What Issues are Building and How Do They Affect Local Governments

What Issues are Building and How Do They Affect Local Governments

• 1.
  Telecommunications Law
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  Telecommunications Law Telecommunications Policyin an IP World IMLA Annual Conference San Francisco CA September 30, 2013 PRESENTED BY Nicholas Miller Partner, Best Best & Krieger, LLP
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  Telecommunications Law Outline •What PrinciplesApply? •The Traditional “Social Compact” in Telecommunications •Does IP Technology Change the Analysis? •The Issues and Local Governments
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  Telecommunications Law Principles forLocal Governments in IP World • Consumer protection  Protection Against Market Abuses Minimal Externalities injuring third parties monopoly power—unfair prices; unfair availability of services  Quality of Life of Community • Economic Development  Fair opportunity to participate  Efficient use of community resources  Promote innovation  “Servicer of last resort”
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  Telecommunications Law Principles forLocal Governments in IP World • Local Government as landlord/trustee  Largest landlord to industry  Right of Way is the most valuable resource held in public trust • Local Government as user  “Anchor tenant”  Bulk Purchase--More with Less  Fair prices and services to reduce taxpayer burden
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  Telecommunications Law Some BasicEconomics •Government should support “efficient markets”--prices = costs + reasonable return  Test is ease of market entry  Best evidence of problems is “value of service” pricing: vendor has power to segment market, charging discriminatory prices based on each consumer group’s value of service :
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  Telecommunications Law Some Lessonsfrom History • Telecommunications infrastructure creates substantial barriers to entry • Wireline: economies of scale  no competitive “last mile” infrastructure • Wireless: artificial scarcity  Limited spectrum  limited number of providers  Telcos and Cable Operators behave like railroads: discriminate in prices, services, and areas served
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  Telecommunications Law The Traditional“Social Compact” •Essential (voice) services available to all • Universal availability • Long distance averaged within and between states • Subsidize where needed  REA loans  Operating subsidies to rural providers  Rate subsidies for low income households
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  Telecommunications Law The traditional“Social Compact” • Competition Where Possible—”Information Services” • Regulation Where Needed—”Telecommunications Common Carriage” • Computer II: regulate transmission facilities (natural monopoly), not software and information services (competitive) • 1982 breakup of Bell System—ownership and control of local monopolies separated from competitive long distance and manufacturing businesses • 1996 Telecomm Act  As local facilities become competitive, forbear regulation; until then, competitive carriers must have access at regulated prices  “Information Services” (over last-mile facilities) are competitive
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  Telecommunications Law •Does NewTechnology Change the Analysis? • Analog to Digital Transmission Format • Switchboards to Computer Switches • Copper to Fiber Lines • NPSTN to Internet Protocol Networks
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  Telecommunications Law Short Answer:Same Principles; Same Problems • Principles Don’t Change with Technology Change • Technology does change “cost structures”—so monopoly power may be  disrupted or  relocated within the supply chain
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  Telecommunications Law Fiber andDigital Cost Disruptions • Fiber  reduces initial cost of construction, but only enough to support high density overbuilds  Increases scale economies--costs decline with increased data volume—increasing monopoly power of first builder  Artificial Data Caps • Digitalization and Packet Switching  reduces costs of switching  allows multiple routing within and between networks—if interconnected
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  Telecommunications Law The PolicyStruggle Today • Propaganda vs. facts—  IP technology does not eliminate monopoly power;  Unrestrained monopoly power will harm your community • Providers using 3 step strategy:  Use fiber/coax capacity to prevent overbuilds  Create artificial scarcity to drive discriminatory prices: data caps; refusal to serve  Claim “effective competition” to eliminate carrier obligations
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  Telecommunications Law Role forLocal Governments Local Government Interests • Consumer Protection • Economic Development Strategy • Oppose Data Caps • Impose Build outs • Universal Service • Carrier of Last Resort • Non Discrimination • Joint Trenching • Right of Way Management
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  Telecommunications Law Role forLocal Government Local Government Interests • Landlord/Trustee • User Strategy • Fair rent paid by all users • Authority to control siting • Use Bulk Purchase Power • Authority to Self-Provision • Monitor FirstNet
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  Telecommunications Law Questions? Nicholas Miller Partner BestBest & Krieger LLP 2000 Pennsylvania Ave NW Washington DC 20006 202 370 5309 [email protected] www.bbklaw.com