Tag: rights-of-way

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Regulation - What is it Good For?

Taxing Broadband

Cities have been petitioning the FCC to ask it to revisit the issue of the ‘mixed-use’ rule that blocks municipalities from assessing franchise fees on broadband revenues. Several cities recently petitioning the FCC to revisit the prohibition against applying the fees to broadband. Cities argue that franchise fees are not taxes, and instead are fees that help cities to manage their rights-of-way.

The municipal (or state) franchise fee is capped at 5% of retail cable TV revenue, and cable companies typically tack this fee onto every cable bill. Cities have been seeking a way to replace sinking franchise fees since the traditional cable industry started to bleed customers. The cable TV industry has lost 32 million customers since the end of 2017, a decrease of over 36% of all cable customers.

The ability of the FCC to block franchise fees was affirmed by the U.S. District Court of Appeals for the 6th Circuit in 2021. That order stems from an FCC appeal of a ruling by the Oregon Supreme Court in 2016 that allowed the city of Eugene to expand the franchise fee to cover broadband revenue.

The biggest complaint from cities involves what they call cable company arbitrage. A big percentage of cable company bills still include a bundle of services, and cable companies get to decide how much of a bundle is subject to the franchise fee. Customers have been saying the same thing, and most customers with a bundle of services have no idea what they pay for each individual product inside the bundle.

The arbitrage issue is decreasing over time as the number of customers buying a bundle is decreasing as cable subscriptions drop, but the largest companies still had almost 57 million traditional cable subscribers at the end of the third quarter of last year. Surveys that my consulting firm has done during 2023 show as many as half of customers in some markets still use a bundle, which is down from over 70% a few years ago.

I can sympathize with cities that have seen a big reduction in franchise fees. However, there wasn’t a peep out of cities for the decade when franchise fees soared as cable customers and revenues grew quarter after quarter. Some cities also increased the franchise fee rate until the FCC mandated that it can’t be higher than 5%.

It’s hard to say if cities are fairly compensated by these fees for maintaining their rights-of-ways. I’ve been in the industry for a long time, and I’ve never had anybody explain to me exactly what that means in terms of effort. I know that some cities have been using the franchise fees for functions other than rights-of-way, such as maintaining local public access programming or just shuffling the fees into the general city coffers.

The industry must be at least a little worried that the FCC might change its mind on the issue. NCTA – The Internet & Television Association filed a strong response to petitions filed by cities. This association includes the largest cable companies, and it urged the FCC to ignore the city’s requests to revisit the mixed-use rule.

The FCC has also been under pressure to assess a fee on broadband revenue to fund the soon-to-expire Affordable Connectivity Program (ACP). If Congress decides not to renew the discount plan for low-income households, many have been arguing that the FCC can tackle this under the Universal Service Fund, which is currently funded with a fee on telephone revenues.

In a tax-crazy world, it’s amazing how ISPs have been able to fend off these kinds of fees. While such fees are typically added to customer bills, ISPs argue that the government shouldn’t be doing anything to make broadband too expensive. That’s rich in an industry where the biggest cable companies have raised rates every year for a decade.

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Regulation - What is it Good For?

Preempting Local Government

In May the House Energy and Commerce Committee marked up nineteen pieces of telecom-related legislation, which means the bills can move forward to the full House for a vote. Today’s blog looks at one bill in particular because it represents what I’m seeing as a new trend of actions taken by big ISPs to preempt the authority of local governments.

The bill is H.R. 3557, the American Broadband Deployment Act of 2023. This legislation would preempt a host of current rights of local governments to manage public rights-of-way for telecom infrastructure. This applies to both wireless infrastructure like towers, but also to landline infrastructure like fiber, huts, and cabinets.

The legislation includes a long list of changes aimed at taking local government out of the business of controlling telecom infrastructure deployment.

  • The bill establishes a 60-day shot clock for local governments to consider requests for rights-of-way. If the local government doesn’t approve a request within that time, the request is ‘deemed’ to be approved. Further, once a project is deemed to be approved, the carrier or ISP can proceed with construction without further notice to the local government. It appears that would give builders the ability to bypass local inspections, traffic control regulations, etc.
  • The legislation would give ISPs and carriers the ability to install facilities anywhere they choose and bypass local zoning rules. This would also eliminate local requirements to hide, conceal, or disguise infrastructure in historic neighborhoods.
  • The legislation imposes a complicated formula for calculating and justifying any fees, with the overall goal of greatly lowering fees.
  • One of the most intrusive changes is that the legislation would place all disputes at the FCC rather than in local courts. This would force local governments to battle disputes in D.C. rather than locally. This would upset a 35-year long truce between Congress and local governments that allows disputes on local-related issues to be heard in local courts.
  • Eliminates cable franchise renewals and eliminates the ability of local governments to require rules such as an ISP having to serve the whole community, the local government requiring PEG channels, or the local government requiring customer service standards.
  • The biggest killer is that the law would give holders of franchise agreements the ability to cancel the agreement without losing any rights-of-ways included in the agreement. This would also kill local franchise fees, a major source of revenue for many governments. Perhaps the most severe provision is that franchise contract holders can eliminate any contract provisions they deem to be commercially infeasible.

There is a mountain of bills in the House this year, and there is no way to know the chances of this coming for a vote. However, there are several telecom bills that have bipartisan support, and bills like this one could be attached to such bills. This includes a bill that would renew the FCC’s authority to hold spectrum auctions and a bill that would stop federal grant funding for broadband infrastructure from being taxable.

To me, this bill is part of an ongoing effort of cellular carriers, cable companies, and big telcos to restrict the ability of local governments to affect the construction of infrastructure. These big companies have already been successful in recent years in eliminating regulation. The cellular companies already got relief from the Ajit Pai FCC that made it a lot easier to place cell sites. This law would codify that change so that a future FCC can’t change it. The large ISPs were successful in getting the Ajit Pai FCC to eliminate most broadband regulations.

This bill is going for a home run to eliminate local regulations these big companies don’t like. I’ve written recently about regulatory capture, and this is an ultimate example of changing the laws to get what the big monopoly providers want. This law would eliminate franchise fees, allow carriers to put infrastructure anywhere they want, and pay low fees in doing so.

More proof of the degree of regulatory capture in the telecom market is that there are no equivalent efforts to change local government control of other kinds of infrastructure like roads, factories, buildings, etc. This bill is the ultimate example of the biggest companies in telecom flexing their power and influence to bypass some of the last vestiges of regulation.

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Regulation - What is it Good For?

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.

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Regulation - What is it Good For?

Reusing Existing Easements

Casey Lide and Thomas B. Magee of Keller & Heckman highlight an issue that anybody building fiber on utility poles should be aware of. A recent article on their website notes that in some cases, an easement obtained for using private land to bring electric service might not automatically allow an easement for bringing fiber.

There is a subtle difference between easements and rights-of-of way. An easement allows somebody to carry out an activity on private land. It was typical when electric companies built the power grid to seek an easement from each landowner to give permission to erect electric poles for bringing electric service. Rights-of-way are generally more specific and wider in scope. A city will often decree that it has a right-of-way in perpetuity to use the first few feet from the street of each property for civic purposes. The city can then use the right-of-way to allow for underground utilities or to place a fire hydrant.

The article warns that the original language of the easement might restrict usage for adding fiber. If the original easement language was narrow and only talked about bringing electric service, then somebody adding fiber would need to seek a new easement for every property underneath a pole line. If the original easement was more generic in nature, it might have allowed for electric and other services, in which case the electric company would have an easement to cover allowing others on its poles.

There are cases where a property owner has refused to allow fiber or other wires to be added to a pole line. In such cases, the new attacher has to get permission from the property owner and possibly pay for the easement when property owners insist there is a value for the easement.

The legislatures in twenty states have dealt with this issue in the last few years by passing legislation that says that the original easement given to the electric company covers other wires added to the poles. Within just the last three years, the following states have enacted this legislative fix as a way to make it easier to build broadband networks. Note that some of these laws are aimed only at electric cooperatives but not for commercial electric companies. The states are Alabama, Arizona, Colorado, Georgia, Hawaii, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, and West Virginia.

If your state is not on that list, or if you are building fiber on the lines of a for-profit utility, then this is an issue that you should investigate as part of building fiber. The natural place to start is to ask the utility if it has clear easements for adding fiber. This is not always an easy thing for a utility to guarantee since some of the easements might have been negotiated more than a century ago. Examining the utility’s easement language should show if the easement is restrictive or open.

The chances are that you can build a network and never worry about this – many people have built fiber networks and never asked the question. But if an easement dispute is raised, you could be stopped in the construction process or even be stopped from using fiber that was built without an easement. Add this to the list of worries that come with building a new fiber network.

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The Industry

Easing Fiber Construction

Almost every community wants fiber broadband, but I’ve found that there are still a lot of communities that have ordinances or processes in place that add cost and time to somebody trying to build fiber. One of the tasks I always ask cities to undertake is to do an internal review of all of the processes that apply to somebody who wants to build fiber, to identify areas that an ISP will find troublesome. Such a review might look at the following:

Permitting. Most cities have permitting rules to stop companies from digging up the streets at random, and ISPs expect to have to file permits to dig under streets or to get onto city-owned utility poles. However, we’ve run into permitting issues that were a major hindrance to building fiber.

  • One of my clients wanted to hang fiber on city-owned poles and found out that the city required a separate permit for each pole. The paperwork involved with that would have been staggering.
  • We worked in another city where the City wanted a $5,000 non-refundable fee for each new entity wanting to do business in the city. Nobody at the City could recall why the fee was so high and speculated that it was to help deter somebody in the past that they didn’t want working in the city.
  • I’ve seen a number of cities that wanted a full set of engineering drawings for the work to be done and expected no deviance from the plans. Very few ISPs do that level of engineering up front and instead have engineers working in front of construction crews to make the final calls on facility placement as the project is constructed.

Rights-of-Way. Cities and counties own the public rights-of-way on the roads under their control. Most cities want fiber badly enough to provide rights-of-way to somebody that is going to build fiber. But we’ve seen cities that have imposed big fees on getting rights-of-way or who want sizable annual payments for the continued use of the rights-of-way.

I’ve seen fiber overbuilders bypass towns that overvalue the rights-of-way. Many cities are desperate for tax revenues and assume anybody building fiber can afford high up-front fees or an ongoing assessment. These cities fail to realize that most fiber business plans have slim margins and that high fees might be enough to convince an ISP to build somewhere else.

Work Rules. These are rules imposed by a city that require work to be done in a certain way. For example, we’ve seen fiber projects in small towns that required flagmen to always be present even though the residential streets didn’t see more than a few cars in an afternoon. That’s a lot of extra cost added to the construction cost that most builders would view as unnecessary.

We’ve seen some squirrelly rules for work hours. Many cities don’t allow work on Saturdays, but most work crews prefer to work 6-day weeks. We’ve seen work hours condensed on school days that only allow construction during the hours that school is in session, such as 9:00 to 2:00. Anybody who has set up and torn down a boring rig knows that this kind of schedule will cut the daily feet of boring in half.

Timeliness.  It’s not unusual for cities to be slow for tasks that involve City staff. For example, if a City does their own locates for buried utilities it’s vital that they perform locates on a timely basis so as to not idle work crews. In the most extreme case, I’ve seen locate put on hold while the person doing the locates went on a long vacation.

We’ve also seen cities that are slow on inspecting sites after construction. Fiber work crews move out of a neighborhood or out of the town when construction is complete, and cities need to inspect the roads and poles while the crews are still in the market.

In many cases, the work practices in place in a city are not the result of an ordinance but were created over time in reaction to some past behavior of other utilities. In other cases, some of the worst practices are captured in ordinances that likely came about when some utility really annoyed the elected officials in the past. A city shouldn’t roll over and relax all rules for a fiber builder because such changes will be noticed by the other utilities that are going to want the same treatment. But cities need to eliminate rules that add unnecessary cost to bringing fiber.

We always caution ISPs to not assume that construction rules in a given community will be what is normally expected. It’s always a good idea to have a discussion with a city about all of the various rules long before the fiber work crews show up.

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The Industry

Fiber Resource Shortages

The fiber industry is as busy as I have ever seen it, and it’s about to get even busier. The cellular carriers, particularly Verizon are actively building fiber to reach small cell sites. The cable companies are building a significant amount of fiber, particularly Altice which is upgrading to FTTP. The FCC is going to award $9 billion in 2020 for the 5G Fund grant program, much which will go for fiber to reach rural cell sites. The FCC will be awarding $16.4 billion in 2020 for RDOF grants to build rural broadband infrastructure. There are state broadband grant programs in many states providing funds to help with rural broadband projects. Independent telephone companies are still building rural fiber to meet their ACAM responsibilities. Electric coops all over the country are jumping into the fiber business. Finally, there are dozens of active fiber overbuilders building into new markets.

All of this fiber activity is going to mean a shortfall of industry resources of all kinds. I’ve already witnessed construction delays in projects this year due to resource shortages and I fear delays will increase in 2020 and beyond. Following is a list of the industry resources that I think will be in short demand or under stress, meaning that some fiber projects will have problems.

Construction Crews. I’ve worked with several projects this year that had problems finding enough construction crews. It’s not hard to imagine a shortfall of underground boring crews, aerial construction crews, or splicers as the industry gets busier. Maybe even more troubling will be a shortage of good fiber project managers. As we’ve seen in busy markets in the past, crew shortages are likely to result in higher construction labor rates.

Engineers. Almost every engineering company I know is already working at nearly full capacity. It won’t be surprising within a year to see engineering firms being selective about who they will work for.

Fiber and Fiber Components. I saw a few projects get slowed down this year due to backlogs of fiber cable and various components like handholes. I can recall worse shortages, but I suspect that we will soon not take the normal delivery intervals in the supply chain for granted.

Pole Attachment Processing. Many of the big pole owners, like commercial electric companies, say they are swamped with pole attachment requests. It will be interesting to see if One Touch Make Ready helps to relive the work pressure, or if it adds to the stress at utilities as they try to meet tighter time frames.

Rights-of-Way / Permits. I’ve already seen a few railroad crossings take longer than normal, with the railroads complaining that they are swamped with crossing requests. Expect the same thing for bridges and interstate underpasses. Expect the Department of Transportation in some states to be slow in issuing permits to build on state highways.

Grant Writers. You might assume that anybody can write a grant, but the specialists who write winning grant proposals for fiber projects are definitely a limited resource.

Consultants. Every consultant I know has a limited capacity in terms of the number of big projects like feasibility studies that they can tackle at the same time. I know I’m already being selective about taking on new work and I expect others are doing the same.

Loan Applications. After the stimulus broadband grants were awarded, the loan application backlog at the RUS grew to 18 months, meaning an applicant had to wait that long before the RUS even looked at an application. Expect the RUS backlogs and of other lenders to start growing again with the RDOF grant awards.

Banking. I can remember a few times during my career when banks like CoBank cut back on issuing new loans. All banks have a natural lending limit and I’m not sure that the normal industry banking institutions – the RUS, CoBank, and RTFC – can collectively float the dollar volume of new loans needed to support the RDOF program, let alone the many other broadband projects that are seeking funding.

All of these potential resource shortages portend problems for anybody building fiber. It’s hard to imagine a fiber project of any size that isn’t going to hit by at least a few of these delays. I’m sure I’ll hear of a few cases where these delays will be crippling. I think anybody planning to build fiber needs to anticipate delays and build them into their schedule because delays cost time, and time costs money.

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Uncategorized

City Authority in Rights-of-Way

The California Supreme Court just joined the fray in the battle over the placement of small cells and other wireless equipment in public rights-of-ways. Currently, there are numerous lawsuits challenging the FCC ruling that wireless carriers can put their devices anywhere in the public rights-of-way. The California lawsuit preceded that order and was asking if a City has the right to dictate the appearance of wireless electronics.

We’ve recently seen wireless carriers hanging some fairly hideous devices on poles. The FCC order allows them to hang devices as large as 28 cubic feet, and that’s large enough to hang devices that sprawl across the sightlines on poles. Cities look at some of the early examples of devices on poles and are fearful of the proliferation of similar devices as each large wireless carrier and others begin hanging small cells and 5G fixed wireless loop devices.

The original suit came from T-Mobile that claimed that San Francisco had no authority to set aesthetics requirements for wireless devices. It is an interesting challenge because government entities have been dictating aesthetics requirements for years – such as cell sites one sees all over Florida that are disguised to look like palm trees – but which never do.

My guess is that T-Mobile has been emboldened by the recent federal law that guarantees wireless carriers access to utility poles, light poles and other locations inside of public rights-of-way. The FCC order effectively tells municipalities that they can’t reject requests to place devices and I’m guessing T-Mobile hoped that meant that cities had no authority over them.

T-Mobile relied on language in section 7901 of the California public utilities code:

Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this State, and may erect poles, posts, piers, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters. (I must admit that one of the reasons I like to read legal cases is the language used in laws. This one uses the term incommode which means to inconvenience or impede.)

T-Mobile interpreted that law to mean that they have the right to construct facilities as long as they don’t obstruct the transmission path. They further argued that San Francisco could not regulate anything that is not specifically allowed by this same language.

The courts disagreed with T-Mobile’s reading of the law. The courts said that a city has inherent local authority to determine the appropriate use of land within its jurisdiction. That authority includes the right to establish aesthetic conditions for land use. The Court said the case boiled down to whether Section 7901 somehow divested the city of that inherent authority.

The Courts also said that T-Mobile’s interpretation of the term incommode was incorrect, in that T-Mobile thought they could hang a wireless device anywhere as long as they didn’t impede public road use or the ability of other utilities to use the poles. The Courts said that incommoded generally means inconvenience and that the city could object to a pole placement if it inconvenienced the city in other ways such as generating noise, causing negative health consequences, or creating safety concerns.

While the California ruling was very specific and ruled that the City of San Francisco could require wireless carriers to meet aesthetic requirements, the ruling and the discussion in the decision can be interpreted as being directly in opposition of the FCC order that allows wireless carriers to place small cells anywhere they want, without city interference.

Lawsuits generally rely on precedents and judges often consider rulings made in other courts on similar issues. It seems likely that this California Supreme Court ruling is going to make it into the challenges to the FCC ruling that preempted local control over small cell placement. That FCC ruling loses its teeth if cities can consider things like public safety or the safety of technicians that work on poles.

Wireless carriers are currently acting as if the FCC order is a done deal, even as it is being challenged by numerous states and cities. I’ve heard several people refer to carrier behavior as a land grab, where the carriers are grabbing connection space on poles even when they have no immediate use for them – they are getting on poles before courts might make it harder to do so. This Supreme Court ruling makes it clear that the small cell issue is far from resolved and we’re probably going to be following this in courts for at least a few more years.

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Regulation - What is it Good For?

FCC Small Cell Order – Timelines and Fees

Yesterday’s blog looked at the preemption issues in the FCC’s new ruling concerning small cell deployment on utility poles, light poles, buildings and other infrastructure. The order is WT Docket No. 17-79; WC Docket No. 17-84 and was approved on September 27. Today I’ll look at the rest of the order concerning timeline and fees.

The new rules establish a ‘shot clock’ for the local review of small cell deployments. The FCC established similar shot clocks in 2009 for the deployment of the traditional cell tower deployments. They said then that localities had to review an application for collocating cellular infrastructure within 90 days and gave localities 150 days to review an application for placing a new cellular tower. Cities were free to reject requests if an application failed to meet local regulations and the shot clock defined the time during which a locality had to provide a response to a cellular carrier.

The FCC just set a shorter shot clock for small cell deployment, and localities now have 60 days to process an application for collocation of small cell equipment on a facility that already has similar infrastructure and 90 days to review an application for a new placement. Interestingly, in the case of small cells, those time lines are likely reversed. Cities probably have more concerns about placing multiple small cells on the same pole, yet that situation has the shortest time frame for review.

Numerous cities intervened in the docket and argued that small cell devices are not necessarily ‘small’. While many devices are the size of a pizza box (the example used by the FCC), there have been requests to place cabinets nearly the size of refrigerators on poles. The FCC resolved these issues by defining devices covered by the new rules as ‘Small Wireless Facility’ that must meet the following parameters: the pole or structure can’t be greater than 50 feet tall; the small cell device can’t add more than 10% to the height of an existing structure; the equipment can’t be larger than 28 cubic feet (excluding antennas) and an antenna can’t be more than 3 cubic feet. This limits the devices to boxes that are just a hair larger than a 3 X 3 X 3 foot cube.

The FCC also suggested limits on the fees that a city can charge for access to rights-of-way. They suggest application fees be no more than $500 per application that can include up to five small cell devices, with an additional $100 per small cell after five. The FCC also suggested a fee limit of $270 per year per small cell to cover any recurring fees including rights-of-way. The new rules say that carriers can’t challenge rates at or below these suggested limits.

The FCC new rules would allow a city to charge fees greater than these suggested limits. However, this adds a burden on the city to demonstrate that the costs are reasonable and are a reasonable approximation of actual costs. The FCC says that it would expect only ‘limited circumstances’ under which a city could charge higher rules. Many cities filed in the docket that their costs to review an application is far greater than $100 per site since they usually do a field visit for each proposed site and often hire wireless engineers to make the review.

Many municipalities in the docket cited costs higher than these FCC limits and these low fee levels are why some are calling this a multi-billion dollar giveaway to the cellular carriers. They not only get small cells deployed more quickly, but they are paying a lot less for the applications and rights-of-way fees.

It’s clear that this docket gives 5G and other small cell providers everything on their wish list. It’s been rare in the past to see FCC orders that are so blatantly in favor of one side of an issue. As a regulator the FCC is supposed to weigh the views and needs of everyone involved in a given issue and try to compromise on common ground. However, this order is entirely one-sided in favor of wireless carriers.

Nobody doubts that 5G is an interesting new technology that will bring benefits to many. However, the recently announced Verizon 5G deployments are talking about bringing broadband speeds in the range of 200-300 Mbps. Everything I read predicts that the 5G improvements to cellular speeds will be incremental over a decade and bring speeds as fast as 100 Mbps for those in areas with multiple small cells. It’s clearly unprecedented for the FCC to come out so heavily in favor of a technology before it’s even been proven in field deployment. It’s still unusual for the FCC to protect a specific technology and it would still be nice to see them make it easier to deploy fiber.

The FCC has taken sides to protect new industries before, just not so early in the game. There were rules that fostered the deployment of cable TV, of cellphone and of landline broadband – but these rules generally were issued when it became clear that the new industry needed market protections to grow and thrive. I guess it’s due to the heavy lobbying that declares that 5G will solve all of our broadband problems – but we’re too early into the new technology to know yet if that’s true.

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Regulation - What is it Good For?

FCC BDAC Removing Regulatory Barriers

One of the sub-committees created by the FCC’s as part of its Broadband Deployment Advisory Committee (BDAC) effort looked at Removing State and Local Regulatory Barriers to broadband deployment. Here is a preliminary draft of their report, which is probably close to the final report. As noted in other blogs on the BDAC, the FCC is not obligated to address any of the issues identified by the sub-committee.

It’s an interesting document in that the sub-committee has made a detailed list of all of the common transgressions imposed by states and localities that have slowed broadband or wireless deployments in the past. It serves as a great primer of the kind of issues that a new network deployment might face. But to be fair, that was the mandate given to this group.

I have zero problems with the list of deployment issues and it seems thorough and accurate. But I don’t think the proposed solution is realistic. They basically recommend that the FCC should preempt states and localities for anything to do with broadband or wireless deployment. That’s not a surprising recommendation since the group was asked to list regulatory hurdles that should be eliminated. But there are numerous reasons why having the FCC preempt all local control of rights-of-ways connectivity is a bad idea. One reason I hate the idea is that this is at the top of the wish list for every DC telecom lobbyist for the big ISPs – and they seem to be getting their way too much these days.

With that said, the complaints listed are valid and I’ve seen many of these issues arise during new network deployments. I’ve worked with a number of communities that have processes or ordinances that are a barrier to broadband, and I always advise them to fix such problems if they are hoping for more broadband deployment in their community. But if I’ve learned anything from working around the country it’s that communities differ significantly, and I don’t favor a one-size-fits-all solution from the FCC that would take everything to do with rights-of-way, permitting and other issues out of the hands of local government.

But this document creates a great cautionary tale for cities, counties and states. Almost every sized community talks about having better broadband or about having more broadband competition. Many cities have looked at their various processes and rules and streamlined or eliminated rules that would be a barrier for somebody building fiber. Any community that is hoping to attract fiber construction should be proactive and look at these issues now. It’s quite possible that prospective fiber builders have investigated cities and taken them off of their list of potential markets without even talking to the cities.

Some of the issues discussed by this document can be real killers of fiber deployment. Some good examples include:

  • Permitting processes that are onerous, require a lot of paperwork and which have issues that make them hard to use, such as only being effective for a few weeks after issuance.
  • Other city practices that slow down construction. This could be burdensome traffic control processes, slow inspection of finished work, slow marking of existing utilities. One of the big killers for larger cities is an unwillingness to hire enough temporary city staff to process the volumes of paperwork associated with a large fiber project.
  • One interesting issue pointed out is that cities often don’t charge all utilities consistently. They might try to charge more or extract concessions from a new fiber provider that they don’t expect of existing utilities.

The sub-committee also addressed wireless deployments. While many cities have policies for large cell tower deployments, most cities have not developed any processes for dealing with the myriad smaller cell sites and 5G transmitters that carriers are going to want to deploy over the next decade. I would hope that considering the issues listed in this draft report will prompt more cities to develop friendlier policies and not wait until they have requests for connections and rights-of-way. I’ve talked to many cities who have said that they wish they had thought harder about fiber deployment before a network was built – and the time is now to get ahead of the curve for wireless deployments.

This document also ignores one of the biggest issues in the industry. The big ISPs all want rules that make it easier for them to build fiber or deploy new wireless devices – but they don’t necessarily support rules that make it easier for new competitors to build against their existing networks. I’ve repeatedly observed some of the big carriers like AT&T or Verizon argue for different rules on the local level than what they supposedly support at the national level. It will be interesting to see where these companies stand if the FCC tries to implement some of the proposed solutions.

Categories
The Industry

How Cities Affect Fiber Construction

Yesterday I wrote about the wish list cities have for the deployment of broadband. That got me to thinking about the ways that cities influence the fiber construction process, so today I am going to write about the flip side of that and talk about all of the ways that cities are involved in the fiber construction process. For anybody who has not been involved in fiber construction this will probably be an eye-opener. But let me preface this whole discussion by saying that the involvement in cities varies widely – some large cities can be relatively easy to work with and some small ones difficult – but generally the larger the city the more of the following processes are involved:

Rights-of-Way. Some cities require that anybody that wants to construct any utility in their city first get permission to use the rights-of-way. This process goes by various names and might be called a franchise agreement (which is different than the agreement to provide cable TV) or a right-of-way agreement. But for cities that require this, nothing else can be done until this is first approved. Some cities extract a ‘pound of flesh’ in the franchising process and may ask for use of fiber pairs or some other concession before granting approval to build fiber.

Permitting. Permitting is the process that can be the most time-consuming for a fiber builder. A permit generally requires getting approval for specific construction done at a certain time. Permit requests may require engineering drawings (something that most builders prefer to do only after the construction). Permitting can become onerous if too many permits must be filed (such as one for each block of construction), or if the permits are for short discrete time windows that can expire when there are construction delays.

Locating. Many cities do the locating of existing utilities. This is the process of marking where existing utilities are supposed to be before a fiber builder can dig up the street.

Traffic Control. Cities often get involved in traffic control. For example, they may require that parked cars are moved before construction. They might provide police or other traffic control when building on busy streets.

Placement of Devices. Many cities want approval of the placement of any hut, cabinet or other device. They may have rules that prohibit certain kinds of devices in certain neighborhoods. Probably one of the best examples of a poor policy was one in a western city that gave homeowners in a neighborhood the right to veto the placement of any cabinets. This meant holding mini-elections in neighborhoods.

Inspection. Cities generally inspect the construction process. They may inspect during the construction process to make sure that specifications from the permits are being met. They also usually inspect after construction to make sure that debris and dirt are cleared and that streets, sidewalks, and yards were returned to a clean condition. Just like any other kind of inspection, the in-process inspections often require the stoppage of work until inspectors do their job.

Paperwork. Many cities require specific paperwork to document the ‘as-built’ network. These are detailed engineering drawings that show what was built and where. Today some cities are starting to ask for electronic records instead, generally in an ESRI format to incorporate into their GIS systems.

Other Issues. Cities might have all sorts of other ordinances and rules that affect the construction process. For example, they might have a dig once, policy (something I discussed last week). They might require a fiber builder to use existing excess conduit. They might have aesthetic rules that require somehow hiding huts and cabinets.

Every one of these steps requires time, interface with city employees and paperwork. If done poorly, these processes can greatly slow the pace of fiber construction. For example, construction might be delayed until a city employee locates existing utilities. Then construction might only be able to proceed so far until an inspector approves. Or a rain delay might mess up a traffic control plan and create significant delays until that is reset. With so many different steps and processes there are ample opportunities for problems to arise. Often cities are not staffed to be able to accommodate a citywide fiber construction program and will need time to get ready.

I’ve found that cities who are active partners in getting a fiber network are usually willing to work to make the processes flow smoothly. But I’ve also seen cases where the city is a major impediment to timely fiber construction and can introduce significant delays and costs in the construction process. One function not listed is the liaison process with a city. We’ve seen it works best to ask the city to have a single point of contact to work through various issues during the construction process.

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