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.-B9'@OSB((===5E,C1:.:*4':,-,/0#1#7.=*:,@7=73920>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>!((C>(-((((((((((---#J:55:1-:::1G::-:5-1::K::1&(#(#(#(((>((((((:((#&&+>>>(#P((P-G>>>>##(PN:>>:(((((=(-=( ,.$(<<<#::::::G51111:::::::-::::::-(######5#####(((((((,((((((("5@^2Coddȧ8CCdr2C28ddddddddddCCrrrdzNdzoȐC8CtdCdoYoYCdo8Co8odooYNCodddYO,Oh2CC!CCPRCdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYYddddooPoNoNCNodo8RoodȐYYoNoNNF2ldCddddddd<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddndddddddy.C8*XC\  P6QP 2S=FXRY&S\  P@Q&P .y.G8*XG4  pQ2J=.X &J\  P6Q&P .2N=.X7&N4  pQ&)P,%X)J,\  P6QJP*a$6,!X|6\  P6QP+: X& \  P6QP,{,C8*X9,C*f9 xQX-0J=.X9&J*f9 xQ&X/7PC2X DXP\  P6QXP ..7UC2XxXU4  pQX P2%*XJ2\  P@QJP2 @(dRhg"5@^**74?A%%*DD:4444444444?D?/G4:7:74and 624(e), generally limit the power of a local franchising authority, under Title VI, to condition the   /provision of telecommunications services by a cable operator; to impose telecommunicationsrelated   requirements on cable operators, or to dictate the type of transmission technology used by the cable   1operator to deliver its cable signal. In this decision, we find that the City has violated section   621(b)(3)(B) by placing a telecommunications condition on its grant of cable permits. By inclusion of   these provisions in Title VI, Congress clearly intended to separate the functions of cable franchising from   `the regulation of telecommunications services. The City's insistence on inclusion of its   jtelecommunications condition in a cable permit impermissibly mixes these separate spheres. In contrast,   we do not agree with TCI's claim that the City's actions violate section 621(b)(3)(A) of the   .Communications Act. That provision applies by its terms only "[i]f a cable operator or affiliate thereof   is engaged in the provision of telecommunications services." By its own admission, TCI is not so engaged  S -  in the City of Troy. We further find that the City has not violated section 624(e), as claimed by TCI. S yO -  ԍSection 624(e) provides in pertinent part: "No State or franchising authority may prohibit, condition, or restrict a cable system's use of any type of subscriber equipment or any transmission technology." 47 U.S.C.  544(e).   =That section eliminates the authority of franchising authorities to interfere with a cable operator's choice   of the subscriber equipment and transmission technology to be used in its cable system. We find that the   City has not sought to restrict the discretion granted to TCI in this regard by its actions with respect to TCI's cable permit applications.  S0-  `7.` ` Congress enacted section 253 to ensure that no state or local authority could erect legal   barriers to entry to telecommunications markets that would frustrate the 1996 Act's explicit goal of   opening local markets to competition. Section 253(d) directs this Commission to preempt the enforcement  S-  [of such legal barriers, upon a proper finding.> S yOx-ԍ47 U.S.C.  253(d).> Our treatment of the claims arising under Title VI resolves   /the controversy between TCI and the City. While TCI advances the additional claim that we should   preempt the Telecommunications Ordinance as a barrier to entry under section 253, TCI states that it has   no present intention of offering telecommunications services in the City. Any resolution of the claims   made by TCI under section 253 would have no impact on TCI's interests given its current intent not to   offer telecommunications services. Under the circumstances, there is no concrete dispute between TCI and   Lthe City for the Commission to resolve under section 253. We decline to issue a declaratory or advisory   ruling as to whether the Troy Telecommunications Ordinance should be preempted, in whole or in part, under section 253(d).  S(-  8.` ` Nonetheless, we are troubled by several aspects of the Troy Telecommunications   Ordinance in the context of the effort to open local telecommunications markets to competition. While   Congress mandated a role for the Commission and the states in the regulation of telecommunications   !carriers and services, we are concerned that Troy and other local governments may be creating an   unnecessary "third tier" of telecommunications regulation that extends far beyond the statutorily protected  S`-  municipal interests in managing the public rightsofway and protecting public safety and welfare.N`S {O$-ԍSee 47 U.S.C.  253(b) & (c).N We   take this opportunity to address several issues related to section 253 that have come to our attention in the   course of this proceeding. In particular, we articulate our concern regarding how redundant and potentially   inconsistent levels of regulation of telecommunications services and service providers may deter or discourage competition."!B,8)8)``U#"Ԍ` `  S- III.BACKGROUND  S-  S-  9.` ` Local Cable and Utility Placement Ordinances. In accordance with Chapter 63 of the Troy   City Code ("Cable Ordinance"), a party seeking to provide cable television service in the City must obtain   a license before constructing, maintaining or operating a cable system in the City, and must obtain a   yfranchise before transacting business by way of a cable system in the City. While a license or a franchise   under Chapter 63 constitutes a general grant of authority to operate a cable television system in the City,   the physical construction and installation of cable and other utility facilities in the public rightofway   -is governed by Chapter 33 ("Public RightofWay"). Chapter 33 establishes a permitting process by which   a franchisee, licensee, or other party may seek authority to conduct construction, repair or maintenance   operations in the public rightsofway. No person, public utility company, franchisee or licensee may   yconduct any construction, repair or maintenance operations in the rightsofway without first obtaining a   =written permit or annual permit from the City Engineer. Chapter 33 also prescribes various engineering,  S -fee and other requirements that permittees must follow when doing work in a rightofway.D S {O8-ԍSee Petition, Exh. 33.D  S -  $ 10. ` ` TCI offers cable television service in Troy, Michigan pursuant to a franchise issued in  SX-  1982 by the City.6 XZS yOR-ԍPetition at 4.6 TCI acquired the cable system in 1993 from the original grantee of the franchise.F XS {O-ԍId.; City Comments at 2.F   In addition to providing cable television service, TCI is authorized and required by the franchise to provide   the City and its residents interactive data and telecommunications services by means of an institutional  S-  ynetwork ("INET").h |S {O-ԍPetition at 4, citing Franchise  23; Amendment  7.h TCI claims that, despite the explicit terms of TCI's franchise, since approximately   M1994, the City has engaged in a pattern of conduct designed to preclude TCI from upgrading its cable  S-system or from ever offering telecommunications services in the City.6 S yO>-ԍPetition at 5.6  S@-  3 11.` ` Since at least early 1994, TCI and the City have engaged in a steady dialogue regarding   <a series of construction permit applications submitted by TCI for the stated purpose of upgrading its cable   system with fiber optic cables. TCI states that such upgrades are routinely undertaken by cable operators   kin order to expand channel capacity, to improve signal quality to digital standards, and to increase the   reliability of cable systems. In 1994, the City surmised that TCI was interested in expanding its offerings  Sx-  .beyond cable service by branching into the telecommunications field.qxS yO"-  ԍCity Comments at 8. Through late 1995, the City continued to believe that TCI was either currently offering  {O~#-  or planning to offer telecommunications services in Troy. See Petition, Exh. 6, October 31, 1995 Letter from Peter   Letzmann, City Attorney to Mr. James Alexander ("I understand you or your subsidiary corporations are operating   ,without franchise or other permits in neighboring cities, therefore, I have continuing concern that TCI is operating telecommunications in the City of Troy.")q TCI indicates that in July, 1994,   jthe City had informed TCI that its permit applications would not be granted unless TCI provided signed"PP ,8)8)``"  S-  assurances that its system would not be used to provide telephone service.S {Oh-  ԍPetition at 5, citing Exh. 3, Letter from Michael Cleland, General Manager TCI Cablevision of Oakland County,  {O2-to Troy Mayor Jeanne M. Stine (Jan. 17, 1995).  See also City Comments at 618. TCI denies that it had   =intended at that time to offer telecommunications services in Troy, and in its pleadings states that it still  S-  "has no present intention to provide such services in the City . . . ."QZ$S {Ot-  YԍTCI Reply at 11. See TCI Reply at 4 ("TCI . . . has never evidenced any intent to provide anything other than   cable television service in Troy"); TCI Reply at 6; Petition at 8; Declaration of TCI General Manager Michael Cleland (Petition, Exh. 8) at para. 5.Q As of 1994, the City had not   adopted any regulations governing telecommunications, but nevertheless wanted to "insure that TCI would   not enter into telecommunications service in Troy without first obtaining the requisite authority to do  S8-  \so....";8FS yO -ԍCity Comments at 8.; According to the City, under state law that authority includes a license from the Michigan  S-  [Public Service Commission and a telecommunications franchise from the City.AS yO-ԍCity Comments at 8, n. 7.A TCI disputes the City's  S-authority under state law to require a telecommunications franchise.;f S yO-ԍTCI Reply at 2122.;  S-   12.` ` January 1995 Letter Agreement. Although TCI believed that the City lacked jurisdiction   Lto impose such regulatory conditions, it entered into negotiations with the City, regarding the conditions  SH -  ?under which TCI could provide telecommunications services over its cable network in the City.6H S yO-ԍPetition at 5.6   Ultimately, TCI and the City entered into a letter agreement dated January 23, 1995 ("January 1995 Letter   Agreement"). That agreement provides that all permits for the upgrade of TCI's cable system will include the following endorsement:   XX` ` The authorized officer of TCI agrees in writing that the permits (i) are   Fgranted solely for the purpose of enhancement and upgrade of the cable   system and not to be used for, or enable any other person or entity to   8provide, any kind of telephone service and (ii) if and when TCI shall   have obtained all lawful requisite authorizations and consents pursuant to   federal, state and local requirements, such system may be used for the    provision of other lawful telecommunications services, including  Sh-telephone service.h S yO!-ԍPetition, Exh. 5; City Comments Exh. 1, attachment 1 ("January 1995 Letter Agreement").x`  S-   13.` ` The January 1995 Letter Agreement further provides that, with respect to the construction permits which result from the agreement, both Troy and TCI agree to the following:  XX` ` X a. Neither Troy nor TCI intends or understands that the   construction permits will alter either party's rights under the existing franchise agreement.  "(,8)8)``"Ԍ XX` ` X b. Neither Troy nor TCI intends or understands that the   construction permits will alter either party's rights under  S-applicable law.1S {O-ԍId.1    The City Attorney, Peter Letzmann, explained that the purpose of this letter agreement was to allow TCI   to make its improvements to the cable system and to acknowledge that TCI would obtain all requisite   zconsents prior to entering into the telecommunications business. Further, Mr. Letzmann declared: "I   Ladvised the City Engineer that all permits that appeared to be usable for services other than cable should   ]be endorsed with 'not for telecommunications purposes' language consistent with the terms of the  S-Agreement with TCI."ZS yO -ԍCity Comments, Exh. 1, Declaration of Peter A. Letzmann, dated September 4, 1996 at p.6.  SH -  _ 14.` ` TCI explains that it accepted the condition because it needed to upgrade its cable facilities,   to keep pace with cable technology and to be able to offer its subscribers stateoftheart cable services   kin an increasingly competitive video marketplace. TCI notes that fiber upgrades also offer a platform   which can support the later offering of telecommunications services. TCI explains that it "understood that   the [January 1995 Letter] agreement would allow TCI to enter the telecommunications market in Troy   {once it 'obtained all lawful requisite authorizations and consent pursuant to federal, state and local  SX-  requirements,' as stated in the condition."8XS yO-ԍPetition at 67.8 TCI further claims that under federal and state law, TCI is   not required to obtain any form of certification or authorization before providing private line   telecommunications services. "Moreover, since Troy's "Telecommunications Ordinance" is unlawful, TCI  S-  /may presently provide certain telecommunications services using its system.":zS yO-ԍPetition at 7 n.9.: TCI maintains that,   Lcontrary its understanding regarding the January 1995 Letter Agreement, the City subsequently asserted   in a letter that the condition was intended to preclude TCI from providing telecommunications services  Sh-in Troy.Uh S yO-  yԍPetition at 7, citing Exh. 6, October 31, 1995 Letter from Peter Letzmann, City Attorney to Mr. James   Alexander (stating: "the Agreement does not say, nor was it ever intended to say, that you would be permitted to   construct telecommunications facilities in the City of Troy rightsofway"). TCI further argues that the Troy   Telecommunications Ordinance is unlawful, and therefore does not control TCI's ability to provide telecommunications services in the City. Petition at 7 n.9.U  S-  15.` ` The Troy Telecommunications Ordinance. The City Council adopted its  S-  LTelecommunications Ordinance, codified at Chapter 62 of the City Code, in December, 1995.< S yOJ#-ԍCity Comments at 11.< Like the   provisions of Chapter 63 governing cable service, Chapter 62 requires a party to obtain a license before   yconstructing, maintaining or operating a telecommunications system in the City, and to obtain a franchise   before transacting business by way of a telecommunications system in the City. Chapter 62 also contains"xJ ,8)8)``"   .a number of more substantive regulations governing the provision of telecommunications service and the  S-payment of franchise fees.3XS yO@-  ;ԍThe full text of the Troy Telecommunications Ordinance is summarized in Appendix B. Certain aspects of the   Ordinance will be discussed below as they pertain to the arguments raised by TCI's Petition, and the record formed in response.3  S-  16.` ` The telecommunications service requirements include Section 12(4), which requires that   kinterconnection between telecommunications providers, where feasible, for the purpose of promoting   universal service. This section also prohibits a telecommunications provider from charging punitive or   .discriminatory fees for interconnection. Section 12(1) states that if a franchisee provides a "new service,   jfacility, equipment, fee or grant to any other community . . . within the State of Michigan, the same shall   be provided in or to the City." This requirement is subject to waiver if compliance is "undesirable,   impractical, infeasible or uneconomical . . . ." Section 27(2) requires that telecommunication services to   the City be provided at the lowest rate given to any other subscriber. Section 8 provides that the City   yshall regulate rates for telecommunications services "to the full extent authorized by federal or state law."   jSection 15(3) requires the provider to maintain an "accurate and comprehensive file" of all subscriber and   user complaints, and to establish a procedure "to quickly and reasonably remedy complaints to the satisfaction of the City."  S -  #17.` ` Franchise fee provisions include Section 3(6), which defines gross revenues to include "all   [receipts collected . . . for all telecommunications and related operations and services within the corporate   limits of the City as well as any other revenue arising from operation or possession of [the] Franchise   regardless of where billed." This definition is relevant for purposes of Section 9(2), under which a   provider may be required to pay an annual franchise fee of up to 5% of gross revenues. Alternatively, the   franchise fee may be based on a linear foot charge of $0.40 per foot for underground facilities and $0.25   for aerial facilities. Section 27(1) requires the provider to pay a franchise fee based on the formula used   in any of certain other Michigan communities, if that formula produces a higher fee than would be due under Section 9(2) of the City's Telecommunications Ordinance.  S-  18.` ` Chapter 62 also includes a severability clause, Section 23, and an "Equal Application"   clause, Section 25, which states that the provisions of the ordinance "shall be imposed upon and enforced   =against all Telecommunications System in the City requiring a License or Franchise under state law from   the City." Pursuant to Section 10, "New Developments," Grantees agree to "have no recourse whatsoever   zagainst the City for any loss, cost, expense or damage arising out of the failure of the City to have the   authority to grant all or any part of a License or Franchise. A Grantee expressly acknowledges that on   accepting a License or Franchise it did so relying on its own investigation and understanding of the power and authority of the City."  S-  19.` ` Construction Permits in Dispute. TCI had originally applied on October 27, 1995 for a   permit (the "Royal Oak" application) to install conduit along several public rightsofway for the purpose  S8-  of interconnecting three separate cable headends and upgrading its cable facilities.T8S yO$-ԍPetition at 8 & Exh. 7; City Comments at 13.T The City rejected this  S -  0application because it "did not meet the most rudimentary engineering standards."K xS yO('-ԍCity Comments at 13, Exh. 2 at p.3.K On or about   January14, 1996, TCI refiled the application. In a letter to TCI dated February 14, 1996, the City's Civil" ,8)8)``t""  S-  Engineer raised three concerns with respect to the Royal Oak Application.fS yOh-ԍPetition at 8 & Exh. 10; City Comments, Exh. 2, p. 3 & Exh. 6.f First, the City's letter stated   =that the route proposed by TCI to interconnect its headends "deviates from the most direct route." The   kletter asked TCI to explain why it had selected an indirect route. Second, the letter indicated that one   jportion of the route proposed by TCI interfered with an easement that TCI had no right to occupy, thus   =requiring TCI to reroute that portion of its installation or to obtain permission to occupy the easement.   Third, the City's letter referred to a City Council meeting that had been held on December 18, 1995.   According to the letter: "At this meeting a resolution was approved which requires any prospective   .telecommunications companies to apply for and obtain a franchise. This you must do." The letter then   stated: "Until the above items have been completed a permit for your cable/conduit installation cannot be issued."  SH -  20. ` ` TCI resubmitted the Royal Oak Application again in early May, 1996 and that application  S -  remains pending.Q XS yO-ԍPetition at 9, n. 9; City Comments at 15.Q TCI claims that the resubmitted application responds "only to the City's assertion...  S -  that the original application did not propose the most direct route for the facilities."=! S yO-ԍPetition at 9, n. 16.= With respect to the   [City's other concern, TCI states that it "has not, and will not[,] obtain a telecommunications franchise as  S -  the City insists . . . ."1" xS {O-ԍId.1 The City responds in its comments that the resubmitted Royal Oak Application  S -  k"did not resolve the [C]ity's concerns."<# S yO*-ԍCity Comments at 15.< Subsequent correspondence demonstrates that the City has   jcontinued to question the route proposed by TCI, because it includes areas not served by TCI and is not   the most direct route between the headends TCI seeks to interconnect, and continues to insist upon  S-  inclusion of its "not for telecommunications purposes" condition in the permit.$(S {OB-  ԍWritten Ex Parte Presentation, File No. CSR4790, TCI Cablevision of Oakland County, Inc., to Mr. William  {O -  -F. Caton, Acting Secretary, FCC, filed by Mark Van Bergh, City of Troy, March 12, 1997, p. 2 (March 12 Van  {O-  -Bergh Letter), attaching Letter from Peter A. Letzmann, Troy City Attorney, to Michael Cleland, TCI General  {O-Manager (March 11, 1997) (March 11 Letzmann Letter). In May, 1997, the City   again reiterated that it will grant the Royal Oak Application if TCI submits a new plan showing a route   yrunning directly between the headends to be interconnected, and accepts the "not for telecommunications  S-  purposes" condition.%( S {O -  ԍWritten Ex Parte Presentation, File No. CSR4790, TCI Cablevision of Oakland County, Inc., to Mr. William  {O!-  F. Caton, Acting Secretary, FCC, filed by Mark Van Bergh, City of Troy, May 14, 1997, pps.12 (May 14 Van  {ON"-  Bergh Letter), attaching Letter from Peter A. Letzmann, Troy City Attorney, to Mr. Russ Anthony, TCI North Central  {O#-Region (May 9, 1997) (May 9 Letzmann Letter). TCI has responded that it will agree to the direct route suggested by the City, but   continues to object to the inclusion of the "not for telecommunications purposes" condition. TCI also   stated that it, "nonetheless wishes to provide video services to the area that would be passed under the"@ z%,8)8)``"   route plan originally submitted with the Royal Oak permit request," and that it will be submitting a request  S-for a new permit to bring hybrid fibercoaxial plant to that area.$&(S {O@-  ,ԍWritten Ex Parte Letter, File No. CSR4790, TCI Cablevision of Oakland County, Inc., to Ms. Meredith Jones,  {O -  -Chief, Cable Services Bureau, FCC, filed by Howard J. Symons, representing TCI, April 4, 1997 (April 4 Symons  {O-  X Letter), attaching Letter from Russell Anthony, TCI North Central Region, to Peter A. Letzmann, Esq., City Attorney,  {O-City of Troy, April 2, 1997 (April 2 Anthony Letter) at 1. $  S-  21.` ` In addition to the Royal Oak Application, TCI submitted another permit application to the   City ("Livernois Road Application") on February 23, 1996 by which TCI sought authority to install aerial  S8-  cable along two other rightsofway.K'8S yO -ԍPetition at 8; City Comments at 16.K The application described the work to be performed as follows:  S-  "Place new aerial cable (coax & fiber) on existing poles for telecommunications."9(HS yO -ԍPetition, Exh. 9.9 In a letter dated   LFebruary 29, 1996, the City responded: "The City of Troy cannot process the above permit application  S-  -until TCI Cablevision of Oakland County obtains a telecommunications franchise from the City of Troy."N)S yO8-ԍPetition, ex. 11; City Comments at 16.N   TCI thereafter advised the City that the purpose of the Livernois Road Application was to upgrade an  Sp-  institutional network and improve the cable service being provided to a local school.<*ph S yOx-ԍCity Comments at 16.< Both the  SH -  institutional network and the cable service were authorized under the terms of TCI's cable franchise.@+H S yO-ԍTCI Reply at 45 & n. 7.@   After being advised of the purpose of the Livernois Road Application, the City approved it by letter dated  S -  |May 13, 1996.R, S yO -ԍPetition, Exh. 12; City Comments at 1617.R The letter stated that the City had issued the permit subject to the following endorsement:   XX` ` This permit is granted for the installation or upgrading of cable service   as described in Troy City Code Chapter 63 only. This permit specifically    prohibits and excludes installation, upgrading or operations for all other  S-telecommunication service.V-S yO-ԍPetition, Exh. 12; City Comments at 17, n. 22.Vx`  S-  22.` ` Subsequent correspondence indicates that on October 9, 1996, TCI informed the INET   yauthorities that TCI had accepted the rightofway permit for its Livernois Road construction to meet its   INET extension obligations, but reserved its objection that the conditions in the permit violate sections   253, 621 and 624 of the Communications Act. TCI stated that it had petitioned the Commission under   those statutory provisions to preempt enforcement of those conditions, and would commence construction   of the INET facilities, "but without agreeing to the conditions placed on the Livernois Road permit by   Lthe City. TCI's construction of these facilities is subject to the express reservation of TCI's rights under" -,8)8)``3"  S-  state and federal law, and before the FCC."G.S {Oh-  ;ԍWritten Ex Parte  Presentation, dated July 1, 1997, Petition of TCI Cablevision of Oakland County, Inc., CSR  ,4790, to Ms. Suzanne Toller, Legal Advisor to Hon. Rachelle Chong, FCC, filed by Howard J. Symons, representing   wTCI ("July 1 Symons Letter"), attaching Letter dated October 9, 1995 from Michael Cleland, General Manager, TCI   Cablevision of Oakland County, Inc. to Donald H. Gillis, Attorney for the Intergovernmental Cable Communications Authority ("ICCC").G In October, 1996, the City responded to TCI's assertions   Lby stating that the Livernois Road permit was issued pursuant to TCI's cable television franchise for the   City of Troy, the agreement between the City and TCI to upgrade the cable system in Troy, "and the endorsement on the above mentioned (building) permit." The City also stated:   WXX` ` [E]ven though the City disagrees, it does recognize TCI's opinion   regarding the preemption. And though TCI may disagree with the   conditions endorsed on that (building) permit, TCI has agreed and the   City expects TCI to honor those conditions. If those conditions are set   daside by some competent authority or TCI obtains a franchise to expand    its services beyond the current franchise, the matter can again be reviewed.x`   XX` ` The City does not interpret your actions to comply with the franchise  S -agreement as a waiver of any right or objection that TCI may have./ zS yO-  ԍJuly 1 Symons Letter, attaching Letter dated October 18, 1996, from Peter A. Letzmann, City Attorney, City of Troy to Mr. Michael Cleland, General Manager, TCI Cablevision of Oakland County, Inc.x` ` `  S -  A23.` ` In the comments the City filed before this Commission on September 4, 1996, responding   to the TCI Petition, the City stated that the terms of the Livernois Road permit endorsement "were  S0-  .narrower than intended . . . ."C00S yO-ԍCity Comments at 17, n. 22.C According to the City, "the actual language of the condition should have  S-  conformed to the terms of the January 1995 Agreement between Troy and TCI."11b S {O -ԍId.1 The City averred in its comments that it:   XX` ` will not enforce the condition beyond the provisions of the January 1995  Sh-  Agreement with TCI, i.e., TCI may not use the facilities authorized in the   dpermit for telecommunications services until it has obtained the requisite  S-consents to provide such service.12 S {O!-ԍId.1 x`   =The City avers that it does not expect a breach of the 1995 Letter Agreement or permit endorsements to   Loccur, but if such a circumstance arises with respect to TCI, "the City would pursue remedies ordinarily  Sx-available."G3x S {O&-ԍMarch 11 Letzmann Letter.G In addition, the City states: "P 3,8)8)``"Ԍ  XX` ` [h]owever, it is not the City's expectation that the City would consider   such an event to constitute a breach of the TCI cable franchise.   eMoreover, it would not require TCI to terminate any operation of its  S-cable television service using the facilities in question.74S {O-ԍId. at 2.7x`  S`-  S8-  }24.` ` The City has granted at least 30 construction permits to TCI since 1993, including permits  S-  for the installation of fiber optic cable.;5ZS yO -ԍCity Comments at 2.; However, the City did not seek to impose the "no   telecommunications services until requisite consents granted" provision on any of the six coaxial cable   .construction permits granted TCI during 1995. The first time Troy sought to impose the condition was   zin connection with the Royal Oak and Livernois Road permits for hybrid fibercoaxial construction in   October 1995 and February 1996, respectively. TCI did not apply for any cable construction permits   kduring 1996. TCI records indicate that only one coaxial cable construction permit with any condition   purporting to limit future use of the facility to provide telecommunications services was granted in January   .1997. TCI claims that this permit has since been used for the construction of hybrid fibercoaxial plant,   and that it did not object to the inclusion of the condition on the January 1997 permit, in light of the City'  S -awareness of its objections to such conditions.D6 S yO2-ԍJuly 1 Symons Letter at 12.D  SX-  225.` ` For the most part, TCI's Petition characterizes the City's actions with respect to both the  S0-  .Royal Oak and Livernois Road construction permits as "denials" of these applications.c70zS {OJ-ԍSee, e.g., Petition at 2, 3, 8, 9, 10, 13, 16 and 17.c For example,   the Petition states: "The City has denied permits to install fiber or conditioned them on a surrender of  S-  the right to deliver telecommunications services."68 S yO-ԍPetition at 8.6 Similarly, the Petition states, "[t]he City has denied  S-  the permits solely because of its fear that fiber optic facilities could be used in the future to deliver  S-  =telecommunications services over which the City seeks regulatory control."79S yO-ԍPetition at 16.7 Other portions of the text   <characterize the City's action with respect to the Livernois Road application as either one in which the City   is "purporting to approve the Livernois Road Application," while insisting on the inclusion of the "not for   [telecommunications purposes" endorsement, or one in which the Livernois Road Applications "was also  S-denied in part because of the use of fiber.";:, S {O!-ԍId. at 9, 13.;  S-  _26.` ` The City specifically objected, in its comments, to TCI's characterization of its permitting   actions as "denials." The City explained that, notwithstanding TCI's arguments to the contrary, Troy has   ynever denied TCI any building permits for its cable system nor has Troy conditioned the permits granted  S*-  to TCI in a manner that prohibits TCI from providing telecommunications services.D;* S yO'-ԍCity Comments at 34, 1217.D Rather, according   to the City, the condition Troy has placed on TCI building permits, which is consistent with the January" N ;,8)8)``"   1995 Letter Agreement between the City and TCI, "simply requires TCI to obtain all requisite federal   state, and local authority before providing telecommunications service using the facilities authorized in   the permits. This condition does not prohibit TCI from providing telecommunications service, but rather   is intended to make certain that before TCI provides any such service, it has obtained the requisite   -authority, including the right to use Troy's rightsofway to provide telecommunications service as required  S8-  Lin the Michigan Constitution and the Ordinance.";<8S {O-ԍId. at 1718.; The City notes that TCI has never sought authority   Lto provide telecommunications service in Troy. To the contrary, the City states that TCI has told Troy  S-officials that TCI was not asking for and has never asked for permission to provide such service.8=ZS {O -ԍId. at 18.8  S-  27.` ` In its reply comments, TCI argues that Troy's refusal to grant TCI's construction permit   applications "is the equivalent of a denial." TCI explains that it has demonstrated, and the City has   admitted, that the City has adopted a steadfast position that TCI will not be permitted to install hybrid   2fibercoaxial facilities as part of its cable television system upgrade unless TCI agrees that   telecommunications services over the upgraded facilities are prohibited or unless TCI obtains a  S -  telecommunications franchise.l> S {O\-ԍTCI Reply at 7, citing Petition at 89; City Comments at 513.l TCI notes that the City maintains that its actions are not denials, but   /merely requirements that TCI obtain other authorizations, or accept a conditional permit, in order to  S -receive authority to begin construction.X? ~S {O-ԍId., citing City Comments at 1418. X TCI avers as follows:   UXX` ` Regardless of the semantic distinctions involved, the simple fact remains   that the City of Troy refuses to grant TCI a construction permit without    restricting or conditioning the permit on matters wholly unrelated to its   8regulation of TCI's cable service. In practice and in effect, the City's   refusal amounts to nothing less than a denial of TCI's permit applications  Sh-on grounds forbidden under the 1996 Act.7@hS yO-ԍTCI Reply at 8.7x`  S-  28.` ` TCI also complains that the City's treatment of Ameritech, the incumbent local exchange   .carrier, and its efforts to enter the cable market by overbuilding TCI's system, has been the opposite of   <the City's treatment of TCI. TCI states that Ameritech maintains a substantial corporate presence in Troy, and that the   XX` ` City appears to be more than willing to protect its corporate 'favorite son.'   For example, the City allowed Ameritech to construct a fiber optic   backbone for its cable system prior to obtaining a cable franchise, and   tthen granted it a cable franchise on substantially less burdensome and  S-more favorable terms than TCI's franchise.6AS yO&-ԍPetition at 3.6 x` " 0 A,8)8)``"Ԍ  Further, TCI alleges, "the City has refused to apply the Telecommunications Ordinance's franchise  S-  requirements to Ameritech."B S yO@-  ԍPetition at 3, 2021 (City granted Ameritech a special land use permit in July 1995, nearly one year before   wAmeritech obtained cable franchise from the City, to construct a cable headend Troy from which it could send signal   via fiber optic cable to other cities where Ameritech already had cable franchises; City officials observed that fiber optics were the "wave of the future"). Moreover, TCI states that the City has not sought to include in any of   yAmeritech New Media (the Ameritech cable subsidiary) permits for hybrid fibercoaxial construction the  S-  [condition that Troy seeks to impose on TCI.BCS yO-ԍJuly 1 Symons Letter at 2.B TCI objects that Ameritech has been permitted to install   fiber optics without limitation, while TCI "has been arrested in its ability to upgrade its system to keep  S8-current with cable technology or to respond to competition."7D8@S yO -ԍPetition at 21.7  S-  29.` ` In its comments, the City defends its actions with respect to Ameritech New Media's   construction in the City. It stated that as early as 1993, the City had advised Ameritech New Media that   if it were to construct a system to provide cable service in Troy it would need to obtain a cable franchise.   The City explained that the headend and conduit construction it later authorized did not require a cable   ?franchise because the facilities were not being built to provide cable service within Troy, and that   =Ameritech New Media did not construct or begin constructing its cable system in the City of Troy until  S -  after it received its cable franchise in April, 1996.E S yOh-ԍCity Comments, Exh. 1 at 89 (declaration of Peter A. Letzmann, City Attorney, City of Troy). In a subsequent ex parte presentation, the City   challenges TCI's claim that the City is applying the Telecommunications Ordinance in a discriminatory  S -  manner.rFZ ` S {O-  ԍWritten Ex Parte Presentation, File No. CSR4790, TCI Cablevision of Oakland County, Inc., to Mr. William   F. Caton, Acting Secretary, FCC, filed by Mark Van Bergh, City of Troy, January 30, 1997, attaching Written Presentation by the City of Troy, Michigan ("January 30 Troy Presentation"). r The City asserts that its Telecommunications Ordinance applies equally to all providers of   telecommunications services within Troy, including Ameritech, drawing no distinction between   competition local exchange carriers and incumbent local exchange carriers. In addition, the City   represented that, on December 16, 1996, it had notified Ameritech that the carrier was in noncompliance  S -with the Ordinance, and had requested that Ameritech complete and submit a franchise application.KG  S yO,-ԍJanuary 30 Troy Presentation at 1. K  S-  $30.` ` The City maintains generally that neither Troy's Ordinance, nor the City's handling of   zTCI's building permit applications violate any provision of the 1996 Act. The City claims that it has   afforded similar treatment to all entrants and potential entrants desiring to provide telecommunications   ~service in the City. It has issued a telecommunications franchise pursuant to the City's   NTelecommunications Ordinance following enactment of the 1996 Act to one potential provider of   competitive telecommunications services Metropolitan Fiber Systems ("MFS"), and has engaged in on S-  going discussions with another potential provider, MCI Telecommunications Corporation ("MCI").QHS yOT'-ԍCity Comments at 34; 37 and Exh. 1 at 8.Q The   [City maintains that if it were to allow TCI to provide telecommunications service in Troy using its cable"zH,8)8)``"   plant without first obtaining a telecommunications franchise under the Telecommunications Ordinance,   yit would create a situation in which TCI's potential competitors, such as MFS and MCI, could claim that   the City was giving TCI a preference and acting in a discriminatory manner relative to other service  S-providers that seek and obtain a franchise under the Telecommunications Ordinance.AIS yO-ԍCity Comments at 37 n.34.A  S8-  R31.` ` Other Providers' Experiences with Telecommunications Franchising in Troy. In its   >comments responding to the TCI Petition, MCI stated that its affiliate, MCI Metro, had intended to   construct a network in Troy to fulfill a contract made with a customer located in another city, but decided   to reroute its network around Troy rather than subject itself to the provisions of the Telecommunications  S-  \Ordinance.6JXS {O -ԍId. at 36 MCI also asserted that, "using its newly enacted [Telecommunications Ordinance], and   /asserting the power to exercise franchising authority thereunder, Troy has . . . precluded MCI's local   ztelecommunications affiliate, MCI Metro, from entering the City's local telecommunications exchange  S -market.":K S yO-ԍMCI Comments at 2.:  S -  A32.` ` The City initially responded to MCI's statement in its reply comments. According to the   [City, Troy was discussing with MCI Metro its interest in providing service in Troy throughout the first   half of 1996, including an exchange of draft telecommunications franchise documents. The last exchange   occurred on July 26, 1996, when the City forwarded a revised draft to MCI. This was approximately two   .weeks after TCI filed the instant Petition with the Commission. The City explains that it heard nothing   further from MCI until it received a copy of MCI's comments in this proceeding, when, for the first time,   Troy learned that MCI had apparently decided not to obtain a franchise. The City claims that although   MCI now describes the requirements of the Troy Ordinance as burdensome, they are the same conditions   that applied when MFS obtained its franchise and that existed during the course of discussions with MCI  Sh-through the first half of 1996.L hzS yO-  ԍCity Reply at 78, Exh. 1 at 2 (declaration of Peter A. Letzmann, City Attorney, City of Troy; expressing belief   =that when the City sent MCI draft franchise documents on July 26, 1996, Troy believed that it was close to   iconcluding these discussion with MCI and that the result would be MCI obtaining a telecommunications franchise and entering the Troy market).  S-   33.` ` Later, in an April 1, 1997 written ex parte presentation, the City responded to a TCI notice  S-  jof ex parte presentation made on March 12, 1997, in which a representation was made by TCI that MCI   had reiterated, "the point, reflected in its filing in this docket, that Troy's ordinance had deterred it from   .offering competitive local service." The City's April 1 response to this assertion takes the position that   it was not Troy's Ordinance that deterred MCI from providing a competitive local service, and that in any   yevent, MCI's comments in the proceeding do not support the allegation. The City quotes from page 3 of   MCI's comments that, "MCI Metro had planned to build a network in Troy in connection with a contract   jmade with a customer located in another city, but it opted instead to reroute around the City." The City   yavers that this is MCI's only description of the service it "was deterred from offering," and the statement   is a reflection of the fact that MCI neither planned to offer a "competitive local service" in Troy, nor was   subject to the franchising requirement of Troy's Ordinance. Instead, the City states, MCI would only have   been subject to the licensing requirement before building in the City's rightsofway to connect service"db L,8)8)``"   locations outside of Troy, and that the provisions of the Ordinance applicable to franchisees would  S-therefore not have applied to MCI.MS {O@-  ԍWritten Ex Parte Presentation to Mr. William F. Caton, File No. CSR4790, TCI Cablevision of Oakland County, Inc., dated April 1, 1997 from Mark Van Bergh, Roberts & Eckard, on behalf of the City of Troy at 12.  S-  Q!34.` ` In a responsive May 13, 1997 written ex parte presentation, MCI takes issue with the   yCity's description of its intentions as "wholly inaccurate," and with the City's claim that MCI would not   jhave needed a telecommunications franchise in Troy. MCI explains that originally, MCI had intended to   offer local telecommunications services to the City. MCI notes that in March, 1995, MCI was authorized   to provide basic local service by the Michigan Public Service Commission, and that it subsequently   Linitiated franchise negotiations with the City in order to use the public rightsofway to construct a fiber   optic system to access and serve Troy customers. Following enactment of what MCI describes as the   "burdensome" Troy Telecommunications Ordinance in December, 1995, MCI opted instead to reroute its  SJ -  system around the City. NJ "S {O -  ԍWritten Ex Parte Presentation dated May 13, 1997, File No. CSR4790, TCI Cablevision of Oakland County, Inc. to William Caton, Acting Secretary, FCC from Lisa B. Smith, Senior Policy Counsel, MCI ("MCI Letter").  MCI further claims that, "at no time during the negotiations with the City was   MCI advised that, as a licensee, it would only be subject to certain provisions of the Ordinance and not   others. Nor did Troy raise this argument in any of its comments in this proceeding." MCI urges that the  S -Commission "not allow any state or local government to undertake such 'bait and switch' tactics."7O |S {O-ԍId. at 2.7  S -  "35.` ` MFS did not file comments or reply comments in response to TCI's Petition. However,   on April 30, 1997, LDDS Worldcom ("Worldcom"), the parent corporation of Metropolitan Fiber Systems   of Detroit, Inc. ("MFSD") filed a letter explaining the circumstances of MFSD's entry into the Troy  S -  market.P S yO-  ԍLetter dated April 30, 1997, from LDDS Worldcom, Richard L. Fruchterman, III, Director of Government Affairs, to the Honorable Reed Hundt, Chairman, FCC ("MFS Letter"). Worldcom explains that MFSD initiated discussions regarding the installation of fiber optic   .telecommunications facilities in the public rightsofway in early 1994. Negotiations over the terms and   conditions under which MFSD would be allowed to install its facilities continued over a two year period,   during which time the City was attempting to develop its telecommunications policy. The negotiations   kultimately culminated in the execution of a Telecommunications Franchise agreement in March, 1996.   "During the course of its negotiations with Troy, MFSD consistently expressed concern over many aspects   of the city's demands, but, despite those concerns, felt compelled to enter into the agreement because of  S-a pressing need to begin providing service to several significant customers located in Troy.":Qf S yO -ԍMFS Letter at 12.:  S-   #36.` ` According to Worldcom, MFSD objected throughout the two years of negotiations, to,  Sz-  yinter alia, the City's compensation requirements for use of the public rightsofway, the requirement that   KMFSD provide the City with free or discounted service, any attempts by the City to regulate its provision   iof telecommunications services, and to the City's discriminatory treatment of MFSD visavis its treatment of Ameritech. Worldcom explains that, over two years of arduous negotiation, MFSD was, " Q,8)8)``L"Ԍ  XX` ` at risk of losing customers and the ability to enter into the Troy   marketplace if an agreement could not be reached. This was an   extremely difficult decision for MFSD in light of the Michigan   Telecommunications Act and the Telecommunications Act of 1996 which    was signed by President Clinton on February 8, 1996 just 4 days   before MFSD's franchise was to be voted by the Troy City Council.   UMFSD knew that the City would not permit further negotiations of the   Gagreement and was forced to accept its terms on a 'takeitorleaveit'  S-basis.8RS yO( -ԍMFS Letter at 3.8x`  S-  Sp- IV.TITLE VI ISSUES  S - A.` ` Overview  S -  $37.` ` As a general matter, TCI claims that the City has impermissibly sought to assert regulatory   yauthority over telecommunications services, and to limit the construction of cable plant solely because of   its potential use in the provision of telecommunications services. TCI claims that it is directly through   the City's cable franchising power that the City is attempting to limit, restrict and condition TCI's  S0-  deployment of advanced telecommunicationscapable technology.;S0XS yO(-ԍTCI Reply at 1011.; TCI argues that Congress did not   kintend municipalities to use their preexisting regulatory relationships with cable operators to impose   franchiselike obligations on providers of telecommunications services under any circumstances. Although   TCI concedes the City has certain regulatory powers over use of the public rightsofway, TCI maintains   that the scope of the City's authority to manage the use of its rightsofway is limited, and must be  Sh-exercised in a nondiscriminatory and competitively neutral manner.KThS yO-ԍPetition at 14; TCI Reply at 1216.K  S-  3%38.` ` Under Title VI, TCI's Petition alleges that by conditioning or refusing to grant the two   construction permits, the City has interfered with TCI's operation of its cable system in a manner that   -violates sections 621(b)(3)(A), (b)(3)(B), (b)(3)(D) and 624(e). These provisions generally limit the power   yof a local franchising authority, under Title VI, to condition the provision of telecommunications services   by a cable operator; to impose telecommunicationsrelated requirements on cable operators; and to dictate   the type of transmission technology used by the cable operator to deliver its cable signal. With respect   to the question of the franchising authority's ability, under Title VI, to regulate telecommunications   services of cable operators, TCI and other cable commenters maintain that section 621(b)(3) precludes the   imposition of franchise obligations upon the provision of telecommunications services by cable operators,  S-  .even if that franchising authority is claimed to arise under a grant of authority other than Title VIoUxS yO#-ԍTCI Reply at 14; Adelphia Comments at 12; Comcast Reply Comments at 11.o TCI   -objects to Troy's attempts to require it to obtain a second franchise to provide telecommunications services   over a cable system that is already subject to a cable franchise between TCI and the City. TCI also claims"`U,8)8)``"   =that the City's failure to grant TCI's permits has interfered with TCI's discretion under section 624(e) to  S-use fiber optic transmission technology in its cable system.:VS yO@-ԍPetition at 1317.:  S-  S-  &39.` ` In response to TCI's Title VI claims, the City defends its actions with respect to the two   [cable permits as appropriate exercises of its traditional authority to manage the public rightsofway and  S8-  [to see that street cuts and trenching are done in the least disruptive manner.>W8XS yO0-ԍCity Comments at 212.> Troy states that it has not   sought to use, nor has it used, TCI's cable franchise in a manner that restricts TCI's ability either to   =upgrade its cable system or provide telecommunications service. The City and its supporters argue that   the language in section 621(b)(3), "under this title" means that telecommunications regulation exercised  S-  under some other authority is not subject to the section 621(b)(3) limitation.?XS yO -ԍCity Comments at 3135.? The City claims that its   regulation of telecommunications providers stems from its responsibility under the Michigan Constitution,   lArticle VII, Section 29, and is beyond the scope of the limitations on cable franchise requirements   contained in Section 621(b)(3) of the Communications Act. Therefore TCI's reliance on section 621 is  S -  misplaced.<Y xS yO-ԍCity Comments at 35.< The City argues that, with respect to TCI's section 624(e) claim, its concern was not with  S -the transmission technology selected by the operator, but rather, was with the circuitous route chosen.FZ S yOx-ԍCity Comments at 1314, 3536.F  S - B.` ` Section 621  Q0-` ` 1. Positions of the Parties   S-  '40.` ` TCI specifically alleges that the City has violated the following subsections of section 621, as amended by the 1996 Act:    XX` ` (b)(3)(A) If a cable operator or affiliate thereof is engaged in the provision of telecommunications services x`  -XX` ` X (i) such cable operator or affiliate shall not be required  to obtain a franchise under this title for the provision of  S-telecommunications services. . . . D[S yO!-ԍ47 U.S.C.  541(b)(3)(A).D  nW* * *   XX` ` (b)(3)(B) A franchising authority may not impose any requirement under   this title that has the purpose or effect of prohibiting, limiting, restricting,"( [,8)8)``z"   7or conditioning the provision of a telecommunications service by a cable  S-operator or an affiliate thereof.D\S yO@-ԍ47 U.S.C.  541(b)(3)(B).Dx` Z* * *   8XX` ` (b)(3)(D) Except as otherwise permitted by sections 611 and 612, a   tfranchising authority may not require a cable operator to provide any   telecommunications service or facilities, . . . as a condition of the initial  S-grant of a franchise, a franchise renewal, or a transfer of a franchise.D]XS yO -ԍ47 U.S.C.  541(b)(3)(D).Dx`  Sp-  (41.` ` As described above, TCI asserts that the City has denied TCI's applications for permits  SH -  to install fiber optics and has done so "solely because of [the City's] fear that fiber optic facilities could   be used in the future to deliver telecommunications service over which the City seeks regulatory control."   }According to TCI, the City is attempting to allay this concern by requiring TCI to obtain a  S -  telecommunications franchise as a condition to receiving the cable construction permits.7^ S yOZ-ԍPetition at 16.7 TCI   acknowledges the City's legitimate interest in managing and maintaining its rightsofway and does not   contest the City's authority to coordinate construction schedules, establish building codes, impose   indemnity and insurance requirements, and otherwise oversee the placement of facilities in rightsofway.   yTCI asserts, however, that these matters are addressed in the Public RightofWay Ordinance set forth in  S -  >Chapter 33 of the City Code.:_ xS yO"-ԍPetition at 1316.: TCI alleges that it has complied with the permit application process  S-  prescribed by Chapter 33 and that its cable franchise allows it to install fiber optic facilities.B`S {O-ԍId.; TCI Reply at 6.B Thus   claiming to have all of the authority it needs to proceed with its fiber installation, TCI argues that the City   may not require TCI to obtain a telecommunications franchise as a condition of receiving a permit for that  Sj-installation.:ajS yO-ԍPetition at 1516.:  S-  )42.` ` In amending the subsections of section 621 quoted above, Congress has "broken the link   between cable franchising and the delivery of telecommunications," according to TCI, by "prohibit[ing]   .franchising authorities from imposing telecommunications requirements or conditions in cable franchises  S-  or through the cable franchising process."7b* S yOl#-ԍPetition at 13.7 TCI contends that "[i]n direct contravention of this policy,   the City has sought to use its cable construction permit process to establish domain over   telecommunications facilities and services and to limit the construction of cable plant merely because of  S*-  "its potential use as a carrier of such services."1c* S {O'-ԍId.1 TCI asserts that it has not sought to provide"*L c,8)8)``"  S-  telecommunications service, and has no present intention to provide such service.8dS yOh-ԍTCI Reply at 11.8 According to TCI,   the City may not use its cable franchising authority "to hold a cable upgrade hostage until the cable   joperator obtains a 'franchise' for the delivery of telecommunications services that might later be delivered  S-over those upgraded facilities.";eXS {O-ԍId. at 1617.;  S8-  `*43.` ` TCI contends that the City's actions would violate section 621 even if TCI intended to   offer telecommunications service in Troy. According to TCI, "a state or local government that directs a   kcable operator to obtain a Title VI franchise or to comply with franchiselike requirements in order to   provide telecommunications services, as Troy has done here, directly conflicts with section 621 and must  S-  be preempted."8fS yO" -ԍTCI Reply at 14.8 Acknowledging certain legislative history that indicates Congress intended local   .governments to retain some oversight of a cable operator's provision of telecommunications, TCI states:   "Congress specifically limited cities to the 'management' of their rightsofway and thus precluded the kind  S -of elaborate regulatory regime that Troy seeks to impose . . . ."Dg zS yO:-ԍTCI Reply Comments at 1213.D  S -  +44.` ` By way of analogy, TCI notes that in establishing a regulatory regime for open video   [systems in the 1996 Act, Congress provided that operators of open video systems are not subject to the  S -  LTitle VI cable franchise requirement.ahJ S {O*-  ԍTCI Reply at 13, citing Implementation of Section 302 of the Telecommunications Act of 1996; Open Video   ,Systems, CS Docket No. 9646, FCC 96312, Second Report and Order and First Order on Reconsideration, 11 FCC  {O-  hRcd 18223 (1996) (OVS Second Report) at para. 208; Third Report and Order and Second Order on Reconsideration  {O-  (OVS Third Report and Reconsideration), CS Docket 9646, FCC 96334 (released Aug. 8, 1997), (referred to  {OP-  collectively as "OVS Orders"), appeal pending, sub nom. City of Dallas, Texas, et al., v. FCC, United States Court   of Appeals for the Fifth Circuit, Nos. 9660502 (and consolidated cases); Fourth Report and Order, CS Docket No.   9646, FCC 97130 (released April 15, 1997)(modifying certain procedural rules relating to the filing and disposition  {O-of OVS certification applications, FCC Form 1275), reconsideration pending. a TCI quotes the portion of the Commission's order implementing   kthis provision stating that "a state or local government requirement that directs an open video system   operator to obtain a Title VI franchise to operate an open video system directly conflicts with section 653  S-  of the Communications Act and is, therefore, preempted."eiS {O-ԍTCI Reply at 13, quoting Second OVS Order at para. 212.e TCI asserts that the Commission must apply   section 621(b)(3)(A)(i) in a similar fashion and preempt any state or local requirement that a cable   operator obtain a Title VI franchise or comply with franchiselike obligations in order to provide  S-  telecommunications service.8jS yO#-ԍTCI Reply at 14.8 TCI acknowledges that, with respect to open video systems, the   =Commission determined that local governments retain authority to oversee the installation of facilities in  S@-  public rightsofway, if done in a nondiscriminatory and competitively neutral manner.@k@>S yO'-ԍTCI Reply at 13 & n. 32.@ This authority,   [however, does not permit the imposition of Title VItype franchise requirements, either in the case of an"k,8)8)``q"   >open video system or in the case of the provision of telecommunications service by a cable operator,  S-  according to TCI.;lS {O@-ԍId. at 1314.; "The limited range of permissible management functions . . . appropriate to municipal   rightofway authority stands in marked contrast to the sweeping power that Troy and others would have  S-the Commission believe is their right," TCI argues.8mZS yO-ԍTCI Reply at 18.8 ` `  S8-  ,45.` ` A number of cable operators and other parties have filed comments in support of TCI's   position. According to MCTA, "Section 621 . . . prohibits a municipality from attempting to regulate a  S-  cable operator's provision of telecommunications service over its cable system.";nS yOr -ԍMCTA Comments at 3.; On this basis, MCTA   kasserts that Troy cannot require "that a cable operator obtain an additional franchise before providing  S-  jtelecommunications service over its cable system,";ozS yO-ԍMCTA Comments at 4.; or in any way "regulate a cable operator's provision  Sp-  <of telecommunications over its cable system."7pp S {O-ԍId. at 3.7 Adelphia asserts that the provision of telecommunications   jservice over existing cable facilities "entails no physical effect on the rightsofway" and therefore should  S -not require separate franchising.q S {O\-  ԍAdelphia Comments at 12. See Hyperion Comments at 2 (characterizing the City's actions as imposing a "duplicative franchise requirement on TCI's fiberoptic upgrade" in violation of section 621).  S -  -46.` ` In joint comments filed with other cable operators, Comcast asserts that by amending   sections 621 and 624, Congress sought "to clear the way for cable operators to upgrade and improve their  S -  networks to eventually provide telecommunications services without municipal interference."WrZ S {O-  KԍComcast Comments at 11. See NCTA Comments at 3 (Congress amended section 621 "to end the growing   practice of State and municipal governments using their cable franchising authority to dictate whether, how, or by whom telecommunications technologies are deployed").W Comcast   magrees with TCI's analogy to open video systems, arguing that when a cable operator provides   /telecommunications service, local jurisdiction over rightsofway extends to "construction issues and   .protection of the streets from disruption and damage," but does not permit substantive regulation of the  S-  telecommunications service itself.;sS yO -ԍComcast Reply at 9.; Comcast asserts that the City's Public RightofWay Ordinance is   Lprotected under section 621 while the Telecommunications Ordinance "is nearly identical to a traditional  S-Title VI, cable television franchise" and therefore violates section 621.8tS {O#-ԍId. at 11.8  S@-  .47.` ` Likewise, Cox argues that the amendments to section 621 prohibit a local government   Nfrom invoking Title VI to impose any franchising or regulatory requirements on a cable operator's   [provision of telecommunications service. Cox states that "any residual, nonTitle VI authority that local":t,8)8)``a"   governments might retain with respect to the regulation of telecommunications service was to be  S-restricted" to managing the rightsofway.7uS yO@-ԍCox Reply at 6.7 According to Cox:   XX` ` Managing public rightsofway does not mean imposing requirements and  Sb-  Gobligations in return for the use of public rightsofway. Nor does it   mean regulating the type of service that is provided over such rightsof  way. What it means . . . is managing the physical manner in which    rightsofway are encumbered by the construction, maintenance and  S-continuing use of facilities that provide telecommunications services.7vXS {O -ԍId. at 7.7x`  St-  /48.` ` Cox argues that no franchising is required when an incumbent cable operator seeks to   =provide telecommunications service because, according to Cox, (i) the local government already regulates   the cable operator's use of public rightsofway through the cable franchise, and (ii) apart from overseeing   the physical use of the rightsofway, local governments have no authority to regulate telecommunications service. As Cox states:   XX` ` If a city has authorized, or is willing to authorize, the use of public   tright[s]ofway for deployment of facilities for the provision of cable   dservice pursuant to Title VI, there is no legitimate reason for it to require   additional permission for the provision of telecommunications service   Fover those facilities unless the provision of such service somehow raises   Fnew problems of safety, interference, disruption or aesthetics relating to   vrightsofway management that are not dealt with by the cable  Sl-franchise.:wlS yO-ԍCox Reply at 810.:x`  S-  049.` ` NCTA contends that Congress has separated regulation of cable service from regulation   of telecommunications service. "The City of Troy, by contrast, has confused these distinct spheres of  S-  regulation by impermissibly using telecommunications considerations to decide a cable franchising matter,"  S-NCTA concludes.;xzS yO-ԍNCTA Comments at 3.;  ST-  o150.` ` The City generally agrees that Title VI divides cable regulation and telecommunications   -regulation into separate spheres. Distinctions between cable service and telecommunications service justify   =separate regulatory structures at the local level, according to the City. The City notes, for example, that   cable distribution plant is installed largely in residential areas since cable television is primarily a   residential service, while "business users are primary consumers of telecommunications service and the  S-  type of consumers that new telecommunications service providers seek to attract."Gy S {O6&-ԍSee City Reply at 1516.G When a cable   koperator decides to expand into the telecommunications area, it will not simply piggyback its existing"dy,8)8)``"   distribution plant, but instead will have to install new plant where it does not currently have facilities, according to the City. The City asserts:   XX` ` This will require access and cause disruption to different rightsofway   Xthan are occupied for traditional cable service. It is, therefore,   Jappropriate to require a cable operator desiring to provide    telecommunications service to obtain a telecommunications franchise or   other local authorization for the use of a city's rightsofway before it  S-may provide such service.KzS {O( -ԍId. at 16 (footnote omitted).Kx`   .The City's Telecommunications Ordinance "is just such a requirement," and has no impact on the City's  SH -regulation of TCI as a cable operator, according to the City. 1{H ZS {OB -ԍId.1  S -  251.` ` The City argues that the subsections of section 621 cited by TCI do not forbid local  S -  .franchising or regulation of telecommunications providers, even when the provider is a cable operator.9| S yO\-ԍCity Reply at 32.9   The City notes that by their express terms, the cited subsections of section 621 merely restrict local   regulation of telecommunications "under this title," i.e., Title VI. These provisions, according to the City,   allow for local franchising and regulation of telecommunications provided by a cable operator to the extent   permitted by any nonTitle VI grant of authority. "Thus, when Section 621(b)(3)(A)(i) provides that a  S-  'cable operator or affiliate shall not be required to obtain a franchise under this title for the provision of   telecommunications services,' . . . the section applies solely to a franchise for cable television service,"  S-according to the City.?}|S yO-ԍCity Comments at 3233.?  Sh-  352.` ` The City further contends that another subsection of section 621 makes clear that Congress   {did not foreclose local franchising and regulation of a cable operator providing telecommunications   services. The City cites section 621(d)(2) which states: "Nothing in this title shall be construed to affect   the authority of any State to regulate any cable operator to the extent that such operator provides any   .communication service other than cable service, whether offered on a common carrier or private contract  S-  basis."[~ S yOL -ԍCity Reply at 13, quoting 47 U.S.C.  541(d)(2).[ Although section 621(d)(2) expressly allows only a state to regulate a cable operator that   provides other communications services, a state may delegate that authority to a local government,  SP-  according to the City.;PS yO#-ԍCity Comments at 8.; In this case, the City claims that the Michigan Constitution grants it the authority   to franchise and license telecommunications providers, as well as any other person making use of its  S-  public rightsofway., S yO&-  ԍCity Comments at 10; City Reply Comments at 1617. TCI and others dispute the scope of the City's authority  {O'-under state law. TCI Reply at 2122; MCTA Reply at 12. See infra at Section VII. While agreeing that the provisions of section 621 cited by TCI restrict its   authority to use Title VI as a means of regulating TCI's provision of telecommunications service, the City" ,8)8)``j"  S-  denies having attempted to use Title VI in this fashion.<S yOh-ԍCity Comments at 35.< Neither the City's Cable Ordinance nor the TCI   cable franchise "prohibit[s] TCI from providing telecommunications service over its cable system,"  S-  >according to the City.AXS yO-ԍTCI Reply Comments at 17.A Claiming that its regulation of telecommunications providers stems from its   authority under state law, not from Title VI, the City contends that TCI's reliance on section 621 is  S`-misplaced.U`S yO-ԍCity Comments at 13, 1517; City Reply at 17.U  S-  453.` ` The City disputes TCI's characterization of the Commission's rules with respect to open   <video systems, where we implemented the statutory requirement that operators of such systems be exempt  S-from the cable franchise requirement.9xS yO -ԍCity Reply at 14.9 The City quotes the Commission's determination that:   7XX` ` [i]f, for example, a state or local government characterizes permission to   8use the public rightsofway as a "franchise," such franchises are not   Hpreempted so long as they are issued in a nondiscriminatory and  S -competitively neutral manner.Z\ S {O-  hԍId. quoting Implementation of Section 302 of the Telecommunications Act of 1996: Open Video Systems, Third  {Oj-  Report and Order and Second Order on Reconsideration ("Third OVS Order"), CS Docket No. 9646, FCC 96334, para. 198 (rel. Aug. 8, 1996).Zx`  S -  2554.` ` A number of local governments have filed comments agreeing with the City's construction   lof the relevant Title VI provisions. In a joint motion to dismiss or deny the Petition, several local   ygovernments and PROTEC, which itself is a coalition of local governments from Michigan, argue that the   City has authority under state law to impose reasonable requirements on telecommunications providers  S-  occupying public rightsofway.<, S yO-ԍPROTEC Motion at 16.< The City's exercise of that authority is valid under section 621,   lPROTEC asserts, because that section does not affect "any nonTitle VI authority a state or local   government may have under state law to regulate or franchise the provision of telecommunications services  S-  by cable operators." S {O-  LԍId. at 16. See City and County of Denver Comments at 4; Reply and Motion To Dismiss of Minnesota Authorities at 2. According to PROTEC, the City "has never conditioned TCI's provision of   telecommunications as a Title VI cable operator, but has only exercised the authority it possesses under   state law, including authority that was specifically preserved to it under Section 621(b)(3) and 621(d)(2),  S-to manage and receive compensation for telecommunications providers' use of its rightsofway."<S yO$-ԍPROTEC Motion at 20.< ` `  S-  #655.` ` PROTEC thus argues that the City acted reasonably in restricting the use of any facilities   installed by TCI to cable service. This restriction merely recognizes that TCI's authority to install and use   facilities in the rightsofway derives solely from its cable franchise and the City's Cable Ordinance, which"x,8)8)``"  S-  yauthorize only cable service, according to PROTEC.<S yOh-ԍPROTEC Motion at 20.< PROTEC disputes what it characterizes as TCI's   argument that section 621(b)(3) "magically transforms a Title VI cable franchise into a free pass to use  S-  local streets for noncable purposes...."CXS yO-ԍPROTEC Reply Comments at 7.C According to PROTEC: "Just as TCI would not be permitted   to use its cable franchise authorization to obtain permits to install gas lines, so too TCI is not permitted   kunder applicable law to use its cable franchise to obtain permits for any other noncable purposes for  S8-  which it has not received a franchise."18S {O -ԍId.1 PROTEC further cites section 621(d)(2), which provides that   nothing in Title VI prohibits a state from regulating a cable operator that provides any communication  S-other than cable service.<zS yO -ԍPROTEC Motion at 17.<  S-  756.` ` The TMIC Communities agree that Congress merely intended "to separate cable  Sp-  franchising under Title VI from telecommunications franchising."Gp S yO-ԍTMIC Communities Comments at 5.G They argue that the phrase "under   othis title" was added as an amendment to the subsections restricting local franchising of   telecommunications providers, thus signalling Congress's intent to permit nonTitle VI regulation of  S -  telecommunications.O S {O2-ԍId. See PROTEC Reply at 6.O The TMIC Communities argue that Troy derives its franchising authority over   =telecommunications providers from the Michigan Constitution, not Title VI, and thus may exercise such   authority without violating section 621(b)(3)(B). "Congress did not intend that a cable operator can build  S -  or operate a telecommunications system without a telecommunications franchise or that the cable franchise  SX-sufficiently covers telecommunications services," according to the TMIC Communities.ZX, S yO$-  -ԍTMIC Communities Comments at 4, 19. Giving cable operators unrestricted access to public rightsofway   would be a taking of property under the Fifth Amendment to the U.S. Constitution, requiring the payment of just  {O-compensation to municipal governments, according to the TMIC Communities. Id. at 1114.   S-  857.` ` Franchising telecommunications service separately from cable service makes practical  S-  zsense as well, according to municipal commenters, even when one entity is providing both services.uN S yO-ԍPROTEC Motion at 89; TMIC Communities Reply at 7; North Suburban Reply at 3.u   Separate franchises will ensure that the provider's cable and telecommunications obligations are not mixed   jand will make clear the source and extent of the local government's authority over each service, PROTEC  Sh-  states.;hS yO#-ԍPROTEC Motion at 8.; The TMIC Communities assert that the cable operator will have to use more streets and rights  Mofway to provide telecommunications service than it uses to provide cable service. "These practical   >considerations alone suggest that a cable franchise does not suffice to protect public rightsofway in  S-connection with telecommunications systems," according to the TMIC Communities.inS {O'-ԍTMIC Communities Reply at 7; see North Suburban Reply at 3.i ",8)8)``a"Ԍ S-  oԙ958.` ` According to some commenters, the Conference Report makes clear Congress' intent to   2preserve a municipality's nonTitle VI authority to franchise and regulate the provision of telecommunications services by a cable operator: ` `   XX` ` The conferees intend that, to the extent permissible under State or local   law, telecommunications services, including those provided by a cable   (company, shall be subject to the authority of a local government to, in a   enondiscriminatory and competitively neutral way, manage its public  S-rightsofway and charge fair and reasonable fees.S {O( -  ԍS. Rep. 230, 104th Cong. 2d Sess. ("Conference Report") at 180 (Feb. 1, 1996). See PROTEC Comments at 17.x`  Sp-  A:59.` ` In joint comments filed with other municipalities and organizations, Richmond argues that   {the foregoing quotation from the Conference Report proves that Congress intended separate, local   jfranchising of cable operators to the extent they seek to provide telecommunications service, particularly  S -  when read in conjunction with an amendment to section 622(b) governing the cable franchise fee.> "S yO-ԍ47 U.S.C.  542(b).>   /Section 622(b) allows a local franchising authority to impose a franchise fee of up to 5% of the cable   operator's gross revenues. In the 1996 Act, Congress amended section 622(b) to clarify that the 5% fee   can be imposed only on revenues derived from the provision of cable service. Richmond thus contends   ythat contrary to the intent of Congress, franchising authorities would receive no compensation for a cable   operator's use of the rightsofway to provide telecommunications service, absent a separate  S-telecommunications franchise requirement.GS yOZ-ԍRichmond Comments at 10, n. 11.G  S-  };60.` ` More generally, Richmond argues that the legislative history cited above demonstrates that   [Congress authorized local governments to regulate telecommunications separately from cable, even when   a single entity is providing both services. Accordingly, Richmond contends it is lawful for the City to   lissue a construction permit for cable service with the condition that the permit does not authorize   telecommunications service, and that such service cannot be provided until all federal, state and local  S-requirements are satisfied.CBS yO-ԍRichmond Comments at 1617.C  S-  <61.` ` A number of commenters argue that exempting TCI from the requirement of obtaining   a telecommunications franchise, based solely on its status as a cable operator, would give TCI an unfair   advantage over other potential telecommunications providers, when the intent of Congress was to provide  S(-  jfor nondiscriminatory, competitively neutral regulation.(S yO#-ԍTMIC Communities at 9; MAS Comments at 2; Richmond Reply at 1011; Anaheim Reply at 78. The TMIC Communities assert that "the city  S-  of Troy would be discriminating in favor of TCI were it not to require a telecommunications franchise   .before TCI builds a telecommunications network and offers telecommunications services," since all non  cable telecommunications providers will be required to obtain a telecommunications franchise before"b ,8)8)``-"  S-  zoffering service.?S yOh-ԍTMIC Communities at 10.? Noting that under a cable franchise a franchising authority may impose a franchise   fee only on revenues derived from cable service, PROTEC asserts that eliminating a separate franchise   \requirement for cable operators providing telecommunications service would allow cable operators to   evade fees on telecommunications revenues, even though other telecommunications providers would be  S`-subject to such fees.I`XS yOX-ԍPROTEC Reply Comments at 7, n. 5.I   Q-` ` 2. Discussion  S-  =62.` ` Title VI establishes "a national policy concerning cable communications,">S yOH -ԍ47 U.S.C.  521(1).> including   "guidelines for the exercise of . . . State and local authority with respect to the regulation of cable  Sp-  [systems...."@pxS yO-ԍ47 U.S.C.  521(2). @ A fundamental aspect of the regulatory scheme erected by Title VI is the requirement  SH -  ?that a cable operator obtain a franchise before providing cable service.ZH S yO-  [ԍ47 U.S.C.  541(b)(1). This requirement does not apply to local or municipal authorities engaged in the  {O-  -distribution of multichannel video programming, id., or to any person lawfully providing cable service without a franchise on July 1, 1984 unless the franchising authority requires such a franchise. 47 U.S.C.  541(b)(2). A franchise is "an initial   authorization, or renewal thereof . . ., issued by a franchising authority . . . which authorizes the  S -  lconstruction or operation of a cable system . . . ."> * S yO-ԍ47 U.S.C.  522(9).> In most cases, the franchising authority with  S -  ljurisdiction to grant a cable franchise is a body of state or local government.I S {O*-ԍSee 47 U.S.C.  522(10).I In general, Title VI  S -  governs cable service only. L S yO-  ԍTitle VI reaches noncable communications services indirectly, such as by restricting the ability of a cable  {O\-operator to own other communications media in the cable franchise area. See 47 U.S.C.  533. The scope of a local government's franchising authority under Title VI does  S -not extend to communications services other than cable service.sZ S {O-  wԍSee 47 U.S.C. 541(d)(2) ("nothing in this title shall be construed to affect the authority of any State to regulate   any cable operator to the extent that such operator provides any communication service other than cable service, whether offered on a common carrier or private contract basis").s ` `  S0-  >63.` ` The plain language of the three provisions of section 621(b)(3) cited by TCI, as amended   [by the 1996 Act, make clear that a local government may not invoke its franchising authority under Title   ?VI as grounds for franchising or regulating the provision of telecommunications service by a cable   operator. Section 621(b)(3)(A) states that a cable operator or affiliate "engaged in the provision of  S-  /telecommunications services (i) . . . shall not be required to obtain a franchise under this title for the  Sj-provision of telecommunications services...."UjS yO'-ԍ47 U.S.C.  541(b)(3)(A) (emphasis added).U Similarly, section 621(b)(3)(B) states:"jX,8)8)``"Ԍ S-  7ԙXX` ` A franchising authority may not impose any requirement under this title   that has the purpose or effect of prohibiting, limiting, restricting, or   tconditioning the provision of a telecommunications service by a cable  S-operator or an affiliate thereof.US yO-ԍ47 U.S.C.  541(b)(3)(B) (emphasis added).Ux` The third provision cited by TCI, section 621(b)(3)(D), states:   tXX` ` Except as otherwise permitted by sections 611 and 612, a franchising   ;authority may not require a cable operator to provide any   telecommunications service or facilities, other than institutional networks,   as a condition of the initial grant of a franchise, a franchise renewal, or  SJ -a transfer of a franchise.DJ XS yOB -ԍ47 U.S.C.  541(b)(3)(D).Dx`  S -  ?64.` ` The enactment of these provisions as part of the 1996 Act is related to the simultaneous  S -  repeal of the crossownership restriction of former section 613(b) of the Communications Act.A S yOZ-ԍ1996 Act,  302(b)(1).A Subject   to certain exceptions, former section 613(b) prohibited a Title II common carrier from offering cable   service or other video programming directly to subscribers within its telephone service area. With the   repeal of this crossownership restriction and adoption of other procompetitive provisions, Congress   Lanticipated that a variety of regulatory issues would arise as locallyfranchised cable operators sought to  S -  =begin providing telecommunications services in addition to cable service.  xS yO"-  <ԍIndeed, the National Cable Television Association reports that there had been a "growing practice" of local   municipal governments using their cable franchising authority to regulate telecommunications services. NCTA   Comments at 3. A group of franchising authorities concedes that such practices would "undercut the 1996 Act...." TMIC Communities Reply at 7.  In light of this, it was logical   jfor Congress to confirm, with the addition of section 621(b)(3), that local governments may not use their   cable regulatory authority under Title VI as a basis to franchise, regulate or condition a cable operator's provision of telecommunications services.  SB-  @65.` ` TCI and the City seem to agree on this point. TCI asserts that Congress "has broken the  S-  link between cable franchising and the delivery of telecommunications . . . .,"7` S yO -ԍPetition at 13.7 and the City states that   #Congress intended "to separate cable franchising from rightsofway management for...  S-  telecommunications services . . . ."CZ S {OZ#-  ԍCity Reply at 15. See NCTA Comments at 3 (amendments to Section 621 create "distinct spheres of   regulation"); TMIC Communities Comments at 5 (Congress intended "to separate cable franchising under Title VI from telecommunications franchising").C Ironically, both TCI and the City claim support for their respective interpretations of section 621(b)(3) from the relevant section of the Conference Report, which states:   dXX` ` The conferees intend that, to the extent permissible under State and local   law, telecommunications services, including those provided by a cable"*,8)8)``"   (company, shall be subject to the authority of a local government to, in a   enondiscriminatory and competitively neutral way, manage its public  S-rightsofway and charge fair and reasonable fees. S yO-  ԍConf. Rep. at 180. Petition at 1314; City Comments at 3334. TCI, however, claims that the City's actions   with respect to its cable permits, and it Telecommunications Ordinance, exceed the scope of the City's permissible   rightsofway management authority, where as the City maintains its actions fall well within its traditional authority, wholly apart from Title VI. Petition at 1617; City Comments at 35.x`   The foregoing statement from the Conference Report reflects an intent to preserve the powers of local   governments to manage the use of the public rightsofway and to receive compensation for the use of   Nthose rightsofway, consistent with the stated standards that such actions be nondiscriminatory, competitively neutral and that fees be fair and reasonable.  S-  A66.` ` While essentially agreeing with the City on the effect of section 621(b)(3) to this extent,   ]TCI and other cable interests contend that section 621(b)(3) imposes a further restriction on local   Lregulation of telecommunications service and telecommunications providers. TCI contends that "section   621(b)(3) precludes the imposition of franchise obligations upon the provision of telecommunications   services by cable television operators," even if the franchising authority purports to be acting under a grant  S -  of authority other than Title VI.8 S yO -ԍTCI Reply at 12.8 As noted above, however, two of the three subsections, section   621(b)(3)(A) and section 621(b)(3)(B), prohibit local franchising and regulation that is imposed "under  S -this title," i.e., Title VI.a @S yO`-ԍ47 U.S.C.  541(b)(3)(A); 47 U.S.C.  541(b)(3)(B).a  Q0- ` `  a.Section 621(b)(3)(A)  S-  S-  CB67.` ` We first conclude that TCI has failed to establish that the City has violated section   621(b)(3)(A) with respect to the City's actions on TCI's construction permit applications. That provision states:   XX` ` If a cable operator or affiliate thereof is engaged in the provision of telecommunications services x`  XX` `  (i) such cable operator or affiliate shall not be required to obtain   a franchise under this title for the provision of telecommunications  S-services . . . .DS yO!-ԍ47 U.S.C.  541(b)(3)(A).Dx`    This provision is inapplicable here because TCI states, and the City acknowledges, that TCI is not now   engaged in the provision of telecommunications services, and has no present intention to provide such   services in the City of Troy. In this case, the cable operator is not "engaged in the provision of   ktelecommunications services," but rather, is engaged solely in the provision of cable services under its   [Title VI cable franchise. Because the prohibition in this subsection does not apply by its terms to TCI's business in the City of Troy, we find no violation of section 621(b)(3)(A). "`` ,8)8)``"Ԍ Q-` `  b.Section 621(b)(3)(B)  S-  C68.` ` The second provision cited by TCI, section 621(b)(3)(B), states that a franchising authority   "may not impose any requirement under this title that has the purpose or effect of prohibiting, limiting,   restricting, or conditioning the provision of a telecommunications service by a cable operator or an affiliate  S8-  thereof."D8S yO-ԍ47 U.S.C.  541(b)(3)(B).D The City's actions complained of by TCI include: the January 23, 1995 Agreement   (prohibiting TCI from using for telecommunications purposes any facilities installed pursuant to cable   construction permits, until TCI has obtained all lawful federal, state and local authority to provide   telecommunications service); the corresponding endorsement on the Livernois Road Application; the City's   {failure to grant the Royal Oak Application without inclusion of a like endorsement; and the City's   enactment of the Telecommunications Ordinance. With respect to its enactment of the Telecommunication Ordinance, the City claims authority under the Michigan Constitution, not Title VI.  S -  D69.` ` We find on the record before us that the City has violated section 621(b)(3)(B). Clearly,   [as Troy itself recognizes, the City entered into the 1995 Agreement with TCI, imposed the endorsement   on the Livernois Road Application, and seeks to condition the Royal Oak permit on the basis of TCI's  S -  status as a cable operator. XS {Ox-  JԍSee City Comments at 8 ("when TCI submits a building permit application to Troy to upgrade its cable system, it does so under the authority granted in its cable franchise to use the city's rightsofway for its cable service"). The City's franchising authority over cable operators such as TCI derives   jfrom Title VI of the Communications Act. Accordingly, the City clearly was acting under Title VI when   0it endeavored to condition the grant of the building permits at issue, and the subject matter of the   .condition was not related to the cable service TCI provides. Rather, it expressly concerns the provision   .of telecommunications service in Troy, a service TCI neither currently provides, nor plans to provide in that locality.  Sh-  E70.` ` The literal terms of the Livernois Road permit endorsement state that the "permit   .specifically prohibits and excludes installation, upgrading or operations for all other telecommunications   service." This language would force TCI to forego the right to provide telecommunications service as a   [condition of upgrading its cable system, and would violate section 621(b)(3)(B), if it were to be enforced   as originally written. Even if, as the City has represented to this Commission, the City does not intend   jto enforce the terms of the Livernois Road Application permit beyond the terms of the 1995 Agreement,   the language of the condition as written and as later interpreted by the City plainly violates the express  SP-  terms of the statute. Section 621(b)(3)(B) states that a "franchising authority may not impose any   requirement under this title that has the purpose or effect of prohibiting, limiting, restricting, or  S-  .conditioning the provision of a telecommunications service by a cable operator or an affiliate thereof."US yOT!-ԍ47 U.S.C.  541(b)(3)(B) (emphasis added).U   In this case, the condition or endorsement is being imposed "under this title," and by its own terms its   -purpose is to condition the provision of a telecommunications by a cable operator. Both the cable interests   and the cities agree that Congress intended by this provision to separate the realms of cable franchising   from telecommunications service regulation. The City's required endorsement therefore violates the plain   |language of the statute and it impermissibly mixes the two distinct regulatory spheres in direct contravention of Congress' intent in amending section 621. ` ` " B,8)8)``t""Ԍ S-  F71.` ` The still pending Royal Oak Application presents no different circumstance. The stated   [purpose of the Royal Oak Application is "to upgrade CATV service quality and interconnect [three]...  S-  Headends."9S yO-ԍPetition, Exh. 7.9 In its letter to TCI dated February 14, 1996, the City raised three concerns with respect to   the Royal Oak Application. Two of the concerns dealt with the route of the proposed installation. First,   =according to the City, the installation proposed by TCI deviated from the most direct route between the  S8-  /headends.:8XS yO0-ԍPetition, Exh. 10.: Second, TCI's plans called for a portion of its facilities to be installed in an easement to   which TCI has no right of access. The third concern related to the Telecommunications Ordinance which,   [according to the letter, "requires any prospective telecommunications companies to apply for and obtain  S-  a franchise." The letter adds: "This you must do."1S {OH -ԍId.1 The City explained that its concern that TCI   intended to provide telecommunications using the facilities proposed in the permit application arose   >principally from the fact that TCI's building plans indicated planned installation of conduit and cable   through a complex of office buildings, where TCI had no existing cable plant and provided no cable  S -service.+Z zS {O:-  ԍCity Comments at 14. See also March 12 Van Bergh Letter at 1 (the proposed deviation went through a   business/research park where TCI has no existing cable television service and did not propose to provide cable service).+  S -  AG72.` ` In its Petition, TCI acknowledges its refusal to obtain a telecommunications franchise, but   Nclaims to have resubmitted the Royal Oak Application in a manner that resolves the City's other  S -  Zconcerns.; S yO-ԍPetition at 9 n.16.; In the resubmitted application, TCI responded to the City's concerns with the proposed route   by stating that the plans submitted by TCI with its Royal Oak permit application reveal only prudent   management by TCI in planning its proposed upgrade. TCI notes that it has become standard practice in   the industry to begin cable system buildouts prior to any specific demand for service in the franchise area,   and that franchising authorities routinely urge cable operators to route their facilities through business   districts. TCI, in its Petition, urges that the "only conclusion warranted by a review of the building plans   submitted with TCI's Royal Oak permit application is that TCI planned to buildout its cable plant for the  Sh-eventual provision of cable service to business areas in which it previously had no facilities.9h, S yO4-ԍTCI Reply at 56.9  S-  H73.` ` The City maintains that its concerns were not resolved when TCI resubmitted its Royal  S-  Oak permit application in May 1996.< S yOL#-ԍCity Comments at 15.< In its March 11 Letter to TCI, the City Attorney represents that  S-  the City will grant the Royal Oak Application if TCI will submit a new and direct route plan.FL S yO%-ԍMarch 11 Letzmann Letter at 2.F   According to the City, the most direct route between the headends that TCI wishes to interconnect is along",8)8)``"  S-  a public street known as Crooks Road.FS yOh-ԍMarch 11 Letzmann Letter at 1.F The "zigzagging, circuitous" route proposed by TCI deviates   from Crooks Road, according to the City, passing several office buildings and a cemetery before returning  S-  to Crooks Road.\XS yO-ԍCity Comments at 14; March 11 Letzmann Letter at 1. \ The City notes that the portion of the proposed route that deviates from Crooks Road  S-  passes no residential customers.<S yO-ԍCity Comments at 14.< The City states: "The more direct route [along Crooks Road] would   create less disruption to Troy's rightsofway and is the route TCI would normally have been expected to  S8-  use simply to connect its headends."18xS {OP -ԍId.1 The City has advised TCI that it will grant the Royal Oak   -application if TCI corrects this routing problem: "After further discussion with the City engineers, we have   =come to the conclusion that if you submit the route plan showing a route running due north and south in   ythe Crooks Road rightofway and otherwise meet appropriate ordinances and design standards, the City  S-  [will issue the permit."F S yOB-ԍMarch 11 Letzmann Letter at 2.F In addition, the City reiterated its insistence that TCI's permit contain the "not   for telecommunications purposes" endorsement "reflecting the January 23, 1995 agreement between the  SH -City and TCI."1H S {O-ԍId.1  S -  nI74.` ` In its responsive ex parte submission, TCI: (1) states that it agrees to a route that runs due   =north and south in the Crooks Road rightofway; (2) clarifies that it wishes to provide video services in   Lthe area that would have been passed in its original Royal Oak application route plan, and (3) states that   it will shortly submit a new, separate permit application to bring hybrid fibercoaxial cable plant to that  SZ-  {area.DZ, S yO&-ԍApril 2 Anthony Letter at 1.D TCI also states that it cannot accede to the City's insistence on including the endorsement   restricting use of the facilities to cable services "unless and until" TCI shall have obtained all lawful   requisite authorizations and consents for the provision of telecommunications services. TCI explains that,   in its view, the City is without authority to impose limitations on TCI's construction of cable facilities in  S-  {this manner.E S yO-ԍ April 2 Anthony Letter at 1.E The City responded by stating that it does not expect a breach of the 1995 Letter   Agreement or permit endorsements to occur, but if such a circumstance arises with respect to TCI, "the   .City would pursue remedies ordinarily available," and that "it is not the City's expectation that the City  SB-would consider such an event to constitute a breach of the TCI cable franchise."FBL S yO.#-ԍMarch 11 Letzmann Letter at 2.F  S-  #J75.` ` Again, the City's actions have impermissibly blurred the distinction, mandated by section   621(b)(3)(B), between regulation of telecommunications services and regulation of cable services. The   .literal terms of the condition the City originally sought to impose on the Royal Oak permit in February,   1996 required TCI to obtain a telecommunications franchise before TCI would be permitted to upgrade"z ,8)8)``"  S-  yits cable facilities.S {Oh-  ԍSee City Comments, Exh. 6, Letter from David B. Lindquist, Civil Engineer, City of Troy, to Chris D.   wMartinez, Field Engineer, TCI Cablevision of Oakland County, Inc., dated February 14, 1996 ("[t]he 'December City   xmeeting' to which you refer is the City Council meeting of December 18, 1995. At this meeting a resolution was   approved which requires any prospective telecommunications companies to apply for and obtain a franchise. This   Kyou must do. Until the above items have been completed a permit for your cable/conduit installation cannot be issued."). Even as revised, the City's condition required TCI to agree that it would not use the   {upgraded cable facilities for telecommunications purposes unless and until TCI obtained all lawful   Lauthorizations, which the City maintains includes a telecommunications franchise from the City of Troy  S-  >pursuant to its Telecommunications Ordinance."BS {Oj -  ԍSee May 14 Van Bergh Letter, attaching May 9 Letzmann Letter ("If TCI is found to need further authorizations   ]or consents to operate a telecommunications system in Troy, including authority under the Michigan   wTelecommunications Act and Chapter 62 of the Troy Municipal Code (as Troy believes it does), then this condition confirms that TCI will obtain such authority before providing telecommunications service."). A requirement that a cable provider must agree to   obtain a telecommunications franchise in the future before it could receive a permit to upgrade its cable   [system for the purpose of providing cable service is just the sort of action that section 621(b)(3)(B) was   intended to prohibit. The City's further attempt in March, 1997 to limit the scope of its condition by   stating that "it is not the City's expectation that the City would consider such an event to constitute a  S-  breach of the TCI cable franchise,"F, S yO-ԍMarch 11 Letzmann Letter at 2.F is too little, too late. The further limitation comes more than one   year after the first revised Royal Oak permit application was filed, and it is not even a definitive statement   that the City would not treat a violation as a breach of the cable franchise. The City, to the contrary, has   clearly indicated that, in its view, the condition is a legally operative mechanism under which the City  S -  ymay take action against TCI in the future. S {O|-  ԍSee May 14 Van Bergh Letter at 3 ("If, as TCI says, it intends to comply with all applicable laws, then the   condition will have no bearing on TCI's conduct. On the other hand, if TCI has other intentions, because the   condition is an independent requirement that pertains to the use of TCI's facilities for services other than cable, it   provides a mechanism for Troy to enforce its management authority over the public rightsofway in the event of   an unauthorized use of the rightsofway, without adversely affecting TCI's cable television service or finding that TCI is in violation of its cable franchise.") It is accordingly a significant condition, related solely to the   Lprovision of telecommunications service over cable facilities, imposed upon TCI in this case pursuant to   the City's Title VI franchising authority. For these reasons, imposition of the condition on TCI's cable permits violates section 621(b)(3)(B).  SX-  K76.` ` We are also concerned that the Royal Oak Application essentially lay dormant with the   City for ten months. An unexplained failure to respond to a permit application by the incumbent cable   operator within a reasonable time would lead to the assumption that local franchising authority under Title   jVI is being used for some other purpose, thereby violating section 621. It appears that the City's March   11, 1997, response is written more in the context of the issues in this proceeding, than as part of it   responsibilities in administering the public rightsofway. The fact that TCI has accepted the City's   objection to the proposed installation route for the fiber optic facilities, as reflected in the parties exchange  S@-  Lof letters in March and April, 1997,@6S {O'-  ԍAs proposed in the City's March 11 Letzmann Letter, TCI has agreed to connect the Headends directly. See April 2 Anthony Letter. reflects that some elements of this dispute could have been, if not"@!,8)8)``T"   "resolved, then at least adequately clarified by the parties at a much earlier time. Although we   acknowledge the difficulties parties face when one pursues resolution of their dispute in another forum,   [we note that, in this case, the City's administrative process relating to the permits was not stayed during   the pendency of TCI's Petition here. Unexplained administrative failure to provide permit applicants with   responses within a reasonable time may lead the Commission to construe the circumstances most favorable  S8-to the party aggrieved by the delay.t8S {O-  JԍSee Public Notice, "Supplemental Pleading Cycle Established for Comments on Petition for Declaratory Ruling   of the Cellular Telecommunications Industry Association, FCC 97264, released July 28, 1997 (Commission believes   it has jurisdiction to preclude siting moratoria of unlimited or unspecified duration under section 253(d), and, to the   extent such moratoria may constitute prohibited commercial mobile radio service (CMRS) entry regulation, as constituting barriers to CMRS entry under section 332(c)(3)).t  S-  PL77.` ` The Commission's filing procedures are intended to afford parties flexibility to convey the   circumstances of their position. We generally do not impose rigid rules, normally associated with civil   litigation, that confine a party's ability to supplement the record. Many of our proceedings have broad   impact, and our rules seek to include commentary from a range of interested parties. Yet, as this   proceeding illustrates, our procedures must not become part of the permit process for franchised cable   operators to obtain access to the public rightsofway to upgrade their cable facilities. It is unfortunate   that it took a Petition from TCI for the City to clarify its intentions. In addition, the yearlong process   of supplementing the record has had a detrimental impact on our ability to render a timely decision on   ia set of facts that accurately represents the situation faced by TCI and other potential providers in the Troy   communications market. We strongly urge future claimants and responding entities under sections   m621(b)(3), 624(e) and 253 to submit complete and accurate accounts of the facts in their initial  S0-pleadings.0zS yOJ-  ԍWe also urge that factual assertions be supported by credible evidence, including affidavits, to avoid the  {O-problems inherent with unsworn ex parte submissions on key factual points in contention.  S-  3M78.` ` We also note that the administration of the public rightsofway should not be used to   undermine the efforts of either cable or telecommunications providers to either upgrade or build new   facilities to provide a broad array of new communications services. The City itself appears to have   <recognized that fiber optic facilities are important to the future of communications networks, but its actions   with respect to the attempts of certain providers to install these facilities in the public rightsofway have  S-  [been less than welcoming.qS yO-ԍPetition at 49; MCI Comments at 3; MCI Letter at 12; MFS Letter at 23.q Upgrades of existing copper and coaxial cable plant are necessary today for   Lthe delivery of high quality cable services, are required for the provision of tomorrow's competitive local   telephone service, and are essential for the future provision of switched, integrated broadband voice, video   and data services. All levels of government can best serve the public interest by joining together to speed   the accomplishment of the sorts of cable upgrades TCI seeks to make in Troy by streamlining and hastening administrative processes.  Q-` `  c.Section 621(b)(3)(D)  S-  oN79.` ` The third and final subsection of section 621(b) invoked by TCI, section 621(b)(3)(D),   2generally prohibits a franchising authority from requiring a cable operator "to provide any   telecommunications service or facilities, other than institutional networks, as a condition of the initial grant"`"d ,8)8)``"  S-  >of a franchise, a franchise renewal, or a transfer of a franchise."DS yOh-ԍ47 U.S.C.  541(b)(3)(D).D It is not clear from TCI's pleadings   exactly how the actions of the City violate section 621(b)(3)(D). The only evidence that could even   remotely be read to suggest that the City has sought to require TCI to provide telecommunications service   is the February 14, 1996 letter from the City's Civil Engineer stating that the City will not grant the Royal  S`-  Oak Application until TCI obtains a telecommunications franchise.q`XS {OX-ԍSee Petition at 8 & Exh. 10; City Comments, Exh. 2 at p.3 & Exh. 6.q In its Petition, TCI claims the City   Mhas imposed this condition to regulate "telecommunications services that might later be delivered" by  S-TCI.7S yO -ԍPetition at 17.7  S-  O80.` ` TCI's invocation of section 621(b)(3)(D) fails properly to invoke the protections of that   provision, because it does not allege that the City has even attempted to require TCI to provide   Ltelecommunications service or facilities, other than institutional networks, as a condition of its franchise.   {Nor would the record in this case support such a claim. We conclude that the decision of when or   whether to provide telecommunications service has been left to TCI, and cannot be attributed in any  S -manner to the City. Therefore, we find no violation of section 621(b)(3)(D).D zS yO-ԍ47 U.S.C.  541(b)(3)(D).D  S -X B.` ` Section 624(e)   QX-` ` 1. Positions of the Parties  S-  P81.` ` TCI asserts that the City's actions violate section 624(e) which, as amended, provides in   pertinent part: "No state or franchising authority may prohibit, condition, or restrict a cable system's use  S-  of any type of subscriber equipment or any transmission technology."> S yOb-ԍ47 U.S.C.  544(e).> TCI claims that Congress sought  S-  "to leave the design of transportation architecture to market players."8S {O-ԍId. at 17.8 Quoting legislative history, TCI   -argues that Congress found that "'the patchwork of regulations that would result from a localitybylocality  S@-  Lapproach is particularly inappropriate in today's intensely dynamic technological environment.'"t@, S yO -ԍTCI Reply at 9, quoting H. Rep. No. 204, 104th Cong., 1st Sess. 110 (1995). t The   NCity has violated section 624(e), according to TCI, by prohibiting it from installing fiber and thus  S-  keffectively requiring TCI to use only coaxial cable for the transmission of its cable signals.S S yOL#-ԍPetition at 17; TCI Reply Comments at 910.S MCTA   llikewise asserts that the City has denied TCI's construction permit applications and therefore has  S-"prohibited TCI's use of fiber optic technology in the cable system" in violation of section 624(e).;L S yO&-ԍMCTA Comments at 3.; "x#,8)8)``"Ԍ S-  Q82.` ` The City claims it could not have violated section 624(e) because it has not denied either   [of the two applications under which TCI has sought the authority to upgrade its cable system with fiber  S-  joptics.<S yO-ԍCity Comments at 36.< The City granted the Livernois Road Application on February 23, 1996,<XS yO-ԍCity Comments at 16.< and the Royal Oak  S-  KApplication is still pending.8S {O-ԍId. at 13.8 Further, the City states: "To the extent Troy has conditioned TCI's permits   on using facilities for cable purposes only[,] until such time as TCI has obtained the requisite consents   to provide telecommunications service, such conditions present no impediment to the technology TCI may  S-  -deploy for its cable system."8zS {O* -ԍId. at 36.8 PROTEC agrees: "Troy could not have violated Section 624(e), since Troy   never in fact denied or rejected TCI's permit applications to the extent such permits applied to the  S-  installation of fiber optic cable for the sole purpose of providing a cable system upgrade."A S yOl-ԍPROTEC Comments at 2425.A Richmond   adds that the City's concern was that TCI intended to provide telecommunications service without the   requisite authority, and that "[s]uch a concern is unrelated to the transmission technology employed by  SH -  TCI."@H S yO-ԍRichmond Comments at 18.@ Richmond cautions that local governments are not suggesting, by their arguments here, that   =section 624(e) prohibits local governments from determining whether a cable operator may install a fiber  S -optic system as opposed to some other technology. , S yO-  ԍRather, they are suggesting only that TCI's Petition does not provide the appropriate forum for determining the scope of section 624(e). Richmond Comments at 18 n.8.  S -  _R83.` ` TCI responds that, regardless of whether Troy has simply refused to grant a construction   permit, or whether it has denied TCI a construction permit, Troy has taken or withheld action on TCI's   .permits based upon the type and potential uses of a particular technology. TCI claims that by blocking   ?its permit applications or placing restrictions upon their grant, Troy has violated section 624(e)'s   prohibitions against prohibiting, conditioning, or restricting the transmission technology that TCI intends   to deploy for the provision of cable service. TCI argues further that Troy's actions fall squarely within   the proscribed conduct under section 624(e) by restricting TCI's use of its preferred cable communications   technology in direct violation of Congress' intention that franchising authorities play no part in such  Sh-decisions.8h S yO!-ԍTCI Reply at 10.8   Q-` ` 2. Discussion  S-  S84.` ` Section 624(e) provides in pertinent part: "No State or franchising authority may prohibit,   condition, or restrict a cable system's use of any type of subscriber equipment or any transmission   .technology." The Conference Report indicates that the purpose of the cited provision of section 624(e)   is to prohibit cable franchising authorities "from regulating in the areas of technical standards, customer"P$,8)8)``"  S-  equipment, and transmission technologies."AS yOh-ԍConference Report at 168.A In the case of the Livernois Road Application, we find that   the City has granted the application and has not prohibited, conditioned or restricted TCI's use of fiber   Moptics as part of its cable system. The City subsequently explained in this record that it would only   enforce the endorsement in accordance with the terms of the 1995 Letter Agreement, so that the   prohibition would be limited to TCI's provision of telecommunications services without first having  S8-  received requisite lawful authorizations.R8XS yO0-ԍCity Comments at 17, n.22 & Exh. 1 at p.7.R We reject TCI's contention that the endorsement on the   [Livernois Road permit, standing alone and as limited by the 1995 Agreement, violates section 624(e). As   ydrafted, the Livernois Road permit endorsement limits the use of the facilities installed to cable television   service, and prohibits TCI from using its cable facilities for the provision of telecommunications  S-  jservices.DS {O -ԍSee Petition, Exh. 12.D We do not believe that the City's conditioning the grant of a cable construction permit in this   kmanner can fairly be considered to constitute a prohibition, condition, or restriction on the use of any   ksubscriber equipment or particular transmission technologies within the terms of section 624(e). The   condition simply does not relate to TCI's choice and use within its cable system of either subscriber   equipment or transmission technology. Rather, the endorsement is directed at the types of services which   may be provided, and the regulatory requirements with which the operator must comply before providing   telecommunications services over the subject facilities. Therefore, the endorsement on the Livernois Road   Application, both as originally written and as later limited to the scope of the 1995 Letter Agreement, does not violate section 624(e).  S-  T85.` ` TCI also argues that the City's failure to grant the Royal Oak Application without the same   \endorsement has interfered with TCI's discretion under section 624(e) to use fiber optic transmission   technology in its cable system. The City's actions with respect to the Royal Oak application were   primarily focussed on the question of whether the route chosen by TCI was the least disruptive to the   =public rightsofway, given the stated purpose of the work, and with TCI's potential use of the facilities   to provide telecommunications services. Section 624(e) does not restrict the City's authority in either  S-  .regard.zS yO2-  JԍIn contrast, we have previously concluded that section 621(b)(3)(B) does restrict the City's ability to condition cable construction permits where the facilities may also be used to provide nonTitle VI telecommunications services. Here, the City has issued numerous permits for the installation of both fiber optic and coaxial   cable since 1993, and has sought to impose the "not for telecommunications purposes" language upon only   Lthree permits; the two permits for fiber optics that are the subject of this proceeding, and one permit for  S-  \coaxial cable.bS {O!-ԍSee City Comments at 2; July 1 Symons Letter at 12.b The condition regarding telecommunications services therefore does not appear to be   jdirected to either the specific transmission technology chosen or the question of whether this technology   will achieve the performance required of TCI under its cable television franchise. Thus, the record as a   whole supports the City's claim that the terms of the condition were unrelated to the transmission   technology chosen by TCI. In light of these circumstances, the prohibition contained in section 624(e)   on a cable franchising authority's regulation of technical standards, customer equipment, and transmission technologies is neither implicated nor violated. ` ` "%d ,8)8)``"Ԍ S- V.TITLE II ISSUES  S- A. Overview of Title II Legal Allegations  S`-  oU86.` ` The 1996 Act amended Title II of the Communications Act in a number of ways aimed  S8-  at ending the old regulatory regime of governmentprotected monopolies.w8S {O-  ԍSee Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket  {Oj-  No. 9698, First Report and Order, 11 FCC Rcd 15499 (1996) ("Local Competition Order"), Order on  {O4-  <Reconsideration, CC Docket No. 9698, 11 FCC Rcd 13042 (1996)(Local Competition Reconsideration Order),  {O-  Yvacated in part on other grounds, Iowa Utilities Board et. al v. FCC, No. 963321 and consolidated cases, 1997 WL 403401 (8th Cir. July 18, 1997). w In furtherance of this goal, Section 253, in pertinent part, states:   #X` ` (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.    #X` ` (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  Psection 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.    #X` ` (c) STATE AND LOCAL GOVERNMENT AUTHORITY.Nothing in this  2section affects the authority of a State or local government to manage the public rightsof way or to require fair and reasonable compensation from telecommunications providers,  ~on a competitively neutral and nondiscriminatory basis, for use of public rightsofway  on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.    #X` ` (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  Pstatute, 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  S-extent necessary to correct such violation or inconsistency.BS yO-ԍ47 U.S.C.  253(a)(d).B    Under Title II, the Petition challenges the Telecommunications Ordinance as a barrier to entry in violation  Sx-of section 253 generally, and seeks preemption under section 253(d).HxS yO(!-ԍPetition at 18, TCI Reply at 15.H  S(-  V87.` ` TCI's specific legal challenges under section 253 can be broken down into four principal   arguments. First, TCI argues that the Telecommunications Ordinance as a whole prohibits, or has the  S-  effect of prohibiting, TCI from providing telecommunications service, in violation of section 253(a).NS yO&-ԍPetition at 1720; TCI Reply at 2021.N   .Second, according to TCI, the City has failed to apply the Telecommunications Ordinance to Ameritech   and therefore has violated the requirement of nondiscrimination and competitive neutrality that TCI claims"&0 ,8)8)``"  S-  applies "[u]nder any interpretation of Section 253."7S yOh-ԍPetition at 21.7 Third, TCI asserts that section 253(c) permits   municipalities' oversight over only the physical use of the rightsofway, as opposed to substantive  S-  regulation of the service provided.zXS {O-ԍPetition at 1720; TCI Reply at 15; TCI November 26, 1996 ex parte comments.z Various provisions of the Telecommunications Ordinance, including   those governing rate regulation, interconnection, and service quality, "far exceed[ ] the City's power to  S`-  /manage the rightsofway" under section 253(c), according to TCI.7`S yO-ԍPetition at 18.7 Fourth, TCI contends that the   franchise fee based upon a percentage of the operator's gross revenues exceeds the "fair and reasonable   [compensation" to which the City is entitled under section 253(c). TCI argues that both federal and state  S-law require costbased fees for use of the public rightsofwayKzS yO -ԍPetition at 19; TCI Reply at 2122.K  S-  W88.` ` TCI further alleges that the City lacks authority under state law to enact or enforce the  Sp-  Telecommunications Ordinance.Kp S yO-ԍPetition at 5; TCI Reply at 2122. K TCI claims that the Troy Telecommunications Ordinance exceeds the   yCity's limited authority under the Michigan Telecommunications Act to manage the public rightsofway  S -  yand to charge franchise fees for use of the rightsofway.; S yOZ-ԍTCI Reply at 2122.; TCI states that "[t]he Michigan Constitution   jprovides only that "reasonable control" of streets and public places is reserved to local governments, and   that a "public utility" must obtain a franchise before transacting business in a municipality. Under section   k102 of the Michigan [Telecommunications] Act, however, telecommunications service is not a 'public  S -utility service' . . . . "^ * S {OJ-  ԍLetter to Barbara Esbin, Associate Chief, Cable Services Bureau, FCC dated November 27, 1996, Re: Ex Parte  {O-  Presentation, Petition of TCI Cablevision of Oakland County, Inc., CSR4790 from Howard Symons on behalf of  {O-TCI at p. 2, citing Mich. Const., art. 7,  29, and Mich. Comp. Laws  484.2102(dd).  S0-X89.` ` TCI requests that the Commission adopt an order:  S-  XX` `  declaring that the City's conditioning of TCI's cable system   (construction violates Sections 621, 624 and 253 of the Communications Act;x`  S@- XX` `  declaring that the City of Troy's denial of TCI's Royal Oak and   Livernois Permit Applications violates the Communications Act, and is preempted by federal law.x` "'P ,8)8)``$"Ԍ S-  XX` `  declaring that the Troy Telecommunications Ordinance and the   7City's denial of TCI's permit applications exceed the City's authority as   Hprovided in Section 253(a) of the 1996 Act and have the effect of   dprohibiting TCI's entry into interstate and intrastate telecommunications markets in violation of Section 253(a) of the 1996 Act; andx`   S-  XX` `  declaring that the City's Telecommunications Ordinance and the   City's denial of TCI's permit applications are preempted by Section  S-253(d) of the 1996 Act.7S yO( -ԍPetition at 22.7x`  Sp-  Y90.` ` The City both denies TCI's assertions on the merits, and argues that the Commission has   no jurisdiction to adjudicate TCI's claims under section 253(d). The City contends that the   Telecommunications Ordinance is primarily an exercise of the City's authority under section 253(c) to   Lmanage its public rightsofway and receive fair and reasonable compensation for the use of those rights  zofway, and that section 253(d) withholds from the Commission any authority to preempt such local   zregulation of telecommunications service. According to the City, any dispute as to the validity of the   -Telecommunications Ordinance under section 253(c) must be resolved by a court of competent jurisdiction,   .according to the City. The City argues, that, at most, even if limited jurisdiction exists, the scope of the   Commission's preemption authority under section 253 is narrow, and is not appropriately exercised in  S-  response to TCI's Petition.?XS yO-ԍCity Comments at 2031.? The City also argues that to the extent the specific provisions challenged   by TCI relate to a matter identified in section 253(b), they are within the City's franchise authority as   delegated under the Michigan Constitution, and the minimal requirements that are imposed are done so   in competitively neutral manner. The City generally defends its Telecommunications Ordinance as an   appropriate exercise of the City's authority to manage its public rightsofway under both federal and state  S@-  law.?@S yO-ԍCity Comments at 1931.? The City asserts that "[t]he Michigan Constitution delegates franchising authority to cities for any  S-  telecommunications service provider (i.e., public utility) transacting business in the city."\xS {O0-  xԍLetter to Mr. William F. Caton, Acting Secretary, FCC dated February 25, 1997, Re: Ex Parte Presentation,   xFile No. CSR4790, TCI Cablevision of Oakland County, Inc., from Mark Van Bergh, Roberts & Eckard, P.C. on  {O-behalf of the City of Troy, attaching Memorandum of Oral Ex Parte Presentation February 24, 1997. Most   municipal and other local government parties also support the view of limited FCC preemption jurisdiction   advanced by Troy, and, accordingly, several Motions to Dismiss the TCI Petition were filed in the  S-proceeding.cS {O!-ԍSee, e.g. PROTEC Motion at 2; TMIC Comments at 1417.c  S- B. Ripeness, Standing and Advisory Opinions X V S yO&-  ԍSummaries of the positions of the parties on the remaining issues arising under Title II are contained in   iAppendix C. These issues are organized as follows: (1) Section 253; Prohibition on Barriers to Entry; (2) Scope"^(,8)8)'"   ,of Local Government Authority Under Sections 253(b) and (c); (3) Competitive Neutrality and Nondiscrimination;   y(4) Scope of Municipal Authority Under Michigan State Law; (5) Fair and Reasonable Compensation; and (6) Commission Jurisdiction to Preempt Under Section 253(d). "(,8)8)``L"Ԍ S-ԙ` ` 1. Positions of the Parties  S-  Z91.` ` Several parties contend that the Commission should not reach the merits of TCI's claims   under section 253. According to PROTEC and Richmond, since TCI has not applied for a franchise, it  Sb-  cannot claim to have been harmed by the Telecommunications Ordinance.WbS yO -ԍPROTEC Motion at 2627; Richmond Comments at 7.W Invoking the judicial   lconcept of standing, PROTEC asks us to dismiss TCI's Petition because there is no injury for the  S-  =Commission to redress.1@S {O -ԍId.1 Anaheim claims that the Telecommunications Ordinance poses no barrier "to   an activity that TCI is undertaking (or even proposing to undertake)," in light of TCI's assertion that it  S-  .does not intend to provide telecommunications service.;S yO4-ԍAnaheim Reply at 5.; Anaheim urges the Commission not to render   an "advisory opinion" as to the validity of a local regulation "that, at present, does not apply to [TCI's]  Sr-operations in Troy."7rb S {Ot-ԍId. at 3.7  S" -  [92.` ` In its reply, TCI responds that this matter is ripe for adjudication because "the adoption   .and enforcement of Troy's Telecommunications Ordinance violates the Communications Act and causes  S -  TCI harm by impairing and impeding its ability to proceed with vital system upgrades."> S yOf-ԍTCI Reply at 8, n. 15.> TCI further   notes that the Commission is not subject to the "case or controversy" requirement that restricts the  S -  jurisdiction of federal courts under Article III of the Constitution.1 S {O-ԍId.1 TCI also argues that this means that   the Commission does not need to wait until the Ordinance is enforced to preempt any of its offending   /provisions; rather, it may act here to "issue a declaratory order to terminate a controversy or remove  S -uncertainty." S {O-  ԍMarch 28 TCI Letter, attaching Ex Parte Presentation, "The FCC's Authority to Preempt the City of Troy's  {O -  <Ordinance is Not Limited by Traditional Judicial Concerns About 'Ripeness,'" citing 5 U.S.C.  554(e); 47 C.F.R.  {OT!-   1.2; American Postal Workers Union v. U.S. Postal Service, 891 F.2d 304, 314 (D.C. Cir. 1989) (agencies are   Kentitled to make predictive judgments of future public interest; complete factual support not required where such  {O"-judgments are based on agency's expert knowledge), rev'd on other grounds, 498 U.S. 517 (1991).  S-  \93.` ` CPI acknowledges the concerns raised with respect to the fact that TCI, the filing party,   khas indicated that it does not seek to provide telecommunications service in Troy. CPI maintains that   although this situation would be dispositive in a formal complaint proceeding under section 208 of the   Act, section 253 does not by its terms limit relief to the party filing a petition for preemption. CPI   \maintains that an action under section 253 can be initiated by any entity, or even by the Commission"),8)8)``b"   \itself. CPI fears that if the Commission were to determine that preemption can only occur where the   entity initiating the proceeding is directly harmed, such a determination would effectively preclude any  S-nonprofit organization (such as itself) or trade association from filing petitions under section 253.:S yO-ԍCPI Memo at 1 n.2.:  S`-  B]94.` ` CPI argues that the facts introduced in the record in this case provide a sufficient basis   on which the Commission can, and should, preempt the Troy ordinance as a barrier to entry under section 253(a). CPI states:   eXX` ` MCI's comments in this record clearly indicate that MCI would have   dconstructed telecommunications facilities in Troy if not for the excessive   regulation that the Troy ordinance imposes on telecommunications   )providers. The city cannot take advantage of the "savings clause" in   subsection (c) because the city's actions such as regulating    interconnection and imposition of a "most favored nation" provision   are not related to the management of its rightsofway. This evidence   Urequires the FCC to preempt the Troy ordinance, even though MCI was  S -not the party who filed the initial petition in this proceeding.6 XS yOx-ԍCPI Memo at 1.6x`  S0-  n^95.` ` In the alternative, CPI contends that the Commission should clarify the meaning of section   j253 as soon as possible, whether it preempts the Troy Ordinance or not. CPI notes that this proceeding   has become "a highprofile case, involving substantial efforts from the industry and the representatives of   \the cities. . . . Should the FCC remain silent on the section 253 issues, or worse, deny the petition to   @preempt under section 253, cities may be emboldened to impose a third layer of regulation on   telecommunications carriers. This result could deny consumers the benefits of local telephone competition  S@-  that the 1996 Telecommunications Act was intended to provide."6@S yO-ԍCPI Memo at 2.6 CPI recognizes that the Commission   cannot decide specific preemption issues prior to reviewing the facts of a case, but urges the Commission   to announce standards it will use in reviewing future preemption proceedings. CPI suggests that the   Commission express the following policy statements or standards in its decision on the Troy ordinance that will provide guidance to cities and the industry:  SP-  (XX` ` (1) Section 253(a) is a broad provision that allows the FCC to preempt   any statute that "may" have the effect of prohibiting "any" entity from providing "any" service.x`   XX` ` (2) Section 253(c) is a limited "savings clause" that allows a State or city to impose rightsofway regulations only if it meets all three conditions:x`  S8- ,XX` ` X (a) The city's regulation must be directly and specifically "related to management of the rightsofway."   XX` ` X (b) The "fair and reasonable" compensation standard does not  allow the city to charge monopoly rents for use of its rightsofway. x ""*x,8)8)``6$"Ԍ ԙXX` ` X (c) Cities must treat new entrants and incumbents in the  S-same manner at the same time.S yO@-  ,ԍCPI Memo at 24 (emphasis original). CPI elaborates on each standard further in its Memo, and also cautions that its list is not meant to be exhaustive.   S-  P _96.` ` LSGAC urges that the Commission "not be tempted to act precipitously to preempt state   0and local governments necessarily. States and local governments should recognize the urgency of  S8-  telecommunications deregulation and work under appropriate deadlines to make their decisions."Q8 S yO-ԍLSGAC Advisory Recommendation No. 1 at 2.Q   LSGAC submits that "[r]egulation, preemption, and formal legal action against another level of   government should be the last, not the first, recourse to resolve conflicting claims. It advocates that rights  ofway disputes between telecommunications companies and local governments be resolved in local   jurisdictions, and offers to explore with an appropriate delegation of industry representatives "areas of  Sp-agreement on rightsofway issues pertaining to state and local governments."9pS {O-ԍId. at 23.9  SH -   S -` ` 2. Discussion  S -  S -   `97.` ` We previously have found that certain governmental actions flatly precluded an entity or  S -  class of entities from providing a particular service in violation of section 253(a).P BS {O-  ԍSee Classic Telephone, Inc. Petition for Preemption, Declaratory Ruling and Injunctive Relief, Memorandum  {OV-  Opinion and Order, File No. CCBPol 9610, 11 FCC Rcd 13082 (1996) (Classic Telephone Decision), petition for  {O -  emergency relief, sanctions, and investigation pending (filed Dec. 6, 1996), petition for review held in abeyance, City  {O-  of Bogue, Kansas and City of Hill City, Kansas v. FCC, No. 961432 (D.C. Cir. Jan. 14, 1997)(denying petitioner's  {O-  ,motion for writ of prohibition and sua sponte holding petition in abeyance); New England Public Communications  {O~-  Council Petition for Preemption Pursuant to Section 253, Memorandum Opinion and Order, FCC 96470, File No.  {OH-  ;CCBPol 9611 (rel. Dec. 10, 1996) (New England Decision), recon. denied, Memorandum Opinion and Order, FCC  {O-97143 (rel. April 18, 1997) ("New England Reconsideration").  We also found that   zthe governmental actions in those cases did not fall within the powers reserved to states and localities  SZ-  under sections 253(b) and/or 253(c).ZZ S {OT-  ԍSee New England Decision at paras. 1925; Classic Telephone Decision at paras. 2942. In the case of Classic   Telephone, however, we did not reach the cities' substantive claims that their actions fell within the reservation of   hauthority under section 253(c) on the ground that, on the record before us, the cities had not established an adequate   premise to invoke the provisions of section 253(c). Rather, the cities had merely claimed that section 253(c)  {Ov -permitted their franchise decisions, without providing any support for this contention. Id. at para. 40. In the Classic Telephone Decision, we held that, under explicit   Mdelegated authority from the state, two cities' denials of a franchise to a prospective provider of local   exchange service prohibited the ability of that entity, Classic Telephone Co., to provide local exchange   /service in those cities. Absent a franchise from the cities, Classic Telephone Co. lacked the requisite  S-  authority to enter the market and thus was legally barred from providing service.YS {Oj%-ԍClassic Telephone Decision at paras.1728.Y Similarly, in the New  S-  England Decision, we preempted a state regulation that permitted only ILECs and certified LECs to"+,8)8)``"   provide payphone services in the state of Connecticut. The regulation legally barred a class of entities  S-ԩ nonLECs from providing payphone services in the state.SS {O@-ԍNew England Decision at paras. 1718.S  S-  Q a98.` ` In addition to outright prohibitions of entry, Section 253(a) also forbids state and local   governments from enforcing any statute, regulation, or other legal requirement that has the effect of   Mprohibiting any entity's ability to provide any interstate or intrastate telecommunications service. In   evaluating whether a state or local provision has the impermissible effect of prohibiting an entity's ability   to provide any telecommunications service, we consider whether it "materially inhibits or limits the ability   of any competitor or potential competitor to compete in a fair and balanced legal and regulatory  S-environment."ZZS yO -  JԍCalifornia Payphone Association Petition for Preemption of Ordinance No. 576 NS of the City of Huntington   KPark, California Pursuant to Section 253(d) of the Communications Act of 1934, CCBPol 9626, Memorandum  {O" -Opinion and Order, FCC 97251 (released July 17, 1997) at para. 31 ("Huntington Park Decision").  SH -   b99.` ` This case does not involve the denial of a franchise application or some other express   kprohibition on the provision of telecommunication service. Rather, TCI challenges the validity of the   Telecommunications Ordinance both on its face and as applied by the City to new entrants. Yet, TCI  S -  asserts that it "has no present intention" to provide telecommunications services in the City.B |S {O-ԍSee TCI Reply at 11.B TCI does   Lnot even explicitly contend that it ever contemplated providing any telecommunications service in Troy.   On the basis of TCI's representations, the record does not demonstrate that the Troy Telecommunications   Ordinance has had the impermissible effect of prohibiting TCI's ability to provide telecommunications   {service in the City of Troy. Given the facts of this case we will not issue what would be a purely  S-  advisory opinion.ES {O-ԍSee Anaheim Reply at 5.E We therefore decline, in our discretion, to decide on the validity of specific sections  S-of the Troy Telecommunications Ordinance under section 253.S yO -  ԍIn addition, we do not address the validity of the provisions of the Ordinance because an open question exists   under Michigan law regarding whether there has been a delegation of authority to Troy sufficient to support its  {O-  adoption of the Ordinance. C.f. Classic Telephone Decision, 11 FCC Rcd at 13084, para. 4 (noting that the  {Oz-  delegation issue had been affirmed d under Kansas law by the Kansas Supreme Court in United Tel. of Kansas v.  {OD-City of Hill City, 258 Kan. 208, 899 P.2d 489 (Kan. 1995)).  S-  Qc100.` ` We do not agree with those commenters arguing that it is strictly necessary for a party   .challenging the validity of a Telecommunications Ordinance such as Troy's to first have applied for, and   have been denied, a franchise before filing a petition with this Commission. Such a party would clearly   have a timely claim under section 253, as may other potential claimants regarding the validity under  S-  section 253 of the Troy Telecommunications Ordinance.V S yO$-  ԍThus, in response to the concerns raised by CPI, we make clear that nonprofit entities or trade associations are not precluded from asserting a properly supported claim under section 253(a). We do not issue a declaratory ruling or   advisory opinion resolving TCI's challenges to the particular provisions of the Troy Ordinance because   our resolution of TCI's claims under section 621(b)(3)(B) resolves the actual controversy between the   =parties. Under our decision, the City may not place a condition related to the cable operator's provision"x,,8)8)``"   of telecommunications services in a cable permit issued pursuant to Title VI cable franchising authority.   In light of this determination, and because TCI has stated that it has no present intention of entering the   >telecommunications markets in the City of Troy, the Troy Telecommunications Ordinance no longer   directly affects the operations of TCI within the City. Our decision under Title VI severs any link between TCI's operations in the City and the impact of the Telecommunications Ordinance.  S-  d101.` ` Nor do the comments and informal filings seeking preemption of the Troy   [Telecommunications Ordinance by MCI, on behalf of MCI Metro, and Worldcom, on behalf of MFSD,   Qprovide an adequate factual basis as currently in the record for us to preempt the Troy   Telecommunications Ordinance under section 253(d). Section 253(d) gives the Commission an important   and powerful tool to promote competition in telecommunications markets it permits us to preempt   the enforcement of legal requirements to the extent necessary to correct violations or inconsistencies with   section 253. With respect to a particular ordinance or other legal requirement, it is up to those seeking   preemption to demonstrate to the Commission that the challenged ordinance or legal requirement prohibits   mor 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   such as the Troy Telecommunications Ordinance 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). We will exercise our authority only upon such fully developed factual   records. This case does not contain such a record, and we exercise our discretion not to address any of   the challenges to the validity under section 253 of the Troy Telecommunications Ordinance in this proceeding.  Sh-  Ae102.` ` We caution that our resolution of the issues under Title VI should not be construed in any   \manner as prejudging how the Commission would rule on a wellfounded section 253 challenge to the   /Troy Telecommunications Ordinance itself, or to any similar ordinance. Although we decline, in our   mdiscretion, to issue a declaratory ruling on the validity of the contested provisions of the Troy   \Telecommunications Ordinance, we take this opportunity to address generally some issues related to   section 253. Section 253 is a critical component of Congress' procompetitive deregulatory national policy  Sx-  Mframework that it put into place by enacting the 1996 Act.IxS {O-ԍSee Conference Report at 1.I As we have noted, "Congress intended   primarily for competitive markets to determine which entrants shall provide telecommunications services   demanded by consumers, and by preempting under section 253 sought to ensure that State and local  S-  governments implement the 1996 Act in a manner consistent with these goals."^ZS {O-ԍClassic Telephone Decision, 11 FCC Rcd at 13095.^ We are troubled by   several aspects of the Troy Ordinance in the context of the effort to open local telecommunications   markets to competition. While Congress mandated a role for the Commission and the states in the   regulation of telecommunications carriers, we are concerned that Troy and other local governments may   >be creating an unnecessary "third tier" of regulation that extends far beyond the statutorily protected  S8-interests in managing the public rightsofway.H8S {O$-ԍSee 47 U.S.C.  253(c).H  S -  f103.` ` We recognize that section 253(c) preserves the authority of state and local governments   to manage public rightsofway. Local governments must be allowed to perform the range of vital tasks   -necessary to preserve the physical integrity of streets and highways, to control the orderly flow of vehicles""-~,8)8)``6$"   and pedestrians, to manage gas, water, cable (both electric and cable television), and telephone facilities   that crisscross the streets and public rightsofway. We have previously described the types of activities  S-  that fall within the sphere of appropriate rightsofway management in both the Classic Telephone  S-  ]Decision and the OVS Orders,iS {O-  ԍSee Classic Telephone Decision, 11 FCC Rcd at 13103, citing 141 Cong. Rec. S8172 (daily ed. June 12, 1995)   (statement of Sen. Feinstein, quoting letter from the Office of the City Attorney, City and County of San Francisco);   Implementation of Section 302 of the Telecommunications Act of 1996; Open Video Systems, CS Docket No. 9646,  {OL-  JFCC 96312, Second Report and Order and First Order on Reconsideration, 11 FCC Rcd 18223, 18330 (1996) (OVS  {O-  Second Report); Third Report and Order and Second Order on Reconsideration (OVS Third Report and  {O-  Reconsideration), CS Docket 9646, FCC 96334 (released Aug. 8, 1997), (referred to collectively as "OVS Orders"),  {O -  Jappeal pending, sub nom. City of Dallas, Texas, et al., v. FCC, United States Court of Appeals for the Fifth Circuit,   Nos. 9660502 (and consolidated cases); Fourth Report and Order, CS Docket No. 9646, FCC 97130 (released April   ;15, 1997)(modifying certain procedural rules relating to the filing and disposition of OVS certification applications,  {O -FCC Form 1275), reconsideration pending.i and that analysis of what constitutes appropriate rightsofway  Sd-  management continues to set the parameters of local authority.  These matters include coordination of   construction schedules, determination of insurance, bonding and indemnity requirements, establishment   and enforcement of building codes, and keeping track of the various systems using the rightsofway to prevent interference between them.   S-  g104.` ` Of similar importance is the authority reserved to the states under section 253(b) to   /preserve and advance universal service, protect the public safety and ensure the continued quality of   telecommunications services, and safeguard the rights of consumers, provided such requirements are   lnecessary, competitively neutral, and consistent with the Communications Act's universal service  S -  yrequirements. As we noted in the Huntington Park Decision, section 253(b) ensures that States continue   to have authority to require telecommunications service providers to make emergency services available  S -to the public and comply with local consumer protection laws._  l S {O-ԍHuntington Park Decision, FCC 97251, at para 35._  S^-  2h105.` ` Our concern is that some localities appear to be reaching beyond traditional rightsofway   matters and seeking to impose a redundant "third tier" of telecommunications regulation which aspires   to govern the relationships among telecommunications providers, or the rates, terms and conditions under   which telecommunication service is offered to the public. For example, the Troy Telecommunications   Ordinance contains provisions that, among other things, require franchisees to interconnect with other   telecommunications systems in the City for the purpose of facilitating universal service, provide for   regulation of the fees charged for interconnection, and mandate "most favored nation" treatment for the   MCity under which a franchisee providing a "new service, facility, equipment, fee or grant to any other  S-  community . . . within the State of Michigan" shall provide the same to the City of Troy.w  S {O!-ԍSee Appendix B, Chapter 62 Telecommunications Ordinance, Section 12(1).w Such   LOrdinance provisions will be difficult to justify under section 253(c) on the grounds that they are within   the scope of permissible local rightsofway management authority or other traditional municipal concerns   ksuch as police, fire, building code enforcement or other public safety concerns. In addition, several of   these provisions seem redundant of comprehensive federal and state regulatory programs governing inter  carrier interconnection and universal service obligations and support. Given the likelihood of such local   requirements impeding competition and imposing unnecessary delays on new entrants, attempts to impose a redundant "third tier" of regulation at the local level will be met with close scrutiny by the Commission.". ,8)8)``M"Ԍ S-  Pԙi106.` ` Each local government may believe it is simply protecting the interests of its constituents.   KThe telecommunications interests of constituents, however, are not only local. They are statewide, national   and international as well. We believe that Congress' recognition of this fact was the genesis of its grant   of preemption authority to this Commission. In addition, section 253(b)'s reservation to the States of   Zauthority over issues such as universal service, safety, and consumer protection appears to reflect Congress'   view that an array of local telecommunications regulations that vary from community to community is   zlikely to discourage or delay the development of telecommunications competition. As a result, where   relations among telecommunications providers would be affected, or where the rates, terms, and conditions   under which telecommunications service is offered to the public are dictated by an local ordinance, is of   considerable concern to this Commission. This concern is exacerbated by the potential for multiple,   inconsistent obligations imposed on a communitybycommunity basis. Such a patchwork quilt of   differing local regulations may well discourage regional or national strategies by telecommunications providers, and thus adversely affect the economics of their competitive strategies.  S -  j107.` ` An especially troubling issue alluded to in the record concerns the discriminatory   application of telecommunications regulation, whether at the state or local level. Arguments are advanced   by localities that the incumbent providers occupy a favored position visavis the state and local   governments because of the way the provision of telephone service and its regulation have evolved over   the last century. While this Commission cannot speak to the intricacies of state law on these matters,   =Congress sought to strike a balance in the 1996 Act. Obligations were imposed on incumbent carriers to  S-  jcreate conditions essential to the development of competition.O \S {OH-  KԍSee, e.g., 47 U.S.C.  251(b) & (c). Section 251(b) imposes certain interconnection obligations on all local  {O-  exchange carriers, while section 251(c) imposes additional interconnection obligations upon incumbent local exchange carriers.O At the same time, Congress recognized   .the need for State and local governments to continue respond to truly local issues. Section 253 plays an important role in this regime.  S@-   k108.` ` One clear message from section 253 is that when a local government chooses to exercise   /its authority to manage the public rightsofway or to require fair and reasonable compensation from  S-  telecommunications providers, it must do so on a competitively neutral and nondiscriminatory basis.! S {O|-  ԍSee 47 U.S.C.  253(c). We are cognizant of the arguments of the City and the other municipal commenters   that the Commission lacks jurisdiction under section 253(d) to preempt actions taken by the City pursuant to section  {O-  253(c). See, e.g., City Comments at 2028; PROTEC Comments at 7; TMIC Communities Comments at 15. Our   observations here do not address the merits of that jurisdictional argument; rather they are confined to our view of   ;the message Congress intended to send through the express terms of section 253(c). No one disputes the possibility   that a municipal ordinance would be subject to preemption if it were found to violate the proscription contained in   ,section 253(a), and not fall within the express terms of the reservation of authority in section 253(c). The dispute   disclosed in this record is over the question of who is authorized to make this determination this Commission or  {O!-  the local federal district courts. See text, supra at section V.A.6. By our decision here, we leave that important issue for another day.!   kLocal requirements imposed only on the operations of new entrants and not on existing operations of incumbents are quite likely to be neither competitively neutral nor nondiscriminatory.   SP-  Q l109.` ` Section 253(b) acknowledges the authority of states to prescribe competitively neutral   Lregulations of statewide applicability necessary to preserve and to advance universal service, protect the   public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the"/ ,8)8)``>"   rights of consumers. Competition is best served where states wield their powers carefully, avoiding, to   the greatest extent possible, an intricate intrastate patchwork of telecommunications regulation at the local   Nlevel that will frustrate the prospects for full and effective competition. States, in deciding which   telecommunications regulatory powers to delegate to their political subdivisions and which regulatory   Kpowers to retain, should strive to avoid redundant layers of regulation, in keeping with the procompetitive,   deregulatory intent of Congress in enacting the 1996 Act. Similarly, governments that have historically   refrained from engaging in substantive telecommunications regulation should not view new entrants as   being more susceptible to regulation than the incumbents. These efforts would go a long way in hastening   >the arrival of local telephone competition of many varieties, and in particular, of facilitiesbased local competition.  SH -   m110.` ` Finally, we note that interpreting the 1996 Act is not an easy task. It requires the   combined efforts of state and local governments, along with those of the Commission. It is a duty that   is shared by all levels of government, shaped by the dictates of section 253. In applying this statutory   Lprovision, we must remain mindful of the fundamental purpose of the Act: to promote competition and   reduce regulation in order to secure lower prices and higher quality services for American   telecommunications consumers and encourage the rapid deployment of new telecommunications technologies. "00 ,8)8)``"  S- `VI. MOTIONS TO DISMISS OR DENY  S-` `  S-  n111.` ` Two joint commenters filed motions to dismiss or deny the Petition on the grounds that   .the Commission lacks jurisdiction to determine the validity of the Telecommunications` Ordinance under  S`-section 253(c). `S {O-  xԍSee PROTEC, et al., Joint Motion to Dismiss or Deny; Minnesota Communities Joint Reply Comments and Motion to Dismiss or Deny. In view of our resolution of this matter, we dismiss the motions as moot.  S- VII.ORDERING CLAUSES  S-  o112.` ` IT IS ORDERED that the Petition filed by TCI Cablevision of Oakland County, Inc., is granted in part, and denied in part, as provided above.  SH -p113.` ` IT IS FURTHER ORDERED that the Motions to Dismiss or Deny are dismissed as moot. ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,William F. Caton ` `  hh,Acting Secretary "1" ,8)8)``"  X-   2 @-  -A -  @ #Xj\  P6G; DXP#AAPPENDIX A ă  X-A List of Commenters in CSR4790 ă  Xv-  Petition TCI Cablevision of Oakland, Inc. ("TCI")  X - Responses  X - Adelphia Communications Corp. ("Adelphia") City and County of Denver ("Denver") City of Farmington Hills, Oakland County, Michigan ("Farmington Hills") City of Richmond, Virginia, City of New York, New York, National Association of XTelecommunications Officers and Advisors, American Public Works Association ("Richmond")(# City of Troy, Michigan ("City") Comcast Communications, Inc., Jones Intercable, Marcus Cable, Scripps Howard Cable, XInterMedia Partners, James Cable, Multimedia Cablevision, Inc., Classic Communications, Inc., Cable Television Association of Georgia, Florida Cable Telecommunications Association, New Jersey Cable Telecommunications Association, Ohio Cable Telecommunications Association, South Carolina Cable Television Association, Tennessee Cable Telecommunications Association ("Comcast")(# Hyperion Telecommunications, Inc. ("Hyperion") MCI Telecommunications Corporation ("MCI") Michigan Cable Telecommunications Association ("MCTA") Municipal Administrative Services, Inc. ("MAS") National Cable Television Association, Inc. ("NCTA") Texas, Michigan, Illinois, Colorado Communities ("TMIC Communities")  X7- Joint Motion to Dismiss or Deny Michigan Coalition to Protect Public Rights of Way from Telecommunications, XEncroachments, Michigan Municipal League, Michigan Townships Association, United States Conference of Mayors, National League of Cities, National Association of Counties, City of Los Angeles, California, City of Chicago, Illinois, Michigan Communities ("PROTEC")   X#- Replies  Xh$- Anaheim, California Public Utilities Department, City of Long Beach, California, City of Manassas, Virginia ("Anaheim et al.")  X:&- City of Richmond, Virginia, City of New York, New York, National Association of XTelecommunications Officers and Advisors, American Public Works Association ("Richmond et al.") (#" (2 ,8)8)``&"ԌCity of Troy, Michigan ("City") Comcast Communications, Inc., Jones Intercable, Marcus Cable, Scripps Howard Cable, XMultimedia Cablevision, Inc., Classic Communications, Inc., Cable Television Association of Georgia, Florida Cable Telecommunications Association, New Jersey Cable Telecommunications Association, Ohio Cable Telecommunications Association, South Carolina Cable Television Association, Tennessee Cable Telecommunications Association ("Comcast")(# Cox Communications, Inc. ("Cox") Michigan Cable Television Association ("MCTA") Michigan Coalition to Protect Public Rights of Way from Telecommunications XEncroachments, Michigan Municipal League, Michigan Townships Association, United States Conference of Mayors, National League of Cities, National Association of Counties, City of Los Angeles, California, City of Chicago, Illinois, and Michigan Communities ("PROTEC")(# National Cable Television Association ("NCTA") North Central Suburban Cable Commission, North Suburban Cable Communications XCommission, Quad Cities Cable Communications Commission, Burnsville/Eagan Cable Communications Commission, Sherburne/Wright Counties Cable Communications Commission, South Washington County Cable Commission, City of Columbia Heights, Minnesota Association of Community Telecommunications Advisors ("Minnesota Authorities")*(# TCI Cablevision of Oakland, Inc. ("TCI") Texas, Michigan, Illinois, Colorado Communities ("TMIC Communities") * Joint Reply Comments include Motion to Dismiss or Deny "3 ,8)8)``"  X-@A -  B -  @  ?L# &a\  P6G;RY&P# APPENDIX B ă  S-#&a\  P6G;RY&P#  S-(  Chapter 62 Telecommunications Ordinance Troy, MI (121895) l  SI- lU1.XLegislative Findings The City of Troy has the authority to grant Licenses and Franchise for  Telecommunications Systems offering public or private line video, data or voice services using  or crossing a street, highway, rightsofway or easements in the City. This Ordinance is  @intended to minimize the disruption to the streets, highways, rightsofway and easements and  to require those who seek to construct a Telecommunication System to cooperate in the  construction and the restoration of streets, highways, rightsofway and easements of both  overhead and underground lines. The City finds that it has too many unsightly overhead lines  Aand poles in some sections of the City. They are proliferating, adversely affecting the public  osafety, detracting from property values and reaching maximum safe capacity of poles and  underground spaces. The City further finds that public health, safety and welfare is better  served by requiring installation of new utility lines and wires in underground conduit wherever practical.(#  SA- _2.XPurpose The purpose of this ordinance is to regulate the granting of Licenses and Franchises of Telecommunication Systems other than cable television systems.(#  S- 3.XDefinitions Unless the context specifically indicates otherwise, the meaning of the terms used in this Ordinance shall be as follows:(#  SQ-(1)` ` City means the City of Troy, Michigan.(#`  S-  (2)` ` Telecommunication Services include regulated and unregulated services offering to customers the transmission of 2way interactive communication and associated usage.(#`  S-  Q(3)` ` Telecommunication System is a system used or to be used to provide Telecommunication   Service including public or private line video, data or voice service to another person,   using or crossing a street, highway, rightsofway or easements in the City other than   cable television service offered pursuant to a Franchise granted under Chapter 63 of the City Code, as amended.(#`  S-  (4)` ` Franchise is a nonexclusive, limited authorization to transact local business for the   %construction, maintenance and operation of a Telecommunication System in the City awarded by ordinance in the form of contract and accepted by the Grantee.(#`  S -  (5)` ` Grantee is any holder of a Telecommunication System License or Franchise granted pursuant of this ordinance.(#`  S#-  Q(6)` ` Gross Revenue shall mean all receipts collected by the Grantee for all telecommunication   $and related operations and services within the corporate limits of the City as well as any   other revenue arising from operation or possession of this Franchise regardless of where billed. "Gross revenue" shall also include:(#`  S'-` ` (a) Access charges paid to the Grantee by other carriers.(# "'4 ,8)8)``&"Ԍ S-ԙ` ` (b) The leases or resales of lines or circuit paths to third parties.(#  S-` ` (c) All Telecommunications Service revenues charged on a flat rate basis.(#  S`-` ` (d) All Telecommunications Services charged on a usage sensitive or mileage basis.(#  S-` ` (e) All revenues from local services.(#  S-` ` (f) All revenues from authorize rental of conduit space.(#  Sp- ` ` (g) All revenues from authorized rentals of any portion of Grantee's Systems, including plant, facilities, or capacity leased to others.(#  S -  ` ` (h) All other revenues collected from Grantee's telecommunication business pursued   within the City, excluding third party billing arrangements not related to Grantee's telecommunication business.(#  SX- ` ` (i) Recoveries of bad debts previously written off and revenues from the sale or  assignment of bad debts. Unrecovered bad debts charged off after diligent,  unsuccessful efforts to collect are excludible from Gross revenues from   telecommunication business. "Gross revenue" does not include revenue  uncollected from customers (bad debts) and sale or lease of customer service   vequipment, taxes, interconnection fees paid by Grantee to other  telecommunications carriers, or other similar types of passthrough charges for  which Grantee merely acts as a collecting agent and derives no economic benefit or "markup".(#  S-  R(7)` ` License is a written agreement granted by resolution for a Telecommunication System   Rto use the rightsofway easements, highways, streets, alleys, and other places in the   City for wires, poles, pipes, conduits or other public utility facilities, but not to transact local business with another person.(#`  S-  (8)` ` Person is any individual, firm, partnership, association, corporation, company or organization.(#`  S-  (9)` ` Subscriber is any Person who contracts with the Grantee for, or is in any manner provided with, Telecommunication Services.(#`  S -4.XCity Approval Required(#  S!-  a(1)` ` No Person shall install, construct, maintain or otherwise operate a Telecommunication   RSystem in the City without a telecommunication License and no person shall transact local business on a Telecommunication System in the City without a Franchise.(#`   S %-  (2)` ` This ordinance shall apply to any existing cable television system operating pursuant to   a Franchise awarded by the City which the Franchisee uses to transact local business   operating a Telecommunication System. However, this ordinance exempts any existing   `institutional network operated by TCI of Oakland County, Inc., until the original TCI term"'5 ,8)8)``&"   of the Franchise expires, except to the extent that TCI or any other entity uses such network for commercial noncable services.(#`  S-  B(3)` ` Before offering or providing any Telecommunication Service, the Grantee shall obtain any   Dand all regulatory approvals, permits, authorizations or licenses for the offering of   Cprovision of such Telecommunication Services from the appropriate federal, state and   local authorities, if required, and shall submit to the City, upon the written request of the City, evidence of all such approvals, permits, authorizations or licenses.(#`  S-  (4)` ` Nothing in this ordinance shall be construed as a waiver of any codes, ordinances or   regulations of the City or the City's right to require Grantee or persons utilizing the   $Telecommunication Service to secure appropriate permits or authorizations for such use.   No fee or charge may be imposed upon a Grantee for any such permit or authorization,   other than the standard fees or charges generally applicable to all persons for such   ppermits or authorizations. Such standard fee or charge shall not be offset against the   Sannual License fee or Franchise fee a Grantee is required to pay to the City under section 9 of this ordinance.(#`  S0-(5)` ` Issuance  S- ` ` (1) The City may grant one or more Licenses and Franchises for a Telecommunication System in the City subject to this Ordinance.(#  Sh- ` ` (2) The City specifically reserves the right to grant, at any time, such additional  Licenses and Franchises for a Telecommunication System as it deems  appropriate. Additional Licenses and Franchises shall not be deemed to modify, revoke, terminate or damage any rights previously granted to any other Grantee.(#  S- ` ` (3) In the event a License application is filed proposing to install facilities within a  'Franchise territory which overlaps in whole or in part an existing area, a copy  shall be served by the applicant by certified mail upon the current Grantee(s).  Applicant shall notify Grantee of existing overlapping territory. Proof that a  copy of the application has been served upon the current Grantee(s) shall be  provided to the City. No application for overlapping territory shall be processed   until proof of service has been furnished to the City. It is not the intent of this Ordinance to either require or prohibit overbuilding.(#  S8- r` ` (4) Applications for a new, renewed or amended Franchises shall be made in such  form as the City may prescribe by resolution. New, renewed or amended  cFranchises which expand the scope of service shall be accompanied by a nonrefundable $5,000 partial repayment of the Franchise formation fee.(#  Sp#-86.Duration  _XAny License or Franchise and the rights, privileges, authority, and responsibilities established  "shall take effect and be in force from and after final acceptance. It shall continue in force and  effect 8for a period established by the License or Franchise not exceeding fifteen (15) years,  provided within thirty (30) days after the date of the City's final acceptance of a License of"'6 ,8)8)``&"  Franchise, the Grantee files with the City Clerk its unconditional acceptance of the License or  "Franchise, all required letters of credit, construction surety and insurance certificates, and pays  mto the City Clerk all reasonable costs actually incurred by the City in preparing, considering and  1awarding the License of Franchise, including legal, engineering, technical, publication and other  |expenses, to wit: the franchise, formation fee described in Section 9. If a Grantee fails to timely  comply with this section, it shall acquire no rights, privileges, or authority whatsoever from the  City. The City Manager may extend the term of a License or Franchise for a period not exceeding one (1) year by written agreement with a Grantee on reasonable and necessary terms.(#  S- 7.XPenalty Violation of any of the terms of this Chapter shall be a misdemeanor punishable by a  ^fine of up to Five Hundred ($500.00) Dollars or ninety (90) days in jail or both, not excluding (in  SH -addition to) civil damages.(#  S - 28.XRate Regulation The rates and charges of a Grantee subject to Franchise for the provision of  BTelecommunication Services and for related services (such as equipment rental, deposits,  Adisconnect fees, and late payment fees) shall be subject to regulation by the City to the full  @extent authorized by federal or state law. The City may from time to time elect not to regulate  "Grantee rates and charges, and any such election shall not waive the City's rights to regulate in  Pthe future. Changes to rates and charges shall only be made after notice, hearing and other requirements provided by law.(#  S-89.Franchise Formation and Annual Fee Payments by Grantee  Sh-  %(1)` ` For the reason that the streets, highways and rightsofway or easements to be used   by Grantee in the operation of its Telecommunication System within the boundaries of   the 8City are valuable public properties, some of which are acquired and maintained by   pthe City at great expense to its taxpayers, and that the grant to Grantee of the use of   said streets, highways, rightsofway or easements is a valuable property right without   which Grantee would be required to invest substantial capital in rightofway costs and acquisitions, a Grantee shall pay:(#`  S(- ` ` (a) A Franchise formation fee (i) for Franchises $10,000.00; or, (ii) for Licenses of $2,000.00; and(#  S-  ` ` (b) An annual fee equal to lesser (i) 5% of it gross revenue, or (ii) an amount determined as set forth in subsection (2).(#  S8-  `(2)` ` The fee to be charged to a Grantee under clause (ii) of subsection 1(b) shall be Grantee's allocated share of the following amounts:(#`   ` ` The estimated actual cost (excluding acquisition costs incurred by the City as a   3consequence of permitting Grantee to occupy a portion of the public rightsofways and in mediating disputes between the citizens of the City and Grantee.(#`    ` ` The estimated actual costs referred to in subsection 2(b) shall be calculated every three   years by the City Finance Director and shall be subject to approval by the City Council   following a public hearing. The costs referred to in subsection (b) shall be allocated   among all of the Grantees based on their per linear foot (not number of lines or"'7 ,8)8)``&"   capacity) of the Telecommunication Systems located upon over, across or under the roads, bridges, streets, rightsofway and easements in the City.(#` XX` ` The annual fee required by subsection (1) may be determined using:(#`  S8-` ` (a) A percentage of gross revenues not exceeding five (5%) per cent; or(# ` ` ` `  S- ` ` (b) $0.40 per linear foot of underground and $0.25 per linear foot of overhead lines,  6wires, cables, poles, conduits and like structures, erections and fixtures upon,  sover, across, or under the roads, bridges, streets, public rightsofway and easements in the City.(#  S -`(3)` ` Miscellaneous fee considerations:  S -` ` (a) Grantees sharing the same conduit shall each pay a full fee. (# `  SX- ` ` (b) Grantees sending signals over another Grantee's existing line or a line that is  7leased to another and upon which fees are already paid are not subject to additional fees.(#  S- ` ` (c) Grantees using the same line to provide cable television service and to provide  Telecommunications Services shall be subject to both a cable television franchise fee and all fees set by this Chapter.(#  S-  a(4)` ` Grantee shall pay to the City for each quarter an amount equal to one fourth (1/4) of   3the minimum annual fee, calculated on the basis of a twelvemonth compensation year.   Grantee shall forward by check or money order an amount equal to the quarterly   payment by noon of the twentyfifth day of the calendar month immediately following   Cthe close of the calendar quarter for which the payment is calculated. Any necessary prorations shall be made.(#`  S-  (5)` ` In the event any quarterly payment is made after noon on the date due, Grantee shall   pay a late payment penalty of the greater of: (i) $100 or (ii) simple interest at ten   percent (10%) annual percentage rate of the total amount past due. Acceptance of   money under this Section shall not in any way limit or inhabit any of the privileges or rights of the City, whether under this Franchise ordinance or otherwise.(#`  S -  (6)` ` In the event the 5% of gross revenue option is utilized, Grantee shall file annually with   othe City Manager no later than ninety (90) days after the end of the Grantee's fiscal year,   pa statement of revenues (for that year) attributable to the operations of the Grantee's   DTelecommunication System within the City. Said statement shall be prepared in   4compliance with general accepted accounting practices and auditing standards. This   statement of revenues shall present a detailed breakdown of Gross Revenues and   uncollectible accounts for the year. This statement of revenues shall be certified by an officer of the Grantee whose statement shall accompany the statement of revenues.(#` "&8 ,8)8)``%"Ԍ  ` ` Any transactions which have the effect of circumventing payment of required Franchise   4fees and/or evasion of payment of Franchise fees by noncollection or nonreporting   Rof Gross Revenues, bartering, or any other means which evade the actual collection of revenues for business pursued by Grantee are prohibited.(#`  S8-  (7)` ` License and Franchise fees shall be in addition to any other tax, charge, fee or payment due the City by a Grantee.(#`  S-10.New Developments  Sp-  (1)` ` Grantee may, from time to time, implement new services and developments allowed by   Rlaw. A Grantee may not provide cable television services as defined by the U.S. Cable Communication Policy Act of 1984.(#`  S -  5(2)` ` In addition to those matters required in a Franchise, Grantees make the following express acknowledgements:(#`  SX- c` ` (a) That the City has the right to make reasonable amendments to this ordinance  which do not materially increase any financial, economic or performance burden  to the detriment of a Grantee during the term of other License or Franchise  Tupon ninety (90) days notice to the Grantee, or without notice with respect to  an emergency amendment. It further recognizes and agrees that the City shall   Tin no way be bound to renew or extend the License or Franchise at the end of   Dany License or Franchise term and that it may be deemed a mere licensee at the expiration thereof.(#  S- T` ` (b) That a Grantee shall have no recourse whatsoever against the City for any loss,   cost, expense or damage arising out of the failure of City to have the authority   to grant all or any part of a License or Franchise. A Grantee expressly  'acknowledges that on accepting a License or Franchise it did so relying on its own investigation and understanding of the power and authority of the City.(#  S- ` ` (c) By acceptance of a License or Franchise a Grantee acknowledges that it has not  been induced to enter into a License or Franchise by any understanding or  Epromise or other statement, whether verbal or written, by or on behalf of City   Tor by any other third person concerning any term or condition of a License or Franchise not expressed in this Ordinance.(#  S - r` ` (d) Grantee further acknowledges by the acceptance of a License or Franchise that   Eit has carefully read its terms and conditions, and does accept all of the risks of the meaning of such terms and conditions. (#  Sp#-  (3)` ` However, if any such state or federal law or regulation shall require a Grantee to   4perform any service, or shall allow a Grantee to perform any service, or shall prohibit   a Grantee from performing any service, in conflict with the terms of the License or   Franchise or of any law or regulation of the City, then as soon as possible, a Grantee   shall notify the City of the point of conflict believed to exist between such regulation or   (law and the laws and regulations of the City or the License and Franchise. "'9 ,8)8)``&"   Notwithstanding such conflict, the grantee shall comply with the terms of the License or Franchise unless released by the City.(#`  S-  (4)` ` If any provision of a License or Franchise is held by any court of competent jurisdiction   Sto be invalid as conflicting with any federal or state law, rule or regulation now or   Shereafter in effect, or is held by such court to be modified in any way in order to   5conform to the requirements of any law, rule or regulation, said provision may be   pconsidered a separate, distinct and independent part of the License or Franchise, and   such holding shall not affect the validity and enforceability of all other provisions if the   bCity so determines. In the event that such law, rule or regulation is subsequently   repealed, rescinded, amended or otherwise changed, so that the provision which had   been held invalid or modified is no longer in conflict with the law, rules or regulations said provision shall return to full force and effect and shall be binding on the parties.(#`   S -  a(5)` ` If the parties determine that a material provision of a License or Franchise is affected   %by action of a court or of the state or federal Government, the parties shall have the   right to modify any of the provisions to such reasonable extent as may be necessary to carry out the full intent and purpose of the License and Franchise.(#`  S-11.Liability  S-  (1)` ` A Grantee shall indemnify and hold harmless the City as set forth in the License or   Franchise at all times during the life of a License or Franchise and will pay all damages   and penalties which the City may be required to pay as a result of granting a License or Franchise to Grantee.(#`   S-  a(2)` ` A Grantee shall at all times during the life of a License or Franchise carry and require   its contractors and subcontractors to carry out public liability, property damage,   worker's disability, and vehicle insurance in such form and amount as shall be   determined by the City as set forth in the License or Franchise. All required insurance   coverage shall provide for thirty (30) day notice to the City in the event of material   aalteration or cancellation of such coverage prior to the effective date of such material   alteration or cancellation. Failure of the Grantee to provide appropriate insurance   certificates to the City within sixty (60) days after the execution of a License or Franchise shall render the License or Franchise null and void.(#`  S`-12.General Capability  S -  CX(1)X` ` Further, if the Grantee of a Franchise, provides a new service, facility, equipment, fee   or grant to any other community which it serves within the State of Michigan, the same   shall be provided in or to the City. City shall waive this requirement in a Franchise upon   San affirmative demonstration that such service would be undesirable, impractical,   infeasible or uneconomical in the City due to population, density or other relevant factors.(#`  S%-  a(2)` ` The Grantee of Franchise shall allow the City to access the Telecommunication System   $from any city buildings, police stations, fire stations, other public buildings, each school"&: ,8)8)``%"   licensed by the State of Michigan, and each pubic library within 500 feet of the Telecommunication System on fees, terms and conditions set forth in the Franchise.(#`  S-  (3)` ` Only in the event of a state or national emergency or other urgent community need, a   BGrantee of a franchise shall, upon request of City, make available its facilities to the City for the duration of the emergency.(#`  S-  (4)` ` To the extent feasible, and subject to reasonable availability and agreement among the   afranchises concerning maintenance, access and security, a Telecommunication System   shall be interconnected with other Telecommunication Systems within the City for the   opurpose of facilitating the provision of universal service in the City. Interconnecting may   be done by direct cable or fiber optical connection, microwave link, satellite, or other   appropriate method. The cost of such interconnection shall be equally shared by each   Grantee. A Grantee shall not impose any discriminatory or punitive interconnection fee   6on a nonSubscriber. A Grantee shall not refuse or delay access service or be   unreasonable in connecting another Grantee to the Telecommunication System or refuse or delay access service by any person to another Telecommunication System.(#`  S0-13.Conditions of Street Occupancy  XA Grantee shall not commence construction upon, over, across, or under the roads, bridges,  streets, rightsofway or easements in the City without first obtaining a construction permit as  required under Chapter 33 of the City Code, as amended, which shall apply to the construction of a Telecommunication System.(#  S-14.Technical and Construction Standards  S-  pX(1)X` ` Each Grantee shall construct, install and maintain its Telecommunication System in a   manner consistent and in compliance with all applicable laws, ordinances, construction   standards, governmental requirements, and technical standards established by the Federal Communications Commission or state agency.(#`  S-  C(2)` ` In any event, the Telecommunication System shall not endanger or interfere with the   safety of persons or property within the City or other areas where the Grantee may have equipment located.(#`  S`-  (3)` ` All working facilities, conditions, and procedures, used or occurring during construction   of the System shall comply with the standards of the Occupational Safety and Health Administration.(#`  S!-  (4)` ` Construction, installation and maintenance of a Telecommunication System shall be   3performed in an orderly and workmanlike manner, and in close coordination with public   Band private utilities serving the City following accepted industry construction procedures and practices and working through existing committees and organizations.(#`  S%-  B(5)` ` All cable and wires shall be installed, where possible, parallel with electric and telephone   lines, and multiple cable configurations shall be arranged in parallel and bundled with due respect for engineering consideration.(#` "'; ,8)8)``&"Ԍ S-ԙ(6)` ` A Grantee shall join the Miss Dig program.(#`  S-  D(7)` ` When Grantee meets recognized engineering standards and the City, at its option,   requests additional linear line footage, then the Grantee shall not be subject to the linear foot fee for such additional footage.(#`  S-15.Maps, Records and Reports  S-  $(1)` ` A Grantee shall annually provide the City with current maps of its existing and proposed   installations in standardized format for use with the City's G.I.S. data system unless no  Sp-changes have occurred in the previously submitted map.  (#`   S -  p(2)` ` The Grantee of a Franchise shall annually file with the City Clerk fifteen copies (15) of   Qits annual financial reports, including its annual income statement, a balance sheet, and   Sa statement of its properties devoted to Telecommunication System operations. A   Grantee shall submit such reasonable information as may be requested by the City with   respect to its property and revenues, expenses or operations within the City. All   information provided to the City shall be maintained by the City as proprietary and confidential.(#`  S-  (3)` ` An accurate and comprehensive file shall be kept by a Franchise Grantee of all   Subscriber and user complaints regarding the Telecommunication System. A procedure   shall be established by the Grantee by the time of installation of the system to quickly   and reasonable remedy complaints to the satisfaction of the City. Complete records of   CGrantee's actions in response to all complaints shall be kept. These files and records shall remain open to the public during normal business hours.(#`  S-  a(4)` ` Grantee shall submit to the City such other reasonable information or reports in such form and at such times as the City may request.(#`  SP-  (5)` ` In the event the 5% of gross revenue option is utilized, subject to the privacy rights of   BGrantee, this Ordinance, federal and state laws and regulations, a Franchise Grantee shall   tkeep open books and records relating to the financial operations of the   Telecommunication System provided to the City. The City shall have the right to inspect,   during normal business hours, upon a twoday notice, all books, records, maps, plans,   service complaint logs, performance test result and other like materials of the Grantee   which relate to the financial operation of the Telecommunication System. Access to the   Baforementioned records shall not be denied by the Grantee on the basis that the records   bcontain proprietary information, provided that City maintains such information as proprietary and confidential.(#`  S"- r(6)` ` a. Subject to the privacy rights of Grantee and this Ordinance and to federal and  state laws and regulations, a Franchise Grantee shall keep open all nonfinancial  rbooks and records relating to the operations of the Telecommunication System   'provided to the City. The City shall have the right to inspect, during normal  business hours, upon a twoday notice, all books, records, maps, plans, service  complaint logs, performance test results and other like materials of the Grantee  which relate to the operation of the Telecommunication Systems. Access to the"'< ,8)8)``&"  aforementioned records shall not be denied by the Grantee on the basis that the   srecords contain proprietary information, provided that City maintains such information as proprietary and confidential.(#   S`-  ` ` b. A Grantee shall allow the City to make inspections of any of the Grantee's  Telecommunications Systems within the City's boundaries at any time upon one (1) day notice or, in case of emergency, upon demand without notice.(#  S-  (7)` ` The refusal of the Grantee to file any of the records or reports and inspections required   pto be provided to the City under this section shall be deemed a material breach, and   shall subject the Grantee to all penalties and remedies, legal or equitable, which are available to the City.(#`  S -  (8)` ` Any material, false, misleading statement, or representation knowingly made by the   oGrantee in any report shall be deemed a material breach of the License of Franchise, and   shall subject the Grantee to all penalties and remedies, legal or equitable, which are available to the City.(#`  S0- #16.XWaiver A Grantee agrees not to oppose intervention by the City in any suit or proceeding to  #which the Grantee is a party relating to the City's Franchise or License. A Grantee agrees to abide by all provisions of this Ordinance and its License and Franchise.(#  S-17.XSale or Transfer of Rights of Franchises(#  S@-  a(1)` ` Neither the Franchise nor any of Grantee's interest therein or in the facilities shall be   psold, assigned, transferred, pledged, leased, sublet, hypothecated or mortgaged in any   manner, in whole or in part, to any person or entity, nor shall title thereto, either legal   or equitable, or any right or interest therein, or any property or assets relating to this   %Franchise or the facilities, pass to or vest in any person or Franchise or the facilities,   %pass to or vest in any person or entity, without the prior written consent of the City,   which consent shall not be unreasonably withheld or delayed. Grantee shall not   otherwise provide service to a person or entity who the City contends is required to   obtain a franchise from the City and who lacks such franchise. Nothing herein shall   prevent Grantee from assigning its rights and obligations to an affiliate (defined as any   entity directly owned by Grantee or a parent entity of Grantee) or subsidiary of Grantee   &upon notice to the City. Any assignment or transfer to a subsidiary or affiliate of   Grantee shall not relieve Grantee of its liability thereunder. Further, nothing herein   shall prevent or prohibit Grantee or any of its parents, subsidiaries or affiliates, from   granting a security interest in the Franchise or the facilities arising form a financing   transaction. The grant or waiver of any one or more of said consents shall not render   $unnecessary any subsequent consent or consents, nor shall the grant of any said consent   constituent a waiver of any other rights of the City. In the event of foreclosure   Cproceeding pursuant to the enforcement of a security interest granted by Grantee, or   any parent or subsidiary of Grantee, the City shall have the right to approve the   4purchaser of the Franchise and/or the facilities at a foreclosure sale, which approval   4shall not be unreasonably withheld or unduly delayed. The prohibition against sales,   assignments, transfer and similar actions shall also fully apply to any transfer of control   Cof Grantee ("Control") and such transfer of Control shall also require the prior written"'= ,8)8)``&"   Dapproval of the City which approval shall not be unreasonably withheld or unduly delayed.(#`  S-  &(2)` ` No Franchise nor any part or portion of its interest in the Franchise may be sold,   transferred or assigned until the facilities, equipment and personnel which the Grantee   3has proposed in the current Franchise application to provide and install pursuant to the   RFranchise are one hundred (100%) percent completed and operational for a minimum period of three (3) years except to Grantee's parent, affiliate or subsidiary.(#`  S-  (3)` ` Any attempted transfer of the Franchise, facilities, Control or similar action by Grantee   in violation of this Section shall be ineffective and void and shall constitute a material event of default by Grantee.(#`  S -18.XConstruction and Performance Guarantee and Letter of Credit(#  PXA Grantee shall, prior to construction and within thirty (30) days of execution of a License or  Franchise, file with the City Clerk, a letter of credit or cash deposit in a reasonable amount set  Aby the terms of the License or Franchise based upon the construction cost of the lines to be  Pinstalled upon, over, across, or under the roads, bridges, streets, rightsofway or easements  min the City. The Grantee and the City Engineer may make arrangements for the periodic release  Oof the cash deposit or letter of credit in proportionate amounts as progress is made, as provided in Chapter 33.(#  Sh- 19.XTermination In addition to all other rights and powers reserved or pertaining to the City, the  }City reserves as an additional and as a separate and distinct remedy the right to terminate a  License or Franchise and all rights and privileges of a Grantee in any of the following events or for any of the following reasons:(#  S-  (1)` ` A Grantee fails after thirty (30) days prior written notice to comply with any of the   aprovisions of the License or Franchise or has, by act or omission, violated any term or condition; or(#`   S-  &(2)` ` A Grantee becomes insolvent, unable or unwilling to pay its debts, or is adjudged bankrupt; or(#`  S-  R(3)` ` All or part of a Grantee's facilities are sold under an instrument to secure a debt and are not redeemed by Grantee within ninety (90) days from such sale; or(#`  S -  R(4)` ` A Grantee attempts to or does practice any fraud or deceit in its conduct or relations with the City under the License or Franchise; and(#`  S"-  (5)` ` City condemns all of the property of a Grantee within the City by the lawful exercise of eminent domain.(#`  S %-  (6)` ` The Grantee abandons the Telecommunication System or fails to seek renewal of its License or Franchise.(#` "&> ,8)8)``%"Ԍ S-  4(7)` ` No termination, except for reason for condemnation, shall be effective unless or until   the City shall have adopted a resolution setting forth the cause and reason for the   revocation and the effective date, which resolution shall not be adopted without thirty   (30) days prior notice to Grantee and an opportunity for Grantee to be heard on the proposed resolution.(#`  S-20.Removal  S-  $(1)` ` Upon expiration or termination of License or Franchise, if the License or Franchise is not   4renewed, the Grantee may remove any underground cable from the streets which has   been installed in such a manner that it can be removed without trenching or other   opening of the streets along the extension of cable to be removed. Except as otherwise   Qprovided, the Grantee shall not remove any underground cable or conduit which requires   Rtrenching or other opening of the streets along the extension of cable to be removed.   5The Grantee shall remove, at its sole cost and expense, any underground cable or   aconduit by trenching or opening of the streets along the extension or otherwise which   3is ordered to be removed by the City based upon a determination, in the sole discretion   Dof the City, that removal is required in order to eliminate or prevent a hazardous   condition or promote future utilization of the streets for public purposes. Any order by   $the City to remove cable or conduit shall be mailed to the Grantee not later than thirty   (30) calendar days following the date of expiration of the License or Franchise. A   Grantee shall file written notice with the City Clerk not later than thirty (30) calendar   Rdays following the date of expiration or termination of the License or Franchise of its   Cintention to remove cable and a schedule for removal by location. The schedule and   `timing of removal shall be subject to approval and regulation by the City. Removal shall   be completed not later than twelve (12) months following the date of expiration of the   License or Franchise. Underground cable and conduit in the streets and rightsofway which is not removed shall be deemed abandoned and title shall be vested in the City.(#`  Sx-  R(2)` ` Upon expiration, termination or revocation of a License or Franchise, if the License or   Franchise is not renewed, a Grantee, at its sole expense, shall unless relieved of the   5obligation by the City, remove, from the streets all above ground elements of the   RTelecommunications System, including but not limited to pedestal mounted terminal boxes, and lines attached to or suspended from poles.(#`  S-  (3)` ` Grantee shall apply for and obtain such encroachment permits, Licenses, authorizations   Qor other approvals and pay such fees and deposit such security as required by applicable   law or ordinance of the City, shall conduct and complete the work of removal in   compliance with all such applicable law or ordinances, and shall restore the streets and    rightsofway to the same condition they were in before the work of removal commenced. The work of removal shall be completed not later than twelve (12) months.(#`  Sp#- 21.XContinuity of Service It shall be the right of all Subscribers to receive all available services  Pinsofar as their financial and other obligations to the Grantee of a Franchise are honored. In  the event that the Grantee elects to overbuild, rebuild, modify or sell the Telecommunication  }System or the City terminates, revokes or fails to renew a Franchise within a reasonable time,  a Grantee shall do everything in its power to ensure that all Subscribers receive continuous,  1uninterrupted service regardless of the circumstances. In the event of a change of Grantee, the"'? ,8)8)``&"  "current Grantee shall cooperate with the new Grantee in maintaining continuity of service to all  "Subscribers. In the event that interruption of service is required by a Grantee for modification,  repairs or the like, the interruption shall be as brief as possible and at times when the impact on Subscribers is at a minimum. Records of such interruption shall be kept.(#  S8- _22.XAcceptance of Agreement and Incorporation of Application and Ordinance by Reference Upon  execution of a License or Franchise by a Grantee, the Grantee agrees to be bound by all of its  terms and conditions and accepts unconditionally the Franchise and promises to comply with  and abide by all of their terms, provisions and conditions. A Grantee also agrees to provide all  oservices set forth in its application and proposal, and, by its acceptance of the License or  Franchise, a Grantee specifically grants and agrees that its application and proposal is thereby  incorporated by reference and made a part of the License or Franchise. In addition, a Grantee  specifically agrees that this Ordinance of the City is incorporated by reference and made a part  of the License or Franchise. In the event of a conflict between the application and proposal of the Grantee, the Ordinance, and the License or Franchise, the Ordinance shall prevail.(#  S - `23.XSeverability If any section, subsection, sentence, clause, phrase or word of the License or  Franchise is for any reason held invalid or unconstitutional by any court of competent  jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not render invalid nor terminate the License or Franchise.(#  S-824.Tampering and Fraudulent Connections or Sales  Sh-  X(1)X` ` No person, whether or not a Subscriber or user to the Telecommunication System, may   intentionally or knowingly remove or damage or cause to be damaged any wire, cable,   8conduit, equipment, or apparatus of the Grantee, or to commit any act with an intent   Cto cause such removal or damage, or tap, tamper with, or otherwise connect any wire   or device to a wire, cable, conduit, equipment and apparatus, or appurtenances of the   Grantee with the intent to obtain a signal or impulse from the Telecommunication   System without authorization from or compensation to the Grantee, or obtain   RTelecommunications Service, or sell, rent, offer or advertise for sale, rental or use any   instrument, apparatus, device or plans, specifications, or instructions for making or   ~assembling the same to connect to the Grantee's Telecommunication System which intent to cheat or defraud the Grantee of any lawful charge to which it is entitled.(#`  S-  (2)` ` The prohibitions, penalties and remedies set forth in this section are in addition to any   aprohibitions, penalties and remedies for theft of service provided by state and federal law.(#`  S - 25.XEqual Application The provisions of this ordinance shall be imposed upon and enforce against  Oall Telecommunication Systems in the City requiring a License or Franchise under state law from the City.(#  SH$- O26.XCompliance with Law All Grantees and the City shall comply with all laws, rules, regulations and  "orders in the exercise and performance of their rights and obligations under this ordinance and under any Franchise.(# "&@ ,8)8)``%"Ԍ S-27.MostFavored Communities Clause  S-  bX(1)X` ` In the event a Franchise Grantee enters into an agreement with a public entity in   COakland County, Macomb County or Wayne County, excluding Detroit, and agrees to a   oformula or method for determining franchise fees which if applied in the City would yield   greater revenues than the formula or method set forth in the franchise for the right to   %operate a Telecommunication System, the Grantee shall grant a pro rata credit to its Troy subscribers so as to cause a redistribution of the excess to Troy subscribers.(#`   S-  (2)` ` Telecommunication services to the City shall be charged at a rate no higher than that charged to any other governmental, public or private subscribers.(#` " A ,8)8)`` "  S-  @B -  C - @AL APPENDIX C ă  S- 1.Section 253(a); Prohibition on Barriers to Entry ` `  S8-   I. 1. A. a.(1)(a) i) a)q I. 1. A. a.(1)(a) i) a)1.` ` TCI asserts that the challenged provisions of the Telecommunications Ordinance violate   $section 253(a) by prohibiting, or having the effect of prohibiting, entities from providing  S-  telecommunications service in the Cit y.g {OP-ԍPetition at 20; See also TCI October 1996 Briefing Paper.g For example, the requirement that an entity obtain a franchise   before providing telecommunications service violates section 253(a), according to TCI, because it leaves  S-  /the City "poised to grant certain entities franchises to do business and deny franchises to others."7Z yO -ԍPetition at 18.7 TCI   argues that the conditions that are placed on the granting of a franchise further demonstrate that the Telecommunications Ordinance violates section 253(a):   XX` ` the franchise requirement under the Telecommunications Ordinance   fposes a formidable barrier to entry into the local exchange market.   From the $10,000 formation fee and the annual gross revenues   9surcharges and other fees, to the "most favored nation" clause, the   *waiver of legal recourse against the City, and other obligations and   limitations on the applicant's legal rights, the Ordinance exacts a heavy   toll on new entrants seeking authority to provide telecommunications  S-services in Troy.8 yOj-ԍTCI Reply at 20.8x`  S-  o2.` ` As described above, TCI generally contends that the City's authority to manage use of the   public rightsofway by telecommunications and cable service providers does not empower Troy to  S@-  ]impose its Telecommunications Ordinance.H@z yOZ-ԍPetition at 18, TCI Reply at 15.H TCI claims that the Troy Telecommunications Ordinance   violates section 253 both because it stands as a barrier to entry under section 253(a), and because it  S-  Mexceeds the scope of the City's rightsofway management authority under section 253(c).:  yO-ԍPetition at 1720.: TCI further   argues that, while section 253 reserves to local governments the authority to "manage the public rights   of way or to require fair and reasonable compensation from telecommunications providers, on a   {competitively neutral and nondiscriminatory basis," this reservation extends only to such health and   safety functions as regulating time or location of excavations; placement of facilities; and street repairs   that are necessitated by excavations." According to TCI, municipal authority over the "management of   /rightsofway does not empower municipalities to adopt sweeping telecommunications ordinances like"B,8)8)``@"   Troy's. TCI also asserts that in any case, Troy's ordinance is neither competitively neutral nor  S-nondiscriminatory.M yO@-ԍTCI October 1996 Briefing Paper at 2.M ` `  S-  3.` ` In support of its arguments, TCI asserts that a potential provider of telecommunications   service, MCI, cancelled its plans to install telecommunications facilities in the City because the  S8-  \Telecommunications Ordinance "poses such a significant entry barrier . . . ."78X yO0-ԍPetition at 20.7 As noted above, MCI itself   {asserts that, "[u]sing its newly enacted [Telecommunications Ordinance], and asserting the power to   exercise franchising authority thereunder, Troy has . . . precluded MCI's local telecommunications  S-  !affiliate, MCI Metro, from entering the City's local telecommunications exchange market.": yOH -ԍMCI Comments at 2.: MCI also argues that the franchising requirement, by itself, violates section 253(a):   uXX` ` The authority to franchise telecommunications carriers includes the   authority to deny a franchise. Because the denial of a franchise plainly   prohibits an entity from providing telecommunications service, it  S -violates Section 253(a).: x yO-ԍMCI Comments at 5.:x`  S -  S4.` ` Comcast asserts that section 253(a) "broadly prohibits" all barriers to entry to the  SX-  telecommunications field imposed by state or local governments.5 ZX {O-  ԍComcast Reply at 12;  See also Competition Policy Institute Comments at 1 (submitted at the Commission's   !December 16th Public Forum on "Use and Management of Public RightsofWay in the provision of Telecommunications Services). 5 According to Comcast: "Any condition  S0-  ?that makes entry more costly, burdensome, or timeconsuming can constitute a barrier to entry."< 0*  yO-ԍComcast Reply at 14.<   "Comcast contends that in other contexts, the Commission has found that provisions of the kind   contained in the Telecommunications Ordinance constitute barriers to entry. Comcast cites to our ruling   regarding state certification requirements that authorize cable operators to provide institutional network services, where we stated:   XX` ` Any state regulation which treats certification as more than a  S-  9ministerial act would be considered a de facto entry barrier, i.e., a   tpublic need showing . . . or burdensome service provision regulation . .  S-. . ^  {O"$-  ԍComcast Reply at 12, citing Cox Cable Communication,s Inc., Commline, Inc. and Cox DTS, Inc., Petition for  {O$-  Declaratory Ruling, Memorandum Opinion, Declaratory Ruling, and Order, 102 FCC 2d 110 (1985), vacated as moot  {O%-on other grounds, 1 FCC Rcd 561 (1986) (moot because Cox Commline had ceased business operations).x` "C ,8)8)``"Ԍ S-  5.` ` In addition, Comcast cites our finding in 1994 that local cable franchising is "the most  S-important policyrelevant barrier to competitive entry in local cable markets."Q Z {O@-  ;ԍComcast Reply at 13, quoting Implementation of Section 19 of the Cable Television Consumer Protection and   wCompetition Act of 1992: Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 9 FCC Rad 7442, 7627 (1994).Q Comcast adds:   tXX` ` Clearly, if Title VItype franchising requirements have historically stood   Gas a barrier to entry in the cable market, then imposition of the same   basic scheme on telecommunications providers would stand as just as   Vformidable a barrier to entry into the telecommunications markets   even greater given the governmentimposed monopoly protection  S-provided local exchange carriers for nearly a century.< yOJ -ԍComcast Reply at 13.<x`  Sp-  %6.` ` Comcast asserts that we need not examine each provision of the Telecommunications   Ordinance separately because regardless of the impact of an individual provision, "the scheme created  S -  Nby such ordinances does effectively prohibit entry, and thus must be preempted."A z yO:-ԍComcast Reply at 14 n.30.A Similarly, NCTA   kasserts that the various provisions of the Telecommunications Ordinance, separately or taken as a whole,   have the purpose or effect of restricting entry into the local telecommunications market. According to   NCTA, the Telecommunications Ordinance, if upheld, will have this effect because other local governments   in Michigan will enforce similar ordinances. NCTA asserts that, "[t]he resulting death by a thousand cuts   that would be inflicted on [competitive local exchange carriers] would surely be a barrier to entry  S0-  /violative of the 1996 Act.";0  yO-ԍNCTA Reply at 710.; The various provisions of the Telecommunications Ordinance violate section   /253(a) without regard to whether they constitute management of the rightsofway, according to NCTA,   because there is "no indication that the reservation of State and local authority over rightsofway  S-management in Section 253(c) was intended as an exception to" section 253(a).8 yO-ԍNCTA Reply at 6.8 ` `  Sh-  7.` ` While acknowledging that a local government cannot specifically prohibit a party from   providing telecommunications service, either expressly or by the grant of an exclusive franchise to   {another party, the City contends that section 253(a) grants local governments substantial latitude to   impose conditions on those seeking to provide service. According to the City: "Simply because a legal   1requirement may impose a cost to transact business does not transform that requirement into a  S-  prohibition against entry."8*  yOj#-ԍCity Reply at 7.8 With respect to the instant case, the City argues that the Telecommunications Ordinance:   XX` ` does not prohibit any party from providing telecommunications service,   :nor does it grant any party an exclusive franchise, which would   effectively prohibit other parties from providing service. Thus, on its"D ,8)8)``"   vface, the Ordinance is fully consistent with Section 253(a) of the  S-  [Communications] Act, which precludes only the prohibition or effective   prohibition of the ability of an entity to provide telecommunications  S-service.< yO-ԍCity Comments at 37.<x`  S8-  8.` ` The City does not dispute that its Telecommunications Ordinance imposes costs on   telecommunications providers, as do "geography, construction, and other considerations." According to   MCity, however, "none of these factors constitute[s] a 'prohibition' or 'effective prohibition' on the ability  S-  0of a party to provide service.";X yO -ԍCity Comments at 7.; The City further argues: "While it is conceivable that a state or city   Mcould enact conditions on the use of rightsofway that are so onerous that no party could conceivably  Sp-  meet them, thereby constituting an effective prohibition of entry, this is not the situation in Troy."<p yO -ԍCity Reply at 6 n.7.<   The City contends that its recent grant of a telecommunications franchise to another provider, MFS, "is  S -  prima facie evidence that the [Telecommunications] Ordinance does not effectively prohibit the ability  S -  of a party, and in the case of MFS[,] a new entrant, to provide telecommunications service in Troy." x {O-  xԍId. With respect to the assertion that MCI built its network around the City because the requirements of the   Telecommunications Ordinance were so onerous, the City contends that MCI abruptly ceased negotiations with the   City when TCI filed its Petition. The City believes that MCI may be simply awaiting the outcome of this   proceeding. City Reply at 8. MCI, in turn, strenuously objects to the City's characterization of its actions and its   motives, and maintains that it did seek to provide local telephone service in the City of Troy, and was deterred by  {O-the Ordinance itself. See MCI Letter at 2.   The decision by an entity not to comply with the Telecommunications Ordinance, and thus not to provide   service in Troy, does not mean that the Telecommunications Ordinance prohibits that entity from  S -providing service, according to the City.:  yO-ԍCity Reply at 67.:  S0-  9.` ` TCI and others overstate the onerousness of some of the individual provisions of the   Telecommunications Ordinance, according to the City. The City points out that under the express terms   of Section 12(4), a telecommunications provider is required to interconnect with other providers "only   to the extent feasible." Further, the City notes that the most favored nation provision of Section 12(1)   0is subject to waiver if compliance is "undesirable, impractical, infeasible, or uneconomic." The rate   lregulation provisions of Section 8 cannot be barriers to entry in violation of federal law, according to  S@-the City, because they are made expressly subject to state and federal law.<@  yOd"-ԍCity Comments at 40.<  S-   10.` ` In support of the City, PROTEC argues that TCI has been prohibited from providing   telecommunications service only by its own failure to seek a telecommunications franchise. Since TCI   has not applied for a franchise, it cannot claim to have been harmed by the Telecommunications"E,8)8)``"   Ordinance, according to PROTEC. Invoking the judicial concept of standing, PROTEC asks us to dismiss  S-TCI's Petition because there is no injury for the Commission to redress.? yO@-ԍPROTEC Motion at 2627.?   S-  a 11.` ` Anaheim et al. claims that the Telecommunications Ordinance poses no barrier "to an   activity that TCI is undertaking (or even proposing to undertake)," in light of TCI's assertion that it does  S8-  \not intend to provide telecommunications service.=8X yO0-ԍAnaheim Reply at 35.= Richmond et al. contends that the failure to apply   for a franchise is fatal to TCI's attempt to prove that the franchise requirement has prohibited it from   /providing service. More generally, Richmond et al. contends that TCI provides "absolutely no evidence"   that any provision of the Telecommunications Ordinance has the effect of prohibiting it from providing   telecommunications service. Richmond et al. recommends that we establish a "high threshold" for   determining what types of state and local regulation satisfy section 253(a), rather than invite "a constant   _barrage of petitions to determine whether 'business' terms, 'management' terms, 'regulatory'   requirements and other local requirements prohibit or effectively prohibit the provision of  S -telecommunications services in violation of Section 253(a)."i  {O-ԍRichmond et al. Comments at 78; see PROTEC Reply at 2122.i   S - 82.Scope of Local Government Authority Under Sections 253(b) and (c)  SX-  ~ 12.` ` With respect to the scope of local authority under section 253, TCI contends that Congress   sought to limit local government regulation of telecommunications service to reasonable measures   8designed to protect the physical integrity of public rightsofway. By way of example, TCI states that   lChapter 33 of the City Code, the RightofWay Ordinance, is a valid exercise of municipal authority   under section 253(c) and "provides . . . an excellent demarcation point between legitimate rightsofway  S-  management and the franchiselike requirements of Troy's telecommunications Ordinance."8z yO-ԍTCI Reply at 19.8 TCI   lcontends that its construction of section 253(c) as a limitation of local government jurisdiction finds   support in the same passage from the Conference Report that Troy relies on in arguing the validity of its Telecommunications Ordinance:   XX` ` The conferees intend that, to the extent permissible under State or local   law, telecommunications services, including those provided by a cable   tcompany, shall be subject to the authority of a local government to, in   a nondiscriminatory and competitively neutral way, manage its public  S(-rightsofway and charge fair and reasonable fees.V(  {O"-ԍConf. Rep. at 180. See TCI Reply at 15.Vx`  S-  o 13.` ` The alleged limitation on a municipal government's rightofway authority under section   253(c) is reinforced, according to TCI, by section 253(b), which reserves to the states, and only the states,   0the authority to impose regulations governing universal service, public safety and welfare, quality of"F,8)8)``"  S-  telecommunications services, and consumer protection.8 yOh-ԍTCI Reply at 19.8 According to TCI, Congress specifically rejected   ^the House version of this provision, which would have sanctioned the authority of "State or local"   governments to impose such regulations, in favor of the Senate's Stateonly savings clause. "Troy's   Telecommunications Ordinance embraces the very functions such as universal service and service   quality that Congress specifically reserved to the States. As a purported exercise of municipal  S8-authority to manage public rightsofway, the Ordinance does not pass muster."18X {O0-ԍId.1  S-  3 14.` ` For example, TCI contends that conditioning the provision of telecommunications service   non the requirement that the provider first obtain a franchise exceeds the City's rightofway   !management power. Likewise, requirements relating to interconnection, rates, and services bear no   0relation to the occupation, use, or management of rightsofway, according to TCI. With respect to   interconnection, TCI argues that Section 12(4) of the Telecommunications Ordinance is preempted by   /section 251 of the Communications Act. To the extent that the municipal interconnection requirement   Mis related to ensuring universal service, TCI claims that section 253(b) reserves authority over that issue   to the state, thus precluding local regulation. TCI likewise challenges what it terms the "most favored   nation" clause of Section 12(1) of the Telecommunications Ordinance, under which a telecommunications   provider may be required to provide in the City any "new service, facility, equipment, fee or grant"   provided in another Michigan community. TCI states that this provision "clearly constitutes regulation  S0-of services . . . and thus violates Section 253(c)."> 0 yO-ԍTCI Petition at 1820.>  S-  o15.` ` Consistent with its position that section 253(b) authorizes only state regulation consistent   /with its terms, TCI further argues that substantive telecommunications regulation by local governments   is not protected by the limited exception of subsection (b), and is a barrier to entry that the Commission  Sh-must preempt under section 253(d).p!hz {O-  ԍLetter to Mr. William F. Caton, Acting Secretary, FCC dated March 28, 1997, Re:Ex Parte Presentation, Petition   of TCI Cablevision of Oakland County, Inc., CSR4790 from Howard J. Symons on behalf of TCI ("March 28 TCI  {O-  xLetter"), attaching Ex Parte Presentation of TCI Cablevision of Oakland County, Inc., "Section 253(b) Reserves   Telecommunications Regulatory Authority to the States Alone and Preempts Exercise of This Authority by Local Governments" ("March 28 TCI Presentation") at 45.p TCI argues:   XX` ` The proliferation of local telecommunications ordinances would create   a substantial barrier to entry, in violation of section 253 of the    Communications Act. If cities are permitted to adopt and enforce   telecommunications ordinances, notwithstanding 80 or more years of  Sx-  State regulation of telecommunications, a competitive local exchange   tcarrier certified by a State public utility commission would be required   to obtain dozens of additional regulatory approvals from local   )governments before it could compete with incumbent carriers in their   service territories. Local ordinances would not even necessarily be   tconsistent from city to city, and a competitor would likely be forced to   eobtain multiple permits to serve a single metropolitan area. In tens of"G. !,8)8)``"   thousands of municipalities throughout the country, competitors will be   Hdiscourage from offering services and the 1996 Act's procompetitive   objectives will be frustrated. The Commission can and must act   Hdecisively to prevent the creation of this regulatory thicket so that   consumers are not deprived of the benefits of choice, innovation, and  S8-lower prices intended by Congress.G"8 yO-ԍMarch 28 TCI Presentation at 4.G x`  S-  16.` ` TCI urges that the Commission has the duty under section 253(d) to preempt "any   statute, regulation, or legal requirement" imposed by a "State or local government" that prohibits or has   /the effect of prohibiting any entity from providing intrastate or interstate telecommunications services.   QAccording to TCI, Congress did not reserve any authority to local governments to regulate   >telecommunications. To the contrary, local telecommunications ordinances create an entry barrier and   must be preempted. TCI also argues that state law that permits delegation of telecommunications  S -authority to local governments is likewise preempted by the 1996 Act.G# X yO-ԍMarch 28 TCI Presentation at 5.G ` `  S -  17.` ` TCI claims that section 253(c) also renders invalid Section 3(6) of the Telecommunications   ^Ordinance, which defines "gross revenues," for purpose of calculating the annual franchise fee, as   Oincluding "all receipts collected by the [Franchisee] for all telecommunication and other related   >operations and services within the corporate limits of the City as well as any other revenue arising from  S-  operation or possession of this franchise regardless of where billed."7$ yO-ԍPetition at 19.7 According to TCI, this provision   ]"violates Section 253(c) by imposing fees based on revenues from the provision of services, including  S-  services unrelated to the system, not on a measure that would indicate impact on rightofway use."7%x yO-ԍPetition at 19.7   Similarly, TCI argues that Cityimposed rate regulation and customer service obligations do not  Sh-constitute management of rightsofway and therefore violate section 253(c).;&h {O-ԍId. at 1819.;  S-  318.` ` Hyperion contends that in its service territories, fees associated with telecommunications   !ordinances often do not appear to bear any relationship to the costs of public management of local  S-  rightsofway.?' yO!-ԍHyperion Comments at 4.? Adelphia asserts that "Congress' use of the term 'manage' reflects that Section 253(c)   provides only a very limited role for local authorities in the telecommunications market." Section 253(c)   ]limits local governments "to exercising management power over issues directly affecting the physical  SP-  occupation of the rightsofway, such as scheduling and overseeing street cuts," according to Adelphia.C(P*  yO%-ԍAdelphia Comments at 5, 12.C   Likewise, NCTA contends that section 253(c) extends "only to such core decisions on rightsofway   matters as the hours during which construction may occur, what kind of excavation equipment would   be used, and the amount of reimbursement due for damage done to the rightsofway." Thus, according"H (,8)8)``"   to NCTA, section 253 "remove[s] from cities whatever authority they may have previously had to establish  S-telecommunications regulatory schemes.":) yO@-ԍNCTA Reply at 56.: V  S-  r19.` ` Comcast agrees that pursuant to section 253, "the sole power reserved for local   >authorities is" the power to manage the physical occupation, use and maintenance of public rightsof S8-  way.>*8X yO0-ԍComcast Comments at 7.> Comcast and other commenters refer to the list of activities we identified in the open video systems rulemaking as being within the scope of local authority over rightsofway including: XX` `  coordination of construction schedules,x`   XX` `  establishment of standards and procedures of reconstructing lines across private propertyx` XX` `  determination of insurance and indemnity requirements,x` XX` `  establishment of rules for local building codes,x` XX` `  scheduling common trenching and street cuts,x` XX` `  repairing and resurfacing construction damaged streets,x`   fXX` `  keeping track of the various systems using the rightsofway to  S -prevent interference among facilities.+  {O-  YԍComcast Comments at 78, citing OVS Second Report at para 210. See Adelphia Comments at 5; NCTA Reply at 78.x`   In support of the contention that these are the only types of activities that local governments are   >entitled to address under section 253(c), Comcast asserts that section 253(c) permits local governments  S-  to manage only public rightsofway, not telecommunications services or providers.b,B {O-ԍComcast Comments at 12. See Adelphia Comments at 5.b According to   Comcast, this use of the term "manage" in Section 253(c) demonstrates that local authorities are not   |allowed to "regulate" telecommunications providers' service offerings, customer service standards,   pricing, interconnection with other providers, service to different areas, or sale or transfer of their  S@-systems, among other things.1-@ {O-ԍId.1  S-  20.` ` This alleged restriction on local regulation of telecommunications service is particularly   ksignificant when the provider is the incumbent cable operator, according to Comcast, because the cable   operator already has installed facilities in the public rightsofway and compensated the local   lgovernment accordingly. The mere transmission of a new signal over existing bandwidth on facilities   already in place would not raise any issue within the local authority's power, according to Comcast. In   this context, Comcast asserts, "any claim for imposing further regulation would be based solely on the   >introduction of the new telecommunications service, and therefore, would be outside the municipality's  S-power under section 253."B.f  yO&-ԍComcast Comments at 1314.B "I .,8)8)``"Ԍ S-  21.` ` Further, Comcast contends that local governments may not regulate in the areas   identified in section 253(b), such as universal service and consumer protection, because those matters   are reserved for state regulation. According to Comcast, "any state law purporting to delegate subsection  S-(b)type powers to local authorities would be in direct conflict with the 1996 Act and thus preempted."/Z {O-  hԍComcast Reply at 5, n.5. See NCTA Reply at 67 ("Congress rejected the House bill's version of Section 253(b)   that would have conferred authority on the cities to regulate such matters as universal service and telecommunications service quality, adopting instead the Senate provision reserving those functions solely to the States.")  S8-  22.` ` MCI agrees that by using two separate subsections to identify the authority reserved to   kstate and local governments, Congress indicated its intention to restrict local authority to those matters   identified in subsection (c). According to MCI: "Had Congress intended to permit localities to exercise   the functions of [section] 253(b), it would have simply drafted a single [sub]section entitled 'State and  S-Local Government Authority.'"<0 yO" -ԍMCI Comments at 56.<  SH -  23.` ` Cox argues that: "Sections 253(b) and (c) are not meant to carve out exceptions to the   >general prohibition on barriers to entry in Section 253(a). To the contrary, they are meant to establish  S -  limits of state and local regulatory authority under Section 253(a)."71 z yO-ԍCox Reply at 4.7 The Competition Policy Institute   M("CPI"), a participant in the Commission's Public Forum on the use and management of publicrights  kofway, refers to these subsections as "extremely limited exceptions" to the broad prohibition in section   \253(a). According to CPI, the Senate Report indicates that "these provisions should not allow states and  SX-  cities to circumvent the prohibition in subsection (a)."2X  {O-  ,ԍSee Outline of the Comments of John Windhausen, General Counsel, Competition Policy Institute, FCC Forum on Section 253, December 16, 1996 at 1 ("CPI Forum Outline"). CPI later elaborated that the Commission should   declare that section 253(a) is a broad provision that allows the Commission to preempt any provision   1that "may" have the effect of prohibiting "any service. CPI argues, in contrast to some industry   \participants, that it does not believe that subsections (b) and (c) provide the Commission with grounds   for preemption independent of subsection (a). Rather, CPI submits they are "savings clauses" that   protect a State or city action that violates (a) as long as it meets the strict requirements of those  Sh-  ]subsections.3Jhd  {O-  jԍEx Parte Filing, CSR4790, to the Honorable Reed E. Hundt, Chairman, FCC from John Windhausen, Jr.,   wGeneral Counsel, Competition Policy Institute (CPI), dated April 2, 1997 at 1 (CPI Letter), attaching Memorandum   I of the Competition Policy Institute concerning the Petition for Declaratory Ruling, Preemption, and Other Relief filed by TCI Cablevision concerning the City of Troy, Michigan ("CPI Memo"). In this case, CPI maintains, "the city cannot take advantage of the 'savings clause' in   0subsection (c) because the city's actions such as regulating interconnection and imposition of a  S-"most favored nation" provision are not related to the management of its rightsofway."64v  yO.#-ԍCPI Memo at 1.6 "J4,8)8)``T"Ԍ S-  24.` ` AT&T urges the Commission to make clear that municipal authority under the 1996 Act  S-  is limited and that certain activities do not fall within the section 253(c) exception.5Z yO@-  ԍLetter to Mr. William F. Caton, Acting Secretary, FCC dated April 24, 1997 from Bruce K. Cox, Government  {O-  wAffairs Vice President, AT&T, Re: Ex Parte Correspondence, Petition of TCI Cablevision of Oakland County, Inc., CSR4790, City of Roseville, Minnesota, CWD9616 ("April 24 AT&T Letter"). AT&T states that   attempts by municipalities improperly to expand their province beyond permitted management of the   public rightsofway have frustrated and are continuing to frustrate AT&T's ability to implement local   service as well as its ability to expand its existing interstate and interLATA service. AT&T notes that in   0Kentucky, for example, the carrier is prevented from installing fiber optic cable for the provision of   interstate and intrastate long distance service by a city's insistence that AT&T obtain a license to provide   local service within the town and be subject to a gross receipts tax as a precondition to installation of such cable on existing poles. According to AT&T,   XX` ` In certain Illinois municipalities, AT&T's construction of facilities   necessary to provide local and other services has been frustrated by   ordinances that apply, among other things, license and franchise   )requirements, excessive fees, recordkeeping and other administrative   and procedural requirements unrelated to rightofway use, and   excessive cash or other "credit" requirements to new entrants but not  S -the incumbent LEC.B6  yO -ԍApril 24 AT&T Letter at 3.B x`   AT&T argues that introduction of local competition will be hampered unless the Commission clarifies that   municipal authority over telecommunications services is strictly limited to nondiscriminatory,  S-competitively neutral management of public rightsofway.17z {O-ԍId.1  S-  25.` ` The City contends that TCI and others have overstated the extent to which section 253  Sh-  limits the permitted scope of local government authority over telecommunications service.e8Xh  yO-  ԍAs noted above, the City's arguments regarding the scope of its substantive authority under section 253 are   secondary to its position that the Commission lacks jurisdiction to resolve this matter. We summarize and address the commenters' arguments on the jurisdictional issue below. e Specifically,   lthe City contends that its jurisdiction is not limited to the matters identified in section 253(c). For   example, the City argues that section 253(b) delineates other broad areas of permitted regulation,   including advancing universal service, protecting public safety and welfare, ensuring the continued   quality of telecommunications services, and safeguarding the rights of consumers. Although by its   kexpress terms section 253(b) preserves only state jurisdiction over these matters, the City contends that   ?it has been delegated the state's authority as to all such matters. "Thus, Troy's Ordinance also falls  SP-within the permitted areas of regulation under Section 253(b)," the City asserts.99P,  yO%-ԍCity Reply at 11.9  S-  26.` ` The City further contends that it has jurisdiction to reach matters not within the scope   of Sections 253(b) or (c). The City contends that when a state or local government regulates a matter"K 9,8)8)``"   that falls outside of sections 253(b) and (c), such regulation is subject to the limitation of section 253(a),   Mwhich forbids a state or local government from imposing any regulation that prohibits, or has the effect   of prohibiting, entities from providing telecommunications service. By contrast, when a state or local   government regulates matters covered by sections 253(b) or (c), the limitation of section 253(a) does   not apply, the City argues. The City explains that, under the express language of the statute, nothing   Min section 253 affects the power preserved to states and local governments in subsection (c). Therefore,   subsection (c) is not limited by subsection (a). The contention of opposing commenters that section   !253(a) is preeminent over Section 253(c) and limits the authority of state and local governments to  S-manage their rights of way, is at odds with the plain language of the statute, according to the City.F: yO( -ԍCity Reply at 5, 1112, n. 21.F  Sp-  27.` ` In sum, the City suggests that sections 253(b) and (c) contain neither a grant nor a   limitation of state and local authority. While Congress expressly recognized state and local regulatory   authority over matters covered by sections 253(b) and (c), it did so as a means of exempting such   regulation from the prohibition contained in section 253(a), according to the City. In other words, the   ?City contends that sections 253(b) and (c) are not exceptions to section 253(a), but rather are "safe   harbors" for municipal activities. As to regulation of matters not covered by sections 253(b) and (c),   mthe City contends section 253 affects state and local authority only to the extent of making such regulation subject to section 253(a).  S-  28.` ` Relying on this construction of section 253, the City defends each of the challenged   provisions of its Telecommunications Ordinance as falling within its jurisdiction to manage the rightsof  way, to obtain fair and reasonable compensation for the use of the rightsofway, and to regulate the   provision of telecommunications service. The City thus contends that the franchise requirement of   kSection 4(1) is a valid exercise of the City's authority under state law. The interconnection requirement   of Section 12(4) complies with section 253(c), according to the City, as reasonable compensation to the   \citizens and city of Troy in exchange for the use of their rights of way. Further, the City notes that the   /interconnection requirement is designed to promote universal service, which it contends is a permitted  S-area of regulation under Section 253(b), delegated to the city under the Michigan Constitution .?;X yO-ԍCity Comments at 3942.?  Sx-  p29.` ` According to the City, section 253(b) also protects the "most favored nation" provision   !of Section 12(1) of the Telecommunications Ordinance, under which a franchisee can be required to   upgrade its services, or increase the amount of its franchise fee, to match any service or fee provided   in another Michigan community. "As permitted under Section 253(b) and authorized under the Michigan   MConstitution, this provision safeguards the rights of Troy's citizens to quality service in exchange for the  S-use of the city's rightsofways," according to the City.@< yO8"-ԍCity Comments at 3942. @  S`-  30.` ` The City denies TCI's assertion that Sections 8 and 27(2) of the Telecommunications   Ordinance constitute rate regulation that falls outside the scope of the City's authority. The City asserts   kthat Section 8, under which the City reserves the authority to regulate rates to the extent permitted by   federal and state law, cannot violate federal law since the provision expressly recognizes the supremacy   of federal law. Section 27(2), which requires a franchisee to charge the City for service at the lowest rate   Mgiven to any subscriber, does not dictate a specific rate, does not place a maximum limit on rates, and""Lx<,8)8)``!"  S-  /therefore is not rate regulation, according to the City.@= yOh-ԍCity Comments at 3942. @ The City argues that section 253(c) specifically   Mrecognizes the authority of local governments to receive compensation for the use of the rightsofway,   \thus authorizing the franchise fee provisions of Sections 3(6) and 27(1), just as section 253(b) allows the   0City, as delegatee of the State, to regulate in the area of consumer protection, thus authorizing the  S`-customer service requirements of Section 15(3) of the Telecommunications Ordinance.;>`X {OX-ԍId. at 4041.;  S-  31.` ` TCI replies that section 253(a) invalidates any local regulation that has the effect of   prohibiting an entity from providing telecommunications service, even if the regulation relates to   management of rightsofway. According to TCI, accepting the City's construction of section 253(c) as   Na safe harbor exception to section 253(a) "would effectively strip the Commission of any authority to   {preempt municipal telecommunications regulation that created a barrier to entry but was ostensibly  SH -premised on municipal rightofway authority."8?H  yO-ԍTCI Reply at 24.8  S -  $32.` ` Municipal commenters support the City's contention that sections 253(b) and (c) do not   define the limits of state and local government regulation over telecommunications. Richmond et al.   argues that section 253(c) merely identifies the functions of a local government that are not subject to  S -  the prohibition of section 253(a), and in no way establishes the boundaries of local authority.H@ z yO-ԍRichmond et al. Comments at 67.H Likewise,   North Central contends that the only effect of sections 253(b) and (c) is to create "safe harbors" in which  S0-  state and local governments may regulate without being subject to section 253(a).AA0  yO-ԍNorth Central Reply at 5.A The establishment   of these safe harbors "does not prohibit State or local governments from doing anything," according to  S-PROTEC.;B yO-ԍPROTEC Reply at 22.;  S-   33.` ` Municipal commenters also agree with the City that the challenged provisions of the   Telecommunications Ordinance fall within the scope of the City's jurisdiction, either as specifically   recognized by sections 253(b) and (c), or otherwise. Several commenters argue that, because the   |Telecommunications Ordinance only regulates entities using the public rightsofway, each of its  S-  Mprovisions constitute an exercise of rightsofway management under section 253(c).CX*  yO!-  ԍPROTEC Motion at 14; City of Farmington Hills Comments at 3; TMIC Communities Comments at 18; Denver   Comments at 3; Minnesota Authorities Reply Comments at 6. For this reason, these commenters agree with the City that the Commission lacks jurisdiction to determine the validity of the Telecommunications Ordinance.  Richmond et al.   0suggests that the entire Telecommunications Ordinance is protected by section 253(c) because each  S-  requirement can be deemed compensation for the use of the rightsofway.DDJ  yO&-ԍRichmond et al. Reply at 12.D According to Richmond"MD,8)8)``"   et al., "nothing in Section 253(c) suggests that 'compensation' must include only monetary compensation."1EPp {Oh-ԍId.1 PROTEC asserts that the   Mdistinction drawn by TCI and others between managing the placement of facilities in the rightsofway,   and regulating the provider that uses those rightsofway, is illusory. According to PROTEC, "Section  S`-  253 draws no such fine distinction between the rightsofway and the user of the rightsofway.">F` yO-ԍPROTEC Reply at 1213.> As   1for individual provisions of the Telecommunications Ordinance, PROTEC argues that many of the   provisions challenged by the cable industry in fact relate to "physical occupation issues," and thus fall  S-within even a narrow reading of the rightsofway management authority preserved by section 253(c).>G yO -ԍPROTEC Reply at 1314.>  S-  !34.` ` State and local rightsofway management and telecommunication service competition   are the subjects of the Commission's Local and State Government Advisory Committee's ("LSGAC"), first  SH -  advisory recommendation, issued June 27, 1997.H H  yO-  ԍLetter to Hon. Reed Hundt, Chairman, FCC dated June 27, 1997 from Kenneth S. Fellman, Chair, FCC Local   and State Government Advisory Committee ("LSGAC Letter"), attaching FCC LSGAC Advisory Recommendation   No. 1, "Policy Statement on State and Local RightsofWay and Telecommunications Service Competition" ("LSGAC Advisory Recommendation No. 1"). The recommendation is intended to reflect the  S -  Committee's views on these matters "prior to any action on Troy.":I  yOJ-ԍLSGAC Letter at 1.: It is divided into "First Principles"   zand "Committee Actions." Among the first principles is the principle that, "State and local governments   are trustees of the public's rightsofway. Rightsofway are real estate property rights of substantial   economic value and interest to local communities. The public has a right to fair compensation for  S -  Moccupancy of and use of its property."QJ   yO:-ԍLSGAC Advisory Recommendation No. 1 at 1.Q The Commission, in contrast, is responsible for setting national   \standards and rules governing the conduct of the "interstate telecommunications marketplace to assure   \fair and open competition that favors neither incumbents nor new entrants." LSGAC acknowledges that,   !"State, local and FCC officials share the common goals of bringing true and effective competition in   telecommunications services to all our citizens as quickly as possible while minimizing the adverse  S-effects on other essential community needs, costs and interest."9K  {O-ԍId. at 12.9   Sh- 3.Competitive Neutrality and Nondiscrimination  S-  p"35.` ` TCI contends that the City has not required Ameritech, the incumbent local exchange   carrier in Troy, to obtain a telecommunications franchise. According to TCI: "Under any interpretation   of Section 253, rightofway management must be nondiscriminatory and competitively neutral. The  S-  ]City has failed to honor either requirement."TL<  {O|&-ԍPetition at 21. See TCI Reply at 16. T In response to the suggestion that Ameritech may be   exempted from local franchising by reason of a franchise that the state issued in the early part of this   zcentury, TCI argues, "[r]egardless of the basis for Ameritech's exemption, the fact that only [competitive"PNL,8)8)``"   {local exchange carriers] must comply with [the Telecommunications Ordinance] renders the measure  S-discriminatory and anticompetitive in violation of the 1996 Act."?M yO@-ԍTCI Reply at 16, n. 39.?  S-  #36.` ` TCI further contends that Section 12(1) of the Telecommunications Ordinance is   inherently discriminatory. That section provides that if a franchisee provides a "new service, facility,   equipment, fee or grant to any other community . . . within the State of Michigan, the same shall be   provided in or to the City." According to TCI, "by imposing greater burdens on one provider over others,  S-Section 12(1) is not competitively neutral and nondiscriminatory, as required by Section 253(c)."1NX {O -ԍId.1  S-  $37.` ` Other industry commenters agree with TCI that the City has violated section 253(b) and  Sp-  (c) by failing to apply the Telecommunications Ordinance to Ameritech.aOp yO -ԍMCI Comments at 67; MCTA Comments at 9; NCTA Reply at 9.a NCTA suggests that   discriminatory application of the Telecommunications Ordinance violates section 253(a) as well, reasoning   that requiring a new entrant to pay a franchise fee equal to 5% of its gross revenues, while imposing no  S -such fee on the incumbent, "would make it nearly impossible for the competition to enter the market."8P z yO-ԍNCTA Reply at 9.8  S -  %38.` ` MCTA reports that in response to a request made under the Michigan Freedom of   lInformation Act for all licenses and/or franchises issued to Ameritech under the Telecommunications   lOrdinance, the City produced only a cable franchise agreement between the City and Ameritech New  S0-  Media.JQ0  yO-ԍMCTA at 8 and Attachments A and B.J Acknowledging that the City has imposed the Telecommunications Ordinance on another entrant, MFS, the MCTA asserts:   XX` ` Far from establishing a nondiscriminatory and evenhanded application   +of [the Telecommunications Ordinance], this fact unequivocally   establishes that Troy is applying its ordinance in a discriminatory   8manner. All new and potential entrants are being required to comply,  S-but Ameritech . . . is not.8R yOR-ԍMCTA Reply at 9.8x`  S-  5&39.` ` MCTA suggests that the City may have refrained from subjecting Ameritech to the   Telecommunications Ordinance based on an interpretation of state law. According to MCTA, Ameritech   claims to have been granted a franchise by the state before the Michigan Constitution was amended to   \give municipalities franchising authority. MCTA believes that Troy is assuming that "the contract clause   of the Michigan and federal constitutions prohibits Troy's right to impair or regulate Ameritech's existing   franchise." MCTA contends that regardless of such issues of state law, section 253 prohibits"O* R,8)8)``@"   {municipalities from exempting incumbent local exchange carriers from regulations applicable to new  S-entrants.;S yO@-ԍMCTA Comments at 9.;  S-  p'40.` ` AT&T requests that the Commission make clear that the following activities, inter alia,   are not permissible rightofway management functions under section 253(c), or otherwise violate the Act because they are not competitively neutral and nondiscriminatory:   XX` `  Grandfathering of situations in which the ILEC has no franchise or   certification requirement and pays no compensation to the municipality   ffor use of the public way, yet new entrants are required to obtain a   franchise or certification and compensate the municipality for use of the rightsofway.x`   XX` `  Grandfathering the ILEC at a compensation level lower than that paid  S -by new entrants.DT X yO-ԍAT&T April 24 Letter at 34.Dx`  S -  (41.` ` In a subsequent ex parte filing, David A. Svanda, a member of the Michigan Public Service   kCommission, avers that the State of Michigan has been a leader in the drive to expand competition into the local telecommunications market.   eXX` ` [T]his expanded competition holds the promise of improved services at   tlower prices to Michigan's business and residential consumers. The key   to competition is the removal of barriers to entry and the establishment   of a 'level playing field' . . . [T]his will be extremely difficult to do in a   patchwork environment of franchise fees and other requirements  S-imposed unevenly on competitors by local governments.nUZ yO-  ԍLetter to the Honorable Reed E. Hundt, Chairman, FCC, dated January 14, 1997, Re: In the Matter of TCI  {Oh-  >Cablevision of Oakland County, Inc., Ex Parte Presentation (Docket CSR4790), from David A. Svanda, Commissioner, Michigan Public Service Commission ("Svanda Letter") at 1.n x` According to the Svanda Letter,   XX` ` to impose fees and conditions unrelated to costs caused will be a   significant impediment to those attempting to compete with incumbent   vproviders. This is especially true in situations where incumbent   providers are claiming exemption from the fees and conditions imposed  S-by local government on new entrants.";V  yO$-ԍSvanda Letter at 1.; x`  S-  )42.` ` Attached to the Svanda Letter is a copy of a letter from Michigan Governor Engler to a   knumber of communities in Michigan, including Troy, expressing the Governor's view on the issue of local"`PV,8)8)``"  S-  control over telecommunications facilities.W yOh-  ԍSvanda Letter, attaching a Letter to the Honorable Jeanne Stine, Mayor of Troy, from John Engler, Governor, State of Michigan, dated December 3, 1996 ("Engler Letter"). Governor Engler notes that the 1995 Michigan   Telecommunications Act ("MTA") set parameters to encourage competition throughout the state similar to those set for the nation by the 1996 Act. The Governor states:   XX` ` A number of Michigan cities have chosen to enact local   telecommunications ordinances. Many have chosen a very desirable   Gapproach that provides a level playing field for all telecommunications   providers and does not include discriminatory franchise taxes. These   Xordinances allow fair and reasonable recovery of costs related to   maintaining the rightofway. These communities have recognized that   the key to establishing an effective competitive environment is to ensure   that all competitors are treated equally. That is why the new state and    federal laws both require such treatment. I believe the overriding   question is not of local control, but a question of removing potential  S -barriers to competition and, thus, intra and interstate commerce.;X  yO-ԍEngler Letter at 1.;x`   The Governor's letter closes by urging the municipalities to resist the attempts by some to hide, under   the rubric of "local control" of rightsofway, what are actually efforts to impose discriminatory   ]"franchise taxes," which ultimately are paid by telecommunications consumers in the form of higher   rates. "I am concerned that the collective actions of a few could have the impact of paralyzing  S-telecommunications infrastructure investments in our state, as well as your own community."9Y {O0-ԍId. at 12.9 XX` ` x`  S-  *43.` ` In its comments, Richmond et al. defends what it views as the City's decision to exempt   Ameritech from the Telecommunications Ordinance, arguing that section 253 does not require the City   \to apply the same regulatory scheme to all telecommunications providers. Richmond et al. asserts that   TCI has failed to show that it will be offering services comparable to those of Ameritech or that it will   lbe subject to universal service obligations and other requirements faced by Ameritech. According to   PRichmond et al., the "competitively neutral and nondiscriminatory" provision applies only to   telecommunications providers providing comparable services. Hence, it does not violate Section 253(c)   to treat providers that provide different services differently for regulatory purposes. Such regulations  SP-do not undermine competition and are not discriminatory.GZPB yO2!-ԍRichmond et al. Comments at 12.G  S-  %+44.` ` Richmond et al. further argues that it would be reasonable for a local government to   ?distinguish between a telecommunications provider that offers service within the local government's   jurisdiction and one that merely maintains facilities in that jurisdiction in order to offer service in some   other community. Richmond et al. maintains that the requirement of nondiscrimination and competitive   kneutrality imposed by section 253(c) applies only to the amount of compensation charged for use of the"`QZ,8)8)``"  S-  rightsofway, and does not apply to regulations designed to manage the rightsofway.J[ yOh-ԍRichmond et al. Comments at 1114.J Compensation   need not be uniform in order to be nondiscriminatory, according to Richmond et al. Richmond et al.   asserts that consistent with section 253(c), a municipal government could require a monetary payment   from one provider, while demanding inkind compensation from another provider, as long as overall the   `compensation demanded of each provider was reasonable, competitively neutral, and non S8-discriminatory.G\8X yOX-ԍRichmond et al. Comments at 14.G  S-  ,45.` ` In its initial and reply comments, the City did not address the issues of lack of   ^competitive neutrality and discrimination against new entrants visavis the City's treatment of   Ameritech that were raised by TCI and other industry commenters. Later, during its presentation at the   kCommission's December 16, 1996 Public Forum, the City stated that the Ordinance applies equally to all   providers of telecommunications services within Troy, including Ameritech, thus drawing no distinction   between competitive local exchange carriers ("CLECs") and the incumbent local exchange carrier ("ILEC").  S -  kIn a subsequent ex parte filing, the City states that it has not changed or amended the Ordinance since  S -  {December 1995, when the Ordinance was initially enacted.J]  yO-ԍJanuary 30 Troy Presentation at 1.J The City also states that it believes that   ]Ameritech currently is in violation of the Ordinance. Accordingly, as part of the City's effort to fully   enforce the Ordinance, Troy has notified Ameritech of its noncompliance and has requested that   Ameritech complete and submit a franchise application. In the event that Ameritech's failure to comply  S0-continues, the City is prepared to take further steps in ensure compliance.1^0 {Op-ԍId.1  S-  -46.` ` Anaheim et al. characterize this situation as the "Incumbent Question," and state that   it is not unique to Troy. "It is probably not an understatement to say that resolution of the question   of whether to treat new providers in a manner equivalent to incumbents . . . has direct relevance for  Sh-  municipalities throughout the country."_$h2 {O:-  ԍLetter to Mr. William F. Caton, Acting Secretary, FCC, Re: Notification of Permitted Ex Parte Presentation TCI   Cablevision Inc., Docket No. CSR4790 from James N. Horwood, Scott H. Strauss, Spiegel & McDiarmid on behalf  {O-  of Anaheim, et. al., attaching Written Ex Parte Presentation by Spiegel & McDiarmid Concerning the "Incumbent Question," at 1 ("January 16 Anaheim Presentation"). According to Anaheim et al., the 1996 Act's movement from   a monopoly or quasimonopoly regime to a competitive market structure, creates certain temporary,   ktransitional market problems. "The Incumbent Question is, we believe, one such problem." Anaheim et   |al. explains that, normally, due process and other ordinary legal requirements applicable to local   zgovernments require that similarly situated carriers be treated in a similar manner. The problem posed   ^by competitive entry into telecommunications, Anaheim et al. suggests, is that carriers generally   commence providing service at different times, provide different types of services, in different locales,   with different demands for public property and undertake service obligations under different state and   local regulatory regimes. Anaheim et al. argues that the 1996 Act does not require that arrangements   with new providers mirror those entered into years earlier. "Indeed, because incumbents and new   entrants are seldom similarly situated, there should be no presumption that identical treatment is either  S-appropriate or 'competitively neutral and nondiscriminatory.'" 9`  {On(-ԍId. at 23.9 "R `,8)8)``"Ԍ S-  ԙ.47.` ` Anaheim et al. acknowledges that the problem of competitive neutrality as between   Nincumbents and new entrants cannot be solved in one day, or one proceeding, because "the issue is   Ofraught with a host of local and state statutory and regulatory requirements," but offers that the   problem is solvable over the near term, provided appropriate guidelines are established. As to the   /situation in Troy, specifically, Anaheim et al. notes that the City has concluded that Ameritech and TCI   >must both comply with the City's Telecommunications Ordinance, and is already taking steps to ensure   that all telecommunications providers will operate on the same basis. Given this circumstance, Anaheim   et al. suggests that the Commission permit the Incumbent Question to first be addressed expeditiously   !by Troy or the State of Michigan, and should in other cases generally defer to such local authorities   where they have stated the intention to address the issue. Troy should be given an appropriate period   of time, for example, six to nine months, free from preemption, within which to resolve the Incumbent   1Question, presumably by bringing the incumbent provider under the City's Telecommunications   \Ordinance. Failing that, or if parties contest Troy's resolution of the matter, they may seek appropriate   relief with the Commission. In the event Troy is unable act, then the Commission should take   appropriate action. Anaheim et al. suggests that appropriate action in this circumstance would be   preemption of any law or regulation underlying the Ameritech service agreement, not the Troy   Telecommunications Ordinance, thereby leaving Ameritech subject to the Troy Ordinance under state  SX-law.OaX yO-ԍJanuary 16 Anaheim Presentation at 34.O  S-  o/48.` ` In a later filing, the City initially reiterates its fundamental position that the Commission  S-  lacks jurisdiction to address issues relating to the compensation required by Troy's Ordinance.Jb yO-ԍJanuary 30 Troy Presentation at 2.J   Notwithstanding, to the extent that the Commission believes it has authority to determine whether the   Troy Ordinance is competitively neutral and nondiscriminatory, the Ordinance satisfies that standard   lbecause it applies to both TCI and Ameritech. At the same time, the City states that it agrees with   Anaheim et al.'s proposed interim solution to the issue of whether a CLEC seeking to provide service must   \be permitted to do so on terms equivalent to the terms to which the ILEC is subjected. The City states   that the Anaheim presentation recognized that the manner in which communities treat ILECs may be   dependent on arrangements that have been in existence for nearly a century. The City concurs with the   kAnaheim suggestion that the incumbent question should, in the first instance, be resolved locally within   {a six to nine month period. "After that time period, parties contesting the issue could request relief   from the Commission, which should then focus on preempting the ILEC's arrangement." The City also   argues that the Commission's jurisdiction and any action it might take if it were to adopt this solution   1may extend only to matters outside the scope of section 253(c), and that the courts remain the  S-appropriate venue for resolving disputes that arise under section 253(c).9c {O -ԍId. at 13.9  S-  b049.` ` LSGAC, in its advisory recommendation, states that the "Committee is prepared to   participate in the development of suggestions to "level the playing field" to require incumbent operators   to pay compensation for rightsofway that embody fair valuation. The Committee asks that the   lCommission work with the Committee on possible actions the Commission might take to achieve the   result that incumbent operators accept fair and modern valuation for use of the public rightsof S!-way."Qd! yO(-ԍLSGAC Advisory Recommendation No. 1 at 3.Q "!S2d,8)8)`` "Ԍ S-  ԙ150.` ` TCI and representatives from MCI, United States Telephone Association ("USTA"),   Association for Local Telecommunications Services ("ALTS"), CPI and Lucent Technologies ("Lucent")   addressed several competitive issues raised by the Troy Ordinance, and responded to the "transitional"  S-  approach suggested by Anaheim et al. and the City in an joint ex parte presentation.1eZ {O-  ԍLetter to Mr. William F. Caton, Acting Secretary, FCC dated March 28, 1997, Re:Ex Parte Presentation,   ;Petition of TCI Cablevision of Oakland County, Inc., CSR4790 from Howard J. Symons on behalf of TCI ("March 28 TCI Letter").1 As to the former,   {the presentation generally noted that the proliferation of local telecommunications ordinances would   prevent the development of local competition, undermining one of the principal goals of the 1996 Act.   USTA and ALTS stated that other municipalities' adoption of ordinances purporting to regulate   telecommunications had already imposed substantial barriers to the provision of competitive new   services. USTA indicated that preempting local ordinances that deter competitive entry and new services was among the most important policy goals of their respective members. In addition,   vXX` ` TCI and the other participants argued that the establishment of   tmunicipal requirements for such matters of interconnection constitutes   )a barrier to entry prohibited by section 253(a) of the Communications    Act . . . and that the discriminatory imposition of a municipal fee or   other requirements to a competitor and not to incumbent carriers   violates section 253(c) of the Communications Act even during a   V"transitional" period when the local government is seeking authority to  S0-impose the fee on the incumbent.Cf0 yO-ԍMarch 28 TCI Letter at 12.Cx`  S- 4.Scope of Municipal Authority Under Michigan State Law  S-  S-  $251.` ` TCI maintains that the City's Telecommunications Ordinance exceeds its authority under  Sh-  >state law to manage public rightsofway.9ghz yO-ԍTCI Reply at 21. 9 TCI points out that under the 1908 Michigan Constitution,  S@-  municipal governments are empowered to manage their streets and highways.ih@  {O-ԍId. & Michigan Constitution of 1908, Article 8, Section 28.i However, the 1995   3Michigan Telecommunications Act ("MTA") vests the state with jurisdiction over intrastate   @telecommunications services, and preempts local municipal ordinances that attempt to regulate  S-  telecommunications services.ai {O!-ԍId.; See M.C.L.A. 484.2101, et seq.a TCI states that the MTA bars municipal governments from using their   rightsofway management authority to charge permittees fees for anything other than the cost of  Sx-  mmaintenance and management of their public rightsofway.njx.  {OF$-ԍTCI Reply at 22; See M.C.L.A. 484.2251(3) and 484.2253. n TCI maintains that the Michigan   /Constitution limits Troy's management of its rightsofway to issuing permits and other such functions  S(-and provides no basis for the City's current comprehensive telecommunications regulatory scheme.9k(  yO'-ԍCity Reply at 22.9 "TP k,8)8)``@"Ԍ S-   352.` ` In response, the City argues that the Michigan Constitution delegates to local   municipalities both the right to control rightsofway and the right to grant franchises to entities  S-  \seeking to transact telecommunications business using those public rightsofway.<l yO-ԍCity Comments at 36.< The City relies on   Article VII, Section 29 of the Michigan Constitution for its authority to regulate telecommunications service. This provision states:   XX` ` No person, partnership, association or corporation, public or private,   operating a public utility shall have the right to the use of highways,   streets, alleys or other public places of any county, township, city or   villages for wires, poles, pipes, tracks, conduits or other utility facilities,   without the consent of the duly constituted authority of the county,   township, city or village; or to transact local business therein without   tfirst obtaining a franchise from the township, city or village. Except as   Xotherwise provided in this constitution the right of all counties,   townships, cities and villages to the reasonable control of their highways,   streets, alleys and public places is hereby reserved to such local units  S -of government.^m X yOx-ԍMichigan Constitution 1963, Article VII, Section 29. ^x`  S0-  453.` ` The City further states that pursuant to the Michigan Constitution, it is well within its  S-  rights to adopt the Telecommunications Ordinance in question.Rn yO-ԍCity Comments at 9 & 10; City Reply at 11.R According to the City, under state law,   before TCI, or any other entity that desires to provide telecommunications service to Troy, can engage  S-  in that service, the entity needs to obtain an appropriate franchise from the City.pox yO-ԍCity Comments at 910; Michigan Constitution 1963, Art.VII, Section 29. p The City argues that   the state of Michigan has delegated the franchising function for telecommunications service providers  Sh-to its local governments.9ph yO-ԍCity Reply at 11.9  S-  $554.` ` MCTA argues that the constitutional provision relied upon by the City does not reference   atelecommunications service specifically, and the MTA defines "utility" so as to exclude   Qtelecommunications providers from applicable rules. It is therefore questionable whether   telecommunications service constitutes a public utility service requiring a franchise in the State of   Michigan. MCTA maintains, therefore, that the constitutional provision relied upon by the City does not  SP-give it franchising authority over telecommunications providers.:qP yO#-ԍMCTA Reply at 13.:  S-  655.` ` The City responds that the legislative history of the constitutional provision at issue   @demonstrates that the drafters intended to include telephone companies as "utilities." The City"U( q,8)8)``"   ?contends, accordingly, that the MTA is unconstitutional to the extent that it can be read to deprive  S-municipalities of franchising authority over telecommunications providers.r$ {O@-  hԍSee Letter to Mr. William F. Caton, Acting Secretary, FCC dated October 24, 1996, Re: Ex Parte Presentation,   xFile No. CSR4790, TCI Cablevision of Oakland County, Inc., from Mark Van Bergh, Roberts & Eckard, P.C. on  {O-  behalf of City of Troy, attaching Memorandum of Oral Ex Parte Presentation October 23, 1996 ("Troy October 23, 1996 Memorandum") at 1.   S- 85.Fair and Reasonable Compensation  S8-  756.` ` TCI challenges the franchise fee provisions of the Telecommunications Ordinances as   exceeding the "fair and reasonable compensation" to which the City is entitled under section 253(c) when   k8authorizing the use of the public rights of way. Under Section 9 of the Telecommunications Ordinance,   a franchisee must pay the lesser of (i) 5% of its gross revenues and (ii) a per linear foot charge of $0.40   for underground facilities and $0.25 for aerial facilities. As noted above, Section 3(6) defines gross   >revenues as "all receipts collected by the Grantee for all telecommunication and related operations and   services within the corporate limits of the City as well as any other revenue arising from operation or possession of [a franchise] regardless of where billed."  S -  857.` ` TCI contends that section 253(c) prohibits the imposition of a revenuebased franchise   zfee. According to TCI, the Telecommunications Ordinance violates Section 253(c) by imposing fees based   {on revenues from the provision of services, including revenues unrelated to the system. TCI cites an   \opinion of the Illinois Supreme Court for the proposition that the fee imposed by a municipality for the   /use of the public rightsofway cannot exceed "a measure that would indicate impact on rightofway  S-use."s {O\-ԍPetition at 19, citing American Tel. & Tel. Co. v. Village of Arlington Heights, 620 N.E.2d 1040 (Ill. 1993).  S-  958.` ` MCI also contends that a franchise fee based on the provider's gross revenues bears no  S-  relation to the use of the rightsofway and is therefore invalid under section 253(c).9tF yOv-ԍMCI Comments at 79 Hyperion argues   that section 253(c) requires that fees bear a "compensatory relationship to maintenance of the public  S@-  right of way . . . ."?u@ yO-ԍHyperion Comments at 5.? Adelphia suggests that a municipality is entitled to no additional compensation   when a cable operator uses its existing facilities to offer telecommunications service, since the  S-  municipality is "already receiving compensation for those facilities' occupation of the rightsofway."@vf  yO -ԍAdelphia Comments at 12.@   lTCI, MCI, USTA, CPI, ALTS and Lucent also argue that efforts by local governments to impose fees and   conditions on telecommunications providers unrelated to costs caused will be a significant impediment  Sx-  to competition.Dwx  yO%-ԍMarch 28 Troy Letter at 12.D AT&T submits that "fair and reasonable" compensation cannot mean marketbased   pricing in the context of a monopoly input such as a public rightofway. Instead, AT&T argues, a   municipality may assess fees only to the extent required to recover an appropriate share of the city's"(V w,8)8)``n"   costs occasioned by the use of the public rightofway such as increased street repair and paving  S-costs.Bx yOh-ԍApril 24 AT&T Letter at 2.B  S-  :59.` ` The City asserts that section 253(c) does not limit the compensation received to an  S`-  amount sufficient only to cover the cost of maintenance of the rightsofway.8y` yO-ԍCity Reply at 9.8 The City describes its   franchise fee as "reasonable, publicly disclosed, nondiscriminatory, and competitively neutral, and thus  S-  >fully with the [C]ity's authority under Section 253(c)."<z yO -ԍCity Comments at 41.< The City contends that the imposition of a 5%   franchise fee on gross revenues has been deemed reasonable in other contexts involving use of the public   {rightsofway. The City notes that in adopting section 622(b) of the Communications Act, "Congress   found that a franchise fee of up to 5% is appropriate compensation to a city for a cable system's use of  Sp-  @its rightsofway."V{p yO-ԍCity Reply at 9, citing 47 U.S.C.  542(b).V The City states that in the 1996 Act "Congress determined that 5% of gross   revenues is also appropriate compensation to a city for an open video system provider's use of the  S -rightsofway, even though no Title VI franchise may be imposed on an [open video system] provider."1| 0 {O-ԍId.1  S -  p ;60.` ` The City notes that, to the extent TCI objects to a franchise fee that is based on gross   krevenues, TCI has the option of basing its fee on a fixed per linear foot charge for the use of the rights  Nofway. Moreover, consistent with its overall construction of section 253, the City contends that the   franchise fee complies with section 253(a) because it does not have the effect of prohibiting any entity   from providing telecommunications service and therefore is not subject to scrutiny under section  S-253(c).9} yO-ԍCity Reply at 42.9  S-  <61.` ` PROTEC agrees with the City that section 253(c) does not limit a franchise fee to the   amount necessary to compensate the municipality for the cost of overseeing the franchisee's use of the   rightsofway. "Mere recoupment of expenses is hardly 'fair and reasonable compensation,'" according  S@-  to PROTEC.<~@z yOZ-ԍPROTEC Motion at 12.< PROTEC likens the City to a landlord renting private property and asserts that fair and   reasonable compensation for the rental of property is not "restricted to recoupment of the owner's cost   of managing a tenant's use of the property." Charging a fee based on the franchisee's gross revenues  S-is fair and reasonable, according to PROTEC.;  {Or"-ԍId. at 1213.;  Sx-  p=62.` ` Richmond et al. notes that, like cable operators, open video system operators also are   lsubject to a franchise fee based on gross revenues, and contends that the Commission has described   such a fee as being compensation for the use of the public rightsofway. Richmond et al. argues that"(W ,8)8)``n"   the City's imposition of a revenue based franchise fee is consistent with these analogous provisions of  S-federal law and therefore "must be deemed reasonable."I yO@-ԍRichmond et al. Comments at 910.I  S-  $>63.` ` The TMIC Communities contend that establishing a franchise fee as a percentage of gross   revenues "is a good marketbased approach because the rent is based upon the economic value of the  S8-  ]property rights in question, namely the income stream they generate."H8X yO0-ԍTMIC Communities Comments at 23.H As in the case of a private   property owner, a municipality should be able to impose a franchise fee that reflects the value of the   >property, in addition to holding the franchisee accountable for direct, outofpocket costs incurred by   kthe municipality, according to the TMIC Communities. The TMIC Communities contend that a revenue  >based franchise fee is the most prevalent measure of compensation for use of the public rightsofway,   not simply with respect to the provision of communications services such as cable and telephone, but  SH -also in the areas of gas and electric service.KH  yO-ԍTMIC Communities Comments at 2224.K  S - 6.Commission Jurisdiction to Preempt Under Section 253(d)  S -  ?64.` ` The City's overriding defense to TCI's Petition is its claim that the Commission lacks   jurisdiction to preempt the Telecommunications Ordinance. The City characterizes the   Telecommunications Ordinance as an exercise of the authority reserved to it by section 253(c) to manage   its rightsofway and to receive fair and reasonable compensation for the use of those rightsofway.   While TCI alleges that the Telecommunications Ordinance does not satisfy the standards set forth in   ?section 253(c) for rightsofway management, the Commission is not the proper forum for resolving   such claims, according to the City. The City notes that under the express language of section 253(d),   the Commission's preemption authority extends only to a state or local requirement "that violates   subsection (a) or (b)" of section 253. The City argues that section 253(d) thus "gives the Commission  S@-  zno authority to preempt state or local government management of or compensation received for the use  S-of their rightsofway."?x yO0-ԍCity Comments at 2022.?  S-  a@65.` ` The City notes that a prior Senate version of section 253(d) would have permitted the  S-  @Commission to preempt, without limitation, any violation of section 253.< yOH -ԍCity Comments at 23.< Following a proposed   amendment that would have eliminated the Commission's preemption authority entirely, Senator Gorton   offered a compromise amendment that omitted violations of subsection (c) from the scope of section   /253(d), but left intact the Commission's authority to preempt other violations of section 253, according   0to the City. The Senate unanimously adopted Senator Gorton's amendment by voice vote, and that  S-  ?version of the bill became the final legislation.< yO&-ԍCity Comments at 23.< The City notes Senator Gorton's description of the impact of his amendment: "X( ,8)8)``"Ԍ  XX` ` There is no preemption . . . for subsection (c) . . . which preserves to   local governments control over their public rights of way. It accepts the   tproposition . . . that these local powers should be retained locally, that   any challenge to them take place in the Federal district court in that   locality and the Federal Communications Commission not be able to  S8-preempt such actions.8 {O-ԍId. at 24, quoting 141 Cong. Rec. S 8213 (July 13, 1995) (remarks of Sen Gorton).x`  S-  ( A66.` ` The City argues that the House of Representatives joined in this view of Commission jurisdiction, noting the floor statement of one member of the House:   ` ` As for the issue of FCC preemption, I am pleased that the committee   agreed to support the Senate language which authorizes the Commission   to preempt the enforcement only of State or local requirements that   Vviolate subsection (a) or (b), not (c). The courts, not the Commission,  S -will address disputes under section 253(c). Z yO-ԍCity Comments at 24, quoting 141 Cong. Rec. H 1174 (Feb. 1, 1996) (remarks of Cong. Pelosi).x` (  S -  B67.` ` According to the City, Troy's Telecommunications Ordinance and the actions Troy took   with respect to TCI's permits all relate directly to the City's management of its rightsofway. In   support of this contention, the City notes that the Legislative Findings of the Telecommunications   NOrdinance state that it "is intended to minimize the disruption" of the public rightsofway and to   regulate "the construction and the restoration" of the rightsofway by "those who seek to construct"   telecommunications facilities. The City contends that the Commission must dismiss the Petition because   the Commission lacks jurisdiction under section 253(d) to preempt any local regulation that relates to   the management of and compensation for the use of the public rightsofway. In further support of   this contention, the City cites federal case law for the proposition that courts are reluctant to find   ]federal preemption of matters traditionally governed by state law. The City cites section 2(b) of the   mCommunications Act as a further restriction on the Commission's jurisdiction to regulate matters  S-affecting intrastate communications.S yOR-ԍCity Comments at 2528 (citations omitted).S ` `  Sx-  C68.` ` Municipal commenters agree with the City's statutory analysis concerning the omission  SP-  of subsection (c) from subsection (d).Pz yOj -  iԍPROTEC Comments at 7; Farmington Hill Comments at 3; Richmond Comments at 4; Texas Communities Comments at 1517; MAS Comments at 910. The TMIC Communities note that Senator Gorton proposed his   |amendment in response to a broader amendment proposed by Senator Feinstein that would have   eliminated all Commission jurisdiction under section 253. As the TMIC Communities indicate, Senator   >Feinstein offered her amendment based on her concern that when faced with a challenge under section 253:   XX` ` cities will have to send delegations of city attorneys to Washington to go   8before a panel of telecommunications specialist[s] at the FCC, on what   may be very broad questions of State or local government rights. . . . " Y,8)8)``,"   It should not be this way. Cities should have control over their streets.  S-Counties should have control over their highways. yO@-  ԍTMIC Communities Comments at 15, quoting 141 Cong. Rec. S8170 (June 12, 1995) (Statement of Sen. Feinstein). x`  S-  $D69.` ` According to TMIC Communities, Senator Feinstein favored a procedure under which "the   cable company may challenge the city or State action directly to the Federal court in the locality and  S8-  the court will review whether the city or State acted reasonably under the circumstance."k8  yO-ԍ141 Cong. Rec. S8171 (June 12, 1995) (Statement of Sen. Feinstein).k TMIC   zCommunities state that Senator Gorton then offered his compromise amendment, ultimately adopted by   @voice vote, giving the Commission authority to preempt violations of subsections (a) or (b) only.   According to the TMIC Communities, this legislative history "irrefutably establishes that Congress intended  S-  >to and did deprive this Commission of any jurisdiction to hear the claims asserted by TCI."L yO -ԍTMIC Communities Comments at 1617. L The TMIC Communities add:   eXX` ` Local regulations which relate to the control of public rightsofway or   compensation for the use of public rightsofway are simply not subject   to FCC review. Challenges to these regulations must be brought in local  S -courts, not before the FCC.1 @ {O-ԍId.1x`  SX-  E70.` ` PROTEC asserts that the Telecommunications Ordinance can violate section 253(a) only   if it is outside the City's authority under section 253(c). Citing the legislative history discussed above,  S-  PROTEC argues that the Commission's subsection (d) preemptive power can come into play only where   \subsection (c) does not apply, and the courts, not the Commission, must determine whether subsection   >(c) applies. The omission of subsection (c) from subsection (d), PROTEC claims, "takes the Commission   completely out of the business of regulating disputes over state and local rightsofway management  Sh-  and compensation requirements.";h yO-ԍPROTEC Motion at 7.; The Commission's alleged lack of jurisdiction over matters arising   under section 253(c) is not only mandated by the plain language of section 253(d), according to PROTEC, but is also a wise policy choice:    XX` ` Placement of facilities in the rightsofway causes significant damage   to very expensive infrastructure which is the lifeblood of any    community. Different communities have devised different procedures   for protecting the rightofway, which may vary significantly depending   on the geography of a particular locality, as well as other factors. These   approaches are designed to reflect local circumstances, state laws,   constitutions and charters, and once again, there is little reason for the   Commission to suppose it can or should decide what the best method for   protecting the rightsofway might be. The Commission is not in a"Zb ,8)8)``"   position to write a national local franchising ordinance, and should avoid  S-doing so. {O@-ԍPROTEC Motion at 11 (footnote omitted). See Farmington Hills Comments at 3; North Central Reply at 34.x`  S-  F71.` ` Similarly, PROTEC argues that a determination under section 253(c) of what constitutes   fair and reasonable compensation for the use of public rightsofway is likely to be affected by   "communityspecific facts concerning rightsofway value, by a particular community's existing   franchise contracts, by state law, by local charters and by the differing regulatory obligations assumed   by particular providers. Not only is Commission consideration of those matters prohibited by statute, it ought to be avoided by the Commission in any case.   GXX` ` Were the Commission to become the arbiter of Section 253(c) disputes,   it would have to resolve individual factual and state law matters relating   9to thousands of different communities across the nation. That is a    burden the Commission lacks the resources and state law expertise to   Hcarry. And that is why Congress properly left those disputes to the  S -courts. Z {O-  JԍPROTEC Motion at 1415. See Farmington Hills Comments at 3 ("Congress and the President have approved legislation recognizing this expertise lies with the State and its political subdivisions").x`  SX-  G72.` ` TCI replies that the instant dispute does not involve section 253(c) because the "elaborate   @franchising requirements" of the Telecommunications Ordinance do not constitute rightsofway   management. TCI further asserts that the City is precluded by both federal state law from regulating   in the areas identified in section 253(b). This leaves the Commission with jurisdiction to preempt the  S-Telecommunications Ordinance under section 253(d), according to TCI.8 yO4-ԍTCI Reply at 23.8  Sh-  H73.` ` TCI claims that the legislative history supports its view that "any exception to the FCC's  S@-  preemptive authority for rightsofway management should be narrowly construed."8@l yOL-ԍTCI Reply at 25.8 TCI quotes   lSenator Gorton, from the floor debate, as describing the impact of his amendment as removing from  S-  \Commission oversight only "'purely local matters dealing with rightsofway.'" {O-ԍId., quoting 141 Cong. Re. S8306 (daily ed. June 14, 1995) (remarks of Sen. Gorton). TCI notes that Senator   Gorton described those local matters as including "whether there are aboveground wires or   underground wires, what kind of equipment ought to be used in excavations, [and] what hours  Sx-excavations should take place....'"1x {O"-ԍId.1 TCI further quotes Senator Gorton's remark that:   XX` ` if, under section (b), a City or county makes quite different rules   relating to universal service or the quality of telecommunications   services the very heart of this bill then there should be a central"[ ,8)8)``"   agency at Washington, DC, which determines whether or not that inhibits  S-the competition and the very goals of this bill . . . .1 {O@-ԍId.1x`  S-  3I74.` ` In addition, TCI restates its position that sections 253(a) and (d) require the Commission   to preempt a local regulation that "impedes an entity's ability to offer telecommunications services,"   notwithstanding any purported justification for the regulation under section 253(c). Contending that the   0Telecommunications Ordinance is barrier to entry that cannot be saved under section 253(c) in any  S-event, TCI argues that the issue of jurisdiction to decide section 253(c) matters never arises.;Z yO -ԍTCI Reply at 2324.;  S-  J75.` ` Other members of the cable industry concur with TCI's analysis.f yO" -ԍComcast Reply at 2021; NCTA Reply at 56; Cox Reply at 1314.f Comcast argues that   ?even if the Commission lacks jurisdiction to review local regulation of the public rightsofway, the   Commission would still have inherent jurisdiction to make the threshold determination of what   constitutes a valid management activity, and thus is within its jurisdiction. Exercising that authority   should compel the Commission to conclude that the Telecommunications Ordinance "is completely   unrelated to the management of the rightsofway," and thus is subject to Commission preemption as  S -a barrier to entry, according to Comcast.@ z yO-ԍComcast Reply at 2021.@  SX-  BK76.` ` Relying on the legislative history quoted by TCI above, NCTA asserts the limitation on the   Commission's authority to preempt extends "only to such core decisions on rightsofway matters as   kthe hours during which construction may occur, what kind of excavation equipment would be used, and  S-  the amount of reimbursement due for damage done to the rightsofway."8  yO-ԍNCTA Reply at 5.8 Congress did not intend   to prohibit Commission preemption of local regulatory requirements "where municipal activities ranged  S-  beyond these core issues."1 {O-ԍId.1 Cox adds that the issue of whether a cable operator must obtain a separate   franchise to provide telecommunications services is "precisely the sort of fundamental issue arising  S@-under the [1996] Act that requires a uniform answer nationwide."8@,  yO -ԍCox Reply at 14.8