New FCC Decision Tips in Favor of Service Providers on Small Cell Wireless Projects
December 03, 2018
On September 26, 2018, the Federal Communications Commission (FCC) adopted its Declaratory Ruling and Third Report and Order (“Declaratory Ruling and Order”) enacting significant regulatory changes that will impact local control over the deployment of wireless infrastructure. Aimed at streamlining the nationwide deployment of 5G wireless—the next generation of wireless technology—the Declaratory Ruling and Order contains several features that will have a direct impact on the validity of certain local code provisions and on the processes used by local boards when hearing and deciding small cell wireless applications. The following are some of the key provisions of the Declaratory Ruling and Order:
Fees. Small cell wireless systems, including Distributed Antenna Systems (DAS), are a form of wireless equipment commonly deployed on utility and light poles along streets and other public right-of-ways. These are the boxes (cabinets), cylinders and antennae that can often be seen at or near the top of host poles.
In order to access the right-of-way to install, operate and maintain small cell systems, service providers and wireless infrastructure developers typically offer municipalities annualized compensation pursuant to certain terms and conditions laid out in a written right-of-way use agreement. Some providers have offered a flat annual fee per location, while others have offered a set percentage of annual profits based on a specified formula. Some have offered both. In some respects, these right-of-way use agreements have operated as rental arrangements.
Under the Declaratory Ruling and Order, the fees municipalities charge for access to their right-of-ways must bear a direct relationship to the “actual and reasonable cost” to the municipality in: (a) maintaining the right-of-way; (b) maintaining the host structure(s) in the right-of-way; or (c) processing an application or permit seeking to deploy in the right-of-way. (¶72).* Fee arrangements which seek to simply maximize a municipality’s profit without any correlation to a demonstrable cost could be deemed illegal barriers to access. (¶73). The Declaratory Ruling and Order goes one step further on this subject by providing a set of fees and rates the FCC views as presumptively consistent with the Federal Telecommunications Act. (¶79).
Aesthetics. The proliferation of small cell systems in public right-of-ways has resulted in frequent complaints from local officials and residents about negative impacts on community character and aesthetics. In response, many municipalities have enacted local zoning code provisions that include aesthetic standards for small cell installations. Examples of such standards include the requirement that small cell installations be placed within “stealth” poles or camouflaged, and that equipment be installed in underground vaults whenever possible (a/k/a undergrounding).
The Declaratory Ruling and Order states that, going forward, aesthetic standards affecting small cell deployments are permissible only if they are: (1) reasonable; (2) no more burdensome than those applied to other types of infrastructure deployments; and (3) objective and published in advance. (¶86). The Declaratory Ruling and Order expounds on its meaning of “reasonable” as “technically feasible and reasonably directed to avoiding or remedying the intangible public harm of unsightly or out-of-character deployments”. (¶87). Its use of “objective” describes standards that are “clearly-defined and ascertainable” and “applied in a principled manner”. (¶88). What is meant by the second criterion—that aesthetic requirements be “no more burdensome than those applied to other types of infrastructure deployments”—is somewhat unclear, particularly so if one attempts to compare the characteristics of small cell wireless installations to those of traditional “utilities”, such as water, sewer, electric, and even cable.
What is clear from this newly minted test is that locally-enacted aesthetic standards will be facing heightened legal scrutiny, and standards that would render a deployment cost-prohibitive or ineffective are most likely to be viewed as an effective prohibition on service. The Declaratory Ruling and Order calls out, specifically, overly specific design and camouflaging requirements, excessive spacing requirements, and mandatory undergrounding requirements as potentially impermissible aesthetic standards. (¶¶84, 90-91).
Shot Clocks. The Declaratory Ruling and Order takes two notable actions with respect to the shot clocks that apply to local decisions on telecommunications projects. First, it purports to codify the existing 90-day and 150-day shot clocks established in 2009 for non-small cell telecommunications projects. Second, it establishes two new shot clocks which apply to local decisions on small cell wireless applications. Under the new shot clocks, a government agency considering a small cell wireless application has 60 days to take action on a complete application for an installation on an existing structure and 90 days to take action on a complete application for an installation on a new structure. (¶105). A batched application (i.e. a single application covering multiple sites on both existing and new structures) is subject to the longer 90-day shot clock. (¶114).
Remedies for Providers. The Declaratory Ruling and Order provides teeth for the new shot clocks by articulating a new theory for legal recourse in the event a government agency fails to act on a small cell wireless application in a timely manner. Under existing FCC regulations, a wireless applicant may seek legal remedy in court if the government agency considering its application fails to act within the time prescribed under the shot clocks. Under the Declaratory Ruling and Order, such a failure is not only a “failure to act” but is also presumptively an “unlawful prohibition on service” by the government agency. (¶¶116-120). The addition of this presumption places a new burden on the defending agency to demonstrate that its failure to act within the time allowed under the applicable shot clock was reasonable and that it did not materially limit or inhibit the applicant from introducing or improving service.
The full Declaratory Ruling and Third Report and Order contains in depth explanations and the reasoning behind each of the regulatory changes briefly addressed above. It further contains clarifications on when shot clocks start, pause, and restart, and when certain applications qualify as “collocations” for purposes of determining which shot clock applies to a given application.
A summary of the Declaratory Ruling and Order was published in the Federal Register on October 15, 2018. The new rules will therefore take effect on January 14, 2019 (90 days after publication).
The full Declaratory Ruling and Third Report and Order can be viewed on the FCC website at: https://www.fcc.gov/document/cellular-reform-third-report-and-order. The summary published in the Federal Register can be viewed on the Federal Register’s website at https://www.federalregister.gov/documents/2018/10/15/2018-22234/accelerating-wireless-and-wireline-broadband-deployment-by-removing-barriers-to-infrastructure.
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*The ¶ symbol followed by a number refers to the paragraph with the same number in the full Declaratory Ruling and Third Report and Order.