ICTA NOTES

August 19, 1999

Comments from ICTA President John Norcutt:

When we started ICTA about 3 years ago, Private Cable Operators and the supporting industry recognized that we need an organization to fight for our rights at the FCC and to build a strong industry through stronger companies. Since then we've developed an organization with a part-time staff and a very lean budget, but we have accomplished quite a bit. As you read the Notes below, think about how much goes into each of the issues we are addressing. Plus, we are building new relationships with MDUs and their association's everyday. The SBCA Alliance is going well and providing us financial and other benefits. There are new PCOs starting every day. We have growth in the MDU market but it's not nearly great enough. We have a lot to do. ICTA helps you - without you ICTA would not exist. Please remember that our total budget is less than $200,000 per year with a half-time Executive Director. ICTA helps our industry and you need to help ICTA.

ICTA-SBCA MDU Conference

ICTA and SBCA held the first event called for in our Alliance. The MDU/Multihousing Conference was organized by ICTA and held as a part of the SBCA Convention and Symposium in Las Vegas from July 19 - 21. The Conference had some 350 attendees, including 27 who represented MDU/REITs with total nationwide units of just under 2 million. Attendees also included 50 true experts that addressed the attendees in 10 different panels and numerous workshops regarding business - technology - regulatory issues; all relevant to MDU - PCO - DBS relations.

On the exhibit floor some 175 exhibitors occupied almost 200,000 square feet. For the first time, the exhibit floor included an MDU Pavilion where companies specifically focusing on DBS - PCO sales in MDUs were located. Based on survey results and informal oral conversations with each of the MDU Pavilion exhibitors and numerous of the Conference attendees, the Conference was rated in a very positive fashion, particularly for content, and that the attendees intend to return to the second Conference in July 2000. The MDU Pavilion will be expanded by some 25% for next year with 80% of that space already sold. This event, part of the Alliance with SBCA, was a learning experience and will provide more opportunities in the future. Your views are invited.

Critical FCC Rulemakings

Cable Services Bureau

We confront a 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 in the 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.

Wireless Bureau

In another NPRM, the FCC Wireless Bureau is pursuing many of the same issues as the rulemaking in the Cable Services Bureau. There is a theoretical difference between the Bureaus as the jurisdiction of one is over telephony and the other video. So in theory the rulemakings should not overlap. In reality they are likely to be mutually influencing in substance, timing and politics. That is why ICTA is involved with both Bureaus.

The Wireless Bureau NPRM is entitled "Promotion of Competitive Networks in Local Telecommunications Markets - WT Docket 99-217". This NPRM has asked for comment on several areas relating to mandatory access to MDUs, either through an interpretation of Section 224 of the Communications Act, 47 U.S.C. §224, which would permit cable operators and telecommunications carriers to access in-building riser conduit "owned and controlled" by a utility, or through a federal mandatory access rule. ICTA's comments will urge the Commission to abandon proposals which would expand the Commission's reach under Section 224, or that would restrict private contracting between MDU owners and telecommunications carriers. Rather, to address CLEC access to residential MDUs, the Commission should require ILCECs to reconfigure MDU on-property networks to a single accessible demarcation point and make the on-property wiring available as a UNE. (ICTA's comments In PDF Format).

SPECTRUM ISSUES

18 GHz

In recent conversations with the FCC International Bureau staff, which prepared the 18 GHz Microwave Transmission NPRM (IB Docket No. 98-172) which was released in September 1998 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.

12 GHz

OpTel, Inc. petitioned the FCC to allow PCOs to use the frequencies in the 12 GHz band for the delivery of video programming. Currently, PCOs are not eligible to use the 12 GHz CARS frequency band to provide video programming. This spectrum, 12.70 GHz - 13.20 GHz, is used by CARS licensees to provide point-to-point and point-to-multipoint video and related audio signals pursuant to Part 78 of the FCC's rules. OpTel asserted to the FCC that because of the congestion in the 18 GHz band and because the 12 GHz band provides some technical benefits that use of this band would allow PCOs to offer better service to MDUs and their tenants. ICTA intends to file comments in support of the OpTel motion and urge the FCC to act promptly in a positive way on the NRPM. Reply Comments will be filed on September 20, 1999.

This Rulemaking is CS Docket No. 99-250, RM-9257 and can be down loaded from the FCC web site - http://www.fcc.gov or you may contact ICTA for a copy of this NPRM.

Fairfax County, VA "Fresh Look"

ICTA expertise was again solicited for comment and involvement in a local cable franchise hearing. During a hearing in Fairfax County, Virginia to approve the sale of the cable franchise from Media General to Cox Communications, we urged the County Board of Supervisors to enhance cable competition by including perpetual contract "fresh look" provisions as a proviso to approving the sale.

ICTA and ICTA property members - United Dominion Realty and Avalon Bay Properties - submitted letters to the County Supervisors urging the inclusion of fresh look provisions in the transfer agreement. At a meeting held on July 26, a motion was introduced by Supervisor Dix outlining a mechanism whereby MDU owners/managers would be able to re-negotiation franchise agreements or terminate such service. The motion did not pass at this meeting, but generated sufficient discussion that the Supervisors delayed the vote until August 3rd, and due to continuing controversy that vote was delayed until September 13.

ICTA is coordinating efforts with Virginia Apartment and Office Building Association's (AOBA) Tom Hyland, Vice President of Government Affairs. A meeting with representatives of Media General is set for August 23.

Franchise renewal or transfer hearings are an excellent point at which to suggest that local cable regulatory bodies consider "fresh look" provisions. Do you know when the cable franchise in your market expires? Do you know how to contact the franchising authorities in your markets? If you as a private cable operator would like a better opportunity to compete, now is the time to get prepared. For additional information contact ICTA (202) 364-0882.

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!

Following is an easy to complete survey. Please fill it out and send it to ICTA. We will then be able to paint a better picture of our industry for the FCC.

Federal Communications Commission Report on Video Competition Survey

To answer the questions the FCC has posed to SMATV-PCO companies, we need the following information:

Should you need additional information contact via e-mail Bill Burhop (bburhop@imcc-online.org) or Brenda O'Connor (boconnor@imcc-online.org), or via telephone (202) 364-0882.