Photo of Thomas B. Magee

The FCC last week released a DRAFT order, scheduled for a vote at its September 26 meeting, designed to dictate the process and fees that state and local governments must apply to small cell wireless antenna installations on government-owned poles and similar facilities, and on newly-constructed poles the wireless carriers want to install in state and local rights-of-way.  As currently drafted, the DRAFT order would establish shot clocks for small wireless facility review, and would declare that all fees must be cost-based.

Although 20 states have already enacted small cell legislation, some states have rejected small cell legislation, and numerous municipalities already have reached agreements with wireless carriers on the process and fees for wireless attachments and new pole installations, the FCC’s DRAFT order appears designed to override such legislation and agreements to the extent they fail to comport with the DRAFT order’s standards.

The DRAFT order would establish the following “shot clocks” for state and local review of small wireless facility applications:  60 days for collocation on preexisting structures, and 90 days for new builds.

The fees the DRAFT order addresses fees for access to public rights-of-way (ROW), and for attachments to government-owned property in the ROW, “such as light poles, traffic lights, utility poles, and other similar property.”  The DRAFT order would conclude that such fees violate the federal Communications Act’s prohibition on excessive state and local regulation unless:  “(1) the fees are a reasonable approximation of the state or local government’s costs, (2) only objectively reasonable costs are factored into those fees, and (3) the fees are no higher than the fees charged to similarly-situated competitors in similar situations.”

The DRAFT order would go even further, by specifying that the following fees presumptively would not violate the federal prohibition on excessive state and local regulation:  “(a) $500 for a single up-front application that includes up to five Small Wireless Facilities, with an additional $100 for each Small Wireless Facility beyond five, and (b) $270 per Small Wireless Facility per year for all recurring fees, including any possible ROW access fee or fee for attachment to municipally-owned structures in the ROW.”

Nowhere in the DRAFT order does the Commission explain how its proposed action establishing shot clocks and fees for municipally-owned “utility poles” and “light poles” comports with the federal Pole Attachment Act, which exempts municipally-owned poles from FCC pole attachment regulation.  In addition, the DRAFT order’s restrictive provisions will not appeal to state and local governments, whose enthusiasm for the 5G rollout appears to be diminishing with every new ruling.

For more information, please contact Tom Magee (magee@khlaw.com; 202.434.4128)

Photo of Wesley Wright

Late last month, Marriott International, Inc. entered into a Consent Decree with the FCC to resolve a violation of Section 310(d) of the Communications Act.

BackgroundIn September 2016, Marriott acquired StarwoodHotels and Resorts Worldwide Inc. The parties closed the transaction without obtaining the Commission’s prior consent to transfer control of 65 wireless FCC licenses held by Starwood to Marriott. Section 310(d) of the Communications Act and Section 1.948 of the Commission’s Rules required the parties to secure prior consent from the FCC before closing the transaction.

Voluntary Disclosure. In February 2017, Marriott admitted to the FCC that it closed its acquisition of Starwood without obtaining the agency’s prior consent to transfer control of the various FCC radio licenses.

FCC Investigation. The Commission’s rules set forth baseline penalties for various rule violations. The baseline penalty for an unauthorized transfer of control is $8,000.  In this instance, however, the various FCC licenses were held by multiple independent companies. The FCC’s rules required each entity to file separate transfer of control applications for independent approval by the FCC.  No applications were filed, and the FCC took an aggressive stance. Instead of viewing this as a single violation (stemming from one large transaction), the FCC treated each application that was not filed as a separate rule violation. The FCC found multiple rule violations and, as a result, significantly increased Marriott’s financial penalty.

Resolution. Marriott agreed to pay $504,000 and implement a compliance plan to promote ongoing compliance with the FCC’s rules.

On the heels of this eye-popping settlement, it is helpful to understand a little more about the FCC’s Enforcement Procedures.

FCC Enforcement Procedures

Investigations typically are initiated by the FCC’s Enforcement Bureau after it receives a complaint, through an inspection, by a referral, or resulting from a voluntary disclosure. In this instance, Marriott voluntarily disclosed its violation directly to the FCC’s Wireless Bureau, which then referred the case to the agency’s Enforcement Bureau.

After an investigation is initiated, the Bureau typically sends the subject of the investigation a Letter of Inquiry (LOI) posing a series of questions related to the alleged violation. The recipient typically has 30 days to respond to the LOI, though it may request additional time.

If the Bureau reviews the LOI responses and believes a rule violation has occurred, it has a few options. It may: (i) take no further action; (ii) issue a Notice of Apparent Liability (NAL); or, (iii) negotiate a settlement agreement with the target company (aka a “Consent Decree”).

  • NAL – Alleges a rule violation occurred, finds the recipient apparently liable for a fine or penalty (typically termed a “forfeiture” in FCC parlance).
  • Consent Decree – Voluntary settlement between the LOI recipient and the FCC. A Consent Decree may require the recipient to admit wrongdoing, pay a fine to the federal government, and implement a compliance plan to guard against future rule violations.

Marriott negotiated a Consent Decree. Perhaps even more onerous than the substantial fine is the FCC-mandated compliance plan. Marriott’s Compliance plan has several burdensome components, including:

  • Compliance Officer – Designate a senior corporate manager to serve as the Compliance Officer.
  • Operating Procedures – Establish operating procedures that all covered employees follow to ensure compliance with the FCC’s transfer of control rules.
  • Compliance Manual – Develop and distribute a compliance manual to all covered employees.
  • Compliance Training Program – Establish and implement a compliance training program and train all covered employees on the FCC’s transfer of control rules within 120 days.
  • Report Noncompliance – Report any noncompliance within 15 days of discovering such noncompliance.
  • Compliance Report – File four periodic compliance reports with the FCC over the next three years. Each report must be certified by the Compliance Officer and provide a detailed description of the steps the company has taken to promote compliance with the FCC’s transfer of control rules.

*       *       *

It is never good to be in the crosshairs of the FCC’s Enforcement Bureau. And corporate transactions are ripe for potential FCC rule violations because FCC licenses are commonly overlooked by transactional teams. Since mergers and acquisitions raise unique FCC licensing issues, such transactions require heightened awareness from both parties. Only by closely tracking all FCC-licensed assets can companies involved in corporate transactions ensure compliance with all FCC requirements.

For more information, please contact Wes Wright (wright@khlaw.com; 202.434.4239).

Photo of Timothy Doughty

The FCC’s Connect America Fund Phase II Auction concluded last week.  The auction allocated nearly $1.5 billion in federal funding over the next decade to support broadband deployments in unserved areas of 45 different states.  This aggregate amount was almost $50M per year ($500M for ten years) short of the available CAF II funds.  Electric cooperatives, terrestrial fixed wireless providers, satellite operators, and incumbent local exchange carriers were among the winning bidders.

The FCC announced the winning bidders as an attachment to a Public Notice earlier this week.  The Public Notice sets forth the next steps for auction winners, including a requirement that each winning bidder submit a post-auction application for support (FCC Form 683) by October 15, 2018.  Further information about completing the FCC Form 683 is available here.  The Public Notice also clarifies that winning bidders may assign some, or all, of their winning bids to related entities.  The Public Notice sets forth the process for dividing and assigning winning bids.  The deadline for such assignments is September 14, 2018.

The other notable item for auction winners is the FCC extended its original deadline for submitting the letter of credit commitment letters and detailed technology and system design descriptions.  This information is now due by November 5, 2018.

For more information, please contact Tim Doughty (doughty@khlaw.com; 202.434.4271).

Photo of Wesley Wright

The FCC has established deadlines for Fixed Satellite Service earth station licensees to certify the accuracy of all information on their current earth station license and provide the agency with additional details about existing operations.  Earlier this year, the Commission sought comment on the feasibility of allowing commercial wireless services to use or share use of the 3.7-4.2 GHz spectrum band.  As part of this effort, the FCC is asking earth station licensees to certify existing operations and provide additional technical information.  The FCC hopes that its efforts will unveil lightly used portions of the 4 GHz band where the agency can introduce fixed and mobile terrestrial use.

The first step is for the Commission to get its arms around existing satellite operations in the band.  As such, the FCC is asking C-Band users to provide the agency with the call sign(s); geographic location(s); licensee contact information; antenna gain; azimuth and elevation gain pattern; antenna azimuth relative to true north; antenna elevation angle; satellite(s) at which the earth station is pointed; number of transponders; how often each is used; and, antenna site elevation and height above ground.  This information is required by October 17th.

Once the FCC has completely digested all this information, it may create an opportunity for fixed microwave links in the band, but it’s a bit too early to tell how expansive any additional use of the 4 GHz band may be. For now, the FCC is focused on protecting existing satellite earth station operations.

For more information, please contact Wes Wright (wright@khlaw.com202.434.4239).

 

Photo of Gregory Kunkle

On August 10, 208, the FCC’s Office of Engineering and Technology released a Public Notice seeking comment on the rule changes resulting its 2015 rule-making regarding the 3.5 GHz band.  It’s unusual for the Commission to seek comment on rule changes that were adopted several years ago when it is not reconsidering those rules.  In this case, the Spectrum Pipeline Act requires the Commission to submit a report by November 2, 2018 regarding the 3.5 GHz band rule changes and also “proposals to promote and identify additional spectrum bands that can be shared between incumbent uses and new licensed and unlicensed services under such rules and identification of at least 1 gigahertz between 6 GHz and 57 GHz for such use.”

The 2015 3.5 GHz band Order was noteworthy because it created the concept of the Citizens Broadband Radio Service (“CBRS”).  An innovative approach, the CBRS uses priority tiers, an incumbent tier, an auctioned tier, and an unlicensed tier, to maximize investment in the band, while also promoting new technologies.  The Commission’s approach generated significant interest from rural and niche service providers and users that were excited to have a band suitable for high-capacity applications.

It will be interesting to see whether the FCC’s upcoming report will mention that since 2015 the Commission has reopened the CBRS proceeding to make the spectrum more palatable to large wireless carriers. Over the objections or critical infrastructure, rural providers, wireless ISPs, and others, the Commission has proposed to increase the size of licenses in the CBRS auctioned tier to more closely align with metro markets.  Concerns have been raised that such changes will foreclose the innovative uses the band was originally envisioned for.  The Commission’s revised 3.5 GHz rules are expected later this year.

Comments on the Public Notice are due September 11, 2018 and Reply Comments are due September 26, 2018.  For more information, please contact Greg Kunkle (kunkle@khlaw.com; 202.434.4178).

Photo of Thomas B. Magee

On Friday, August 3, the FCC released its order adopting a One-Touch Make-Ready (OTMR) policy for attaching telecom and cable facilities to utility poles in the 30 states that don’t regulate pole attachments themselves. The FCC stated that it believes its action should help enable deployment of small cells and wireline backhaul for 5G services. However, Commissioner Rosenworcel, the only Democrat on the Commission, stated that she is concerned that the policy will slow down deployment because the Commission’s “definitions of simple and complex processes do not provide enough real-world guidance to attachers and utilities, setting the stage for disputes and delays.”

The order itself is problematic for a number of reasons, including those raised by Commissioner Rosenworcel.

Many of the provisions do not appear well grounded in the reality of electric utility operations, and in practice might not serve the Commission’s goals of promoting broadband and 5G services.  For example, the public safety, worker safety, and reliability implications of losing control over the electric space cannot be overestimated.  While the final order makes helpful changes to address certain concerns expressed by our Coalition of Concerned Utilities in this proceeding, we would much prefer that this electric space self-help remedy be removed entirely.

For more information, please contact Tom Magee (magee@khlaw.com; 202.434.4128) or Tim Doughty (doughty@khlaw.com; 202.434.4271).

Photo of Wesley Wright

In December 2013, the FCC adopted rules to improve 911 network reliability.  The rules require Covered 911 Service Providers (“Providers”) to take certain measures to provide reliable 911 service.  The specific measures adopted by the agency attempt to address three network vulnerabilities identified by the FCC in the aftermath of the derecho storm that knocked out 911 service along the east coast in 2012.

Earlier this summer, the FCC released a Public Notice seeking comment on the efficacy of these rules and soliciting input on whether those rules need to be revised.  Comments were filed last month and Reply Comments are due in mid-August.

The Rules

The rules require Providers to promote reliable 911 service with respect to three network elements: circuit auditing, central-office backup power, and diverse network monitoring.  Providers must certify annually that they have met the FCC’s safe harbor provisions for each of those elements or have taken reasonable alternative measures in lieu of those safe harbor protections.  The rules also require Providers to notify PSAPs of any outage that impacts 911 service.

Providers subject to these rules include entities that provide 911, E911, or NG911 capabilities such as call routing, automatic location information (ALI), automatic number identification (ANI), or the functional equivalent of those capabilities, to a public safety answering point (PSAP).

What Has Worked?

Identifying Network Elements.  The Commission considered adopting a generic standard that would have required Providers to take reasonable measures to generally promote network reliability.  Instead, it adopted specific rules that require Providers to meet precise (and narrow) benchmarks that the agency believes will promote network reliability.  This includes conducting circuit audits, ensuring adequate backup power is maintained in data centers, and having diverse paths to monitor network traffic.  These specific standards have worked.  They enable the FCC to address key vulnerabilities in the 911 network while providing the industry with clear, achievable targets.

Annual Certification.  One reason the FCC requires an annual certification is to ensure that senior management is aware of significant vulnerabilities in the 9-1-1 network and accountable for decisions regarding network design, maintenance, and disaster preparedness.  In my experience, this also has worked.  The rules require a senior executive to sign a certification under penalty of perjury, which ensures that senior management is aware of – and involved in – network design and maintenance decisions.

What Needs to be Changed?

Though largely successful, the Commission should consider a few revisions to clarify and strengthen the rules.

Definition of a Provider.  The definition of a Covered 911 Service Provider could be revised to add clarity.  The Commission should tweak this definition to confirm that a Provider must have a direct contractual relationship with a PSAP to provide routing, ALI, and/or ANI service.  This would eliminate confusion about which entities are – and are not – Providers subject to these rules.

PSAP Notifications.  The rules require Providers to communicate outage information directly to PSAPs.  The well-founded intent is to enable PSAP personnel to have real time outage information to formulate appropriate responses to network issues.  However, this frequently leads to individual PSAPs receiving multiple outage updates for a single network event.  By revising the definition of a Provider (as suggested above), the FCC may be able to eliminate some of the duplicative PSAP communication problems so that only the entity with a contractual relationship with the PSAP communicates outage information.

Where Do We Go From Here?

The FCC is seeking objective feedback about the rules because it has not yet determined whether they should be revised, expanded, curtailed, or left unchanged.  One bellwether for determining whether the FCC believes the rules have been effective is going to be how the agency treats the annual certification requirement.

Some commenters have suggested that the certification should be made once every two, three, or even five years.  Other parties urged the FCC to relax the certification obligation so that it need not be made under penalty of perjury by a corporate officer.  Still other parties have urged the FCC to eliminate the certification requirement.

How the Commission handles this issue will indicate whether the agency pursues a deregulatory agenda.

My two cents?  By and large, the rules have worked.  The FCC should make some minor clarifying revisions to the rules, but should otherwise leave the rules unchanged.

Photo of Al Catalano

To speed deployment of wireless broadband to the nation’s communities, the FCC created a Broadband Deployment Advisory Committee (BDAC) charged with drafting model codes to govern the relationship between wireless carriers and states and local jurisdictions. However, what may be a “model” for carriers looking to speed broadband deployment and maximize profits is not being viewed favorably by local jurisdictions seeking to protect land use from unsightly and overzealous deployment and to receive a fair share of the revenue generated from wireless carriers’ use of local infrastructure.

5G Deployments Will Benefit from Access to Public Infrastructure. Fifth generation wireless network technology – or 5G as it is more commonly known – is a dynamic broadband technology having substantial promise and potential. Wireless speeds and lower latency rates for wireless communications will improve exponentially, leading to innovation and uses that could include augmented and virtual reality, the Internet of Things, smart homes, smart cities and autonomous vehicles.

For this technology to blossom two things are necessary – sufficient spectrum and available infrastructure. It is anticipated that the full implementation of 5G calls for spectrum having super-wide bandwidth that, in turn, can only be transmitted over very short distances, resulting in the need for hundreds of thousands more cells than currently exist. These so-called “small cells” are low-powered base stations that cover much smaller areas than the typical macrocell. Whereas macrocell deployments are typically 70-300 feet in height, small cell transmitters are mounted 30-60 feet above ground, having coverage areas measured in meters, not miles.

The FCC is intent on ensuring that sufficient spectrum is available to meet the 5G needs of the wireless carriers, initiating multiple spectrum rulemakings and planning for auctions that will be conducted during the next several years. The Commission also intends to play a major part in facilitating the availability of infrastructure.

Because of the massive number of cells that will be required for 5G, local community infrastructure including traffic lights, lamp posts and similar structures are needed for a successful broadband deployment. In some residential neighborhoods, new small cells may need to be placed in public rights-of-way in front of homes and apartment complexes. This essential requirement is causing significant debate on the respective needs of carriers and communities – and much activity at the federal, state and local levels.

BDAC’s Work is Wrapping Up. With the hope of developing a framework for broadband deployment on a nationwide basis, the FCC created the BDAC to provide recommendations on how best to accelerate the deployment of broadband. As part of its mission, the BDAC is working on a Model Broadband Code for Municipalities and a Model Broadband Code for States. It hopes to finish its deliberations soon and then propose the codes to the FCC for consideration as nationwide “model” codes.

BDAC’s one-sided tilt favoring wireless carriers proved too much for some local jurisdictions. San Jose Mayor, Sam Liccardo, was initially vice chair of the BDAC’s municipal model code committee. He felt that this working group, heavily weighted with carrier representatives, was working to promote the interests of carriers and not the public. He resigned from the BDAC in January of this year saying that “after nine months of deliberation, negotiation, and discussion, we’ve made no progress toward a single proposal that will actually further the goal of equitable broadband deployment.” The Chief Technology Officer of New York City, the nation’s largest city, withdrew from the BDAC for similar reasons.

A More Balanced Approach Emerges. Six months after Mayor Liccardo’s departure from the BDAC, the City of San Jose reached small cell agreements with three wireless carriers including, AT&T and Verizon. These agreements contain numerous municipally-friendly provisions.  For example, each carrier will be required to comply with the City’s public noticing process before installing a small cell on any of the City’s light poles. In addition, each small cell will have to meet the City’s established design standards, which restrict the size and placement of each installation. Recurring fees to place small cells on city structures are market-based and range up to a rate of $2,500 per site – in stark contrast to “cost-based” rates of less than $50 proposed in other jurisdictions.

As a strong advocate of a collaborative approach to broadband deployment, FCC Commissioner Rosenworcel was so impressed that she posted San Jose’s agreements on the FCC’s website, referring to them as “model” agreements. Commissioner Rosenworcel urges similar carrier-local government cooperation across the country based on the framework of these agreements.

Restrictive State Laws Already in Place. Not all jurisdictions will have the opportunity to apply the San Jose model for the benefit of their residents. Restrictive state laws prevail in many jurisdictions. The wireless industry has been successful in its lobbying efforts to get state legislatures to pass broadband legislation favorable to the industry. These laws restrict the ability of local jurisdictions to protect land use from potential overreaching by wireless carriers or to negotiate market-based rates for carrier access to rights-of-way and local infrastructure.

At last count, some 20 states had adopted such legislation. Common elements of these statewide preemption laws include capped fees for right-of-way use, expedited timelines for processing infrastructure applications, limited scope for local governments to deny requests, presumed application approvals, and limited (or prohibited) zoning authority over attachment to new poles.

Last year, Governor Jerry Brown of California vetoed similar broadband legislation. This decision was instrumental in positioning San Jose to enter into market-based agreements enabling broadband deployment for the benefit of both the wireless industry and the local community. A true win-win situation.

Photo of Douglas Jarrett

On June 28, the FCC released a Public Notice announcing the 220 applicants that qualified for the CAF II reverse auction.  These entities include rural rate of return carriers, electric cooperatives, wireless internet services providers, satellite providers, cable operators, and price cap ILECs (or affiliates thereof).  Several consortiums also qualified.  In one sense, the auction is already a resounding success as it elicited qualified bids from an array of existing and prospective rural broadband service providers.

One significant question that will be answered later this summer or early in the fall is the distribution of the performance tiers among the winning bids:  Gigabit–Gbps/500 Mbps, Above Baseline–100/20 Mbps, Baseline–25/3 Mbps, and Minimum–10/1 Mbps. This should inform the FCC, Congress and the public as to whether the current fixed broadband benchmark of 25/3 Mbps should be retained or increased. The winning bids will indicate what speeds are reasonably doable in many rural areas.  An answer to a related question is whether the distribution of winning bidders tracks the diversity of qualified applicants.

From a systems perspective, the reverse auction, scheduled to start on July 24, will confirm whether the bidding system can accommodate the diversity of bidding weights, package bidding and calculate the data points for individual bidders and the aggregate implied support amounts after each round.  This could encourage the use of reverse auctions in other USF contexts.

Assuming positive outcomes on these points, one criticism of the CAF II auction that will not be resolved concerns the selection of eligible bidding areas.  Census blocks having multiple high-cost locations (based on the average of low cost, high cost and extremely high cost locations) in which a single location obtained service at 10/1 Mbps were not eligible for the CAF II auction.  The result was eligible bidding areas with only one or a handful of locations included in the auction while census blocks having far more unserved locations excluded.  This unfortunate “false-positive” needs to be addressed in both the Remote Areas Fund auction and in the auction that could take place as the state-wide offers to the price cap carriers expire in 2021.

By 2021, the progress reports filed by CAF II auction winners should either validate or raise questions as to whether the reverse auction is producing the desired outcomes of higher speed, reliable fixed broadband service in rural areas at reasonable rates.  Another unknown is whether the minimum, baseline, and above baseline performance tiers for the 2018 auction will apply in 2021.  Our sense is technology advances and marketplace developments such as Charter’s network-wide gigabit deployments will drive these thresholds higher.

Photo of Douglas Jarrett

In-building reception of mobile service is a prerequisite in multitenant commercial and residential properties. Office environments in which individuals cannot check their smartphones or place a call during a break in a meeting or conference leave impressions—negative ones. Asking a resident to pay $2000 or more per month in a Class A apartment complex having poor wireless reception is a non-starter. Reliance on WiFi calling is a high-risk proposition.

The challenge in both commercial and residential multi-tenant properties is that energy-efficient building materials interfere with RF signals and cell coverage is largely unavailable above the 21st or 22nd floors. In MDUs, residents’ use of landline telephone service whether POTS, stand-alone VoIP or over-the-top VoIP is depicted in graphs and tables having steep, downward slopes. For owners of high-end properties, spotty mobile service coverage diminishes the appeal of a residential unit or prospective office location.

This challenge is compounded by the realities that (1) wireless carriers have limited Capex and Opex funds that are allocated on internal ROI assessments, and (2) these services providers are not obligated to extend their service to residents, tenants and visitors inside of multi-tenant residential or commercial properties. The same holds true for hotels. Carrier panelists at almost any wireless infrastructure conference emphasize that the wireless carriers will rarely, if at all, “take the investment” to support distributed antennas systems (DAS) (including “neutral host DAS systems”) and the balance of in-building wireless equipment (IBW) to extend service into and throughout multi-tenant properties.

Wireless carriers are more likely to fund or help fund investment in IBW systems to support wireless reception in major venues (convention centers, stadiums and arenas) and at major locations for their enterprise customers. The permissible use of mobile service signal boosters in commercial spaces is not a solution for many multitenant properties, even if the FCC adopts a simplified registration procedure for wideband (multi-carrier) boosters.

Another reality is that the RF elements of in-building wireless systems are subject to technological obsolescence as wireless carriers transition to higher capacity (5G) or more efficient transmission technologies that likely will occur multiple times during the life of a modern building.

Fundamentally, property owners must determine whether in-building wireless is an amenity or an essential utility. Wireless carriers must also demonstrate a higher level of flexibility in bringing solutions (though not necessarily funding IBW systems) to facilitate more reliable in-building wireless service. Hopefully, the impetus will not be a series of emergencies or tragedies that could have been avoided through reliable in-building wireless signal coverage.