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The Municipal Wire

In Issue 1 (Fall/Winter, 2000):

• Cable Competition Emerging in New England
• AT&T/MediaOne Cable Modem Policy in Transition
• Municipalities Negotiate Agreements for Metricom Wireless Internet
• Governor Vetoes Mass Municipal Wireless Siting Proposal
• DTE Issues New Pole Attachment Regulations
• The Legal Wire

Cable Competition Emerging in New England

Approximately twenty-two Massachusetts municipalities have awarded competitive cable television licenses to RCN-BecoCom, with twelve RCN systems now  built and operational.  In Rhode Island, American Broadband, Inc. has applied for state authorization to provide competitive cable services in seven of the state's thirteen regional service areas.  Municipal and state officials have generally responded favorably to the emergence of cable competition, hoping that it will provide consumers with a choice of cable provider and promote price stability.  Franchising authorities are also interested in RCN and ABI proposals to provide Internet service, Institutional Networks and public, educational and governmental (“PEG”) access channels, facilities and support.

Competitive cable licensing has raised new legal and policy questions for franchising authorities, including the issue of how "level playing field" clauses in some existing licenses may require that RCN license terms be comparable to those in the existing license.  In Rhode Island and New Hampshire, state law imposes certain level playing field requirements on competitive cable systems.  In the area of Institutional Networks (“I-Nets”), both RCN and ABI are willing to dedicate fiber for municipal interconnection purposes, which presents municipal officials with new I-Net planning options.  Franchising authorities are also addressing whether new cable competitors should have the right to retransmit municipal meetings and other access programming provided by incumbent cable operators.  As incumbent cable operators have allowed RCN to retransmit access corporation programming, but not other local programming, a number of Towns are deciding to create access corporations to manage local programming. As RCN and other New England cable "overbuilders" (and other telecommunications providers) expand, franchising authorities must address basic right-of-way management issues such as grant of location terms and conditions (where applicable), street opening permits, coordination of right-of-way construction, police details, performance bonds, insurance, indemnification and other right-of-way concerns.

AT&T/MediaOne Cable Modem Policies in Transition

The close of year 2000 will mark the expiration of the FCC’s MediaOne (now AT&T) rate settlement, known as the ‘Social Contract,’ which provides for free cable modems and free Internet service to public schools.  AT&T states that it will continue a free school modem to schools under a voluntary industry initiative, the School Connections Program.  Municipal officials are pleased with this development, but are nonetheless faced with long-term planning problems as a result of AT&T’s reported unwillingness to confirm this commitment in cable franchise language.  While MediaOne has been installing cable modems in schools and libraries for several years, it has not launched cable modem service for other non-school municipal buildings, such as town halls. 

Municipalities Negotiate Right-of-Way Agreements for Metricom Wireless Internet

Approximately forty-seven Massachusetts and Rhode Island towns and cities, including Boston, have authorized Metricom, Inc. to install wireless Internet radios on street lamps in the municipal right-of-way.  The right-of-way agreements address, among other things, equipment specifications, pole owner consent, applicable local laws, FCC radio authorizations, non-exclusivity, removal of radios, removal bonds, insurance and indemnification, fees and municipal Internet services.  In Massachusetts, Towns must determine the applicability of the grant of location requirements in Mass. Gen. Laws Ch. 166, s.22 and likewise make a threshold determination of the applicability of zoning and other local by-laws. 

In a recent Massachusetts Department of Telecommunications and Energy ("DTE") rulemaking on non-discrimination in pole attachment and right-of-way access (see below, “DTE Issues New Pole Attachment Regulations”), the DTE confirmed the potential applicability of the grant of location statute to wireless technology located in the public right-of-way.  Metricom provides mobile wireless Internet services and competes with “hard-wire” Internet providers such as AT&T, RCN, AOL and DSL vendors.  As Metricom may be the first provider to occupy the street light "bracket," municipalities need to recognize that future providers may assert the right, pursuant to federal law,  to occupy similar space.

Massachusetts Governor Vetoes Municipal Association Wireless Siting Bill

In July, 2000, Governor Paul Cellucci vetoed the Massachusetts Municipal Association’s ("MMA") proposed legislation to eliminate DTE preemption of municipal wireless tower and facility zoning.  Although the 1996 Telecommunications Act explicitly allows local zoning of wireless facilities (so long as the zoning is neither prohibitive nor discriminatory), Massachusetts is one of the few states that allows utilities to petition for state preemption of such local zoning.   When requested to do so by a wireless provider, the DTE typically acts to override local zoning of wireless facilities.  Municipal officials generally supported the MMA bill following the DTE’s Nextel decision.  In the Nextel  case, DTE staff initially found that wireless service providers were not utilities within the meaning of the zoning exemption statute, but the DTE reversed the staff ruling, thus upholding state preemption of local zoning.

DTE Issues New Utility Pole Attachment Regulations

The Massachusetts Department of Telecommunications and Energy (“DTE”) issued new regulations implementing the 1996 Telecommunications Act pole attachment discrimination ban.  (DTE Docket 98-36.)  Under the Telecommunications Act, the Federal Communications Commission has jurisdiction over pole attachment discrimination cases.  States may take jurisdiction by certifying the adoption of their own pole attachment non-discrimination regulations.  (47 U.S.C. 224.)   Under the new regulations, the DTE takes original jurisdiction over access discrimination proceedings, including access to utility poles, conduit and even access to certain multiple-dwelling unit and commercial building rights-of-way.  The availability of state jurisdiction is expected to make it easier for companies such as RCN to gain access to utility poles.  By applying the non-discrimination regulations to utilities and owners of multiple dwelling units with telecommunications attachments, the DTE has gone further than the FCC in its prohibition of pole attachment discrimination.

The Legal Wire

AT&T Closes MediaOne Deal and is Acquiring Cablevision Licenses in Massachusetts 
AT&T closed the business side of its merger with MediaOne and is now completing its acquisition of Cablevision’s Massachusetts systems.

Portland Open Access Case  
A U.S. Circuit Court of Appeals rejected the City of Portland, Oregon cable television license transfer requirement that AT&T provide "open access" to its cable system for competing Internet service providers.  The court found that cable Internet services were telecommunications services, not cable services, and therefore not subject to the cable franchise transfer process.   Because some communities may now be receiving a percentage of their cable operators cable modem revenues, the Portland ruling may impact the calculation of fees paid to these communities, however, it should be noted that the Portland decision is not a binding precedent within New England.  The DTE Mass. Cable Television Division also recently held that a municipality could not condition a franchise transfer request on the provision of open access.  The Cable Division’s ruling was based on existing Massachusetts transfer regulations that prohibit the conditioning of license transfer on amendments to the license.  (See 207 CMR 4.04(2))  

Federal Court Limits Local Zoning of Wireless Facilities  
In Omnipoint Communications v. Town of Lincoln (August, 2000), the United States District Court (Massachusetts) held that although the 1996 Telecommunications Act authorizes towns and cities to adopt non-discriminatory zoning by-laws regulating wireless communications towers and facilities, if a zoning by-law is so restrictive that it causes "significant gaps" in wireless coverage, then that by-law may be found unduly prohibitive and therefore in violation of the Telecommunications Act.

Uniform Computer Information Transactions Act Recommended 
Earlier this year, the National Conference of Commissioners on Uniform State Laws approved the Uniform Computer Information Transactions Act (UCITA), providing a recommended framework for Internet, software and computer-related commerce.  Such proposed uniform laws are typically adopted by most states after recommendation by the Commissioners.  Adopted in Virginia and Maryland, the Computer Information Transaction Act would make it easier for e-commerce consumers to establish jurisdiction in the state of delivery of Internet purchased goods, and the Act clarifies the applicability of implied warranties to consumer information products. 

Clinton Signs Cyber Signature Act
New legislation on electronic signatures became effective October 1, 2000, establishing ground rules for e-commerce contract execution.  The law requires consumer consent to proceed with Internet contract formation, and allows a consumer to withdraw consent and proceed with a non-electronic contract. 

Taxes not Inevitable on Internet 
Internet sales continue free from state and local sales tax, while “brick and mortar” stores pay the tax on the sale of identical goods.  A majority of Congress’s Internet Tax Commission supported continuing tax-free Internet sales, but state and local officials are questioning the equity of taxing traditional store sales while Internet sales remain tax exempt. 

The "Municipal Wire" is a newsletter produced by Epstein & August, LLP. The Municipal Wire focuses on developments in cable television regulation and related municipal technology issues. Readers are advised that the newsletter is for general information purposes and should not be applied to individual situations without inquiry or legal counsel as needed.

Editor's Note: The Municipal Wire is published by Epstein & August, LLP, a partnership of attorneys Bill August and Peter Epstein. We look forward to sharing information on local, state and federal cable television, telecommunications and public right-of-way issues. We extend special thanks to Marc Lucas for his editorial assistance. Copyright Epstein& August, LLP.

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