Part V

revenues,19 even though adding broadband services to the traditional cable video plant imposes no new burden on the rights-of-way. The city reasons that neither the existing cable franchise nor the franchise provisions in Title VI provided Comcast with a preexisting right to use the public rights-of-way for telecommunications services using facilities it has already deployed.20 The court agreed and found that this broadband license fee was paid in return for a specific privilege granted to Comcast and therefore not considered a tax that would be barred by the Internet Tax Freedom Act.21 Of particular relevance here, as part of that analysis the court found that the Open Internet Order language cited above was somehow inapplicable because the use of the term "franchising fees" meant the Commission only intended to preclude additional fees on cable service.22 The court separately found that the application of the seven percent broadband license fee did not violate the five percent cap on franchise fees in Title VI of the Communications Act.23

19 Id. at 534.

20 Id. at 536.

21 See id. at 539-55.

22 Id. at 554-55.

23 Id. at 555-58.

24 The Oregon court expressly stated that its decision did not reach the question of whether the Eugene ordinance was valid under Section 253, so that question remains open for resolution by the Commission. Id. at 553 n.14.

The Commission should send a strong signal that the Oregon Supreme Court misinterpreted the language in the Open Internet Order and Title VI and that the Commission does not support ordinances that materially inhibit the provision of broadband or telecommunications services by imposing excessive fees and discriminating among providers of broadband services.24 The Eugene ordinance’s imposition of a license fee of seven percent of telecommunications (including broadband) revenues – on top of the franchise fee equal to five 9

percent of cable revenues – needlessly adds to the retail cost of broadband service, impeding deployment and adoption, and is not justified by any additional cost or burden incurred by the city.25 Absent a clear statement from the Commission that such an approach would be presumed to materially inhibit deployment and be neither "fair and reasonable" nor "competitively neutral and nondiscriminatory" under Section 253, we are concerned that other jurisdictions could follow this path and impose new fees on broadband services.26

25 In addition to the 7% broadband license fee, Eugene imposes a 7% license fee and 2% registration fee on Comcast’s VoIP and Ethernet transport services, as well as its cellular backhaul services. Further deployment of the latter will be a crucial element in supporting the deployment of 5G.

26 A number of Oregon communities already are assessing other non-cable services, such as VoIP and Ethernet.

27 Decision Denying the Petition to Open a Rulemaking Proceeding to Extend the Right-Of Way Rules Adopted by Decision 16-01-046 to Cable Television Corporations, Decision 17-02-006 at 17-18 (Feb. 10, 2017).

28 See, e.g., New England Public Communications Council Petition for Preemption Pursuant to Section 253, Memorandum Opinion and Order, 11 FCC Rcd 19713, 19722, ¶ 21 (1996).

In addition to clarifying that additional fees are not permitted as a condition of providing broadband or telecommunications services over franchised cable systems, the Commission also should explain that franchised cable operators may not be required to obtain an additional local franchise or state certification to deploy facilities necessary for the provision of additional services. Cable operators have encountered this road block in the State of California, where the California Public Utilities Commission has determined that a cable operator must obtain certification as a facilities-based CMRS carrier before it may install wireless equipment on poles.27 Such a policy is at odds with Section 253(a) because it materially inhibits the ability of cable operators to deliver new and innovative wireless broadband services directly to the public in competition with existing wireless carriers, as well as offer competitive options for small cell and other infrastructure solutions to CMRS providers. Nor is it consistent with the Commission’s precedent interpreting the savings clause in Section 253(b).28 The Commission 10

should make clear that once a provider has permission to deploy facilities in the public right-of-way, a state or local government may not require separate permission for facilities necessary to provide telecommunications or broadband services.

B. Cable Franchise Obligations Should Be a Relevant Consideration in Assessing Whether State or Local Right-of-Way Obligations are Discriminatory

The Mobilitie petition also asks the Commission to find that "competitively neutral and nondiscriminatory" for purposes of Section 253(c) means "charges imposed on a provider for access to rights-of-way that do not exceed the charges that were imposed on other providers for similar access to the rights-of-way."29 NCTA generally agrees with this principle, although applying it in practice may present challenges.

29 Mobilitie Petition at 32.

The difficulty in considering whether any particular obligation has been imposed in a nondiscriminatory manner for purposes of Section 253(c) is that different types of entities may have different rights and obligations in connection with their use of the rights-of-way. For example, cable operators and wireless providers historically have used different technology and been subject to different regulatory regimes. But as noted above, increasingly these companies will be competing for the same customers by offering the same services using similar networks. Accordingly, any assessment of whether fees imposed on wireless providers are "competitively neutral and nondiscriminatory" for purposes of Section 253(c) should consider the full scope of rights and obligations faced by other providers, including the fact that cable operators are subject to revenue-based franchise fees that are paid as a condition of using the public rights-of-way. 11

CONCLUSION

For all the reasons explained above, NCTA encourages the Commission to take a holistic approach to right-of-way management that encourages deployment by all providers and all technologies, rather than narrowly focusing on small cell deployment. The Commission should focus on eliminating practices that create undue delays or burdens on deployment by any type of provider. In particular, the Commission should make clear that localities may not require a franchised cable operator to obtain an additional franchise or to pay additional fees in connection with the offering of broadband or telecommunications services or to deploy equipment that places no meaningful new burden on the public right-of-way.

Respectfully submitted,

/s/ Steven F. Morris

Steven F. Morris

Jennifer K. McKee

NCTA – The Internet & Television

Association

25 Massachusetts Avenue, NW – Suite 100

April 7, 2017 Washington, D.C. 20001-1431