TR Daily Draft FCC Item Calls Inaction on Small Cells ‘Presumptive Prohibition’
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Wednesday, September 5, 2018

Draft FCC Item Calls Inaction on Small Cells ‘Presumptive Prohibition’

A draft declaratory ruling and third report and order that the FCC tentatively plans to consider at its Sept. 26 meeting would make clear that state and local governments that fail to act on small cell applications by newly planned shot clocks would constitute “a presumptive prohibition” on the provision of services.

The FCC today released its eight-item tentative agenda for the meeting, as well as draft items of six of the items. Two involve enforcement matters. The meeting is scheduled to start at 10:30 a.m.

A fact sheet on the small cell item in WT docket 17-79 and WC docket 17-84 said it would (1) “[c]larify the scope and meaning of the effective prohibition standard set forth in Sections 253 and 332(c)(7) of the Communications Act as they apply to state and local regulation of wireless infrastructure deployment”; (2) “[c]onclude that Sections 253 and 332(c)(7) limit state and local governments 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”; (3) “[i]dentify specific fee levels for small wireless facility deployments that presumably comply with the relevant standard”; (4) “[p]rovide guidance on certain state and local non-fee requirements, including aesthetic and undergrounding requirements”; (5) “[e]stablish two new shot clocks for small wireless facilities (60 days for collocation on preexisting structures and 90 days for new builds) and codify the existing 90 and 150 day shot clocks for non-small wireless facility deployments that were established in the 2009 Declaratory Ruling”; (6) “[m]ake clear that all state and local government authorizations necessary for the deployment of personal wireless service infrastructure are subject to those shot clocks”; and (7) “[c]onclude that a failure to act within the new small wireless facility shot clock constitutes a presumptive prohibition on the provision of services. Accordingly, we would expect local governments to provide all required authorizations without further delay.”

The draft item says that “while we do not adopt a ‘deemed granted’ remedy for violations of our new shot clocks, we clarify that failing to issue a decision up or down during this time period is not simply a ‘failure to act’ within the meaning of applicable law. Rather, missing the deadline also constitutes a presumptive prohibition. We would thus expect any locality that misses the deadline to issue any necessary permits or authorizations without further delay. We also anticipate that a provider would have a strong case for quickly obtaining an injunction from a court that compels the issuance of all permits in these types of cases.”

As for fees, the item would “conclude that ROW access fees, and fees for the use of government property in the ROW, such as light poles, traffic lights, utility poles, and other similar property suitable for hosting Small Wireless Facilities, as well as application or review fees and similar fees imposed by a state or local government as part of their regulation of the deployment of Small Wireless Facilities inside and outside the ROW, violate Sections 253 or 332(c)(7) unless these conditions are met: (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.”

“Based on our review of the Commission’s pole attachment rate formula, which would require fees below the levels described in this paragraph, as well as small cell legislation in twenty states, local legislation from certain municipalities in states that have not passed small cell legislation, and comments in the record, we presume that the following fees would not be prohibited by Section 253 or Section 332(c)(7): (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,” according to the item.

Additional industry entities praised the item today, while additional representatives of local governments criticized it.

“All Americans need access to the 5G wireless networks that will power our economic future. The FCC’s plans to update infrastructure regulations later this month means that more Americans will share in the benefits of 5G,” said Margaret McCarthy, executive director of Mobile Future. “Mobile Future thanks the FCC and in particular Commissioner Carr for recognizing that smart reforms will stimulate investment, connect more local communities, and enhance our global competitiveness in wireless.”

“The plan that Commissioner Carr unveiled [yesterday] takes the successful tenets of small cell deployment legislation that have been passed by some of the states and standardizes them in a manner that will provide a road map moving forward that is necessary to ensure more Americans are in a position to take advantage of broadband and 5G networks in the future,” said National Association of Tower Erectors Executive Director Todd Schlekeway. “NATE encourages all of the FCC Commissioners to support this important order during their upcoming September meeting.”

Meanwhile, Corning Inc. argued in an updated analysis submitted to the FCC today “that reducing small cell and application fees could reduce deployment costs by $2.0 billion over five years, or $7,500 per small cell built. These cost savings could lead to an additional $2.4 billion in capital expenditure due to additional neighborhoods moving from being economically unviable to becoming economically viable, with 97% of this capital expenditure going towards investment in rural and suburban areas.”

“NATOA is disappointed with the FCC’s draft Declaratory Ruling and Third Report and Order. We continue to disagree with the premise that preempting local governments will lead to small cell deployments in un- and underserved communities,” said Nancy Werner, general counsel of the National Association of Telecommunications Officers and Advisors. “The proposed fee caps are out of line with what providers are willing to pay in freely negotiated agreements and we have not seen evidence that lower fees actually spur deployment in less lucrative markets. In fact, in congressional testimony, industry representatives have acknowledged that preempting local governments will not lead to deployment in rural areas. Wireless providers’ earnings calls do not mention local fees and regulations as a factor in capital expenditure decisions. If the FCC is going to give one industry special access to locally owned property at below market rates, at the very least they should require a public benefit in return by ensuring service beyond the most profitable markets, which the item does not do.”

“While we are grateful to Commissioner Carr for his outreach throughout this process, his promise to keep the conversation going, and his efforts to preserve community design standards, we are deeply disappointed that his proposed solutions result in such a giveaway of community property to telco executives in exchange for exactly no promises to serve all sections of our cities, let alone rural America,” said Gerry Lederer, an attorney for Best, Best & Krieger LLP who represents local governments “This order could well result in the type of digital divide that San Jose Mayor [Sam] Liccardo warned against when he left the BDAC [Broadband Deployment Advisory Committee] [TR Daily, Jan. 25]. The greatest casualty of this proposed order could the creative solutions a number of public-private partnerships were developing to bring services to consumers.”

Mr. Lederer added that “if you have invested your life savings in a home, in front of which a carrier decides it wants to deploy a small cell, it’s not clear that you’ll have the opportunity to be heard on the issue because the FCC has decided that all issues must be resolved in 60 days.”

The item the FCC plans to consider later this month is the latest action or proposal designed to make it easier for industry to deploy small cells.

Since last year, the FCC has exempted small cells from historic preservation and environmental reviews (TR Daily, March 22), proposed a Program Comment to the Advisory Council on Historic Preservation to address “twilight” towers (TR Daily, Dec. 14, 2017), and made it easier to install replacement utility poles by exempting such deployments from historic preservation review when they replace substantially identical poles (TR Daily, Nov. 16, 2017).

The Commission also has circulated for consideration later this month a notice of proposed rulemaking in PS dockets 18-261 and 17-239 to address “calls to 911 made from multi-line telephone systems, pursuant to Kari’s Law, the conveyance of dispatchable location with 911 calls, as directed by RAY BAUM’S Act, and the consolidation of the Commission’s 911 rules,” the tentative agenda noted.

The item would “[p]ropose rules to implement the direct dial and notification requirements of Kari’s Law. The proposed rules are intended to provide clarity and specificity regarding the statutory requirements and to enable covered entities to meet those requirements cost-effectively,” a fact sheet said.

It also would “[p]ropose to apply dispatchable location requirements to MLTS, fixed telephone service, interconnected Voice over Internet Protocol (VoIP) services, and Telecommunications Relay Service (TRS). It seeks comment on the technical feasibility of providing dispatchable location and the benefits and costs associated with different technical solutions.”

The item also would “[s]eek comment on whether the Commission should consider dispatchable location rules for other 911-capable services. However, it does not consider new rules for mobile wireless services because they are subject to 911 rules that already provide for dispatchable or coordinate-based location information.”

It also would “[p]ropose to consolidate the Commission’s 911 rules from multiple rule parts into a single rule part, making the rules more streamlined and easing the administrative burden on entities subject to 911 requirements.”

The FCC adopted a notice of inquiry in the proceeding last year (TR Daily, Sept. 26, 2017).

The FCC also tentatively plans to consider a report and order and further notice of proposed rulemaking in IB docket 17-95 to harmonize three types of fixed-satellite service earth stations that transmit in motion on vessel, vehicles, and aircraft.

The earth stations in motion (ESIMs) order would “[a]dd new rules for the operation of ESIMs in the conventional Ka-band,” a fact sheet noted.

It said it would improve the structure and eliminate redundancy in the FCC’s regulations by (1) “[c]onsolidating the technical and operational rules for C- and Ku-band ESIMs in Part 25 and extending those rules to cover ESIM operations in the conventional Ka-band”; (2) “[c]onsolidating the specific application rules for C- and Ku-band ESIMs into a general Part 25 earth station application rule and adding application provisions for ESIMs operating in the conventional Ka-band”; (3) “[m]erging the blanket licensing provisions for conventional Ka-band GSO FSS earth stations into Part 25 rule sections, which contain similar provisions for GSO FSS earth stations in the conventional and extended C- and Ku-bands, to improve the organizational coherence of Part 25”; and (4) “[e]liminating repetition in certain ESIM rules by referring to existing provisions in other rules that apply to other GSO FSS earth stations.”

Last year, the FCC voted unanimously to adopt an NPRM proposing to streamline, consolidate, and harmonize the agency’s regulations for ESIMs (TR Daily, May 18, 2017).

The tentative agenda also includes a draft report and order in WC docket 17-192 and CC docket 95-155 that would establish “as an experiment” an auction process for distributing any phone numbers in the 833 toll-free code opened last year that are sought by more than one entity. Insights gained from the 833 auction experiment would be used for future toll-free number assignments.

It would also modify FCC rules to allow for a secondary market in toll-free phone numbers.

In an NPRM last year, the FCC proposed auctioning toll-free numbers that are sought for end-users by more than one “responsible organization” (RespOrg), or toll-free service provider, and allowing toll-free numbers to be sold in a secondary market (TR Daily, Sept. 26, 2017).

There were about 17,000 numbers from the 833 toll-free code that elicited multiple expressions of interest from RespOrgs, which the FCC is proposing to allocate through a single-round, sealed bid auction, according to the draft report and order released today.

“Based on the Federal Communications Commission’s success using competitive bidding to assign spectrum licenses and award universal service support, we adopt new measures to explore the use of competitive bidding for the assignment of toll free numbers. To further evaluate this approach, as an experiment we establish the framework in this Report and Order for an auction of the rights to use certain numbers in the recently-opened 833 toll free code. After the release of this Report and Order, we will initiate the pre-auction phase of this proceeding to seek input on the procedures for the auction. This experiment will help us determine how best to use competitive bidding to most effectively assign toll free numbers, as well as provide experience in applying auction procedures to the toll-free numbering assignment process,” the draft report and order says.

Regarding the authorization of secondary markets in toll-free numbers, the draft item says, “[W]e agree with commenters who argue that our current rules may have a ‘chilling impact . . . on private enterprise.’ Consistent with our goal of making the rights to use numbers available on an equitable basis by assigning them to those who can put the numbers to their best use, and with the record, we now allow for the development of a secondary market for numbers assigned via competitive bidding. It adds, “To allow for a secondary market to develop, we adopt exceptions to the Commission’s rules prohibiting the brokering, hoarding, and warehousing of toll free numbers for numbers acquired in an auction. Because, as explained, a secondary market can promote the efficiency of an auction, we find that it is appropriate that we apply our exceptions to numbers assigned via competitive bidding. Numbers which are eligible for this exception by virtue of having been assigned via competitive bidding do not lose their eligibility if they are sold or otherwise transferred to another subscriber. Numbers which are returned to the spare pool, however, do not retain eligibility for the exception simply because they were once assigned in an auction.”

The draft report and order would “decline to adopt proposals in the record to provide special treatment for trademark-holders,” such as a right of first refusal for trademark-holders. “We find that, as under the first-come, first-served methodology, ‘concerns regarding trademark infringement and unfair competition . . . should be addressed by the courts under the trademark protection and unfair competition laws, rather than by the Commission,’” the draft item adds.

The tentative agenda also includes two draft items addressing cable system operators.

A draft second further notice in MB docket 05-311 would address two issues raised in the remand by the U.S. Court of Appeals for the Sixth Circuit (Cincinnati) last year of FCC order orders treating “in-kind” payments as franchise fees (TR Daily, July 12, 2017).

In “Montgomery County, Maryland, et al. v. FCC et al.” (cases 08-3023 and 15-3578) last year, the Sixth Circuit vacated as “arbitrary and capricious” the FCC’s ruling that obligations under franchise agreements, such as providing PEG (public, educational, and governmental) access, should be considered in-kind payments that count against franchise fees. The FCC orders “contain scarcely any explanation at all for the FCC’s decision to expand its interpretation of ‘franchise fee’ to include so-called ‘in-kind’ cable-related exactions.” However, the court’s ruling left room for the FCC to re-adopt the same policy if it does so with a more explicit explanation of its rationale for doing so.

The court also vacated as arbitrary and capricious the FCC’s “mixed-use rule,” which, the court said “in essence states that local franchising authorities can regulate only the provision of cable services over ‘cable systems’ as defined by the Act. Although the FCC has conceded “that its mixed-use ruling was not meant to prevent local franchising authorities from regulating institutional networks,” the court said that a concern remained about LFAs’ [local franchising authorities’] ability to regulate “other services, like ‘information services’ ….”

The court noted that the FCC’s legal justification for adopting that rule relied on a statutory provision that only applies to entities that are regulated as common carriers under Title II of the Communications Act, and that “many incumbent cable operators are not Title II carriers.”

The court remanded the provision “for the FCC to set forth a valid statutory basis, if there is one, for the rule as so applied.”

The draft second FNPRM released by the FCC today says, “Specifically, we tentatively conclude that we should treat cable-related, ‘in-kind’ contributions required by a franchising agreement as ‘franchise fees’ subject to the statutory five percent cap on franchise fees set forth in Section 622 of the Communications Act of 1934, as amended (the Act), with one limited exception” for capital costs for public, educational, and government channels required by the franchise.

“We also tentatively conclude that we should apply our prior mixed-use network ruling to incumbent cable operators, thus prohibiting LFAs from using their video franchising authority to regulate the provision of most non-cable services, such as broadband Internet access service, offered over a cable system by an incumbent cable operator. We seek comment on these tentative conclusions, which we believe faithfully interpret relevant statutory provisions and will promote competition by fostering parity between incumbents and new entrants and helping to ensure that local franchising requirements do not discourage cable operators from investing in new facilities and services,” the draft item says.

The other cable-related item, a draft report and order in MB dockets 17-290 and 17-105 would eliminate the annual FCC Form 325 annual report filing requirement for cable television systems. The FCC proposed the change in an NPRM last year (TR Daily, Nov. 16, 2017).

The tentative agenda also includes two enforcement items. The Commission does not disclose details on enforcements actions until they are adopted.- Paul Kirby, [email protected]; Lynn Stanton, lynn.[email protected]

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