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MDU Plan Could Alter Cable Regs

Washington -- A last-minute lobbying barrage by cities haspostponed Federal Communications Commission action on a proposal that could alter videocompetition in the apartment-building market and, perhaps, that could poke a big hole intraditional cable regulation.

The proposal would allow certain video providers thefreedom to interconnect geographically dispersed apartment buildings by using thefacilities of local phone companies to access public rights-of-way.

Were such a plan endorsed by the FCC,satellite-master-antenna television (SMATV) operators, for example, could target apartmentbuildings, both large and small, in various parts of a community, under almost no federalor local supervision.

Cities, for instance, would be barred from seekingfranchise agreements or collecting franchise fees, and the FCC would be barred fromenforcing must-carry, retransmission-consent and leased-access policies that apply tofranchised cable operators under Title VI of the Communications Act.

The proposal, pending since February, was advanced byEntertainment Connection Inc., a SMATV provider that serves about one-dozen apartmentbuildings in East Lansing, Mich. ECI wants to lease fiber from Ameritech Corp. to accessrights of way and to interconnect with other properties.

ECI's ability to use Ameritech's fiber would makeserving buildings with as few as 100 apartment units economical because of lowerper-subscriber rooftop-reception costs. Were ECI required to install a headend on everybuilding, it would need at least 400 apartment units in each to justify the expense.

According to FCC sources and to sources outside of theagency, ECI has four FCC votes -- one more than necessary -- for approval.

"I think that they have made a very reasonablerequest," an FCC source said. "It's pro-competitive, and it has some othervery good aspects to it."

After learning of their imminent defeat, Washington, D.C.,lobbyists for municipal regulators pressured the FCC to step back and reconsider theimplications of endorsing ECI's request.

"We're hopeful that the commission will pausebefore it leaps into the dark," said Nick Miller, whose firm, Miller & Van Eaton,is representing an ad hoc coalition that includes the cities of Dallas and St. Louis."Our view is that the logic of ECI's request is a fundamental change in therelationship of federal law and local law in video delivery."

According to municipal sources, cities predicted thatapproval of ECI's petition would result in the demise of Title VI, and that it couldprompt franchised cable operators to become imitators -- namely, to sell their externalfacilities to common carriers under long-term leasing deals in order to avoid local andfederal regulations.

"What ECI is asking for would wipe out Title VI. Theexception would consume the rule," a Washington lobbyist for cities said. "Ifyou let ECI do this, what don't you allow someone else to do?"

Alan Fishel, ECI's Washington, D.C., attorney, saidthe notion that cable operators would give up their prized facilities to escapefranchising obligations was implausible.

"The cities' claim that this is going to lead toall sorts of problems is wrong," Fishel said. "Companies like[Tele-Communications Inc.] aren't going to give up their infrastructure to become auser of a system like Ameritech's."

The cable industry has opposed ECI's petition, sayingthat the FCC should require ECI to obtain a cable franchise. Cable attorneys have beenpressing this point at the FCC in recent weeks.

"[The ECI proposal] creates cable systems thataren't cable systems," said Daniel Brenner, vice president of law and regulatorypolicy for the National Cable Television Association.

The NCTA has also told the FCC that ECI's proposal, ifapproved, would create a large loophole in Title VI.

FCC sources said they hope that by granting ECI'spetition, the agency would be promoting cable competition. They said they do not share theview that support for ECI would upset traditional cable regulation, mainly because theservice that ECI is proposing is contingent upon the construction of such facilities by anunaffiliated common carrier.

Fishel echoed that point of view: "Idon't see this as having the overwhelming implications that everybody sees. I do seethis as helping out small providers that otherwise would end up going out ofbusiness."