*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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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-  -  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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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 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
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