3 excellent example. With the extensive cooperation of 4 local government officials, we were able to deploy 5 both competitive phone service and high- speed internet 6 access smoothly and efficiently in Omaha. They did 7 not enact new ordinances. They did not require 8 additional franchises. They relied on existing 9 permitting processes, and they moved things right 10 along. And, indeed, they did the same thing for 11 Qwest, and we enjoyed very speedy action, as did 12 Qwest, and, as a result, we now have Qwest and Cox go 13 head- to- head, providing the full- range of services in 14 Omaha. We've got a very, very vibrant competitive 15 landscape there, and I think it's, in large part, 16 thanks to both the state of Nebraska statutes and, 17 also, the commitment of local regulators. 18 We do run into problems, however, in some 19 communities, and they are similar to the ones other 20 face. And then we had the unique issues of, you know, 21 do you need to get another franchise if you're 22 offering telecommunication service and you already 23 have a cable franchise? Do you have to pay every time 24 you roll out a new service? And we've had a 25 171 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 172 particular problem placing some back- up power supply 1 cabinets in rights- of- way, which enhance the 2 reliability of our networks. 3 But we have found that there are ways of 4 working through these issues, and I'd like just to 5 mention a few. First, I'll just add my voice, another 6 industry voice, to requesting that the FCC take up at 7 least some of the key questions involving 8 interpretation of the Communications Act provisions 9 dealing with the interplay between Title 6, Title 2, 10 and Title 1. That would be great for cable operators 11 and their local regulators if we had some greater 12 clarity there. 13 We very much believe we are longstanding 14 users of the rights- of- way, that a cooperative 15 approach to dealing with the day- to- day management 16 issues is the best way to go, and we do lock ourselves 17 into rooms with local regulators when we get stuck 18 sometimes and try to hash things out. And often those 19 cooperative efforts really do bear fruit, so we are 20 very much committed to that. We do like very much the 21 fact that policymakers at all levels of government are 22 now getting greater visibility to these rights- of- way 23 issues and are talking about best practices, and, 24 while it may be that there's no one set of practices 25 172 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 173 that every could follow, I think the fact that we get 1 more examples out there will be that much more useful. 2 And lastly, we are supportive, as an industry, of the 3 states' efforts to take on these issues and adopt 4 statewide measures because the reality is certainty 5 goes a long way, and even if you're not in total 6 agreement with the end result, at least you know how 7 to proceed, and we can all go about our business of 8 providing new services to customers. Thank you. 9 MR. FERREE: And our final panelist is 10 Robert Nelson, who is a commissioner at the Michigan 11 Public Utility Commission serving a term that ends in 12 2005. Mr. Nelson served as President of the Michigan 13 Electric and Gas Association from December 1987 until 14 his appointment to the commission in 1999. From 1979 15 to 1987, he was Director of the Michigan Commission's 16 Office of Regulatory and Consumer Affairs. Mr. Nelson 17 serves on NARUC's consumer affairs committee and the 18 telecommunications committee, of which he is co- vice 19 chairman. Mr. Nelson also is a member of the FCC's 20 North American Numbering Council. 21 MR. NELSON: Thank you, Ken. Thank you to 22 the members of the Commission, who invited me here to 23 speak today and also participate in this conference 24 and for giving me the last word, I guess, today on 25 173 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 174 this very vigorous and public- spurred debate. The 1 purpose of this panel was to offer positive 2 recommendations, and many of the panelists have done 3 so, and I intend to do the same. I'll rely heavily on 4 the NARUC Study Committee report that was issued 5 earlier this year, which did deal with positive 6 recommendations. 7 This is just a pictorial display of some 8 construction of right- of- way put together by Florida 9 staff. This is a significant quote, which will appear 10 on the screen shortly. When Euclid theorized that the 11 shortest distance between two points is a straight 12 line, he didn't take into account that there might be 13 public rights- of- way in between the two points. I 14 think that's pretty obvious from what we've heard 15 today. 16 There certainly, as Alexandra just 17 mentioned, a significant role for the states in this 18 whole debate. We haven't heard a lot about that 19 today, but if you look at Section 706 of the 1996 Act, 20 it does say that each state commission shall encourage 21 the deployment on a reasonable and timely basis of 22 advanced telecommunications capability to all 23 Americans, and that would include measures that remove 24 barriers to infrastructure investment. So we have the 25 174 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 175 state role there. 1 Also, as we've talked about earlier today, 2 Section 253( a), on the other side of the scale, makes 3 sure that the states and local governments do not have 4 ordinances or requirements that prohibit or have the 5 effect of prohibiting the ability of any entity to 6 provide intrastate or interstate telecommunications 7 service. Mr. Knight had indicated that right- of- way 8 humor was an oxymoron. This is, perhaps, an attempt 9 to belie that. If you can read the quote from the 10 fellows walking across the golf course, but the fellow 11 who is not being hit by the golf ball says, "Stop 12 moaning, Norman. There's a public right- of- way on 13 this golf course." 14 As we've heard throughout most of the day 15 today, there are a number of problems that have been 16 identified. Again, as NARUC discovered, this is not 17 true in all communities. In fact, not even a majority 18 of communities. But certainly, we have identified 19 these various issues, as well as others. The 20 unreasonable delay in getting permits, the excessive 21 compensation, conditions unrelated to rights- of- way 22 management, requirements to waive legal rights in 23 order to gain access, requirements contrary to state 24 law and discriminatory terms and conditions. This is 25 175 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 176 a graphic display of some of the right- of- way problems 1 that some communities are facing. I think it dates 2 back to the turn of the last century. 3 As a result of those problems that were 4 identified, NARUC, in February of last year, adopted a 5 resolution, and it identified these problems in the 6 resolution and called for the creation of a study 7 committee to deal with these problems and bring 8 forward recommendations. And that's where we get the 9 Study Committee. There were five topic areas for the 10 topic areas for the Study Committee, and each topic 11 committee had a commissioner, a state commissioner in 12 charge of that particular topic area: public lands, 13 Commissioner Kjellander from Idaho; myself from state 14 legislation; state and local policy initiatives, 15 Commissioner Cartagena from right here in the D. C. 16 area; federal legislative and policy recommendations 17 from Commissioner Deason from Florida; and 18 condemnation recommendations from Commissioner Burke 19 of Vermont. 20 The Study Committee, after the resolutions 21 adopted in February, had several meetings, conference 22 calls, e- mail exchanges, and created a report which 23 contained model state legislation and contained a 24 number of recommendations. Finally, the NARUC 25 176 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 177 resolution was adopted this summer. The participants 1 in this Study Committee debate included all the 2 players that we've heard from today, some of the major 3 carriers, NATOA, NCTA, and the National League of 4 Cities. 5 I won't go into too much about this, 6 except to say that the Study Committee did bring 7 forward this report, the NARUC reviewed it and, 8 although the NARUC did not endorse it all in respects, 9 it did say that it should be carefully reviewed. We 10 have brought copies here today. We encourage you to 11 review it. It does have supplemental views from both 12 the cities, local governments, and from industry. 13 Public lands, as Nancy Victory talked 14 about this afternoon, is a very significant issue. I 15 won't go into a lot of detail here, but the two issues 16 identified, as you can see on the screen, are the 17 delays from federal agencies and also the excessive 18 fees some agencies charge at the federal level. 19 State legislation: what we did was to 20 survey 19 different states. Most of these states had 21 passed legislation since the '96 Act, and we 22 identified the best ideas, developed a list of best 23 practices, and, again, I would accept Mr. Fellman's 24 characterization of maybe not best practices but some 25 177 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 178 good practices, and we created some model state 1 legislation. Some of this legislation is modeled 2 after the Michigan law that passed earlier this year, 3 but let me just very quickly highlight some of the 4 features in it that are relevant to the positive 5 recommendations. We dealt with timeframes, and not 6 only did we have specific timeframes that were 7 recommended for a permit to be approved but, also, 8 during the course of a dispute, the state could order 9 local government to authorize that permit to be issued 10 pending that dispute, so that the construction could 11 begin and the rest of the issues could be resolved 12 later on. 13 With regard to the fee, we had two 14 choices. I think it's very important. One is the 15 fair and reasonable cost standard, and the other is a 16 fixed fee, which is what we adopted in Michigan. You 17 may ask how do we get all the local governments in 18 Michigan or most of them and the providers to agree to 19 a fixed fee? Well, it was very simple because we did 20 maintain local control. Local governments in Michigan 21 still have the management of the right- of- way under 22 their purview. The state administers the fee process, 23 however. And that fee is nondiscriminatory. It meets 24 the White Plains test, in my view. 25 178 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 179 We dealt with restoration, and we dealt 1 with remediation, which I think is important for 2 getting groups together and solving problems absent 3 litigation. And just very quickly with the next slide 4 because John Mann would quick me if I didn't show 5 this. Some federal legislative and policy 6 recommendations, and this is in the report, I'll just 7 put it up on the screen. Again, this is not intended 8 to have the FCC preempt states or local governments 9 but to have the FCC promote best policies. And that's 10 what the FCC can do is to clarify their role here, add 11 some certainty to the process, and I think even if 12 they do step in, it's important that state and local 13 governments work together in a cooperative manner, and 14 we must work together to remove barriers to entry. 15 Thank you very much. 16 MR. FERREE: Thank you. I see we have 17 almost 20 minutes left, so we're going to have some 18 time for some questions. I think, as moderator, I 19 probably get to start. Dane asked me to moderate this 20 panel. I said I'd be happy to be moderator, but I'm 21 often more comfortable in the role of agitator, as 22 opposed to moderator, so I'm going to jump right into 23 that role now and start with Bob down there. 24 Bob, you suggested in your comments a 25 179 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 180 rather limited role for local elected officials, and 1 I'm sort of curious about that. I mean, it seems to 2 me a lot of this involves not just technical questions 3 but, really, policy questions, and these are the 4 folks, after all, that hear the most from their 5 constituents and maybe best appreciate the value of 6 the property that we're talking about. So can you 7 elaborate on that? 8 MR. CHERNOW: I'm actually a local 9 official myself, and we had one other, when we met 10 with Ameritech, we actually had one other elected 11 official. But the reality of it is that they are 12 technical issues on a local basis, and those are the 13 problems that we run into on a case- by- case basis. So 14 my advice would be to continue to use this. Also, 15 importantly, they're the ones who actually enforce the 16 regulations. 17 MR. FERREE: Libby? 18 MS. BAILEY: Hi, Libby Bailey with NATOA. 19 Ms. Denburg, I wanted to ask a question, and I'm not 20 sure whether or not you'll know, but I was curious 21 about whether or not you had had any success in 22 collecting any data in states such as Florida and 23 South Carolina? I think Michigan is probably too new 24 in its legislation. But is the correlation between 25 180 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 181 the change in regulation and an increase in broadband 1 deployment? 2 MS. DENBURG: (Inaudible). 3 MR. FERREE: Yes, sir? 4 AUDIENCE MEMBER: Hi, my name is David 5 Milken (phonetic). I'm with Verizon, and I have a 6 question for clarification for both Mr. Fellman and 7 Mr. Chernow. Under your scenarios, in your various 8 communities or your consortium of communities in which 9 you had coordination, communication, and cooperation, 10 it's my understanding that that was with respect to 11 management of the rights- of- way issues and not issues 12 such as franchising authority or fees, of which I 13 understand that in the Colorado instance, the state 14 statutes outline what your authority is with respect 15 to regulating telecommunication providers and granting 16 franchising, and in Wisconsin, with respect to the 17 undertaking that's being made at the Wisconsin PSC 18 with regards to rulemakings. 19 MR. FELLMAN: As far as Colorado goes, 20 you're correct. We have state legislation which, 21 basically, takes local governments out of the 22 franchising process and does not allow recovery of 23 fees above the actual cost of the use of rights- of- 24 way. Actually, to tie that into Ms. Bailey's 25 181 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 182 question, there's no documented evidence, and that 1 legislation has been in place since 1996, there's no 2 documented evidence that we have a more wider roll- out 3 of broadband services in Colorado without having any 4 of those franchise requirements or fees. So take that 5 for what it's worth. 6 But the issue that was actually our 7 biggest hang- up, Dave, in that discussion was not fees 8 above costs, it was how do you determine the costs? 9 What are the degradation fees? How do you determine 10 what to charge every time a street is trenched? 11 And I mentioned some of the things that 12 worked in the negotiation, and we did have some very 13 proactive and positive industry members who helped us 14 with this legislation. We also had some, and one of 15 them, confidentially, came up to me after the process 16 and apologized and said, Our instructions from our 17 company was to participate in your process and to do 18 absolutely nothing that would bring this to consensus, 19 so that's why we were difficult to deal with through 20 the process. And we got into fights over, well, how 21 did you determine how much those degradation fees 22 should be? Well, we looked at this study and that 23 study, and, Well, we don't like any of those studies. 24 Well, if we do a new study, will you accept that? 25 182 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 183 Well, no. We've actually never, we've never seen a 1 study on degradation costs that we agree with. So we 2 said, All right, how about if you guys do a 3 degradation study, and we'll examine it and take it 4 under consideration. The response was, Well, we're 5 not the government, we're not going to pay for a 6 degradation fee study. 7 So, again, it's one bad example, and we 8 still got a good product out of this, but there is 9 some difficult issues to deal with, despite the fact 10 that we never talked about franchises or franchise 11 fees because we don't have state authority to do that. 12 MR. CHERNOW: Well, actually, the people 13 who have come to us have not only been cable 14 operators, but we've had some interesting groups of 15 people who have come to us who want to be, basically, 16 regulated as a cable operation, even though they're 17 also doing telecommunications and they're also doing 18 high- speed internet, and we do have the right to work 19 out an arrangement with them. We handle our 20 restoration systems in a somewhat different way. We 21 have very strict restoration standards that we want to 22 have implemented, and we, basically, have the utility 23 implement it. If they don't, and we've never had a 24 case like this, we will actually then go in after a 25 183 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 184 period of time and do the work ourselves and then 1 charge back the utility. But we've never had to go to 2 that extent to do that. To a great extent, it's 3 letting people know what the standards are that we 4 want them to go to, and they're very cooperative in 5 that respect. 6 MR. FERREE: Mayor Fellman, your comments 7 also made me think of something else you said earlier 8 about the FCC might have a role in fostering 9 discussions or sort of a mediation role. Is there any 10 role like that for state utility commissions as 11 mediators in these sorts of, when disputes arise? 12 MR. FELLMAN: You know, I think it depends 13 on, it's probably a function more of state law and how 14 active the state commissions want to get. I think 15 state legislators can serve in a mediation role, 16 governors offices can serve. I don't dismiss any 17 level of government or any office within government 18 from serving as a role to bring parties together and 19 try to get these issues resolved. But, you know, I 20 think an important part of that, and it's something 21 that hasn't been mentioned here as we talk about the 22 scope of authority, I haven't heard any of the 23 speakers mention the 10 th Amendment yet and the 24 principles of federalism. 25 184 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 185 MR. FERREE: I thought there were only 1 eight. 2 MR. FELLMAN: Well, we went to different 3 law schools. You know, really, the issue is, before 4 we talk about preempting, whether it's state 5 preempting local or federal preempting state or local, 6 we need to determine what really is the scope of the 7 problem and is preemption appropriate. I appreciate 8 Commissioner Nelson's comment and I've heard some 9 other speakers say that not all or even most local 10 governments are imposing problematic regulations. 11 Well, if that examination of the problem would 12 indicate that there's no need for preemption, then any 13 level of government and any agency within the 14 government that wants to try to bring the parties 15 together and do the harder work of resolving these 16 issues as they come, as opposed to a broad federal 17 rule, yes, I think it would be appropriate. 18 MR. FERREE: Commissioner Nelson, do you 19 have a reaction? 20 MR. NELSON: Yes, I do have a reaction. 21 We had a situation in Michigan where we had one 22 community that was holding up a major fiber deployment 23 project, and all the other communities had agreed very 24 amicably to a fee structure, etcetera, but this one 25 185 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 186 community held us up for several years, and I think 1 that's the kind of issue that you want the state to be 2 able to jump in and try to mediate. We were able to, 3 through the Commission's efforts, turn that around by 4 finding the community that was involved. But I think 5 the state has an important role here, and, certainly, 6 I would agree with Ken that we want to avoid federal 7 preemption, if at all possible, but I don't think the 8 10 th Amendment talks about the states and the local 9 government relationship. 10 MR. FERREE: Okay. Ms. Denburg, you look 11 like you would like to  - 12 MS. DENBURG: Yes, what I was going to say 13 is I think that we discussed jurisdiction and 14 preemption a bit this morning, so I don't want to go 15 back to that. But just to pick up on Mayor Fellman's 16 comment that no best practices work everywhere and the 17 example, you know, Erie Pennsylvania doesn't work in 18 Erie, Colorado, if you will. I think, however, that 19 still there can be a tremendous benefit in setting, if 20 you will, ceilings and floors and what is not 21 acceptable and what is. And it's really very 22 critical, I think, that, particularly at a state 23 level, you can come together and figure out what works 24 in the state, and you cannot have one standard or 400 25 186 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 187 standards, let's say, in the municipalities in Florida 1 and a difference 750 in Georgia, for instance, for 2 BellSouth or any provider that's working in 3 BellSouth's region. And I think that's the key is 4 that, you know, you're talking about, well, you 5 shouldn't have the fed preempt the state. 6 The bottom line is I think that there 7 should be recognition that, in a wholesale manner, we 8 can accomplish a lot and come to agreement on certain, 9 you know, whether it's regulations or rules of 10 deployment and relationships, and I think that the 11 broader scale they are, the more their set out, the 12 more everybody knows what the rules are, then you can 13 live within the rules. But if you have to guess every 14 time you're in it, and, of course, BellSouth is an 15 incumbent provider so we don't have some of these 16 issues, but as a new entrant, if you have to guess at 17 the rules every time you're coming in, that's a cost 18 of business that, in and of itself, is a barrier. 19 MS. WILSON: And I thought it was 20 interesting that, of all the examples that were given 21 by the panelists, that we were all talking about 22 states in which the states had adopted legislation 23 that spelled out what the rules of the roads were in 24 Michigan, Nebraska was my example, Florida, and 25 187 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 188 Colorado. 1 MR. FERREE: Okay. Yes, I know you're all 2 anxious. Just one second; I got to get one more in 3 here for Sandy. Why shouldn't you go into your 4 comments about your company's providing a lot of 5 different services and this question about, well, if 6 we start providing a new service through an existing 7 right- of- way, should that be subject to new fees and 8 new regulation? From a competitive standpoint, just 9 in terms of competitive neutrality, why shouldn't you 10 pay? If you're doing cable services, you're regulated 11 as a cable operator, you pay as a cable operator. 12 When you enter in the telecom market, why shouldn't 13 you pay whatever other telecom service providers are 14 paying for that service and being regulated as such? 15 MS. WILSON: I think it would be probably 16 a big step forward in some communities if that's what 17 the rules of the road were. I mean, I think we do pay 18 probably more than any rights- of- way user through the 19 cable franchise fee, which is a nice chunk of change, 20 and other in kind benefits. So I think you certainly 21 make a very good argument that the payment that is 22 made, regardless of whether you're offering your 23 services, is more than enough to compensate for our 24 rights- of- way use. 25 188 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 189 But even if you were to put that to one 1 side, what we often find is that we are asked to pay 2 five- percent of our revenue for every new service we 3 roll out. Let's say, for example, our local phone 4 service. We had communities where we were asked to 5 pay five- percent on those revenues, and the incumbent 6 is not paying anything, and that is clearly a 7 competitive disadvantage. 8 MR. FERREE: Okay. Some of these folks 9 definitely want to get another shot in here. My 10 friend from NCTA. 11 MR. SUMMERMAN: Rick Summerman from the 12 National Cable and Telecommunications Association. I 13 actually wanted to tie, I guess, your last question to 14 Sandy and the Florida situation that Ms. Denburg 15 raised. Back to the last panel on compensation, and 16 one of the outstanding questions from that panel was, 17 you know, why doesn't the industry seem to want to pay 18 the value or the worth or rent for property? But I 19 think what's missing in the debate, and I know it's 20 not really an FCC role, but is the tax question. I 21 had the tremendous pleasure of working on the National 22 Tax Association Communications and Electronics 23 Commerce Project looking at tax simplification, and it 24 turns out, if I'm recollecting correctly, that 25 189 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 190 telecommunications comes right after cigarettes and 1 liquor as the most highly- taxed industry, whereas 2 we're not looking, you know, to the FCC to do 3 something about telecommunications taxes, I think you 4 have to recognize when you say, gee, you're not paying 5 your fair share, telecommunications industry. You 6 have to say, well, what's happening on the tax front? 7 And if it's a tax of general applicability, that's 8 one thing; but if it's a tax burden only on 9 telecommunications providers, that's another thing. 10 So to bring it back to the question to Sandy, you 11 asked about telecommunications, on telecommunications 12 services, they pay the same taxes when they're a CLEC 13 or an ILEC  - 14 MR. FERREE: Is there a question in here 15 Rick somewhere? 16 MR. SUMMERMAN: There is for Ms. Denburg. 17 I'm wondering if Ms. Denburg can, just in the Florida 18 situation, describe how -- the change they made was 19 not just about rights- of- way, they rolled in all 20 telecommunications taxes. 21 MS. DENBURG: Correct. The key of the 22 Florida legislation, there were a couple of points, 23 and it's in my handout, but one of the things that 24 they did, it had revenue neutrality so that any local 25 190 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 191 government getting revenue kept the revenue. But it 1 also, for our tax folks, had administrative simplicity 2 and ease, in terms of auditing, as well. Instead of 3 being audited by 400 municipalities, there's one 4 centralized audit. 5 But the key, in terms of what you're 6 speaking about, Rick, is the competitive neutrality. 7 And what we moved away from was using the rights- of- 8 way for discriminatory franchise fees and, instead, 9 moved to a competitively neutral flat tax. We 10 broadened the base. And, generally, when I speak in 11 front of other folks and talk about tax, I say that 12 tax is not a four- letter word. What the taxes on DBS, 13 satellite, cable, wireless, telephony, and it removes 14 the right- of- way as the vehicle for taxing, puts it on 15 the services. 16 MR. FERREE: All right. It's been a very 17 long day, and I think we need to start to wrap this 18 up. Let's do one more from the crowd. This gentleman 19 here. 20 MR. LLOYD: Frank Lloyd from Mintz Levin 21 law firm representing cable companies. Ken, this is a 22 question to you. 23 MR. FERREE: You don't understand the 24 format here. 25 191 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 192 MR. LLOYD: Has anything happened with the 1 notice of inquiry on rights- of- way regulation that was 2 put out about three years ago and all the comments  - 3 MR. FERREE: That's in Dane's shop now. 4 MR. LLOYD: And there's a hesitancy on the 5 part of the Commission to have regulation in this 6 area, wouldn't it be possible to have a number of hoe- 7 downs in this area, like the ones over the digital 8 television transition? It seems to me this is as 9 important to the future economy of this country as 10 digital television, if not more so. And hoe- downs 11 would require your participation. 12 MR. FERREE: Fair enough. And, in some 13 sense, maybe this is the first of the hoe- downs, I 14 don't know. But it's a fair point, well taken. I 15 think we have to wrap up. I'm sorry, folks. Thanks. 16 MR. SNOWDEN: Thank you, Ken. As you can 17 tell, he definitely does a good job of being the 18 agitator and passing the buck, as well. 19 I guess, to steal a line from Mr. Ferree, 20 spring is probably the best time we'll have something 21 coming out. That's a little inside joke. 22 I want to thank the panelists today. 23 Thank you very much for your insight and thank all of 24 you for participating today and all of you who 25 192 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 193 participated as panelists and speakers. As Chairman 1 Powell said in his opening remarks, we did not attempt 2 to deal with all aspects of all issues touching upon 3 the use and management of rights- of- way. Indeed, 4 there are many other rights- of- way issues that impact 5 other industries and services. Today's forum should 6 serve as a useful mechanism to move forward in 7 partnership with local and state governments and 8 members of industry in addressing the many difficult 9 issues relating to the management of rights- of- way. I 10 think we're well on our way to a good start. 11 Although we have focused primarily on the 12 concerns of industry and local governments, it would 13 be remiss of me to allow this forum to conclude 14 without an acknowledgement of the many consumers that 15 are affected by the resolution of rights- of- way 16 issues. Of course, as Chief of the Consumer and 17 Governmental Affairs Bureau, I have to put that in 18 there. I can assure you that the Commission remains 19 cognizant of its responsibilities to consumers in 20 these matters. The quick and efficient deployment of 21 telecommunications services, along with the necessary 22 maintenance and upkeep of public rights- of- way, are 23 important to every citizen in our society. This is 24 the thought that should guide us as we move forward. 25 193 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 194 Now if you can allow me, as emcee, to take 1 a point of privilege. I would like to acknowledge two 2 people who have allowed me to stand up here and look 3 good because they actually deserve all the credit for 4 pulling off this forum, and that is Linda Kinney from 5 the Office of General Counsel, and Chris Montief 6 (phonetic) from my bureau, the Consumer and 7 Governmental Affairs Bureau, so thank both of them. 8 And with that, I send you out to the brave 9 new world of the rain and enjoy yourselves and thank 10 you very much. We are adjourned. 11 (Whereupon, the foregoing matter was 12 concluded at 3: 33 p. m.) 13 14 15 16 17 18 19 20 21 22 23 24 194