States, Cities Feud Over Wireless Network Small Cells

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By Tara Jeffries

The running battle between cities and states over wireless carriers’ plans to deploy critical infrastructure equipment for ultra-fast networks continues to rage as the Federal Communications Commission weighs whether to step in.

Texas, Ohio, and 11 other states have passed laws in recent months that dictate how cities should regulate small cells—communications equipment that companies such as AT&T Inc. and Verizon Communications Inc. are deploying to build the next-generation networks known as 5G. Cities that want to charge more or impose stricter rules on where to put the boxy communications nodes are fighting back with court challenges to the state laws.

The state actions have opened a new front in the cities’ fights with carriers over setting up more small cells around the country. Small cells will form the backbone of 5G, which is touted by carriers as the faster successor to today’s networks, and provide capacity in high-density cities. But although cities and states agree that high-speed broadband is important, the squabbles have created an uncertain regulatory climate that may slow deployment.

“When you’re talking about barriers to cell deployment, there’s market barriers, and there’s legal, policy barriers,” Tom Struble, technology policy manager at the think tank R Street Institute, told Bloomberg BNA.

Carriers that envision a future of “smart” cities capable of handling a proliferation of internet-connected devices have successfully pitched their visions of next-generation broadband to state governments across the country. But they are clashing with cities on how to deploy the small cells necessary to achieve that goal. Cities, meanwhile, are banding together in lawsuits and advocacy groups to fight state laws they view as wireless-carrier handouts.

The Federal Communications Commission may step in to supersede local authorities in certain circumstances. In April, the FCC said that it is considering whether to issue rules to override local freezes on permit applications for small cells, scrutinize municipal application fees, approve small-cell applications if cities fail to weigh in by a certain deadline, and streamline federal historic and environmental reviews.

States Act

Several of the recently passed state laws, such as a Texas measure that took effect Sept. 1, cap prices for small-cell leases at $250 per cell, speed up permitting, and impose other restrictions on local regulators. Others set the cap at $500, and Delaware’s new law sets a $100 fee cap.

Cities argue that these caps drain them of necessary revenue in favor of the carriers. Cities also want to be able to exert more control over physical additions to public structures, including in historic areas, where the nodes are often seen as cumbersome eyesores.

An average small-cell lease runs about $2,250 a year in places without rate caps, Ken Schmidt, president of Baldwinsville, N.Y.-based tower-leasing consultancy Steel in the Air, told Bloomberg BNA.

States argue that getting broadband deployed efficiently is an essential priority statewide. “The timely permitting of network nodes in the public right-of-way is a matter of statewide concern and interest,” the Texas law says.

California is one of the latest states to weigh a small-cell bill. Lawmakers there are looking to emulate other states’ approaches, Kish Rajan, chief “evangelist” at CALinnovates, a tech advocacy group supporting the measure, told Bloomberg BNA.

The bill, like Texas’ small-cell law, caps annual small cell leases at $250. It also eases the permitting process and classifies small cells as a “matter of statewide concern.”

The California measure passed both chambers of the statehouse last month and awaits the governor’s approval as of Oct. 5.

The League of California Cities is “lobbying for a veto” of the legislation, Eva Spiegel, a spokeswoman for the group, told Bloomberg BNA. “That’s really our focus right now,” she said. She declined to comment on potential litigation.

Cities Sue

Twenty-two Texas cities, including Dallas, challenged that state’s law, arguing they should be able to exert more influence over small-cell structures on local turf. That lawsuit, filed Aug. 31, decries the state law as a bilking of local governments. City of McAllen v. State of Tex., Tex. Dist. Ct., D-1-GN-17-004766, complaint 8/31/17 .

The state law “would make cities and their officials complicit in these transgressions by having them administer and sanction the transfer of wealth of as much as hundreds of millions of dollars from municipal coffers to private telecommunications companies each year,” the cities said in the lawsuit.

Cities are taking the fight to court in other states. Ohio’s small-cell law has seen so many courtrooms that lawmakers are considering starting afresh with new legislation, Ohio Municipal League Executive Director Kent Scarrett told Bloomberg BNA. Cities have concerns about fees and local restrictions as in other states, but in Ohio, they’ve also argued the small-cell legislation, nestled into a wide-ranging law that also covers minimum wage rates, puppy mills, and cockfighting restrictions, violates an Ohio rule that state bills must stick to a single subject.

“There have been conversations now with members of the legislature to come up with alternative language, to address some of the concerns that municipalities have raised,” Scarrett said.

The court fights have yielded mixed results. Cincinnati and Columbus won two challenges, while a judge sided with the state in Akron’s challenge. A fourth case, led by Cleveland, is ongoing, he said. Dan Tierney, a spokesman for Ohio Attorney General Mike DeWine (R), told Bloomberg BNA the state is deciding whether to appeal one ruling and has already appealed another.

Another local-government complaint: Small cells aren’t always small.

“If, indeed, these things were the size of a pizza box or a paperback book or a laptop computer,” cities would welcome them, Steve Traylor, executive director of the National Association of Telecommunications Officers and Advisors, a local-government telecom group, told Bloomberg BNA.

Carriers say they’re building the internet of the future—connecting everything from cars to fire safety systems—but such promises are mostly theoretical at this point, Traylor said.

What Will FCC Do?

The main question about the FCC is whether it can step in and pre-empt state and local laws. The agency’s potential regulatory effort, when finalized, may clarify the federal approach to these intrastate small-cell civil wars. An FCC spokesman declined to comment on when the agency might act.

FCC Commissioner Michael O’Rielly, a Republican, told reporters Sept. 26 he thinks “we have sufficient authority to act and push bad actors out of the way, bad actors in state and local, tribal governments that are preventing deployment of this technology, and we must take action.”

City-government groups requested an extension of the July reply-comment deadline for those proposals, but didn’t receive one.

Although the FCC may get involved in some aspects of the process, they’re likely to stay away from the fight over local fees, Schmidt said.

“It gets a little bit more hazy when you start looking at, ‘How can a municipality charge or not for the right to place infrastructure on city-owned poles?’” Schmidt said.

As the FCC mulls how it may aid deployment, there is the looming possibility that any action it takes could also attract lawsuits. In the meantime, states continue to face challenges to new laws, and the federal government hopes that cities begin to see beyond fees.

“It’s very shortsighted to look at access fees and right-of-way fees as a benefit to the community,” Glenn Reynolds, chief of staff at the National Telecommunications and Information Administration, said at a Sept. 27 event. “It may be a short-term benefit, but in the long-run it is denying their citizens broadband.”

To contact the reporter on this story: Tara Jeffries at tjeffries@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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