THE BUSINESS OF TELECOMMUNICATIONS: PAST PRESENT AND FUTURE

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THE BUSINESS OF TELECOMMUNICATIONS: PAST PRESENT AND FUTURE Powered By Docstoc
					      Law Seminars International
Local Telecommunications Infrastructure


                 Nicholas P. Miller
            Miller & Van Eaton P.L.L.C.
                   (202) 785-0600
            www.millervaneaton.com

                    August 23, 2001




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Introduction

Convergence
Conflicting Business and Regulatory
 Models
Legal Developments--Be Careful What
 You Wish For




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Convergence

New PROW Investment Patterns by
 Traditional Industries:
Cable moving to “fiber to the neighborhood”
Telephone industry moving to fiber
 augmented XDSL
Provision of local fiber directly to high-end
 consumers (e.g., Competitive Local Exchange
 Carriers (CLEC’s))
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CATV -- 1990




               Fiber
               Copper Coax
               Copper Twisted Pair
      CATV -- TODAY

POP




                      Fiber
                      Copper Coax
                      Copper Twisted Pair
                            TELCO -- 1990

           Local Central Office        Local Central Office




Long
Distance                          TANDEM

                                                              Fiber
                                                              Copper Coax
                                                              Copper Twisted Pair
                   TELCO -- TODAY
           ILEC                  ILEC




                          CLEC
Long
Distance

             POP                        Fiber
                                        Copper Coax
                                        Copper Twisted Pair
      CONVERGENCE




                    Fiber
                    Copper Coax
                    Copper Twisted Pair
POP   CLEC
               Summary
Crossover Point between Costs and Revenues
 Changing
No increase in competition to individual
 consumer
Major increase in PROW occupancy



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The Telecomm Act of 1996--Focus on
       Title II; Ignore Title VI

Open all tcom markets to all providers
Nondiscriminatory interconnection of all
 networks
RBOC’s compete when local telephone
 market is “contestable”
Expansion of universal service



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The Statutory Problem in 2001

 Broadcast/CATV/Telephone Content have “merged”
   consumer choice drives content sent
   advertising and pay-per-use and flat rate prices in all
    industries
 Continued logic to regulatory jurisdictional “silos”?
      local/feds regulate CATV
      state/feds regulate telephone
      feds regulate wireless/broadcast



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The Business Model Problem in
2001

Cable: Control Network Content
  contract w/ customers & suppliers
  limited and local regulation of prices and services
  community benefits through PEG/franchise fees
TeleComm: No Control on Network Content
  non-discriminatory tariffs
  guaranteed interconnection
  community benefits through universal service
  regulate/preempt local Eaton PLLC
                  Miller & Van
                               authority             12
Detailed Arguments on the Margin

Title VI
Title II
The Courts’ Confusion




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Title VI Definitions

“Cable System” -- ECI
  excused from franchise--but few are pursuing
“Cable Service” -- Cable Modem cases
  FCC reluctant?
  Both telco and catv appear to want non-common
   carrier treatment
“Information Service”
  only a Title II issue
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Title II (Sec. 253) Definitions

What is a “prohibition”?
  Auburn: everything
  Coral Springs: a factual question
What is “use”?
  Dallas II: only physical occupancy
  Dearborn: anticipatory and inchoate uses



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Definitions (con’t)

What is “management”?
  Troy (FCC): specific list, community burden to
   prove
  Coral Springs: a factual question, safe-harbor
   analysis
What is “fair & reasonable compensation”
  Dallas II: Allocated Direct and Indirect costs
  Prince Georges I: Cost of Regulation
  Dearborn: reasonably related to value conveyed
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Fundamental PROW Dispute

 is “franchise” a regulatory relationship? a
 property interest?




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Case outcomes determined by this
question

  Dearborn; Cablevision of Boston: right to occupy
   PROW is property interest, subject to state
   property law.
  Auburn; Prince Georges II; Chattanooga: PROW
   occupancy is a regulatory interest, subject to state
   and federal regulatory exclusion.
  Coral Springs: It’s both--if govt action prohibits,
   OK if related to property interests


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Conclusion

 Operational world is not regulatory world
Legal Approach to PROW is Still Unresolved
 Catastrophic Results for Industry If Local
   Govts Drop Out of PROW Management




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