Competitive Broadband and Cable Providers: Legal and Regulatory

Considerations

Presented by:Kenneth S. Fellman, Vice-President

Kissinger & Fellman, P.C.Denver, Coloradowww.kandf.com

NATOA Litigation & Regulation Seminar

Washington, D.C.March 24, 2006

I. Negotiating with Qwest – a different perspective

Disclaimer: we’re in negotiations now

Some different issues than Verizon and AT&T Financial Initially planning to obtain franchises in

limited number of market areas

II. Where We Started

“We’ll agree to whatever the incumbent is obligated to in its franchise… ....except build out”

Incumbent Level Playing Field language in metro Denver franchisesNew franchises must be comparable – no

more favorable or less burdensome when viewed as a whole

II. Where We Started (cont.)

Problem: if the competitive agreement is different, but we think it’s comparable, we still might get sued

Solution: indemnification from QwestQwest has previously agreed to this in

another metro Denver competitive agreement

III. The Elephant in the Room

Build OutQwest’s position based in large part on its

prior experiences renegotiating in the Phoenix markets

“If we aren’t 100% convinced we can do it, we won’t agree to it in a franchise.”

Promise (threat?) to go elsewhere if LFAs insist on build out

III. The Elephant (Cont.)

Who will welcome you without a build out requirement?

Salt Lake City Faux build outOnce Qwest gets 51% of the market, it

has the obligation to upgrade its system in order to offer services to everyone in the City.

III. The Elephant (Cont.)

In a market that already has an incumbent cable operator and two satellite companies, Qwest will reach a 51% market share when: ____________________________________

(you fill in the blank)

IV. Getting Over the Build Out Hurdle

Are there any creative ways to address build out?

Build Out “Lite”Tastes lousyUn-fullfilling

IV. Getting Over the Build Out Hurdle (cont.)

Options to ConsiderDefined franchise term; no build out

requirement; if not satisfied with deployment at term end – build out schedule in renewal franchise will not be challenged

Short term franchise with automatic extensions if % coverage met

Others?

V. Level Playing Field Concerns and Suggestions

Without Build Out, how do you make the franchise comparable?

What are your PEG opportunities?Equipment upgrades Interconnection issuesVideo on DemandVideo Streaming

V. Level Playing Field Concerns and Suggestions (Cont.)

Unbundling language

PEG fees on total number of units served in MDUs

Violations/Remedies provisions

Financial issuesGAAPAudits

V. Level Playing Field Concerns and Suggestions (Cont.)

If no build out, or “build out lite” might be acceptable in your community:Examine incumbent franchise -- what

would you do to improve it?Review your PEG and I-Net operations --

are there ways to expand and enhance programming and services?

Questions