With Legal Challenge Likely, FCC Approves Rules Designed to Speed 5G Deployment

Numerous local and state governments urged the FCC to reject the new rules, including New York and Los Angeles. On the eve of the meeting, House Commerce Democrats urged the FCC to put off a vote (see 1809250059). Also as expected, Commissioner Mike O’Rielly said he would have gone further than the FCC does in the item (see 1809190030). Commissioners also approved consolidating rules for earth stations in motion (ESIM) and eliminating the Form 325 submitted by cable operators.

Chairman Ajit Pai said a few outlier state and local governments pose a problem the FCC is addressing. “They 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,” Pai said. “These actions are not only unlawful, they’re also short-sighted.”

Rosenworcel said she agreed with parts of the new rules, especially shorter time frames for siting small cells but objected to provisions that take away local control of siting decisions. “Instead of working with our state and local partners to speed the way to 5G deployment, we cut them out,” Rosenworcel said. “We tell them that going forward, Washington will make choices for them, about which fees are permissible and which are not, about what aesthetic choices are viable and which are not, with complete disregard for the fact that these infrastructure decisions do not work the same in New York, New York, and New York, Iowa.”

The law doesn’t allow Washington “to run roughshod over state and local authority like this and I worry the litigation that follows will only slow our 5G future,” Rosenworcel said. She listed major and state groups that asked the FCC to delay a vote. A Wireless Bureau official said the biggest change in the item, made at Rosenworcel's suggestion, is that if a local government gets an incomplete application, the shot clock goes back to zero rather than being paused, as long as an applicant is notified within 10 days.

O'Rielly's Concerns

O’Rielly said he would have deleted provisions allowing local control of siting based on aesthetics. “I will have to swallow recognizing that I can’t get the rest without it,” he said. O’Rielly also doesn’t like the focus on “reasonable” rates for siting fees. “The commission is inviting localities to adopt these rates even if they’re not cost based,” he said. “Providers should be explicitly provided the right to challenge these rates … if they’re not cost based.”

The order also puts too much focus on small cells, O’Rielly said. “There needs to be a recognition that macro towers will continue to play a role in wireless networks.” He said the FCC should wrap up the twilight tower proceeding. In December, commissioners approved a public notice on how twilight towers could be made available for collocation of wireless facilities without additional historic review (see 1712140049).

“Being first matters” for 5G, said Commissioner Brendan Carr, architect of the order. “It determines whether capital will flow here, whether innovators will start their new businesses here and whether the economy that benefits is the one here.” Carr highlighted the local and state officials who endorsed the FCC’s approach. The new rules will make a difference, he said, cutting "$2 billion in red tape. That’s about $8,000 in savings per small cell.” Carr warned of a "cottage industry of consultants" spurring lawsuits and disputes on wireless siting. ”We provide clear and updated guidance, which will eliminate the uncertainty inspiring much of that litigation,” he said.

The order “will likely chill and undermine the good faith work that states and wireless carriers are doing across the country to ensure the public has access to next-generation wireless and fixed wireless networks,” said Phillip Berenbroick, senior policy counsel at Public Knowledge. Free Press called it "yet another giveaway from Chairman Pai to wireless giants like AT&T and Verizon."

A Wall Street Journal​​​​​​​ editorial endorsed Tuesday evening the rule change. “The FCC has acted decisively to secure America’s global leadership in 5G and the innovation it will unleash across the economy,” said CTIA President Meredith Baker. The order "will clarify the role of state and local governments to make the process of siting wireless infrastructure faster and more efficient," said Jonathan Adelstein, president of the Wireless Infrastructure Association.

Court Challenge

Local government officials expect to challenge the FCC wireless order. “The first response to today’s vote will almost certainly be a petition for reconsideration, followed by appeals if that petition is not successful,” emailed a National League of Cities (NLC) spokesperson. “While we don’t yet know who the parties will be for an appeal, our first priority is to support our cities and their leadership on this issue, and will take whichever path best helps them achieve their goals in the appeals process.”

Mayors “now look to the federal courts to review and rectify this unlawful taking of local property, actions which we believe will compel local elected officials to subsidize, or 'gift,' local public property to a small, favored group of private businesses," said U.S. Conference of Mayors CEO Tom Cochran. The FCC misapplied federal law, he said. "This aggressive, and surely unlawful, intervention will prove counterproductive."

City and county associations “urge the FCC to delay the rule, and we plan to support local effort to mitigate its impacts,” said NLC and the National Association of Counties. The order “overlooks significant concerns from the nation’s cities and counties,” said the local groups, noting more than 100 local governments from 22 states filing opposition comments. “This ruling promises to force local governments to rubber-stamp small cell applications or face crippling legal recourse from providers racing to corner the 5G communications market.”

The order disregards work of the Broadband Deployment Advisory Committee, including by working groups on the municipal model code, state model code, and rates and fees, said BDAC Vice Chair David Young in an interview. “There was no finding that recurring rates were a barrier.” Cities should still look at BDAC’s municipal model code, “a good document,” he said. “I’m dubious as to whether we need a state model code now” given the FCC order, Young said. The rates-and-fees group surveyed more than 1,200 agreements, work that now is “thrown out the window,” he said. Lincoln, Nebraska, has agreements with three major carriers that are “deploying small cells right now,” said Young, the city’s right-of-way manager. It’s unclear if the FCC can overturn those contracts, but Lincoln doesn’t plan to change them, he said.

Maryland’s Montgomery County is moving ahead with locally developed rules “because we don’t think what the FCC is doing is legal,” and expect the federal order to be challenged in court, said ultraMontgomery Program Director Mitsuko Herrera in an interview. “The best solutions are local solutions.” Possible FCC pre-emption loomed over Montgomery County’s Tuesday hearing about proposed local rules for processing small-cell applications, with FCC and state pre-emption efforts disrupting local efforts across the country, Herrera said. The county’s Planning Housing Economic Development committee plans to vote Oct. 1 on proposed rules, which must be voted on by the full council by Oct. 31.

NATOA is weighing next steps, said General Counsel Nancy Werner. She said the wireless order and Tuesday’s cable further NPRM (see 1809250017) “trample any notion of localism -- substituting the judgment of a few unelected federal regulators for that of locally elected officials who know the needs and interests unique to their communities, and leaving consumers with no voice or vote in the matter.”

Governors and state legislatures raised concerns about the wireless order in a letter posted Wednesday in docket 17-79. “Shot clocks and the fee caps will preempt all 20 states that have passed small cell legislation in cooperation with industry and localities,” wrote National Governors Association CEO Scott Pattison and National Conference of State Legislatures Executive Director William Pound. “Not only will these 20 states be affected, but it also ties the hands of any other state that is looking to ensure inclusive and equitable access to high speed internet services to residents. … We oppose this effort to restrict state and local authority and stymie local innovation.

Tariffs and 5G

The Trump administration's Trade Act Section 301 tariffs are a big concern for 5G, Rosenworcel said in a news conference after the meeting.

“We’re going to have a 25 percent increase by the end of this year on essential antennas, routers, and circuit boards that are all necessary for 5G,” Rosenworcel said. Much of the discussion on the 5G item was on theoretical costs, she said. “We know with extraordinary clarity that by the end of this year we will have a 25 percent duty” on critical equipment, she said. “That’s not going to help us lead, it’s not going to help us be first,” she said. Republican commissioners need to speak out, she said. “I don’t think their silence, if they care about this issue, is acceptable.”

Pai said of the tariffs: “We’re focused on what the FCC can do to promote 5G deployment." Carr said he doesn’t closely monitor tariffs: “I defer to the international trade experts.” O’Rielly said he was very engaged on trade policy as a Senate staffer but also doesn’t spend a lot of time now on trade issues. To the extent the tariffs are being used to address trade deficits and unfair practices, “that’s incredibly valuable,” he said. CTA Senior Vice President Michael Petricone said the 5G order is helpful to deployment, but tariffs aren’t. “Tariff-driven cost increases are a tax on 5G that will increase costs and dramatically slow infrastructure deployment,” he said. “Increasing U.S. equipment costs actually helps China in an area where the U.S. should be dominating.”

Other Votes

The ESIM rules harmonization item approved 4-0 (see here) didn't differ substantially from the draft, International Bureau Chief Tom Sullivan said.

Satellite Division attorney Cindy Spiers said the need for rules consolidation is because the regulations for ESIMs developed over the course of years in separate but overlapping proceedings. “A fresh look at our rules is warranted because new capabilities have allowed the development of more spectrally efficient, ultra-small terminals that can provide broadband communications to support voice, video and high-speed data,” Rosenworcel said. Carr said deploying broadband in remote areas like the Arizona desert or above the Arctic circle requires "a modern-day version of Duck Tape and bailing wire," and the flexibility given to satellite operators by the order should make serving those areas a little easier. The item wasn't released Wednesday.

Axing Form 325 is "innocuous but important" as part of broader media modernization moves, O'Rielly said. The order was approved 4-0; it wasn't released.

O'Rielly hopes the agency will move quickly on "eight or so" other media modernization items that have been briefed and then turn its attention to yet others. Asked about the next media modernization priorities, including whether the agency would look at the retransmission consent rules, Pai demurred. "We're always open to suggestions" as the FCC tries to ensure its rules reflect the modern market, he said. The American Cable Association said eliminating 325 was "long overdue."

The agency on Tuesday released the Further NPRM (see here) on how local franchise authorities should treat cable "in-kind" contributions that was approved before Wednesday's meeting (see 1809250017).

Robocall Enforcement

Commissioners also approved levying a combined $119.5 million in fines against two makers of spoofed marketing calls (see here and here).

Rosenworcel also criticized the agency for what she said was too reactive an approach to robocall problems. "It's crazy to think these individual actions are going to do the trick to staunch the flow," she said. "We are trying to empty the ocean with a teaspoon.” O'Rielly dissented in part on the $82 million enforcement action against North Carolina's Wilmington Insurance Quotes and owner Philip Roesel, arguing Roesel caused harm with his millions of caller-ID spoofing calls, but there's no proof of intent to cause harm.

Roesel and his companies Wilmington and Best Insurance Contracts made more than 21 million robocalls in 2016 and 2017 selling health insurance, the agency said. It said Roesel requested the case be designated for hearing, but there was no reason for doing so. It said the $37.5 million fine against Affordable Enterprises of Arizona stemmed from 2.3 million caller ID spoofing telemarketing calls to Arizonans during 2016 and 2017 to sell home improvement and remodeling services. Roesel and Affordable Enterprises didn't comment.

Rosenworcel said the FCC needs a policy statement of its goals and efforts to reduce robocalls and to set deadlines. She said the agency should follow Canada's lead and implement the Secure Telephone Identify Revisited call authentication protocol combined with the Signature-based Handling of Asserted Information Using toKENs framework. She said the FCC should revive the Robocall Strike Force and hold field hearings. Pai said enforcement alone won't stop robocalls, but penalties "must be a component of any effective strategy." He also said the agency is watching private industry efforts to set up governance of a call authentication system to see if FCC action is needed.

Other 4-0 votes were on direct 911 dialing and auctioning toll-free numbers: (see 1809260047).

Meeting Notebook

Concerns within the powerful Interdepartment Radio Advisory Committee over sensing in the 3.5 GHz citizens broadband radio service band (see 1809240059) aren't expected to slow FCC work on final rules for the band, O’Rielly said. The timing is up to Pai, but the FCC is getting “really close” to making decisions, O’Rielly said. “None of the debates that I’ve heard so far throw me or suggest that we’re not sufficiently ready to move forward in the near future.” Work on environmental sensing “runs parallel” to the FCC’s focus on priority access licenses in the band, he said. “The rollout of 3.5 has already been slow,” Rosenworcel said. “We have a serious deficit of mid-band spectrum in the United States. … We’re stuck in some kind of bureaucratic quagmire I do not understand. We should have done this a long time ago.”

Pai indicated he plans to address a White House 5G summit scheduled for Friday (see 1809210052). “Overall, we’re just focused on making sure that the United States maintains and extends its leadership in 5G,” Pai said in a news conference. “I’m going to be discussing some of the FCC’s initiatives both with respect to spectrum and infrastructure.” The FCC is always working with its “federal partners” on spectrum and other issues, he said. “We have a close working relationship with NTIA,” he said. Discussions continue with other agencies on “spectrum that could be usable for 5G,” he said. “That’s a cooperative process that is always ongoing.” The FCC is also working with other agencies on infrastructure, he said. “All the spectrum in the world won’t matter if you don’t have that infrastructure.” Rosenworcel confirmed she hadn’t been invited to the event: “I’m willing to sit down with anyone, anywhere, no matter what side of the aisle.”

The meeting included a staff overview of the Connect America Fund Phase II auction, which was completed in August (see 1808280035). Winning bidders -- wireless ISPs, electric co-ops, cable operators, telcos and one satellite company (ViaSat) -- committed to provide fixed broadband and voice services to 713,176 homes and small businesses, 99.75 percent at 25/3 Mbps or faster data speeds, said a presentation of the Rural Broadband Auctions Task Force. The 103 winners are scheduled to receive $1.49 billion in cumulative CAF II support over 10 years.

An FCC Lifeline proposal to ban resellers is "dangerous" and isn't "dead" despite the lack of support, said ex-Commissioner Michael Copps at the outset of a small rally outside headquarters to protest the plan, as commissioners' meeting began. About 70 percent of the program's existing low-income subscribers would be excluded under the ban, he said, calling the administration "hell-bent on deconstructing the administrative state." Asked after the meeting about an update, Pai said the agency is "actively studying the record." The rally was held to "lift up the voices of the people who are going to be impacted by the FCC's proposals to gut the Lifeline program," Free Press Senior Policy Counsel Carmen Scurato told us beforehand. "I think it's going to be difficult to change their mind," Copps told us. "They seem to be deaf to all the legitimate concerns" about how the proposals will affect the "poor" and "vulnerable," said ex-Commissioner Gloria Tristani, who was also to speak at the rally: "They have absolutely no support in the record" for cutting off resellers. She's hopeful that opponents can force the FCC plan to "stall," and that the November midterm election could change the political dynamics. Tristani and Scurato, both born in Puerto Rico, cited concern about the potential impact of a Lifeline reseller ban on their native island. "It's personal," Scurato said. At an Ohio event, ex-Commissioner Mignon Clyburn voiced concern about "strangling" Lifeline through the proposed reseller ban (see 1809260031).