Don't Get Run Over by the Telecom Deregulation Steamroller

So you think that telecommunications deregulation means less work for government? Maybe for federal and state governments, but for local and county governments, consider this a wake-up call.

The telecom marketplace is changing rapidly. Existing vendors are entering new markets. And a whole new cast of characters is emerging: wireless carriers, Internet service providers, competitive access providers and direct broadcast satellite operators.

A frenzy of construction activity accompanies these changes. They are followed by a dramatic increase in building permit applications, requests for access to public rights of way, applications for zoning variances, requests to place antennas on water towers and applications for new or expanded cable franchises-in other words, lots of new work for local and county governments.

Ignoring these requests is not an option, nor is negotiating a single franchise and turning away all other applicants. The Telecommunications Act of 1996 mandates a level playing field-requiring that you allow all carriers to enter your market under a common set of rules. Doing nothing will land you in court. On the other hand, if you simply grant all requests, you could easily have Main Street dug up five times next year by five different carriers.

Even worse: Chances are good that your current ordinances are no longer valid, such as right-of-way leases that treat telephone companies differently from cable carriers. If you don't revise them, you may stand to lose revenue if a carrier challenges your ordinances.

Whatever the case, expect to spend countless hours of staff, town council and county board time-as well as lots of legal fees-as telecommunications deregulation rolls through your community.

Your most important immediate step will be to enact an omnibus ordinance establishing uniform procedures for dealing with telecom carriers. The 1996 Telecom Act contains specific language (the Barton-Stupak Amendment) that reaffirms local authority over rights of way, building codes and the like. But until you have a conforming ordinance in place, you will not be in a position to exercise your authority.When drafting your ordinance, remember that it should:

* Cover the full range of issues associated with telecom-related construction within your community, including application procedures, zoning, building codes, right-of-way leases, other fees and franchising where applicable.

* To the maximum extent possible, allow you to recover the full costs of maintaining your rights of way and of processing applications.

* Provide a way to avoid repeated construction activity in the same location-for example, by requiring that the first applicant for a street cut allow other carriers to "buy in" to the same dig.

Be on the Lookout

In addition, you should be sure to:

* Retain legal counsel with expertise in federal telecommunications law and in the specifics of your state's telecommunications and utility laws.

* Keep a close eye on the courts and your state house. In many states, there is lobbying and legislative activity under way that may further limit your authority over telecom activities in your community. For example, Texas has passed legislation prohibiting municipalities from offering telecom services.

* Keep an eye on FCC rule-making activities that are fleshing out details of the Telecom Act.

* Look for ways to collaborate with other jurisdictions, particularly in the drafting of a model telecommunications ordinance for communities in your state and in lobbying against state telecommuni- cations legislation that would adversely affect localities.

While federal and state legislation and court decisions may increasingly limit your regulatory authority, you have a far more powerful weapon for dealing with carriers: your purchasing power.

Local and county governments are large purchasers of telecom services, with numerous public facilities to wire together. Take care not to dilute your purchasing power. If each agency builds or buys its own telecom facilities, you will have lost your opportunity to exploit economies of scale or to exert negotiating leverage.

By contrast, if all agencies act in concert, you are likely to be the largest telecom purchaser in town, with all the influence that goes with being a dominant buyer in any market.

Be very careful in how you wield that influence. Your purchasing decisions will have a significant effect on what becomes available to other users in town. For example, if you build a consolidated public-sector-only network using government-owned fiber, there may not be enough business left for carriers to be interested in serving the rest of your community.

If you build a network by leasing analog lines from your existing telephone company, you will have the side effect of further entrenching a monopoly carrier and a previous generation of technology. Instead, look for approaches that expand access and lower costs for the rest of the community, not just the public sector.

If you're careful, an important side effect of your purchases can be the development of universal service. Unlike commercial users, government buildings are located throughout the community, not just in developed commercial and industrial areas. Once a carrier has pulled fiber to a remote public-works depot, serving the one or two nearby commercial users becomes a lot easier.

A good first step is to assemble a telecommunications task force representing all major users in town, both public and private. In other words, get all the major buyers together.

The first job of such a task force is to identify and quantify the overall telecom requirements-current and future-of your residents, businesses and public-sector organizations. Look toward the future. What are projected needs? What are the plans of carriers serving your community? What services are needed that are not forthcoming from the marketplace?

Look for areas where cooperation can cut costs and/or bring in new services. Start with a map of locations with high telecom needs: public buildings, medical facilities, bank branches, businesses (here, a geographic information system can be very helpful). Then start drawing existing leased lines on the map. You're likely to discover quite a lot of duplication and opportunities for consolidated operations (a shared T-1 is a lot less expensive than 16 leased voice-grade lines). Look for ways to meet expansion needs through joint purchasing.

Think about strategies for obtaining the communications services your community needs. For larger communities, use your negotiating power to induce carriers to serve the entire community, not just the central business district and industrial parks. In smaller communities, which are less attractive to commercial carriers, consider forming a telecom cooperative or municipal telecom carrier.

The most important thing is to get started. In today's climate, the most dangerous strategy is to do nothing.

Miles Fidelman is president of the nonprofit Center for Civic Networking (www.civic.net/telecom). He can be reached at mfidelman@civicnet.org.

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