Court Adopts Pro-Competition, Pro-Innovation Standard on Cell Siting

On July 14, the U.S. Court of Appeals for the Third Circuit issued its decision in Cellco Partnership v. White Deer Township Zoning Hearing Board. The court held that the Zoning Board's denial of Verizon's application to build a cell tower had "the effect of prohibiting the provision of personal wireless services" contrary to the Telecommunications Act of 1996. The Third Circuit's decision is significant because the court applied a pro-competition and pro-innovation interpretation of the "effective prohibition" requirement that the FCC made in a 2018 order. 

At issue in the case was a local zoning board's decision that denied Verizon's application for a zoning variance for purposes of constructing a cell tower. Verizon alleged that the denial of its application was contrary to Section 332(c)(7)(B)(i)(II) of the Telecommunications Act, which states that a local government's actions "shall not prohibit or have the effect of prohibiting the provision of personal wireless services." Verizon prevailed at the District Court, and the zoning board appealed.

 

The Third Circuit concluded that the local zoning board's decision was unlawful under the court's pre-existing APT Pittsburg test for claims that a local government's action violated the "effective prohibition" requirement. Under the APT Pittsburg test: "First, the provider must prove there is a significant gap in wireless service and, second, the provider must show it is filling that gap in the least intrusive manner." 

 

But that did not end the court's analysis. The Third Circuit observed: 

In a declaratory ruling, the Federal Communications Commission (FCC) criticized the APT Pittsburgh test and others like it for being too narrowly focused on coverage gaps and reflecting "an outdated view of the marketplace." Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Inv., 33 FCC Rcd. 9088, 9106-07 [paragraph 40] (2018). Instead, it interpreted the statute to prohibit government action that "materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment." Id. at 9102 [paragraph 35].

The court expressly adopted the FCC's "materially inhibit" standard, concluding that the agency's interpretation is entitled to Chevron deference. In doing so, court noted that the FCC has applied the "materially inhibit" standard to Section 253(a) since its 1997 California Payphone Association Order. Section 253(a) applies to effective prohibitions of "telecommunications services." Based on the canon of statutory construction that identical words in neighboring provisions of the same statute should have the same meaning, the court determined that the "materially inhibit" standard also should apply to the "effect of prohibiting" language found in Section 332(c)(7)(B)(i)(II). 

 

Moreover, upon reviewing the FCC's 2018 order and various court decisions that the order referred to, the Third Circuit derived a few key points: (1) "a prohibition does not need to be complete or 'insurmountable' to run afoul of' § 332"; (2) "local government action which either imposes unreasonable fees or requires a provider to accept unreasonable costs materially inhibits wireless services"; and (3) the "materially inhibit" standard requires us to consider the totality of the circumstances" – meaning that "[a] legal requirement that imposes a reasonable cost on one tower in one jurisdiction may constitute an effective prohibition when aggregated across many towers, or many wireless facilities, in several jurisdictions." 

 

The Third Circuit also recognized the implications of the FCC's "materially inhibit" for wireless competition policy: 

The "materially inhibit" standard is more consistent than the APT Pittsburgh test with the TCA's goals of "promoting competition, securing higher quality services for American telecommunications consumers and encouraging the rapid deployment of new telecommunications technologies." 33 FCC Rcd. at 9105 (quoting Preamble to the Telecommunications Act of 1996, Pub. Law No. 104-104, § 202, 110 Stat. 56 (1996)) (ellipses and brackets omitted). Coverage-gap-based tests are "incompatible with a world where the vast majority of new wireless builds are going to be designed to add network capacity and take advantage of new technologies, rather than plug gaps in network coverage." Id. at 9107-08 (quotation marks and citation omitted). 

Additionally, the Third Circuit acknowledged that the FCC's "materially inhibit" standard constitutes an improvement over the court's pre-existing test for claims that a local government action constitutes an "effective prohibition" on wireless services: 

This case reveals the inadequacy of the APT Pittsburgh test. The Zoning Board plausibly argued that requiring Verizon to remove the property's existing structures or to purchase the property might be less intrusive on the values that the township's set-back requirements sought to serve. But it would be unreasonable for the Zoning Board to require such extreme measures. The APT Pittsburgh test does not clarify how much a local government can reasonably require a provider do to avoid intruding. We think that the "materially inhibit" better answers this question.

The Third Circuit also set forth the implications of the FCC's "materially inhibit" standard for network upgrades to next-generation technologies: 

In light of our decision to adopt the "materially inhibit" standard, not only does "insufficiency in coverage" ordinarily entitle a provider to a variance but so does insufficiency in network capacity, 5G services, or new technology. In the TCA, Congress recognized that "[t]he telecommunications interests of constitutions are . . . statewide, national and international." 33 FCC Rcd. at 9110. Local zoning boards, like White Deer Zoning Board, are prohibited from preventing providers from meeting those broader interests.

The decision in Cellco Partnership v. White Deer Zoning Hearing Board constitutes binding precedent in the Third Circuit. And its reasoning ought to be persuasive to courts in other jurisdictions that face legal challenges to local government denials of wireless infrastructure citing permits.  

 

For additional background on the FCC's 2018 order at issue in Cellco Partnership v. White Deer Zoning Hearing Board, see my September 2020 blog post "Court Decision Will Advance 5G Network Deployment" as well as a June 2022 Perspectives from FSF Scholars, co-authored with Andrew MagLoughlin, "The FCC Should Preserve and Expand Its Broadband Infrastructure Reforms." 

Opensignal Reports Reflect the Reality of Mobile Wireless Innovation and Competition

 On July 5, Opensignal released the latest iterations of its 5G Experience Report as well as its Mobile Network Experience Report. The reports were based on data for mid-March to mid-June 2023.

Opensignal's 5G Experience Report found that Verizon Wireless had the best upload speed of 18.5 Mbps, up nearly 15% from mid-September to mid-December 2022. It also awarded Verizon three "5G experiential awards" for gaming, voice app, and live video. According to the report, T-Mobile had the highest download speeds at 195.9 Mbps. Meanwhile, T-Mobile also had the highest 5G availability, with Opensignal finding that 5G-capable users were connected to 5G 57.9% of the time that those users were on T-Mobile's network.

Opensignal's Mobile Network Experience Report – which includes 4G LTE wireless networks – found that T-Mobile had the best download speeds at 97.1 Mbps, up 17.6 Mbps or 22.1% compared to the prior data collection period of mid-September to mid-December 2022. T-Mobile also had the highest upload speeds, at 11.7 Mbps. And the report found that AT&T had the best network service availability – with a score of 99.4% – based on proportion of time that wireless users have a network connection. 

 

Regardless of which provider came out on top in the categories considered by Opensignal, what is important for consumer welfare in the U.S. is that speed, experience performance, and coverage continue to increase rather than remain static. Also, the report reflects the prevalence of effective competition in the wireless broadband market. A decade ago, the FCC was sometimes reluctant – unjustifiably in the view of Free State Foundation President Randolph May and I – to recognize that the wireless services market was "effectively competitive." But the mobile wireless market in 2023 surely is effectively competitive. Aside from the three major nationwide providers, the report observes that US Cellular will be rolling out its mid-band 5G network across ten states. And the market presence of cable-hybrid mobile virtual network operators (cable MVNOs) Xfinity Mobile and Spectrum Mobile give consumers additional competitive choices. 

 

To promote future improvements in speed, experience performance, and coverage for 5G wireless networks, Congress should restore the FCC's authority to conduct competitive bid spectrum license auctions. More spectrum is needed to support commercial mobile wireless services, particularly mid-band spectrum. Congress should pass H.R. 3565, the Spectrum Auction Reauthorization Act of 2023. If it becomes law, H.R. 3565 would revive the Commission's spectrum license auction authority and it also would direct the NTIA to conduct feasibility studies for making spectrum in the 4 GHz and 7/8 GHz bands available for commercial use, either on a shared or exclusive basis. 

Ookla Insights: U.S. Leads World in 5G Availability

Ookla's report on global 5G speeds ranks United States 5G networks number one in the world for 5G availability, more than doubling the performance of networks in China, Canada, and almost the entire continent of Europe. This is an encouraging sign ahead of January 19th, the date when AT&T and Verizon will begin activating the high-capacity C-Band spectrum that should substantially boost U.S. 5G network speeds. But it also highlights the need to free more spectrum for 5G. 

Ookla defines 5G availability as the "percent of users on 5G-capable devices [who] spent the majority of their time on 5G," and the United States sits atop the world at 49.2%. This means that roughly half of all 5G device users in the U.S. had 5G connections during a majority of their time on wireless networks. China (20.1%), Canada (23.7%), Japan (7.6%), and the vast majority of European countries are far behind the U.S. on 5G availability, with only Netherlands (45.3%) and South Korea (43.8%) posting comparable availability above 40%.

The report also highlights that the U.S. lags behind other countries in median 5G speeds, but this is partly a function of spectrum policy and should be improved by fast-approaching carrier deployments of C-Band spectrum and other mid-band frequencies like the recently concluded 3.45 GHz auction. So far, U.S. 5G networks have largely relied on low-band spectrum for nationwide 5G deployment and high-band spectrum in certain dense urban settings. Mid-band spectrum, such as C-band spectrum and other nearby frequencies, has the combination of high-capacity and propagation over distances that leads to nationwide fast speeds.

Deployment of C-Band spectrum and other mid-band frequencies will also improve 5G speeds by densifying networks so a higher number of base stations each support fewer customers. The FCC should take additional actions to free mid-band spectrum for commercial use, such as setting a date for the 2.5 GHz auction and announcing auctions in additional bands, so U.S. 5G networks improve their speed ranking.

But the report also highlights that widespread 5G availability in the U.S. is in some ways more important than posting the fastest speeds. For example, Norway ranks second among countries for median 5G download speeds at 426.75 Mbps, but its availability is a mere 8.4%. This means 91.6% of Norwegians spend less than half their time on 5G when connected to wireless networks. This fact suggests that Norway's and other low-availability countries' top speed rankings are paper tigers – their 5G is fast but rarely used in real life. U.S. consumers are experiencing 5G far more often, and at high speeds, like the 160.41 Mbps median 5G speed Ookla measured in our nation's capital.

The United States' first place ranking for global 5G availability in Ookla's report is welcome news. The FCC should continue to act – especially by auctioning more mid-band spectrum – so the U.S. can also claim a top global ranking for speeds.