Texas Right-of-Way Dispute Raises Tension Between Cities, Industry

Texas commissioners likely will vote on a decision at their February, March or April meeting, though there's no statutory deadline to act, a PUC spokesman said Tuesday. Before the meeting, commissioners will receive a recommended decision from an administrative law judge at the Texas State Office of Administrative Hearings. The case concerns a complaint by ExteNet against Houston for imposing public right-of-way fees (docket 45280). The distributed antenna systems (DAS) provider said it doesn’t have to pay fees because Chapter 283, a local code for franchise fees, sets rates based on a company’s number of access lines -- but as a DAS provider, ExteNet has no access lines. Houston argued Chapter 283 doesn’t apply to ExteNet because the company provides backhaul exclusively for commercial mobile radio service (CMRS), which it claimed isn't a qualifying service under the code. Companies that don’t fall under Chapter 283 but want to build facilities in the right of way must negotiate with the city for permission.

The Texas case “ties in directly to the arguments Mobilitie is making in its FCC petition on local governments targeting telecom networks for revenue generation,” Lightower Fiber Networks Senior Assistant General Counsel Natasha Ernst emailed Tuesday. In the Nov. 15 petition, Mobilitie asked for a federal ruling interpreting Section 253(C) to preclude cities from charging carriers more than other providers for use of the right of way. The FCC hasn't docketed or sought comment on the petition, but some expect a Republican commission next year to agree with Mobilitie (see 1612120053). The current FCC under Chairman Tom Wheeler already was eyeing ways to ease local barriers to wireless facilities (see 1610260058). Spiegel & McDiarmid's Tim Lay, attorney for local governments, emailed: "There is overlap in the sense that, both ExteNet before the PUC, and Mobilitie before the FCC, wish to pay as little as possible to use public property that doesn’t belong to them. And they want the law construed in a way that allows them to do that."

The Wireless Infrastructure Association supported its member ExteNet. “By affirming the application of Chapter 283 to the installation of distributed antenna systems (DAS), the Texas Public Utility Commission will promote the deployment of advanced technology while ensuring a level playing field for all providers of communications services,” WIA Senior Government Affairs Counsel Van Bloys emailed Tuesday. “Encouraging the deployment of small wireless facilities, such as DAS and small cells in rights-of-way, along with traditional macro towers, is key as communities work with the wireless industry to improve today’s mobile communications and tomorrow’s 5G networks.”

The state dispute “affects all municipalities in Texas,” San Antonio said Monday in an amicus reply brief. “The Commission must not allow ExteNet and companies like it to use Commission-issued certificates of authority to gain free access to municipal right-of-way.” In a separate filing, 50 Texas cities said Chapter 283 doesn't cover installing DAS or providing wireless services through DAS, "and thus cities are not prevented-from requiring the service providers to obtain city consent for their occupancy and use of the public rights-of-way ('ROW'), or from obtaining compensation for that private use of public property."

ExteNet isn’t the only backhaul company avoiding right-of-way fees, San Antonio said. After hearing about the case, the city searched its records and "found that multiple Commission-certificated providers have been installing facilities in municipal right-of-way without paying a penny for its use.” Not all are DAS providers; for example, Zayo has been installing fiber facilities in San Antonio right of way since 2012 without paying the city, it said. The city said it hasn't received compensation "because Zayo does not offer local exchange telephone service or any of the other qualifying services." Zayo didn’t comment.

“It is doubtful that ExteNet provides any telecommunications service,” Houston said in its closing brief. “ExteNet either is nothing more than a contractor for companies like Verizon Wireless; or it is itself a provider of wireless service. In either event, neither as a contractor would it be allowed under Chapter 283 to install facilities for a wireless network in the City’s ROW on behalf of Verizon Wireless, nor as a wireless carrier itself. But, either Verizon Wireless, or ExteNet as a wireless provider, would need the City’s consent to use the City’s ROW.” Texas PUC legal staff agreed ExteNet should pay Houston because it provides backhaul exclusively to CMRS carriers that aren’t covered by Chapter 283. The PUC shouldn’t let ExteNet “interpret Chapter 283 to shield itself from the payment of franchise fees for the use of Houston's ROW,” said the staff’s reply brief.

ExteNet said the language of Chapter 283 supports its case. "ExteNet submits that the end result of fairness does not dictate or define what the ALJs or the Commission is required to do in its analysis of the evidence and law in this proceeding,” the company replied. “The proper focus in this complaint must be on applying the statutes and rules as written to the credible evidence. … If the Commission believes that applying the law and its rule as written produces a result that warrants a review and possible rule revision, that is subsequent rulemaking proceeding is readily available.”

PUC staff warned the commission to narrowly address DAS providers. While adopting ExteNet’s interpretation would inappropriately expand the code to include backhaul to CMRS carriers, adopting Houston’s interpretation of backhaul could exclude more backhaul providers than DAS from Chapter 283, the staff cautioned. “Both of these interpretations would reshape the current regulatory landscape.” Houston denied that it seeks to exclude all backhaul services from the code, a concern that Comcast previously raised (see 1608310023 and 1609140055).