Otsego City Counsel File No. 200247
Considered and decided by Lansing, Presiding Judge, Peterson, Judge, and
The cable-franchise requirement of Minn. Stat. §á238.08, subd. 1(a) (2002), applies to an open-video system operated by a local exchange carrier, and neither that requirement nor the imposition of a service-area requirement under Minn. Stat. §á238.08, subd. 1(b) (2002), is preempted by federal law as applied to an open-video system.
The opinion of the court was delivered by: Lansing, Judge
This appeal involves a dispute between a city and a telecommunications carrier over whether the carrier must comply with state-law requirements governing cable- television systems in order to provide video programming to its local telephone customers over an open-video system. The city approved the carrier's application for a cable franchise, conditioned on the carrier's acceptance of a service-area requirement under the "level playing field" provision of the Minnesota cable statute. Believing that condition to be illegal as applied to its proposed open-video system, the carrier appealed to this court for certiorari review of the city's decision. Because we conclude that the challenged state-law requirements apply to the carrier's open-video system, we affirm.
In 2000, WH Link, LLC, (WHL) received authorization from the Minnesota Public Utilities Commission to provide local telephone service in areas including the City of Otsego. With that authorization, and in compliance with the city's right-of-way ordinance, WHL installed network facilities and began providing local telephone and Internet services within the city. The network, constructed with copper and fiber optic wire, has the capacity simultaneously to carry telephone, Internet, and video signals.
In order to add video programming to its services, WHL filed an application in April 2001 with the Federal Communications Commission (FCC) for certification to operate an open-video system (OVS). After the FCC approved the application, WHL filed with the FCC a notice of intent to establish an OVS in Otsego and several other communities. At that time, Charter Communications Holding Co., LLC, (Charter) provided cable television service in the city under an extension permit.
After filing its notice of intent, WHL met with city officials to discuss WHL's plan to begin providing video programming in the city. The city took the position that WHL would have to obtain a cable franchise to provide OVS service. WHL disagreed, contending that the state-law franchise requirement was preempted by federal laws establishing the OVS regulatory framework. In December 2001, after no resolution had been reached, WHL informed the city that it would begin providing video programming in compliance with federal law over its OVS system in January 2002. After further negotiations, WHL agreed to apply for a cable franchise under state law, subject to a reservation of its "rights under applicable law." In its franchise application, WHL asserted that it was exempt from state-law service-area requirements and affirmed that it sought "authorization to provide cable services over its open video system in its federal 'telephone service area,' without being obligated to go beyond that service area through the imposition of any specific build-out or line-extension obligations."
The city initiated the statutory cable franchising application process in March 2002, and both WHL and Charter applied for franchises. (Charter's extension permit was to expire at the end of 2002.) Charter proposed a service area comprising all incorporated areas of the city with a density of nine homes per quarter mile. WHL proposed initially to serve a smaller area of the city—five residential subdivisions in which it was already providing local telephone and Internet service—but indicated it would continue to expand its network so that its video service would be available to more city residents in the future.
After holding a public hearing and considering written comments of the applicants, in October 2002 the Otsego City Council adopted resolutions approving Charter's franchise application and conditionally approving WHL's application, subject to WHL's acceptance of a service-area requirement. Specifically, the city's draft franchise ordinance required WHL to extend its OVS service within seven years to all areas of the city with a dwelling density of nine homes per quarter mile. WHL rejected the service-area requirement and ...