ICTA NOTES

The telecommunications field is still heavily influenced by the Federal Communications Commission (FCC), Congress and state legislatures. If MDU companies are to provide better and more financially remunerative services to their tenant-viewers and if PCO companies are to benefit we must address regulations and legislation. This paper describes what is the most important FCC Rulemaking that our industries will confront for years into the future. Therefore, if you as an ICTA member want to influence your future, you need to influence this FCC Rulemaking.

Franchised cable companies have had a virtual monopoly in the MDU market for many years due to certain statutory, regulatory and economic reasons which PCOs, DBS companies and MDU owners have only been able to meaningfully challenge in recent years. In October, 1997, the FCC adopted the MDU Inside Wiring Rules which are critical to alternative provider expansion into the MDU marketplace. These rules were advocated by the PCO and MDU industries and our success at the FCC was both a major lobbying and substantive victory which has led to many business opportunities for ICTA members.

Now, we confront the next critical regulatory junction at the FCC for three issues: Exclusive Contracts, Perpetual Contracts, and State Mandatory Access Statutes.

Here is what we know:

• The FCC Cable Services Bureau (CSB) is preparing a draft Rule and Order that they intend to submit to the FCC Commissioners by late Summer or early Fall.
• The CSB focus is on finding ways to enhance competition in the delivery of video services to MDU viewer-tenants.
• The CSB views exclusive contracts as the most important item to address and believe that these contracts, if the duration of exclusivity is too long, impair competition and hurt the end-use viewer.
• They do not know what duration to set or what formula to use to calculate the exclusive contract duration.
• They also recognize that state mandatory access statutes and perpetual contracts are anticompetitive and reinforce the franchised companies' monopolies. They are not certain if the FCC has authority to address these statutes and contracts and if so how.

Your involvement is critical to our victory.

If we develop a strong coalition of SBCA, ICTA, the National MultiHousing Council (NMHC), the National Apartment Association (NAA), the Community Associations Institute (CAI) and National Association of Home Builders (NAHB), we have a very good chance of winning in this regulatory process. Central to this victory will be your involvement. We all need you to send letters to the FCC describing your own views and experiences with the three issues. Please send a copy of your letter to ICTA.

Please write to: Chairman William Kennard, Federal Communications Commission, 445 Twelfth Street, SW, Washington, DC 20554.

Please tell him experiences, anecdotes and any statistics that demonstrate that exclusive contracts make it possible for competition in the MDU marketplace to occur, that state mandatory access statutes retard competition and limit the ability of MDU owners to contract with PCOs and DBS providers and that perpetual contracts have the same negative effect on tenant-viewers. Be specific. Use examples. Use your own words. Do it soon.

For additional information you are welcome to contact Bill Burhop at ICTA (Phone: (202) 364-0882 or e-mail: bburhop@imcc-online.org) for details or further explanation.

If we all work together on this Rulemaking we can dramatically influence these regulations and the future of telecommunications in the multihousing market.

FCC Report on Competition

Congress requires the FCC to submit an Annual Report on Multichannel Video Competition. The report addresses each means of video delivery and the percentage of the market they control. It also reports on regulatory and technological changes and advances that could enhance competition. In the past, ICTA has been able to submit significant input regarding proposals for regulatory changes to enhance competition, they are our priorities such as inside wiring, exclusive contracts, perpetual contracts, etc.

However, we have not been able to submit significant data regarding the size of our industry and its competition with franchised cable companies in the MDU market. This year, with your help, we intend to submit more meaningful information. That information must come from you!

The FCC has requested our input regarding the following questions. Therefore, if you are willing to help, we need your PCO's:
1) number of passings under contract;
2) number of subscribers;
3) services offered including DBS, telephony, and high-speed Internet;
4) the 5 states in which you have your greatest presence;
5) percentage of your subscribers that are in new build MDUs or are subscribers taken away from franchised cable companies;
6) the percentage growth your company has experienced in the past 12 months and 3 or 4 similar questions.

If you are willing to help, please contact us and we will send you a form to complete. Please do so promptly because our input must be submitted to the FCC during August.

Rader to Represent PCOs

Bryan Rader, President of Apartment MediaWorks, will represent ICTA at the SBCA SkyFORUM planned for New York City on September 16. He will appear on a panel to discuss the growth of the PCO industry and its present and potential penetration in the MDU market. Some 400 Wall Street analysts, journalist and multimedia industry representatives are expected to be in attendance. This is an excellent opportunity for Bryan to communicate our message to influential people and draw attention to our industry. This opportunity evolves from the Alliance recently entered into between SBCA and ICTA.

18 GHz

In recent conversations with the FCC International Bureau staff, which prepared the 18 GHz Microwave Transmission NPRM which was released in September and which was so negative for our industry, we have learned that they intend to pursue the Rulemaking this Fall endeavoring to finalize it by the end of the year.

As you will recollect, we won a major battle in February, 1999, when the FCC accepted our arguments and withdrew the grandfathering portion of the Rulemaking which essentially foreclosed future use of 18 GHz microwave transmission. Now, we must battle the larger issues underlying the Rulemaking which puts us at odds with the major satellite launching companies. We have strong arguments on our side and are encouraged that we can prevail on the larger issues as well. Therefore, in late Summer, ICTA will again be lobbying to protect our spectrum interests.

A Pat on the Back

Janice Nagazine, the General Manager, of AML Wireless Systems Inc. sent ICTA the following message. "Thank you for your recent update on the NPRM for the 18 GHz frequency. We would like to complement the ICTA for the excellent job being done in supporting this industry segment and keeping all interested parties informed." All members of ICTA through their involvement - direct and financial - are to be congratulated. Thanks Janice.

Another Mandatory Access Bill

ICTA has joined with representatives of the MDU industry to fend off franchised cable efforts to have state legislatures adopt mandatory access statutes in numerous states. We have informed you about those battles.

California is the most recent example. AB 651 was introduced and sped through the Assembly but due to concerted action by Anne Walker of Castle Cable and Mike Katzenstein of OpTel working with Debra Carlton of the California Apartment Association this legislation was tabled in the California Senate. Even though this bill, on its face, addressed "telecommunications providers" and may not have directly or immediately affected cable video services, it posed a distinct threat and needed to be foreclosed.

We can be sure that the cable companies will be back in numerous states seeking such statutes and therefore must work closely in unison with the local MDU associations. Your vigilance in watching for such bills and being willing to work with your local real estate associations is essential if we are to continue our successes in preventing the adoption of such bills.

Local "Fresh Look"

ICTA has recently been in contact with two MDU companies which, because of their frustration with perpetual contracts held by franchised cable companies, sought ways to escape from these provisions and learned of our thoughts regarding "fresh look" that we have communicated to the FCC. They asked us if there was any way to pursue "fresh look" on the local level. The Plantation City, Florida franchising authority, in September of 1998, adopted "fresh look" language which precludes perpetual provisions. ICTA sent a letter to some 300 franchising authorities around the country urging them to consider a similar approach.

This seed has been planted. It needs fertilizing and nurturing. In addition to our work at the FCC regarding this issue, if we had additional resources, we could pursue this on the local level.