The United States Court of Appeals-Eleventh Circuit held today that MCI Communications Services, Inc., could not recover loss-of-use damages absent some showing of monetary loss apart from costs of repairs. MCI initially brought a claim that it could recover such damages after having its cable severed during some excavation work being done by CMES. The cut resulted in 568,263 calls being blocked in addition to a number of customer complaints.

Fortunately for the company, the blocked calls did not result in a loss of customers or loss of profits. Also, the company did not issue any customer refunds or credits as a result of the event.

The court of appeals noted in its opinion that there were no cases on point that it could rely on as precedence and also noted that the Georgia Supreme Court had also ruled that as a matter of law in Georgia, there should be a showing of damages if you are going to recover for loss-of-damages.

I think what is also important is what the court of appeals did not say. It did not throw out the loss recovery standard of rental value of substitute cable. This standard was offered by MCI as a basis of recovery.

Federal Communications Commission member Ajit Pai today issued a statement assessing state and local governments’ potential role in the delayed deployment of an all Internet Protocol (IP) digital infrastructure. Here is some of what he said today:

“It is critically important that states and local communities adopt broadband-friendly policies when it comes to rights-of-way management. When broadband service providers seek to construct next-generation networks, they need to access government-controlled land, poles, and conduits in order to lay fiber and install other infrastructure. Currently, too many providers who try to obtain such access are confronted with daunting sets of federal, state, and/or municipal regulations that often delay and sometimes deter infrastructure investment and broadband deployment .”

“More generally, to enable the nationwide deployment of next-generation networks like
Google Fiber, we need to eliminate regulatory barriers to innovation and investment at all levels
of government. Whether we are dealing with economic regulation or rights-of-way management,
we cannot apply 20th century approaches to our 21st century challenges.”

Commissioner Pai has hit it on the nail head. As I tweeted earlier today, local governments have been on an extortion rampage when it comes to extracting franchise fees for I-Net projects and funding their in-house television studios so that they can broadcast useful information like how to get your cat out of a tree without calling the fire department. These fees are eventually passed through to consumers on their cable and telephone bills.

It’s no wonder Verizon said enough is enough and opted for an agreement to just cross sell video distribution services rather than go through the onerous process of satisfying a local government’s need to play local broadcaster.

In addition, these onerous rights-of-way management requirements not only increase fees on consumer bills, but keep out potential broadband competitors. Just ask Starpower and RCN about their experiences with Fairfax County, Virginia, then you’ll see why Cox and Comcast have been sole providers of cable in that county for decades.

Mr. Pai’s assessment is spot on. If his fellow commissioners are serious about broadband deployment spreading universally throughout the U.S., then it si time they put their ears to the ground in local jurisdictions.

The Hillicon Valley reported last Thursday about Senator Al Franken’s displeasure with the settlement agreement between Verizon and the U.S. Department of Justice. The Minnesota Democrat reportedly believes that the Obama Administration via the DOJ has not gone far enough to ensure competition in the video distribution industry.

No wonder Democrats get accused of choosing winners and losers. Mr. Franken is advocating for government forcing companies to compete with each other.

It’s one thing to accuse a company of practices that keep another company out of a market, but just because Verizon knows how to provide video distribution services doesn’t mean it should be compelled to do so versus cross selling the services of another competitor.

If a third party wants to take advantage of the opening Verizon is providing by not providing video distribution services, let them step in and do so.

Jamal Simmons’ piece in today’s The Podium raises two important issues. First, we should not take for granted how much the private sector has invested in meeting the increasing demand for broadband services. According to his piece, broadband providers have invested tens of billions of dollars last year in broadband deployment. I remember when the fiber deployments of AT&T and Verizon started up back in 2005. The companies were investing upwards of $30 billion a year to compete with entrenched cable monopolies and provide the competition not only for cable programming but higher broadband speeds.

That was private investment. No government subsidies were being provided. No universal service. Ironically the impediment to broadband deployment was onerous franchise agreements that AT&T and Verizon, new to the cable franchise game, had to face. They could have slowed down or worse yet yanked their deployment plans off the board. Instead they marched ahead with the intent of meeting consumer demand, again without subsidies.

Second, there is the issue of flow of capital. Mr. Simmons’ piece is a reminder that as regulator of commerce, the federal government should be willing to avoid applying unnecessary regulations that would discourage investment in the private sector in general and the broadband sector in particular. I saw a number of cable firms that may have ended up providing competitive broadband services had not entry fees and other franchise requirements kept them out of certain markets.

These requirements didn’t even have anything to do with consumer protection, but more so with localities extracting onerous obligations such as cable TV studios and I-Nets; items that municipalities should have funded from their own general funds. Now these same municipalities complain about a lack of competition in their local franchise areas. Go figure.

During a Senate antitrust review Wednesday, Senate antitrust committee chairman Herb Kohl (D-WI) said the following: “Having won the battle for competition by blocking last year’s AT&T/T-Mobile merger, are we now in danger of losing the war?” Mr. Kohl asked.

That’s the problem, Senator Kohl. Had you, your congressional colleagues, the FCC, and DOJ not looked at the AT&T/T-Mobile deal from the standpoint as a war against “the big companies”, you wouldn’t have AT&T and Verizon buying spectrum from cable. We should be mindful of the corners we back industry into with poor public policy.