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Minn. Ops Lament Net Bills Demise

Minnesota franchising authorities dodged a bullet when
state lawmakers adjourned last week without acting on a bill that would have prohibited
local regulation of Internet services.The legislature's failure to act on Senate File
1647 was a setback for cable operators, which saw the bill as a way of limiting
government's ability to regulate Internet services offered over cable.

Local franchisers, meanwhile, characterized the measure as
an exaggerated reaction to attempts to unbundle cable's high-speed broadband pipe.

The bill, which was introduced by Democratic Sen. Steve
Kelley, passed out of the Senate before being tabled by the House Regulated Industries

"But I think there's a good chance it will
resurface [next session]," Minnesota Cable Telecommunications Association executive
director Mike Martin said.

Martin added that cities have been engaging in
"classic nose-under-the-tent" behavior when it comes to Internet services.

"We find that cities continue to try to worm their way
into Internet regulation," he said. "They want to set service standards, or they
want statistical reports on Internet activity. We give them the right to collect franchise
fees on our Internet services, but that doesn't satisfy them."

Not surprisingly, local regulators opposed S.F. 1647.

Coralie Wilson, executive director of the North Suburban
Cable Commission, a consortium of 10 communities north of Minneapolis, said that as
originally written, the bill would have barred local franchising authorities from handling
consumer complaints about cable's Internet offerings, even though the service would
be delivered over the same infrastructure.

"Our concerns were that the bill would have affected
our ability to enforce customer-service or institutional-network requirements contained in
our franchises," Wilson said.

Moreover, Wilson added, the bill's definition of
Internet services was so broad that it could have been applied to cable's digital
signal, thereby limiting a city's oversight authority.

If the bill does resurface next year, working in the
franchisers' favor will be the fact that most of the state's telecommunications
industry -- including AT&T Corp., MCI WorldCom and Internet-service providers -- have
come out against the measure, Wilson said.

Meanwhile, Martin said, cable's position on a second
"revolutionary" proposal by Kelley, which was also put off until next year, was
less clear.

S.F. 2133 called for eliminating all state laws governing
cable and telephone operators. Regulation of cable would then shift from municipalities to
the Minnesota Public Utilities Commission.

The PUC would be responsible for establishing rules and
regulations covering universal service; deployment of infrastructure serving voice, video
and data; fair competition; quality of service; promoting customer choice; consumer
protection; and voluntary resolution of disputes between carriers.

However, local franchises would be eliminated in the
process -- along with the franchise fees cities depend on and support for PEG-access
(public, educational and government) channels and I-nets, Wilson said.

Martin said cable operators expected the second measure to
be the subject of considerable political horse-trading during the next session, which
raised concerns about how the final bill will look.

"On the surface, it looks like it eliminates a lot of
bothersome regulation for cable," Martin said. "But we also know there's
going to be a lot of give and take. Our concern is that we don't end up with both
state and local regulation. Just because [local regulators] oppose it, that doesn't
mean it's good for us."