IX. Obtaining Third-Party Access to Customer Premises

A. Parties' Positions

During the ROW workshops, various parties raised the issue of how the Commission could assist utilities seeking to obtain access to the full pathway up to and including the minimum point of entry (MPOE) to a customer's premises.

Pacific states that the pathway up to and including the MPOE to a customer's premises usually includes facilities in the public ROW and facilities on the property to be served. An LEC only controls the supporting structure that is in the public way; the property owner provides and owns the supporting structure on his or her property. Pacific claims it cannot supercede the property rights of owners by permitting access to third parties. If the utility is able to successfully negotiate access with the property owner, Pacific offers to provide access to its equipment rooms and other facilities as long as the security and safety of its equipment is not compromised.

In some cases the property owner has determined that a single entity shall provide service to the premises. While acknowledging this can create difficulties if a tenant desires service from a different carrier, Pacific claims this is an issue between the tenant and the property owner, and cannot be resolved by the carrier.

Pacific believes that the Commission should require all utilities to permit nondiscriminatory access to facilities on private property that they own or control, but should not dictate to owners which carrier they must choose to provide service. Pacific proposes that the Commission consider limiting the amount of access or rental fees a carrier is permitted to pay a property owner for access rights.

GTEC agrees to provide access up to the MPOE, to the extent that GTEC owns and there is availability on the poles, conduits, ducts, or the ROW in question. Since the property owner is responsible for facilities beyond the MPOE, however, GTEC opposes a Commission regulation that would abrogate private agreements between such property owners and a carrier which would allow other carriers the ability to trespass on such property without negotiating their own agreement.

While the Coalition acknowledges that this Commission lacks jurisdiction to require non-utility third parties to grant utilities access to their properties, the Coalition argues that there are still important actions the Commission can take to assist CLCs in this area. First, the Coalition asks the Commission to make findings of fact regarding the importance of the development of a new telecommunications infrastructure and deployment of alternative facilities to customer premises by CLCs. The Coalition believes such findings would be useful in eminent domain proceedings to gain access to tenants' facilities.

The Coalition further asks the Commission to require utilities that have vacant space (excess capacity) in existing entrance facilities (e.g., conduit) into commercial buildings to make such space available up to the MPOE so that competitors may gain access to building cellars, telephone closets (or cages) and risers, network interconnection devices and/or frames, and so forth, in such buildings. Further, the Coalition asks the Commission to require that ILECs not impede such access where it is requested by landlords on behalf of their tenants. Finally, the Coalition asks that ILECs and incumbent electric utilities be required to exercise their own powers of eminent domain, just as they would on their own behalf to obtain or expand an existing ROW over private property, in order to accommodate a CLC's request for access.

The Coalition argues that under no circumstances should a building owner or manager be allowed to charge CLCs for use of its inside wire while allowing ILECs unlimited use of the same facilities at no charge. The Coalition suggests that the Commission can exercise its influence to prevent such discriminatory treatment in the following manner. Assuming that the Commission has the authority to regulate building owners as "telephone corporations" as defined under PU Code § 234, the Coalition suggests that the Commission could declare it will refrain from such regulation if, but only if, the building owner makes access to inside-wire available to ILECs and CLCs alike on a nondiscriminatory basis.

As a basis for this recommendation, the Coalition cites the Commission's "shared tenant services" ("STS") decision, D.87-01-063.²⁴ In the STS decision, the Commission adopted a set of guidelines aimed at ensuring that, among other things, tenants in buildings or campus-like settings where the landlord provides PBX services to tenants (via a PBX switch and inside wire owned by the landlord) continue to have options for obtaining telephone services from the provider of their own choosing. The decision provided that landlords would not be regulated as a public utilities, even though they appeared to fit within the literal terms of PU Code §§ 233 and 234, if but only if, they complied with the STS guidelines. The rationale underlying the decision is that the Commission could have asserted jurisdiction, had it wanted to do so, over such telecommunications services providers under the statutory definitions of a "telephone line" in PU Code § 233 and of a "telephone corporation" in PU Code § 234. The Coalition claims that a similar sort of Commission authority should apply to any landlord who is charging certificated telephone corporations, ILECs and/or CLCs, for access to a building system or systems of entrance facilities, tie down blocks, frames, wires, fibers, closets, conduits, risers, etc. The Coalition argues that the building owner or manager is not providing such service to tenants, but to telecommunications carriers. The Coalition characterizes such as directly akin to a special access service through which situation, the building owner or manager is, or, if necessary in a given case, certainly could be held to be, operating a "telephone line," and offering service to the public or a portion thereof (i.e., to certified carriers) within the meaning of PU Code § 233.

Edison and SDG&E argue that an electric utility must be allowed to deny access requests when its property rights do not allow use of the property by a third party. Edison and SDG&E also oppose being required to exercise their powers of eminent domain in order to accommodate a telecommunications provider's request for access, claiming that such an exercise of powers would go beyond the legally authorized limits for electric utilities. Edison argues that its powers of eminent domain do not allow it to condemn property for the benefit of telecommunications providers. Edison believes that since certificated telecommunication providers have the power of eminent domain, they should not depend upon the electric utilities to secure their access rights.

Electric utilities also frequently obtain easements or licenses containing provisions that limit use of the property to operations directly related to the generation, transmission or distribution of electricity. Edison argues that it should not be obligated to negotiate broader easements or licenses to allow telecommunications carriers to access the property, since this would impose additional costs on the utility and its customers and shareholders.

Comments were also filed jointly by a group known as the "Real Estate Coalition"¹⁶ representing the interests of owners and managers of multiunit real estate. The Real Estate Coalition concurrently filed a motion for leave to intervene and become a party in the proceeding. Separate comments were filed by the Building Owners and Managers Association of California (BOMA) with a similar motion to intervene. There is no opposition to either of the motions for leave to intervene, and the motions shall be granted. Both parties represent very similar interests.

The Real Estate Coalition argues that the Commission lacks jurisdiction to regulate building owners, and opposes rules permitting telecommunications carriers to enter the premises of multiunit buildings and install facilities without the express consent of the underlying property owner. The Real Estate Coalition believes forced access by telecommunications carriers would constitute an unlawful taking under Loretto v. TelePrompTer Manhattan CATV Corp, 458,US 420 (1982), because it would entail a physical occupation without the owner's consent.

The Real Estate Coalition identifies a number of effects that are triggered by telecommunication carriers' access to buildings, including fire and safety code compliance, tenant security, and the ability of building owners to manage finite physical space needs.

BOMA argues that the Commission should not attempt to regulate access issues between the telecommunications industry and private property owners in order to avoid distorting an otherwise free and functioning market. BOMA argues that the real estate industry is highly competitive, and building owners have a strong incentive to satisfy the telecommunications needs of their tenants, and have no incentive to ban or restrict telecommunications service providers. BOMA argues that building owners must have the freedom and power to select and coordinate which telecommunications companies have access to their buildings .

B. Discussion

We recognize, that the development of a competitive telecommunications infrastructure and deployment of alternative facilities to customers' premises by CLCs are important to the health of California's economy. The adoption of rules to facilitate the CLCs' ability to negotiate access to customer premises is consistent with our policy of opening all telecommunications markets to competition. To the extent that owners of buildings and their tenants are able to choose among multiple telecommunications carriers, they are likely to benefit from higher quality service at lower cost and with greater responsiveness to customers' needs.

We agree that one way to facilitate competition within the multi-unit buildings is to require the opening of access up to the MPOE of the building.

Requirements for establishing demarcation points, or MPOEs, at multi-unit properties are governed by regulations adopted by this Commission and by the FCC. On June 14, 1990, the FCC released a report in CC Docket No. 88-57 establishing a new definition for demarcation points. This Commission in Decision (D.) 90-10-064 and D.92-01-023 added clarification to the demarcation point ruling, including approval of a Demarcation Settlement Agreement among Pacific and other telephone carriers. The changes were to become effective on August 8, 1993, and were intended to foster competition by transferring ownership and responsibility for certain telephone cable and inside wire to property owners, who then more easily would be able to connect to the networks of competitive telephone providers.

For multi-unit properties built or extensively remodeled after August 8, 1993, the rules generally required Pacific to establish a single MPOE as close as practical to the property line. The MPOE became the physical location where the telephone company's regulated network facilities ended and the point at which the building owner's responsibility for cable, wire, and equipment began. Generally speaking, facilities on the building owner's side of the MPOE are designated as Intrabuilding Network Cable (INC), which in all instances, was to be owned by the property owner.

For existing buildings constructed before August 8, 1993, Pacific was required to convey to property owners any cabling that was identified as INC on Pacific's books.¹⁷ Pacific's investment in this transferred INC was to be recovered over a five-year amortization period (from August 1993 to August 1998) from the general rate base.

Generally, Pacific's practice prior to 1993 was to install a local loop demarcation point at each building in a multi-unit complex. That meant that Pacific maintained ownership (and responsibility) for INC that often ran hundreds of feet into multi-unit property until reaching an MPOE. It also meant that competing telephone companies had no single point at which to cross-connect to the owner's cabling in these properties. Other carriers were free, of course, to purchase and install their own cable at these properties.

The Demarcation Settlement Agreement approved by the Commission in D.92-01-023 provides that for multi-unit properties built prior to August 8, 1993, the only network plant that was to be unbundled and conveyed to property owners consisted of "INC within building (riser and lateral) that was in place prior to August 8, 1993." (D.92-01-023, Attachment B (proposed tariffs), at No. A2, 2.1.20(E)(3)(b).) Pacific was required to relinquish ownership of this embedded INC to the building owner upon full recovery of the utility's capital investment. (Id. at No. A8, 8.4.3(A)(3).) However, other utility-owned network plant (described as "Non-INC") - and this included network cable stretching from a utility's central office to each MPOE at individual buildings -- was not affected by the tariff or the Commission's order.¹⁸

To facilitate the development of the competitive telecommunications infrastructure, we shall require that incumbents with vacant space in existing entrance facilities (e.g., conduit) into commercial buildings make such space available to competitors up to the MPOE to the extent the incumbent has the right to assign its interest to another. This requirement will enable CLCs to gain access to building cellars, telephone closets, and network interconnection devices (NIDs) in such buildings. THE MPOE shall be defined in accordance with the demarcation points as prescribed in D.90-10-064 and D.92-01-023.

We shall also prohibit all carriers from entering into any type of arrangement with private property owners that has the effect of restricting the access of other carriers to the owners' properties or discriminating against the facilities of other carriers such as CLCs. For example, an agreement which provides for the exclusive marketing of ILEC services to building tenants may be improper if the agreement has the effect of preventing a CLC from accessing, and providing service to, a building because of the building owner's financial incentives under the marketing agreement. Similarly, a situation in which a building owner, either for convenience or by charging disparate rates for access, favors the access of the ILEC to the detriment of a CLC will also be in violation of our rules herein. Such arrangements conflict with our stated policy promoting nondiscriminatory ROW access.

On a prospective basis, we will prohibit all carriers from entering into any kind of arrangement or sign any contract with building owners that result in exclusive or discriminatory access. Although we will not disturb any agreements predating the effective date of this order, we will permit any carrier to file a formal complaint against another carrier that the complainant believes is benefiting from exclusive or discriminatory access to private property. The complainant carrier will have the burden of proving that the defendant carrier, either by its actions or the actions of the building owner, is the exclusive provider of service or the beneficiary of better terms of access in violation of the policies of this order. If after hearing the evidence we find that the agreement or arrangement is unfairly discriminatory with respect to other carriers, we shall direct that the agreement be renegotiated or use Commission authority under PU Code §§ 2107 and 2108 to impose a fine for continuing violations against the carrier for everyday that the agreement or arrangement is in effect. Such fine would be based on the number of lines served in the building multiplied by the number of days of violation, and be levied in the range of $500 to $20,000 per day per statute. A carrier will have 60 days to renegotiate a contract deemed discriminatory by the Commission or else the fine will begin to accrue.

This solution permits the Commission to employ its jurisdiction over telecommunications carriers to effectuate the desired policy for nondiscriminatory access to buildings without addressing our jurisdiction if any, over private property.

We recognize, however, that the private property rights of building owners must be observed. Building owners must retain authority to supervise and coordinate on-premise activities of service providers within their building. Installation and maintenance of telecommunications facilities within a building may disrupt tenants and residents, and could cause physical damage to the building. Unauthorized entry into a private building by a third party whether an ILEC or a CLC could compromise the integrity of the safety and security of occupants of the building. The building owner or manager is uniquely positioned to coordinate the conflicting needs of multiple tenants and multiple service providers. Telecommunications carriers' access to private buildings shall therefore be subject to the negotiation of terms of access with the building owner or manager.

While building owners are entitled to exercise due discretion in managing and controlling access to their premises for the protection and security of the building occupants, they may not abuse such discretion in a manner that would unfairly or capriciously discriminate against carriers seeking ROW access in order to offer competitive local exchange service. In the event a carrier is unable to reach a mutually satisfactory arrangement with a building owner for access to the building premises to serve customers, then the carrier may seek resolution of its dispute in the appropriate court of civil jurisdiction or file a complaint as described above if the carrier believes that another carrier is benefiting from exclusive or unfairly discriminatory access.

Lastly, incumbent utilities shall not be required to exercise their powers of eminent domain to expand their existing ROW over private property to accommodate a CLC's request for access. The CLC, as a telephone corporation, has independent authority sufficient to pursue its own eminent domain litigation, and there is no basis to require contracting for such litigation through the incumbent. The eminent domain powers of a CLC are covered under PU Code § 616, which states that "a telephone corporation may condemn any property necessary for the construction and maintenance of its telephone system."

We will not at this time extend the requirements and procedural vehicles described above to electric-utility access to private property for the purpose of providing electric service only. We may do so in a future order in this docket or on a case-by-case basis.

¹⁶ The Real Estate Coalition is composed of the Building Owners and Managers Association International, the Institute of Real Estate Management, the National Apartment Association, the National Association of Real Estate Investment Trusts, the National Multihousing Council