Upload
earl-lee
View
214
Download
1
Embed Size (px)
Citation preview
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com
1
DIGITAL INFRASTRUCTURE AND VIDEO COMPETITION ACT OF 2006 (AB 2987)
William M. Marticorena
““Brave New Worlds”Brave New Worlds”
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 2
OVERVIEW
• Creates parallel franchising scheme at state level
• Local franchising not preempted as to any entity which holds a franchise as of January 1, 2008
• Empowers Public Utilities Commission as franchising authority
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 3
GOALS
• Promote video and broadband competition
• Level playing field
• Protect local government revenues and control of PROW
• Compliance with “applicable” customer service laws
• “Continue” access to and “maintenance” of PEG channels
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 4
WHAT IT ISN’T
• No Creation of “vested right” – Legislature may amend (§5820)
• No impairment of environmental laws – City/County lead agency
• No impairment of local ability to mitigate environmental impacts upon PROW
• Not a “public utility” – no PUC authority over “rates, terms and conditions” of video service
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 5
KEY DEFINITIONS
• “Cable Service:” defers to federal definition
• “Franchise:” Any authorization for any network in PROW capable of providing Video Service
• “Incumbent Cable Operator:” Cable Operator of OUS serving subscribers under franchise on January 1, 2007
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 6
KEY DEFINITIONS (cont.)
• “Video Programming:” Generally comparable to broadcast programming
• “Video Service:” Video programming + cable service + OUS using facilities “at least in part” in PROW irrespective of technology and delivery protocol
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 7
STATE FRANCHISING SCHEME
• PUC sole franchising authority for State franchise
• State franchise exclusive for entities not franchised as of January 1, 2008
• May or may not be preemptive thereafter
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 8
APPLICATION PROCESS
• PUC must accept applications by April 1, 2007
• Cost-based fee
• Basic and minimal provision of information
• Description of “video service area and footprint”
• “Adequate Assurance” of financial, legal and technical qualifications
• May require bond – LOC?
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 9
STATE FRANCHISE TIME LINES
• Commence by April 1, 2007
• PUC to notify applicant as to completeness within 30 days
• PUC to issue (ministerial?) State franchise within 14 calendar days of complete application
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 10
TRANSFERS OF STATE FRANCHISE
• Ministerial transfer – no legislative discretion
• Notification of local entities
• Holder of State franchise may terminate at its discretion
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 11
TERM OF STATE FRANCHISE
• 10 years
• Renewal ministerial – apply §5840 criteria
• Renewal “consistent with federal law” – what dues that mean?
• No grant or renewal if violation of specified customer protection states and “this division.”
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 12
FRANCHISE FEE
• “State Franchise Fee”
• Characterized as “rent”
• Paid to local entity quarterly
• Amount tied to “Incumbent Cable Operator” up to 5%
• No additional fees and charges other than utility user taxes and “generally applicable” taxes, fees and charges applied in nondiscriminatory and competitively neutral manner
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 13
FRANCHISE FEE (cont.)
• Definition of “Gross Revenues”
– Generally accepted accounting principles
– Includes franchise fees
– Ancillary revenues
– Excludes “reimbursements … of identifiable marketing costs”
• Pro rata allocation of “bundled discounts”
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 14
FRANCHISE FEE (cont.)
• Annual audits – paid by Video Service Provided if more than 5% under payment
• 3 year 45 days statute of limitation
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 15
PEG CHANNELS
• Existing PEG channels as of January 1, 2007, protected if programmed 8 hours per day
• If you have less than 3 channels, 3 channels can be required in State franchise
• 4th channel if programmed with more than 56 hours/week of “locally produced and non-duplicative” measured quarterly
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 16
PEG CHANNELS (cont.)
• PEG channels on lowest tier with same channel numbers
• State franchising responsible for protocol conversions using “most economic” conversion technology
• Quality consistent with commercial channels
• Interconnection may be required
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 17
PEG FUNDING
• PEG support grandfathered for later of term of existing franchise or January 1, 2009
• Upon expiration, local entity by ordinance can impose fee of 1%-3% to match existing contribution
• No formula for conversion to percentage of gross revenues
• Advertising, underwriting or sponsoring allowed if revenues go to PEG
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 18
PEG FUNDING (cont.)
• Allocation of preexisting continuing financial obligation
• All video service providers and incumbent cable operator subject to same recurring obligations – appear to be measured by existing franchise
• Only fees in effect on December 31, 2006 may be imposed if they exceed 1%
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 19
I-NETS AND IN-KIND PAYMENTS
• Grandfathered for existing franchise term
• I-nets, free drops, etc. unenforceable after expiration of franchise
• Unclear if enforceable if contained in separate agreements
• Free insertion points and transmission from PEG studio to head-end may be lost
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 20
CABLE OPERATOR ABROGATION
• Cable operator may “abrogate” existing franchise and obtain State upon earliest of:
– Franchise expiration
– Mutually agreed date
– “Notification” of intent of State franchisee to provide service in all or part of jurisdiction
• State franchise not available until January 2, 2008
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 21
CABLE OPERATOR ABROGATION (cont.)
• Local entity “may” extend existing franchise until 2008
• PEG, I-Net, In-Kind services, emergency alert grandfathered until expiration of franchise
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 22
CONSTRUCTION
• Must comply with time, place manner regulations
• Must pay applicable encroachments, permit and inspection fees
• Must approve or deny permits within 60 days of “completed application”
• Failure to approve or deny within 60 days will not result in automatic approval
• “Completed application” means complies with all statutory requirements including CEQA
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 23
CONSTRUCTION (cont.)
• Must provide “detailed explanation” for denial
• Right of appeal to governing body
• Not “deemed approved” – applicant remedy?
• Impact of California Supreme Court grant of review in Sprint v. San Diego County
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 24
CONSTRUCTION STRATEGIES
• Establish process which complies with 60-day rule
• Establish information requirements
• Establish concrete construction standards
• Undergrounding of street furniture
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 25
CONSTRUCTION STRATEGIES (cont.)
• Public notice and participation
• Aesthetic controls
• Continuing maintenance obligations
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 26
LOW-INCOME BUILD-OUT REQUIREMENTS
• No discrimination based upon income
• Low income construction milestones
– 3 years: 25% with access must be “low income”
– 5 years: 30% with access must be “low income”
• PUC to enforce
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 27
TOTAL BUILD-OUT REQUIREMENTS
• Dominant construction technique is FTTP - 25% in 2 years and 40% in 5 years
• Dominant construction technique in not FTTP - 35% in 3 years + 50% in 5 years
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 28
TOTAL BUILD-OUT REQUIREMENTS (cont.)
• 5 year requirements “tolled” until 30% penetration for 6 consecutive months
• May request extensions after 2 years
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 29
CUSTOMER SERVICE REQUIREMENTS
• Shall comply with Gov. Code Sections 53055, 53055.1, 53055.2 and 53088.2
• Shall comply with video service standards “established by federal law”
• Must “accommodate” newer or different techniques
Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400, Costa Mesa, CA 92626 | 714-641-5100 | www.rutan.com 30
CUSTOMER SERVICE REQUIREMENTS (cont.)
• Local entities shall “enforce” but may not adopt or enforce any “additional or different” customer service or performance standards
• Penalties may be enforced
• Progressive penalties starting at $500 per day
• ½ of penalties to Digital Divide Account
• De novo review