Supreme Court Order Ends Legal Challenge to FCC's Wireless Infrastructure Orders

On June 28, the U.S. Supreme Court denied certiorari in City of Portland v. FCC. Thus, the Court left undisturbed the August 2020 decision by the Ninth Circuit Court of Appeals that upheld most of the Commission's 2018 Small Cell Order, Moratoria Order, and One Touch Make-Ready Order. The Small Cell and Moratoria Orders defined limits on local governments' permitting authority regarding wireless infrastructure siting for small cells. And the OTMR Order established limits on local governments' discretion regarding pole attachments involving wireless networks. Those orders effectively removed local regulatory obstacles to deploying advanced wireless networks, including 5G networks.  

The Supreme Court's order is important because it leaves standing important circuit court precedent recognizing the preemptive authority of the FCC prohibit certain actions by state and local governments that effectively prohibit the offering of wireless communications services. That authority comes from the 1996 Telecommunications Act and the Constitution's Commerce Clause. The Court's order also leaves undisturbed the Ninth Circuit's rejection of Tenth Amendment-related anti-commandeering challenges to the Commission's rules regarding permitting fees, shot clocks for decisionmaking on permit applications, and moratoria on reviewing permit applications. The Ninth Circuit concluded (rightly) that the Commission's orders did not require state or local officials to take action to implement any federal regulatory scheme, but instead they secured a federal right to place and modify cell sites subject only to certain federal constraints. 

The Ninth Circuit's decision in City of Portland v. FCC was discussed in more detail in my September 2020 blog post. Free State Foundation President Randolph May and I also discuss the Ninth Circuit's decision as well as the Small Celland Moratoria Orders in our June 2021 Perspectives from FSF Scholars paper, "Wireless Infrastructure Reforms Rest on Solid Constitutional Foundations: Congress Should Preempt Local Obstacles to 5G Deployment." 

A Nationwide "One-Touch Make-Ready" Policy Would Spur Broadband Investment

On January 25, 2018, Corning Incorporated filed a report with the FCC titled “Assessing the Impact of Removing Regulatory Barriers on Next Generation Wireless and Wireline Broadband Infrastructure Investment: Annex 1, Model Sensitivities.” This report, prepared by CMA Strategy Consulting and supported by Corning, finds that adoption of a nationwide “one-touch make-ready” (OTMR) policy would create an additional $12.6 billion in capital expenditures invested by fiber providers and an additional $8.8 billion in capital expenditures invested by 5G wireless providers.

In the FCC’s Notice of Proposed Rulemaking for “accelerating wireline broadband deployment by removing barriers to infrastructure investment,” the Commission proposed an OTMR policy, which ensures that attachment poles are prepared for the installation of new broadband infrastructure. In many municipalities, when a provider wishes to attach equipment to a pole, providers currently attached to that pole must approve the plans and hire contractors to carry out the work of moving existing attachments to make room for the new ones. The current process creates unnecessary costs among multiple providers and multiple contractors. With an OTMR policy, a single, pre-approved contractor is able to perform all of the necessary attachments, significantly reducing the costs of broadband deployment.

The CMA Strategy Consulting report analyzes the potential impacts of a nationwide OTMR policy on the deployments of fiber-to-the-premise (FTTP) and 5G wireless broadband. A nationwide OTMR policy would result in an additional 8.3 million premises passed by fiber providers, which corresponds to $12.6 billion in capital expenditures invested by fiber providers. It also would result in an additional 5.9 million premises passed by 5G wireless providers, which corresponds to $8.8 billion in capital expenditures invested by 5G wireless providers.

Importantly, twenty states and the District of Columbia are certified for “reverse preemption,” which means these states are not required to adopt FCC regulations regarding pole attachments, potentially limiting the positive impacts of an OTMR policy. However, if an OTMR policy is adopted and these states choose not to implement it, there still would be an additional 5.1 million premises passed by fiber, which corresponds to $7.7 billion in capital expenditures invested by fiber providers. And for 5G technology, there would be an additional 3.7 million premises passed, which corresponds to $5.4 billion in capital expenditures invested by 5G wireless providers.

The report also estimates the impact of higher-than-average municipality-imposed fees on nationwide 5G deployment if those above-average fees were to become the national average.

In many cases, the annual pole attachment fee for small cells, which are the infrastructure supporting deployment of 5G technology, is about $20 per pole. But some municipalities charge annual fees of $500 to $37,000 per pole. Applying a nationwide fee of $12,000 annually per pole would result in 28.2 million fewer premises passed by 5G technology, which corresponds to $37.9 billion in foregone network investment.

Some municipalities require application fees for pole attachments that are separate from the annual fees. These application fees range from $500 to $15,000 per pole. A nationwide application fee of $500 per pole would result in 7.9 million fewer premises passed by 5G technology, which corresponds to $11.6 billion in foregone network investment.

Lastly, while gross revenue fees are more common in the cable market, some municipalities have attempted to charge broadband providers fees of up to 5% of gross revenues for access to municipally owned rights-of-ways. If this were the national standard, there would be 9.4 million fewer premises passed by 5G technology, which corresponds to $13.6 billion in foregone network investment.

This report by CMA Strategy Consulting provides two very important takeaways. First, a nationwide OTMR policy would lead to an additional $7.7 to $12.6 billion in capital expenditures invested by fiber providers and an additional $5.4 to $8.8 billion in capital expenditures invested by 5G wireless providers, depending on how many states choose to adopt the policy. Secondly, the report highlights an unfortunate trend by some municipalities to charge excessive fees that surely will hinder deployment of advanced broadband networks and services.

The CMA report demonstrates that a nationwide OTMR policy would further the rapid deployment of next-generation broadband services. By significantly lowering the costs of deployment, a nationwide OTMR policy would create more competition, investment, and innovation, all benefitting America’s broadband consumers.