i'd like to reserve four minutes for a bottle if i may you may please proceed but the orders under review and particularly the reconsideration order have significant problems underlined by some of the concessions made by the f c c on brief that sort of events the typical problems that this court often find weren't reversal of an administrative order for example big on the reconsider order the commission ruled that every requirement contained in the cable franchise counts against the franchise fee unless it falls within one of the four exceptions to the definition of a franchise fee in the cable act at the same time in the second order the commission indorse a decision made by the media bureau in the city of bowie that said precisely the opposite that as a general matter franchise fee requirements do not count against the franchise fee and it was very explicit on that in the city boy where there is no explanation or even a recognition of the conflict between the positions the commission has historically taken and the position is taken in this order and there you're referring to the inclusion of cable service related i use i'm thinking of the term exactions including those as part of the five percent franchise fee cap right with streaming every time every cable related regulatory requirement has a franchise whereas in your view in the first order they only counted non cable service related exactions as part of the five percent is that a minor standing criterion on cable related they may not be directly related to cable service but they relate to the cable system or the cable systems operation institutional networks being an example of something that was recognised that could be required in the first order and as to which contributions could be required by that that difference between cable related requirements and non cable related fireman's is significant and it's significant in the statute because the statute prohibits enforcement non cable related requirements in a franchise specifically history you can say yes you only a fifteen minutes if you really raised five issues they seem to have varying importance and weights here so would you mind telling us how you weight these five different claims that you're bringing and which ones do you want to talk about that i like to focus on the morning just started with the franchise fee and i just five percent french rulings do not apply to state franchise states the states where the state has a franchising law and if the and the contradiction was the hobbs act the order commission said but the require courts to apply the order and that was you know ok ok you got to be on that all your arguments on the i mean focus on the fee issue basically the fee requirement is pretty astounding when you look at the basic structure of the something that i think results and and it doesn't even pass muster under chevron step one much less two or the arbitrary and capricious or you have two aspects of your argument here right number one you exaction you're not arguing our position i certainly think that would be the proper ruling based on the deaf in the ordinary definition of tax v and i sassed meant the tax the definition of tax by dan finishing is raising money but i know you're not arguing that that was raised by me because our position was was because that related to the extent that it related be on and i'm sorry let me restate that we certainly believe that's the case right our focus should be force or not it is an issue that's before you but that issue i think was more clearly and raised in the first quarter and as contrast to lion cable related and that's why we that's why we focused on the nine cable real decided that particular issue in that appeal of the tax fear assessment whether tax fear is threatened i don't think it actually directly did decide that issue and i think that's what i gather you personally are not going to be arguing about that non monetary thing today i'm not going to i will not i will actually i'm not going to focus on the couch i want to talk about what you want to talk about ok the structure of the cable actors several dozen provisions that are designed to determine that say what we can require from a cable operator how we can requirement and actually establish a process particularly for incumbent operators which is who this second order applies to that requires to go through something like a quad i trowe procedure before we could ever deny or email and that includes consideration of community needs an interest it requires us to establish to temp to get an operator to provide the services s and equipment that meet community related cable needs and interests and it requires us to consider the cost of the operator of doing that that whole scheme would make no sense if as the commission said a requirement is then paid for by the community if we're paying for it no operators going to object to doing it and there's certainly no reason for the federal government to establish a multimeter a dozen or so provisions including it if you assume that you've already maxed out the five percent and i guess if i was to be a devil's advocate here i don't mean major you know maybe maybe your transaction costs so to speak are a lot less than five percent and and reasonably there should be plenty of room in there for a reasonable level of these sorts you know free and discounted services and what it's what it's encouraging you to do is to be efficient about all these things we are actually we aren't even talking about the free or discounters any requirements would include things like build out operators the required to build out to areas they don't want to build out to and construction cost are over one hundred thousand a mile so there would be no city where they could if they could afford to build out requirement if that ever requirement was treated if that sort of requirement was necessarily you're you're building out your own infrastructure to serve a broader geographic area i mean well that's i mean you can see a difference in kind i mean really no pun intended between  them saying ok we're going to give you five government channels are going to do all this free stuff for schools ok on the one hand and on the other hand ok we're going to build out our network to to reach rural areas that really aren't very profitable for us but you know would do it because you know you're telling us we need to do it that those are different in the sense of them conveying value to you i'm not sure they are different and i think that that failure c to even explain the difference or what that difference would be between those things is actually a failure understanded review i suspect that the f c c is going to tell us today that they don't mean what you're suggesting and if they don't then the question is what's the line drawn because let's take a senior citizen discount that's says it's been on endorsed by the f c c in the anti act it's actually the same function as a buildout requirement fact the antioxidant explains that the reason you allow senior citizen discounts is so that cable services reach areas of the community and people in the community they would not otherwise be able to get service goals or not these schools are not the government i mean governments are often strickly but let's just back up a little i mean we had the first order which at least as we construed in alliance says that incidental that the the agencies interpretation the word incidental as used in the non cable related certain services that the providers might be required to cough up and now you're saying ok they extended it to cable related services and so is your argument that now that is no longer a permissible construction of incidental or is it in a p a argument that this is  think i think this goes back to the initial question you asked me you start off by asking what is a franchise fee it's got to be a tax for your assessment those are undefined terms under i think your band or big decision let me ask you those have to be defined right dictionaries why is it worse from let's say an interpretive standpoint ok to say that incidental expenses include  include or don't accrued i'm getting kind of vertigo on this but why is there interpretation of incidental as extended to these non cable service or to extended to cable related services why is that less reasonable as a matter of statutory construction step one you're arguing step want to shop around in this writing right there right there on top explain me from an in an interpretive way why that's incidental to being small as opposed to related to which was the argument that was actually before the court in the six they mean small and what you see in the cable act is not anything that is a basic structure that's designed to make sure cable systems meet the needs and interests of the community that's a basic function and it stated right in the purpose of the act one can't say i i want to make i want to establish regulatory obligations to serve and at the same time what i'm going to tell you is you have to pay for those regulatory obligations that sort of structure makes no sense and what you do in a regulatory interpretation is this court has recognized you've got to look at the act as a whole and ask with that sort of interpretation actually we need or is it consistent with the rest of the structure of the act is there anything in the act that indicates congress only wanted us to impose small obligations on the operators whatever that could mean and i would say to you there's nothing   am i right that your essential contention on the subject that we've been talking about is the fact that while the second order and the reconsideration order say that they're following the first order they deleted those three words except as discussed below in the second order and then they denied in the reconsideration order that it was any difference and that whatever the import is is was what seeds this confusion that you're argue about here today that's going to focus in with the government's attorney when we get to her in a minute that that's what is the root cause of all i was actually turning on the first for  small group and i can tell you that what affected me was the representation of the commission to this court during a motion for stay in kind did not apply to cable related matters once i saw all that i wasn't going to come to this court and argue oh the commission's been sloppy in its language the commissions with all due respect is often sloppiness language but big question here is now the applied it in a way they've now taken what they said before and essentially dead in the remedy you're asking for is that it remained for clarification as to the position is that it as opposed to reversal i think you're going to revert on this one because under chevron i think you can under chevron i think you can find that the ruling in so far as it applies to cable related mandates isn't consistent with the plain language of the statute and it's certainly not a permissible in the statute under either chevron of the arbitrary and capricious standard but what right if we read if we reverse then they've got to start over with a new rule making proceeding if you find under chevron that the language that if you find under chevron step one that the language does not support the idea that cable related matters can be treated as franchise fees as a whole lot i think that to extent they want to reverse the issue will be a very different rule making than if you simply send it back to them for further clarification if i'm not sure what's so the import i'm guessing is that if we reversed and said that that rule making procedure was improper then you could continue to be doing what you're doing for however long it would take a new rule making to be instituted so as a practical matter you're better off with a reversal that is they have to start over that's right in the indifferent they would say they're better off for the remain and because they can bring incumbents and new entrants into the same system which is a matter of fairness they can do that faster do i basically discern the two competing objectives here i think that's right i think on remand the one the one reason and i hate to argue against myself or one reason for remand would be on the tax fear assessment issue to recognize that they never really did confront what those plain language terms meant it was never discussed in the first o issue is resolved this case they may never i can't say that the f c c would if you rule for us on that cable related are not franchise fees i'm not sure there would be a follow up proceeding there might be but generalized ruling in the second order was we can't regulate anything with respect to mixed use facilities that's not video programming related so just just just kind of normally we don't like the part for pete the basics but on this one so the deal here is the second order says that the local franchising authorities cannot regulate cable providers to the extent they're providing non cable services the extent they're right and i'm thinking may use the term video programming services like i may be mistaken but i believe it's video programming services they refer to ok which is actually  but apart from the i know you can't do this stuff ok so then you look at five section five forty four big which says that we may force any requirement contained in the franchise for video programming or for other services in the section before that says we can't establish a requirement that is we can't demand that the operator propose something with respect to video programming or of the services but that uses the actual term information services and information services uses that term specifically five forty four h there's also a provision that says we cannot regulate telecommunications services that would be completely unnecessary b supplier if the act didn't generally allow us to go beyond cable service what section i believe that's five twenty two and i think it's see i can check that while there are waiting close enough the section five fifty one the privacy provisions the f c c has read that to apply to services beyond cable services and five fifty one contains a specific provision that says localities may adopt regulations with respect to privacy consistent with this action or you're ok with the commission saying that you cannot regulate tell me from getting the terminology wrong title two carriers to the extent they're providing non cable services i cannot regulate title two i cannot regulate a title to carry to extend its providing telecommunications services right i cannot regulate a title to facility except to the extent it's been used to provide cable services the law actually distinguished in the definition of cable system the exception is for title two facilities which would be fulfill these established pursuant to section two fourteen of the act not every facility non cable non common carrier facilities can be used to carry common carrier traffic that happens all the time and the f c c has recognized that but the distinction that was made in the first order and actually based on the first order we can't use our cable service authority to begin to regulate title two facilities and we have no problem with that at all ok could i go back to just the basics for a moment before we leave this item in here for the government when i got done reading all of this it seemed to me your main focus was the and that when i read the commission's response they actually don't disagree with you on the question of i know it's so then under this whole mixed use section of these pleadings i was left to wonder what's left what's left that you are actually arguing about so it must be some sort of cable services that are not it's yeah and i think it's and so what what is that they you're still arguing about or it would be wonderful if you said well w their concession you don't have a problem with their concision we actually talked about this their confession i take care of ninety percent of our problem and i'd love to say the other ten percent doesn't matter the person of just a quick nutshell what does the ten percent consist of there are a lot of server this is that are being provided called quote over the top like television services that are video services they look just like cable services but the classification is unknown right now they're clearly not telecommunications services but if an operators provide we're seeing more and more operators begin to use new technologies to deliver the same services into the home so the cable access  regulate the facility that allows us to respond to changes in technology if it limits us to doing classic cable service then some of the changes in technology we will not be able to respond to so you in that example would want to be able to regulate t v being direct of the home as opposed to cable simming somebody knows what the difference is there it's a they say they say and they say should be able to regulate it they say right at the well we don't literally we have a void where the commission has a pending rulemaking to determine whether things that are delivered using internet protocol not internet right but using internet protocol our cable service why isn't that the better place to be resolving what you say is this additional ten percent that's new over the top stuff because because if it's whether or not it's cable service if if to use and i don't mean to insult the company but if comcast is delivering cable service and something called an ip service that looks identical our argument would be it's probably should be subject to the same rules and unless the cable act prohibits us from regulating it we can deal with it we don't have to wait for the f c c to classify it in order to regulate it and rule our ability to act depends on a classification rule they may or may not issue are you saying you want to be able to regulate based on the type of facility rather the type of service we want to be able to regulate based on that we want to be able to regulate based on the type of facility the cable system and we want to be able to regulate services other than telecommunications services that are provided fine at that facility ok so you'd have cable not a yes to my question  yes so you'd have cable you wouldn't have telephone and you would have whatever's left whatever's left yes ok and that's the information services actually categorize it when you get right down to it but most of the information categories and the idea that this is what you're wor please the court my name is maureen fly and i'm here this morning on behalf of the federal communications commission before i get started with my presentation i want to rebut the point that opposing counsel made he argued that had he known that the first report an order covered cable related in kind contributions he would have preferred issue and that underscores his point that the commission somehow extended the first report martin's ruling and the second import marker i want to read to your from petitioners brief when they challenge the first report in order before this court no wiser community if you look at the appendix that page four forty nine and four fifty the section is headed cable service to government buildings and other in kind services are not franchise under the act which is the argument that he's making today so in terms of responding to his phrase but that said you did tell this court didn't you in alliance that mandates for free or discounted cable services would not count against the five he did and that was a mistake it was interstate hoopers it was but it was ok but i mean here's the way it normally works in litigation if you make a representation to the court in the course of seeking an order from the court and you get that order you are stuck with that representation per judicial stoppel throughout the litigation but your honor what happened here was the  doesn't you're you're saying it that you guys this was a stay a motion i got to follow but somebody filed a motion probably the other side to stay the effect of your i guess first order right during the would they make this i'm not talking about his conduct or their conduct i'm talking about the commissions in telling this court hey you should not stay the effect of the first order because the first order does not treat non it does not treat cable service kind of you know exactions towards the five percent cap you know just so we let this order take effect and we say you know what ok fine we'll let it take effect told us in seeking an order which it caught in the first appeal that this cap include did not include something that the commission now says it does include player on or again that goes back to the state paper did not make that doesn't matter it's doesn't matter you try to case your honor that you your honor do either of you think that you either will ultimately win or lose you started on a very curious way this morning when we got a lot to talk about you said i want to address his statement that he would have brief something differently who cares i would say unless you think this is somehow dispositive let's get to the five percent franchise fee and then we'll give you five minutes on mixed use agree with you because my to talk about there so it seems to me that that what the commission is doing here is saying on this issue that the second order parallels the first order when the second order omits what seems to be supporting the language from the from the first order so that we're trying to figure out what difference that omission means and then so then you're going to clear this up seven years later in the reconsideration when you double down on saying the second order didn't change the first you know so far interpret would you please allow us to finish our questions before you jump in i know you're frustrated and we are too i'm just that's good this is good when marshall so explain why the what seems to be a clear change in language i didn't repeat those three words that then refers to a whole other section why isn't that a change that is then not explained because you because you double down in the reconsideration order and say there isn't any difference in the first local franchise in story and paragraph one of four you were clearly referring to cable related kind of contributions because that section appears and a part of the order in kind contributions as discussed but those are the only in kind contributions covered those not on cable in kind contributions discussed in the next section but if that's the case the example of free or discounted services providers who a local franchising authority would be superfluous now they go on to argue when they're applying for it as discussed below modifies every example and that sentence but that doesn't make any sense because the one of the other examples in that sentence are application and processing fees well those are clearly cable related and they would fall outside the ruling and paragraph so right now you're arguing that the commission reasonably construed its first order what it issued it second i think that mr van is also arguing he's making a chevron step want to argue on this point and he's saying that when you look at the structure of this act as a whole it's simply me makes no sense to say that cable related obligations in the franchise agreement if a local franchising authority could require a cable operator to pay a five percent franchise fee and then require the cable operator to provide unlimited in kind contributions over and above the franchise fee and with monetary kamens there no longer is a statutory cap on franchise fees now the commission and congress are not telling local franchising authorities that they cannot impose obligations the value of that obligation has to count against the franchise and that's captured in the incidental exception in six twenty two shey two d where it talks about the only charges and requirement that don't count against the franchise to cap are those the what's the scope of what you're saying is captured as part of the franchise fee i mean obviously mr van even has a concern that that thing more like perhaps a buildout requirements and less like had are being counted as part of the franchise fee what your understanding of that the limitation is postman it says imposed by a franchise in authority or over other government entity on a cable operator subscriber or both lea because of their status as such so for example a buildout obligation or simply the cable operators operating costs those are imposed by the franchising authority as part of the franchise and similarly rate regularly explain that because it's not so the sense that this term franchise fee only requirements are we talking about instances where the the provider really doesn't want to expand its service because it's just not very profitable to extend the lines a long ways to reach just a handful of commission the way we read franchise section two six twenty two shey wine is to hold that if it's something that's permissible under the cable act that is not expressly provided for it's not a situation other provisions of the act say local franchise in authorities can regulate rates or build out allegations the franchise really covers those sort of voluntarily voluntary commitments made by the cable operator and not it the franchise rulings in the first reporter to the second report in order so if you disagree with that framework that's a framework that we import it i mean on the first up here there are errors so i make sure i see where this is going ok in the second order that you say is extending the first order the end result is if i understand this right that all in kind payments have to count towards the fee cap right now if we go back to the first order the first order says it refers to all in kind payments or services but then it modifies that by saying or discussed below right i agree in part as well that's what a says how can you disagree with that i'm talking it well is the word kind contributions made by l a phase that are unrelated to the provision of cable services are subject to the statutory five percent get fed french as we came back that's what it says right so it just seems at least logically speaking that the negative inference from that is that things that are related to the british and of cable services are not subject to that why is that not a reasonable construction of that ones that are unrelated to the provision of cable services your honor and that same sentence at last free or discounted services and because that paragraph appears in a section of the order and titled charges that charges that are related to enforcing and awarding of a franchise free or discounted services and that contacts are referring to free or discounted cable so the answer to the question is the reason why these orders are consistent is and it's not affected by the emission of this language is because of one of the three examples that were employed in the first order from which the reader would have then known that any in kind payments related to cable services are also subject to the french it absolutely is that the answer is the answer because it's ok it's just i did say that let me just say that makes no sense to me whatsoever so my hope would be just take a couple minutes just to tell me why you're right and i'm wrong and then the most obvious as a question of move on to med students seems to me the reason probably same thing as in kind payments as discussed below it all in kind contributions were covered by paragraph one of five which refers to nine cable in kind contributions there would be no need to put free or discounted services in that sentence and in fact every other example in that sentence is cable related we talk about application and processing it's right application processing these are clearly cable related the s sweat in kind payments as discussed below because it's trying to distinguish those kind contributions from free or discounted services which time contacts clearly are cable related every example and that s phase on notice that your regulating cable related services and they count towards a five percent and you've done that all out i mean that and that you meant that all we did mean that all along and i think we find so why did you take seven years on this re provided to a local franchising authority and then says likewise any requests made by local franchising authorities that are unrelated to the provision of cable services by new competitive entrant are such that both of those are subject to the statutory path so this kind assumes going back to your conversation with judge kessler that when the court drafted that order alliance that they were relying upon what you told them before which was something the opposite they're citing j a five thirty query whether that's your brief so we extended that same holding to become the cable operators and the second reporting order because we found that the definition of cable system did not differentiate between scuse me telecommunications carriers and cable operators now when mr mann even comes out here and says that facilities are regulated based on the classification of a carrier he is absolutely wrong and that is in conflict with the so we've already established when a facility in a cable network carries telecommunications services it's a telecommunications facility and that's because telecommunications in section three forty six of the system to provide telecommunications services it's not part of the cable system and it's off limits to local franchising authority so the way that we interpret the act the classification of  depend on the classification of the owner when the facility was deployed it's based on the services running across it we also read the cable act to restrict cable operators to regulating cable services in the facilities to mandate and regulate finance but what we don't agree with is that somehow there are limited authority over i and that allows a number on authority over and for nation services again go back to the fact that our ruling in the first report in order was that under the definition of panel system cable franchising authorities cannot regulate the facilities used to provide on cable service  on cable services not just telecommunications services only did that is all we did is extend that second report in order so just find this information services exception that he's looking for you would have to practically overrule the next use network rolling in the first report in order in your world is there some way the you all know the difference between the information services that are provided and i net and other information services that apparently is the ten percent you're remaining fighting about  tell the difference is in your world can you tell the difference you don't tell the difference between service you tell the difference between facilities some facilities can carry information services other facilities can't get i don't have it all but i'm basically saying i'm good thank you thank you recognizes that non title two facilities title two facilities are subject to regulation is common carrier facilities can be used to carry telecommunications services here's what i'm hoping that you'll drill down to either want us to say that facility of a common carrier which is what the access means title to facility and i'm having trouble finding why that's true it seems counterintuitive under the act it's a facility of a common carrier subject to title two and then i when you look at the f c c first order it refers to the two local exchange facilities the title to it actually refers to title two facilities so we the facilities of a common carrier subject title to every the subject title to is qualifying the facility not the common carrier common carrie by definition subject to title two so the subject of title two must refer to the facility and that's how it was referred to in the original order are you what statutory provision are you referring to the definition i think is reading i think it says it has a facility of a what the act i think was meant to do is keep us from controlling the telephone company facility remember when this was written cable companies were leasing capacity from telephone systems to provide cable service so in the context of the time it made sense as a way to prevent us from laois to regulate the cable service whatever was being used for cable service without extending that into an area over a title to facilitate it would be subject to the state or to the calico or to the federal government what doesn't make sense is to say i'm now going to extend that to any service other than cable service i'm going to accept of sylvie's being used to provide other services it's not subject  regulation there's no way you can get to that point from that exception and by the way these companies don't consider it when the state we have record evidence that these companies we submitted record the thing these companies who own the cable systems aren't common carriers they aren't registered as common carriers in any state they have to see the areas that provide services that are common carrier services that flow over their network so they don't consider them to be title to common carrier facilities and the regulated by the f c c like title to common carriers systems so that the turning on to the new regulating these remaining ten percent over the top do want to correct one thing we're not looking to regulate information services per se there's a provision in the cable act that point out that says the operator griese to provide a broad category of service we can force it so as a cow operator said if you're not looking to regulate it then what i regulate what i was fighting over because we have there are facilities that are going in the right away that we have an interest in controlling pursuant to the franchise agreement to make sure they're built out and we don't end up with discriminatory treatment in the delivery of services across their franchise area ok