FCC 5G Order Could Lower Some State Ceilings on Small-Cells Fees; Suits Possible

Proposed rate ceilings for small-cells application fees set for an FCC vote Sept. 26 may undercut caps set by one-quarter of the 20 states that made small-cells laws in the past two years. Proposed FCC ceilings for recurring access and attachment fees appeared to equal or exceed the state laws that specified limits on such fees. Commissioner Brendan Carr said last week the draft wouldn’t “disturb nearly any” of the provisions of small-cell bills that state legislatures enacted (see 1809040056 and 1809050029).

Lawsuits are possible. The order would tie states’ hands, said Danielle Dean, National Conference of State Legislatures policy director-communications and technology.

The order wouldn’t likely disturb application-fee caps set by state small-cells laws in Arizona, Delaware, Indiana, Iowa, Missouri, New Mexico, North Carolina, Tennessee, Utah and Virginia, based on a wireless industry summary of state bill rates filed at the FCC last month by CTIA and the Wireless Infrastructure Association. Delaware and Virginia limits applied only to state agencies. Proposed FCC safe harbors might override application-fee limits set by Illinois, Kansas, Ohio, Texas and possibly Oklahoma depending on legal interpretation. Impact is harder to measure in states with small-cells laws that didn’t specify caps but required charges to be based on actual costs. A Carr aide said the draft order probably wouldn’t affect rates in those states. The FCC didn’t comment.

The document says it’s fine to charge up to $500 for a batch application with up to five small cells, plus $100 for each additional facility on the application. Governments may charge at most $270 per facility annually for “all recurring fees, including any possible [right-of-way] access fee or fee for attachment to municipally-owned structures in the ROW,” it said. Regarding the Communications Act, it said that “fees at or below these amounts presumptively do not constitute an effective prohibition under Section 253(a) or Section 332(c)(7), and are presumed to be ‘fair and reasonable compensation’ under Section 253(c)." Proposed amounts are based on review of the FCC pole attachment formula, the 20 state small-cells laws and some local laws.

“In … limited circumstances, a locality could prevail in charging fees that are above this level by showing that such fees nonetheless comply with the limits imposed by Section 253,” the draft said. “That is, that they are (1) a reasonable approximation of costs, (2) those costs themselves are reasonable, and (3) are non-discriminatory.”

“The FCC’s proposed shot clocks and the fee caps will impact all 20 states that have passed small cell legislation and worked to reach a compromise with industry and localities,” emailed NCSL’s Dean: “It also ties the hands of any other state that is looking to ensure inclusive and equitable access" broadband services.

One Size Fits All?

Setting “a one-size-fits-all maximum that is presumed reasonable assumes that staff costs in San Francisco are the same as they are in Wray, Colorado,” said local telecom attorney Ken Fellman. “That’s a wildly inaccurate assumption.” The FCC “claims that at $270 we’ll see a dramatic increase in deployment in most markets,” but the Colorado-based attorney knows no community there charging more than $200 annually for attachment to city-owned poles.

Wireless companies “recognize the role that all levels of government play in wireless siting,” said CTIA Senior Vice President-Regulatory Affairs Scott Bergmann. “The FCC’s proposal addresses this by adopting a balanced approach to siting, while acknowledging networks are evolving and that leadership in 5G is a national priority.”

Proposed FCC rates are below the Illinois small-cells law, which exempted Chicago and allowed smaller localities to charge application fees of $350 per facility for a single application with multiple facilities -- or $650 for an application with one facility -- on an existing utility pole or wireless support structure. The state allowed $1,000 for each facility in an application that includes installation of a new pole. It allowed $200 in annual attachment rates, below the ceiling.

Kansas allowed a $500 application fee per small-cells facility, exceeding the ceiling. The state law required annual fees that match what other providers pay. It's the oldest in effect, becoming law in late 2016.

Ohio’s small-cells law allowed $250 per small-cell facility on applications, which could exceed the proposed limits if a company applies for more than two facilities on the same application. The law says municipalities “may adjust this fee ten per cent every five years, rounded to the nearest" $5. Ohio allows $200 annually per small cell for attachment, below the proposed requirement.

Texas allows $500 for the first five facilities on an application, the same as the FCC draft, but $250 for each additional facility on the same application -- 2.5-times what the FCC would allow -- and up to $1,000 per application for each pole. Texas allows up to $270 in annual fees, on par with the FCC proposal.

The draft might override Oklahoma rates, depending on how one reads the law: “The application and permit fees for collocation of small wireless facilities on an existing or replacement authority pole shall not exceed" $200 "each for the first five small wireless facilities on the same application and" $100 "for each additional small wireless facility on the same application.” If “each” refers to each small cell, that could add up to twice what the FCC would allow for an application with five facilities, but if it means $200 for each application containing up to five facilities, it’s below what the FCC would require. Oklahoma allows $20 annually per pole for attachment and $20 per small cell annually for access, below what's proposed.

Concerns

The Ohio Municipal League is “very concerned with the actions being proposed by the FCC and the federal government to overturn the successful negotiations the state of Ohio has had to address the challenges associated with the deployment of 5G infrastructure in our communities,” emailed OML Executive Director Kent Scarrett. Telecom industry and local governments reached compromise to ensure responsible deployment to Ohio residents and businesses,” he said. “It’s unfortunate the FCC does not give more recognition to the solutions being reached locally.”

“The rates in the FCC order are equally in violation of the Texas Constitution as our state bill was,” emailed Texas Municipal League Executive Director Bennett Sandlin. Municipalities sued Texas in state and federal court (see 1710040044). “The League will oppose them vigorously,” Sandlin said.

"We support the ability of cities to control and manage public property and rights-of-way and to impose franchise or use fees on those entities that utilize the rights-of-way," said a spokesperson for Kansas City and Wyandotte County, Kansas.

Ohio Public Utilities Commission staff is "reviewing the draft FCC order, and thus unsure of its impact on Ohio at this time," emailed a spokesperson. Other affected states we contacted didn't comment.

The application-rate limits wouldn't “take into account all kinds of authorizations” that may be required by state law, said Fellman. Colorado, which didn’t cap the rates but required them to approximate costs, “allows all telecom companies to put facilities in the ROW, but also requires that they can’t do it until they receive an initial authorization from the ROW owner to use the ROW,” said Fellman. “So many communities grant a broad master license agreement to use the ROW for small cells, and then have supplemental site licenses for individual sites.” A Colorado community can charge $850 if it demonstrates that’s an accurate cost recovery, said Fellman, saying he knows of one that charges that to cover administrative costs for the master license, plus $552 per site to cover review and staff time.

Mayors reject "unprecedented federal intrusion" into local and state property rights that would reduce funding for essential local government services and put public safety at risk, U.S. Conference of Mayors CEO Tom Cochran said Monday about FCC proposals that pre-empt local government in the ROW. Proposed small-cells rules could threaten billions of dollars over the next decade in revenue to state and local governments, he said. The conference will sue if needed, Cochran said. "We believe the courts will conclude that FCC’s proposals are based on misguided interpretations of federal law."