City-Industry Rifts Mire FCC Panel's Bid To Grease 5G

City-Industry Rifts Mire FCC Panel's Bid To Grease 5G

June 4, 2018

 

When FCC chairman Ajit Pai announced a new task force last year, he optimistically billed it as a way to break down local regulatory hurdles slowing the rollout of new 5G technology. But a year and half after its formation, the panel is facing many roadblocks of its own.

The idea for the Broadband Deployment Advisory Committee, or BDAC, was simple: The panel would draw up templates for municipal right-of-way agreements, state legislation and other guidance that would streamline and unify the deployment process. The effort was part of a push from both the Federal Communications Commission and industry to ensure companies don’t get bogged down haggling with local officials while applications for new 5G infrastructure languish in thousands of communities across the U.S.

Since the panel’s launch, however, the process has been anything but simple. Members from San Jose, California, and New York City quit this year, claiming industry representatives were steamrolling municipalities. Original BDAC chair Elizabeth Pierce left the panel in September, and in April, she was arrested for an alleged fraud scheme unrelated to the group’s work.

Despite recent success in getting industry and local officials to agree to a template for municipal rights of way, big fights still loom over states’ power to cap pole-attachment rates, as well as cities' freedom to seek concessions from broadband providers and offer their own municipal broadband services.

Members of the BDAC include representatives from various levels of government, as well as telecom giants, startups, smaller network companies, industry associations and advocacy groups. Securing local approvals for 5G rollout were expected to be particular headaches because the technology relies on “small cell” receptor sites that blanket the landscape, as opposed to the sparsely located huge cell towers of 4G. For service providers, installing cells in so many new locations exacerbates the burden of winning regulatory approvals.

Companies that build networks want cheap, easy permits to use rights of way, but cash-strapped cities often balk at offering no-strings-attached, subsidized access to valuable public assets for highly profitable providers. So the FCC instructed BDAC to reduce cost and red tape associated with acquiring access to public rights of way. This valuable real estate can range from underground conduits to publicly- and utility-owned telephone poles — long a sticking point between towns, companies and states.

The conflicting interests have flared into clearly drawn battle lines, with companies and their trade associations pushing for state laws that preempt buildout obligations and other conditions municipalities may want to add in exchange for cheap, easy permitting.

Cities Decry Representation, 'Outcomes-Focused' Process

Wireless industry players in the BDAC argue that fees should cover little more than costs, and that cities hurt their residents by seeking higher rates and insisting on red tape. Jonathan Adelstein, president and CEO of the Wireless Infrastructure Association — which represents dozens of companies including AT&T and Verizon —said broadband is the “last place” cities should tax to generate their revenue.

“The right of way is something that should be used in the public interest. And what’s more in the public interest than broadband that can be used to deliver education, health care [and other benefits]?” Adelstein told Law360. “If we as society want to see next-generation broadband deployed, it has to be done in a different way than the way it was done yesterday.”

City representatives said they felt outgunned from the start. The initial BDAC had 29 members but just one municipal representative — San Jose Mayor Sam Liccardo. After some fluctuation, that number now sits at three, but that alone is not enough to effectively vote down recommendations specifically adverse to local governments.

Liccardo quit in January. Shireen Santosham — a technology-focused staffer for Liccardo who represented him at BDAC — said it wasn’t a good use of city time.

“At BDAC, we were hoping to have a more balanced conversation. It was dominated by industry voices,” Santosham said. “We were getting carbon legislation [that telecom companies lobbied for in several state legislatures] into BDAC documents.”

New York City, added to BDAC in May 2017 amid criticism of too little municipal representation, withdrew in late March. Sam Cooper, a senior technology adviser to the mayor, said municipal concerns fell on deaf ears in an “outcomes-focused” process. He said the solution can’t be “just unfettered access to public rights of way for private gain.”

BDAC Chair Elizabeth Bowles, CEO of political technology company Aristotle, counters that “industry” is not a monolith, and different private interests often conflict. Other members backed her sentiment, noting that BDAC doesn’t have binding authority; its templates would be meaningless if state and local officials don’t widely accept them.

Adelstein, of the WIA, accused some municipal representatives of “lots of grandstanding” with press conferences right after meetings to undermine the collaborative process. He added that their arguments “weren’t carrying the day” in BDAC, Congress, state legislatures or the FCC because their demands would unreasonably impede deployment.

Phillips Lytle LLP’s Doug Dimitroff — who founded industry group New York State Wireless Association and heads the BDAC Municipal Model Code working group — said he agreed with the “grandstanding” characterization. Bowles and Dimitroff both argued that municipal interests have in fact influenced the process in important ways.

Remaining Municipal Members Hope for New Direction

The remaining municipal voices sympathized with the departed members’ perspective, but said they don’t view the effort as a lost cause. And they say the process has been more collaborative lately, even if major roadblocks remain.

David Young, who manages fiber infrastructure and rights of way for the city of Lincoln, Nebraska, joined the BDAC in April and credits San Jose and New York for that.

Young, who has been praised by parties on both sides as a driver of compromise, said the outgoing cities’ gestures “drew attention toward the unbalanced nature of the project” and spurred a more balanced approach.

Andy Huckaba, a city councilman in Lexana, Kansas, who joined the BDAC in August, said Dimitroff “has done a fabulous job” heading the municipal code work group. He noted that despite the initial unhappiness over a municipal code drafted in January that prompted the San Jose and New York representatives to exit, the BDAC approved the final version without objection at its April 25 meeting.

“I believe that code is to a point where cities that don’t have codes surrounding broadband wireless deployment could pluck this up, make a few minor modifications and call it good. I think it’s that good,” Huckaba told Law360. “I’m not sure anybody would have told you we’d have gotten there in December.”

The municipal code contains a number of blanks where possible fees and other variables can be filled in through negotiation between town and company, making the template’s guardrails customizable. Municipal advocates hope they remain blank during a harmonization with the State Model Code — a thornier problem. The three municipal interests and four other BDAC members voted against the state code in April. Huckaba said of 13 articles, five had preemption of local authority he found unacceptable.

State Preemption: The Next Big Fight

In recent years, one-on-one negotiations often led telecom companies to rent poles from cities for about $1,800 per pole annually. But sometimes in the same state, companies have gone over cities’ heads to secure state legislation capping fees at 10 percent of that price or less.

Since 2016, 19 states have passed laws governing small cell infrastructure deployment, most limiting municipal power to negotiate with telecom companies. Many of these laws are modeled after a 2015 guide designed by the conservative American Legislative Exchange Council. Some members suggest that pattern appears to be repeating itself in the BDAC.

Adelstein, who admits the state code still has “rough edges,” defended both state legislative and FCC efforts to create boundaries for cities in light of “unreasonable” demands from some. Even the biggest telecom companies, despite billions in profits and cash, have finite infrastructure investment capital, he said.

While telecom companies may currently pay higher rates for desirable locations, he argued, states’ elected representatives are right to prevent localities with varying telecom policy expertise from bleeding companies of broadband-deployment capital. And he said it’s a simple reality that smart cities that make deployment cheap and predictable — and, by extension, states that require cities to do so — will be first to reap the benefits of broadband, including a 5G deployment projected to reach hundreds of billions of dollars.

“Smart communities realize they might get more deployment than the market may otherwise dictate. Other communities throw up obstacles,” Adelstein said. “The right of way is not really a free market. It’s a monopoly controlled by the government in the public interest. It’s supposed to be used by the good of the community.”

But Angela Stacy of CNX, which helps cities develop broadband deployment plans, said industry players often seek to cut municipal fees without offering any commitments to build networks in underserved areas in return. She said that’s particularly concerning since 5G is most likely to be developed in urban areas already receiving coverage.

Young’s state of Nebraska tried for such a commitment, offering a statewide cap at $95 per pole if providers would commit to deploy in rural areas. It found no takers, and now, Lincoln rents pole access for roughly 20 times that amount.

Dimitroff said “it’s too early” to list possible BDAC proposals on the matter until a new ad hoc BDAC rates and fees committee — led by Huckaba and University of Pennsylvania Law School antitrust professor Christopher Yoo — completes its work. It aims to determine actual costs that municipalities bear in processing and maintaining right-of-way access as well as rates generally being paid now.

Regardless of that effort, Young said some language in the draft state code is at odds with the fundamental goal of facilitating deployment.

The draft includes a preference that municipal broadband networks be built, owned and operated by private industry. It does allow for public-private partnerships and municipal-owned broadband, although municipal representatives complain that cities would be forced to jump through bureaucratic hoops first. The code also takes franchising — annual fees paid by cable operators to municipalities for right-of-way access, capped by federal law at 5 percent of local gross revenue — off the table.

“It shows bias, and the unbalanced nature of the group. How is that decreasing barriers to broadband deployment?” said Young. “I just don’t think that was the intent of the BDAC. That’s what’s challenging for me, for a lot of people … if they are trying to say we can’t make arrangements with 19,000 cities, why are you creating barriers for cities to do it themselves?”

 

This article originally ran on Law360.com.

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