Terman Library in the Terman Community Center, 661 Arastradero Road, Palo Alto, CA
Brian Moura, Assistant City Manager of San Carlos, was introduced. He's an early pioneer on the Internet and city use of the network. He has 20 years experience in public life, 10 years in San Carlos. He's very active in city involvement with telecom issues, including working with the League of California Cities. He was involved with lobbying for the recent Telecommunications Act.
The communications environment is changing radically. There are many more players in the field. People like MFS are coming in and skimming the cream by selling phone services to businesses, taking customers from the classic providers like Pacific Bell. Cellular phones are moving into the area rapidly. Federal rules can preempt local restrictions on location of antennas if the city is considered unreasonable in establishing rules. California passed a law effective Jan. 1 which preempts local regulations, including condominium rules and restrictions on installation of dishes.
Phone companies are pushing a bill, SB1896, which eliminates fees for use of public right-of-way. The Telecommunications Act requires that both phones and cable be treated equally as far as fees for right of way are concerned. Now cable pays pole rent but phone companies don't. The California League of Cities may sponsor a bill, (at this point AB3154 won't happen), that requires phone companies to also pay pole rents. The original exemption for phones in California dates to 1858 when it was passed to help the telephone industry survive. It worked but hardly seems essential now. If the phone companies win cities will lose more than $200 million/year in revenue. Almost anyone can claim to be a phone company the way the rules are written.
Although Pacific Bell and cable companies give lip service to competition they really want to avoid it at all costs if they can. In many midwestern states the public agencies own the poles and infrastructure and charge rent to everyone.
Existing cable franchise agreements require public access, but in the new telecommunications law cities can negotiate for but can't require public access or public channel space. Institutional access requirements are forbidden unless the cable or phone company agrees. Pacific Bell is very aggressive about not granting any public access or programming.
Cities have basically 3 models for city involvement in telecommunications: they can do it all themselves and lease access to service providers or those who want to operate the system, they can do it only to provide access to city facilities or city plus schools and replace existing city inter connections, or they can have a 3rd party fund and run the system under city direction.
There are 2 companies (ICS and Spectranet) encouraging cities of 50,000+ to borrow with tax-free bonds and build the advanced fiber system. Anaheim is using Spectranet money to fund the fiber system and run it. Telecommunications companies think it's shocking for cities to build and lease systems. The telecommunications industry in general is opposed to city ownership of the distribution system. A question is if a city builds a system, will anyone else actually want to lease and use it. The city has the ability to limit where lines are put because of physical limitations, but phone companies can't be prevented from putting in their own system in competition with others. If there are no phone or cable company takers for the publicly owned system who will use it? If Palo Alto can take the existing cable vendor and have them use the system it's a simpler and more desirable scenario.
San Bruno probably will both rebuild the city-owned system with fiber plus add extra fiber to lease, using existing cable profits. San Bruno plans to ask for bidders once they put in the system.
The theory is that everyone wants to own the infrastructure. If the city builds and owns the system it messes up classic free market model assumed by industry. Industry thinks 2 or more networks in an area are viable. Milpitas is building a network only to government facilities because they were told there were too many competitors already in the area.
A major problem of the new telecommunications activities is that the phone and cable companies are most interested in serving businesses, not residences, for high capacity access. Also the tendency is for installation of modems with high capacity downstream and low speed upstream. They want to push information and ads to the consumers, but not allow consumers to become publishers or content providers.
The Telecommunications Act significantly reduced city ability to ask for public access, government and school wiring, etc. For example, Pac. Bell is providing only 3 hours/week for council meetings in Calabases. There is no support for other community groups, schools or nonprofit. The telecom industry feels there is little interest in or public use of public/educational/government (PEG) channels now or in the future. Many telecom companies consider PEG channels to be undesirable, a waste of capacity, and socialistic. If governments want public access they should pay for it. Pacific Bell also wants to avoid paying franchise fees in part to starve cities of funds to regulate the system. They are reluctant to provide any public access. They want the San Diego agreement with no public access, not even the 3 hours/week they offer in Calabases, to be the agreement they sign with all other cities. Access and public programming will not be provided by Pacific Bell under the present model. Federal law makes this easy for operators like Pacific Bell.
The main events in communications regulations now are the FCC regulations which will be issued in the next 90 days, plus the legislation going through the legislature. One bill, SB610, passed the Senate even though all the district attorneys, all consumer groups, cities, counties, etc. oppose it. It allows late fees of $5 to $10 plus forbids district attorneys from filing consumer protection suits against cable companies for anti-consumer practices. It is the cable industry's top priority now. The bill is supported by Cuneen and Alquist even though Cuneen's constituents were the victims of exactly the acts that now would be allowed. The lobbying ability of the cable industry appears to have overcome the public interest.
ACTA is lobbying for a rule prohibiting use of the Internet to make phone calls. The computer industry now has gotten involved on the side of allowing access to continue. Rather than real competition many industries are interested in protecting their revenue streams. It is likely that this effort will fail. There is a problem getting legislators both informed enough on the issues and willing to take on powerful lobbies.
San Mateo Communications Authority (SAMCAT) was organized to provide stronger negotiating positions for cities and the county. Instead of cities of 30,000 or so negotiating with communications providers, the group represents more than 300,000 people so they have much better leverage. If cities and counties band together they have a stronger negotiating position plus they offer faster time to market for the providers. Lots of other cities and counties nationwide are interested in the concept and have asked for information.
Moss proposed that PA-COMNET take a formal position opposing SB1896 and SB610 and supporting AB3154, and transmit our actions to the appropriate bodies and organizations. Elliot Margolis will be in Sacramento April 15 for the hearing and will present the PA-COMNET position that SB610 and SB1896 should be defeated. Those present approved the resolution unanimously.
The meeting adjourned at 9:05 AM with thanks to Brian Moura for his very interesting presentation.
Next meeting will be Wed. May 8, 7:30 AM at Terman Library.
Submitted by Bob Moss