Right to Place Telecom Infrastructure

There was an interesting legal decision recently from the United States District for the Eastern District of New York that found that the Village of Flower Hill, NY had the right to deny ExteNet, an agent of Verizon Wireless, from placing small cell sites within the Village. The decision raises some interesting legal and other issues about telecom infrastructure.

The facts are straightforward. ExteNet was hired by Verizon Wireless to place 66 small cells site in and around the Village, including 18 within the Village, for the stated purpose of strengthening the existing 4GLTE network. ExteNet and the Village went through several rounds of negotiations on the appearance of the small cell sites, but ultimately, the Village denied the request. One of the primary reasons for the denial is that the Village didn’t see any evidence of current gaps in 4GLTE cellular coverage.

As has happened with many similar suits, the case boiled down to language included in the Telecommunications Act of 1996 – language that has been described in some cases as ambiguous. ExteNet cited the provisions of the Act that says that no state or local government shall prohibit the ability of an entity to provide any interstate or intrastate telecommunications service. The Village countered with language also from the Act that says that the FCC cannot preempt the rights of state or local governments to manage the public rights-of-way in a competitively neutral and nondiscriminatory manner.

The Court ultimately decided in favor of the Village using additional language from the Act that says that any denial for the placement of telecommunications infrastructure must be supported by substantial evidence. The Court ultimately decided that one of the reasons given by the Village to deny the permitting request could be construed as substantial evidence – that there was already sufficient 4G cellular coverage in the Village.

Interestingly, it doesn’t seem like the case invoked what I think are the strongest arguments for the Village. The case was decided because the Court decided that there was no evidence that Verizon needed the new network to bolster cellular voice traffic – a telecommunications service.

What the case didn’t say, and I’m sure that ExeNet wasn’t allowed to raise by Verizon, is that the purpose of the new small cell sites is not to improve voice service – the network expansion is to introduce and bolster Verizon’s cellular broadband FWA network so that the company can provide commercial broadband to homes and businesses. The reason ExteNet wouldn’t want to raise that issue is that broadband is currently not considered a telecommunications service due to the actions of the Ajit Pai FCC that eliminated Title II regulation over broadband.

The Telecommunications Act of 1996 does not provide any rights to expand broadband networks since it only gives those rights for expanding telecommunications services. Had this issue been raised, the Court would have had an easier time denying the expansion of the Verizon network.

This raises all sorts of uncomfortable issues for the industry. First, Verizon would have been better off in this case if the Ajit Pai FCC had not eliminated broadband regulation. If broadband was still a telecommunications service, and if Verizon claimed the new network was to bolster broadband, I don’t think the Court would have had any choice other than to rule in favor of ExteNet and Verizon. This case is another example of the trickle-down impact of declaring that broadband is not a telecommunications service. With this court ruling, communities across the country can feel emboldened to deny the placement of small cell networks built to bring broadband.

But this raises an even more uncomfortable issue. Are local communities able to deny the construction of any new broadband infrastructure? That could mean fiber or the wireless infrastructure in this example. If broadband is not a telecommunications service, then all of the parts of the Act that allow for access to rights-of-ways would not be operative. A community would just need to declare that the community already has sufficient broadband to deny permitting requests. I hate to even think where that line of reasoning might go.

Of course, the opposite is also true and the above arguments all get reversed if the current FCC is able to somehow reinstitute Title II authority for broadband, something that Chairman Jessica Rosenworcel says the FCC has the power to do (if it seats the fifth Commissioner).

As I’ve argued many times, it does the country no good to be on this regulatory yoyo where broadband is declared to be telecommunications and then not, depending upon the philosophy of the party with the most votes at the FCC. That is no way to regulate such a giant industry. For now, there is a gaping hole in the ability of ISPs to know they have the right to build broadband in a community – this case says that the community can deny them if there is evidence to support the denial. The evidence could be something as simple as not wanting construction that disturbs the paved streets.