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In late September, MissionCritical Communications posted several online articles about network-based and wireless handset-based emergency location technologies that will provide local public-safety answering points (PSAPs) the physical location of wireless callers dialing 9-1-1. These articles coincided with the FCC’s implementation of Kari’s Law, which Congress enacted this year.

Kari’s Law was enacted in response to an unfortunate incident where a young girl in a hotel room repeatedly dialed 9-1-1 but failed to reach the PSAP because the hotel’s phone system required a “9” be dialed as a prefix to secure an outside line. The legislation targets wireline voice technology, which increasingly, is limited to relatively large commercial locations. Operators of small businesses and individuals, including persons who lease their residences in multifamily dwelling units, are abandoning use of landline service.

In early October, MissionCritical Communications highlighted the public-safety community’s concerns over wireless carriers promoting Z-axis location accuracy of 5 meters or more as the dispatchable location standard. It was noted that this tech­nology could report a caller’s location either one floor below or above the calling party’s actual location, across the street or in a different building. Also noted was that substantially more accurate standards of 3 to about 1.8 meters are achievable.

Unfortunately, even assuming network-based or handset-based technologies will perform flawlessly, wireless emergency calling from in-building locations remains problematic. The efficacy of in-building wireless communications requires that RF signals be transmitted from and received by wireless callers within the buildings. Energy-efficient building materials impede RF signals, and persons above the 20th floor often do not receive a reliable signal from wireless carriers’ networks, particularly in dense urban areas or other high-density cluster environments.

Distributed Antenna Systems

The principal solution is an in-building distributed antenna system (DAS) built using off-the-shelf technologies and leveraging proven RF engineering practices. DAS enables in-building connectivity for multiple wireless technologies — Wi-Fi, public safety and commercial mobile radio service (CMRS). Whether a home, hotel or venue, a property’s owner or operator largely determines Wi-Fi connectivity. A public-safety DAS is often required by statute.

With the rollout of the First Responder Network Authority (First-Net), AT&T’s participation in DAS arrangements should increase. Whether in-building voice and broadband CMRS is available requires a wireless carrier’s participation and financial commitments from building owners. DAS supporting CMRS may be carrier specific or capable of supporting multiple service providers, referred to as a neutral-host DAS.

In-building DAS configurations require wireless carriers to extend their networks to a venue or building, typically installing baseband and RF equipment in a basement vault or equipment room. The wireless carrier operates this equipment. The RF signal is transmitted via in-building wiring — increasingly, fiber-optic cable — to antennas on one or more locations on each floor or every other floor to maximize coverage through an in-building distribution network. In a neutral-host DAS, multiple wireless carriers’ terminal equipment first connects to the owner’s neutral-host equipment, which in turn connects to the in-building distribution network.

The ecosystem of consultants, equipment, technologies and firms providing turnkey in-building DAS solutions is reasonably mature. Fiber-optic cable is the preferred wiring because of its extended useful life and substantial capacity. Major tower management companies that operate outdoor DAS networks are among the leading DAS providers in major venues. These entities may lease access to their in-building networks to the wireless carriers.

Business Models

Whether a DAS is deployed in a given building or venue turns on a series of business decisions. For­most, a wireless carrier determines whether its network would benefit from an in-building DAS by offloading or minimizing traffic on a carrier’s macrocell/outdoor network or if competitive pressures dictate that its service be available within the venue or building. Whether to extend its network into a major sports and entertainment venue is an easy decision for a wireless carrier.

Beyond these venues, wireless carrier participation is inconsistent, at best. In countless wireless infrastructure forums and conferences, wireless carriers emphasize their resources are limited and acknowledge they cannot extend their networks into every building requiring in-building coverage. Because of wishful thinking or a lack of due diligence by a systems integrator or property developer or owner, more than a handful of well-designed, fully constructed in-building distribution networks are not active because wireless carriers did not commit to extend service to the buildings.

The decision to make the investment for an in-building distribution system belongs to a property developer or owner. Wireless carriers rarely provide financial support for in-building distribution systems. Even if a property owner is willing to make this investment, the question remains whether the wireless carriers will extend their networks into the building and install their equipment to provide service. Many buildings don’t make the cut.

A Combination Solution

A combination equipment and financing solution that may improve carrier engagement in supporting in-building wireless communications exists. Cheytec Telecommunications established a relationship with the principal wireless equipment vendors to acquire the same baseband and RF equipment deployed by the carriers in their networks. Cheytec “takes the investment” in, retains title to and assumes the maintenance for the in-building wireless network equipment, charging the property owner a monthly licensing fee. Further, wireless carriers are authorized to operate and control this installed equipment as part of their networks.

The solution lowers a wireless carrier’s cost of extending its network into a building but still obligates the owner to fund the in-building distribution system and pay the monthly equipment-licensing fee.

Whether an owner takes this step depends on the owner’s economic analysis of providing wireless connectivity for its tenants or residents. Some property owners now view indoor wireless as an essential utility for their tenants. These decisions are made on a case-by-case basis. Wireless carriers could better support property owners by entering into DAS agreements with terms beyond five years, allowing the property owner to recover the cost of the in-building distribution system over a longer period.

Conclusions

Without question, dispatchable location standards must fully support public-safety emergency response activities. Equally important, policy-makers and legislators must recognize that wireless carriers largely determine the underlying availability and reliability of their services within many high-rise residential and commercial properties.

There are no easy solutions because substantial financial commitments are involved, but the challenges associated with in-building wireless communications should be acknowledged by the wireless carriers and recognized by regulators. Without open dialogue, an underlying issue in emergency wireless communications will persist indefinitely.

For more information, please contact Doug Jarrett (jarrett@khlaw.com; 202.434.4180).

This article originally appeared in the November/December 2018 issue of Mission Critical Magazine, and is reproduced with their permission. Visit MissionCritical Communications here. 

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On October 23, 2018, the FCC adopted a Report and Order in its 3550-3700 MHz Citizens Broadband Radio Service (CBRS) proceeding.  The Report and Order makes several modifications to rules governing the band, including extending license terms to 10 years, adding license renewability, and increasing the size of Priority Access License (PAL) areas from census tracts to counties.  Most notably, these items are the last substantial rule tweaks the Commission needed to resolve to move forward with its plans for CBRS deployment.

CBRS is somewhat of an experiment in spectrum management by the FCC.  It will entail third party Spectrum Access System (SAS) managers that will coordinate three tiers of users – General (unlicensed), Priority (auctioned licensees), and Incumbent (largely earth stations and federal users).   The goal is for each SAS to provide advanced, highly automated frequency management that will assign spectrum in nearly real time.  If it works, it will provide more intensive use of the band than manual coordination, while mitigating interference between the three tiers of users.

Way back on December 21, 2016, the FCC conditionally certified seven entities seeking to provide SAS services.  That conditional certification allowed further testing and pilot programs to commence, but did not authorize full commercial SAS deployment.  Full SAS certification is expected in early 2019, at which point users will be able to begin operating under the General Access tier.  Auction of the Priority Access tier licenses has not been announced, but likely will not occur until at least late-2019, given the Commission’s typical auction timelines.

The question now has become whether the Commission has taken so much time that additional relief is required.  This process started in 2015 when the FCC first adopted its initial CBRS rules.  At that time, the FCC gave incumbent users in the 3.65-3.7 GHz band a deadline to move out of the band or transition to CBRS service.  That deadline expires for many licensees as early as April 17, 2020.  That means some current users must transition their systems in the next 18-months even though the CBRS service is not even commercially authorized, yet.

Two entities representing wireless ISPs and utilities have filed a request asking the FCC to extend the transition period for 3.65-3.7 GHz band users until January 8, 2023.  This would allow time for SAS providers to become fully certified, the CBRS service to fully commence, and 3.65-3.7 GHz band users the time necessary to transition their service in a considered manner.  There seems to be little, if any, downside to granting the request.  The 3.65-3.7 GHz portion of the band has been successfully used for more than 10 years to provide applications such as rural wireless Internet access and critical infrastructure data communications.  There’s an argument it was not necessary for the FCC to require users in this portion of the band to migrate from their legacy systems at all.  An unnecessarily condensed migration timeframe will not allow users to evaluate the CBRS and may encourage users to move to other bands, such as 5 GHz.  This isn’t good for the viability of CBRS.  In light of the length of time it has taken to bring the CBRS to reality, it certainly seems like a good decision not to rush the final remaining steps.

The FCC currently is seeking comment on the extension.  Comments are due December 12, 2018 and Reply Comments are due December 24, 2018.

For more information, please contact Greg Kunkle (kunkle@khlaw.com; 202.434.4178).

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The FCC’s small cells order (Declaratory Ruling and Third Report and Order, WT Dk. No. 17-79 and WC Dk. No 17-84, released September 27, 2018) is a big win for the wireless industry.  The FCC largely adopted the industry’s vision that deployment of 5G technology will require hundreds of thousands of so-called “small cell” sites in commercial and residential areas throughout the country and that longstanding state and local wireless siting rules and practices irrevocably impair that vision. To “win the 5G war with China,” the FCC interpreted key provisions of the Communications Act to extend unprecedented federal authority for carrier deployment of small cell sites in the public rights-of-way (ROW), at the expense of state and local governments’ historic land-use authority to manage the ROW.

Broad Interpretation of State and Local Prohibitions – The Commission broadly interpreted Sections 332(c)(7)(B)(i)(II) and Section 253(a) of the Communications Act that limit state or local laws, regulations and other legal requirements that “prohibit or have the effect of prohibiting” the provision of wireless service. In so doing, the Commission emphasized that a state or local legal requirement constitutes an effective prohibition if it “materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.” The standard adopted in this order allows that a “requirement can constitute an effective prohibition of services even if it is not an insurmountable barrier.”

Longstanding local prerogatives over managing access to public rights of way were largely swept away. In its carrier-centric interpretations, the Commission significantly limited “the authority of a State or local government to manage the public rights-of-way” and “to require fair and reasonable compensation from telecommunications providers” under Section 253 (c) of the Act.

Cost-Based Fees –A significant wireless industry victory pertains to the FCC’s determinations on allowable compensation for carrier use of the ROW. The FCC ruled that under Sections 253(c) and 332(c)(7) state and local governments are limited to charging fees that are no greater than “a reasonable approximation” of their costs for processing applications and for managing deployments in the rights-of-way. This ruling applies to fees for access to public rights-of-way and for attachments to government-owned property in the rights-of-way including “light poles, traffic lights, utility poles, and other similar property.” While the decision expressly excludes access or attachments to government-owned property located outside the public rights-of-way, the order requires that application or review fees for facilities outside the ROW must be cost-based.

Many local communities had argued that the “fair and reasonable compensation” clause contained in Section 253(c) of the Act embodied the intent of Congress that telecommunications providers could be charged market-based fees for use of public rights-of-way. In rejecting this approach, the Commission found that “although there is precedent that ‘fair and reasonable’ compensation could mean … market-based charges in certain instances, the statutory context persuades us to adopt a cost-based interpretation here.”

The FCC found that Section 253(c) “should be understood as focused on protecting the interest of providers.” This finding contrasts with countless court decisions that hold Section 253(c) is intended to preserve the state and local interests in managing the public right of way; that is, as a counterweight to Section 253(a) that prohibits state or local government action otherwise inimical to the interests of telecommunications carriers.  Relying on its novel view of Section 253(c), the Commission concluded “while it might well be fair for providers to bear basic, reasonable costs of entry, the record does not reveal why it would be fair or reasonable from the standpoint of protecting providers to require them to bear costs beyond that level, particularly in the context of the deployment of Small Wireless Facilities.” (emphasis added)

Under the order, fees violate the Act unless: “(1) the fees are a reasonable approximation of the state or local government’s costs, (2) only objectively reasonable costs are factored into those fees, and (3) the fees are no higher than the fees charged to similarly-situated competitors in similar situations.”

The FCC provided further guidance, setting a presumptively lawful, nationwide fee schedule for small cell applications:  “(a) $500 for a single up-front application that includes up to five Small Wireless Facilities, with an additional $100 for each Small Wireless Facility beyond five, or $1,000 for non-recurring fees for a new pole (i.e., not a colocation) intended to support one or more Small Wireless Facilities; and (b) $270 per Small Wireless Facility per year for all recurring fees, including any possible ROW access fee or fee for attachment to municipally-owned structures in the ROW.”

State and Local Land-Use or Zoning Requirements – In addition to fees, the Commission noted there are other state and “local land-use or zoning requirements” that could restrict small cell deployments such that they “have the effect of prohibiting service in violation of Sections 253 and 332.” In its order, the Commission provides “guidance” on local zoning considerations typically assessed in wireless siting requests.

Aesthetics requirements are not preempted if they are (1) reasonable, (2) no more burdensome than those applied to other types of infrastructure deployments, and (3) published in advance.

The Commission explained that aesthetic requirements that are “reasonably directed to avoiding or remedying the intangible public harm of unsightly or out-of-character deployments” are permissible.  However, if these aesthetic requirements are more burdensome than those applied to “similar infrastructure deployments” they are not permissible because the “discriminatory application evidences the requirements are not” reasonable or “directed at remedying any wireless infrastructure deployment.” Finally, to establish they are reasonably directed to aesthetic harms these requirements “must be published in advance.”

Minimum spacing requirements. – While some spacing requirements (i.e. mandating facilities be sited at some minimum distance apart from certain facilities or locations) “may violate Section 253(a), others may be reasonable aesthetic requirements.”  Therefore, the Commission determined that spacing requirements should be evaluated under the same standards as other aesthetic requirements.

Underground requirements – The Commission ruled that a “requirement that all wireless facilities be deployed underground would amount to an effective prohibition given the propagation characteristics of wireless signals.”  The FCC emphasized that although “undergrounding requirements may well be permissible under state law as a general matter, any local authority to impose undergrounding requirements under state law does not remove the imposition of such undergrounding requirements from the provisions of Section 253.”

Quid pro quo – “in-kind service” – The Commission  found “[a]nother type of restriction that imposes substantial burdens on providers, but does not meaningfully advance any recognized public-interest objective, is an explicit or implicit quid pro quo in which a municipality makes clear that it will approve a proposed deployment only on condition that the provider supply an “in-kind” service or benefit to the municipality, such as installing a communications network dedicated to the municipality’s exclusive use.” According to the FCC, “[s]uch requirements impose costs, but rarely, if ever, yield benefits directly related to the deployment. Additionally, where such restrictions are not cost-based, they inherently have ‘the effect of prohibiting’ service, and thus are preempted by Section 253(a).”

Shot Clocks For Expedited Review – The order seeks to speed approval of small cell wireless facility applications by establishing “shot clocks” applicable to state and local review, building upon the Commission’s 2009 Declaratory Ruling that established shot clocks for co-located (90-days) and new (150 days) macro-cell facilities.  Under the newly established rules applicable to small cells, there is a 60-day shot clock for collocation on preexisting structures, and a 90-day shot clock for new sites. The Commission clarified that for purposes of these Section 332 shot clocks, “attachment of facilities to existing structures constitutes collocation, regardless of whether the structure or the location had previously been zoned for wireless facilities.”

The FCC believes that the adoption of the shot clocks balances the authority states and localities have over review of wireless siting applications with the requirement of Section 332(c)(7)(B)(ii) to exercise this authority “within a reasonable period of time” taking into account the nature and scope of the request.

Shot Clocks and Batch Filings – The Commission also determined that when applications to deploy small cell facilities are filed in batches, “the shot clock that applies to the batch is the same one that would apply had the applicant submitted individual applications.”  In cases where an applicant files a single batch application including “both collocated and new construction of small wireless facilities, the longer 90-day shot clock will apply.” In an “extraordinary” case, a siting authority “can rebut the presumption of reasonableness of the shot clock period where a batch application causes legitimate overload on the siting authority’s resources.”

Violation of the Shot Clocks – State or local inaction by the end of the applicable shot clock will function as a “failure to act” under Section 332(c)(7)(B)(v) thereby allowing a carrier to file a court action. Such failure to act will also be considered a “presumptive prohibition” of the provision of personal wireless services in violation of Section 332(c)(7)(B)(i)(II). In such cases, the FCC “expects the state or local government to issue all necessary permits without further delay.” In cases where permits are not issued, the FCC believes “the applicant would have a straightforward case for obtaining expedited relief in court.”

If a case does go to court, the FCC acknowledges the siting authority “will have an opportunity to rebut the presumption of effective prohibition by demonstrating that the failure to act was reasonable under the circumstances and, therefore, did not materially limit or inhibit the applicant from introducing new services or improving existing services.”

In fashioning this regulatory framework, the Commission declined to adopt the “deemed granted” approach strongly advocated by the wireless industry for applications not ruled on within the shot clock period.

Starting of Shot Clock and Incomplete Applications –The Commission ruled that “a shot clock begins to run when an application is first submitted, not when the application is deemed complete.” For small cell applications, “the siting authority has 10 days from the submission of the application to determine whether the application is incomplete.”  Once an applicant submits the supplemental information requested by the siting authority the shot clock then resets – effectively giving the siting authority an additional 60 days for review.  For subsequent findings of incompleteness, “the shot clock would toll if the siting authority provides written notice within 10 days that the supplemental submission did not provide the information identified in the original notice delineating missing information.”

Voluntary Tolling of Shot Clock –The order allows the parties to mutually agree to toll the running of a shot clock period, allowing disagreements to be resolved in a collaborative setting if possible.

Shot Clock – Broad Application – In another major victory for the wireless industry the Commission adopted a broad interpretation of 332(c)(7)(B)(ii) requirements that will be applicable to the shot clocks. Under the Commission’s reasoning, “deployment will be kept on track by ensuring that the entire approval process necessary for deployment is completed within a reasonable period of time, as defined by the shot clocks.”

Turning aside arguments by local jurisdictions that this section of the Act – and any associated  shot clocks – should apply only to zoning requirements, the Commission agreed with the wireless industry and found the shot clocks should apply to “all authorizations a locality may require, and to all aspects of and steps in the siting process, including license or franchise agreements to access ROW, building permits, public notices and meetings, lease negotiations, electric permits, road closure permits, aesthetic approvals, and other authorizations needed for deployment.”

Existing Agreements – One key question left unanswered by the Commission’s order relates to existing small cell agreements between localities and wireless carries. As Commissioner Rosenworcel noted following adoption of the order, this decision “interferes with existing agreements and ongoing deployment across the country.”  She emphasizes there are “thousands of cities and towns” with agreements for infrastructure deployment – including 5G wireless facilities – and “many of them could be torn apart” as a result of the Commission’s order.

The next move is up to state and local jurisdictions around the nation. If substantial litigation follows as a result of this order, the “race” to 5G may be slowed to a “crawl” in many parts of the country. Perhaps, the Commission will soon learn that a true consensus-based regulatory scheme that accommodates the interests of not just the wireless carriers but also those of state and local governments – and the citizens they represent – is the best approach to winning the 5G war with China.

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The 2004 U.S. Supreme Court decision in Trinko is generally understood to mean that an incumbent local exchange company is not obligated under the antitrust laws to open its network to a competitor.[1]  In the context of recent FCC decisions, it is noteworthy that Justice Scalia’s opinion in Trinko was grounded on the fact that the “regulatory framework that exists in this case demonstrates how, in certain circumstances regulation significantly diminishes the likelihood of major antitrust harm.”[2]

This regulatory framework no longer applies for the Nation’s most significant telecommunications-related market, high speed Internet access service.  The FCC’s Restoring Internet Freedom Order adopted in December 2017 held that the Commission does not have jurisdiction over high speed Internet access services, including wireless broadband services provided by CMRS providers.[3]

The Telecommunications Act of 1996 (1996 Act) sought to “promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technology.”[4] The 1996 Act left undisturbed the application of the antitrust laws to telecommunications.[5]  But, subsequent antitrust analysis and litigation have been highly influenced by the FCC’s expansive regulatory system even after enactment of the Telecommunications Act of 1996 explicitly directed that the antitrust laws be applied to telecommunications, with Trinko as a leading example.

The Restoring Internet Freedom Order means that FCC decisions are of limited precedential value and prior court decisions must be reassessed. Opponents of the FCC’s reclassification of broadband cited Trinko as posing obstacles to meaningful antitrust remedies and the Commission cited Trinko in its Order, but the implications of the Commission’s Order regarding the effect of prior judicial precedent was not addressed.[6]

The Commission’s decision requires reevaluation of Trinko.  Absent any Commission regulation under Title II of the Communications Act, a key element supporting the court’s conclusions is absent.  It is an open question whether the Justice Department’s acquiescence to wireline and wireless mergers over the last twenty (20) years is relevant for assessing the business practices of the major broadband providers, particularly the four nationwide mobile broadband service providers (that may be reduced to three if the T-Mobile/Sprint merger is approved).  Any antitrust challenge to wireless broadband services providers, will be judged under the rule of reason, focusing principally on the adverse impacts on the downstream market (end-user customers).

Most antitrust claims are evaluated under the “rule of reason,” which is a case-by-case inquiry into all the circumstances to assess whether a particular activity or arrangement lessens competition. Typically, plaintiffs need to demonstrate that defendants with market power have engaged in anticompetitive conduct. To conclude that a practice is “reasonable” means it survives antitrust scrutiny, in contrast to a “per se” offense for which the activity is presumed to be anticompetitive and illegal, as with price fixing.  The rule of reason assessment permits a defendant to justify allegedly anti-competitive practices by demonstrating valid procompetitive justifications.[7]

If the Restoring Internet Freedom Order is affirmed on appeal, major broadband providers may well find the antitrust laws not as accommodating as anticipated.

 

[1] Verizon Communications v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (Trinko).

[2] Trinko, supra, 540 U.S. at 412.

[3] In the Matter of Restoring Internet Freedom, Declaratory Ruling, Report and Order, and Order, WC Docket No. 17-108, ¶¶ 86-123 and 143-154 (Dec. 14, 2017).

[4] Preamble to the Telecommunications Act of 1996, 47 U.S.C. §§ 151, et seq.

[5] The 1996 Act contains a Savings Clause and an No Implied Effect Clause, see, § 601(b)(1) and (c)(1). “[N]oting in this Act of the amendments made by this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.”

[6] Restoring Internet Freedom Order, note 556.

[7] Eastman Kodak Co. v. Image Tech. Services, 504 U.S. 451, 461-462 (1992). The Trinko decision did not fault Verizon’s refusal to deal under precedent existing in 2004, and under the essential facilities doctrine, which is recognized by several federal courts of appeals, but not explicitly by the Supreme Court. Trinko, supra, 540 U.S. at 408-411.

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Earlier this month, the FCC’s Wireless Telecommunications Bureau implemented a temporary freeze on applications for new and modified authority for Land Mobile systems operating in the 896-901/935-940 MHz band.  The freeze was effective as of September 13, 2018.

The freeze stems from a Notice of Inquiry (NOI) issued by the FCC in 2017, seeking input on possibly reconfiguring this band to accommodate a Petition for Rulemaking filed by Pacific Data Vision (PDV) in December 2014.  The FCC delayed PDV’s vision for the band in 2017 when it issued an NOI – which generally seeks information from the public – as opposed to a Notice of Proposed Rulemaking (NPRM) – which is a vehicle through which the FCC could have changed its rules to accommodate PDV’s request.

By issuing the licensing freeze last week, however, it appears the Commission is likely considering the issuance of an NPRM to modify the rules governing this 900 MHz land mobile band.  The stated purpose of the freeze is to allow the Wireless Bureau to examine the band and determine what changes, if any, can be made.

One other important clarifying point: the portion of the 900 MHz band that currently is frozen by the FCC differs from the portion of the 900 MHz band that is used by critical infrastructure entities for Multiple Address Systems (MAS).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

FCC Enforcement Procedures

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

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

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

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

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

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

*       *       *

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

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

Photo of Timothy Doughty

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

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

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

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

Photo of Wesley Wright

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

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

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

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

 

Photo of Gregory Kunkle

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

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

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

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