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7nC:,3&8C!C!bC@@>.*(@<[<@85<5x::::::::::::<:C![3[3[3[3[3MY3J3J3J3J3(!(!(!(!eCe@e@e@e@b@b@b@b@W@[3`H:eC::R:W@H<<!!!WxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNWWW<::+33::o:::bb:(C<<:b(!!33:b!!xx::HH[xf ̏",tB^ f ^88Qdd4??d888ddddddddddd88N||NHx|k?d?dd4]oUoYFkv;8o;vkooUHHvkkh`dddd4ddddd8ddddddddv;]]]]]U~Y~Y~Y~YN;N;N;N;vkkkkvvvvh]pkkhk~odddXXddX|d|dXdkkkkvvL;dvddNvsddo8PxdzQz;ppvdkXXdpLkHpLkdPDdvpvvpvhX`Xoxdvkddh8dd444WxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNddd8N``ddd]]dFodddF44]]d??ddzzdddvv4]dF"dhd9dCCz8ddoddddYds`zUvddd????zozoY~NYYYN8YooYdYz~dzddYYzozzz~NdzYzzzz88dddddddzdzdYC\   pxtll\tll@\@\`Ly.X80,ɒX\  P6G;Py.\80,>\4  pG;2a=5,u&a\  P6G;&P2e=5,&e4  pG;&7jC:,ynXj\  P6G;XP 7nC:,-}6 5 {Od-ԍxSee id.> The City points out that the Ordinance does not prevent  Xf-any entity from installing a payphone inside a building.>.f 5 {O-ԍxSee id.>  X8-x19.` ` 276PREEMPTThe City distinguishes our New England Decision on the ground that the prohibition struck down in that case affected a particular class of payphone providers and not  X -others, whereas the Ordinance applies to all providers without exception.F/ Z 5 {O#-ԍxSee id. at 34.F The City also  X-maintains that our Pay Telephone Reconsideration Order actually supports the validity of the  X-Ordinance, because the Commission therein allegedly "acknowledged that local governments" /0*&&88"  X-retain the ability to regulate the locations of pay phones pursuant to zoning regulations."@05 {Oy-ԍxId. at 4.@ In the City's view, the Ordinance is just such a permissible zoning regulation, which the City  X-adopted as part of its effort to combat crime in the Central Business District.1Z5 {O-ԍxSee id. at 45; City Supp. Comments at 1 ("The subject ordinance is the critical element in the City's program to eradicate the crime associated with pay phones in the City's Central Business District").  X-x20.` ` 276PREEMPTThe City further argues that CPA improperly "bootstraps" the Ordinance to the City's execution of the Payphone Agreement and removal of nonpermitted payphones. According to the City, because CPA concedes the legality of those latter two actions, CPA cannot link those actions with the Ordinance to construct an illegal scheme to extract  XH-monopoly rents.P2H5 {O -ԍxSee City Comments at 12.P Moreover, the City defends the legitimacy of both of those actions, contending that (i) its removal of nonpermitted payphones falls well within its traditional  X -powers as the owner of the public rightsofway,D3 F5 {O-ԍxSee id. at 3.D and (ii) the Payphone Agreement resulted from an "entirely competitive" process "in keeping with both the letter and spirit of the  X -applicable FCC policies."I4 5 {Ou-ԍxId. at 2.` ` I  X -x21.` ` 276PREEMPTThe City also maintains that the Payphone Agreement is not exclusive.`5 j 5 {O-ԍxSee id. at 23; City Supp. Comments at 2.` Rather, the City claims that it will accept "reasonable" proposals from payphone service providers other than Pacific Bell to install payphones on the public rightsofway in the  Xy-Central Business District.l6y 5 {O&-ԍxSee City Comments at 23; City Supp. Comments at 12.l  XK- C.xOther Comments  X-x22.` ` 276PREEMPTAll of the other commenters support CPA's position that we should preempt the  X-Ordinance pursuant to section 253(d), section 276(c), and our Pay Phone Orders, for  X-essentially the same reasons stated in CPA's Petition.7 5 {O0#-ԍxSee XyCom Comments at 12; NEPCC Comments at 23; NJPA Comments at 37; APCC Comments at 39; APCC Reply at 24; PTC Reply at 2. They argue primarily that the Ordinance, coupled with the Payphone Agreement, amounts to a virtually absolute barrier to" 70*&&88"  X-entry,85 {Oy-ԍxSee XyCom Comments at 12; NEPCC Comments at 2; NJPA Comments at 56; APCC Comments at 5; APCC Reply at 24; PTC Reply at 2. particularly because indoor payphones are inherently uneconomic and unable to  X-compete with outdoor payphones.9"5 {O-ԍxSee XyCom Comments at 1; APCC Comments at 3, 56; APCC Reply at 23; PTC Supp. Comments at 23.  X-x23.` ` 276PREEMPTIn addition, several commenters argue that the Ordinance is not competitively neutral, because its effect is to allow only one provider Pacific Bell to provide payphones  X-at lucrative outdoor locations.:|5 {O -ԍxSee NJPA Comments at 36; APCC Comments at 79; XyCom Comments at 2; XyCom Reply at 12; APCC Reply at 34; NEPCC Supp. Comments at 2. XyCom claims that the City did not employ a competitive  Xv-process to select Pacific Bell and that the City has no permitting process.;v5 {O-ԍxSee XyCom Comments at 12; XyCom Reply at 1. See also Petition at 5 n.2; CPA Reply at 3. NJPA, NEPCC, and XyCom contend that the Ordinance must not be necessary to protect the public safety and welfare, because the City still allows Pacific Bell to provide outdoor payphones in the Central  X1-Business District.<1h 5 {OJ-ԍxSee NJPA Comments at 67; XyCom Reply at 2; NEPCC Supp. Comments at 2. See CPA Reply at 56. NJPA also asserts that the Ordinance resembles pre1996 Act ordinances  X -of two New Jersey municipalities that did not survive court challenges.P= 5 {O-ԍxSee NJPA Comments at 67.P Some commenters  X -also maintain that our New England Decision and our Classic Telephone Decision> 5 {O@-ԍxClassic Telephone, Inc. Petition for Preemption, Declaratory Ruling and Injunctive Relief, Memorandum  {O -Opinion and Order, File No. CCB Pol 9610, 11 FCC Rcd 13082 (1996) (Classic Telephone Decision), petition  {O-for emergency relief, sanctions, and investigation pending (filed Dec. 6, 1996), petition for review held in  {O-abeyance, City of Bogue, Kansas and City of Hill City, Kansas v. FCC, No. 961432 (D.C. Cir. Jan. 14, 1997)  {Oh-(denying petitioner's motion for writ of prohibition and sua sponte holding petition in abeyance). require  X -preemption of the Ordinance.? F5 {O-ԍxSee NEPCC Comments at 23; APCC Comments at 4; PTC Reply at 3; NEPCC Supp. Comments at 2. In addition, PTC claims that the proliferation of local regulations like the Ordinance would dampen the development of competition among payphone providers that Congress designed the 1996 Act to promote, because such regulations would add costs and legal uncertainties to any geographic expansion effort by a payphone" ?0*&&88"  X-provider.L@5 {Oy-ԍxSee PTC Reply at 23.L XyCom, APCC, and NEPCC state that the Ordinance impermissibly gives the  X-City a locational monopoly.AZ5 {O-ԍxSee XyCom Comments at 2; APCC Reply at 34; XyCom Reply at 12; NEPCC Supp. Comments at 2.  X-x24.` ` 276PREEMPTAPCC proffers two reasons why section 253(b) would not shelter the Ordinance from preemption, even if the Ordinance were found to be competitively neutral and necessary for the protection of public safety and welfare. First, according to APCC, section 253(b) is  Xv-merely an "interpretive guideline," not "an exception to the plain meaning of section 253(a)." Bv5 {O -ԍxAPCC Comments at 67 (citing Joint Explanatory Statement of the Committee of Conference, S. Conf.  {O -Rep. No. 104230, 104th Cong., 2d Sess. 113, 126 (1996) (Joint Explanatory Statement)).   X_-Second, in APCC's view, section 253(b) does not apply at all to actions of local governments,  XJ-because that section refers only to state authority, whereas section 253(c) refers to both state  X5-and local authority.NC5H5 yO.-ԍxAPCC Comments at 7 n.2.N  X - IV. DISCUSSION ă  X -x25.` ` For the reasons explained below, we find that CPA, on this record, has not shown that the Ordinance "prohibit[s] or ha[s] the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service" within the meaning  X-of section 253(a).GD5 yO-ԍx47 U.S.C. 253(a).G Because the record does not support a finding that the Ordinance falls within the proscription of section 253(a), we do not reach the question whether section 253(b) applies in these circumstances. For similar reasons, we further find that CPA has not shown that the Ordinance conflicts with the purpose of section 276 and our implementing rules "to promote competition among payphone service providers and promote the widespread  X#-deployment of payphone services to the benefit of the general public."JE#h 5 yO<-ԍx47 U.S.C. 276(b)(1).J Accordingly, on the basis of the record before us, we deny CPA's Petition. Our holding does not preclude CPA from filing a new petition with additional support for preemption.  X- A.xSection 253 Analysis  X-x26.` ` As discussed above, section 253(a), considered alone, bars state and local governments from imposing legal requirements that "prohibit or have the effect of prohibiting" E0*&&88P"  X-the ability of any entity to provide any interstate or intrastate telecommunications service."GF5 yOy-ԍx47 U.S.C.253(a).G We have already ruled that payphone service is a "telecommunications service" within the  X-meaning of sections 3(46)eGX5 yO-ԍx47 U.S.C. 153(46). Section 3(46) defines "telecommunications service" as "the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available  {Ok-directly to the public, regardless of the facilities used." Id. The Communications Act defines "telecommunications" as "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." 47 U.S.C. 153(43).e and 253(a).WH5 {OU -ԍxNew England Decision at 17.W Consequently, "state and local regulations regarding the payphone market are subject to scrutiny under section 253 on the basis of a claim that they 'prohibit or have the effect of prohibiting' the ability of potential competitors to provide  X-payphone services."@Id 5 {O-ԍxId.@  X_-x27.` ` In analyzing whether the Ordinance falls within the proscription of section 253(a), considered in isolation, we assume, without deciding, that CPA's unchallenged characterizations of the relevant service market and geographic market are correct: payphone  X -service, collectively outdoors and indoors, in the Central Business District.J  5 yO-ԍxAlthough the City does not challenge CPA's characterization of the relevant geographic market, it does point out that "the subject ordinance covers only a several block long stretch in the City's Central Business District; there is no similar restriction regarding pay phones on the exterior of buildings throughout the rest of the City." City Supp. Comments at 2. Within the context of those markets, we first consider whether the Ordinance "prohibit[s]... the ability  X -of any entity to provide any interstate or intrastate telecommunications service."GK 5 yO{-ԍx47 U.S.C. 253(a).G As discussed below, we conclude that the present record does not support such a finding. We then consider whether the Ordinance has the practical "effect of prohibiting the ability of any  X -entity to provide any interstate or intrastate telecommunications service.":L n5 {O-ԍxId.: We conclude that  X-the present record also does not support that finding.xMX5 yOA"-ԍxNeither CPA nor any of its supporting commenters argues that the State of California has not delegated to the City the power to enact laws such as the Ordinance. Therefore, for purposes of this proceeding only, we assume without deciding that the State of California has delegated to the City the power to enact the Ordinance.x "y M0*&&88"Ԍ X-x28.` ` Prior to the City's enactment of the Ordinance, a payphone service provider could install a payphone in three kinds of locations in the Central Business District: (1) indoors on private property (by contracting with the property owner); (2) outdoors on the public rightsofway (by contracting with the City); and (3) outdoors on private property (by  X-contracting with the property owner).vNX5 yO-ԍxUnlike the three kinds of locations in the Central Business District mentioned in the text, a fourth kind of potential location indoors on public property (such as a courthouse) is not mentioned by CPA or any commenter. Accordingly, we do not address that kind of location in analyzing the lawfulness of the Ordinance.v The Ordinance eliminates the third category of locations for all providers, including Pacific Bell. The Ordinance does not, however, expressly restrict the first two categories of locations for any provider. Any payphone service provider may still seek to install payphones in the Central Business District indoors on private property and/or outdoors on the public rightsofway. Thus, the Ordinance, by its terms, does not "prohibit" the ability of any payphone service provider to provide payphone service in the Central Business District within the meaning of section 253(a).  X -x29.` ` Neither the New England Decision nor the Classic Telephone Decision supports CPA's petition for preemption on the present record. In both of those cases, we found that certain governmental actions were of the kind proscribed by section 253(a) because those actions expressly precluded an entity or class of entities from providing a particular service in  X-a particular area. O&5 yO+-ԍxWe also found that (i) the governmental actions involved in those cases did not fall within the powers  {O-reserved to states and localities under section 253(b), and (ii) the governmental entities in the Classic Telephone  {O-Decision did not establish an adequate premise to invoke section 253(c). See Classic Telephone Decision, 11  {O-FCC Rcd at 1309713104; New England Decision at 1925.  In the Classic Telephone Decision, franchise denials by two cities flatly prohibited a prospective provider of local exchange service from lawfully providing such  Xf-service anywhere in those cities.tPf5 {O-ԍx Classic Telephone Decision, 11 FCC Rcd at 1309113097. t Similarly, in the New England Decision, a state regulation permitting only incumbent LECs and certified LECs to provide payphone service plainly prohibited a class of entities nonLECs from lawfully providing such service anywhere in  X#-that state.Q#h 5 {O<-ԍxNew England Decision at 1718; New England Recon. Decision at 56. ė Thus, both of those cases involved express legal prohibitions of service covering the entire relevant geographic market.  X-x 30.` ` This case, by sharp contrast, does not involve an express legal prohibition of service covering all of the relevant geographic market. The Ordinance does not completely bar prospective competitors from lawfully providing payphone service in the Central Business District. Specifically, the Ordinance does not "prohibit" payphone service providers from placing payphones indoors on private property and outdoors on the public rightsofway in the" Q0*&&88" Central Business District. Instead, the Ordinance simply specifies certain places within the Central Business District where payphones may not be installed by any payphone service  X-provider. Consequently, neither the Classic Telephone Decision nor the New England  X-Decision supports a finding on the present record that the Ordinance "prohibits" the ability of any entity to provide payphone service within the meaning of section 253(a).  Xz-x31.` ` The more difficult issue is whether, under section 253(a), the Ordinance "has the effect of prohibiting" the ability of any entity to provide payphone service in the Central Business District. In making this determination, we consider whether the Ordinance materially inhibits or limits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.  X -x32.` ` CPA alleges that the Payphone Agreement, the City's removal of nonpermitted payphones from the public rightsofway, and the economics of indoor payphones foreclose  X -the ability of payphone service providers other than Pacific Bell to provide service in two of the three kinds of locations in the Central Business District: outdoors on the public rightsofway and indoors on private property. CPA further alleges, therefore, that the practical effect of the Ordinance which bars payphones from the only remaining category of location in the  Xf-Central Business District (i.e., outdoors on private property) is to foreclose the ability of payphone service providers other than Pacific Bell to provide any payphone service in the Central Business District. Accordingly, in CPA's view, we must preempt the Ordinance so that payphone service providers other than Pacific Bell can enter the payphone service market in the Central Business District by installing payphones outdoors on private property.  X- x 33.` ` CPA's argument hinges on the validity of its premise that payphone service providers other than Pacific Bell cannot compete in the Central Business District outdoors on the public rightsofway or indoors on private property. We now examine the record for support of that premise.  Xk-x!34.` ` CPA and other commenters claim that payphone service providers other than Pacific Bell cannot install payphones outdoors on the public rightsofway in the Central  X=-Business District because the Payphone Agreement is exclusive.R=5 {O-ԍxSee Petition at 5, 1418; APCC Comments at 56; NJPA Comments at 56; CPA Reply at 26; APCC Reply at 24. The plain terms of the Payphone Agreement, however, allow the City to contract with providers other than Pacific Bell to install payphones outdoors on the publicrightsofway in the Central Business""R0*&&88"  X-District.PS\5 {Oy-ԍxSee Payphone Agreement at  4. In fact, it appears on this record that the City deliberately rejected the suggestion of its Director of Community Development to issue an exclusive contract to a single telephone  {O -provider. See Petition, Exhibits 1, 3. P The Payphone Agreement clearly states that "[t]he City shall not be required to  X-maintain or install only Pacific's public telephones on The City's public way."T"5 yO-ԍxPayphone Agreement at 4 (emphasis added). Indeed, despite its unsupported claim that the Payphone Agreement is "exclusive," CPA acknowledges elsewhere in its Petition that the City might contract with payphone service providers other than Pacific Bell to install payphones outdoors on the public rightsofway in  {O-the Central Business District. See Petition at 1618.  X-x"35.` ` CPA alleges that, notwithstanding those unambiguous contract terms, the City has implemented the Payphone Agreement in an exclusive manner, making "illusory" the prospect of contracting with the City to install payphones outdoors on the public rightsofway  Xz-in the Central Business District.CUz5 yO-ԍxCPA Ex Parte at 3.C Neither CPA nor any supporting commenter, however, has buttressed that allegation with evidence that, since 1994, the City has rejected any concrete contract proposal from a payphone service provider to install payphones outdoors on the  X5-public rightsofway in the Central Business District.V5f 5 yOL-ԍxWe note that the record contains conflicting evidence concerning the extent to which entities other than Pacific Bell had notice of, or the opportunity to participate in, the process that culminated with the Payphone  {O-Agreement. Compare City Comments at 2 ("The process by which City made the decision to contract with Pacific Bell was entirely competitive, and in keeping with both the letter and spirit of the applicable FCC policies. City simply made a business decision to contract with Pacific Bell, and said 'No' to alternative proposals made by Petitioner and/or some of Petitioner's member businesses"); Petition, Exhibit 3 (indicating  {O-that the City considered at least one proposal from MCI other than Pacific Bell's), with XyCom Reply at 1 (in reaching the Payphone Agreement with Pacific Bell, "[t]he City did not go through the process of an RFP nor did it solicit bids of private PSP's before making a contract decision for the City"). In any event, we note CPA's statement that "this aspect of the City's conduct was not the basis for CPA's Petition....Petitioner has not challenged the City's contract with Pacific Bell." CPA Reply at 3. Moreover, no party has proffered evidence that the City has insisted upon contract terms that would effectively prohibit payphone service providers other than Pacific Bell from providing service outdoors on the  X -public rightsofway in the Central Business District.mWB 5 yOk-ԍxCPA makes one reference to the City potentially extracting "monopoly rents" from all payphone service  {O3 -providers, see Petition at 17, but CPA makes no argument that: (1) the thirtytwo percent revenue sharing arrangement between the City and Pacific Bell amounts to a monopoly rent; (2) the City has insisted or will insist upon the same revenue sharing arrangement with any other provider seeking to install payphones outdoors on the public rightsofway in the Central Business District; or (3) such insistence effectively has barred or would bar a payphone service provider from installing payphones outdoors on the public rightsofway in the Central Business District. Accordingly, we express no opinion regarding the propriety of the thirtytwo percent revenue sharing arrangement. We note with some concern, however, that Pacific Bell's commission payments to"$V0*&&8%"  {O-the City apparently are twice as high under the Payphone Agreement than they were previously. See Petition, Exhibit 3 at 1.m The only supporting evidence that" "W0*&&88 " CPA has offered consists of a single, latefiled declaration of one payphone service provider. According to this declaration, a City official told the provider that the "company is welcome to submit a proposal to install sidewalk phones but that the City sees no need to add more  X-sidewalk phones at present or in the foreseeable future."NX"5 yO-ԍxCPA Ex Parte, Exhibit B at 2.N  X-x#36.` ` The City disputes CPA's characterization of the City's implementation of the Payphone Agreement. The City represents that "[e]ntities other than Pacific Bell have both a legal and practical opportunity to contract with the City for pay phones in the public rightof XH-way in the Central Business District."JYH5 yO -ԍxCity Supp. Comments at 2.J According to the City: XxX` ` as the Pacific Bell contract is intended to be a "pilot program" and does not operate to prevent City from contracting with other PSPs, there is no reason to conclude that the result of the Pacific  X -Bell contract will be the creation of a monopoly.FZ B5 yO-ԍxCity Comments at 23.Fx` XxX` ` The City is not insistent on contracting only with one PSP for phones in the rightofway....The City's contract with Pacific Bell is not exclusive....[T]he City is willing to agree to any type of reasonable program to insure that PSPs other than Pacific Bell will receive permits for payphones in the public rightof X4-way in the Central Business District.L[45 yO-ԍxCity Supp. Comments at 12.Lx`  X-x$37.` ` On the foregoing record, we cannot conclude that payphone service providers other than Pacific Bell lack a realistic opportunity to contract with the City to install payphones outdoors on the public rightsofway in the Central Business District. The Payphone Agreement expressly permits such contracts; the City officially avows its willingness to enter into such contracts; the City apparently has never rejected such a proposed contract or required prohibitive terms; and the only supporting information adduced after five rounds of written submissions is one declaration purporting to describe unofficial conversations with one City employee. "Nb [0*&&88"Ԍ X-x%38.` ` CPA further argues that the City's very involvement in the contracting process for installing payphones outdoors on the public rightsofway "amounts to an arbitrary and  X-potentially absolute barrier to entry" proscribed by section 253(a).\5 {OK-ԍxPetition at 17. See id. at 1618; CPA Reply at 23, 5; CPA Ex Parte at 1, 3. We cannot agree that the  X-City's exercise of its contracting authority as a location provider constitutes, per se, a situation proscribed by section 253(a). The City's contracting conduct would implicate section 253(a) only if it materially inhibited or limited the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment in the market for payphone services in the Central Business District. In other words, the City's contracting conduct would have to actually prohibit or effectively prohibit the ability of a payphone service provider to provide service outdoors on the public rightsofway in the Central Business District. As described above, the present record does not permit us to conclude that the City's contracting conduct has caused such results. If we are presented in the future with additional record evidence indicating that the City may be exercising its contracting authority in a manner that arguably "prohibits or has the effect of prohibiting" the ability of payphone service providers other than Pacific Bell to install payphones outdoors on the public rightsof X -way in the Central Business District, we will revisit the issue at that time.  "\V   "\V   X{-x&39.` ` Regarding the viability of payphones indoors on private property, CPA and certain commenters allege that "installation of competing payphones indoors and away from doorways would be impractical and uneconomic, given the types of businesses located in the  X6-central business district and the configuration of their premises."]6Z5 {OA-ԍxPetition at 7 n.4. See CPA Ex Parte at 2, Exhibit A; APCC Comments at 56; APCC Reply at 23; PTC Supp. Comments at 3. They further contend that indoor payphones generate far less revenue than outdoor payphones, because the latter, unlike  X-the former, "are exposed to pedestrian foot traffic and are highly visible to the public."^5 {Om-ԍxAPCC Comments at 5. See id. at 56; APCC Reply at 23; Petition at 7 n.4; CPA Ex Parte at 2, Exhibit A; PTC Supp. Comments at 3. They conclude, therefore, that installing payphones indoors on private property in the Central Business District would not be commercially viable.  X-x'40.` ` Even assuming, arguendo, that indoor payphones would generate less revenue than outdoor payphones in the Central Business District, that fact, standing alone, does not necessarily mean that indoor payphones are "impractical and uneconomic," as argued by CPA. For us to reach such a conclusion, the record would have to demonstrate that indoor payphones in the Central Business District would generate so little revenue as to effectively prohibit the ability of an entity to provide payphone service in the Central Business District. The present record does not contain much relevant information, however, beyond unsupported assertions of the inferiority of indoor payphones visavis outdoor payphones. The record says" ^0*&&88[" little, for example, regarding the potential opportunities for user traffic for indoor payphones, such as information concerning the number, type, configuration, and hours of operation of businesses located in the City's Central Business District; the potential impact of advertising outdoors the availability of a payphone indoors; and the feasibility of competing with outdoor payphones by offering lower coin rates indoors. The record also says little regarding the actual revenue potentials and breakeven levels for indoor payphones in the Central Business District. Indeed, in this regard, the record includes only a yearold letter from a payphone service provider to the City, which letter contains unsubstantiated observations about the  XH-viability of indoor payphones.U_H5 {O -ԍxSee CPA Ex Parte at Exhibit B.U  X -x(41.` ` On the present record, therefore, we cannot conclude that payphone service providers lack a commercially viable opportunity to install payphones indoors on private property in the Central Business District. We do not rule out the possibility that such a showing could be made. We simply find, on this record, that CPA has not sufficiently supported its allegation that operation of indoor payphones on private property in the Central Business District would be "impractical and uneconomic."  Xy-x)42.` ` In sum, for the reasons discussed above, we conclude that the present record does not support the premise on which CPA's request for preemption under section 253 rests that the Ordinance bars payphone service providers other than Pacific Bell from the only locations in the Central Business District that would otherwise be available and viable for the installation of their payphones. In other words, we do not find that the Ordinance's requirement that payphones on private property in the Central Business District be indoors materially inhibits or limits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment in the market for payphone services in the Central Business District. We further conclude, therefore, that the record does not support a finding that the Ordinance "prohibit[s]" or "ha[s] the effect of prohibiting" the ability of any payphone service provider to provide payphone service in the Central Business District. Accordingly, on the record presently before us, we find that the Ordinance is not proscribed by section 253(a) and that, therefore, no predicate for preemption pursuant to section 253(d)  XN-exists.`NZ5 yOY-ԍxOf course, were the Ordinance ever shown to fall within the proscription of section 253(a), we would then need to examine the applicability of section 253(b), given that CPA seeks federal preemption of a local law that the City maintains was enacted to fulfill an essential municipal duty preventing criminal activity in the  {O!-Central Business District. See Ordinance at Sections 2, 3; City Comments at 45. Specifically, we would need to examine whether the Ordinance is "competitively neutral" and "necessary" to protect the public safety and  {OC#-welfare. See 47 U.S.C. 253(b). " `0*&&88\"Ԍ X-ԙ B.xSection 276 Analysis  X-x*43.` ` Pursuant to the Supremacy Clause of Article VI of the Constitution, we may preempt local laws that impede the accomplishment of the objective of section 276 "to promote competition among payphone service providers and promote the widespread  X-deployment of payphone services to the benefit of the general public."a5 {O-ԍx47 U.S.C.  276(b)(1). See, e.g., Louisiana Public Service Commission v. FCC, 476 U.S. 355, 36869  yO-(1986). Moreover, Congress has expressly preempted any state requirement that is inconsistent with regulations  X_-promulgated by the Commission to implement section 276.Gb_"5 yO2 -ԍx47 U.S.C.  276(c).G Those regulations direct, inter  XJ-alia, the removal of all state rules that impose market entry requirements or that allow a  X5-particular class of competitors to enter the payphone market and not others.c55 {O-ԍxSee Pay Telephone Order at  2, 13, 49, 60, Appendix D; Pay Telephone Reconsideration Order at  134, 13940; 47 C.F.R.  64.1330(a).  X -x+44.` ` In the Pay Telephone Reconsideration Order, the Commission has already concluded that, without running afoul of section 276 and regulations implementing that section, "a state can identify, for public safety reasons, areas where no competitor can place a payphone," as long as the state does not "draw distinctions that allow some class of  X -competitors to enter the payphone market and not others."d 5 {Oj-ԍxPay Telephone Reconsideration Order at  140. The petitions for review adjudicated by the Pay  {O4-Telephone Court Decision did not challenge this aspect of the Pay Telephone Reconsideration Order. Thus, in examining the Ordinance to determine whether preemption is appropriate in this context, we must determine whether the Ordinance draws any legal or practical distinctions that allow some class of competitors and not others to enter the payphone market in the City's Central Business  XQ-District.eXQh 5 yOj-ԍxCPA does not challenge the Payphone Agreement or the City's removal of payphones without permits from the public rightsofway in the Central Business District, so our analysis under section 276 applies only to the Ordinance.  X#-x,45.` ` On the record before us, we cannot conclude that the Ordinance draws such impermissible distinctions among competitors. The Ordinance identifies, purportedly for public safety reasons, areas where no competitor can place a payphone: outdoors on private property in the City's Central Business District. As a result, the Ordinance, on its face, bars all competitors including Pacific Bell from installing payphones at such locations. Moreover, the Ordinance, as apparently construed by the City, precludes no competitor from installing payphones in the Central Business District indoors on private property or outdoors" e0*&&88Q" on the public rightsofway pursuant to a contract with the City. Furthermore, as explained more fully above, there is no basis on this record to conclude that payphone service providers other than Pacific Bell lack a realistic and viable opportunity to install payphones outdoors on the public rightsofway or indoors on private property in the Central Business District. Thus, the present record does not support a finding that the Ordinance by its terms or its effect, alone or in conjunction with the Payphone Agreement draws any impermissible legal or practical distinctions that allow only Pacific Bell and not others to enter the market for payphone services in the City's Central Business District. Accordingly, on the record before us, we find no basis to preempt the Ordinance pursuant to the Supremacy Clause or section  X1-276(c).fD15 yO -ԍxWe note that CPA does not allege that the Ordinance has led or will lead to callers being charged supracompetitive local coin rates. Such an allegation, if made and proven, might warrant regulatory action by the  {O: -State of California and/or the Commission. See generally Pay Telephone Order at  15, 61 (In certain locations, "the location provider can contract exclusively with one PSP to establish that PSP as the monopoly provider of payphone service. Absent any regulation, this could allow the PSP to charge supracompetitive prices. . . To the extent that market forces cannot ensure competitive prices at such locations, continued  {O\-regulation may be necessary"); Pay Telephone Court Decision (denying challenges to the Pay Phone Orders' rulings regarding locational monopolies).  X -n V. ORDERING CLAUSE ă  X -x-46.` ` Accordingly, IT IS ORDERED that the Petition for Preemption filed by the California Payphone Association IS DENIED. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton x` `  hhActing Secretary"f0*&&886" x` `  hh@hpp  xxJuly 16, 1997X(# X(# X(# X(#T  X- Separate Statement Lw of ` Commissioner Susan Ness  XH-T  V1-TP  V -Re: City of Huntington Park Our decision today correctly declines to preempt Huntington Park Ordinance No. 576 NS on the basis of the record before the Commission. Our decision should communicate at least three messages:  Xy-First, Congress carefully crafted the preemption language in Section 253 of the Telecommunications Act of 1996. Congress entrusted the Commission to navigate between two critical but competing objectives: (1) fostering competition, by enabling "any entity to provide any interstate or intrastate telecommunications service." (Sec. 253(a)); and (2) allowing the legitimate exercise of state and local authority (Sec. 253(b) and (c)). In this case, the City of Huntington Park has premised its actions on the police powers of the City. We assume that the state has delegated to the City the power to enact the Ordinance. The record provides some basis for the City's assertion that its pay phone regulations are directed at crime abatement. We stress, however, that the mere incantation of concerns with public safety or crime control, without more, does not immunize a local action against preemptive action. The statute directs the Commission to evaluate the effect of local or state actions on competition a task which requires a thorough review of the facts in each case. We are proceeding with great care and with respect for the competing considerations spelled out in Sec. 253. The Commission's decision today is evidence of the restrained judgment Congress intended the Commission to exercise in preemption cases.  X-Second, our decision today should not be read by state and local authorities as an endorsement of the actions taken by Huntington Park, nor should it be viewed as an affirmative finding  X!-that the City's actions are consistent with the Act. Rather, we conclude that, on this record, the petitioner has not demonstrated a violation of Section 253 or of our pay telephone orders. For example, if a government action "prohibit[s] or ha[s] the effect of prohibiting the ability of any entity to provide any telecommunications service" (253(a)), that action must be"l$f0*&&88(#" preempted unless it is shown to be "competitively neutral" and "necessary" to protect the public safety and welfare (253(b)).  X-In the instant case, we were not able to rule that the City violated 253(a); thus, we did not take the next step to draw conclusions on "necessity" or "competitive neutrality." It is far from clear whether, in practice, the Huntington Park Ordinance and Payphone Agreement are necessary to prevent crime, and if so, whether they do so in a competitively neutral manner. In particular, I am troubled by the distinction the City has drawn in its central business district between private property (where no outdoor payphones are permitted) and public property (where only Pacific Bell's outdoor payphones currently exist). It is unclear why an outright  X -ban on outdoor payphones on private property is necessary when the City permits payphones  X -to be located on outdoor public property, even immediately adjacent. Why can't the City achieve its anticrime objectives by imposing the same operational limitations (no incoming calls, etc.) on payphones in both locations? We are not eager to secondguess the decisions made by officials of other government agencies. By the same token, municipal and state authorities can reduce the potential for interjurisdictional conflict by crafting their laws, regulations, and decisions consistent with the Act's goal of robust competition in all telecommunications services.  X4-Third, our decision in no way precludes parties from petitioning again to preempt the Ordinance. Any future filings should contain more explicit information on the effect of the Ordinance and the Payphone Agreement on payphone competition. For example, more information on the ability of other providers to enter into similar arrangements with the City would have been probative here. Under the Payphone Agreement, the City is obligated to permit Pacific Bell to retain 80 percent of the Pacific Bell payphones installed on public outdoor property as of November 1, 1994. Although we were not asked to preempt the Payphone Agreement, I am troubled by this arrangement. Unless other payphone providers are able to negotiate similar agreements, Pacific Bell's payphones will be the only payphones located outdoors. But Huntington Park has asserted that its arrangement with Pacific Bell is not exclusive, and there is little contrary evidence, so we are unable to conclude at this time and on this record that other payphone providers are foreclosed from negotiating similar arrangements. Congress has promised new entrants an opportunity to compete, but not freedom from every possible hindrance that may result from state or local regulation. Those who seek preemptive action by this Commission should be prepared to demonstrate, with particularity, precisely how the municipal or state action forecloses them or others from competing and what remedy will most effectively solve the problem. The stronger the evidentiary record, the greater the likelihood that we will be able to take corrective action."j$f0*&&88(#"Ԍ \-#Xxjp P7 SXP#љ `(#July 16, 1997  ]- DISSENTING STATEMENT OF  COMMISSIONER RACHELLE B. CHONG  \-  \_-Re:XxCalifornia Payphone Association Petition for Preemption of Ordinance No. 576 NS of the City of Huntington Park, California Pursuant to Section 253(d) of the Communications Act of 1934.(#  \ - xI respectfully dissent from the Commission's decision today to deny petitioners' request to preempt the City of Huntington Park's Ordinance banning outdoor payphones on private property within its central business district. xAt the outset, I do not question a state's or local government's legitimate right to exercise its police power to establish reasonable zoning requirements restricting the placement of payphones for public safety purposes. I believe, however, that the record before us demonstrates that the City's Ordinance, considered in conjunction with the City's overall program regulating payphones, has the effect of banning competitive offerings of outdoor public payphone service in Huntington Park's downtown district. In  \-my view, the Ordinance violates Section 253(a) and (b),f~  \-#Xxjp P7 SXP#эXx47 U.S.C. Section 253(a), (b).(#~ as well as the twin statutory goals set forth in Section 276 of promoting competition among payphone service providers and  \-the widespread deployment of payphone services.}y  \-#Xxjp P7 SXP#эXx47 U.S.C. Section 276 (b)(1).(#} xI agree with my colleagues that, on its face, the Ordinance is competitively neutral  \-in that it effectively bans, in the downtown area, the provision of all payphone service on  \-outdoor private property and within ten feet of any entrance to a building. As the majority acknowledges, however, the more difficult question is whether the Ordinance "has the  \e-effect of prohibiting" the ability of any entity to provide payphone service on both public  \N-and private property in the downtown area. Today's decision finds the record inadequate as to evidence demonstrating that competitors are essentially barred from entering the downtown outdoor payphone market in the City of Huntington Park. I disagree with my colleagues on this point. xIn denying the petitioner's claims that the Ordinance in effect cordons off the City's downtown outdoor payphone market to new entrants, the majority focuses on the" *0*&&88" following: (i) competitive entry for outdoor payphones on public property is permitted under the terms of an existing contract between the City and its sole provider of outdoor payphones; and (ii) the record fails to indicate any affirmative attempt or action by a  \-competitor to contract with the City to provide payphones on public property outdoors.j  \4-#Xxjp P7 SXP#э xSee paras. 3435.j xIn my view, the majority's analysis is too narrowly focused. I believe that our inquiry into the practical competitive effects of the Ordinance should not end because of  \v-the mere existence of contractual language which on its face appears to permit competitive entry. One cannot measure the competitive effect of an Ordinance on a dynamic marketplace looking only at the static language of a single contract between the City and a payphone provider. It would be preferable for the Commission to consider whether, under actual marketplace conditions, the City's Ordinance effectively is prohibiting payphone competition. In doing so, we should assess the Ordinance in the full context of both the City's overall actions and omissions in attempting to implement a payphone regulatory program, and the marketplace conditions that entrepreneurs currently face when seeking to provide competitive payphone services in downtown Huntington Park. xIf we did this assessment, we would find that the City's program in fact is impairing payphone competition. Today's decision states that, before adoption of the Ordinance, payphone service providers could place a payphone in Huntington Park: "(1) indoors on private property (by contracting with the property owner); (2) outdoors on the public rightsofway (by contracting with the City); and (3) outdoors on private property (by  \-contracting with the property owner)."fy  \G-#Xxjp P7 SXP#эx See para. 28.f The majority finds that the Ordinance does not violate section 253(a) because it eliminates the third category of locations for all providers, but does not, on its face, restrict the first two for any provider. I believe, however, that the record in this case raises questions about the majority's fundamental assumption that three separate relevant payphone markets exist within the City's downtown area. As the petitioners note, the relevant market for measuring the effects of the City's Ordinance on competitive entry should not be limited to the City's sidewalks nor to private premises,  \|-but rather should include the entire downtown business district both public and private property on which payphone services may be provided. xIf viewed from the perspective of the relevant market being the entire downtown business district, our analysis would likely lead to a contrary result than that reached today. The record reflects that the City, under its police power authority, initiated the first step of its payphone regulatory program in October 1994, by signing a five year contract with one  \-telecommunications provider to install and retain public telephones in the City's outdoor  \ -public rights of way. In December 1994, the City, under its authority to abate public" *0*&&88" nuisances, embarked on the second step of its program by ordering the removal of 70 to 80  \-outdoor nonpermitted sidewalk pay telephones on public property belonging to private payphone service providers. Finally, in June 1996, the City enacted the Ordinance requiring the removal of all pay telephones located in the City's downtown business  \-district on private property either outdoors or within ten feet of any outside doorway. xThe record thus demonstrates that before adoption of the Ordinance, the City contracted with only one payphone service provider for all of the outdoor payphones on  \H-public property. The City then used its power to abate public nuisances to eliminate all  \1-competing public telephones on public property outdoors. Next, the City adopted its  \ -Ordinance requiring the removal of all pay telephones located on private property within the downtown business district. In my view, the Ordinance by effectively banning competing payphones on private property along with the other two regulatory measures taken by the City, impermissibly allows the City to exercise monopoly power over the payphone services market in the downtown business district. xThe majority disagrees, and contends that, as a legal matter, potential competition for the provision of outdoor payphones on public sidewalks is unobstructed because contractual language exists which allows the City to contract with providers other than the incumbent provider. Today's decision also points out that petitioners failed to produce any factual evidence demonstrating that the City had ever rebuffed a "concrete contract proposal" from a competing payphone service provider to install outdoor payphones on public property. xLooking beyond the four corners of the contract, I believe the record contains ample evidence of the City's intent to contract with only one provider. For example, several staff memoranda regarding payphones forwarded to the Mayor and City Council of Huntington Park, before the City payphone contract was signed, contained recommendations advocating that the City should contract with only one payphone service  \e-provider.e  \-#Xxjp P7 SXP#э xMemorandum, dated November 13, 1993, from Jack L. Wong, Director of Community Development, to Mayor Loya and Members of the City Council (attached to CPA's Petition at Exhibit 1); Memorandum, dated September 19, 1994, from Jack L. Wong, Director of Community Development, to Mayor Loya and Members of the City Council (attached to CPA's Petition at Exhibit 3). Unrefuted evidence in the record indicates that, in seeking the provision of payphone service for its "pilot program," the City neither engaged in a "Request for Proposal Process" nor sought to solicit any bids from private payphone providers before  \ -signing the payphone contract.l   \$-#Xxjp P7 SXP#э XyCom Reply Comments at 1.l " 0*&&88>"ԌxThe record also provides some insight as to why petitioners did not submit a  \-"concrete contract proposal" from the City. According to a signed and unrefuted declaration from a corporate officer of a private payphone provider, a City official had informally told the payphone company that it was free to submit a proposal to the City, "but that the City sees no need to add more sidewalk phones at present or in the  \-foreseeable future."  \-#Xxjp P7 SXP#э Ex Parte Letter dated April, 4, 1997, from Martin A. Mattes, Attorney for California Payphone Association, to William F. Caton, Acting Secretary, FCC, at Exhibit B. The record further indicates that the incumbent payphone provider nearly doubled its commission payments to the City after signing the contract to provide  \_-payphone service on city sidewalks._b  \r -#Xxjp P7 SXP#э  See California Payphone Association Petition, Exhibit 3 at 1. xIn my view, the weight of the evidence supports the petitioners' contention that the City's Ordinance, viewed in conjunction with its payphone regulatory program, is designed to ensure that payphone services provided in the outdoor downtown area of Huntington Park are the exclusive domain of the City's handpicked provider. It is no coincidence that the chosen provider is one who has doubled its commission payments to the city coffers in  \ -exchange for the privilege of a de facto monopoly, despite Section 276's mandate that the payphone market be procompetitive in the future. Thus, I would have found that the City's payphone program shortchanges payphone users, because it effectively bans competition for outdoor payphone service in the City's downtown district. xI also cannot join the portion of the majority's decision that finds the record insufficient as to whether the Ordinance frustrates competition because, as petitioners  \-contend, it limits competitive payphone providers to the offering of services only inside downtown commercial buildings. In my view, common sense tells us that such an overly narrow restriction will result in competitors not entering the market, because as a practical  \-matter, offering payphones only well inside downtown buildings is not likely to be a  \-commercially viable opportunity.   \-#Xxjp P7 SXP#э Again, the relevant market at issue here is the entire downtown area. A limit to only indoor payphone sites will significantly reduce the number of calls placed, and therefore, the revenue potential of the payphone. xToday's decision, however, rejects this sensible conclusion on the basis that petitioners failed to submit extremelydetailed economic analyses that would include "actual revenue potentials and breakeven levels for indoor payphones" demonstrating that these type of payphones are impractical and uneconomic. In my view, petitioners have met their evidentiary burden and the additional data which the Commission seeks is unnecessary, overly burdensome, and runs contrary to our general procompetitive, deregulatory charge"  0*&&88[" under the 1996 Act. In my opinion, the City's requirement limiting the placement of competitive payphones in the downtown area to indoor private property not only has a negative effect on competition, but also frustrates Section 276's mandate to encourage the "widespread deployment of payphone services." xSince today's decision finds no violation of Section 253(a), it does not reach the issue of the applicability of Section 253(b), which permits a State to supersede Section 253(a) if it imposes "on a competitively neutral basis and consistent with Section 254, requirements necessary to . . . protect the public safety and welfare." In the matter at hand, petitioners seek federal preemption of a local Ordinance that the City of Huntington Park contends was enacted to prevent criminal activity in the Central Business District. I address the applicability of Section 253(b), because I think we should have found that the Ordinance violates Section 253(a).  \ - xAs I stated above, I do not question a state or local government's legitimate right to exercise its police power to set reasonable zoning requirements restricting the placement of payphones for public safety purposes. The City has the power to take reasonable measures to protect its citizens from criminal activity. Yet, it would be preferable if the City exercises that authority in a way that promotes its public safety goals, while doing so in a competitively neutral fashion as to telecommunications competitors. I am quite troubled by the fact that nowhere in the record does the City provide a rationale as to why it chose  \-to ban all competing payphones on outdoor private property rather than mandate, in a competitively neutral fashion, that all outdoor payphones should have the same anticrime features and functions required under its contract for all nearby payphones on public property. Further, I see no evidence on the record from the City that would explain why a payphone on outdoor private property poses a greater threat to public safety and welfare thus necessitating a complete ban, whereas a payphone across the street provided on public property would not pose that same threat. If the City does need to restrict the placement of payphones for public safety purposes, it ought to do so in a way that is fair and does not pose an arbitrary entry barrier to competitive payphone providers.  \7- xI agree with the petitioners that Section 253(b) does not permit the City to protect its proprietary interest in the provision of sidewalk payphones by applying different regulations to competitors on private property. Thus, I would have preempted the ordinance.