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Here is the final entry of a three-part series of articles outlining the key provisions of new state legislation regarding the deployment of wireless small cell equipment in public right-of-way (ROW). Each of the three-part series addresses newly enacted legislation. The first two articles in the series featured Nebraska and Wisconsin. Today’s article features Maine and Connecticut.

Background

Over the last few years, the wireless industry has actively pursued state legislation enacted to constrain the broad authority of local governments over the deployment of wireless small cell equipment in public ROW. Connecticut, Maine, Nebraska and Wisconsin have now joined Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, Texas, Utah, Virginia, and West Virginia to bring the list of states which have enacted legislation to facilitate the deployment of wireless small cells to 28.

These state laws typically limit the authority of local governments to decide where wireless small cell equipment can be installed in the ROW; limit the time for action on applications to install small cell equipment; and limit the amounts that can be charged for applications and use of the ROW.

Today’s blog post will focus on Maine and Connecticut, which took a very different approach from those of Nebraska and Wisconsin.

Maine

This brief new law provides:

With regard to small wireless facilities:

  • Notwithstanding any zoning or land use ordinance to the contrary, a the facility must be a permitted use within the public right-of-way, subject to permitting requirements and duly adopted, nondiscriminatory conditions otherwise applicable to permitted uses within the municipality and consistent with state and federal law, including, without limitation, any permitting requirements in Title 35-A, Chapter 25.
  • The rights and responsibilities of a cable television company under franchise agreement executed pursuant to Section 3008, Subsection 5 are not affected or altered.

Connecticut

 This law establishes a Council on 5G Technology and tasks it with:

  • Reviewing wireless carriers’ requests to place personal wireless service facilities and small wireless facilities, as defined in federal law, on state-owned real property.
  • Determining which state-owned properties may be made available to the wireless carriers for these facilities.

The law requires the Council to:

  • Adopt guidelines for safely placing personal wireless service facilities and protecting open space land.
  • Perform due diligence and review comments from any entities that own property within a 500-foot radius of any state-owned real property under the council’s review.

The law requires the state Office of Policy and Management to:

  • Jointly develop, with certain other state agencies, licensing agreements, forms, and fee structures for placing the wireless facilities on state owned property, noting that the law does not supersede existing rules and requirements regarding the review and approval of permits for proposed personal wireless service facilities under the Public Utilities Regulatory Authority’s (PURA) and the Connecticut Siting Council’s jurisdiction.
  • In consultation with PURA and the Siting Council, to work with municipalities to establish a process for siting small wireless facilities on municipal property and, when using utility or light poles is insufficient, private property with the property owner’s permission.

Many of the state laws that have been enacted have provisions that are similar to, draw from, or incorporate by reference FCC actions regarding wireless small cell facilities. However, each state law is unique and must be read fully and carefully to determine its detailed provisions and impacts.

For more information about any of these state laws, please contact Michael Fitch, Keller and Heckman Senior Counsel, (fitch@khlaw.com; 202-434-4264)

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Here is the second of a three-part series of articles outlining the key provisions of new state legislation regarding the deployment of wireless small cell equipment in public right-of-way (ROW). Each of the three-part series addresses newly enacted legislation. The first part of the series featured Nebraska. Today’s article features Wisconsin and the final article in the series will feature Maine and Connecticut.

Background

Over the last few years, the wireless industry has actively pursued state legislation enacted to constrain the broad authority of local governments over the deployment of wireless small cell equipment in public ROW. Connecticut, Maine, Nebraska and Wisconsin have now joined Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, Texas, Utah, Virginia, and West Virginia to bring the list of states which have enacted legislation to facilitate the deployment of wireless small cells to 28.

These state laws typically limit the authority of local governments to decide where wireless small cell equipment can be installed in the ROW; limit the time for action on applications to install small cell equipment; and limit the amounts that can be charged for applications and use of the ROW.

Today’s blog post will focus on the Wisconsin law, which addresses many specific areas in detail.

With regard to ROW, the law:

  • Prohibits the state and political subdivisions from entering into an exclusive agreement with any person for the use of ROW for the construction, operation, or maintenance of small wireless facilities, wireless support structures, or for the collocation of small wireless facilities.
  • Provides that the state and political subdivisions may impose nondiscriminatory rates or fees on wireless providers only if they charge other entities for the use of ROW, subject to a number of conditions and limitations.
  • Subject to a number of exceptions, and notwithstanding a political subdivision’s zoning ordinances, authorizes a wireless provider to collocate small wireless facilities and construct, modify, maintain, and replace utility poles that support small wireless facilities, along, across, upon, and under ROW, provided such activity does not obstruct or hinder travel, drainage, maintenance, or the public health or safety or impede other uses of ROW by communications service providers, public utilities, or cooperatives.
  • Limits the height of utility poles and small wireless facilities. With regard to the rights of a wireless provider to construct or modify utility poles, the law allows a political subdivision to propose an alternate location for collocation, which the wireless provider must use if it has the right to do so and the alternate location is reasonable and technically feasible and does not impose material additional costs.
  • Allows the state or political subdivisions to require a wireless provider to repair all damage that is directly caused by its activities in ROW that involve small wireless facilities, utility poles, and wireless support structures.
  • Generally requires a wireless provider to indemnify and hold harmless a political subdivision for any liability and loss from personal injury or property damage that results from the use or occupancy of ROW by the wireless provider.
  • Prohibits political subdivisions from doing any of the following in a way that exceeds federal or state regulatory requirements: regulating communications service facilities in rights-of-way; regulating communications service; or imposing certain charges relating to communications service provided over facilities in rights-of-way. “Communications service” is defined as cable television, telecommunications, information, or wireless service.
  • Creates a rights-of-way study committee consisting of the governor, legislators, and representatives of public and private stakeholders.

With regard to the permitting process, the law:

  • Subject to a number of exceptions, prohibits the state and political subdivisions from prohibiting, regulating, or charging any person for the collocation of small wireless facilities.
  • Notwithstanding a political subdivision’s zoning ordinances, classifies small wireless facilities as a permitted use that is not subject to such zoning ordinances if they are collocated in or outside a ROW if the property is not zoned exclusively for single-family residential use.
  • Subject to a number of conditions, authorizes the state and political subdivisions to require an application for a permit to collocate a small wireless facility and to construct and operate a new or replacement utility pole if the permit is of general applicability and does not apply exclusively to small wireless facilities. The law specifies the types of information that can be required in a permit The law imposes various deadlines relating to the permit application and approval process. If the state or a political subdivision misses a deadline for an application, the law allows the applicant to consider the application approved.
  • Requires the state or political subdivisions to approve permit applications unless the application interferes with rights-of-way, as specified in the law, or does not meet applicable codes, which are defined as state codes related to electrical wiring, plumbing, and fire prevention; commercial building codes; uniform dwelling codes; and local amendments to those codes. However, the law allows the state or a political subdivision to condition approval of a permit on compliance with reasonable and nondiscriminatory relocation, abandonment, or bonding requirements that are consistent with state law applicable to other occupiers of ROW.
  • Prohibits the state and political subdivisions from requiring an applicant to perform services unrelated to the approval sought, and prohibits such governmental units from requiring a wireless provider permit applicant to provide more information in its permit application than the governmental unit requires of communications service providers for the same type of permit.
  • Requires an applicant whose permit application is approved to commence the activity authorized by the permit within 365 days after its receipt and requires the applicant to pursue work on the activity until completion. However, the law prohibits the state and political subdivisions from placing any time limit on an application related to the permit.
  • Prohibits the state and political subdivisions from imposing express or de facto moratorium on filing, receiving, or processing applications, or issuing permits.
  • Subject to specified conditions, allows a political subdivision to adopt aesthetic requirements for deployment of small wireless facilities and associated antenna equipment and utility poles in rights-of-way.
  • Authorizes a political subdivision to enact an ordinance to prohibit, in a nondiscriminatory way, a communications service provider from installing utility poles or wireless support structures in the ROW of a historic district or an area in which all utilities are located underground (underground district), except that the ordinance may not prohibit collocations or the replacement of existing structures, and the ordinance must satisfy specified requirements. The law also allows a political subdivision to impose certain aesthetic requirements in a historic or underground district.
  • Subject to specified monetary limits and adjustments based on actions by the Federal Communications Commission, authorizes the state and political subdivisions to charge an application fee for permits. Generally, neither the state nor a political subdivision may require applications, permits, fees, or other approvals for routine maintenance, the replacement of small wireless facilities with substantially similar or smaller facilities, or certain activities involving micro wireless facilities that are strung on cables between existing utility poles.

With regard to access to governmental structures, the law:

  • Prohibits a person who owns or controls a governmental pole or utility pole for designated services (UPDS) from entering into an exclusive arrangement with any person for the right to attach to or use such poles, and prohibits the owner of such poles from imposing discriminatory fees, charges, or other terms and conditions.
  • Provides that the rate a political subdivision may charge for collocating a small wireless facility on a UPDS is governed by agreement between the political subdivision and a wireless provider and provides that, if no agreement is reached, the rate is subject to the Public Service Commission’s authority under current law.
  • Subject to a number of conditions and adjustments based on FCC actions, limits the rate an owner of a governmental pole, other than a UPDS, charges another person to collocate on the pole to an amount that is sufficient to recover the owner’s actual, direct, and reasonable costs, subject to a maximum of $250 per small wireless facility per year.
  • Specifies deadlines for the state and political subdivisions to make available rates, fees, and terms for collocation of small wireless facilities on governmental poles that comply with the law’s requirements and to amend existing agreements relating to collocation in the ROW.
  • Provides that a person who owns or controls a governmental pole other than a UPDS may not require more make-ready work than required to meet applicable codes or industry standards, and prohibits fees for make-ready work from including costs related to preexisting conditions, prior damage, or noncompliance with current standards. Such fees may not exceed actual costs or the amount charged to other communications service providers for similar work.

With regard to dispute resolution, the law:

  • Requires courts to determine disputes regarding the law’s requirements, except that, as noted above, subject to court review, the PSC resolves disputes over the rates charged by a political subdivision for collocating a small wireless facility on a UPDS.
  • Provides a mechanism for political subdivisions to allow the placement of a small wireless facility or utility pole at a temporary rate pending the resolution of a ROW dispute.

With regard to setback requirements, the law:

  • Notes that generally, under current law, a political subdivision may not impose a setback requirement for a mobile service support structure.
  • Grants a political subdivision limited authority to impose a setback requirement on the placement or substantial modification of such a mobile service support structure with regard to new or substantially modified structures. However, a setback requirement could apply only to a structure that is constructed on land that is zoned for only single-family residential use or on adjacent land. In addition, the setback requirement must be based on the height of the proposed structure, and may not exceed the height of the proposed structure.
  • Provides that a setback requirement does not apply to an existing or new utility pole, or wireless support structure that supports small wireless facilities if the pole or facility meets the height limitations specified in the bill for such a pole or facility.

The third and final entry in this series will address provisions of newly enacted legislation in Maine and Connecticut.

Many of the state laws that have been enacted have provisions that are similar to, draw from, or incorporate by reference FCC actions regarding wireless small cell facilities. However, each state law is unique and must be read fully and carefully to determine its detailed provisions and impacts.

For more information about any of these state laws, please contact Michael Fitch, Keller and Heckman Senior Counsel, (fitch@khlaw.com; 202-434-4264).

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Here is the first of a three-part series of articles outlining the key provisions of new state legislation regarding the deployment of wireless small cell equipment in public right-of-way (ROW). Each of the three-part series addresses newly enacted legislation. Today’s article features Nebraska, the next article will feature Wisconsin, and the final article in the series will feature Maine and Connecticut.

Background

Over the last few years, the wireless industry has actively pursued state legislation enacted to constrain the broad authority of local governments over the deployment of wireless small cell equipment in public ROW. Connecticut, Maine, Nebraska and Wisconsin have now joined Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, Texas, Utah, Virginia, and West Virginia to bring the list of states which have enacted legislation to facilitate the deployment of wireless small cells to 28.

These state laws typically limit the authority of local governments to decide where wireless small cell equipment can be installed in the ROW; limit the time for action on applications to install small cell equipment; and limit the amounts that can be charged for applications and use of the ROW.

Today’s blog post will focus on Nebraska. The new Nebraska law reflects the conclusion that “encouraging the development of strong and robust wireless communications networks throughout the state is necessary to address public need and policy and is integral to the state’s economic competitiveness.”

The new state law defines a small wireless facility as:

“A wireless facility that meets each of the following conditions: (1) The facilities (a) are mounted on structures fifty feet or less in height including the antennas or (b) are mounted on structures no more than ten percent taller than other adjacent structures; (2) each antenna associated with the deployment is no more than three cubic feet in volume; (3) all other equipment associated with the structure, whether ground-mounted or pole-mounted, is no more than twenty-eight cubic feet in volume; (4) the facilities do not require antenna structure registration under 47 C.F.R. part 17, as such regulation existed on January 1, 2019; (5) the facilities are not located on tribal lands, as defined in 36 C.F.R. 800.16(x), as such regulation existed on January 1, 2019; and (6) the facilities do not result in human exposure to radio frequency radiation in excess of the applicable safety standards specified in 47 C.F.R. 1.1307(b), as such regulation existed on January 1, 2019.”

Key provisions of the Nebraska law are:

  • One-time and recurring charges to wireless service providers must be non-discriminatory compared to charges to any other users of the ROW.
  • A wireless provider has the right as a permitted use not subject to zoning review or approval to collocate small wireless facilities and install, maintain, modify, operate, and replace utility poles along, across, upon, and under the ROW as long as such facilities or poles do not obstruct or hinder the usual travel or public safety on such ROW or obstruct the legal use by utilities or the safe operation of their systems or provision of service.
  • A new small wireless facility (including antennas) or a new or modified utility pole installed in the ROW is limited to the greater of five feet above the tallest existing utility pole in place located within 500 feet of the new pole in the same ROW or 50 feet above ground level. Local authorities have discretion to permit taller heights.
  • Except for facilities excluded from evaluation for effects on historic properties under 47 C.F.R. 1.1307(a)(4), as such regulation existed on January 1, 2019, an authority shall have the right to require design or concealment measures in a historic district established prior to January 1, 2019. Such design or concealment measures shall be objective and directed to avoid or remedy the intangible public harm of unsightly or out-of-character wireless facilities deployed at the proposed location within the authority’s jurisdiction. Any such design or concealment measures shall be reasonable, nondiscriminatory, and published in advance, and shall not be considered a part of the small wireless facility for purposes of the size restrictions of a small wireless facility.
  • An authority may require a wireless provider to repair all damage to a ROW directly caused by the activities of the wireless provider in the ROW and return the ROW to equal or better condition to that before the damage occurred pursuant to the competitively neutral and reasonable requirements and specifications of the authority. If the applicant fails to make the repairs that are reasonably required by the authority within 14 days after written notice, the authority may undertake such repairs and charge the wireless provider the reasonable, documented cost of such repairs.
  • An authority may require an applicant to apply for and obtain one or more permits to collocate a small wireless facility or install a new, modified, or replacement utility pole associated with a small wireless facility. Such permits shall be of general applicability and not apply exclusively to wireless facilities.
  • An authority shall be allowed to reserve space on local authority poles and the applicant shall cooperate with the authority in any such reservation, except that the authority shall first notify the applicant in writing that it is interested in reserving such pole space or sharing the trenches or bores in the area where the collocation is to occur. The applicant shall allow the authority to place its infrastructure in the applicant’s trenches or bores or on the utility pole as requested by the authority, except that the authority shall incur the incremental costs of placing the conduit or infrastructure as requested. The authority shall be responsible for maintaining its facilities in the trenches and bores and on the authority pole.
  • An authority may require an applicant to include an attestation that the small wireless facilities will be operational for use by a wireless services provider within nine months after the later of the completion of all make-ready work or the permit issuance date unless a delay is caused by lack of commercial power or communications transport facilities to the site. In such case the applicant shall have an extension not to exceed nine months. The authority and applicant may mutually agree to an additional extension.

In addition, the law spells out specific reasons for which an application can be denied and maximum processing times for an application. It also provides “deemed granted” relief if a complete application is not granted or denied within the required timeline.

The next article in this series will feature key provisions of the new enacted Wisconsin legislation.

Many of the state laws that have been enacted have provisions that are similar to, draw from, or incorporate by reference FCC actions regarding wireless small cell facilities. However, each state law is unique and must be read fully and carefully to determine its detailed provisions and impacts.

For more information about any of these state laws, please contact Michael Fitch, Keller and Heckman Senior Counsel, (fitch@khlaw.com; 202-434-4264).

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In a draft Notice of Proposed Rulemaking (NPRM) released on July 11, 2019 (scheduled to be adopted at the FCC’s August 1, 2019 Open Meeting), the FCC proposes to make $20.4 billion available under the Rural Digital Opportunity Fund (RDOF) through two multi-round, descending clock auctions, largely following the bidding rules of the CAF II auction that was conducted in 2018.

Under the draft NPRM, Phase I of the RDOF would allocate support to wholly unserved census blocks not having broadband speeds at or above the 25/3 Mbps fixed broadband benchmark with a budget of at least $16 billion over ten years. Many of these wholly unserved census blocks were included in the state-wide offers the FCC extended to the price cap ILECs in 2015. The performance obligation in the statewide offers was set at the very low bar of 10/1 Mbps. The funding under these offers expires in 2021.

A large percentage of these statewide offers were accepted, though Verizon declined its offers except for areas in which it was selling assets to Frontier Communications. The areas in the accepted statewide offers are available here. Under the NPRM, the census blocks eligible for the Phase 1 auction will include principally those (i) “for which the price cap carriers currently receive…model-based support,” (ii) eligible in the CAF II auction but not part of winning bids, (iii) included in winning bids in the CAF II auction for which the bidder defaults, and (iv) not included in the state-wide offers or the CAF II auction because they were served with voice and 10/1 Mbps service. The final list of eligible areas will be released at a later date.

In parallel with finalizing procedures for the Phase I auction, the Commission has committed to address the widely acknowledged overstatement of broadband availability in rural areas. This overstatement is attributable to outdated mapping procedures that stem, in major part, from the longstanding, widely criticized Form 477 reporting instruction that requires if a single location in a census block is served at the fixed broadband benchmark, the entire census block is reported as “served” and therefore not eligible for inclusion in an auction.

After receiving a “voluminous amount” of recommendations and proposals for improving broadband reporting and mapping, the Commission released a draft Report and Order and Second Further Notice of Proposed Rulemaking on July 11, 2019 which is scheduled to be adopted at the FCC’s August 1 Open Meeting and will set out reforms and proposals to develop more granular and accurate maps of unserved locations. At a date to be determined, the Phase II reverse auction would make available $4.4 billion, plus the remaining support to unserved locations in (i) partially unserved census blocks, and (ii) areas not won during the Phase I auction.

Shifting the focus to unserved locations from census blocks is long overdue. In recent years, Congress, public interest groups, and state and local governments criticized the current broadband reporting methodology and the resulting chronic overstatement of broadband availability in the United States.

The FCC believes that a meaningful amount of the $16 billion of the Phase I auction will remain available for the Phase II auction as the bidding procedures and, presumably, the closing conditions that governed the 2018 CAF II auction will apply. Under the closing conditions for the 2018 CAF II auction, approximately 25% of the $1.98 billion budget distributed over 10 years was not assigned.

Based on ex parte filings recently submitted proposing changes to the two draft documents, the FCC will have a range of choices in finalizing the eligible areas for the Phase I auction and the new rules for reporting and mapping broadband availability in rural areas. Beyond Telecom Law Blog will highlight developments in these important proceedings as they arise.

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On July 10, 2019, the FCC adopted a Notice of Proposed Rulemaking (NPRM) and Declaratory Ruling that focuses on access and marketing agreements for fixed broadband, video, and voice services (Triple Play Agreements) negotiated by cable companies, telcos, other fixed broadband services providers and developers, and owners of multiple dwelling units (MDUs).

The NPRM also raises questions regarding rooftop leases and distributed antenna system (DAS) agreements between wireless carriers and, sometimes, third-party DAS [1] operators, and developers and owners of MDUs and commercial properties, collectively referred to as multi-tenant environments (MTEs).

The Declaratory Ruling is more controversial and, potentially, more consequential. The ruling preempts a San Francisco ordinance (“Article 52”) that requires sharing of in-use MDU wiring used for the distribution of broadband services to the building’s residents. When a draft of the ruling was released in June, the House of Representatives approved an amendment to an appropriations bill that would prohibit the FCC from “finalizing a draft declaratory ruling that would overturn local ordinances that promote broadband competition.” Nonetheless, the agency moved forward.

Declaratory Ruling

As paraphrased by the FCC, San Francisco’s Article 52 prohibits a building owner from “‘interfer[ing] with the right of an occupant to obtain communications services from the communications services provider of the occupant’s choice,’ and provides that an owner so interferes by refusing to allow a communications services provider to (1) ‘install the facilities and equipment necessary to provide communications services,’ or (2) ‘use any existing wiring to provide communications services as required by this Article 52.’”

The decision to preempt Article 52 is consistent with recent FCC decisions promoting facilities-based competition, investment in broadband infrastructure, and limiting facilities-based services providers’ obligations to grant competitors access to their facilities. The FCC’s logic is straightforward.

“Rather than promoting access to buildings and customers, Article 52 requires building owners to share existing facilities. And the forced sharing of in-use facilities reduces incentives for incumbent providers and building owners to invest in shared infrastructure and encourages providers to take advantage of existing infrastructure rather than building their own. These deleterious outcomes would frustrate the policies the Commission sought to achieve in the [prior] MTE orders, and this fact informs our decision to preempt in-use wire sharing.”

On the other hand, the preemption in the Declaratory Ruling is limited as it does not foreclose state and local laws that “promote facilities-based broadband deployment and competition in MTEs so long as the efforts do not contravene” FCC rules and policies. The FCC emphasizes it is not preempting cable mandatory access laws that establish “a legal right to install and maintain cable wiring in MDU buildings, even over an MDU owner’s objections,” leaving the door open for state and local governments to enact similar statutes to support broadband deployments in MTEs.

Notice of Proposed Rulemaking

Triple Play Agreements

The NPRM poses a series of questions regarding exclusive marketing and revenue sharing provisions in Triple Play Agreements. These include the largest services providers – Comcast, Verizon, Charter, AT&T, and others – regional services providers such as Wave, and services providers focused on off-campus student housing.

In 2010, the FCC found these agreements and bulk billing agreements to be in the public interest, but retained longstanding rules prohibiting services providers from demanding “exclusive access agreements” with MDUs.

An extensive record developed in response to the 2017 Notice of Inquiry confirms these arrangements support the buildout of sophisticated inside wiring systems and that the prevalent practice in newbuilds is for developers to install spare conduit and pathways to support inside wiring systems of multiple services providers.

It is unlikely industry practices, recognized benefits, and underlying interests have changed noticeably, if at all, since 2017. Moreover, many MDU industry arguments cited favorably in the Declaratory Ruling support continuation of policies affirmed by the FCC in 2010.

Distributed Antenna Systems

Another aspect of the NPRM reflects T-Mobile’s position that the FCC should review exclusive access provisions in rooftop leases and potential “monopoly rents” extracted for access to in-building distributed antenna systems (DAS).  Exclusive of matters related to the Over the Air Reception Device (OTARD) statute, this may be the initial instance in which the FCC has raised questions regarding the rates, terms, and conditions of DAS agreements or rooftop leases.

DAS are deployed in public buildings, airports, railroad terminals, convention centers, stadiums and arenas, as well as in MDUs and commercial properties. In the larger venues, a third-party operator negotiates with the venue operator for the rights to install the DAS, paying the venue operator a fee, and then leases access to the DAS wireless carriers. These track the arrangements between wireless carriers and aboveground tower operators.

This is not the case in the MTE environment, particularly in MDUs. Typically, the developer or owner invests in the DAS looking for the wireless carriers to extend their networks to the building and connect to the DAS to enable wireless connectivity throughout the building. In countless forums and conferences, the major wireless carriers have stated they lack the resources and will not extend their network facilities into all buildings even if the developer or owner commits to installing and maintaining a neutral host DAS. Hopefully, comments submitted in response to the NPRM will describe the real-world challenges confronting MTE developers and owners regarding inbuilding wireless connectivity.

Rooftop Leases

Interest in rooftop leasing varies among MTE developers and owners. Rooftops are not routinely constructed to support wireless infrastructure that accommodates one or more wireless carriers’ facilities. Moreover, rooftops are proving increasingly valuable as tenant common areas. At most, the FCC should limit wireless carriers from demanding exclusivity in rooftop lease agreements. Privately-owned MTEs should retain their longstanding discretion whether to lease rooftop space in the first place, whether to one wireless carrier or to all wireless carriers. A lease with one wireless carrier should not establish a presumption supporting access rights for other wireless providers. Bottom line, the FCC should not immerse itself into negotiations related to wireless rooftop leases on privately owned MTEs.

In a deregulated telecommunications environment in which wireless and wireline carriers are free to charge marketplace rates, regulatory oversight of the transactions between these services providers and operators of privately-owned MTEs is inappropriate. This is particularly true in the case of wireless services providers that are unwilling to assume the obligation to meet the inbuilding connectivity requirements of MTE owners and tenants.

_______________________________________

[1] A DAS is an in-building antenna network designed and deployed to distribute wireless carriers’ signals throughout the property.

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A highly respected antitrust professor wrote: “When Congress enacted the federal antitrust laws it chose not to foreclose state antimerger activity. The legislative histories of the antitrust laws indicate that the congressional purpose was to supplement, not supplant, state activity. This intention has repeatedly been affirmed by the Supreme Court. Critics fear negative effects from ascendant state merger scrutiny. Many believe that the government’s position towards exceptionally large transactions should be a fundamental matter of national economic policy. Enforcement and nonenforcement decisions, they say, should be made by officials appointed by the President with the approval of the U.S. Senate. Such critics fear that the prospect of challenge by any of fifty states adds uncertainty and delay into an already problematic process, and will cause beneficial transactions never to be attempted.” The year was 1989.[1]

Since the enactment of the Hart-Scott-Rodino Act in 1976, we have grown accustomed to premerger notification at the federal level for all larger mergers and acquisitions. For the most part, State Attorneys General have participated via comments or supplemental filings in large transactions subject to premerger review. A generation of antitrust lawyers have lived in this environment. Indeed, some years ago lawyers were surprised that the federal government could challenge mergers after the fact given the long lapse in the governments exercise of that power, but that power was never removed, and private merger enforcement action also remains possible.

Can the states seek to block the merger? Yes. Will FCC and US Department of Justice approval stop the state litigation? No. What’s the biggest obstacle facing the state challenge? Limited state funding. Antitrust litigation is often protracted and costly. T-Mobile and Sprint, with their largest stockholders — Deutsche Telekom AG and SoftBank Group Corp., respectively — will certainly dedicate resources to defeat the states via litigation siege. These pressures, coupled with Justice Department clearance, may push the states to settle, although the terms of a successful settlement for the states is unclear. Meanwhile, T-Mobile and Sprint may be delayed in completing the transaction, which is a costly complication without a certain outcome.

The Redacted Complaint filed by nine states and the District of Columbia, and later joined by an additional four states, presents a solid facial argument against the merger. There are only four companies with networks that serve at least 90% of the U.S. population. Verizon and AT&T are the largest. “T-Mobile and Sprint are the third and fourth largest [mobile network operators] MNOs in the United States and serve approximately 80 million and 55 million customers, respectively.”[2]

The states allege that T-Mobile’s controlling shareholder, Deutsche Telekom AG, believes that it could earn a greater return on its investment by reducing competition.[3] The states argue that:

“The proposed transaction would eliminate Sprint as a competitor and reduce the number of [mobile network operators] MNOs with nationwide networks in the United States from four to three. The combined company would have a retail market share larger than the two largest MNOs today, Verizon and AT&T. In some areas, including in the New York City metropolitan area, the combined company’s share of subscribers would exceed 50%. The combined market share of Sprint and T-Mobile would result in an increase in market concentration that significantly exceeds the thresholds at which mergers are presumed to violate the antitrust laws. This increased market concentration will result in diminished competition, higher prices, and reduced quality and innovation.”[4]

Although the data table is redacted, the Complaint claims that the nation’s top 50 cellular market areas (CMAs) encompass about 50% of the U.S. population, and competition would be substantially lessened in each of the top 50 CMAs. The complaint argues many, particularly those with lower incomes who cannot pass a credit check and must purchase mobile wireless telecommunications service on a prepaid basis, rely on mobile wireless telecommunications services as their primary form of communications and do not have traditional wireline phone or broadband connections. If the merger is permitted, the “merger will negatively impact all retail mobile wireless telecommunications service subscribers but will be particularly harmful to prepaid subscribers”[5]

The states rely upon these claims to allege that “the transaction likely would substantially lessen competition in these local markets,” creating an actionable harm to the state’s citizens that justify the states’ standing to challenge the merger.

The complaint contains other supporting arguments and detail. The merger “would cost Sprint and T-Mobile subscribers more than $4.5 billion annually.”[6] Other countries that have allowed consolidation from four to three competitors recorded an average price increase “between 17.2% and 20.5%.”[7] There are significant barriers to entry that will be faced by any new provider, so potential competition will not be a factor. Finally, the states argue that the proposed commitments made to the FCC are insufficient to protect competition.[8]

The states have set a solid foundation from which to proceed. There is no obvious precedent that will permit T-Mobile and Sprint to end the case quickly, but protracted litigation will test the resolve and resources of all the parties.

[1] Robert H. Lande, “When Should States Challenge Mergers: A Proposed Federal/State Balance” N.Y. L. School Rev. vol 35, pp. 1049 and 1047

[2] Complaint at 3.

[3] Complaint at 3.

[4] Complaint at 5.

[5] Complaint at pp. 2 and 5.

[6] Complaint at 29.

[7] To support this claim the Complaint cites the United Kingdom Office of Communications, A Cross-Country Econometric Analysis of the Effect of Disruptive Firms on Mobile Pricing (March 15, 2016)

[8] Complaint at pp. 31-33.

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Earlier this week, FCC announced the agenda for the Agency’s July 10th Open Meeting. Chairman Ajit Pai also published a blog post detailing some of these items. This includes an announcement that Chairman Pai had circulated a draft Report and Order for consideration at the meeting next month.

The Report and Order is of keen interest to private wireless licensees – including critical infrastructure companies – as it would significantly change the landscape of the valuable 2.5 GHz band.

2.5 GHz Band Background. The band consists of 114 MHz of contiguous spectrum, the largest chunk of contiguous spectrum below 3 GHz. The FCC adopted rules in the mid-1990s hoping this band could be used to support the transmission of instructional/educational materials. The current rules governing the 2.5 GHz band require a licensee to be an accredited public or private institution engaged in formal educational activities. As a result, many of the active licenses are currently held by state governments, colleges and universities, community colleges, technical schools, and elementary/secondary schools. These entities are not using the spectrum in large swaths of the country, as the FCC has noted in the past that the 2.5 GHz band is unused across approximately half the United States.

Proceeding. The draft Report and Order that the Commission will consider at next month’s Open Meeting follows a Notice of Proposed Rulemaking the FCC issued in May 2018. The NPRM contemplated several proposed changes to the agency’s existing 2.5 GHz rules. The overarching goal of the Commission was to put this spectrum to greater use. To that end, the agency’s proposals included:

  • Potentially permitting 2.5 GHz licensees to assign or transfer existing licenses to commercial entities;
  • Eliminating the educational use requirement for the spectrum;
  • Confirm existing, active operations to where spectrum in the 2.5 GHz band is unused (much like the FCC has done in the C-Band); and
  • Potentially auctioning the unused portions of the band to commercial entities.

Next Steps. It is possible that the draft Report and Order will change between now and the time it is voted on by the Commission. However, it appears likely that the FCC will remove the educational use requirement for this spectrum. Such a move could quickly transform the band by allowing existing educational licensees to assign or transfer active licenses to commercial entities.

The draft also proposes to establish a priority filing window for Indian tribes located in rural areas to provide these Tribal Nations with an opportunity to license 2.5 GHz spectrum to promote broadband deployment. Immediately following the completion of the Tribal priority filing window, the FCC plans to auction the remining unassigned 2.5 GHz spectrum to commercial entities.

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If you would like updates on this proceeding, please be sure you’ve subscribed to our complimentary Telecom Alert (which is distributed each Monday afternoon). Simply email announcements@khlaw.com and write “Telecom Alert Subscription” in the subject line, please include your full name, company name, title, email address and country in the body of the message. And, of course, stay tuned for the FCC’s July 10th Open Meeting!

Photo of Al CatalanoPhoto of Eric Gotting

In its September 2018 small cell order, the FCC sought to speed carrier deployment of 5G wireless facilities in public rights-of-way by removing “barriers to infrastructure investment.”  As we noted in an earlier entry, the order greatly restricts the ability of state and local jurisdictions to manage their own rights-of-way or to receive more than costs for carrier use of municipal property. As expected, the order was appealed by numerous localities across the country on constitutional and other legal grounds and is currently pending before the 9th Circuit, with opening briefs now filed.

The FCC’s order, however, involves more than aesthetic and financial concerns for local jurisdictions and its citizens. The new 5G environment envisioned by carriers will rely on millimeter wavelengths that travel only short distances. As a result, small cell poles need to be placed within 100 feet or so from each other with transmitters about 30 feet above the ground in direct-line-of-sight with homes and businesses. This 5G densification is projected to lead to hundreds of thousands of small cell facilities across the country, subjecting the public to emissions from multiple transmitters at close ranges.

Prior to release of the order, a number of parties asked the FCC to first complete a stalled 2013 proceeding evaluating whether the Commission’s existing RF safety standards, adopted in 1996, would adequately protect the public’s health from RF emissions in this new 5G environment. Without any analysis of more recent health studies, the FCC refused to review its 23 years-old standards, simply stating “[w]e disagree” with concerns raised about RF emissions from 5G small cell facilities. In light of the FCC’s refusal to address the RF issue, Montgomery County, Maryland appealed the order on grounds that the FCC violated the National Environmental Policy Act and the Administrative Procedure Act by failing to reevaluate RF standards in light of recent research and to determine whether these standards remain protective of human health.

Photo of Douglas Jarrett

Several weeks ago, Zayo announced that it had agreed to be acquired by private equity firms Digital Colony and EQT. Over several years, Zayo had expanded its network footprint significantly through network buildouts and a series of acquisitions. Interestingly, EQT recently completed its acquisition of regional fiber network operator Lumos Networks. In another May 2019 transaction, Great Plains Communications, controlled by Grain Management, acquired InterCarrier Networks.

Zayo, Lumos, and InterCarrier Networks shared several traits, including a focus on high capacity private line services, dedicated Internet access services and dark fiber offerings targeting enterprise customers and other services providers. Interestingly, Lumos and InterCarrier developed regional fiber networks extending into and connecting multiple 2nd and 3rd tier cities.

These transactions reaffirm the long-term value of fiber-based networks in the telecommunications marketplace. These companies’ services and product offerings underscore that high capacity services and dark fiber arrangements are meeting a critical demand among mid-to-large enterprises and government agencies that previously looked almost exclusively to the enterprise service offerings of the major carriers—AT&T, Verizon (now including XO) and CenturyLink (now including Level 3).

Zayo’s, Lumos’s, and InterCarrier’s focus on fiber offerings for business customers should be fully considered for, if not immediately incorporated in, the business plans of emerging fiber-based municipal and rural broadband providers. The incremental investment in business-oriented offerings is nominal, particularly for dark fiber. Network extensions to business locations can and should be accomplished through non-recurring, one-time charges. Unlike services to consumers, small businesses and anchor institutions, flexibility is the dominant theme in pricing enterprise-focused services and dark fiber offerings.

Emerging rural and municipal services providers should understand the two-dimensions of the concept of “location.” For consumer and small business customers, customer locations within a network’s physical footprint is paramount. These customers are looking for substantially upgraded, last-mile broadband connectivity for their homes and businesses. Providing connectivity to and from wireless carrier small cell locations may emerge in several years as even AT&T and Verizon do not have unlimited capital to extend fiber backhaul and fronthaul connectivity to all of their cell sites.

For larger businesses, government customers and other services providers, the 2nd dimension of location comes into play. This dimension relates to whether the entity’s network is located along or provides a leg in a path or route diversity for a major regional or multi-state east-west or north-south fiber route, a much-needed lateral route, or connectivity to a remote data center or even to an undersea cable landing location.

As noted above, fiber-based networks have long-term economic value. As with core assets in virtually all industries, maximizing the value of these assets is fundamental to business success.

Photo of Douglas JarrettPhoto of Tracy MarshallPhoto of Wesley Wright

On 6 March 2019, Democrats in the House and Senate introduced the “Save the Internet Act of 2019.” The three-page bill (1) repeals the FCC’s Restoring Internet Freedom Order released in early 2018, as adopted by the Republican-led FCC under Chairman Ajit Pai; (2) prohibits the FCC from reissuing the RIF Order or adopting rules substantively similar to those adopted in the RIF Order; and (3) restores the Open Internet Order released in 2015, as adopted by the Democratic-led FCC under Chairman Tom Wheeler.

Major Impacts:

  • Broadband Internet Access Service (BIAS) is reclassified as a “telecommunications service,” potentially subject to all provisions in Title II of the Communications Act.
  • The three bright line rules of the Open Internet Order are restored: (1) no blocking of access to lawful content, (2) no throttling of Internet speeds, exclusive of reasonable network management practices, and (3) no paid prioritization.
  • Reinstates FCC oversight of Internet exchange traffic (transit and peering), the General Conduct Rule that authorizes the FCC to address anti-competitive practices of broadband providers, and the FCC’s primary enforcement authority over the Open Internet Order’s rules and policies.
  • Per the Open Internet Order, BIAS and all highspeed Internet access services remain subject to the FCC’s exclusive jurisdiction and the revenues derived from these services remain exempt from USF contribution obligations.
  • The prescriptive service disclosure and marketing rules of the Open Internet Order, subject to the small service provider exemption, would apply in lieu of the Transparency Rule adopted in the RIF Order.

FCC Chairman Pai promptly issued a statement strongly defending the merits and benefits of the RIF Order.

KH Assessment

  • From a political perspective, Save the Internet Act of 2019 garners support from many individuals and major edge providers committed to net neutrality principles but faces challenges in the Republican-controlled Senate.
  • In comments filed in the proceeding culminating in the RIF Order, the major wireline and wireless broadband providers supported a legislative solution that codified the no blocking and no throttling principles but not the no-paid prioritization prohibition or classifying BIAS as a telecommunications service.

It is highly unlikely that the legislation will be enacted as introduced. Though still unlikely, there is a better chance that a legislative compromise may be reached.