SUMMARY

NATOA and TCCFUI respond to three elements of specific questions posed by NTIA. The following comments address: (a) the appropriate federal-state-local relationship necessary to foster broadband development; (b) the role of public rights-of-way as one of the market characteristics necessary to induce competitors to make facilities-based investments; and (c) the impact of local government right-of-way management regulatory policies on current broadband deployment rates.[1] In particular, NATOA and TCCFUI herein discuss the impact of broadband deployment on: the legal authority and fiduciary duty of state and local governments to recover fair value for private use of publicly-owned property; and present evidence that local franchising and rights-of-way compensation authority has not affected broadband deployment rates.

It is time for NTIA to bring to rest a persistent misunderstanding arising in the wake of the Telecommunications Act of 1996. NTIA should state that local governments do not stand in the way of competition and deployment of broadband facilities. Our citizens are hungry for residential broadband deployment. Local governments are seeking facilities-based competition to address this need. Efficient, fair management and pricing of public rights-of-way is essential to a predictable, vigorous broadband market. Public rights-of-way should be neither a source of subsidy nor a barrier to advanced networks. Local governments take seriously their duty to steward scarce public resources and to provide competitive access to local markets without damaging innocent third parties.

Any national broadband policy must recognize the rights of local governments under the Telecommunications Act of 1996 (“1996 Act”). The U.S. Constitution protects local governments’ property rights in public rights-of-way. It also protects the federal form of government, reserving to states and local governments all powers not delegated to the United States, including all authority to manage use and disruption of local public rights-of-way.

The Telecommunications Act of 1996 Was Drafted to Balance the Interests of Federal, State, and Local Governments, and to Protect Local Management of Public Rights-of-Way. The 1996 Act recognized the rights of local governments to control and manage their rights-of-way and to obtain fair compensation for right-of-way use. In the 1996 Act, Congress sought to promote the entry of multiple, competing telecommunications providers, without transgressing the rights and responsibilities of state and local governments, through the language developed in section 253 of the 1996 Act. The legislative history shows that Congress inserted § 253(c) specifically to preserve local authority over reasonable rights-of-way compensation and management, and drafted § 253(d) to ensure that the courts, and not federal agencies, have jurisdiction over § 253(c) issues.

Right-of-Way Management By Local Governments Is Necessary to Balance the Competing Demands Placed Upon Local Rights-of-Way. Local communities work with telecommunications providers and other rights-of-way users to resolve problems and make rights-of-way work efficient. When telecommunications providers refuse to cooperate, or ignore legitimate requirements, people get hurt and physical assets are damaged. Too often, providers fail to abide by local government standards of right-of-way management. Too often providers seek shelter before the FCC. Many examples prove that local governments are the place to coordinate local right-of-way use. However, these efforts require local government resources, and the cost of these resources must be recovered – not only the costs of administration and repair, but also those of acquisition and maintenance.

Reasonable Right-of-Way Compensation is Not a Barrier to Entry. Limiting local government right-of-way compensation to less than market value does not recognize the scarce and valuable nature of public-rights-of-way. Compensation should assure that the right-of-way is dedicated to its highest and best use and avoid wasteful consumption of this precious resource. The federal government spectrum auction policies are directly analogous: spectrum, like right-of-way space, is a scarce resource that is most efficiently allocated through a market price mechanism. It is inconsistent for the federal government to auction spectrum at the highest possible price while at the same time asserting that local government property should be given away to telecommunications companies at below market compensation. Local governments must be free to seek appropriate efficient pricing mechanisms, including revenue-based measures, to establish such compensation.

There Is No Evidence to Suggest That Local Governments' Current Right-of-Way Policies Have Impeded the Entry of Competitive Providers Into the Market. Telecommunications providers are pursuing entry strategies based on market factors, not local right-of-way policies and regulations. The primary factor driving broadband deployment is access to capital financing. Broadband deployment has tended to focus on highly urbanized Central Business Districts because the density and affluence of those areas offer higher return on invested capital. Broadband facilities are being built wherever the returns and capital are adequate – including communities where local governments charge reasonable compensation and regulate their public rights-of-way. New networks are not being built wherever there is inadequate returns on invested capital. And this includes most communities around the nation, even those offering rights-of-way for free and without any regulation requirements.

Restricting Local Authority Does Not Increase Broadband Deployment Rates. All available evidence suggests that restricting or preempting local government authority over public rights-of-way does nothing to change the rate of deployment of advanced services. As an example, Texas municipalities were broadly preempted by Texas HB 1777. However, these restrictions on local government rights-of-way authority have not led to any change in deployment of advanced services to Texans. HB 1777 is evidence that local government regulation is not the cause of delays in broadband deployment.

TABLE OF CONTENTS

SUMMARY. i

I. Introduction 1

II. THE TELECOMMUNICATIONS ACT OF 1996 PROTECTS LOCAL
AUTHORITY TO MANAGE AND REQUIRE COMPENSATION FOR
USE OF THE PUBLIC RIGHTS-OF-WAY TO DEPLOY BROADBAND FACILITIES........ 5

A............ Preemption of State and Local Regulations Is Not Permissible
Unless Such Regulations Have the Effect of Prohibiting the
Provision of Telecommunications Service............ 7

B............ Section 253(d) Precludes Federal Agencies From Addressing
Issues Regarding Local Right-Of-Way Compensation Or Management............ 8

C............ Congress Preserved Local Authority to Impose Reasonable
Compensation and Management Requirements............ 10

D............ Under Federal Law, Compensation for Use and Occupation of
Public Rights-of-Way Is Not Limited to Cost............ 13

E............ Compensation For Use of the Public Rights-of-Way May Be In the
Form of Gross Revenues............ 13

III.. APPROPRIATE RIGHT-OF-WAY MANAGEMENT IS NOT A BARRIER
TO ENTRY... 15

A............ Right-Of-Way Management Is Necessary To Balance the Competing
Demands Placed Upon Local Rights-of-Way............ 15

B............ Right-of-Way Management Is Necessary to protect the Public Health
and Safety............ 17

C............ Communities Experience Substantial Costs For Right-Of-Way
Management............ 20

IV.. REASONABLE RIGHT-OF-WAY COMPENSATION IS NOT A
BARRIER TO ENTRY... 22

A............ A Local Government Has A Right To Gain A Fair Price For Its
Property............ 22

B............ Prohibiting Local Governments from Collecting Fair Compensation
Would Create A Subsidy............ 26

C............ Local Communities Seek To Apply Reasonable Right-Of-Way
Compensation Requirements Fairly To All Competitors............ 27

V... PREEMPTION OF LOCAL GOVERNMENT RIGHT-OF-WAY FRANCHISE AUTHORITY HAS NOT INCREASED DEPLOYMENT OF ADVANCED SERVICES...... 27

A............ Preemption of Local Authority Has Not Increased Deployment
of Advanced Telecommunications Services to the Majority of
Americans, i.e., Residential and Small Business Customers............ 29

B............ Broadband Deployment Is Dependant on Access to Capital
Financing, Not the Absence of Local Regulation............ 31

VI. CONCLUSION.. 32

Before the

UNITED STATES DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

Washington, D.C. 20230

In the Matter of

Request for Comments on Deployment of

Broadband Networks and Advanced

Telecommunications

)

Docket No. 011109273-1273-01

RIN 0660-XX13

INITIAL COMMENTS OF THE NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS (“NATOA”) AND THE TEXAS COALITION OF CITIES FOR UTILITY ISSUES (“TCCFUI”)

I. Introduction

The National Association of Telecommunications Officers and Advisors (NATOA) is a national association that represents the telecommunications needs and interests of local governments, and those who advise local governments. The membership is predominately composed of local government agencies, local government staff and public officials, as well as consultants, attorneys, and engineers who consult local governments on their telecommunications needs.[2]

The Texas Coalition of Cities for Utility Issues (“TCCFUI”) is a coalition of more than 110 Texas Cities dedicated to protecting and supporting the interests of the Citizens and Cities of Texas. TCCFUI monitors the activities of the Texas Legislature, Public Utility Commission, Rail Road Commission and the Federal Communications Commission. TCCFUI also provides franchising expertise and model franchise documents to member cities, and ensures that the citizens of Texas continue to enjoy quality utility and cable service.[3]

NATOA and TCCFUI respond to three elements of specific questions posed by NTIA. The following comments address: (a) the appropriate federal-state-local relationship necessary to foster broadband development; (b) the role of public rights-of-way as one of the market characteristics necessary to induce competitors to make facilities-based investments; and (c) the impact of local government right-of-way management regulatory policies on current broadband deployment rates.[4] In particular, NATOA and TCCFUI herein discuss the impact of broadband deployment on: the legal authority and fiduciary duty of state and local governments to recover fair value for private use of publicly-owned property; and present evidence that local franchising and right-of-way compensation authority has not affected broadband deployment rates.

The Communications Act of 1934, as amended by Congress in 1996[5], establishes a system of shared regulatory authority between the states and the federal government. The Federal Communications Commission ("FCC" or “Commission”) regulates “interstate communication by wire and radio,”[6] subject to the acknowledged authority of local and state governments over public rights-of-way. However, the FCC’s jurisdiction over interstate communications itself has limits. For example, the FCC may not broadly preempt federal, state or local health and safety regulations, zoning regulations, and Equal Employment Opportunity requirements. The states (and local governments pursuant to delegated state authority) regulate “intrastate communications by wire and radio.”[7] Local governments and the FCC each have a measure of independent authority, but also share certain regulatory jurisdiction over cable television franchise requirements related to "facilities and equipment,"[8] and cable television consumer protection.[9] For example, the FCC has authority to establish minimum cable television customer service standards, but each state and each locality has the authority to establish more rigorous requirements, and the FCC is not authorized to intrude upon that authority. In sum, where Congress has granted federal agencies regulatory authority, Congress has also reserved discrete authority for state and local governments.

Federal agencies should acknowledge that federal law assigns local governments responsibility for protecting and stewarding their most valuable real estate asset — the public right-of-way. Local authority assures that multiple, conflicting uses of public rights-of-way does not thwart the public purposes to which it is dedicated. In this context, local governments currently manage public rights-of-way to encourage market entry and competition. Local governments are committed to the following regulatory principles:

1. Encourage rapid deployment of advanced networks which enhance the welfare of our citizens and the economic development of our communities;

2. Ensure advanced network providers address local community needs and interests;

3. Protect consumers from unfair and unreasonable business practices;

4. Encourage the development of meaningful telecommunications competition; and

5. Ensure that the private, for-profit use of public property is efficiently and effectively managed, fully compensated, and consistent with the dedication of public rights-of-way to serve the public interest.

NATOA and TCCFUI dispute suggestions by telecommunications companies (made in numerous filings before the FCC) that further preemption or restriction of local government right-of-way authority will speed deployment of advanced services. All available evidence suggests that restricting or preempting local government authority to manage and require compensation for use and occupation of the public rights-of-way does nothing to accelerate the rate of deployment of advanced services. Preempting local authority does, on the other hand, increase costs to all persons dependent on using rights-of-way. When telecommunications providers do not pay their fair share, local governments and their taxpayers must foot the bill.

All available evidence demonstrates that effective right-of-way management and compensation speeds development of overbuild telecommunications facilities. Preemption of this local authority has the opposite effect. Many of the local government restrictions suggested by industry are now imposed on Texas municipalities by Texas HB 1777. These restrictions on local government right-of-way authority have not accelerated deployment of advanced services to Texans. The implementation of HB 1777 has harmed Texas taxpayers and all right-of-way users. HB 1777 proves local government regulation is not the cause of delays in telecommunications network deployment. Advanced services remain unavailable to the majority of Texans – regardless of whether they live in urban areas, affluent suburbs, rural areas, or economically depressed or disadvantaged areas. Advanced services are deployed only to large commercial buildings in Texas that are more profitable to service than residential and small business subscribers. Deployment of advanced services is most influenced by the single factor of capital availability – access to capital and return on investment. When capital was available to the telecommunications markets, deployment rates in Texas and elsewhere increased. When access to capital became limited, deployment stopped. This was not caused by HB 1777’s preemption of local authority. HB 1777 did not improve the deployment rates in Texas, and there is no evidence that such a preemption on a national level would improve deployment rates anywhere in America.

II. THE TELECOMMUNICATIONS ACT OF 1996 PROTECTS LOCAL AUTHORITY TO MANAGE AND REQUIRE COMPENSATION FOR USE OF THE PUBLIC RIGHTS-OF-WAY TO DEPLOY BROADBAND FACILITIES.

The Telecommunications Act of 1996 (“1996 Act”) sought to promote the entry of multiple, competing telecommunications and advanced services providers, without transgressing the rights and responsibilities of state and local governments. Congress explicitly resolved these two goals in the final text of 47 U.S.C. § 253 (Removal of Barriers to Entry). NTIA’s ultimate broadband recommendations will impact the use and occupation of local public rights-of-way to deploy broadband facilities. Therefore, an accurate analysis of § 253 is crucial to any NTIA action on broadband deployment.

47. U.S.C. § 253 states:

(a) IN GENERAL. ‑‑ No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

(b) STATE REGULATORY AUTHORITY. ‑‑ Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

(c) STATE AND LOCAL GOVERNMENT AUTHORITY. ‑‑ Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.

(d) PREEMPTION. ‑‑ If, after notice and an opportunity for public comment, the Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal requirement that violates subsection (a) or (b), the Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correction such violation or inconsistency. . . .

First, it is useful to briefly summarize the proper interpretation of the various subsections of § 253. Subsection (a) is a general prohibition against state and local regulations that have the effect of prohibiting the provision of telecommunications service. Subsection (b) is a safe harbor that protects traditional state consumer participation regulations, including universal service. Subsection (c) is a safe harbor that protects state and local right-of-way management and compensation authority. Finally, subsection (d) gives the FCC jurisdiction to determine whether state or local regulations violate subsection (a), or fall within the state safe harbor of subsection (b). As discussed below, if the FCC were to determine that a state or local regulation actually had the effect of prohibiting the provision of telecommunications service in violation of subsection (a), it would be for a federal court – not a federal agency – to determine whether such state or local regulation is nonetheless permissible because it falls within the safe harbor of right-of-way management and compensation.

Congress delegated to the courts – and thus took away from federal agencies – the power to interpret what are fair and reasonable right-of-way management and compensation regulations. Section 253 dismisses federal agency jurisdiction to take actions (even to promote competitive networks) that infringe upon local property rights in the public rights-of-way.[10]

A. Preemption of State and Local Regulations Is Not Permissible Unless Such Regulations Have the Effect of Prohibiting the Provision of Telecommunications Service.

As a threshold matter, under § 253(a), state and local right-of-way management regulations may not be preempted by the FCC unless the agency determines that the state and local requirements “prohibit or have the effect of prohibiting the ability of any entity to provide” telecommunications service.

In one of the seminal cases analyzing § 253, the FCC itself recognized that there must be a prohibition before there can be a violation of § 253:

[I]t is up to those seeking preemption to demonstrate to the Commission that the challenged ordinance or legal requirement prohibits or has the effect of prohibiting potential providers' ability to provide an interstate or intrastate telecommunications service under section 253(a). Parties seeking preemption of a local legal requirement . . . must supply us with credible and probative evidence that the challenged requirement falls within the proscription of section 253(a) without meeting the requirements of section 253(b) and/or (c).[11]

Most recently, the Eleventh Circuit interpreted § 253 and applied the same construction:

[I]t is clear that (b) and (c) are exceptions to (a), rather than separate limitations on state and local authority in addition to those in (a). Consistent with this interpretation, if a party seeking preemption fails to make the threshold showing that a state or local statute or ordinance violates (a) because it "may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service," the FCC has found it unnecessary to consider whether the statute or ordinance is "saved" by the exceptions in (b) or (c).[12]

B. Section 253(d) Precludes Federal Agencies From Addressing Issues Regarding Local Right-Of-Way Compensation Or Management.

In the event that credible evidence is presented to demonstrate that a state or local regulation has the effect of prohibiting the provision of telecommunications service, under § 253(d) the FCC lacks authority to consider whether state or local right-of-way compensation or management are nonetheless permissible regulations under the safe harbor of § 253(c). Congress intended these questions to be left to the courts. Subsection (d) gives the Commission authority to resolve only subsection (a) and (b) disputes, and withholds from the Commission authority over subsection (c) disputes. Federal agencies lack authority to determine whether compensation charged by a municipality is "fair and reasonable" or whether right-of-way management or compensation requirements are exercised on a "competitively neutral and nondiscriminatory basis." Such questions are for the courts to resolve. Any NTIA policy regarding broadband deployment must recognize Congress withheld from federal regulations the jurisdiction to intrude on the rights of sovereign state and local governments on matters of rights-of-way management and compensation.

Subsection 253(d), the preemption provision, was added in Conference, based on Section 254 of the Senate Bill.[13] In the Senate, § 254(d), as originally proposed and numbered, contained a sweeping preemption provision that did not exclude subsection (c) from its coverage. After a proposed amendment to remove the preemption provision in subsection (d) entirely, and after substantial debate on the Senate floor, a compromise amendment, offered by Senator Gorton (R‑WA), was adopted to preserve state and local authority over management of and compensation for the public rights-of-way. The Gorton Amendment, adopted by unanimous voice vote, revised subsection (d) to clarify that subsection (c) (rights-of-way management and compensation issues) would not be subject to FCC preemption authority under subsection (d).

Senator Gorton, the author of the successful compromise amendment, stated:

There is no preemption . . . for subsection (c) which is entitled, "Local Government Authority," and which preserves to local governments control over their public right of way. It accepts the proposition from [Senators Feinstein and Kempthorne] that these local powers should be retained locally, that any challenge to them take place in the Federal district court in that locality and that the Federal Communications Commission not be able to preempt such actions.[14]

The intent of Congress to reject any implied FCC preemptive authority over local and state governments is also explicit:

The conference agreement adopts the House provision [under Section 601] stating that the bill does not have any effect on any other Federal, State, or local law unless the bill expressly so provides. This provision prevents affected parties from asserting that the bill impliedly preempts other laws.[15]

Section 601(c)(1) states:

NO IMPLIED EFFECT. –This Act and the amendments made by this Act shall not be construed to modify, impair, or supersede Federal, State, or local law unless expressly so provided in such Act or amendments.[16]

In sum, under the 1996 Act, the federal agency responsible for implementing the Act has no implied authority, its delegated authority is limited, and does not extend to the authority to review state and local government management and compensation decisions affecting public rights-of-way.

C. Congress Preserved Local Authority to Impose Reasonable Compensation and Management Requirements.

Section 253(c) specifically preserves local authority over reasonable right-of-way compensation and management. Both the language of 253(c) and the intent of Congress are explicit and unambiguous. The Senate bill which eventually became the 1996 Act was introduced without any safe harbor for local governments. The Senate Commerce Committee added subsection (c) in much its present form to the Senate bill as originally introduced. The Committee intended to provide a safe harbor for local governments.

The House took similar action to preserve local authority over public rights-of-way. The corresponding bill introduced in the House explicitly preempted local right-of-way compensation. While it included a safe harbor provision for state consumer regulation, analogous to the Senate’s version,[17] it also contained a preemption requiring “parity” of franchise fees and other local charges between incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs). This parity provision was cast in the form of a prohibition (“no local government may impose or collect…"). These two provisions were generally referred to as the “MFS amendment,” because that company had successfully sought inclusion of similar language in H.R. 4103, a predecessor bill in the 103d Congress.

In the House hearings, local government witnesses testified in opposition to the MFS amendment. Negotiations between Representatives favoring the local government position and Representatives favoring the MFS position failed to resolve how the House bill should treat right-of-way issues.[18] The debate then moved to the floor of the House. After debate, the House adopted the Barton-Stupak amendment by the overwhelming vote of 338-86.[19] The Barton-Stupak amendment struck the entire Committee proposal to preempt local governments, including the MFS amendment, and substituted new language essentially the same as that added by the Senate Committee, with three exceptions not directly material here. Speaking in support of the Barton-Stupak amendment, Representative Barton stated:

[The amendment] explicitly guarantees that cities and local governments have the right not only to control access within their city limits, but also to set the compensation level for the use of that right-of- way…. The Chairman’s amendment has tried to address this problem. It goes part of the way, but not the entire way. The Federal Government has absolutely no business telling State and local government how to price access to their right-of-way.[20]

Despite the overwhelming House vote in favor of the Barton-Stupak amendment and rejecting Mr. Schaefer’s position, as well as the unanimous adoption of the Gorton amendment on the Senate floor, the debate over local right-of-way management and compensation language continued into the conference committee. Mr. Schafer was a member of the Conference Committee and attempted once again to revisit preemption of local right-of-way authority. The final conference agreement on the bills as adopted by both houses, however, adopted the Senate language of § 253. The final law thus preserves the safe harbor protecting the authority of local governments over right-of-way management and compensation.

Section 253(c) begins “Nothing in this section affects….” Congress chose this language to mirror Section 2(b) of the 1934 Act, 47 U.S.C. § 153(b) (“Nothing in this act shall … apply …”).[21] Congress was well aware that the Supreme Court had held that language to be an overarching denial of jurisdiction to the Commission in Louisiana PSC v. FCC, 476 U.S. 355, 370, 374 (1986) (the language “fences off” this area from FCC jurisdiction).[22]

D. Under Federal Law, Compensation for Use and Occupation of Public Rights-of-Way Is Not Limited to Cost.

Nothing in Section 253(c) suggests that public compensation for private use of public rights-of-way is limited to cost. Congress spoke of “compensation … for use” rather than reimbursement of costs. The debate on the Barton-Stupak Amendment on the House floor explicitly ratified franchise fees measured by the traditional percentage of gross receipts – analogous to the percentage franchise fee for cable television operators, embodied in Section 622 (Franchise Fees) of the Cable Act of 1984. [23]

If Congress had intended to limit local government to recovery of its costs, it would have used language to that effect rather than using the term “compensation,” which as one federal court recently stated, “has long been understood to allow local governments to charge rental fees for public property appropriated to private commercial uses.”[24] The United States Supreme Court held early on that a franchise fee could properly be based on the value of the franchise and that whether the municipal fee was excessive or not could not be determined from the face of the franchise.[25]

E. Compensation For Use of the Public Rights-of-Way May Be In the Form of Gross Revenues.

A gross revenues fee is a fair and reasonable method of approximating use of public rights-of-way. A percentage of a telecommunications provider’s gross revenues is a measure of use that is roughly proportional to the intensity of the provider’s use of the public rights-of-way. Use is not limited to permanent physical occupancy. Transiting a public right-of-way is a use of that roadway. Consider that the telecommunications provider using facilities in a right-of-way is in the business of transporting bits of information over lines occupying the streets. As a first approximation the provider’s charge to customers is proportional to the amount of information transported, i.e., the number of bits. The amount of the carrier’s transport is reflected in its revenues. Thus, to measure use of the rights-of-way by information transported for which the end-user pays is comfortably within the legislative discretion of local governments.

Furthermore, “calculating the impact or costs of telecommunications providers on the public rights-of-way would not be a simple undertaking.”[26]

(“A number of intangible factors would need to be considered, including the shortened life of pavement, added police costs to deal with traffic disruptions, interference with the City’s other systems, impact on traffic, and offsetting benefits to the City from the availability of multiple telecommunications providers.”)[27]

Given the difficulty of determining the costs to be associated with a particular company’s use of the rights-of-way, a gross revenues fee offers the simplest and fairest way of setting compensation. Several courts have recognized these difficulties, and have upheld gross revenue-based compensation.[28]

III. APPROPRIATE RIGHT-OF-WAY MANAGEMENT IS NOT A BARRIER TO ENTRY.

The various and often competing interests of the rights-of-way users must be coordinated and managed. Telecommunications providers, utilities and the traveling public have conflicting requirements. A right-of-way manager must take control if any of the parties are going to use the local public rights-of-way effectively. For this reason alone it is imperative that an entity coordinate these uses of the local rights-of-way, taking into account the needs of the local community. Local governments are the only practical level of government that balance these interests and preserve the local rights of way for future use.

A. Right-Of-Way Management Is Necessary To Balance the Competing Demands Placed Upon Local Rights-of-Way.

Since the passage of the 1996 Act, the number of companies seeking to offer telecommunications services has exploded. Since 2000, the number of these providers that have postponed or eliminated scheduled broadband facility deployment or gone into bankruptcy has increased exponentially.[29] While not every provider will seek to enter every market at the same time, local communities are increasingly finding themselves faced with a myriad of telecommunications providers seeking access to or abandoning facilities in their public rights-of-way — property often under intensive use by other providers, utilities, and the traveling public. With each new user of the local rights-of-way comes, in addition to increased physical burdens on the local right-of-way, an increase in the possibility that a new user will interfere with and damage existing uses.

Appropriate right-of-way management is not a barrier to entry. Nor is there any substantial evidence in any federal regulatory or court proceeding to the contrary.[30] Local communities have worked with telecommunications providers and other right-of-way users to resolve problems and make right-of-way work more efficient. For example, the permitting process affords a community the opportunity to be aware of the various activities occurring in the public rights-of-way and to spot any potential conflicts.[31] Local governments may also be involved in arranging for common trenching or joint undergrounding of utilities and similar facilities when new developments are built or existing areas rebuilt.[32] Such construction- and restoration-related requirements are characteristic of right-of-way use agreements and telecommunications ordinances.

Reasonable right-of-way management does not prevent competitive entry. Indeed, it is essential to competitive entry, insofar as the local government must make sure that entrants do not interfere with other telecommunications providers or other right-of-way users. If each telecommunications provider were permitted to occupy the public rights-of-way in any manner it saw fit, some users would inevitably interfere with the use of others. The coordinating function of the local government is thus crucial to advancing competitive networks.[33]

B. Right-of-Way Management Is Necessary to protect the Public Health and Safety.

More directly harmful are those cases where failure of telecommunications providers (or other right-of-way users) to abide by sound standards of right-of-way management results in serious damage due to the use of the same physical space by multiple companies.[34] The following list are only one set of examples from the state of Texas:

· A contractor laying fiber optic cable for SWBT dug into a 2-inch diameter gas main in Harris County (outside Houston). The resulting explosion destroyed one home, badly damaged another, and forced evacuation of 25 other homes when gas entered the sewer lines. Multiple fire crews were required. Damage was estimated at $600,000.[35]

· A contractor putting in a fiber-optic duct system drilled into a 33-inch diameter pressurized sewer line. The spill lasted 9 hours, sent 4.3 million gallons of sewage downstream creating the worst environmental spill in Plano (near Dallas) history. Twenty municipal workers worked through the night to repair the damage and sewage pump stations had to be shut down to repair the damage.[36]

· A construction crew installing fiber-optic cable in downtown Dallas hit a 32-inch diameter water main buried 32 feet beneath the street. The force of the water created a 50-foot gash in the sidewalks, and 20 million gallons of water flowed for four hours, flooding the basements of four buildings before the break could be contained. The flooding destroyed electrical boxes, motors that run air conditioning and pump water, elevators, carpeting and 30 to 40 cars. Eight hundred federal employees and residents of a 205-unit apartment building could not return to their offices or homes for several days.[37] If the incident had not occurred on a holiday, workers in basement offices could have been killed.

· A contractor installing underground conduit severed a SWBT telephone line, cutting off telephone service, including emergency 911 service for 3,600 Arlington, Texas (near Dallas) residents.[38] Surrounding merchants could not make credit card sales during the phone outage.[39]

· Over a two-week period, sub-contractors for Touch America cut through two water lines and three gas lines in Flower Mound, Texas. Forty people were evacuated, residents were without water for seven hours, flooding occurred for four hours, and traffic had to be diverted. Municipal utility crews worked through-out the night to repair damage.[40]

· A private contractor doing fiber optic work drilled into a 4-foot diameter water pipe shutting down one of Irving, Texas’s (Dallas suburb) primary water mains.[41]

· Fiber optic installation contractors caused $204,440 worth of damage to Plano, Texas water and sewer facilitates between 1998 and 2001.[42]

· A SWBT contractor bored into an 8-inch diameter water main at Crowley Road and Westwood Drive in the City of Arlington, Texas, causing $41,284 in damages.[43]

· A Level 3 Communications contractor bored under West Street in the vicinity of the Union Pacific Railroad in the City of Arlington, Texas. Immediately after the boring began, West Street began to shift and crack due to the boring operations. The City was required to expend $84,957 to repair the damage to West Street.[44]

The list of Texas incidents is duplicated in every state of the Union. These right-of-way accidents will be reduced only if local governments have adequate regulatory authority to: properly manage the public rights-of-way; to impose construction and control and coordination requirements; to enforce inspections and penalties for safety violations; to evaluate the experience and safety procedures of construction contractor crews on-site; and to impose appropriate bonding, insurance and restoration requirements with incentives for safe performance.

Local government requirements not only prevent accidents, but will save all right-of-way users money. For example, common trenching can save money for all concerned, avoiding cases such as that of Sierra Pacific Power Company in Reno, Nevada, which ended up paying $90,000 in additional costs when it dug up a newly resurfaced street for a new installation.[45] In a similar case, Constitution Avenue N.W. in Washington, D.C., after being resurfaced in 1998, was being reopened by e.spire in early 1999 to install communications lines.[46]

C. Communities Experience Substantial Costs For Right-Of-Way Management.

Public rights-of-way involve substantial costs to communities. The most obvious, and smallest, are the costs of administering use – processing applications, reviewing the qualifications of users (and their subcontractors), overseeing installations, and the like. But in addition, a community incurs the cumulative cost of telecommunications companies' incursions into the public rights-of-way. Numerous studies have documented, for example, how repeated street cuts reduce the useful life of a street, even if the surface is "repaired" by the company making the cut.[47] This cost is massive, and it is increasing. For example, the D.C. government's average of 9,000 street cut applications had swelled to 15,000 by 1998.[48] A news item from San Francisco reported: "In the past three months, three different telecommunications companies have torn up exactly the same strip of road in almost the exact same spot. Three more companies are lined up to do the same."[49]

Further, neither of these categories of costs takes account of the communities' original cost of obtaining the land and constructing and maintaining the physical improvements public rights-of-way require. Full recovery of the asset cost of rights-of-way for communities thus represents substantial amounts in addition to the superficial cost of administration alone.