July 2009
Cable and Telecommunications Policy Newsletter
In This Issue
MENDOZA PRESENTS ON BROADBAND STIMULUS PROGRAMS
NTIA BROADBAND STIMULUS PROGRAM WORKSHOP HIGHLIGHTS
MINNESOTA SUPREME COURT DENIES REVIEW IN TDS/MONTICELLO CASE
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PRESENTATIONS TO 2009 COMMUNICATIONS LAW FORUM AND MINNESOTA CABLE COMMUNICATIONS ASSOCIATION
 
Tony Mendoza gave two presentations last week on the broadband grant and loan programs under the American Recovery and Rehabilitation Act of 2009 (ARRA).  On Tuesday, July 14, 2009, Mendoza spoke to the Minnesota Cable Communications Association annual meeting in Brainerd, Minnesota about the Notice of Funds Availability (NOFA) issued by the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS).  On Thursday, July 16, 2009, he delivered a similar presentation to the 2009 Regional Communications Law Forum sponsored by the Communications Law section of the Minnesota State Bar Association (MSBA).
 
Copies of Mendoza's presentation, including a summary of the broadband provisions under the ARRA, a summary of the NOFA, and Mendoza's Power Point slides are posted on the Mendoza Law Office web site.  Those materials can be accessed by clicking on the following link: 

 
NTIA WORKSHOP SHEDS LIGHT ON FEDERAL BROADBAND PROGRAM ISSUES
 
The NTIA and RUS conducted a training workshop regarding applications for federal broadband stimulus grants and loans on July 21, 2009 in St. Paul.  In addition to official presentations, NTIA and RUS officials made themselves available to answer questions about the program "off-line."  One NTIA official provided "unofficial" answers to questions about the broadband program's interconnection obligations.  In other words, all of the information below is not yet official NTIA policy, and is subject to change.
 
With respect to the interconnection and nondiscrimination obligations provided for in the NOFA, it is not the intent of the NTIA to apply Title II regulation under the Telecommunications Act of 1996 to broadband service providers who are selected to receive grants or loans under either of the two federal broadband programs, the Broadband Initiative Program (BIP), administered by the RUS, or the Broadband Technology Opportunities Program (BTOP), administered by the NTIA.  While acknowledging that phrases used such as "wholesale access" venture into the Title II vernacular, broadband service providers awarded funds under either program will not unknowingly subject themselves to regulation under Title II.
 
That said, the NOFA provides a minimum set of obligations to which all awardees will be required to adhere.  Those obligations are detailed in the presentation materials posted on the Mendoza Law Office web site (www.mendozalawoffice.com).  An official described what the NTIA is doing as (paraphrased) creating a whole new regulatory regime within the confines of the BTOP and BIP programs.  The NTIA official acknowledged that the definitions, and interconnection and nondiscrimination provisions are inconsistent with those established under the Telecommunications Act of 1996.  Another NTIA official stressed in an official presentation that the interconnection and nondiscrimination obligations set forth in the NOFA apply only to facilities constructed with ARRA funds.  In other words, the NTIA and RUS will be applying the minimum interconnection and nondiscrimination obligations set forth in the NOFA to BIP and BTOP awardees, and presumably the agencies will create their own mini-body of law (interpretations of the minimum interconnection and nondiscrimination NOFA standards) applicable to BTOP and RUS awardees as the programs progress.  Applications going above and beyond the minimum interconnection and nondiscrimination requirements will be scored higher.
 
The NOFA also contains provisions restricting the sale or lease of assets funded through the program.  Specifically, the NOFA provides that any sale or lease of assets funded under the NOFA must either be disclosed in the application, or awardees must wait ten (10) years to receive a waiver from this requirement.  The NTIA will generally look favorably upon applications that propose to offer interconnection and competitive access to ARRA funded facilities.  The more leasing arrangements can be finalized and disclosed in the application, the higher the score, particularly under the BTOP program.  To the extent possible, the NTIA expects that all leasing arrangements for capacity on funded facilities will be disclosed up front in its application.  If such arrangements are not finalized, applicants should emphasize in their applications that they intend to lease capacity on their facilities to third parties, and provide as much detail as possible about these business plans.  Specific capacity leases that are not disclosed in an application will need to be reported to the applicable agency.  Despite the language in the NOFA stating that awardees must wait ten (10) years before seeking a waiver, the agencies also have authority to waive any non-statutory requirement when extraordinary circumstances require and where the waiver serves the purposes of the program.
 
Finally, the NOFA was vague about dispute resolution with respect to interconnection and nondiscrimination requirements.  Applicants will be expected to propose their own dispute resolution policies with respect to interconnection and nondiscrimination.  The NTIA's official workshop presentation materials state that all applicants will be required to agree to submit to binding arbitration of interconnection disputes.  Applicants for infrastructure funding should include binding arbitration provisions in their applications, along with specific proposed arbitration procedures they agree to follow.
 
MINNESOTA SUPREME COURT DENIES REVIEW OF TDS METROCOM/MONTICELLO CASE
 
Last month, the Minnesota Supreme Court denied a petition from TDS Metrocom to review a decision by the Minnesota Court of Appeals holding that the City of Monticello has the authority to use revenue bonds to fund construction of a municipal fiber network.
 
The City issued $25.6 million in revenue bonds to fund a fiber-to-the-premises telecommunications network in Monticello.  TDS challenged the project on two grounds: (1) that the fiber project did not constitute a "public convenience" under the Minnesota statute that provides for city bonding authority; and (2) that the City's plan to use some bond proceeds to pay for operating and maintenance expenses during the first three years of the project violated a provision under the Minnesota bonding statute prohibiting the use of bond proceeds for "current expenses."
 
The Minnesota Court of Appeals held a municipal fiber-to-the premises project constitutes a "public convenience" under the bonding statute.  The Court compared the fiber project to a utility project, stating, "there appears to be minimal dispute that telephone and cable television are utilities."  The Court stated that internet services could arguably be considered either a "telecommunications service" or a "related service."
 
The Court of Appeals also rejected TDS's argument that the City's plans to fund a three-year Operating Reserve Fund violated the prohibition against funding "current expenses."  The Court found that the Operating Reserve Fund would pay for "start-up expenses" which it distinguished from "current expenses."