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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.

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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.

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FCC Process Changes for Larger Wireless Facilities

Part 1 summarized the exemption of small wireless facilities from the FCC’s environmental review process under conditions specified in the new FCC rules adopted in March 2018. In its Second Report and Order, the FCC also took actions to streamline the review process for larger wireless facilities under the National Historic Preservation Act (NHPA) and the National Environmental Policy Act (NEPA).

The FCC clarified its procedures for engaging Tribal Nations and Native Hawaiian Organizations (NHOs) in review of construction projects located off of Tribal lands. The FCC specified that applicants must provide all potentially affected Tribal Nations and NHOs with a Form 620 (for new towers) or a Form 621 (for collocations) packet where one of these forms is prepared. Forms 620 and 621 are required for review by State Historical Preservation Officers (SHPOs). If no SHPO review is required and thus there is no Form 620 or 621, applicants must provide Tribal Nations and NHOs “information adequate to fully explain the project and its locations.” At a minimum, that must include applicant contact information, coordinates, a description of the facility to be constructed including all of its elements, and a description of the proposed site including both aerial and site photographs. The FCC time lines for Tribal responses will not begin to run until a complete and accurate submission has been made by the applicant.

Regarding time lines, the FCC reduced the period in which Tribal Nations or NHOs must respond to notification if they have issues with proposed construction from up to 60 days to up to 45 days. If there has not been a response within that maximum of 45 days, the applicant’s pre-construction obligation to the non-responding entity is discharged. The 45 days includes time for an FCC follow-up notification in addition to the initial notification by the applicant.

The FCC clarified that applicants may choose to but are not required to pay fees requested by Tribal Nations or NHOs that have been invited to participate in this process. The FCC stated that some Tribal Nations and NHOs have been asking for an “up-front fee” before they will participate (i.e., respond). The FCC found that “up-front fees” are in the nature of a processing fee and applicants are not required to pay such fees. The FCC stated that if a Tribal Nation or NHO conditions its response on receipt of up-front compensation, the FCC will treat that as a failure to respond.

The FCC addressed situations in which Tribal Nations have requested payment for activities undertaken after initial determination that historic properties are likely to be located in a site vicinity. The FCC concluded that while an applicant may negotiate and contract with a Tribal Nation or NHO for services, “an applicant is not obliged to hire a Tribal Nation or accede to Tribal requests for fees in the absence of an agreement” and may seek other means of having needed work done. An applicant’s selection of a consultant is subject to the requirement that with respect to the identification and evaluation of historic properties, any assessment of effects shall be undertaken by a professional who meets the Secretary of the Interior’s Professional Qualification Standards.

The FCC specified a conflict resolution system to apply in individual cases of disagreement between an applicant and a Tribal Nation or NHO as to whether the applicant has met the reasonable and good faith standard in connection with the hiring of paid consultants.

The FCC adopted some reforms to its own processes as well. It modified a requirement for filing an Environmental Assessment (EA) for any proposed facility located in a floodplain. The FCC exempted from that requirement facilities that, including all associated equipment, will be constructed at least one foot above the base flood elevation, unless other criteria in the FCC rules trigger an EA.

The FCC also adopted time lines on its own processes when EAs are filed. The FCC puts EAs on public notice for 30 days to allow public input. It stated that most EAs are acted upon by its issuance of a Finding of No Significant Impact (FONSI) about 15 days after the close of the public notice period. In the Second R&O, the FCC directed its staff to review EAs for completeness and adequacy to support a FONSI within 20 days of the date the EA is placed on public notice. If that review is positive, the FCC staff is instructed to advise the applicant that unless there is an informal complaint or petition to deny filed, a FONSI will be issued within 60 days of the date the EA was placed on public notice. If the staff review finds that additional information is required, the applicant will be notified within 30 days after the EA is placed on public notice. In that case, if a FONSI is warranted, it will be issued by the later of 60 days after the EA is placed on public notice or 30 days after the additional information is provided. If the additional information might affect the public’s ability to comment effectively, a new 60 day period may commence from the publication of the additional notice. Finally, if an informal complaint or petition to deny is filed against an application containing an EA, FCC staff is instructed to endeavor to try to resolve the matter within 90 days of the close of the pleading cycle.

These changes go into effect on July 2, 2018.

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FCC Exempts Wireless Small Cells from Environmental Review Requirements

A high FCC priority is to streamline broadband deployment including the wireless infrastructure necessary to provide service to the public. One FCC proceeding directed to that objective was initiated in April 2017 with a Notice of Proposed Rulemaking (NPRM), Notice of Inquiry (NOI), and Request for Comment (RFC) regarding Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment.

The NPRM addressed Pole Attachments, Expediting Copper Retirement, and Streamlining the Section 214(a) Discontinuation of Service process. The NOI addressed possible prohibition of state and local laws inhibiting broadband deployment and pre-emption of state laws governing copper retirement. The RFC addressed common carrier discontinuation of service issues unrelated to wireless infrastructure and the environmental review process.

In November 2017 the FCC adopted a (first) Report and Order (R&O). It concluded that in specified circumstances “replacement of a pole that was constructed with a sole or primary purpose other than supporting communications antennas with a pole that will support such antennas would have no potential to affect historic properties.”  Accordingly, it excluded replacement utility poles from required review under Section 206 of the National Historic Preservation Act (NHPA) if specified conditions are met. Please see my December 5, 2017 blog entry “Is the Road to 5G Paved with Federal and State Pre-emptions of Local Authority?” for a summary of those conditions.

In March 2018, the FCC adopted a Second R&O. In it, the FCC excluded small wireless facilities from National Historic Preservation Act (NPHA) and National Environmental Policy Act (NEPA) review under specified circumstances and also streamlined NHPA and NEPA review for larger wireless facilities. The FCC stated that these actions will make a real difference in promoting U.S. leadership in 5G and can cut the costs of deployment by 80%, trim months off deployment timelines, and incentivize thousands of new wireless deployments thus expanding the reach of 5G and other advanced wireless technologies in the U.S.

The FCC concluded that deployment of small wireless facilities by non-Federal entities do not require historic preservation review under NHPA nor environmental review under NEPA because such deployments are neither an “undertaking” (NHPA) nor a “major Federal action” (NEPA). The Second R&O noted that the FCC last considered whether some wireless facilities could be exempt from these requirements in 2004 when virtually all wireless sites were “macro” sites, but that new small cell sites are materially different in size and in their likelihood of impact on surrounding areas. The FCC concluded that conducting such reviews for small wireless sites would result in costs far exceeding benefits and that the burden would grow exponentially as ever-increasing numbers of small wireless facilities are deployed.

Here is the newly amended FCC rule that specifies the conditions for exclusion from NHPA and NEPA review for small wireless facilities:

Section 1.1312(e): Paragraphs (a) through (d) of this section shall not apply:

  1. to the construction of mobile stations; or
  2. where the deployment of facilities meets the following conditions:

(i)  The facilities are mounted on structures 50 feet or less in height including their antennas as defined in § 1.1320(d), or the facilities are mounted on structures no more than 10 percent taller than other adjacent structures, or the facilities do not extend existing structures on which they are located to a height of more than 50 feet or by more than 10 percent, whichever is greater;

(ii) Each antenna associated with the deployment, excluding the associated equipment (as defined in the definition of antenna in § 1.1320(d)), is no more than three cubic feet in volume;

(iii) All other wireless equipment associated with the structure, including the wireless equipment associated with the antenna and any pre-existing associated equipment on the structure, is no more than 28 cubic feet in volume;

(iv) The facilities do not require antenna structure registration under Part 17 of this chapter;

(v) The facilities are not located on Tribal lands, as defined under 36 CFR § 800.16(x); and

(vi) The facilities do not result in human exposure to radiofrequency radiation in excess of the applicable safety standards specified in § 1.1307(b).

These changes were adopted by the FCC on a 3-2 vote. The changes go into effect on July 2, 2018.

Part 2 will address the actions of the FCC to streamline its environmental review process for larger wireless facilities.

 

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This third entry on the FCC’s ongoing review of RF exposure limits highlights the Notice of Inquiry that focuses on possible changes to the current RF exposure limits.

The NOI reiterates that the current exposure limits were adopted in 1996 and while expressing confidence in these limits, the NOI observes that intervening research studies, the ubiquity of device adoption, advances in technology, and developments in international standards support updating the record on RF exposure limits. Accordingly, the NOI seeks comment on whether the current exposure limits should be changed, and the costs and benefits of any suggested changes. The FCC explains its “intent is to adequately protect the public without imposing an undue burden on industry.” It adds that its goal “is to open a science-based examination of the efficacy, currency, and adequacy of the Commission’s exposure limits for RF electromagnetic fields.”

The tenor of the NOI is that, while safety concerns regarding the exposure limits have not been scientifically substantiated, there is extensive research and standards bodies activity on many aspects related to RF exposure.  These include partial-body and whole-body averaging of exposure; averaging area for power density; averaging time for limits; among others. The FCC must review a vast array of technical studies and information compiled since the adoption of the current limits as the agency considers whether and how to proceed. The views of other federal agencies with health and safety expertise will be particularly important to the FCC in this process.

Specific issues raised in the NOI may categorized as follows:

Exposure Limits. Issues of interest to the FCC include partial-body and whole-body averaging of exposure; averaging area and averaging time considerations; whether there should be peak pulsed field limits and/or limits on contact RF currents; whether the frequency range for FCC limits should be broadened from the current 100 kHz-100 GHz range; and conductive implanted objects.

Consumer Information. The FCC notes that it makes a variety of information on RF electromagnetic fields available to the public, but it seeks comment on whether it should make additional information available. If so, what form would be most useful to the public. It also asks whether it should require that more information be made available in equipment manuals, at point-of-sale, or on websites.

Exposure Reduction Policies. The FCC asks whether, in addition to its current “conservative, bright line limit[s]”, it should consider a general technical approach to reduce exposure below its limits in some situations, requesting  comment on cost-benefit and other trade-offs of such an approach and that interested parties specify the specific circumstances, tangible benefits, and impact on the cost and performance of  such an approach.

Evaluation. The FCC defines evaluation as “the determination of compliance with its exposure limits by measurement or computation.” The FCC requests comment on the pros and cons of measurement versus computation and variants thereof. In addition, the FCC requests comments on the effectiveness of its SAR and MPE limits in certain situations and whether any of the non-bindings matters in its Knowledge Database (KDB) should be made mandatory.

Portable RF Sources. The FCC notes that, although Supplement C of EOT Bulletin 65 recommends maintaining separation of about one inch during the testing of consumer portable body-worn devices, many radiating devices may be used without any separation from the human body (e.g., Bluetooth headsets). The FCC states that its calculations suggest that some devices may not be compliant with its exposure limits without the use of a spacer to maintain a separation distance when body-worn. It asks for comments on whether it should consider zero spacing or actual contact with the body when testing some devices. 

As this summary discussion demonstrates, the NOI is extremely broad and is important to equipment manufacturers, spectrum licensees, and many classes of RF device users.  It is possible that, after developing an up-to-date record on appropriate exposure levels, the FCC may decide that the current exposure limits remain valid.  The FCC frequently states that the current values are cautious and in many cases, equipment operates below the permitted levels.

On the other hand, if the FCC concludes that changes in the exposure limits are necessary or appropriate, the FCC likely would issue a Notice of Proposed Rulemaking setting forth the basis for and the details of the changes it proposes.

We believe the FCC’s next action in this proceeding will be adoption of many of the changes it proposed in its FNPRM discussed in the second entry of this three-part series, including some form of the more detailed signage requirements. Those signage changes, if adopted as proposed, will impose tangible costs for many FCC licensees. These include a significant financial impact–the costs of determining where signage is required and obtaining and installing the new signage.   There is also the potential for significant fines from the FCC if licensees do not fully comply with the updated FCC rules.

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Radiofrequency exposure limits and mitigation requirements are an area of special expertise at Keller and Heckman LLP. With our wide-ranging and deep experience in the areas of telecommunications and health and safety, we stand ready to assist you with any questions or concerns about these regulatory requirements. Please feel free to contact the author at Fitch@khlaw.com.

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Part One of this series summarized the FCC’s long-pending proceeding and initial set of decisions on human exposure to radiofrequency (RF) fields. Generally, the more complicated and difficult decisions were deferred.  In light of Chairman Pai’s commitments to Congress, we expect the FCC to resolve at least some of the remaining issues in 2018. Let us now examine areas that are likely up next for decision.

In addition to the decisions in its First Report and Order (R&O), the FCC adopted a Further Notice of Proposed Rulemaking (FNPRM) and Notice of Inquiry (NOI). The FCC summarized the FNPRM as follows:

We are proposing to broadly revise and harmonize the criteria for determining whether single or multiple fixed, mobile, or portable RF sources are subject to routine evaluation for compliance with the RF exposure limits or are exempted from such evaluations.  Additionally, we propose clarifications of evaluation requirements for portable and medical implant devices.  We also propose to adopt specific new requirements for signs and barriers at fixed transmitter sites to ensure compliance with public and occupational exposure limits.  Further, we propose a clarification of the definition of transient exposure for non-workers exposed at levels up to occupational limits.

[We] propose establishing general exemptions from evaluation to determine compliance in place of existing service-specific “categorical exclusions.”  These proposed exemptions involve simple calculations to establish whether any further determination of compliance is necessary. .  .  .  The new, general exemptions would instead apply to all subparts authorizing RF sources. .  .  .  Given the trend toward opportunistic spectrum access to allow services to utilize multiple bands of frequencies with various power limits, inclusion of all services is necessary to better ensure compliance with our exposure limits.

Important proposed changes in the FNPRM include:

  1. Clarified definitions of “power” for consistency throughout the Rules.
  2. Changes to general exemption criteria based on power, distance, and frequencies involved for all services using fixed, mobile, and portable transmitters including implants; elimination of distinctions between different services.
  3. A blanket exemption for single transmitter operations with up to 1 milliwatt (mW) available maximum time-averaged power independent of frequency and service; minimum two-centimeter separation between multiple transmitters operation at up to 1 mW.
  4. For single transmitter operation above 1 mW, requiring routine environmental evaluation above a “sliding scale” of values for minimum distance as a function of wavelength and maximum power as a function of frequency and distance for five frequency ranges from 0.3-100,000 MHz. The FNPRM acknowledges that the formulas used for the sliding scale are based on worst-case calculations but states that they trigger further evaluation, not necessarily a finding of non-compliance with permitted exposure limits.
  5. A multi-step equation to sum the effect of multiple fixed transmissions in proximity to each other and determine whether further evaluation is required.
  6. Additional exemption criteria based primarily on Specific Absorption Rate (SAR) limits for single fixed, mobile, and portable transmitters in the frequency range 300 MHz-6 GHz at distances of 0.5-40 centimeters from a human body and formulas to determine whether additional evaluation is required for multiple portable and multiple portable and mobile transmitters.

The FNPRM also proposes changes regarding mitigation of exposure to RF, stating that “. . . mitigation matters involve post-evaluation procedures to ensure that our exposure limits are not exceeded. Such measures include labels, signs, barriers, occupational training, and enforcement.” Specifically, these proposals include:

  1. Clarification of transient exposure and how to apply exposure limits in controlled environments with respect to averaging time.
  2. Specific new training, access restriction, and signage requirements for fixed transmitter sites with a new four-category system based on an Institute of Electrical and Electronics Engineers (IEEE) standard.

There are four-categories of proposed signage requirements.  Signage would be required for Categories 2-4 but optional for Category 1.

Category 1 is exposure up to the General Population (GP) limit. No signage would be required. Green “INFORMATION” signs stating that a transmitting source of RF energy is nearby but compliant with FCC exposure limits would be optional.

Category 2 is exposure above the GP limit and up to the Occupational (O) limit. Signs and access control would be required surrounding the area in which the GP limit is exceeded. Blue “NOTICE” signs would have to be large enough to be visible at the separation distance required to comply with the GP limit. Training would be required for occupational personnel with access to the area. Use of personal RF monitors would be recommended but not required.

Category 3 is exposure above the O limit and up to 10 times the O limit. In addition to the Category 2 mitigation requirements, yellow “CAUTION” signs would be required surrounding the area in which the O limit is exceeded. Transient individuals would not be permitted in the Category 3 area. Use of personal protective gear would be recommended but not required.

Category 4 is exposure to more than 10 times the O limit. In addition to the Category 3 mitigation requirements, orange “WARNING” signs would be required where the O limit could be exceeded by a factor of 10 and red “DANGER” signs would be required wherever immediate and serious injury would occur. If power reduction would not sufficiently protect in the event of human presence considering additional use of optional personal protective equipment, lockout/tagout procedures would have to be followed.

The signage for Categories 2, 3, and 4 would require inclusion of the “radiating antenna” RF energy advisory symbol, an explanation of the RF source, behavior necessary to comply with exposure limits, and contact information for a timely response in addition to the color and key words listed for each category.

The FNPRM states that barriers may not be appropriate for all Category 2 environments and that the FCC continues to support suggested Engineering and Technology (OET) exceptions not to require barriers in remote areas with unlikely public access. The FNPRM also reiterates the principle that licensees cannot rely exclusively on natural barriers for protection unless specifically approved by the FCC on a case-by-case basis. The FCC Enforcement Bureau can require corrective action and impose fines or other sanctions for non-compliance.

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This is the first entry of three regarding the FCC’s ongoing proceeding addressing human exposure to radio-frequency (RF) fields.  Although the FCC proceeding has been pending for some time, Chairman Pai has informed Congress that further action is a Commission priority.  Thus, we expect the FCC to adopt one or more orders in this proceeding in 2018.

Exposure to RF emissions is a persistent concern for segments of the public and some public health and workplace safety advocates.  With ever-increasing consumer adoption of wireless communications including unlicensed operations and in-building Wi-Fi, the emergence of small cells, the Internet of Things (IoT), and 5G implementation, a review of existing rules, largely unchanged for over 20 years, is warranted to consider more current research and studies and to maintain the credibility of the FCC’s regulations regarding RF exposure limits.

The FCC regulations on RF exposure limits impact a wide range of business interests—companies which manufacture equipment, including wireless medical devices, businesses which use radio equipment in their delivery of other goods and services, public safety organizations of all types, and the general public– both as cell phone or other wireless device users and as beneficiaries of countless wireless applications.  Any change in the current RF emission limits could cause significant expense for these groups, especially if there are changes in the limits governing devices having high numbers of consumer adoption—smart phones, tablets and WiFi routers.

The long-pending FCC proceeding addresses a very broad range of issues.  The FCC re-states its confidence in the current exposure limits adopted in 1996.  However, it acknowledges that intervening research, the ubiquity of device adoption, advances in technology, and developments in international standards warrant a far more current and up-to-date record on these matters.

The current FCC limits differentiate between general public and occupational/controlled exposure limits. The latter apply to personnel with expertise and training regarding RF exposure safety.  For that reason, the exposure levels are higher than for the general public.  In today’s increasingly wireless world, a closer look at exposure levels for the general public appears warranted.

2013 First Report and Order

The current FCC proceeding actually dates back to March 2003, when the FCC issued a Notice of Proposed Rule Making (NPRM) to “provide more efficient, practical, and consistent application of compliance procedures” relating to rules “to ensure that the public is appropriately protected from any potential adverse effects from RF exposure . . . .”  In March 2013, the FCC adopted a First Report and Order (R&O), Further NPRM, and Notice of Inquiry (NOI).

In the First R&O, the FCC clarified power evaluation procedures and references to determine compliance with FCC limits and made changes to its regulations regarding labeling of RF devices.  Key changes include:

  1. Amending the rules to reference the underlying whole-body and partial-body exposure limits for SAR (Specific Absorption Rate) and to allow evaluation of SAR instead of power density or field strength for demonstrating compliance for fixed and mobile RF sources below 6 GHz.
  2. Maintaining use of maximum permissible exposure (MPE) as a basis for evaluation subject to certain conditions.
  3. Discontinuing Supplement C of OET Bulletin 65, which provided guidance on RF limits for portable and mobile devices because more updated information is available in OET’s “Knowledge Database” (KDB).
  4. Classifying the outer ear (“Pinna”) as an “extremity” and subject to exceptions for localized SAR limits for “extremities.”
  5. Adopting more specific labeling requirements for occupational/controlled exposure to mobile and portable devices. The occupational/controlled limits apply when individuals are “fully aware” and can “exercise control” over exposure.  For these situations there is a two-tiered approach: (1) written and/or verbal information must be provided to an individual that exposure is part of their employment, and (2) appropriate training regarding work practices to ensure awareness and control must be provided.
  6. For fixed sites with multiple transmitters, noting that failure to comply with the rules can result in penalties for all transmitter operators whose systems contribute significantly to the exposure.
  7. Declining to require a new evaluation for existing sites that were excluded from evaluation under its prior evaluation criteria.

The regulated community did not raise significant objections to these rules largely because there were few substantive changes from existing requirements.  The next phases of the proceeding may prove more challenging for device manufacturers and services providers.

Part Two will review the changes proposed by the FCC in its Further Notice of Proposed Rulemaking.

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This entry provides an overview of how enterprise customers shape the underlying business deals in telecommunications services agreements. In the previous entry, we discussed the primary objectives enterprise customers look to achieve in negotiating telecommunications services agreements.  In our initial entry in this series, we discussed the challenge counsel for enterprise customers face in confining telecommunications services agreements to the four corners of the customer contract.

Overview. There are two basic approaches for putting these deals together. The first is the default or “seat of the pants” approach in which the customer (telecom manager) limits discussions to the current provider(s), typically 3 to 6 months prior to expiration of the current contract and, based on informal discussions with consultants or other customers, asks for a “market-based” reduction in rates for a new three-year deal, maybe remembering to request pricing for replacement IP services. The second is to initiate a more structured process 9 to 14 months prior to the expiration of the current agreement by engaging an experienced consultant to develop a demand set for an RFP to issue to both incumbent and potential successor carriers and to advise on trends in carrier services and pricing, particularly the transition to IP-based services offerings. This entry focuses on the second approach.

Caveat: The incumbent often prevails even under a systematic, well-planned procurement. Transitioning to successor providers is resource-intensive and, for some period, entails the payment of services to the incumbent and the successor provider during the transition process. Hot cuts are not the rule for major enterprises, particularly at critical locations. Caveat to the Caveat. If there is insufficient time to initiate a transition to a successor provider (and avoid a substantial increase in service pricing per the rates in the incumbent’s price guide), both the incumbent provider and its competitive providers likely will not propose market-based pricing and terms and conditions. Thus, the RFP should be issued in a timely manner to allow for competitive, responsive bids and for a doable transition to the successor provider(s).

Value of Telecom Consultants. There are several reasons for engaging a competent consultant. First, there are no published lists of market-based rates; carrier guide rates are rarely accepted by customers. There is no equivalent of published commodity prices (crude oil, corn or pork bellies) or web sites such as Edmunds or TrueCar for enterprise telecommunications service pricing. Even the “best of the best” telecom managers have a limited knowledge base of current market pricing; unless they have changed jobs (frequently), these persons’ pricing knowledge is limited to the company’s last agreement or competitive pricing review of 12 to 18 months ago. Experienced consultants have more insights into current market pricing.

Consultants offer two other value-added services. The first is the development of the enterprise’s demand set for its RFP. Telecom service pricing is based largely on volume, customer locations, and service mix. Two aspects of developing a demand set are determining current usage of existing services at current and planned locations (or anticipating a reduction in locations) and selecting the services (type and capacity) that the customer is looking to acquire. This entails a review of bills and invoices, existing network design, current services, expected growth or contraction of the enterprise’s requirements, and desired services. The two latter considerations are driven by the customer with input from the procurement consultants.

The second value-added is the consultant’s RFP templates. In addition to setting out the demand set and desired services, the RFP elicits information on pricing, other business considerations and legal terms and conditions. The RFP is the starting point for negotiations. The consultant’s RFP should be reviewed within the enterprise by the telecom/IT department, procurement group, legal, and, perhaps, risk management. A company may wish to incorporate the consultant’s RFP into its standard RFP documents or modify the consultant’s RFP. A related consideration to be determined upfront is the extent to which the consultant is the principal contact and whether the consultant will take the lead in discussions with the carriers.

Revenue Commitments and Pricing Reviews. Several other economic considerations are central to the business deal in addition to rates (recurring charges, non-recurring charges, waivers and credits). The first is the minimum revenue commitment which the customer commits to spend either annually or over the term of the agreement. Exclusive purchase commitments are rare. The minimum commitment level is based on projected expenditures at the proposed rates. Currently, term commitments with annual commitments for each renewal period are more common. The minimum commitment is increasingly supplemented by “incentive credits.” The best pricing or highest discount under the agreement is achieved only when expenditures exceed some dollar amount above the minimum commitment level, qualifying for the incentive credits.

Agreements also include a so-called “business downturn/downsizing” provision. This clause is triggered when unexpected reductions in projected expenditures occur due to downturns, divestitures or downsizing in the customer’s business. This clause addresses the risk of paying a hefty sum that is the difference between the minimum commitment and the actual (reduced) level of expenditures. The typical quid pro quo is an increase in rates or an increase in the term of the agreement or both.

The second major economic consideration is the competitive pricing review. These reviews are typically conducted annually or every 18 months. Involvement with consultants are often essential for the customer to have some insight into current market trends. For enterprises with stable or growing expenditures and general satisfaction with the incumbent’s services, services agreements may be extended based on the price negotiations that follow the path of competitive pricing reviews.

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Many in the wireless industry are aware of the FCC rulemaking proceeding proposing regulatory changes to streamline the expansion of wireless infrastructure (WT Docket 17-79).  A basic premise of this proceeding is the tremendous potential of 5G wireless technology and the increased capacity needs and vast expansion of infrastructure supporting wireless networks that will be needed to deploy 5G. The proceeding focuses on and identifies potential obstacles to rapid deployment of wireless infrastructure at the local level.

For wireless carriers, small wireless cells are important because small cells support greater re-use of available spectrum and bring the wireless network closer to users and devices. Those attributes are very important to the developing Internet-of-Things (IOT).

Action by the FCC. In Nov. 2017, the FCC took one action in this docket. It excluded from required review under Section 206 of the National Historic Preservation Act (NHPA) replacement utility poles if these conditions are met:

(i)   The original structure

(A) Is a pole that can hold utility, communications, or related transmission lines;

(B) Was not originally erected for the sole or primary purpose of supporting antennas that operate pursuant to a spectrum license or authorization issued by the Commission; and

(C) Is not itself a historic property.

(ii)  The replacement pole—

(A) Is located no more than 10 feet away from the original pole, based on the distance between the centerpoint of the replacement pole and the centerpoint of the original pole; provided that construction of the replacement pole in place of the original pole entails no new ground disturbance (either laterally or in depth) outside previously disturbed areas, including disturbance associated with temporary support of utility, communications, or related transmission lines.  For purposes of this paragraph, “ground disturbance” means any activity that moves, compacts, alters, displaces, or penetrates the ground surface of previously undisturbed soils;

(B) Has a height that does not exceed the height of the original pole by more than 5 feet or 10 percent of the height of the original pole, whichever is greater; and

(C) Has an appearance consistent with the quality and appearance of the original pole. (FCC 17-153, footnotes omitted.)

What’s a “Small Cell.” There is no succinct, agreed definition of the term “small cells.” One FCC point of guidance is in the August 2016 First Amendment to the Nationwide Programmatic Agreement (NPA) for the Collocation of Wireless Antennas between the FCC, the National Conference of State Historic Preservation Officers, and the Advisory Council on Historic Preservation.

The amendment lists requirements for exemption from review under Section 106 of the NHPA for “collocation of small wireless antennas and associated equipment on buildings and non-tower structures that are outside of historic districts and are not historic properties.” The specified limits of the “small wireless antennas and associated equipment” are:

  1. Each individual antenna, excluding the associated equipment (as defined in the definition of Antenna in Stipulation l.A.), that is part of the collocation must fit within an enclosure (or if the antenna is exposed, within an imaginary enclosure, i.e., one that would be the correct size to contain the equipment) that is individually no more than three cubic feet in volume, and all antennas on the structure, including any pre-existing antennas on the structure, must in aggregate fit within enclosures (or if the antennas are exposed, within imaginary enclosures, i.e., ones that would be the correct size to contain the equipment) that total no more than six cubic feet in volume; and,
  2. All other wireless equipment associated with the structure, including preexisting enclosures and including equipment on the ground associated with antennas on the structure, but excluding cable runs for the connection of power and other services, may not cumulatively exceed:
    1.  28 cubic feet for collocations on all non-pole structures (including but not limited to buildings and water tanks) that can support fewer than 3 providers; or,
    2.  21 cubic feet for collocations on all pole structures (including but not limited to light poles, traffic signal poles, and utility poles) that can support fewer than 3 providers; or,
    3.  35 cubic feet for non-pole collocations that can support at least 3 providers; or,
    4.  28 cubic feet for pole collocations that can support at least 3 providers;

State Legislation. In addition to the FCC proceeding, there has been a flurry of actions at the state level that are changing the regulatory landscape for small cells. There has been a major campaign underway by the wireless industry which has achieved impressive results. A list of state legislative initiatives considered in recent years includes about 20 states, many of which have enacted new legislation limiting the authority of local governments regarding small cell installations on public right-of-way.

These proposed state law changes typically limit or eliminate the authority of local governments to determine where in local right-of-way small cell equipment can be installed; limit the time for review by local governments; and limit the application and/or right-of-way leasing charges that can be imposed. For example, Virginia enacted S.B. 1282 earlier this year. It provides that localities cannot require special exceptions or special use permits for small cell facilities installed on existing structures where providers already have permission to co-locate equipment. It imposes a 10-day limit to notify carriers of an incomplete application and a 60-day limit to approve or deny applications. It limits fees to $100 each for up to five small cell facilities on an application and $50 for additional facilities. It prohibits fees for carrier use of municipal rights-of-way, except for zoning, subdivision, site plan, and comprehensive plan fees. It mandates that approval for a permit shall not be unreasonably conditioned, withheld, or delayed.

The Virginia law uses these definitions:

“Micro-wireless facility” means a small cell facility that is not larger in dimension than 24 inches in length, 15 inches in width, and 12 inches in height and that has an exterior antenna, if any, not longer than 11 inches.

“Small cell facility” means a wireless facility that meets both of the following qualifications: (i) each antenna is located inside an enclosure of no more than six cubic feet in volume, or, in the case of an antenna that has exposed elements, the antenna and all of its exposed elements could fit within an imaginary enclosure of no more than six cubic feet and (ii) all other wireless equipment associated with the facility has a cumulative volume of no more than 28 cubic feet, or such higher limit as is established by the Federal Communications Commission. The following types of associated equipment are not included in the calculation of equipment volume: electric meter, concealment, telecommunications demarcation boxes, back-up power systems, grounding equipment, power transfer switches, cut-off switches, and vertical cable runs for the connection of power and other services.

State legislation along these same lines has been adopted in many other states in the last year. Of course, each state’s law varies and must be read carefully to determine its changes.

In contrast, Senate Bill 649 was passed this year by the California legislature but was ultimately vetoed by the Governor. S.B. 649 streamlined the local approval process for small cell sites and limited fees for small cells installed on municipal infrastructure to $250/year with a defined cost of living increase formula. The bill defined small cells as follows:

(3) (A) “Small cell” means a wireless telecommunications facility, as defined in paragraph (2) of subdivision (d) of Section 65850.6, or a wireless facility that uses licensed or unlicensed spectrum and that meets the following qualifications:

(i) The small cell antennas on the structure, excluding the associated equipment, total no more than six cubic feet in volume, whether an array or separate.

(ii) Any individual piece of associated equipment on pole structures does not exceed nine cubic feet.

(iii) The cumulative total of associated equipment on pole structures does not exceed 21 cubic feet.

(iv) The cumulative total of any ground-mounted equipment along with the associated equipment on any pole or nonpole structure does not exceed 35 cubic feet.

(v) The following types of associated ancillary equipment are not included in the calculation of equipment volume:

(I) Electric meters and any required pedestal.

(II) Concealment elements.

(III) Any telecommunications demarcation box.

(IV) Grounding equipment.

(V) Power transfer switch.

(VI) Cutoff switch.

(VII) Vertical cable runs for the connection of power and other services.

(VIII) Equipment concealed within an existing building or structure.

In his veto message, the Governor stated:

This bill establishes a uniform permitting process for small cell wireless equipment and fixes the rates local governments may charge for the placement of that equipment on city or county owned property, such as streetlights and traffic signal poles. There is something of real value in having a process that results in extending this innovative technology rapidly and efficiently. Nevertheless, I believe that the interest which localities have in managing rights of way requires a more balanced solution that the one achieved in this bill.

That suggests the possibility of another effort to address these issues during the next legislative session in California.

Federal Legislation. There is also proposed Federal legislation regarding the approval process for small cells. On October 19, Senators Wicker (R-MI) and Cortez Masto (D-NV) introduced S. 1988, the Streamlining Permitting to Enable Efficient Deployment of Broadband Infrastructure Act of 2017 or the “SPEED Act”.

This legislation would exempt small wireless facilities from environmental and historic reviews under the National Environmental Policy Act (NEPA) if they meet these conditions: (1) They are being deployed in public right of way and are not higher than an existing structure in the public right of way; or (2) They are serving as a replacement for an existing small cell and are substantially similar (as defined by the FCC) to the small cell being replaced. It would also exempt wireless towers from NEPA review if located in public right of way and the antenna tower or support pole is not more that the higher of 50 feet tall or 10 feet higher that any existing structure in the public right of way and does not have guy wires. The SPEED Act uses FCC size and other applicable requirements as its definition of small wireless facilities.

Prospects for enactment are not clear at this time.

If you would like additional information regarding these actions, please contact me or any other attorney in the Telecommunications Practice Group at Keller and Heckman LLP.

Photo of Douglas Jarrett

Updated May 2, 2018

Trends in wireline and mobile services strongly suggest a refresh to the FCC Forms 499-A/Q is warranted.  A shift to fewer revenue buckets (reporting categories and lines) consistent with the major services currently being offered to customers could reduce the time for services providers to prepare Forms 499-A, assist USAC staff in reviewing the forms, and help streamline USAC audits.  Other incremental steps are also suggested.  For purposes of brevity, this entry focuses on the Form 499-A.

Block 3: Carrier’s Carrier Revenue Information is a prime example of outdated and unnecessary revenue reporting obligations.  Several lines under Fixed Local Service could be aggregated or deleted; Line 308 (USF support revenues) should be a standalone category.  Toll services and all other wireline voice services should be consolidated on one line—Wholesale Wireline Voice Services, and all mobile voice services could be consolidated on one line (the toll distinction is irrelevant).  All wholesale private line service revenues should be reported on one line with special access service revenues expressly included or reported on a separate line as special access is the principal wholesale data service.

Consumers increasingly purchase service in bundles:

Wireless bundles: Voice, text and data (Internet access service); occasionally, voice-only

Wireline bundles: Voice, data and video: data and video; or increasingly data-only

Voice services are assessable services.  High speed Internet access and multi-channel video programming services are not.  Interconnected VoIP is rapidly displacing circuit switched wireline voice services.  Switched access service revenues are approaching inconsequential status.

The all-distance plans for wireline voice services may encompass unlimited domestic calls and an unlimited or an allotment of international minutes to select countries with the overage billed on a per minute basis; voice calling to other counties may be billed on a usage-basis.  All-distance voice plans are even more common for mobile services.  International calling card revenues remain cognizable.  Payphone services revenues are not.

The utility of separate USF reporting categories for wireline voice services, depending on how they are priced, is not apparent.  The same is true for mobile voice service revenues:  Despite a bewildering array of pricing plans, distinguishing between prepaid and postpaid voice revenues is irrelevant for determining USF assessable revenues.  The relevant USF contribution considerations for all mobile voice services are (1) apportioning revenues between assessable voice services from the revenues of bundled non-assessable services and products, and (2) determining the jurisdictional mix of voice services.

Enterprise customers often obtain a broader mix of wireline services:

Voice services (local, outbound and inbound (increasingly interconnected VoIP)) with multiple pricing options

Special access services

Private line services

Other non-Internet data services, such as MPLS-based services

High speed Internet access services

Enterprise customers, including the Federal government and many state governments, will have significant international revenues.

As with the wholesale service reporting under Block 3, all wireline retail voice services revenue reporting could be simplified.  All enterprise, small business and residential wireline voice service revenues can be reported on one line, the principal USF consideration is assignment to the correct jurisdiction (intrastate, interstate, international or foreign).  Again, mobile voice revenues should be reported separately with determining the correct jurisdiction being the principal USF contribution consideration.

Special access services should be reported separately from private line service, consistent with industry practice of offering and charging for these services separately. Private line service should be reported on one line as the distinction between “local’ and “toll” private line services is both confusing and irrelevant.  The critical issue for private line and special access services is determining the correct jurisdiction.

For physically intrastate private lines and special access services (almost all special access services have endpoints within a single state), services providers must follow the 10% de minimis rule to determine the jurisdictional nature of these revenues associated with these services.  The Bureau addressed several longstanding requests for review of USAC determinations involving the 10% de minimis rule in its 30 March 2017 Memorandum and Opinion and Order, but the decision is subject to Commission review that remains pending for over a year.

Another addressable issue raised in the 2012 USF Contribution Reform Further Notice of Proposed Rulemaking is the disparity between the “safe harbors” for interstate/international mobile service (37.1%) and interstate/international VoIP service (64.9%) on the one hand, and the noticeably lower assessable percentages reported for these services (based on actual traffic or traffic studies) on the other.

The Commission or the Wireline Competition Bureau could take the pragmatic step of issuing a Public Notice to refresh the record to align the safe harbors with services providers’ reported data. This could ease reporting burdens for filers and reduce administrative burdens on USAC staff.  The safe harbors could be updated every three years to reflect shifts in usage, if any.