Government Relations Services Protecting the Public Interest in Washington, DC Presented by: Tony Perez NATOA Gerard Lavery Lederer Best Best & Krieger, LLP

Government Relations Services AT&T Trials (IP Transition) Company has asked for permission to shift to all IP services Commission has granted permission in two locations  West Delray Beach, Florida (Kings Point) and  Carbon Hill, Alabama Why does local government need to be concerned?

Government Relations Services Open Internet Order Verizon v. FCC. FCC is not going to appeal Verizon Notice of Proposed Rulemaking will be issued to explore authority under Section 706 options, including state barrier issue. Title II Stays Alive Municipal Broadband  706 Authority

Government Relations Services Update of the 96 Act What issues does local government need to address/ be concerned about?

Government Relations Services Comcast-Time Warner Merger Franchise Authority Review Rights Is successor financially, technologically and legally capable of honoring your franchise? Are their non-compliance issues to be addressed with incumbent?  Can you review?  Will State review? What are the other opportunities to make your voice heard?

Government Relations Services E-Rate The Federal Communication Commission’s Wireline Competition Bureau (WCB) released a second public notice seeking focused comment on three issues raised in the E-rate Modernization Notice of Proposed Rulemaking.second public notice Comments in the proceeding are due April 7, and reply comments are due by April 21 to address: (1) How best to focus E-rate funds on high-capacity broadband, especially high-speed Wi-Fi and internal connections; (2) Whether and how the Commission should begin to phase down or phase out support for traditional voice services in order to focus more funding on broadband; and (3) Whether there are demonstration projects or experiments that the Commission should authorize as part of the E-rate program that would help the Commission test new, innovative ways to maximize cost-effective purchasing in the E-rate program.

Government Relations Services FCC HAS COMMENCED NEW RULEMAKING ON WIRELESS

Government Relations Services Rulemaking Structure In re Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, WT Docket No , FCC (9/26/2013). Four areas addressed: 1.Should FCC expedite National Environmental Policy Act and National Historical Preservation review processes for DAS and small cells, and categorically exclude these deployments from review?

Government Relations Services Rulemaking Structure (cont’d) 2.Should FCC exempt temporary antenna structures from federal review? 3.Should FCC adopt rules re: Section 6409? What rules? 4.Should FCC alter its shot clock rules, to, e.g. determine when an application is complete and address remedies if shot clock not met; address DAS; address moratoria, muni siting preferences.

Government Relations Services FCC Questions re Implementation of Sec What does “shall not deny and shall approve” mean?  Are there any special circumstances where an application may be denied?  Does it require approval where a structure violates safety codes, or otherwise places persons and property at risk?  Can it be read to allow imposition of conditions?

Government Relations Services 2013 CAP ACT / S.1789 PROBLEM Cable Act Unnecessary Limits on the Use of PEG funds. SOLUTION Bill amends the Act to ensure that PEG fees can be used for any PEG purpose, i.e. money can be spent for operating as well as capital.

Government Relations Services 2013 CAP ACT / S.1789 PROBLEM(s) Discriminatory Treatment of PEG channels SOLUTIONS Bill amends the Act to ensure PEG programming is transmitted without  “material degradation and without altering or removing content or data” and  such signals shall be viewable “by, every subscriber of the cable system without additional service or equipment charges…”  No fee for connection.

Government Relations Services 2013 CAP ACT / S.1789 PROBLEM Loss of PEG Support and Localism SOLUTION Cable operator must provide greater of:  2% of gross revenues;  Historical support received (i.e. prior to the state franchise) or  State franchise financial obligations.

Government Relations Services 2013 CAP ACT / S Problem Loss Of PEG Channels Solution Cable Operator must provide number of channels in place day before state law was passed. If none on that day, then up to 3 channels at request of locals.

Government Relations Services 2013 CAP ACT / S.1789 PROBLEM Operators claiming they are video providers, not cable and therefore not subject to PEG obligations SOLUTION Act is amended to ensure providers using wired facilities in the rights of way are treated similarly and are subject to similar PEG requirements.

Government Relations Services TAXES WHAT IS TAXABLE N.B. This is not only a federal issue!

Government Relations Services Tax “Reform” Tax Exempt Bonds  Chairman Camp’s proposal would impose a 10 percent surtax on interest income from otherwise tax-exempt municipal bonds and applies to interest earned on both new issues and outstanding bonds. This would result in increased costs for local governments and special districts to borrow and raise the cost of infrastructure investment by capping the tax exemption for municipal bond and eliminating private activity bonds. In addition to the municipal bonds,. State and Local Tax Deductibility  Chairman Camp’s proposal would eliminate the deduction for personal state and local income, property and sales taxes. Such a proposal would rollback taxpayer protections against double- taxation by eliminating the federal deduction for local government tax payments.

Government Relations Services CAVEATS/GIVENS Communications tax “reform” at the federal or state level is a very dangerous game for local governments who have the most to lose, the least to gain. Local governments’ future ability to tax or impose fees on any type of communications service provider is at serious risk. Tim Lay Rule: “Beware if it has ‘fairness’ in the title of the bill!” Communications tax reform may be inevitable in 2014 at the Federal level. Don’t lose at the state level before then. Reform need not be bad for local governments. Locals must be far more active participants if interests are to be protected. 18

Government Relations Services CAN CONGRESS HARMONIZE ELECTRONIC TAXATION? Possible On-Line Tax Reform Marketplace Fairness Internet Tax Freedom Digital Goods Cell Tax Morat’m

Government Relations Services The Permanent Internet Tax Freedom Act (S 31/HR 434) or (S. 1431) Internet Tax Freedom Forever Act (“ITFFA”)  ITFA has been in effect since 1998, currently scheduled to expire in November, 2014  ITFA “walls off” from state and local taxation the largest, and fastest growing, form of communications — broadband  ITFA must be repealed or allowed to expire as a condition of reform or this is simply an industry tax reduction exercise, not true tax reform  Left in place, the ITFA will eventually “tax exempt” all, or almost all, of the entire telecommunications industry’s services 20

Government Relations Services Wireless Tax Fairness Act H.R. 2309, S.1235 Last Congress (HR-1002) passed the House, went nowhere in the Senate Would impose a 5-year moratorium on any new “discriminatory”, or any increase in existing, state or local taxes on wireless services; would grandfather existing taxes and exclude taxes imposed by vote of community 21

Government Relations Services The Digital Goods and Services Tax Fairness Act of S.1364 Legislation creates a nationwide “tax preference” for online goods and services over competing brick-and- mortar sales by limiting state and local taxes on “digital goods and services.” Downloaded music and videos; Pay-per-View (PPV) and video-on-demand (VoD) revenue from the cable franchise fee revenue base 22

Government Relations Services Marketplace Fairness Act (S. 743 and H.R. 684) Passed Senate on a strong bi-partisan basis Allows states and local governments to collect sales and use taxes on remote (typically online) sales to their residents Aims to eliminate the current disadvantage suffered by brick-and-mortar retailers vis-à-vis online retailers Generate funds 23

Government Relations Services DON’T FORGET THE THREAT AT THE STATE LEVEL: State Communications Tax Reform

Government Relations Services Communications Tax “Reform” Basic approach Collapse all communications-related taxes and fees (cable franchise fees, perhaps PEG fees, DBS, landline telecom & wireless) into a single tax Move responsibility for imposition, collection and auditing of the tax to the state level Examples include VA, FL, KY, OH, and NC DOWNSIDE: Eliminate communications-related ROW fees 25

Government Relations Services Communications Tax “Reform” (cont’d) Benefits for industry: Lower tax administration costs Lower taxes, except perhaps for DBS Greater protection against future tax increases Risks to local governments: Loss of ability to control local tax structure and policy, and thus control over local budget revenues Loss of auditing authority to ensure correct amounts are paid 26

Government Relations Services Name of Bill/ Why it’s Important to Local Government Bill Number/ Status/Last Congressional ActionIssuesUpdate as of 3/19/14 STELA REAUTHORIZATION Not a huge issue for local governments, but tracking to ensure it does not become a vehicle for an anti- local government initiative Awaiting Introduction Sen. Rockefeller & Thune letter asks stakeholders for input House begins plans for clean mark up before end of first quarter While no bill has yet been introduced, I have added to the list as this is the lone “must pass” piece of communications legislation in this Congress. Rep. Greg Walden wants a discussion draft to be circulated by March MARKETPLACE FAIRNESS ACT Provides local government authority to impose existing sales and use taxes on local purchases made on-line from a remote seller-Value is estimated at over $23B a year S 743 and H.R. 684 Passed Senate and awaiting House Action. House GOP staff meeting in early Feb was not very positive about bill moving – but has yet to determine how to deal with ITFA. S 743: 6/14/2013- Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law H.R. 684: 4/8/2013- Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law. House Hearing set for 1st week of March Question is -- what impact possible departure of Finance Chairman Baucus and elevation of Sen. Wyden (D-Or) might have on legislation. Also, unknown whether House Judiciary will turn its attention to Immigration Reform as has been recently reported. S 743: 22 Democratic Cosponsors 6 Republican Cosponsors 1 Independent Cosponsor H.R. 684: 42 Democratic Cosponsors 24 Republican Cosponsors SCORE CARD

Government Relations Services SCORE CARD CAP ACT Provides fixed number of channels and financial support for PEG operations despite state laws and eliminates limitation of PEG support used only for capital needs. S /10/2013- Referred to the Committee on Commerce, Science, and Transportation. Markey co-sponsor Referred to Senate Commerce. S. 1789: 1 Democratic Cosponsor The Permanent Internet Tax Freedom Act Would forever ban state and local taxing internet access – and could potential grow as more services are considered access. S 31/H.R. 434  Current bans expires in 11/  No actions to date S 31: 1/22/2013- Referred to the Committee on Finance. H.R /28/2013-Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law Question is -- what impact possible departure of Finance Chairman Baucus and elevation of Sen. Wyden (D-Or) might have on legislation. Also, unknown whether House Judiciary will turn its attention to Immigration Reform as has been recently reported. S 31: 1 Republican Cosponsor H.R. 434: No change

Government Relations Services SCORE CARD Internet Tax Freedom Forever Act (ITFFA) Would forever ban state and local taxing internet access – and could potential grow as more services are considered access S  Current bans expires in 11/  No actions to date. 8/1/2013- Referred to the Committee on Finance. Question is -- what impact possible departure of Finance Chairman Baucus and elevation of Sen. Wyden (D-Or) might have on legislation. Also, unknown whether House Judiciary will turn its attention to Immigration Reform as has been recently reported. S 1431: 22 Republican Cosponsors, 11 Democratic Cosponsors Wireless Tax Fairness Act Would impose a five year moratorium on new or discriminatory state and local wireless taxes. H.R  No actions to date. 7/15/2013- Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law H.R. 2309: 139 Republican Cosponsors 80 Democratic Cosponsors

Government Relations Services SCORE CARD Digital Goods and Services Tax Fairness Act of 2013 Would create certain carve outs from taxation of on-line services – This bill is almost the opposite of the Marketplace Fairness Act. S No actions to date. 7/25/2013- Referred to the Committee on Finance. Question is -- what impact possible departure of Finance Chairman Baucus and elevation of Sen. Wyden (D-Or) might have on legislation. Also, unknown whether House Judiciary will turn its attention to Immigration Reform as has been recently reported. S 1364: 3 Republican Cosponsors 1 Democratic Cosponsor Prohibiting In-Flight Voice Communications on Mobile Wireless Devices Act of 2013 Would allow for issuance of regulations prohibiting individuals [on-duty crew and federal law enforcement acting in official capacity exempt] on aircrafts from engaging in voice communications using a mobile device during flight. H.R /10/2013- Referred to the Subcommittee on Aviation. 2/11/2014- Ordered to be reported by Voice Vote. Was cleared by voice vote. H.R. 3676: 18 Republican Cosponsors 13 Democratic Cosponsors

Government Relations Services SCORE CARD Unlocking Consumer Choice and Wireless Competition Act Repeals a Library of Congress (LOC) rulemaking determination regarding the circumvention of technological measures controlling access to copyrighted software on wireless telephone handsets for the purpose of connecting to different wireless telecommunications networks. H.R. 1123Legislation was passed on 2/25/14 House consent calendar despite opposition of leading Democrats. (House GOP had a FOP letter of support on opposing bulk unlocking.) 2/26/14- Received in the Senate and read twice and referred to the Committee on the Judiciary. H.R. 1123: 7 Democratic Cosponsors 3 Republican Cosponsors

Government Relations Services Notable Filing Deadlines Due DateProceeding March 28Facilitating the Deployment of Text-to-911 and other Next Generation 911 Applications April 7, 2014E-Rate Comments Due April 21, 2014E-Rate Reply Comments Due April 21, 2014Replies due in Annual Assessment of the Status of Competition in the Market for Video Programming April 28Facilitating the Deployment of Text-to-911 and other Next Generation 911 Applications 30 Days after Fed Reg. Publication Multilingual EAS Comments Due 45 Days after Fed. Reg. Publication Multilingual EAS Reply Comments Due

Government Relations Services Questions Tony or Gerry for a copy of the presentation.

Government Relations Services Contact Information Tony Perez President NATOA Director Seattle Office of Cable Communications

Government Relations Services Gerard Lavery Lederer Best Best & Krieger 2000 Pennsylvania Avenue N.W. Suite 4300 Washington DC Phone: (202) Fax: (202) Cell: (202) Website: Contact Information PHOTO