Newsom Vetoes Small Cell Bill, Fumbles His Explanation

California Governor Gavin Newsom made confusing remarks while explaining his Monday veto of SB 556, a bill for streamlining small cell deployment in California. Newsom claimed, in one breath, that SB 556 would have severely limited local government authority, but said in another it contradicted federal law – presumably the FCC’s Small Cell Order.

Newsom's remarks made little sense because SB 556 mirrors current federal policy. The FCC's Small Cell Order prevents intentional, costly delays to broadband deployment that prolong the digital divide while also preserving local authority for aesthetic and safety reviews. It bans local authorities from charging discriminatory siting fees and siting fees above objective reasonable costs, and it implements shot clocks for small cell collocation and siting on new structures.

My description of SB 556 sounds quite similar. It bans local authorities from charging discriminatory and unreasonable siting fees above a reasonable estimate of actual cost, and implements shot clocks for small cell siting. The only difference between the Small Cell Order and SB 556 is that the Order places a 60-day shot clock on small cell collocation and 90-day shot clock for siting on new structures, while SB 556 has a 45-day shot clock for both, unless there are more than 300 poles involved, at which point the shot clock extends to 60 days.

But this faster timeline in SB 556 does not conflict with federal law, as Newsom suggests. The FCC derives its authority to implement shot clocks from 47 U.S.C. § 332 (c)(7). Section 332(c)(7)(A) expressly preserves local authority for siting decisions, subject to limitations found in the next section. One of these limitations, found in Section 332(c)(7)(B)(ii), is the requirement that local governments act on wireless siting applications "within a reasonable period of time after the request is duly filed with such government or instrumentality, taking into account the nature and scope of such request."

The Small Cell Order establishes that shot clocks of 60 days for collocation and 90 days for new structure siting are presumptively reasonable for meeting the "within a reasonable period of time" requirement in Section 332(c)(7)(B)(ii). Given that the purpose of shot clocks is preventing delay, state laws with faster shot clocks are presumptively reasonable too. Indeed, nothing in the Small Cell Order prohibits states from requiring cell siting permit decisions faster than the FCC's shot clocks. How could timelier decisions by local governments regarding cell siting pose a conflict with federal policy favoring timelier decisions?

Which brings us back to Governor Newsom's confusing remarks. I've established that SB 556 comports, not conflicts, with federal law. Newsom's other stated reason for vetoing SB 556 is that it's too restrictive on local authority. We can infer, then, that Newsom also thinks the Small Cell Order is too restrictive on local authority since it is barely different from SB 556.

Maybe his remarks aren't so confusing after all. Newsom could be hoping that a future FCC might repeal the Small Cell Order, and without SB 556 in place, California localities could once again use dilatory tactics and punitive fees to prevent or slow broadband deployment. Commissioner Carr wrote in the Bay Area outlet Mercury News about how San Jose's government did just this.

Local government policies that slow or stop broadband deployment are a serious contributor to the digital divide. The Small Cell Order discusses this phenomenon. Highly populated municipalities have an incentive to charge above-cost fees for siting and right-of-way access because broadband providers make the most money from densely populated areas. Absent regulation preventing these fees, incumbent broadband providers will likely pay them because they need to access the densest swaths of customers. But such excessive fees are a deterrent to new entrants. And in all cases, the fees drain broadband providers' funds for capital investment, slowing next generation broadband rollouts in smaller metros and especially rural areas, which are tougher to serve due to lower density. Meanwhile, smaller metros and rural areas don't have the incentive to charge high fees because they need more broadband. When fees are set to cover reasonable costs and no more, providers have more money to deploy better broadband to everyone at a faster pace.

Deployment delays also cause other economic harms. Boston Consulting Group's February 2021 report estimates that 5G infrastructure buildout will directly contribute $400-500 billion to U.S. GDP and create up to 1 million jobs over the coming decade. But it also estimates nationwide losses of $25 billion in potential benefits for every 6-month stall in 5G deployment. SB 556 would have usefully complemented the Small Cell Order, helping to ensure our country enjoys the full economic benefits of 5G.

Government Newsom's veto of SB 556 is disappointing, especially given that 32 other states have passed similar measures in bipartisan efforts, Pennsylvania being the most recent. This is now the second time a California governor has vetoed sound small cell legislation: former Governor Jerry Brown also vetoed a bill supported by Free State Foundation scholars. Hopefully the third time will be the charm.