Before
the
Federal
Communications Commission
Washington,
DC 20554
In the
Matter of
)
)
Inquiry
Concerning the Deployment of
)
Advanced
Telecommunications
)
Capability
to All Americans in a Reasonable )
CC Docket No. 98-146
and
Timely Fashion, and Possible Steps )
to
Accelerate Such Deployment
)
Pursuant
to Section 706 of the
)
Telecommunications
Act of 1996
)
Comments
of Metromedia Fiber Network Services, Inc. on the Deployment of Advanced
Communications Infrastructure in the United States
Regulatory
Affairs
Traci
Bone, Senior Attorney
Jill
Sandford, Senior Attorney
Metromedia
Fiber Network Services, Inc.
One
Meadowlands Plaza
East
Rutherford, NJ 07073
(201)
531-8047
September 24,
2001
Metromedia Fiber Network Services, Inc. (“MFN”) submits these comments in
response to the Commission’s Third Notice of Inquiry into whether “advanced
telecommunications capability” is being deployed to all Americans in a
reasonable and timely fashion (“NOI”). This NOI is mandated by Section
706 of the Federal Telecommunications Act of 1996 (“Act”)[1]
and will result in a Commission report to Congress regarding the status of such
deployment. If the
Commission determines that advanced services are not being deployed in a
reasonable and timely fashion, Section 706 obligates it to “take immediate
action to accelerate deployment … by removing barriers to infrastructure
investment and by promoting competition …”
As described in these comments, obtaining access to
public rights of way poses a significant barrier to the deployment of broadband
infrastructure. The Commission
should identify this issue in its report to Congress and recommend enhancement
of existing access laws to actively discourage governments from denying or
unreasonably conditioning access to public rights of way. Additionally, the Commission should
reopen its 1999 Notice of Inquiry into rights of way issues (“ROW NOI”)[2]
to provide definitive guidance regarding lawful rights of way management
practices.
ACCESS TO PUBLIC RIGHTS OF WAY
POSES A SIGNIFICANT BARRIER TO THE DEPLOYMENT OF BROADBAND
INFRASTRUCTURE
At its most fundamental, broadband deployment is the
construction of conduit networks and the installation of fiber optic cable in
those conduits. Barriers to that
construction and fiber installation inhibit the deployment of broadband
infrastructure. As one of the
leaders of fiber optic cable deployment in the United States, MFN is well
qualified to comment on what can accelerate such deployment – and what hinders
it.
Unfortunately, while significant gains have been
made, deployment of broadband capability is not where it could be – in large
part because of hurdles to market entry erected by parochial governments anxious
to place tolls on the information highway.
MFN has
installed over 2 million fiber miles and has fiber operational in 29 cities
worldwide. While this
infrastructure is impressive, more construction is required to add
infrastructure redundancy and to serve new customers. Unfortunately, it takes only one
uncooperative jurisdiction along a fiber ring to render the entire ring, and
thousands of fiber miles, unusable.
Additionally, as these comments will demonstrate, it takes only one
uncooperative jurisdiction to prevent MFN from serving a customer by connecting
it to that ring, thus directly costing MFN thousands of dollars in lost
revenues.
Previously,
tight construction schedules and abundant capital enabled carriers to pay
illegal demands for franchise and license fees to ensure completion of a ring
and service to customers. With the
tightening of available capital, carriers must now balance even more critical
construction schedules, budgets, and revenue requirements with the long-term
costs incurred by a decision to accede to illegal government demands. In many instances, faced with
increasingly unreasonable demands for access to public rights of way, MFN has
elected to litigate to enforce its well-established
rights.
However,
even pervasive litigation has only limited effects. Despite conclusive legal “wins” by
carriers in many parts of the country, governments in those same regions
continue to “test” settled law regarding rights of way access – costing
carriers hundreds of thousands, if not millions, of dollars in unnecessary
attorney fees, increased construction costs, and lost revenues because of
delayed deployment. While more
“wins” may ultimately stem this litigation tide, MFN currently sees no end in
sight. Each week brings the
formation of a new municipal coalition dedicated to undermining existing rights
of way access legislation. This
translates into further delays and costs to deployment of MFN’s own network –
and the deployment of communications infrastructure
nation-wide.
In most cases, governments have no incentives to
comply with access laws. In
contrast, a carrier faces extensive costs due to delays in obtaining
access. Often, governments face
only the legal costs to fight the battle - costs for which they bear little
accountability, even if they lose.
Unlike a private person who might be liable for interference with
contractual advantage or other torts, governments are rarely responsible for
damages to the delayed carrier or the legal costs incurred by the carrier to
enforce its clearly stated rights.
Recognition of this imbalance has led many carriers, including MFN, to
sign blatantly illegal agreements, including clauses waiving all future rights
to a challenge, in order to access the public rights of way. Such practices must
end.
The Commission can directly affect this situation in
at least two ways. First, it can
comment on this situation and propose legislative remedies in its report to
Congress. Among other things,
legislative amendments should include:
1.
A specific time-frame
of no more than 60 days in which a government must either grant or deny, with
fully articulated and legally defensible reasons, an application for rights of
way access (including construction and excavation
permits);
2.
Penalties and the
opportunity to recover attorney fees and costs for a government’s failure to
comply with the Act;[3]
3.
A prohibition on
contractual waivers of rights to challenge a government’s actions, applied to
both past and future rights of way access agreements as against public policy;
and
4.
A finding that all
local exchange carriers are “similarly situated” for purposes of Section 253
of the Act so that all carriers are ensured the same “non-discriminatory”
treatment under the Act.
Second, the Commission can revive the ROW NOI and
specifically enumerate those requirements that constitute legitimate rights of
way management, and those that do not. Among other things, the Commission
should find, like various courts before it, that the following requirements do
not constitute legitimate rights of way management practices, and are therefore
prohibited by the Act:
1.
Fees
FF that are
not identified in writing and publicly available;
2.
Fees in
excess of the costs incurred to manage the public rights of
way;
3.
Prohibitions
on the resale, leasing, or the granting of an indefeasible right to use the
facilities to anyone who does not have a franchise;
4.
Restrictions
on the transferability of an access agreement and ownership of the facilities,
including restrictions on the granting of security interests and stock
sales;
5.
Provisions
requiring waiver of the right to challenge an access
agreement;
6.
Lengthy
and detailed application forms that require disclosure of matters such as:
corporate policies and business plans; detailed ownership and control
information; financial, technical and legal qualifications; a description of all
current or future services; and open-ended requirements to produce additional
information “as needed”;
7.
Overreaching
reporting and inspection requirements;
8.
In kind
compensation requirements, such as free fiber and conduit capacity;
and
9.
Buy-back
provisions that provide that title to the facilities and related equipment will
transfer to the municipality at no cost upon termination or expiration of an
access agreement.
To demonstrate the need for the actions MFN urges the
Commission to take, MFN offers three recent examples of instances where MFN has
been required to litigate settled legal principles regarding rights of way
access in order to enforce its rights.[4] None of these cases have involved a
challenge to legitimate rights of way management practices (notwithstanding
possible city claims to the contrary).
MFN has no issue with legitimate rights of way management
regulations. It recognizes that
such regulations benefit all parties by ensuring coordination and protecting the
integrity of installed systems. In
each case described below, the real dispute involves a city attempt to challenge
legal constraints on its ability to raise revenues from carriers occupying the
public rights of way. While each of
these cases has already resulted, or ultimately will result, in legal
“victories” to MFN, these victories are somewhat hollow, given the delays
resulting in lost revenues, unnecessary construction costs, and in some cases,
indefinitely deferred market entry.
1.
DEARBORN,
MICHIGAN – RECENT DECISION FROM MICHIGAN PSC
MFN’s case against the City of Dearborn, MI
(“Dearborn”) evidences most dramatically the nature of the problems faced by
carriers seeking access to public rights of way.[5]
Notwithstanding explicit state law
requiring Dearborn to approve or deny a permit request within 90 days,[6]
the city refused to respond to MFN’s permit requests. Instead, it insisted on a franchise
containing terms, including revenue-generating franchise fees, clearly illegal
under state law.[7] After attempting to enforce its rights
through nearly a year of negotiations with Dearborn, MFN was forced to file a
complaint with the Michigan Public Service Commission (“Michigan PSC”), which
has authority to enforce the Michigan Telecommunications Act (“MTA”).[8]
The Michigan PSC found that MFN was entitled to its
attorney fees and costs under state law “because the City’s position in this
proceeding has been frivolous as defined in that section.”[9] The Michigan PSC further
commented:
The Commission finds that the City’s primary purpose
in asserting its claimed defenses has been to harass and injure MFN. Furthermore, as discussed in this order,
some of the City’s legal positions are devoid of arguable legal merit.[10]
Given Dearborn’s history
of litigation over the MTA with other providers, the Michigan PSC found that the
city had not dealt with MFN in good faith – “Any reasonable reading of the MTA
and the court decisions should have resulted in the City’s issuance of a lawful
permit long ago.”[11] In response to the City’s constant
litigation of settled principles – and in an effort to discourage further delays
- the Michigan PSC exercised its authority under the MTA to impose monetary
penalties on Dearborn. In words
bittersweet to MFN, the Michigan PSC acknowledged the irreparable harm to both
MFN and consumers wrought by Dearborn’s refusal to comply with the
law:
It cannot seriously be
contended that the City’s conduct has not caused economic loss. The City played at least a significant
role, if not the sole role, in MFN’s decision to cease construction of its
network in the Detroit area. MFN’s
entry into the marketplace has been indefinitely delayed, and the company has
invested in constructing a network that it cannot complete and use. In addition, the City has harmed the
residents of Michigan and its own residents by depriving them of access to
another high-speed broadband network.[12]
In these prescient
remarks, the Michigan PSC drives at the heart of this Commission’s inquiry –
what are the barriers to broadband deployment and how can they be removed? Clearly, time-consuming litigation
against intransigent cities is a barrier to broadband deployment. Commission action, of the type outlined
in these comments, is a necessary step towards removing those
barriers.
2.
CARROLLTON,
TEXAS – RECENT DECISION FROM TEXAS PSC
MFN has 89 miles of fiber optic backbone in the
Dallas, TX metropolitan area. Among
other things, MFN provides inter-office transport to other carriers and private
line services to end-use customers.
Approximately July 17, 2001, MFN sought excavation permits from the city
of Carrollton, TX (“Carrollton”) for less than two miles of construction. MFN needed to build a service lateral to
connect a customer located in Carrollton to its fiber optic backbone, located in
an adjacent city.
In MFN’s experience, obtaining excavation permits in
Texas had previously been relatively straightforward – in large part due to
state legislation passed in 1999 to clarify the law regarding rights of way
access. Chapter 283 of the Texas
Local Government Code (or “HB 1777”) eliminated franchising requirements in lieu
of a compensation scheme implemented by the Public Utility Commission of Texas
(“Texas PUC”)[13]
for providers certificated by the agency. Municipalities, uncertain
regarding their rights under the new law, could contact Texas PUC staff for
guidance, and they generally complied with HB 1777’s
mandates.
This has all changed. Texas municipalities, unhappy with the
compensation scheme implemented by the Texas PUC, are now intent on reversing HB
1777 to raise additional revenues.
Notwithstanding the fact that HB 1777 prohibits franchises and rights of
way fees,[14]
Carrollton insisted that MFN sign an agreement and pay fees substantially higher
than those required by HB 1777 as a condition of accessing the rights of way to
serve its customer. To avoid the
clear mandate of HB 1777, Carrollton illogically argued that MFN was not a
certificated telecommunications provider (“CTP”) and was therefore not eligible
for the benefits of HB 1777 – this despite the fact that MFN is certificated by
the Texas PUC. Carrollton refused
to discuss the issue with Texas PUC staff.
Recognizing the significant implications of this new
trend among Texas municipalities, MFN elected to stand on its rights. Notwithstanding the time constraints it
was under to serve its customer, it filed a complaint against Carrollton with
the Texas PUC. On September 19,
2001, the Texas PUC came to the obvious conclusion that any telecommunications
provider certificated to offer local exchange service, even if only providing
nonswitched telecommunications service, is a CTP for purposes of HB 1777.[15] Thus, while MFN will ultimately prevail
in this litigation – MFN has incurred irreparable damages as a result of
refusing to accede to Carrollton’s demands. Among other things, MFN was unable to
provide service to its customer within the time frame anticipated, resulting in
additional construction costs, lost revenue, and damage to MFN’s service
reputation.
3.
BERKELEY,
CALIFORNIA – PENDING FEDERAL COURT LITIGATION
The city of Berkeley, California (“Berkeley”) has
lead California cities in advancing novel and unsupported interpretations of law
in an attempt to generate revenues.
As a result, MFN and at least one other carrier have sued Berkeley to
strike down its ordinances and force it to grant fair and non-discriminatory
access to its public rights of way.
Fortunately, the Ninth Circuit’s recent decision, City of Auburn v. Qwest Corp., 247 F.3d
966, 980 (9th Cir. 2001) (“Auburn”), provided the
California Northern District Court the clear authority to enjoin Berkeley’s
first rights of way ordinance.[16] However, this has not deterred Berkeley
from enacting a new ordinance, incorporating many of the same faults of the
enjoined one. In summary,
Berkeley’s new ordinance purports to regulate any carrier providing private
carriage, and seeks, among other things, to impose an illegal agreement, rights
of way fees, and service regulation upon the carrier as a condition of rights of
way access.[17] Thus, heedless of its impact on national
telecommunications policy and the deployment of broadband infrastructure in the
San Francisco Bay Area, and despite clear defeat under both Auburn and
Berkeley, Berkeley continues to test the limits of the law – in the name
of local revenues.
CONCLUSION
As demonstrated herein, municipalities have routinely
placed their parochial desires to raise revenue above state and federal laws and
policies expressly adopted to encourage broadband deployment. There is no doubt that these actions
have unnecessarily delayed broadband deployment, in some instances,
indefinitely. There is a need for
legislation creating disincentives to this behavior, and there is a need for
Commission action. MFN respectfully
requests the Commission to include MFN’s recommendations in its report to
Congress and to reopen the ROW NOI and quickly bring it to a meaningful
conclusion.
Traci
Bone, Senior Attorney
Jill
Sandford, Senior Attorney
Metromedia
Fiber Network Services, Inc.
One
Meadowlands Plaza
East Rutherford, NJ 07073
(201)
531-8047
CERTIFICATE OF
SERVICE
I hereby certify that copies of
the foregoing “Comments of Metromedia Fiber Network Services, Inc. on the
Deployment of Advanced Communications Infrastructure in the United States” were
filed electronically at the FCC on this 24th day of September, 2001 and on the
24th day of September, 2001 were sent to the of the following via U.S.
mail:
Berkeley City Attorney
1947 Center Street, First Floor
Berkeley,
CA 94704
Lynn
Nunns
Assistant
City Attorney
1945 E.
Jackson Road
Carrollton,
Texas 75006
Debra A. Walling
Corporate Counsel
13615 Michigan Avenue
Dearborn,
MI 48126
[1] See §
706(b) of the Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56
(1996) (1996 Act), reproduced in the notes under 47 U.S.C. §
157.
[2]Notice of Proposed Rulemaking and Notice of Inquiry in WT Docket No.99-217, and Third Further Notice of Proposed Rulemaking in CC Docket No. 96-98, FCC 99-141, CC Docket No. 96-98, released July 7, 1999.
[3] See Michigan law at MSA 22.1469(601) for an example of legislation containing appropriate penalties.
[4] These are not the only jurisdictions that have
created barriers to MFN’s access of public rights of way. On many occasions, MFN has elected to
either “route around” the jurisdiction or concede to illegal demands due to
business demands or the fear of political retribution for instituting
litigation.
[5] See Opinion and Order, Metromedia Fiber Network
Services, Inc. v. City of Dearborn, MI, Case No. U-12797, Michigan Pub.
Serv. Comm’n, Aug. 16, 2001 (“Opinion and Order”).
[6] See MSA 22.1469(251)(3): “A local unit of
government shall approve or deny access under this section within 90 days from
the date a provider files an application for a permit for access to a
rights-of-way, easement, or public place.”
[7] See MSA 22.1469(253): “Any fees or assessments made under
section 251 shall be on a nondiscriminatory basis and shall not exceed the
fixed and variable costs to the local unit of government in granting the permit
and maintaining the right-of-way, easements, or public places used by a
provider.” (Emphasis
added).
[8] MSA 22.1469(101) et
seq.
[9] Opinion and Order, mimeo at p.
30.
[10] Id. at pp. 30-31.
[11] Id. at pp. 28-29.
[12] Id. at p. 29 (citations to transcript
omitted).
[13] See HB 1777 Secs. 283.051 and 283.052
[14] Id.
[15] The Texas PSC reached this decision during its
September 19, 2001 public meeting.
It will be memorialized in a written order issued no later than September
28, 2001.
[16] See Qwest Communications Corp. v. City of
Berkeley, Order Granting Preliminary Injunction, No. C 01-0663 SI (N.D.
Cal., May 23, 2001) (“Berkeley”).
[17] See Berkeley Municipal Code Sec.
16.11.070(A)(ii). Only carriers
meeting the following requirements, as determined by the City, are exempt from
franchise requirements and rights of way fees:
Any telephone corporation holding a Certificate of Public Convenience and Necessity (CPCN) issued by the California Public Utilities Commission (CPUC) but only to the extent that … [it] is providing said service on a common carrier basis, and has fulfilled all of the requirements of the Telecommunications Act (TCA) for the provision of a telecommunication service including, without limitation, the making of all required payments for the advancement of universal service as required by Section 254 of the TCA and the implementing regulations of the Federal Communications Commission and the filing of all necessary tariffs or compliance with all detariffing and related notice requirements. …