**DISSENTING STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: Implementation of Section 621(a)(1) of the Cable Communications
Policy Act of 1984 as amended by the Cable Television Consumer
Protection and Competition Act of 1992 (MB Docket No. 05-311)*

The policy goals of this *Order*, to promote competitive video offerings
and broadband deployment, are laudable. But while I support these goals,
today's item goes out on a limb in asserting federal authority to
preempt local governments, and then saws off the limb with a highly
dubious legal scheme. It substitutes our judgment as to what is
reasonable -- or unreasonable -- for that of local officials -- all in
violation of the franchising framework established in the Communications
Act.

Today's *Order* is certain to offend many in Congress, who worked long
and hard on this important issue, only to have a Commission decision
rushed through with little consultation. The result will be heavy
oversight after-the-fact, and a likely rejection by the courts. It will
solve nothing, create much confusion, and provide little certainty or
progress on our shared goal of promoting real video competition and
universal broadband deployment.

This outcome is disappointing because I believe we must do everything we
can to encourage competitive video offerings. As I was driving to work
this morning, I saw a line of Verizon trucks installing FiOS in my
neighborhood. I must admit, I am very excited about this new service,
and plan to subscribe. FiOS is now available because our local county
officials approved a franchise for Verizon. If they had not, I imagine
many of my neighbors would have complained loudly. Maybe that is why
Verizon has repeatedly told Wall Street investors, "\[e\]ven in those
states where we don't have the whole state, places like Pennsylvania, we
have become very successful now in getting franchising. So we don't see
that as an issue going forward."[^1] I am pleased with their efforts and
their success, and want to encourage their continued investment.

As I said in the underlying *Notice of Proposed Rule Making*, "Congress
clearly sought to promote competitive cable offerings and to facilitate
the approval of competitive cable franchises in the Cable Act of
1992."[^2] I agree the Commission should do what it can within the
current legal framework to facilitate increased video competition
because it benefits American consumers, promotes U.S. deployment of
broadband networks and services, and enhances the free exchange of ideas
in our democratic society.  

Notwithstanding these worthy goals, I, unfortunately, cannot support
this *Order* because the FCC is a regulatory agency, not a legislative
body. In my years working on Capitol Hill, I learned enough to know that
today's *Order* is legislation disguised as regulation. The courts will
likely reverse such action because the Commission cannot act when it
"does not really define specific statutory terms, but rather takes off
from those terms and devises a comprehensive regulatory regimen.... This
extensive quasi-legislative effort to implement the statute does not
strike \[me\] as merely a construction of statutory phrases."[^3]

 

Today's *Order* is disappointing because while there is bipartisan
agreement that the current video franchising framework should be refined
to better reflect marketplace realities, technological advancement, and
consumer demands, the decision skips the fine-tuning and performs an
extreme makeover. The majority accomplishes today what the elected
representatives of the American people have tried to do through the
legislative process. In doing so, the Commission not only disregards
current law and exceeds its authority, but it also usurps congressional
prerogatives and ignores the plain meaning of Title VI, the cannons of
statutory construction, and the judicial remedy Congress already
provided for unreasonable refusals. In crafting a broadly aggressive and
legally tenuous solution, the majority attempts the legal equivalent of
triple axels and quadruple toe loops that would only impress an Olympic
judge who is willing to overlook slips, stumbles, and falls.

We might keep in mind former President Ronald Reagan's views on
federalism and the role of local governments. In his first State of the
Union Address, President Reagan exhorted Americans to give power back to
local governments:

> Together, after 50 years of taking power away from the hands of the
> people in their states and local communities we have started returning
> power and resources to them. ... Some will also say our states and
> local communities are not up to the challenge of a new and creative
> partnership. Well, that might have been true 20 years ago. ... It\'s
> no longer true today. This Administration has faith in state and local
> governments and the constitutional balance envisioned by the Founding
> Fathers.[^4]

More recently, President George W. Bush echoed this trust in local
government, asserting that "government closest to the people is more
responsive and accountable."[^5] While the Commission has long viewed
the cable franchising process as "a deliberately structured
dualism,"[^6] today's decision is a clear rebuke of this storied
relationship with local government.

Congressional action in 1984, 1992, and 1996 re-affirmed further that it
is Congress' intent that "the franchise process take\[s\] place at the
local level where city officials have the best understanding of local
communities' needs and can require cable operators to tailor the cable
system to meet those needs."[^7] This is clearly set forth in the
purposes of Title 6, wherein Congress made clear that Title 6 would
establish the proper local, state and federal roles.[^8] Congress
established a framework whereby state and local authorities, within
certain federal limits, are primarily responsible for the administration
of the franchising process. That process is inherently local and
fact-specific. Indeed, a one-size-fits-all approach is antithetical to
clear congressional intent that cable systems be "responsive to needs
and interests of local community."[^9]

To be sure, the franchising process is not perfect and, by definition,
negotiations may result in some delay. But Congress, after much
deliberation, created this process to achieve certain stated policy
objectives, which are clearly set out in the Act. [^10] Regardless of
how commenters now feel about this carefully calibrated and negotiated
balance, Congress delegated authority to state and local governments to
make certain decisions and to determine the merit of granting cable
franchises in their respective communities. It then set forth a judicial
remedy if a party is aggrieved by a denial of franchising.[^11] While
Congress has the power to revisit this scheme, and has strongly
considered doing so, until then this Commission must adhere to the law
as written.

Yet today, the Commission is federalizing the franchising process,
taking it upon itself to decide, in every local dispute, what is
"unreasonable," without actually looking at specific, local examples to
determine the real situation.[^12] Instead of acknowledging the vast
dispute in the record as to whether there are actually any unreasonable
refusals being made today, the majority simply accepts in every case
that the phone companies are right and the local governments are wrong,
all without bothering to examine the facts behind these competing
claims, or conduct any independent fact-finding. This is breathtaking in
its disrespect of our local and state government partners and in its
utter disregard for agency action based on a sound record.

Today's *Order* also displays a fundamental misunderstanding about the
commitment of franchising authorities to bring competition to their
citizens. By law, a franchise under Title 6 confers a right of access to
people's property.[^13] Unlike members of this Commission, many state
and local officials are elected and directly accountable to their
citizens. Our knee-jerk embrace of everything interested companies say
while discounting local elected officials on a matter grounded in local
property rights certainly does not inspire a great deal of confidence in
the Commission's ability on the federal level to arbitrate every local
dispute in the country and fairly decide who is unreasonable and who is
not. Even if the Commission had such power, there is no mechanism
outlined in this *Order* to establish how that process would work.
Consequently, the end result will likely be litigation, confusion, abuse
of the process, and a certain amount of chaos. It is sadly ironic that
this agency, which has been recently in violation of one of its own 90
day statutory deadlines, is telling localities to do as I say, not as I
do.[^14]

Over the past two years, Congress held nearly two dozen hearings on
franchising, and sought to amend the Cable Act in an effort to reform
the current franchising process and "strike the right balance between
national standards and local oversight."[^15] Yet, the Commission has
finalized in the dark of night what Congress was unable to resolve in
two years of intensive public deliberations. In contrast to the Senate
where I used to work, one might call the FCC the world's least
deliberative body. And the final product shows it.

Congress would not have expended effort on a major piece of legislation
had its members believed it was not necessary to grant the Commission
explicit authority to do what the majority now contends the Commission
can do under existing law. The House bill proposed a national cable
franchising regime, while the Senate bill proposed an expedited
competitive franchise process which would have required local
authorities to issue franchises pursuant to a standard application
drafted by the Commission. Today's *Order* turns federalism on its head
by putting the Commission in the role of sole arbiter of what is a
"reasonable" or "unreasonable" LFA practice and short-circuiting the
franchising process if an arbitrary shot clock has expired.

While Congress worked to change federal law to create a role for the
Commission in the franchising process, there was and continues to be
considerable state and local activity to reform the local franchising
process. To date, nearly half of all states have adopted state-wide
franchise reform or mandatory state franchise terms, or have engaged in
a democratic process to enact meaningful franchise reform
legislation.[^16] Hundreds of other localities have approved new
franchises, and many more are in the works.

When we launched this proceeding, the central question was "whether the
local franchising process truly is a hindrance to the deployment of
alternative video networks, as some new entrants assert\[ed\]."[^17]
Indeed, the *Local Franchising NPRM* explicitly solicited "empirical
data" and "concrete examples" regarding problems in the franchising
process that FCC could resolve. In response, the record evidence
provides scant, dated, isolated, and unverified examples that fall far
short of demonstrating a systematic failure of state and local
governments to negotiate in good faith and in a reasonable fashion.

According to the Telecommunications Industry Association, "some recent
examples of overly-burdensome, and ... 'unreasonable,' extraneous
obligations"[^18] included: (1) Merton Group's two year negotiations
with Hanover, New Hampshire, which concluded in December, 2004; (2)
Knology's negotiations with Louisville, Kentucky in early 2000; (3)
Knology's franchise negotiations with the greater Nashville, Tennessee
area in March 2000; and (4) Grande Communication's negotiations with San
Antonio and Corpus Christi, Texas in 2002. Additionally,
Fiber-To-The-Home Council cites the efforts of Guadalupe Valley
Telephone Cooperative to seek a franchise in the City of Bulverde, Texas
in 2004. The *Order* itself relies on unconfirmed allegations by Verizon
and AT&T about unreasonable demands and negotiations being drawn out
over an extended period of time; and complaints by U.S. Telecom
Association, Qwest, and Bell South about new entrants accepting
franchise terms that they considered unreasonable in order to avoid
further delay in obtaining the franchise, or, in one case, filing a
"friendly lawsuit."

These examples, based on my review of the record evidence, represent the
extent to which competitive video providers argue that LFAs are delaying
in acting on franchise applications. However, considering the current
franchising process has been in place nearly 15 years and there are over
30,000 LFAs, I find these sporadic examples, individually and
collectively, wholly insufficient to justify the Commission's
quasi-legislative attempt to federalize the local franchising process.
These sparse allegations and anecdotal evidence do not rise to a level
that warrants today's drastic, substantive measures. The Commission's
blind acceptance of a few alleged instances as illustrative of a much
broader problem is a poor and unfortunate reflection of the disregard
for proper agency process. The Commission neither attempted to conduct
any independent fact-finding or due diligence, nor verify the
allegations made by parties who have a vested interest in the outcome of
this proceeding.[^19] Even more shocking, the Commission and the
commenters fail to cite to a single actual, present day problem pending
with any specific LFA.[^20]

Notwithstanding the scant record evidence to justify agency preemption
and the creation of a national, unified franchising process in
contravention of federal law, the Commission conjures its authority to
reinterpret and, in certain respects, rewrite section 621 and Title VI
of the Communications Act, on just two words in section 621(a)(1)[^21]
-- "unreasonably refuse." The Commission ignores the verb that follows:
"to award." A plain reading section 621(a)(1) does not provide a
wholesale "unreasonable" test for all LFA action. Rather, the statutory
language focuses on the act of awarding a franchise. While I agree that
the Commission has authority to interpret and implement the
Communications Act, including Title VI,[^22] the Commission does not
have authority to ignore the plain meaning, structure and legislative
history of section 621, and judicial precedent. [^23]

While the Commission purports to limit its action today to interpreting
"unreasonably refuse," the *Order* stretches section 621 well beyond the
meaning that the statute can bear and, consequentially, changes the
franchising process in fundamental ways. There are certain salient
features of today's *Order* that raise serious legal and policy
implications, requiring careful scrutiny. Most notably, the *Order*: (1)
imposes a 90-day shot clock on LFAs to render a decision on the
franchise application of a competitive applicant with existing
rights-of-way; (2) deems a competitive entrant's franchise application
granted after 90-days; (3) prohibits the denial of a competitive
entrant's application based upon the entrant's refusal to comply with
any build-out obligations; (4) prohibits the denial of a competitive
entrant's application based upon the entrant's refusal to build and
support PEG and I-net; and (5) authorizes a new entrant to refrain from
obtaining a franchise when it is upgrading "mixed use" facilities that
will be used for the delivery of video content.

The *Order* finds that franchising negotiations that extend beyond the
time frames created today by the Commission amount to an unreasonable
refusal to award a competitive franchise within the meaning of
621(a)(1). This finding ignores the plain reading of the first sentence
of section 621(a)(1), which provides that a franchising authority "may
not *unreasonably refuse* *to award* an additional competitive
franchise."[^24] On its face, Section 621(a)(1) does not impose a time
limitation on an LFA's authority to consider, award, or deny a
competitive franchise. The second and final sentence of section
621(a)(1) provides judicial relief, with no Commission involvement
contemplated, when the competitive franchise has been "denied by *a
final decision* of the franchising authority."[^25] There is no
ambiguity here: Congress simply did not impose a time limit on franchise
negotiations, as it did on other parts of Title VI (see discussion
*infra*). Hence, whether you read the first sentence alone or in context
of the entire statutory provision or title, its plain and unambiguous
meaning is contrary to the Commission's interpretation. Section
621(a)(1) provides an expressed limitation on the *nature*, not the
timing, of the refusal to award a competitive franchise.[^26]

Even if I were able to move beyond this *Order*'s facially defective
reading of 621(a)(1), the Commission's selection of 90 days as the only
reasonable time frame for an LFA to consider the franchise application
of a competitive provider that already has rights-of-way access before
it is "deemed granted" is demonstrably inconsistent with the overall
framework of Title VI, unsupported by the record evidence, and quite
arbitrary.

The franchising framework established in Title VI does not support the
Commission's decision to select 90 days as the deadline for a default
grant -- another Commission creation -- to become effective.[^27]
Throughout Part III (Franchising and Regulation) of Title VI, when
Congress specifically decided to impose a deadline for LFAs to consider
sales of cable systems, modification of franchise obligations, and
renewals of existing franchises, in all three instances, Congress chose
120 days.[^28] In other sections of the Act, the prevalent time frame
Congress imposed on LFAs and the Commission is 180 days.[^29] Today, the
Commission, without authority, cannot take the place of Congress and
impose a tighter time frame than Congress ever contemplated to impose on
LFAs in the franchising process. This is well beyond Commission
"line-drawing" authority, which requires the Commission to operate
within the established framework of the authorizing legislation.

While a 90-day deadline arguably could be considered "reasonable," that
is not the statutory standard the Commission is purporting to use as the
basis of its authority. We can only define "*unreasonable*" refusal,
[^30] which could be "foot-dragging" or "stonewalling" that amounts to a
*defacto* denial of a franchise application. This is not the same as
establishing an arbitrary, inflexible 90-day time frame, which overlooks
the fact that 120 or 180 days may be reasonable under certain
circumstances. While the Commission has line-drawing authority in some
cases, the position taken in the *Order* is untenable on its face, given
that Congress set a 120-day deadline for franchise transfers, which tend
to be simpler than awarding new franchises, unless one is willing to
assert that Congress itself was unreasonable. The aggressive schedule
set here, while understandable and even desirable from a policy
perspective, is evidence of the legislative nature of the *Order*.

To make matters worse, the Commission-created 90-day shot clock seems to
function more like a waiting period, during which time the new entrant
has little incentive to engage in meaningful negotiations. An objective
review of the evidence shows that there is sufficient blame on both
sides of the negotiation table. Sometimes, there are good reasons for
delay; and at other times, one side might stall to gain leverage.[^31]
While the majority is certainly aware of these tactics, they fail to
even mention the need for LFAs and new entrants to abide by, or so much
as to have, reciprocal good faith negotiation obligations. The majority
also has ignored the apparent need to develop a complaint or grievance
mechanism for the parties to ensure compliance. Perhaps Congress might
consider imposing on the Commission a binding deadline to resolve
complaints, which would inject an incentive for both sides to negotiate,
meaningfully and in good faith.[^32]

Without anything other than the asserted authority to interpret
"unreasonably refuse," the Commission creates a regulatory reprimand for
an LFA's failure to render a final decision within the
Commission-created time limits. The consequences of the failure to reach
agreement within 90 days is that the LFA will be deemed to have granted
the competitive entrant an interim franchise based on the terms proposed
in the entrant's franchise application. In practicality, this will
confer rights-of-way access over local property. In selecting this
remedy, the Commission purportedly "seeks to provide a meaningful
incentive for local franchising authority to abide by the deadlines
contained in the *Order*."[^33] While the policy goal is understandable
and arguably consistent with congressional intent to encourage the award
of competitive cable franchises, we do not have legal authority to
establish punitive, one-sided consequences, in order to create an
"incentive." Moreover, the Commission ignores that by establishing a
default grant of franchise applications effectively confers local
property rights unilaterally and without regard for inherent local
police powers and public health, safety and welfare.

The Commission cites no credible authority that empowers it to deem a
new entrant's franchise application granted by the LFA and thus confer
local property rights.[^34] When construing a statute, principles of
construction caution against any interpretation that may contravene
existing law or U.S. Constitution. In this case, I am wary of a federal
agency, which purports not to preempt any state-based franchising law,
but yet is prepared to step into the shoes of an LFA -- an
instrumentality of the state -- to grant a franchise application with
all the attendant rights-of-way privileges.[^35]

The Commission rejected an approach that would have deemed an
application "denied" once the shot clock expired without LFA action.
This approach, I maintain, would have expedited the judicial review that
was Congress' chosen remedy, and is infinitely more consistent with the
letter and spirit of the Communications Act, Title VI, and specifically
sections 621(a)(1) and 635. Nowhere in the Act is the Commission granted
the authority to force localities to grant franchises. Simply put, the
Commission's "deemed granted" approach in the *Order* is not a
justifiable choice to fill the perceived gap left open by Congress when
it did not provide a specific remedy against LFA action that is short of
an outright denial of a franchise application. While it is generally
proper for the Commission to exercise its "predictive judgment," that is
only when the Commission has the requisite authority to act within a
certain area and it stays within its authority. Neither exists in this
case.

In terms of build-out, the Commission seems to make a deliberate effort
to overlook the plain meaning of the statute and to substitute its
policy judgment for that of Congress. The Commission concludes that it
is unlawful for LFAs to refuse to grant a competitive franchise on the
basis of an applicants' refusal to agree to any build-out obligations.
The Commission's analysis in this regard is anemic and facially
inadequate.

Section 621(a)(4)(A) provides that "\[i\]n awarding a franchise *the
franchising authority* shall allow the applicant's cable system a
*reasonable period of time* to become capable of providing cable service
to all households in the franchise area." Absent express statutory
authority, the Commission cannot declare it unreasonable for LFAs to
require build-out to all households in the franchise area over a
reasonable period of time. The Commission's argument in this regard is
particularly spurious in light of the stated objective of this *Order*
to promote broadband deployment and our common goal of promoting
affordable broadband to all Americans. In the end, this is less about
fiber to the home and more about fiber to the McMansion.

The Commission is correct on one point, that section 621(a)(4)(A) is
actually a limitation on LFA authority. However, consistent with plain
reading of the provision and its legislative history, Section
621(a)(4)(A) surely is not a grant of authority to the Commission and
does not impose a limitation on the *scope* of a competitive provider's
build-out obligations. Indeed, section 621(a)(4)(A) explicitly limits
the "period of time" to build-out, but an LFA is unrestrained to impose
full, partial, or no build-out obligations on all cable service
providers. As long as an LFA gives a competitive provider "a reasonable
period of time to become capable of providing cable service to all
households in the franchise area," section 621(a)(4)(A) essentially
shields build-out requirement from constituting an "unreasonable
refusal" to grant a competitive franchise. While this policy could be
changed by Congress to facilitate competitive entry, that is not the
current state of the law. An LFA cannot be prohibited from requiring
build-out to all households in the franchise area if an LFA allows "a
reasonable period of time" to do so. The Commission has not been
ordained with a legislative "blue pencil" to rewrite law. Congress
specifically directed LFAs -- not the FCC -- to allow a reasonable
period of time for build-out. As much as the Commission would like it be
its role, Congress gave the role to LFAs, and it is Congress' purview to
modify that explicit delegation of authority.

Assuredly, Section 621(a)(4)(A) does not impose "universal" or "uniform"
build-out requirements on franchise applicants. This may be a reflection
of congressional intent to focus on the needs of the locality.[^36]
However, it does not prohibit LFAs from requiring build-out obligations
as a condition of franchise approval, so long as the competitive
applicant is given a reasonable period of time.

The rapid deployment of broadband has been a goal of mine since I joined
this Commission. Wireline competition in the video market, particularly,
is critical as a means to constrain prices, which in itself is a worthy
goal after year upon year of price hikes. It is also critical to the
future of our democracy that Americans have access to as many forms of
video content as possible so they can make up their own minds about the
issues of the day and not remain subject to a limited number of
gatekeepers who decide what deserves airing based on their own financial
or ideological interests. But, in order for the Commission to promote
these goals effectively, we must operate within our legal authority.

Perhaps the majority has failed to consider the real life consequences
of today's *Order*. For instance, in New York City, competitive entrants
could file the Commission-mandated informational filing that proposes to
serve only Broadway, Madison, or Park Avenue. Under today's *Order*, the
New York City franchising authority would be forbidden from denying the
competitive franchise based solely on the fact that the new entrant
refuses to certain build-out requirements. The LFA is placed in the
difficult position of either denying outright the franchise and absorb
the costs and fees for the ensuing litigation, or agree to a franchise
that is not responsive to needs and interests of local community.

How can the majority declare build-out to be an impediment to entry when
one of the major incumbent phone companies, AT&T, claims that it does
not need a franchise to operate its video service, and the other,
Verizon, has agreed to different, but favorable, build-out obligations
with various states and localities? Under the federalist scheme of the
Act, different jurisdictions can choose models that best suit their
specific needs. For example, in New Jersey, the state-wide franchise
reform law correlates build-out principally to population density, while
build-out obligations in Virginia principally track the entrant's
existing wireline facilities. And in New York City, Verizon and the LFA
were actively negotiating universal build-out over a period of a few
years.

The broad pen with which the majority writes today's *Order* does not
stop with build-out. The *Order* also uses the Commission's alleged
authority under Section 621(a)(1) to determine that any LFA refusal to
award a competitive franchise because of a new entrant's refusal to
support PEG or I-Net is *per se* unreasonable. Although the *Order*
purports to provide clarification with respect to which franchise fees
are permissible under the Act, it muddles the regime and leaves
communities and new entrants with conflicting views about funding PEG
and I-Net. Indeed, Congress provided explicit direction on what
constitutes or does not constitute a franchise fee, with a remedy to the
courts for aggrieved parties.

Today's Order should make clear that, while any requests made by an LFA
unrelated to the provision of cable service *and* unrelated to PEG or
I-NET are subject to the statutory five percent franchise fee cap, these
are not the type of costs excluded from the term "franchise fee" by
section 622(g)(2)(C). That provision excludes from the term "franchise
fee" any "capital costs that are required by the franchise to be
incurred by the cable operator for public, educational, or governmental
access facilities." The legislative history of the 1984 Cable Act
clearly indicates that "any franchise requirement for the provision of
services, facilities or equipment is not included as a 'fee.'" [^37]

PEG facilities and access provide an important resource to thousands of
communities across this country. Equally important, redundancy or even
duplicative I-Net provides invaluable homeland security and public
health, safety and welfare functions in towns, cities, and
municipalities across America. It is my hope that today's decision does
not undermine these and other important community media resource needs.

While my objections to today's *Order* are numerous and substantial,
that should not overlook the real need I believe there is for franchise
reform. Indeed, there is bipartisan support for reform in Congress, and
most LFAs throughout this country are committed to bring video
competition to their jurisdictions. My fundamental concern with this
*Order* is that it is based on such paper-thin jurisdiction, but it is
truly broad in scope. It ignores the plain reading of the section 621,
usurps congressional prerogative and pre-empts LFAs in certain important
respects that directly contradict the Act.

The sum total here is an arrogant case of federal power riding roughshod
over local governments. It turns federalism on its head. While I can
support certain efforts to streamline the process and preclude local
authorities from engaging in unreasonable practices, this item blatantly
and unnecessarily tempts the federal courts to overturn this clearly
excessive exercise of the limited role afforded to us by the law. The
likely outcome of being reversed in Federal Court could have pernicious
and unintended consequences in limiting our flexibility to exercise our
discretion in future worthy endeavors.

Accordingly, I dissent.

[^1]: *Final Transcript,* Thomson StreetEvents, VZ-Verizon at UBS 34^th^
    Annual Global Media Conference, Dec. 6, 2006, at page 7, available
    at,
    http://investor.verizon.com/news/20061206/20061206_transcript.pdf.

[^2]: Statement of Commissioner Jonathan S. Adelstein, *Implementation
    of Section 621(a)(1) of the Cable Communications Policy Act of 1984,
    as amended by the Cable Television Consumer Protection and
    Competition Act of 1992*, MB Docket No. 05-311, Notice of Proposed
    Rulemaking, FCC 05-180 (rel. Nov. 18, 2005) ("*Local Franchising*
    *NPRM"*).

[^3]: *Kelley v. E.P.A*., 15 F.3d 1100, 1108 (DC. Cir. 1994). While the
    Commission contends that "\[d\]espite the parameters established by
    the Communications Act, ... operation of the franchising process has
    proven far more complex and time consuming than it *should be*,"
    (Order, ¶ 3), the proper inquiry is whether the franchising process
    is operating *as Congress intended*. Today's *Order* ignores this
    important question. In so doing, the Commission disregards the
    parameters established in the Cable Act and imposes its view of how
    the franchising process *should be*.

[^4]: President Ronald Reagan, *State of the Union Address*, January 26,
    1982, available at,
    <http://www.reagan.utexas.edu/archives/speeches/1982/12682c.htm>.

[^5]: George W. Bush, "What the Congress Can Do For America," [Wall St.
    J.]{.smallcaps}, January 3, 2007, at A13.

[^6]: *Cable Television Report and Order,* 36 F.C.C. 2d 143, 207 ¶177,
    *recon.,* 36 F.C.C. 2d 326 (1972).

[^7]: H.R. Rep. No. 934, 98^th^ Congress, 2d Sess. at 24.

[^8]: 47 U.S.C. § 521 (3).

[^9]: 47 U.S.C. § 521(2).

[^10]: One of the principal purposes of Title VI is to "establish
    franchise procedures and standards which encourage the growth and
    development of cable systems and which assure that cable systems are
    responsive to the needs and interests of the local community." 47
    U.S.C. § 521(2).

[^11]: 47 U.S.C. § 555.

[^12]: See Letter from David L. Smith, City Attorney, City of Tampa , to
    Kevin Martin, Chairman, FCC, dated January 5, 2007 (stating "\[h\]ow
    disappointing it was to learn that ... the FCC would embrace as
    truth an allegation in a rulemaking that has such far-reaching
    implications to so many, without doing any follow-up with the
    jurisdiction named to confirm it accuracy.").

[^13]: *See* 47 U.S.C. § 541 (a)(2).

[^14]: See, e.g., In the Matter of Comcast Corporation's Request for
    Waiver of 47 C.F.R. § 76.120(a)(1), CSR-7017-Z, CS Docket No 97-80,
    DA-06-2543, CS Docket No 97-80, filed 4/19/06 (waiver proceeding
    placed on public notice 5/17/06 and decided 1/10/2007, well past the
    statutory "shot clock"); 47 U.S.C. § 549(c) ("the Commission shall
    grant any such waiver request within 90 days of any application
    filed under this subsection.").

[^15]: H.R. REP. No. 109-470, at 3 (2006).

[^16]: While the *Order* purportedly refrains from explicitly preempting
    "statewide franchising decisions" and only addresses "decisions made
    by \[instrumentalities of the state, such as\] county -- or
    municipal level franchising authorities," this dubious distinction
    has a questionable legal basis. Under Title 6, LFAs derive their
    power by virtue of state law, so such distinctions are not for the
    FCC to make. Moreover, the Commission's contention that it does not
    have sufficient information in the record to consider the effect of
    franchising by states (some of which have had laws in place for a
    decade), but has sufficient record evidence to preempt 33,000 LFAs,
    is facially preposterous.

[^17]: Adelstein Statement, *Local Franchising* *NPRM*.

[^18]: Letter from Grant Seiffert, to Jonathan S. Adelstein,
    Commissioner, FCC, MB Docket No. 05-311 (dated December 11, 2006).

[^19]: *Local Franchising* *NPRM*, ¶1 ("potential competitors seeking to
    enter the multichannel video programming distributor ("MVPD")
    marketplace have alleged that in many areas the current operation of
    the local franchising process serves as a barrier to entry.
    Accordingly, this *Notice* is designed to solicit comment on
    implementation of Section 621(a)(1)'s directive that LFAs not
    unreasonably refuse to award competitive franchises.")

[^20]: During the Commission's Agenda Meeting in Keller, Texas, on
    February 10, 2006, one Verizon official identified Montgomery
    County, Maryland, as an obstinate LFA that was insisting upon
    unreasonable illegal demand and delaying negotiations. Since that
    meeting, Verizon has in fact obtained a franchise in Montgomery
    County. *See* Press Release, Montgomery Country, Md., County
    Negotiates Cable Franchise Agreement with Verizon; Agreement
    Resolves Litigation, Provides Increased Competition for Cable
    Service (Sept. 13, 2006) (available at
    http://www.montgomerycountymd.gov/apps/News/press/PR_details.asp?PrID=2582).
    In fact, this *Order* blatantly ignores public statements that
    significantly undermine representations some proponents of this
    decision have made to the Commission. For example, AT&T has publicly
    stated that Project Lightspeed will be available to 90% of its
    "high-value" customers, but to less than 5% of its "low value"
    neighborhoods, but today the Commission undermines a locality's
    ability to ensure all residents are served. Leslie Cauley*, Cable,
    Phone Companies Duke it out for Customers*, USA Today, May 22, 2005,
    available at:
    http://www.usatoday.com/money/media/2005-05-22-telco-tv-cover-usat_x.htm?csp=34
    (last viewed 12/20/06). As Verizon's CEO of one major new entrant
    recently noted, "Any place it's come to a vote, we win." Dionne
    Searcey, *As Verizon Enters Cable Business, It Faces Local Static
    Telecom Giant Gets Demands As It Negotiates TV Deals*, Wall St. J.,
    Oct. 28, 2005, at A1. Yet in today's *Order*, the Commission somehow
    determines that there is widespread bad faith only on the part of
    the LFAs, not the new entrants, in order to justify this sweeping
    federal preemption.

[^21]: 47 U.S.C. §541(a)(1).

[^22]: Admittedly, however, read together, sections 621(a)(1) and
    635(a), clearly vest the courts, not the FCC, with exclusive
    jurisdiction over the determination of what constitutes
    "unreasonably refuse." In light of the fact that these two
    provisions were amended simultaneously in 1992, this is the only
    rational interpretation. As NATOA pointed out in its Comments,
    "\[i\]t is ludicrous to suggest that Congress, having provided that
    only "final" decisions of the "denial" of a franchise application
    may be appealed, somehow intended, *sub silentio*, to have its own
    language gutted by allowing parties to bypass the last sentence of §
    621(a)(1) entirely and go directly to the FCC." NATOA Comments at
    28.

[^23]: The Senate Report of the 1992 Cable Act concluded that,
    "\[b\]ased on the evidence in the record taken as a whole, it is
    clear that there are benefits from competition between two cable
    systems. Thus, the Committee believes that local franchising
    authorities should be *encouraged \[not required\]* to award second
    franchises. Accordingly, \[the 1992 Cable Act,\] as reported,
    prohibits local franchising authorities from unreasonably refusing
    to grant second franchises." S. Rep. No. 102-92, at 47
    (1991)(emphasis supplied). Thus, an LFA's decision to not grant a
    franchise need only not be unreasonable.

    As one federal district court observed:

    > The House version contained a specific list of "reasonable"
    > grounds for denial. H. R. Conf. Rep. No. 102-862, at 168-69
    > (1992). The Senate version, on the other hand, listed "technically
    > infeasible" and left other reasonable grounds undefined. By
    > choosing not to adopt a federally mandated list of reasonable
    > grounds for denial in favor of an open-ended definition, *Congress
    > intended to leave states with the power to determine the bases for
    > granting or denying franchises, with the only caveat being that a
    > denial must be "reasonable.*"

    *Knology, Inc. v. Insight Communications Co., L.P*., 2001 WL 1750839
    at \* 2 (W.D. Ky. March 20, 2001) (citation omitted) (emphasis
    supplied).

[^24]: 47 U.S.C. §541(a)(1) (emphasis added).

[^25]: *Id.* (emphasis added).

[^26]: Congressional intent to qualify the nature of an LFA's refusal,
    [not]{.underline} the timing of the refusal, is clear when you
    consider another provision of Section 621(a). Section 621(a)(4)(A)
    provides that "franchising authority shall allow the applicant's
    cable system *a reasonable period of time* to become capable of
    providing cable service to all households in the franchise area." In
    that case, Congress explicitly qualified timing, not the scope of
    buildout. As demonstrated in the Order, the Commission's attempt to
    super-inflate the meaning of "unreasonably refuse" in 621(a)(1), and
    diminish the significance of "unreasonable period of time" in
    section 621(a)(4)(A) is transparently inconsistent and blatantly
    self-serving.

[^27]: The *Order* imposes a time limit of 90 days on LFAs to decide
    franchise applications from entities that already have access to
    public rights-of-way and a time limit of six months for applicants
    that are not already authorized to occupy the rights-of-way. Such a
    distinction does not exist in Title 6, notwithstanding the fact that
    Congress specifically contemplated phone companies -- entities that
    already have access to public rights-of-way -- obtaining franchises
    to provide video service.

[^28]: 47 U.S.C. § 537 (providing LFAs 120 days to act upon request for
    approval of sale or transfer on cable systems); 47 U.S.C. § 545
    (providing LFAs 120 days to modify franchise obligations); and 47
    U.S.C. § 546 (providing LFAs a "4-month period" to "renew the
    franchise or, issue a preliminary assessment that the franchise
    should not be renewed").

[^29]: *See, e.g.*, 47 U.S.C. § 543 (authorizing the Commission to
    "ensure that the rates for the basic service tier are reasonable"
    and requiring the Commission to develop regulations in 180 days).

[^30]: 47 U.S.C. § 541(a)(1). Today's *Order* specifically adopts rules
    that prohibit franchising authorities from "*unreasonably* refusing"
    to award competitive franchises. *Order* at ¶ 1.

[^31]: As the July 11, 2006, filing of the Greater Metro
    Telecommunications Consortium, the Rainer Communications Commission
    and the City of Tacoma, Washington explained: "\[I\]t is an
    oversimplification to believe that competitive entry into video
    programming can be facilitated by requiring a local government to
    act on a franchise application within a specific period of time.
    What the Commission may consider a delay is often a reasonable time
    for consideration, and indeed, the internal bureaucracies within
    many large companies often times dwarf the internal processes within
    local government, so that any rule the Commission might deem
    appropriate to apply regarding time to respond, must also be imposed
    upon the other party to negotiations."

[^32]: The Commission purposefully stops short of creating reciprocal
    good faith obligations because that would authorize the parties to
    file a complaint with the Commission when negotiations fall apart.
    Such a complaint process would effectively serve as an enforcement
    mechanism, which would only increase this *Order*'s litigation
    exposure as quasi-legislative document. Nevertheless, today's
    *Order* cannot be reasonably viewed as mere guidance to LFAs or a
    clarification of the term "unreasonably refuse" in section
    621(a)(1). There is a real, punitive consequence if the LFA does not
    follow the Commission's dictates -- a "deemed granted" franchise,
    which incurably alters the dynamics of franchise negotiations.

[^33]: *Order* at ¶ 76.

[^34]: The Commission's reliance on ancillary authority it exercised in
    the early 1970s, well before congressional enactments in 1984, 1992
    and 1996, is unavailing. In fact, such reliance reveals the
    Commission's need to make too large a reach to justify it actions.
    *See* Letter from James L. Casserly, Counsel for Comcast
    Corporation, to Marlene Dortch, Federal Communications Commission ,
    MB Docket No. 05-311 (filed December 13, 2006).

[^35]: *See generally*, *[Charter Communications v. County of Santa
    Cruz]{.underline}*, 304 F.3d 927 (9^th^ Cir. 2002) (holding that
    deference is accorded to legislative action of local government),
    especially in light of fact that the Commission does not have clear
    congressionally delegated authority in this case; and local
    regulations, in this case, are likely explicitly sanctioned by the
    Cable Act and consistent with the express provisions of the Act,
    *see* 47 U.S.C. § 556(a).

[^36]: *See* 47 U.S.C. § 521 (2)(stating that the one of the central
    purposes of Title 6 is to "assure that cable systems are responsive
    to the needs and interests of the local community.") *See also* 47
    U.S.C. § 521(3)(stating that another central purpose of Title 6 is
    to establish clear federal, state and local roles).

[^37]: The legislative history of 1984 Cable Act provides "in general,
    \[section 622(g)(2)(C)\] defines as a franchise fee only monetary
    payments made by the cable operator, and does not include as a 'fee'
    any franchise requirement for the provision of services, facilities
    or equipment. As regards PEG access in new franchises, payments for
    capital costs required by the franchise to be made by the franchise
    to be made by the cable operator are not defined as fees under this
    provision." H.R. REP. No. 98-934, at 65 reprinted in 1984
    U.S.C.C.A.N. 4702.