The FCC is pondering a Michigan town's attempt to regulate cable and phone companies in a case that could set the stage for local governments gaining the upper hand in their dealings with the firms.
The case concerns a 1995 Troy, Michigan, ordinance that requires cable and phone utilities to obtain permission before tearing up sidewalks and streets to lay new lines. Tele-Communications Inc., Troy's cable operator, asked the FCC to overturn the ordinance, which also forces the operators to obtain a US$10,000 franchise license and pay stiff fees as part of doing business in the town.
The law also requires companies to pay a fee of either 5 percent of the annual gross for operations in the town or 40 cents per foot of new cable laid inside the city limits. Additionally, the provider must set "most-favored" provisions for Troy, offering rates equal to or better than those available in the rest of the state.
The city has told the FCC that the law is the only way it can keep control of its own streets and other public facilities affected by the business activities of the cable and phone companies. The companies say the ordinance subjects them to excessive regulation.
The Wall Street Journal reported Wednesday that though the FCC isn't likely to endorse Troy's law, it will probably not issue an order overturning it, either. Comments from the FCC Wednesday seemed to support that conclusion.
The "franchise" allows the city to oversee construction, says John Logan, deputy chief of the Cable Bureau at the FCC. "If you go dig up the street, there has to be some coordinating entity."
The fees, says Mark Van Bergh, an attorney at Roberts & Eckard, the Washington, DC, firm that defended the ordinance before the FCC, are established to offset the city's costs of managing the developments. "When somebody cuts into a street, it cuts into the life of the street considerably," says Van Bergh. "Usually a street lasts 18 years. After two or three cuts, suddenly it's nine only years. The streets are going to suffer."
Moreover, he says, the fees that were ultimately adopted are "far below city's cost" for allowing the development. TCI was unwilling to comment on the potential ruling. "[The franchise process] is under the state constitution," he says. "Troy is in the process of an $85 million bond issue for resurfacing their streets. They have to get involved."
But telecom advocates see the costs as a kind of municipal graft. "The problem here is that cities think that this is their chance to cash in on the telecom revolution happening under their streets," says Daniel Brenner, VP of law and regulation for the National Cable Television Association. "The real benefit for them is if they let companies in and they can get cheap, quality telecommunications."
The regulatory fight centers on Article 253 in the federal Telecommunications Act of 1996. While the provision prohibits states from enacting laws that bar entry to a telecom company, the role of cities under the law is unclear. Brenner believes the state, not the cities, can claim the only legitimate authority: "This creates a third layer of telecom regulation by the cities.... If you've ever tried to build an addition on your house, you'll understand just how cities can create a delay." Eugene, Oregon, he notes, has even established a prohibitive 12 percent charge for new telecom construction.
from the Wired News New York bureau at FEED magazine
