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December 30, 2005, 8:00 AM ET, Alert No. 1,281.
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8th Circuit Rules in North Kansas City Municipal Broadband Case

12/29. The U.S. Court of Appeals (8thCir) issued its opinion [6 pages in PDF] in Time Warner Cable v. City of North Kansas City, a dispute between a municipality and a private sector service provider over municipal provision of broadband services. The municipality won this round.

The City Council of the City of North Kansas City adopted a resolution to construct a fiber-optic network that would provide data, voice, and video to customers in the City. The City did not decide whether or not to also provide cable television services. However, the City's own engineering firm recommended that providing cable-television services would be necessary in order for the network to be self-supporting.

The relevant statute of the state of Missouri (Mo. Rev. Stat. 71.970) provides in part that "[n]o municipality may own or operate cable television facilities and services unless approved by a vote of the people."

KCCP Trust, dba Time Warner Cable (TWC), provides services in the City.

TWC filed a complaint in U.S. District Court (WDMo) against the City seeking to enjoin the City from constructing its planned fiber-optic network without a public vote. The District Court dismissed the complaint, without prejudice, for lack of jurisdiction. The District Court concluded that the case was not yet ripe, because the City had not yet stated that it would use its fiber-optic network to provide cable television services.

See, April 4, 2005 opinion [PDF] of the District Court. (The phrase "without prejudice" means that TWC is not barred from filing another complaint, for example, if the City decides to offer cable-television services.)

TWC appealed. See, appeal brief [70 page PDF scan] of TWC and opposition brief [40 pages in PDF] of the City.

The Court of Appeals affirmed. It wrote that the statute "expressly prohibits municipalities from owning or operating cable-television facilities unless the municipality's populace votes to approve the endeavor. The pertinent question then is whether the City owns or operates such a facility or is threatening to do so in violation of 71.970(1). In order to own cable-television facilities, the City would require the capacity to receive cable-television signals for transmission over its fiber-optic network. It is factually undisputed that the City's fiber-optic network is not connected to the required head end facility to receive such signals nor is there any plan to acquire it."

The Court of Appeals continued that "Thus, Time Warner's statutory claim rests on a contingent future event: the ownership or operation of a cable-television facility by the City; therefore, Time Warner's claim that a vote is required under Missouri law is not ripe in that the City does not currently own or operate a cable-television facility because the planned fiber-optic network will not be capable of transmitting cable-television signals and because the City recognizes that in order for it to provide cable-television services a public vote would be required."

The Court added that "If the City seeks to upgrade the network without a public vote, Time Warner may again seek a preliminary injunction."

While the Court of Appeals may consider the court case ripe at that time, voters might consider the political issue moot at that time. That is, if the City builds a fiber-optic network, and incurs the considerable expense that this would entail, but makes no decision as to whether to offer cable television service, it can avoid putting the issue before the voters. Then, after the completion of the construction project, if it announces plans to offer cable television service, it must put the question before the voters. However, the only further costs to be passed on to taxpayers at that point would be the cost of connecting to an existing head end facility, or constructing its own. Voters would have little reason not to support the offering of cable television service at that point.

TWC made this point in its brief. It wrote that "without holding the required prior public vote until the money is spent ... it can present its plan to the voters as a fait accompli".

TWC is represented by the law firm of Lathrop & Gage. The City of North Kansas City is represented by the law firm of Blackwell Sanders.

TLJ spoke with Jim Baller of the Baller Herbst Law Group, which focuses on representing local governments in telecommunications and broadband matters. He stated that the Missouri statute at issue in this case "is pretty specific to Missouri". However, he added that "another victory in an incumbent provider's challenge to a municipal provider is always welcome".

Baller also stated that "we run into litigation in almost every one of our projects". He noted, for example, that BellSouth has challenged a municipal broadband project in Lafayette, Louisiana.

He added that the North Kansas City opinion is the second victory for municipal broadband providers in two weeks. On December 16, 2005, a state court in California issued a decision in Cebridge v. Nevada County. See, following story titled "California Superior Court Rules in Cebridge v. Nevada County".

See also, Baller's paper [PDF] titled "Deceptive Myths About Municipal Broadband". And see, story titled "US Chamber Hosts Panel on Municipal Broadband" in TLJ Daily E-Mail Alert No. 1,160, June 23, 2005.

This case is KCCP Trust, dba Time Warner Cable v. The City of North Kansas City, U.S. Court of Appeals for the 8th Circuit, App. Ct. No. 05-2265, an appeal from the U.S. District Court for the Western District of Missouri, D.C. No. 04-1119-CV-W-ODS, Judge Otrie Smith presiding.

California Superior Court Rules in Cebridge v. Nevada County

12/16. The Superior Court in California issued its opinion [32 page PDF scan] in Cebridge v. Nevada County, a municipal broadband dispute.

The Local Agency Formation Commission of Nevada County approved an application of the Truckee Donner Public Utility District to provide broadband services to citizens within its jurisdiction.

Cebridge Connections, a private sector provider of cable television and internet access services, filed a complaint in the Superior Court for Nevada County, which is a trial court in the state of California, against the Local Agency Formation Commission of Nevada County, seeking to invalidate the approval. Cebridge argued that, under the California Public Utility Code, a California public utility district may not provide broadband services.

The Superior Court held that it may. It also rejected all other arguments of Cebridge, and denied its request to invalidate the approval.

This case is Cequel III Communications I, LLC, dba Cebridge Connections v. Local Agency Formation Commission of Nevada County, Superior Court of the State of California in and for Nevada County, Case No. 70226, Judge Albert Dover presiding.

8th Circuit Rules in Reciprocal Compensation Case

12/29. The U.S. Court of Appeals (8thCir) issued its opinion [10 pages in PDF] in Ace Telephone Association v. Koppendrayer, a dispute regarding reciprocal compensation, or the costs that one carrier pays to another carrier for completing its calls.

The appellees in the Court of Appeals are Ace Telephone Association and eight other competitive local exchange carriers (CLECs) that compete with Qwest in providing local telephone service in the state of Minnesota

The appellants are Leroy Koppendrayer, who was sued in his official capacity as Chairman of the Minnesota Public Utilities Commission (MPUC), the other members, and the MPUC.

Qwest Corporation intervened in the District Court as a defendant, and is an appellant in the Court of Appeals.

The CLECs and Qwest did not negotiate a reciprocal compensation agreement. Rather, the CLECs initiated a proceeding before the MPUC to set the rate. It set the rate at zero.

The District Court the held that the zero reciprocal compensation rate was arbitrary and capricious, and a violation of 47 U.S.C. 252(b)(5).

The Court of Appeals reversed the District Court. It upheld the zero rate on several grounds.

This case is Ace Telephone Association, et al. v. Leroy Koppendrayer, et al., U.S. Court of Appeals for the 8th Circuit, App. Ct. Nos. 05-1170 and 05-1171, appeals from the U.S. District Court for the District of Minnesota.

Washington Tech Calendar
New items are highlighted in red.
Friday, December 30

The House will not meet. It will convene for the 2nd Session of the 109th Congress on Tuesday, January 31, 2006.. See, Majority Whip's calendar.

The Senate will not meet. It will hold a pro forma session on January 3. It will convene for the 2nd Session of the 109th Congress on Wednesday, January 18, 2006. See, 2006 Senate calendar.

Deadline to submit initial comments to the Federal Communications Commission (FCC) regarding a petition for rulemaking of 13 hearing impairment related entities. Their petition requests that the FCC initiate a rulemaking proceeding to mandate captioned telephone relay service and to approve internet protocol captioned telephone relay service. The FCC's Public Notice [PDF] states that "Captioned telephone service is a form of telecommunications relay service (TRS) that permits persons to simultaneously both listen to what the other party is saying and read captions of what the other party is saying on the same device. Presently the service is eligible for compensation from the Interstate TRS Fund (Fund), but is not mandatory. The petition asks the Commission to initiate a rulemaking for the purpose of making captioned telephone service a mandatory form of TRS and approving Internet Protocol (IP) captioned telephone service as eligible for compensation from the Fund." (Footnotes omitted). This notice is DA 05-2961 in CG Docket No. 03-123. See also, notice in the November 30, 2005, Vol. 70, No. 229, at Pages 71849 - 71850.

Sunday, January 1

New Years Day.

Monday, January 2

Federal holiday. The Federal Communications Commission (FCC) and other federal offices will be closed. See, Office of Personnel Management's (OPM) list of federal holidays.

Tuesday, January 3

The Senate will meet in pro forma session.

Effective date of the Library of Congress' Copyright Royalty Board's rules changes that provide for a cost of living adjustment of 4.3% in the royalty rates paid by colleges, universities, or other nonprofit educational institutions that are not affiliated with National Public Radio for the use of copyrighted published nondramatic musical compositions in the BMI, ASCAP and SESAC repertoires. See, notice in the Federal Register, December 1, 2005, Vol. 70, No. 230, at Page 72077.

Wednesday, January 4

Deadline to submit to the Library of Congress' Copyright Royalty Board petitions to participate in its proceeding commenced at the request of XM Satellite Radio. The purpose of this proceeding is to determine the reasonable rates and terms for the transmission and ephemeral recording statutory licenses that would apply to a new subscription service that performs sound recordings on digital audio channels programmed by the licensee for transmission by a satellite television distribution service to its residential customers, where the audio channels are bundled with television channels as part of a basic package of service and not for a separate fee. See, notice in the Federal Register, December 5, 2005, Vol. 70, No. 232, at Pages 72471 - 72472.

Friday, January 6

12:00 NOON. The Federal Communications Bar Association's (FCBA) Wireless Telecommunications Practice Committee will host a lunch. There will be a debate regarding municipal WiFi networks between Tom Lenard (Progress & Freedom Foundation) and Harold Feld (Media Access Project). See, registration form [PDF]. Location: Sidley Austin, 1501 K Street, NW.

4:00 - 7:00 PM. The International Trademark Association (INTA) will host a symposium titled "Should Parma be a Trademark? Issues Surrounding Geographical Marks and Indicators". The speakers will be Roger Schechter (George Washington University Law School), Lionel Bently (University of Cambridge), Min-Chiuan Wang (Institute of Technology Law, National Chiao-Tung University in Taiwan), and Glynn Lunney (Tulane University School of Law). See, notice. Location: __.

Deadline to submit reply comments to the Office of the U.S. Trade Representative (USTR) regarding the operation, effectiveness, and implementation of and compliance with (1) the World Trade Organization (WTO) agreements affecting market opportunities for telecommunications products and services of the U.S., (2) the telecommunications provisions of the North American Free Trade Agreement (NAFTA), (3) the U.S. free trade agreements (FTAs) with Chile, Singapore, and Australia, and (4) any other FTAs coming into effect by January 1, 2006. See, notice in the Federal Register, November 16, 2005, Vol. 70, No. 220, at Pages 69621 - 69622.

Monday, January 9

12:00 NOON. The Senate Judiciary Committee (SJC) will begin its hearings on the nomination of Judge Sam Alito to be a Justice of the Supreme Court. Location: Room 216, Hart Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Sharp Kabushiki v. ThinkSharp, Inc., No. 05-1220. This is a dispute regarding registration of the mark "Thinksharp" for computer software by ThinkSharp, Inc. Sharp, which makes electronics products, objects. Location: Courtroom 201, 717 Madison Place, NW.

The Federal Communications Commission (FCC) will begin a mock auction for its FM Broadcast Construction Permits Auction (Auction No. 62). See, Public Notice [PDF] numbered DA 05-3204, and dated December 21, 2005.

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