While it's inevitable that the Telecommunications Act signed into law the first of February will result in sweeping industry changes, it's also imperative that local governments continue to play a leading role in their oversight of communications services.

By tearing down regulatory "barriers" to effective competition, the Act ensures the economical and efficient delivery of telecommunications services. The new Act will inspire further advancement in technology and will incite a mad scramble by companies to achieve advantageous positions in the marketplace. Ultimately, the future will bring new service offerings not even dreamed of today.

However, to the extent that city and county governments want to ensure that telecommunications systems use their rights-of-way in a manner that benefits the public welfare, local governments must be active, educated participants in the change. As with other municipal services, residents expect local government to provide and regulate telecommunications services. But it takes planning on the part of local government officials, understanding changes resulting from the new legislation, and translating how those changes will impact cities and towns.

COMMENT
It appears that the passage of the Telecommunications Act of 1996 is turning out to be a victory of one battle with the war now shifting to the States. Those rights which provide local authorities with the ability to retain their regulatory control over their rights-of-way, which were preserved in the new Act, are once again being challenged. The telecommunications industry has directed its resources to the state capitals whereby they are asking for legislation to be approved which will remove all regulatory control of right-of-way from local jurisdictions. States like Colorado, California and Minnesota are some of the first states that the telecommunications industry has targeted with this legislation.

Unfortunately, the telecommunications industry has managed to convince the Colorado General Assembly and the governor to approve a law that removes all regulatory controls of rights-of-way from local jurisdictions. This model legislation (as proposed by the telecommunications industry) limits revenue to administratve functions (i.e., the cost of permits), abolishes the ability to access other fees (i.e., annual maintenance), and prohibits in-kind services. Furthermore, the passage of this legislation in Colorado will serve as a primer for the cable industry to demand releases from their I-NET commitments and other in-kind services they are currently providing.

The telecommunications industry has touted this legislation as the model that will appear before all statehouses. Local governments need to be aware of this latest challenge by the telecommunications industry, and state and national governmental associations (like NATOA, ICMA, NLC, APWA, etc., etc.), should unite together in assisting those states currently considering the legislation.

Gerald C. Smith
Administrative Assistant
Village of Deerfield

Retaining Control of Rights-of-Ways
Municipal officials should consider implementing ordinances or resolutions that govern telecommunications providers in a uniform and consistent way. There are already a plethora of permanent facilities, including water mains, natural gas pipes, telephone wires, and cable TV system cables below the surface of our public streets and sidewalks.

As more telecommunications providers attempt to obtain rights-of-way, there will be even more layers added to that substructure, intensifying public safety concerns and driving up management costs. Every time a new carrier enters a right-of-way, local government (and the taxpayers) face both increased direct costs for road replacement and indirect costs in the form of increased travel time, loss of access and trade to local businesses, and increased noise pollution and visual intrusion to name just a few.

An example from a white paper prepared by the National Association of Telecommunications Officers and Advisors dramatically illustrates the financial implications these rights-of-way represent to municipalities.

Denver: A Case Study in the Financial Aspects of Rights-of-Ways
Denver, Colorado estimates its public rights-of-way have an acquisition value of $5.5 billion. The market rental value of Denver's public rights-of-way is $483 million. However, the city receives from all private utility users only $38 million a year to use those rights-of-way, while spending over a half billion each year to maintain them.

In other words, the city "leases" a property right for only 13 percent of its fair market value, while taxpayers fund $500 million, maintaining that property at no cost to the private user. Who is subsidizing who?

Cable television operators have clamored about having to pay cities a five percent franchise fee for use of the rights-of-way, and telephone companies have fought strenuously against cities exercising even the slightest regulatory control over telecommunication services. However, the reality is that, without local control of the public rights-of-way, taxpayers are providing billions of dollars of subsidies to private enterprises.

May 1996 / Illinois Municipal Review / Page 19

Universal Service and Revolutionary Technological Changes Will Drive Municipal Decision
During the next few years, municipalities will be expected to deliver basic services to some and state-of-the-art services to those residents who have the means and the motivation to be on the leading edge of the current technological revolution. The Information Infrastructure Agency, initiated by Vice President Al Gore, has stressed the need to assure that voice, video and data communication capabilities will be available to every household, business, and industry throughout the U.S. In addition, the current administration has announced that one of its top priorities is to ensure that a telecommunications infrastructure is in place to provide universal access to the broadband capabilities that are available through fiber optic and digitalization. These relatively new technologies make interactive capabilities faster and more accessible. For instance, local utilities can use them for load management, billing, meter reading, time-of-day pricing, monitoring services, and consumer communications. They can also be used for long distance services, local telephone services, paging and cellular radio services, video and data two-way services, and many other interactive communications services.

The Telecommunications Act of 1996 preserves the rights of state and local governments to control the public rights-of-way and to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and non-discriminatory basis.

The new Act also affirms local zoning authority over the citing of cellular towers and other telecommunications facilities. Effectively managing the public rights-of-way within the limits allowed by state and federal law will be one of the biggest challenges of the next decade for municipal officials and managers. As citizens, we all have a vested interest in their ability to do this well so they can encourage the availability of a wide array of services at competitive prices. •

Adrian E. Herbst is the chair of Fredrikson & Byron's telecommunications practice group. He has more than 25 years' experience in working with municipalities, utilities and other entities in developing a wide-range of cable and telecommunications systems. He is a former municipal official and city attorney and has served on a variety of local and national telecommunications committees. Mr. Herbst will be one of the presenters at the IML Telecommunications Seminar, June 28 in Bloomington.

Page 20 / Illinois Municipal Review / May 1996