By Brandon Schall, Staff Writer
On September 26, 2018, the Federal Communications Commission (FCC) voted to approve a new rule that would cap the amount of fees local authorities could charge wireless providers on its fifth-generation networks (5G).[1] The rule also tightened deadlines for localities to consider applications for companies to put antennas on publicly owned poles, or to install new gear beside sidewalks and in medians.[2] The fees assessed to wireless companies are assessed by local authorities, in order to pay for the local review 5G wireless network antennas placement.[3] All four commissioners offered support for at least part of the rule; Democrat Jessica Rosenworcel dissented in part.[4]
Chairman Ajit Pai offered reasoning behind the rule: “Big-city taxes on 5G slow down deployment there and also jeopardize the construction of 5G networks in suburbs and rural America.”[5] Additionally, Pai stated, “[W]hen a municipality fails to act promptly on applications, it can slow down deployment in many other localities.”[6] Small cells must be spaced every few blocks to carry the signals for 5G.[7] The next-generation of servicing is expected to perform up to 100 times faster than current fourth-generation (4G) standards.[8]
Separately, FCC Commissioner Brendan Carr presented an industry-funded economic analysis which showed capping fees at rates on a local level could save industry $2 billion in “unnecessary costs.”[9] In a recent assessment the new caps of fees are expected to stimulate $2.4 billion in 5G investment.[10] The new fee caps for installing small cells to utility poles are $500 for installation on an existing pole, $270 per year thereafter, plus an application fee cap of $100.[11]
Despite the benefits claimed by FCC commissioners, New York City Chief Information Officer Samir Saini said the FCC “is threatening the public’s right to control public property.”[12] Additionally, many other cities across the United States have complained about the rule, arguing that more control is needed over the process and that they should be able to set fees as they see fit.[13] Recently, the city of Philadelphia filed a complaint stating that the FCC caps barely cover the costs cities incur for doing the necessary due diligence for hardware placement.[14] Specifically, Marcel S. Pratt, the City Solicitor, wrote,
“[The fees] are simply de minimis when measured against the costs that the City incurs to approve, support and maintain the many small cell and distributed antenna system (DAS) installations in its public rights-of-way…In order to accommodate and support the numerous service providers while ensuring public safety and an environment conducive to all uses of the public rights-of-way, the City incurs significant upfront engineering costs to review and inspect each location, including structural analysis review, geographic information system (GIS) updating, and design review and approval.”[15]
However, not all localities agree that the FCC rule will hurt local governments.[16] Commissioner Carr announced a press release with local officials representing 15 different states supporting the order, including: Mayor Ashton Hayward, Pensacola, Florida; Commissioner Maureen Davey, Stillwater County, Montana; and Chairman Todd Nash, Commissioner Susan Roberts, and Commissioner Paul Castilleja, Wallowa County, Oregon.[17] Additionally, FCC Commissioner Michael O’Rielly noted during the hearing that the FCC is curbing the “exorbitant fees, ridiculous practices and prolonged delays,” in big cities.[18] Separately, the three big mobile operators in the United States – AT&T, Verizon, and T-Mobile USA – are all supportive.[19] Additionally, industry groups like The Internet & Television Association (NCTA), CTIA – The Wireless Association, and the Computer and Communications Industry Association (CCIA) have been supportive of the rule.[20]
Despite the support, not all commissioners were in agreement. Commissioner Rosenworcel pointed out a number of cities that have already made agreements with telecom companies to spur innovation without this rule.[21] Commissioner Rosenworcel pointed to cities like Little Rock, AR, Austin, TX, and Troy, OH, which predict that their agreements will be hurt by the FCC’s ruling.[22] Additionally, San Jose, CA, has signed a deal with three major telecom providers to install small cells on government-owned light poles, and it plans to use the money from the public-private partnership (PPP) to fund parts of its Broadband and Digital Inclusion Strategy and increase internet access across the city.[23]
While the caps on fees drew criticism, there was broad agreement to refine the review periods for localities.[24] The new periods will give localities 60 days to review small cells placed on existing infrastructure and 90 days for new buildings.[25] Additionally, the rule allows for a “restart” if an applicant is notified of “material deficiencies” within 10 days.[26] Chairman Pai said, “[Some localities] would like to continue extracting as much money as possible in fees from the private sector and forcing companies to navigate a maze of regulatory hurdles in order to deploy wireless infrastructure.” He continued, “these actions are not only unlawful, they’re also short-sighted. They slow the construction of 5G networks and will delay, if not prevent, the benefits of 5G from reaching American consumers.”[27]
Several scholars have raised concerns that the FCC recent ruling could be taken to court, suggesting that it violates federal law and the 10th Amendment of the U.S. Constitution.[28] Commissioner Rosenworcel raised this concern during the proceedings saying, “This is extraordinary federal overreach, and I don’t believe the law permits Washington to run roughshod over state and local authority like this,” further suggesting that this litigation could slow 5G.[29]
5G will enable new technologies such as internet of things (IoT) devices and autonomous vehicles and will have a huge impact on daily living for most Americans.[30] Currently, the U.S. is engaged in a “race to 5G” with other countries.[31] Today, the wireless industry supports over 4.7 million jobs and contributes roughly $475 billion annually to the American economy.[32] However, with the expansion of 5G, it is expected to bring 3 million new jobs, $275 billion in new investment, and more than $500 billion in economic growth.[33] AT&T President of Technology & Operation Melissa Arnoldi recently said, “We believe 5G will ultimately create a world of new economic opportunity, greater mobility, and smarter connectivity for individuals, businesses, and society as a whole.”[34]
Industry leaders have suggested that China is winning the race to 5G.[35] The FCC rule was passed to help speed up 5G deployment and level the playing field with China. If the rule survives legal challenges, it has the potential to spur deployment and help the U.S. compete with China. In late October, President Trump took another step to see that the U.S. wins the race to 5G by signing a memo directing the creation of a national spectrum strategy.[36] Regardless of whether the FCC order is taken to court, the Trump administration has signaled that they plan on winning the race to 5G, amidst an ongoing trade war with China.
Sources
[1] Harper Neidig, FCC sides with telecom giants in vote to cap 5G fees, The Hill (Sep. 26, 2018, 11:54 AM ET), https://thehill.com/policy/technology/408504-fcc-sides-with-telecom-giants-in-vote-to-cap-5g-fees.
[2] Todd Shields, FCC, Seeking More 5G Deployment, Limits Fees, Bloomberg (Sep. 26, 2018 12:12 PM ET), https://www.bloomberg.com/news/articles/2018-09-26/fcc-seeking-more-5g-deployment-limits-fees-as-new-york-objects.
[3] Neidig, supra note 1.
[4] Id.
[5] Shields, supra note 2.
[6] Id.
[7] Id.
[8] Id.
[9] Bryan Koenig, FCC’s Carr Touts $2B In Possible 5G Savings From Fee Caps, Law360 (Sep. 6, 2018, 7:50 PM ET), https://www.law360.com/articles/1080197/fcc-s-carr-touts-2b-in-possible-5g-savings-from-fee-caps.
[10] Kate Patrick, FCC Votes to Limit Local Governments’ Ability to Regulate 5G Deployment, Inside Sources (Sep. 28, 2018) https://www.insidesources.com/fcc-votes-to-limit-local-governments-ability-to-regulate-5g-deployment/.
[11] Jeremy Horwitz, Massachusetts towns may sue FCC over capped 5G fees and review times, Venture Beat (Oct. 2, 2018, 12:58 PM), https://venturebeat.com/2018/10/02/massachusetts-towns-may-sue-fcc-over-capped-5g-fees-and-review-times/.
[12] Shields, supra note 2.
[13] Becky Bracken, FCC Caps Fees Cities Can Charge For Small Cell Real Estate, Daily Wireless News (Sep. 27, 2018), https://dailywirelessnews.com/2018/09/27/fcc-caps-fees-cities-can-charge-for-small-cell-real-estate/.
[14] Karl Bode, Cities, Counties Say FCC 5G Plan A Massive Handout To Wireless Carriers, Tech Dirt (Oct. 1, 2018, 6:23 AM), https://www.techdirt.com/articles/20180924/08281340701/cities-counties-say-fcc-5g-plan-massive-handout-to-wireless-carriers.shtml.
[15] Id.
[16] FCC, Local Government Support Builds for Carr’s 5G Order, Office of Commissioner Brendan Carr (Sep. 24, 2018), https://docs.fcc.gov/public/attachments/DOC-354225A1.pdf.
[17] Id.
[18] Chris Teale, FCC Ruling On 5G Fees Blocks Cities From Surcharge Fees, Technocracy (Sept. 27, 2018), https://www.technocracy.news/fcc-ruling-on-5g-fees-blocks-cities-from-surcharge-fees/.
[19] Kieren McCarthy, US cities react in fury to FCC’s $2bn break for 5G telcos: We’ll be picking up the tab, say officials, The Register (Sep. 22, 2018), https://www.theregister.co.uk/2018/09/22/city_fury_fcc_5g_plan/.
[20] Id.
[21] Teale, supra note 17
[22] Id.
[23] Id.
[24] Id.
[25] Id.
[26] Id.
[27] Id.
[28] Chris Teale, Could cities sue FCC over its 5G ruling?, Smart Cities Dive (Sep. 28, 2018), https://www.smartcitiesdive.com/news/fcc-cities-5g-ruling-lawsuit/533454/.
[29] Id.
[30] Koenig, supra note 8.
[31] Bode, supra note 13.
[32] The Race to 5G, CTIA, https://www.ctia.org/the-wireless-industry/the-race-to-5g (last visited Nov. 2, 2018).
[33] Id.
[34] Adonis Hoffman, The hot race for 5G will change the world we know now, The Hill (Sep. 24, 2018, 8:00 AM ET), https://thehill.com/opinion/technology/407918-the-hot-race-for-5g-will-change-the-world-we-know-now.
[35] Aaron Pressman, How Real Is the Race to 5G? A New Report Tries To Explain Why Winning Matters, Fortune (Aug. 7, 2018), http://fortune.com/2018/08/07/5g-china-verizon-sprint-t-mobile/.
[36] Kathryn Watson, Trump signs off on creation of new spectrum strategy, amid global race for 5G, CBS News (Oct. 25, 2018, 5:04 PM), https://www.cbsnews.com/news/trump-signs-off-on-creation-of-new-5g-wireless-network-strategy/.
