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AB 2987 BUILD OUT REQUIREMENTS: WHY THESE ARE STILL INADEQUATE The amendments specify build out require- ments on franchise holders with more than 500,000 telephone customers in California, as well franchise holders with less than 500,000 telephone customers in California. Here are some of the concerns with these requirements: . A franchise holder with more than 500,000 telephone customers must build out to at least 30 percent of low-income households within five years after the holder begins providing video service. But there is no requirement to go beyond this 30 percent build out level after five years - even though the franchise is issued for 10 years. . Specifying that holders with less than 500,000 telephone customers, who are required to provide video service to "all customers ... within a reasonable time (undefined)," but the holder will not have to meet the requirement if "the aver- age cost to provide service is substantially above the average cost of providing service in that community." . The bill allows holders to apply to the Secretary of State for a waiver from the build out requirements with no prior notice to cities and counties. . The bill defines "'ow-income household" as having an average income of less than $35,000. But this definition does not account for geographic location or number of persons in the household. AT&T and Verizon are still free to gerry- mander their service area to underserve lower income areas, and later seek a waiver from the Secretary of State from any further build out requirements, 9A Page 3 TELECOM from page 1 . .. ... . . .. . .. . The bill still protects telephone companies at the expense of consumers, and provides compe- tition mainly for those "high value" areas of the state that already are likely to have high quality video and broadband service. This bill will not improve the United States' pathetic 15th worldwide ranking in terms of access to broadband services. Other serious problems with the bill remain unaddressed. These include the funding for "PEG" (public, education and government) chan- nels that would be required; consumer protection; preserving community control over local rights-of- way; and funding for I-Net ("institutional network") services and free hook-ups for schools and libraries. Key Issues with AB 2987 (NúñezlLevine), As Amended On June 22 Need to Prevent Discrimination. The June 22 amendments attempt to respond to the concerns raised by the League and many other concerned parties regarding cherry-picking of "high value" customers by the telephone compa- nies -leaving "low value" customers with inferior or no service, The amendments specify build-out requirements on franchise holders - but the "requirements" contain numerous weaknesses, virtually guaranteeing that discrimination will occur. (See "AB 2987 Build-Out Requirements: Why These Are Still Inadequate".) Solution: Amend the bill to require that state franchise holders must provide the same landline- based broadband service throughout each local jurisdiction within a specified number of years of providing the service to the first customer within that jurisdiction. Provide that state franchisees must offer the same land line-based broadband service throughout their telephone service territory within the state within a specified number of years, deploying to both high and low income areas. Continued on Page 4 Visit the League's Official Website--www.cacities.org PRIORITY FOCUS. PAGE 3 June 23, 2006 . Issue #25