APPA LEGISLATIVE UPDATE:APPA LEGISLATIVE UPDATE:Communications Issues in Communications Issues in the 109the 109thth Congress Congress Impacting Public PowerImpacting Public Power

Desmarie M. WaterhouseDesmarie M. WaterhouseGovernment Relations RepresentativeGovernment Relations RepresentativeAPPA COMMUNITY BROADBAND APPA COMMUNITY BROADBAND CONFERENCECONFERENCEMonday, October 10, 2005Monday, October 10, 2005Boston, MABoston, MA

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Presentation OverviewPresentation Overview

The key playersThe key players Overview of major communications issues in Overview of major communications issues in

the 109the 109thth Congress Congress Discussion of efforts to amend U.S. Discussion of efforts to amend U.S.

communications laws to deal with rapid communications laws to deal with rapid technological changes technological changes – HouseHouse– SenateSenate

Discussion of community broadband legislation Discussion of community broadband legislation in House and Senatein House and Senate

Outlook for communications legislation in 109Outlook for communications legislation in 109thth Congress Congress

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Committees with Committees with Jurisdiction over Jurisdiction over Communications IssuesCommunications Issues House Energy & Commerce House Energy & Commerce

CommitteeCommittee– Telecommunications & Internet Telecommunications & Internet

SubcommitteeSubcommittee Senate Commerce CommitteeSenate Commerce Committee

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Key Players on Communications Key Players on Communications Issues on the House Energy & Issues on the House Energy & Commerce CommitteeCommerce Committee Full Committee Chairman Joe Barton (R-Full Committee Chairman Joe Barton (R-

TX)TX) Ranking Member John Dingell (D-MI)Ranking Member John Dingell (D-MI) Telecommunications & Internet Telecommunications & Internet

Subcommittee Chairman Fred Upton (R-MI)Subcommittee Chairman Fred Upton (R-MI) Telecommunications & Internet Telecommunications & Internet

Subcommittee Ranking Member Ed Markey Subcommittee Ranking Member Ed Markey (D-MA)(D-MA)

Rep. Chip Pickering (R-MS)Rep. Chip Pickering (R-MS) Rep. Rick Boucher (D-VA)Rep. Rick Boucher (D-VA)

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Key Players on Communications Key Players on Communications Issues on the Senate Commerce Issues on the Senate Commerce CommitteeCommittee

Chairman Ted Stevens (R-AK)Chairman Ted Stevens (R-AK) Ranking Member Daniel Inouye (D-Ranking Member Daniel Inouye (D-

HI)HI) Senator John McCain (R-AZ)Senator John McCain (R-AZ) Senator Conrad Burns (R-MT)Senator Conrad Burns (R-MT) Senator John Ensign (R-NV)Senator John Ensign (R-NV) Senator John Rockefeller (D-WV)Senator John Rockefeller (D-WV) Senator Byron Dorgan (D-ND)Senator Byron Dorgan (D-ND)

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Major Communications Major Communications Issues in the 109Issues in the 109thth CongressCongress Digital television transitionDigital television transition Public Safety/First RespondersPublic Safety/First Responders IP enabled servicesIP enabled services Universal service reformUniversal service reform Indecency (broadcast & cable) Indecency (broadcast & cable)

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Efforts in House to Amend U.S. Efforts in House to Amend U.S. Communications Laws to Deal Communications Laws to Deal with Rapid Technological with Rapid Technological

ChangesChanges Series of hearings in 2005 on how Series of hearings in 2005 on how

Internet Protocol (IP) enabled services Internet Protocol (IP) enabled services are changing the face of are changing the face of communicationscommunications– A view from technology companiesA view from technology companies– Competition in the communications Competition in the communications

marketplace: how technology is changing marketplace: how technology is changing the structure of the industrythe structure of the industry

– A look at the voice market placeA look at the voice market place– A look at video and data servicesA look at video and data services– A view from government officialsA view from government officials

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Wide Diversity of Wide Diversity of Witnesses at House Witnesses at House HearingsHearings Technology companies (Motorola, Alcatel, etc.)Technology companies (Motorola, Alcatel, etc.) Incumbent local exchange carriers (Bells, rural Incumbent local exchange carriers (Bells, rural

telcos)telcos) Wireless companies (Sprint, Nextel)Wireless companies (Sprint, Nextel) Inter-exchange carriers (AT&T, MCI)Inter-exchange carriers (AT&T, MCI) CLECsCLECs Cable industryCable industry BroadcastersBroadcasters Wall Street analystsWall Street analysts Government officials (state and local, including Government officials (state and local, including

APPA witness)APPA witness) Consumer groups (CFA) Consumer groups (CFA)

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Efforts in Senate to amend U.S. Efforts in Senate to amend U.S. communications laws to deal communications laws to deal with rapid technological with rapid technological changeschanges No hearings held in Senate No hearings held in Senate Chairman Stevens instead held Chairman Stevens instead held

private listening sessions with private listening sessions with invited speakersinvited speakers– Sessions were not open to public or Sessions were not open to public or

presspress– Most invitees were from industryMost invitees were from industry– Few public interest invitees Few public interest invitees

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Community Broadband: Community Broadband: Congress Finally Wakes Congress Finally Wakes UpUp Prior to 2005, there was little interest on Prior to 2005, there was little interest on

the Hill on the ability of municipalities to the Hill on the ability of municipalities to provide broadband services.provide broadband services.

With the enactment of PA right-of-first-With the enactment of PA right-of-first-refusal law at end of 2004, increasing refusal law at end of 2004, increasing national press coverage and awareness national press coverage and awareness of issue.of issue.

U.S. broadband penetration rankings U.S. broadband penetration rankings continue to drop – now 16continue to drop – now 16thth in world in world according to International according to International Telecommunications Union studyTelecommunications Union study

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Community Broadband Community Broadband Legislation – House Legislation – House In May 2005, Rep. Pete Sessions (R-TX) introduced H.R. In May 2005, Rep. Pete Sessions (R-TX) introduced H.R.

2726, the Preserving Innovation in Telecom Act of 2005.2726, the Preserving Innovation in Telecom Act of 2005. The measure would prohibit state and local governments The measure would prohibit state and local governments

from providing telecommunications, information, and cable from providing telecommunications, information, and cable services if a private provider is providing substantially services if a private provider is providing substantially similar services.similar services.

It also includes a grandfather provision that would exclude It also includes a grandfather provision that would exclude state and local governments that are providing such state and local governments that are providing such services at the date of enactment of the bill from the services at the date of enactment of the bill from the prohibition.prohibition.

The goal of the legislation is to The goal of the legislation is to “discourage local “discourage local governments from wasting taxpayer funds on building governments from wasting taxpayer funds on building duplicative infrastructure while at the same time duplicative infrastructure while at the same time encouraging private sector companies to offer continually-encouraging private sector companies to offer continually-innovating service in underserved areas by removing the innovating service in underserved areas by removing the specter of government competition.”specter of government competition.”

APPA opposes this legislation.APPA opposes this legislation.

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Community Broadband Community Broadband Legislation – Senate Legislation – Senate On June 23, 2005, Senators Frank Lautenberg On June 23, 2005, Senators Frank Lautenberg

(D-NJ) and John McCain (R-AZ) introduced S. (D-NJ) and John McCain (R-AZ) introduced S. 1294, the Community Broadband Act.1294, the Community Broadband Act.

The bill amends the section 706 of the The bill amends the section 706 of the Telecommunications Act of 1996 (47 USC 157 Telecommunications Act of 1996 (47 USC 157 note) to preclude state laws and regulations note) to preclude state laws and regulations that prohibit or having the effect of that prohibit or having the effect of prohibiting the ability of a “public provider” prohibiting the ability of a “public provider” from providing advanced telecommunications from providing advanced telecommunications capability or any service that utilizes capability or any service that utilizes advanced telecommunications capability to advanced telecommunications capability to any person or any public or private entity. any person or any public or private entity.

APPA endorsed this legislation.APPA endorsed this legislation.

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Structure of Structure of Community Broadband Community Broadband ActAct Preemption provisionPreemption provision

– Preempts state laws explicitly prohibiting broadband Preempts state laws explicitly prohibiting broadband services as well as barrier-to-entry laws.services as well as barrier-to-entry laws.

Anti-discrimination provisionAnti-discrimination provision– Requires public providers that regulate competing Requires public providers that regulate competing

private providers to apply their rules and ordinances in a private providers to apply their rules and ordinances in a non-discriminatory manner (cannot favor itself).non-discriminatory manner (cannot favor itself).

Savings clauseSavings clause– Applies all federal and state telecom laws applicable to Applies all federal and state telecom laws applicable to

all private providers of broadband services to public all private providers of broadband services to public providers.providers.

Definition of public providerDefinition of public provider– State or political subdivision thereof, any agency, State or political subdivision thereof, any agency,

authority, or instrumentality of a state or political authority, or instrumentality of a state or political subdivision thereof.subdivision thereof.

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Broad Communications Broad Communications Legislation That Includes Legislation That Includes Language on Community Language on Community Broadband – Senate Broadband – Senate On July 26, 2005, Senator John Ensign (R-NV) On July 26, 2005, Senator John Ensign (R-NV)

introduced S. 1504, the Broadband introduced S. 1504, the Broadband Investment and Consumer Choice Act of 2005.Investment and Consumer Choice Act of 2005.

The measure seeks to further deregulate the The measure seeks to further deregulate the telecommunications marketplace by telecommunications marketplace by eliminating “government managed eliminating “government managed competition of existing communications competition of existing communications service,” and to provide parity between service,” and to provide parity between functionally equivalent services. functionally equivalent services.

The bill also includes language on the ability The bill also includes language on the ability of municipalities to provide broadband of municipalities to provide broadband services (section 15), which APPA opposes. services (section 15), which APPA opposes.

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S. 1504, the Broadband S. 1504, the Broadband Investment and Consumer Investment and Consumer Choice Act of 2005Choice Act of 2005 Key provisions of legislationKey provisions of legislation

– Eliminates franchising requirements for video providers.Eliminates franchising requirements for video providers. Retains 5% franchise feeRetains 5% franchise fee Eliminates build out requirementsEliminates build out requirements Prohibits access to video distribution facilities by other Prohibits access to video distribution facilities by other

video providersvideo providers– Precludes federal, state, and local governments from Precludes federal, state, and local governments from

regulating rates, terms, price, or quality of any regulating rates, terms, price, or quality of any communications service; imposing open access communications service; imposing open access requirements; and regulating rates, terms, or conditions requirements; and regulating rates, terms, or conditions on leasing access to facilities by third parties.on leasing access to facilities by third parties.

– Ensures access to content for subscribers.Ensures access to content for subscribers. Limits the ability of state and local governments Limits the ability of state and local governments

to provide communications services (section 15).to provide communications services (section 15).

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Structure of Section 15 – Structure of Section 15 – Municipally Owned Municipally Owned NetworksNetworks Provision on Protection Against Undue Provision on Protection Against Undue

Government Competition with the Private Government Competition with the Private Sector Sector – Requires state and local governments seeking to Requires state and local governments seeking to

provide communications services to “provide provide communications services to “provide conspicuous notice of the proposed scope of the [] conspicuous notice of the proposed scope of the [] service to be provided including: cost; services to be service to be provided including: cost; services to be provided; coverage area; term; and architecture.” provided; coverage area; term; and architecture.”

– Requires detailed accounting of “all proposed Requires detailed accounting of “all proposed accommodations that such government owned accommodations that such government owned communications service would enjoy,” such as communications service would enjoy,” such as below-cost or free right-of-way access; any below-cost or free right-of-way access; any beneficial or preferential tax treatment; bonds, beneficial or preferential tax treatment; bonds, grants, or other sources of funding unavailable to grants, or other sources of funding unavailable to the private sector; and land, space in buildings, or the private sector; and land, space in buildings, or other considerations. other considerations.

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Structure of Section 15 – Structure of Section 15 – Municipally Owned Municipally Owned NetworksNetworks Open Bidding ProvisionsOpen Bidding Provisions

– Requires governmental entities to open bidding on Requires governmental entities to open bidding on communications networks to “non-governmental communications networks to “non-governmental entities” within 90 days of issuing notice on such entities” within 90 days of issuing notice on such projects. projects.

– This bidding process must be conducted by a “neutral This bidding process must be conducted by a “neutral third party” (not defined in bill). third party” (not defined in bill).

– Once all bids have been submitted, preference must be Once all bids have been submitted, preference must be given to “nongovernmental entities” if their bids are given to “nongovernmental entities” if their bids are identical to that of the local or state government. identical to that of the local or state government.

Open Access to Non-Governmental Entities Provision Open Access to Non-Governmental Entities Provision – If a governmental entity wins the bid, a If a governmental entity wins the bid, a

“nongovernmental entity… [would] have the ability to “nongovernmental entity… [would] have the ability to place facilities in the same conduit, trenches, and place facilities in the same conduit, trenches, and locations as the state or local government for concurrent locations as the state or local government for concurrent or future use under the same conditions secured by the or future use under the same conditions secured by the state or local government.”state or local government.”

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Structure of Section 15 – Structure of Section 15 – Municipally Owned Municipally Owned NetworksNetworks Grandfather ClauseGrandfather Clause

– Exempts state and local governments Exempts state and local governments providing communications services at the providing communications services at the date of enactment from the requirements of date of enactment from the requirements of section 15. section 15.

– It would not apply if the municipal or state It would not apply if the municipal or state provider decided to “substantially enter[] a provider decided to “substantially enter[] a new line of business or substantially expand[] new line of business or substantially expand[] its communications service beyond its current its communications service beyond its current service area, as such service area existed service area, as such service area existed upon the date of enactment” of the bill.upon the date of enactment” of the bill.

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Broad Communications Broad Communications Legislation That Includes Legislation That Includes Language on Community Language on Community Broadband – House Broadband – House On September 15, 2005, the House Energy & On September 15, 2005, the House Energy &

Commerce Committee released a bipartisan staff draft Commerce Committee released a bipartisan staff draft IP enabled services bill.IP enabled services bill.

The draft bill seeks to amend federal communications The draft bill seeks to amend federal communications law to govern IP enabled services such as broadband law to govern IP enabled services such as broadband Internet transmission, VoIP, and broadband video Internet transmission, VoIP, and broadband video services. services.

The measure also includes language, section 409, that The measure also includes language, section 409, that allows for “public providers” (i.e. governmental allows for “public providers” (i.e. governmental entities) to provide IP voice, video, and data services entities) to provide IP voice, video, and data services by preempting the abilities of states to prohibit or by preempting the abilities of states to prohibit or effectively prohibit such services.effectively prohibit such services.

APPA has not taken a position on the overall draft bill, APPA has not taken a position on the overall draft bill, but does support the language in section 409 but does support the language in section 409 excluding the cross-subsidy provision. excluding the cross-subsidy provision.

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House Energy & Commerce House Energy & Commerce Committee Bipartisan Staff Committee Bipartisan Staff Draft IP Enabled Services Draft IP Enabled Services BillBill Key provisions of legislation Key provisions of legislation

– Defines new categories of communications Defines new categories of communications services – broadband Internet transmission services – broadband Internet transmission service (“BITS”), VoIP, and broadband video service (“BITS”), VoIP, and broadband video service -- that are exclusively subject to service -- that are exclusively subject to federal jurisdiction as interstate services federal jurisdiction as interstate services (except where provided in the Act).(except where provided in the Act).

– Requires BITS, VoIP, and broadband video Requires BITS, VoIP, and broadband video providers to register with FCC and state PUC.providers to register with FCC and state PUC.

– Imposes network neutrality requirements Imposes network neutrality requirements (BITS provider cannot block access to (BITS provider cannot block access to content).content).

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House Energy & Commerce House Energy & Commerce Committee Bipartisan Staff Committee Bipartisan Staff Draft IP Enabled Services Draft IP Enabled Services BillBill Key provisions of legislation (cont’d)Key provisions of legislation (cont’d)

– Gives VoIP service providers right and duty to Gives VoIP service providers right and duty to exchange voice communications with other VoIP exchange voice communications with other VoIP service providers and telecommunications carriers.service providers and telecommunications carriers.

– Imposes 911 and E-911 requirements on VoIP Imposes 911 and E-911 requirements on VoIP providersproviders

– Requires FCC to conduct inquiry on whether VoIP Requires FCC to conduct inquiry on whether VoIP service providers should contribute to universal service providers should contribute to universal service fund.service fund.

– Eliminates franchising requirements for broadband Eliminates franchising requirements for broadband video service providers.video service providers.

Retains 5% franchise feeRetains 5% franchise fee Retains PEG channelsRetains PEG channels Prevents redliningPrevents redlining

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House Energy & Commerce House Energy & Commerce Committee Bipartisan Staff Committee Bipartisan Staff Draft IP Enabled Services Draft IP Enabled Services BillBill Key provisions of legislation (cont’d)Key provisions of legislation (cont’d)

– Imposes certain Communications Act of Imposes certain Communications Act of 1934 requirements such as 1934 requirements such as retransmission consent, must carry, etc.retransmission consent, must carry, etc.

– Preempts states from enacting laws, Preempts states from enacting laws, regulations, or other legal requirements regulations, or other legal requirements that would prohibit or have the effect of that would prohibit or have the effect of prohibiting “public providers” (i.e. prohibiting “public providers” (i.e. governmental entities) from providing governmental entities) from providing BIT, VoIP, or broadband video services BIT, VoIP, or broadband video services (section 409).(section 409).

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Structure of Section 409 – Structure of Section 409 – Government Authority to Government Authority to Provide ServicesProvide Services Preemption provisionPreemption provision

– Prevents states from enacting laws that prohibit or Prevents states from enacting laws that prohibit or have the effect of prohibiting public providers from have the effect of prohibiting public providers from providing BITS, VoIP, and broadband video providing BITS, VoIP, and broadband video services.services.

Competition neutrality provisionCompetition neutrality provision– Prevents governments providing BITS, VoIP, and Prevents governments providing BITS, VoIP, and

broadband video services from granting any broadband video services from granting any preference or advantage to itself (anti-preference or advantage to itself (anti-discrimination).discrimination).

– Applies to such things as (not exclusive list):Applies to such things as (not exclusive list): Use of public rights of wayUse of public rights of way PermittingPermitting Performance bondingPerformance bonding ReportingReporting

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Structure of Section 409 – Structure of Section 409 – Government Authority to Government Authority to Provide ServicesProvide Services Cross-subsidization provisionCross-subsidization provision

– No language included, just placeholder.No language included, just placeholder. Compliance with other laws provisionCompliance with other laws provision

– Subjects public providers to the same laws Subjects public providers to the same laws and regulations that apply to providers of and regulations that apply to providers of BITS, VoIP, and broadband video services.BITS, VoIP, and broadband video services.

Definition of public providerDefinition of public provider– State or political subdivision thereof, any State or political subdivision thereof, any

agency, authority, or instrumentality of a agency, authority, or instrumentality of a state or political subdivision thereof.state or political subdivision thereof.

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Legislative Outlook on Legislative Outlook on Communications BillsCommunications Bills House Energy & Commerce House Energy & Commerce

Committee staff draft IP enabled Committee staff draft IP enabled services billservices bill– Hearing on draft possible later this Hearing on draft possible later this

fall.fall.– Mark up at subcommittee and full Mark up at subcommittee and full

committee also possible this fall.committee also possible this fall.– Passage of a bill by the House unlikely Passage of a bill by the House unlikely

in 2005; probable in 2006.in 2005; probable in 2006.

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Legislative Outlook on Legislative Outlook on Communications BillsCommunications Bills Ensign Bill – S. 1504Ensign Bill – S. 1504

– Unlikely to move as a stand alone Unlikely to move as a stand alone measure.measure.

– Chairman Stevens likely to take Chairman Stevens likely to take parts of Ensign bill when he begins parts of Ensign bill when he begins drafting comprehensive drafting comprehensive communications legislation.communications legislation.

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Legislative Outlook on Legislative Outlook on Communications BillsCommunications Bills Draft Senate bill by Chairman StevensDraft Senate bill by Chairman Stevens

– Possible by spring 2006.Possible by spring 2006.– It is unclear whether such a bill will follow It is unclear whether such a bill will follow

the approach taken in the House.the approach taken in the House.– May include universal service reform.May include universal service reform.– Unclear whether it would include language Unclear whether it would include language

on municipal broadband.on municipal broadband.– It is unclear whether the Senate will move It is unclear whether the Senate will move

comprehensive communications comprehensive communications legislation in the 109legislation in the 109thth Congress. Congress.

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Legislative Outlook on Legislative Outlook on Communications BillsCommunications Bills Lautenberg-McCain Bill – S. 1294Lautenberg-McCain Bill – S. 1294

– Not likely to move as a stand alone measure.Not likely to move as a stand alone measure.– Likely to be offered as an amendment to a Likely to be offered as an amendment to a

comprehensive communications bill marked comprehensive communications bill marked up by the Senate Commerce Committee.up by the Senate Commerce Committee.

– There is a small possibility of a hearing on There is a small possibility of a hearing on municipal broadband in the Senate at some municipal broadband in the Senate at some point in 2006.point in 2006.

– Important to get as many cosponsors as Important to get as many cosponsors as possible for the bill to show Chairman possible for the bill to show Chairman Stevens strong support for community Stevens strong support for community broadband.broadband.

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Legislative Outlook on Legislative Outlook on Communications BillsCommunications Bills PredictionsPredictions

– No comprehensive communications bill No comprehensive communications bill will be enacted in the 109will be enacted in the 109thth Congress. Congress.

– At a minimum, this is probably a three to At a minimum, this is probably a three to four year process.four year process.

– If such a bill includes universal service If such a bill includes universal service reform, it could slow down the process.reform, it could slow down the process.

– The issue of community broadband will The issue of community broadband will be addressed in a comprehensive bill.be addressed in a comprehensive bill.

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Wrap UpWrap Up

Thoughts? Questions?Thoughts? Questions?– Feel free to contact me at:Feel free to contact me at:

dwaterhouse@appanet.orgdwaterhouse@appanet.org 202-467-2975202-467-2975