Cable FCC Order Stay Motion
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MEMORANDUM
December 14, 2006
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Proposed FCC Order That Threatens Our Cable Franchise
Cable TV Coordinator Craig Nowack is recommending that the City join a coalition of
communities to prepare a stay motion and appeal before the FCC acts to adopt a rule
that will most likely have a very negative effect on the Dubuque Cable Franchise.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Craig Nowack, Cable TV Coordinator
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MEMORANDUM
TO:
FROM:
Michael C. Van Milligen, City Manager
Craig Nowack, Cable TV Coordinator
DATE:
December 13, 2006
RE:
Proposed FCC Order That Threatens Our Cable Franchise
INTRODUCTION
The purpose of this memorandum is to recommend the City of Dubuque join a coalition of
communities to prepare the stay motion and appeal before the FCC acts to adopt a rule that will
most likely have a very negative effect on our cable franchise.
BACKGROUND
A memorandum received today from the law firm of Miller & Van Eaton, a copy of which is
attached, seeks to form a coalition of interested communities to prepare legal action in advance
of a rule the FCC is considering that is at severe odds with our cable franchise. Although the
text of the proposed rule is not public, the Miller & Van Eaton memorandum identifies, from
published reports and other information, several areas of concern:
o It eliminates public, educational, and governmental (PEG) access support in franchise
agreements, including I-Nets and cable service to schools and municipal buildings, by
counting these benefits against the 5% franchise fee cap.
o It eliminates or restricts build-out requirements.
o It limits the amount of time a local government has to negotiate a franchise to 90 days to
an entity already in the rights-of-way and to six months to an entity not currently in the
rights-of-way.
o It limits local community oversight to cable service only, depriving municipalities of
existing consumer protection or police power authority over cable modem service.
o It possibly weighs in on AT&T's contention that its IPTV service is not a cable service.
Today's memorandum also states that FCC Chairman Martin has said that he wishes to issue
this order at the Commission's December 20 meeting. If so, Miller & Van Eaton expects
telephone and cable companies to immediately claim it as a justification for refusing to pay for
PEG and I-Net support, and build-out requirements. They recommend filing a stay motion at
once, probably on Friday, December 22. In order to do that, preparation for the stay motion
should begin immediately.
RECOMMENDED ACTION
I respectfully recommend City Council approval to join this coalition and contribute $5,000 from
the Cable TV fund's cash balance in an attempt to prevent this proposed order from
undermining our cable franchise agreement.
MILLER
& V A N
P. L. L. C.
EATON
MATTHEW C. AMES
KENNETH A. BRUNETTI*
FREDERICK E. ELLROD III
MARCI L. FRISCHKORN
GAIL A. KARISH*
WILLIAM L. LOWERY
NICHOLAS P. MILLER
MATTHEW K. SCHETTENHELM
JOSEPH VAN EATON
* Admitted to Practice in
California Only
1155 CONNECTICUT AVENUE, N.W.
SUITE 1000
WASHINGTON, D.C. 20036-4320
TELEPHONE (202) 785-0600
FAX (202)785-1234
OF COUNSEL:
JAMES R. HOBSON
GERARD L. LEDERER
WILLIAM R. MALONE
JOHN F. NOBLE
NANNETTE M. WINTER t
MILLER & VAN EATON, L.L.P.
400 MONTGOMERY STREET
SUITE 501
SAN FRANCISCO, CALIFORNIA 94104-1215
TELEPHONE (415)477-3650
FAX (415) 477-3652
t Admitted to Practice in
New Mexico Only
WWW.MILLERVANEATON.COM
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TO:
Interested Communities
FROM:
Nicholas P. Miller
Frederick E. Ellrod III
DATE:December 13,2006
RE:
Appeal of Pending FCC Order
The Federal Communications Commission ("FCC" or "Commission") is considering new
rules that may eliminate many of the benefits your community currently receives from cable
franchising. News reports suggests the cost to local communities could be millions of dollars
annually. The FCC may act at its December 20, 2006, meeting. It will be essential to seek a stay
immediately and to appeal the order to the courts. Otherwise, cable companies will use the FCC
order to immediately reduce payments and services to communities. We ask that you join a
coalition of our client communities to prepare the stay motion and appeal before the Commission
acts.
The FCC Proposes to Eliminate or Sharply Reduce PEG Support, I-Nets, Build-Out
Requirements, and Other Benefits.
Based on published reports and other information (the text of the proposed order is not
public), it appears the FCC's order would:
,
,
MILLER & VAN EATON, P.L.L.C.
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· Eliminate public, educational, and governmental (PEG) access support in franchise
agreements, including institutional networks ("I-Nets") and/or cable service to schools
and municipal buildings, by counting these benefits against the 5% franchise fee cap.
Reports differ as to whether all in-kind benefits would be affected, or only certain
categories. This could preempt state laws that ensure PEG support (such as the one
percent PEG fee in Texas), as well as local agreements and ordinances.
· Eliminate or restrict build-out requirements. Some reports indicate that build-out
requirements would be limited to what is proposed by the applicant; others suggest that a
new entrant could not be required to build out more quickly than the incumbent cable
operator did. The order may include a list of economic factors that limit local authority
to require build-outs. Here, again, state-law build-out requirements such as those in the
2006 Virginia law might be preempted.
· Limit the amount of time a local government has to negotiate a cable franchise: ninety
days with an entity already in the rights-of-way (such as an incumbent telephone
company), six months with those that do not have such a pre-existing right. Failing to get
a franchise within ninety days, a telephone company could go ahead and provide cable
service until the parties reached an agreement, the terms of which would then be
retroactive. In other words, the telephone company would not have to negotiate in good
faith.
· Limit local cornmunity oversight to cable service only. This could deprive local
governments of existing consumer protection or police power authority, such as authority
to establish customer service rules regarding cable modem service.
· Possibly address AT&T's contention that its "IPTV" service is not a "cable service"
(although it fits the federal definition) and hence does not require a cable franchise.
The proposed order may be either retroactive and affect existing franchise agreements, or
purely prospective, affecting future negotiations. In either case, any communities subject to
"level playing field" terms either in their own franchises or in state law could be affected in the
same way as if the rules were expressly retroactive.
An Immediate Appeal and Motion for Stay Will Be Necessary.
Chairman Martin of the FCC has stated that he wishes to issue this order at the
Commission's December 20 meeting. He may be able to muster the two additional votes
necessary to do so.
If the FCC issues the kind of order described above, telephone companies and cable
companies will immediately claim it as a justification for refusing to pay for existing PEG
requirements, build-out requirements, and the like. They will also demand action on new
I
MILLER & VAN EATON, P.L.L.C.
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franchises according to the deadlines set by the FCC. Thus, the FCC order would have an
immediate effect on current negotiations. Any withheld payments or stoppage of institutional
networks, closing of studios, or the like, will be immediate and severe.
A stay motion should be filed at once, to attempt, if possible, to delay the effectiveness of
the FCC order while an appeal is pending. Federal rules state that a stay must be sought from the
FCC before a stay motion can be filed with a court. Thus, the first action would be to file a
motion for stay with the Commission - probably on Friday, December 22.
Wide Support from Local Communities Will Be Needed.
We expect any legal action on the anticipated FCC order will be coordinated with the
national organizations - the National Association of Counties, the U.S. Conference of Mayors,
the National League of Cities, NATOA, and others. But a wide base of support will be
necessary. The normal budgets of the national organizations provide only limited resources for
major litigation. The FCC order in question, however, would so fundamentally impair the rights
and benefits of local govemments that failure to mount a full-scale effort could have grave
consequences for communities nationwide. We are thus urging as many communities as possible
to commit both their names, and their funds, to this effort.
Only those communities (or groups) that were parties to the FCC's rulemaking will be
directly eligible to bring an appeal. Those who did not participate in the rulemaking, however,
may enter the proceeding as intervenors. The number of local communities will affect how the
court sees the case. (In the 1994 rate regulation appeal, one judge actually asked at oral
argument why more cities and counties were not among the appellants.) The more supporters,
the less financial support will be needed from anyone community.
We are thus requesting that as many local communities as possible agree to act as parties
or intervenors in the appeal, and commit $1,000, $5,000, or $10,000, depending on size, to the
coalition of MVE clients. Please contact Nick Miller or Rick Ellrod as soon as possible (202-
785-0600, fellrod@millervaneaton.com, nmiller@millervaneaton.com) to let us know whether
you can participate. Please feel free, of course, to contact us also with any questions or
comments.
/.]
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