FCC Hands Big Win to Michigan SMATV

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Washington -- In a decision that stirred the cable industry
and local governments, the Federal Communications Commission ruled last week that a
Michigan private-cable operator was not required to obtain a franchise because it used
phone-company wires to cross public rights-of-way.

In a 4-1 vote, the FCC said the company, Entertainment
Connections Inc., was neither "a cable operator," nor a "cable
system," under federal cable statutes.

"Today's decision is wrong as a matter of law and
misguided as a matter of policy," said FCC commissioner Gloria Tristani, in a
dissenting statement that was highly critical of the majority's reasoning.

National Cable Television Association president Decker
Anstrom released a statement that echoed Tristani's sentiments, and he vowed to
appeal the decision in federal court.

"We regret that the FCC has granted ECI's wish to
operate as a cable system, but to be freed of franchising and other requirements that
Congress established," Anstrom said.

FCC chairman William Kennard said: "Our decision makes
clear our commitment to ensure competitive opportunity while safeguarding the discretion
and responsibilities of local officials."

As the result of a ruling that took 16 months to obtain,
ECI can go forward with its plans in East Lansing, Mich., and elsewhere to interconnect
apartment buildings separated by public streets by leasing fiber owned by Ameritech Corp.,
the local phone provider.

The FCC's decision will allow ECI to forgo installing
headend equipment at each building that it wants to serve. By using Ameritech's
distribution facilities, ECI will no longer be limited to serving only large apartment
buildings where it can be sure of recovering its costs.

"It's going to allow the private-cable industry
to flourish and to provide a great deal more competition to franchise cable, because they
will be able to serve smaller buildings and a great number more buildings," said
attorney Deborah Costlow, who represents ECI. "I think that you are going to see a
lot of competition arise out of this."

ECI operates a satellite-master-antenna-television service.
The SMATV industry has about 1.2 million subscribers nationwide, not including some
800,000 motel and hotel units, Costlow said.

The city of East Lansing had ordered ECI to obtain a
franchise when it pitched the Ameritech leasing plan. And Costlow said Meridian Township,
Mich., sued ECI, saying that Michigan law required a franchise. These actions, she said,
caused ECI to file with the FCC last February.

The FCC said ECI was not a cable system because it
maintains headend equipment and wiring on private property. And, the commission said,
ECI's facilities were totally separate from Ameritech's phone network, which
uses public rights of way.

"The decision reads as if the commission went out of
its way to make this as broad a decision as possible, and I find it hard to believe that
the commission intended that result," said attorney Nick Miller, who represented the
cities of St. Louis and Dallas in opposing ECI.

Under the FCC ruling, ECI will not have to pay franchise
fees, not have to provide public-access or leased-access channels and not have to comply
with must-carry or retransmission-consent rules.

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