Delaware Privacy Law Makes a Dozen – or a Baker's Dozen?

First State Governor John Carney signed the Delaware Personal Data Privacy Act (the DPDPA) into law on September 11, 2023.

For those keeping score, Delaware increases the number of states to have passed a comprehensive data privacy law either to twelve – "Delaware Becomes Twelfth State to Enact Comprehensive Privacy Law" – or thirteen – "The 'First State' Officially Becomes the Thirteenth State with a Comprehensive Data Privacy Law" – depending on how one defines "comprehensive."

And for those concerned with the confusion and cost caused by the growing patchwork of inconsistent state laws, the fact that commenters cannot agree even on what the current total is underscores the extent of the problem.

In "More States Compound the Dreaded Privacy 'Patchwork' Problem," a July 2023 Perspectives from FSF Scholars, I noted that the DPDPA cleared the Delaware legislature on June 30, 2023. I also made the case that:

[T]he … "patchwork" of laws has become so complicated that interested observers can no longer agree even on the precise number of comprehensive data privacy statutes that have been passed. That fact alone speaks volumes about how difficult it has become for both companies and consumers to make sense of the ever-evolving regulatory landscape – and how important it is for Congress to establish a uniform national data privacy framework that preempts state laws.

For what it's worth, I am one of those keeping score – and I do include the Florida Digital Bill of Rights (FDBR) for a running total of thirteen. While many provisions of the FDBR apply only to companies with at least $1 billion in annual gross revenues, its requirements regarding the handling of "sensitive personal data" apply to all for-profit businesses. As such, "it undeniably represents yet another item on the growing list of data privacy statutes with which businesses must grapple."

Senate Bill Would Improve Permitting for Broadband Projects on Federal Land

On September 21, Senators John Barrasso and Kyrsten Sinema introduced the Closing Long Overdue Streamlining Encumbrances to Help Expeditiously Generate Approved Permits (CLOSE THE GAP) Act. The purpose of the bill is to make permitting processing faster and more efficient for broadband infrastructure projects on federal lands.

Among other things, the CLOSE THE GAP Act would require federal land management agencies – namely, National Park Service, Bureau of Land Management, Bureau of Reclamation, U.S. Fish and Wildlife Service, Bureau of Indian Affairs, and Forest Service  – to adopt new rules for streamlining the process for considering and approving broadband project applications on federal lands. Within a year of the Act becoming law, the Secretary of the Interior would be required to adopt regulations that, the maximum practical extent, require federal land management agency permitting processes be "uniform and standardized." Also, the regulations must require that applications to locate or modify broadband facilities must be granted on a "competitively neutral, technologically neutral, and nondiscriminatory basis." And agency cost recovery fees for locating or modifying facilities must be cost-based. 

 

Additionally, the CLOSE THE GAP Act would make it easier to monitor the status of broadband infrastructure projects by making those projects trackable under the Permitting Dashboard that was established pursuant to the Fixing America's Surface Transportation (FAST) Act of 2015. The Permitting Dashboard is "an online tool for Federal agencies, project developers, and interested members of the public to track" federal environmental reviews and authorization processes for "large or complex infrastructure projects." Additionally, the bill would establish online portals for submissions of Standard Form-299 Applications (SF-299s), which are standard forms required by federal land management agencies in applying for access to rights-of-way, leases, licenses, or permits involving federal lands. 

 

Furthermore, the CLOSE THE GAP Act includes exemptions from the National Environmental Policy Act for broadband infrastructure on federal lands that previously received permit approval as well as exemptions from NEPA and the NHPA for collocations of radio towers on existing towers as well as for removal or replacement of radios on existing towers. These exemptions and others included in the bill would reduce likely unnecessary permitting expenses and delays in building out broadband infrastructure.

 

The permitting process reforms included in the CLOSE THE GAP Act are particularly important in western states like Wyoming and Arizona, where large geographic areas are designated as federal lands. In the past few years, Congress has dedicated over $100 billion to expanding access to broadband services, including about $65 billion in the Infrastructure Investment and Jobs Act of 2021. In order to help ensure that those substantial sums are spent timely and efficiently to bring broadband access to unserved and underserved areas, improved permitting processes should be a priority of Congress. Senators Barrasso and Sinema are to be applauded for introducing the bill. The Senate should give the legislation timely consideration. 

 

The House of Representatives has pending legislation that would streamline permitting processes for broadband deployments on federal lands. For more, see my FSF Blog post from April 23 of this year, "Subcommittee Looks at Legislation Promoting Broadband Infrastructure Buildout," and my May 2023 post, "House Committee Passes Reforms for Broadband Infrastructure Siting on Federal Property." 

 

(Note: A Senate bill number for the CLOSE THE GAP Act has yet been provided. This post will be updated with the number and link to the filed bill when it is made available.) 

PRESS RELEASE: FCC Proposing to Reimpose Net Neutrality Regulations Is Foolhardy

Free State Foundation Randolph May issued the following statement regarding FCC Chairwoman Rosenworcel's proposal to reimpose net neutrality regulations: 

It is foolhardy for the FCC to embark on yet another attempt to impose public utility-like regulations on Internet service providers. As a matter of policy, it's wrong to go down this road again when there's no evidence of a problem justifying new burdensome regulations. And as a matter of law, it's a big blunder because it's very likely the Supreme Court will determine that any FCC action reimposing net neutrality regulations is a "major question" and Congress has not clearly authorized the agency to exercise the power it claims. It would make a lot more sense, and benefit consumers, if the Commission would just devote its resources to important matters within its authority, such as ensuring that the multi-billions of dollars in subsidies it's responsible for disbursing are used effectively and efficiently, without fraud or abuse, to promote broadband deployment and adoption?

 

And don't believe for an FCC minute that the Chairwoman Rosenworcel and her Democrat majority colleagues intend to foreclose rate regulation of ISPs' offerings. These actions may not be called "rate regulation" but rather prohibitions on usage-based pricing or free data applications, or some such. The effect will be rate regulation.

Major Questions Doctrine Is a Major Obstacle to Net Neutrality Regulation

On September 20, attorneys Donald B. Verrilli, Jr. and Ian Heath Gershengorn published a white paper titled "Title II 'Net Neutrality' Broadband Rules Would Breach Major Questions Doctrine." The co-authors served respectively as former Solicitor General and Acting Solicitor General in the Obama Administration. The paper's co-authors are right in identifying the ascendant major questions doctrine as a major legal impediment to any future attempt by the FCC to re-impose Title II public utility-like regulations on broadband Internet access services. According to Messrs. Verrilli and Gershengorn:

The Supreme Court will surely consider the question whether to classify broadband as a Title II telecommunications service subject to common carrier regulation to be a “major question”—that is, one involving a matter of major economic and political significance… The statutory text on which the Commission proposes to hang its hat lacks the clear statement of authority that the Supreme Court demands. Nothing in Title II of the Communications Act itself or in any other statute gives the Commission the clear and unambiguous authority to classify broadband as a Title II telecommunications service subject to common carrier regulation, and the Commission cannot reasonably conclude otherwise. 

The paper's co-authors trace the Supreme Court's recent major questions decisions – including the June 2023 decision in Biden v. Nebraska and helpfully lays out the factors that the court uses to assess whether Congress provides "clear congressional authorization for agency action" on a matter of major economic and political significance. They provide straightforward analysis of relevant provisions in the Communications Act of 1934 as well as the Telecommunications Act of 1996, concluding that clear congressional authorization is lacking for prospective Title II regulation of broadband by the FCC. Additionally, the co-authors explain why the Supreme Court's 2005 decision in NCTA v. Brand X Services – which upheld the FCC's decision to classify broadband Internet services as a Title I "information service" and not as a Title II "telecommunications service" does not justify Title II reclassification but forecloses it. 

 

According to the paper's co-authors, with Title II amounting to a legal dead end for net neutrality regulation, other avenues should be preferred: 

Congress should enact legislation to resolve this issue once and for all. Absent that, the Commission could use its finite resources to pursue more legally defensible policy initiatives, such as adopting light-touch net neutrality rules under Section 706 of the Telecommunications Act, thereby avoiding Title II reclassification that would be inevitably doomed under the major questions doctrine.

The legal reasoning of Messrs. Verrilli and Gershengorn is persuasive that the FCC lacks statutory authority to impose Title II regulation on broadband Internet access services. And their paper is worthwhile reading. Both Congress and the FCC ought to carefully consider the points made in their paper. 

 

Aside from serious legal roadblocks to imposing Title II public utility-like regulation on broadband Internet services Free State Foundation President addressed policy reasons why such regulation would be a serious mistake in his Perspectives from FSF Scholars – originally published on September 21 as an op-ed in the Washington Examiner – "Reimposing Burdensome Net Neutrality Mandates Will Harm Consumers." And for additional legal background, see FSF President May's July 2022 Perspectives from FSF Scholars, "A Major Ruling on Major Questions."

USF Surcharge Rate Spikes to 34.5%

On September 13, the FCC's Office of Managing Director announced that the Universal Service Fund (USF) contribution factor for the fourth quarter of 2023 will be 34.5%. This appears to be a record high and a matter of concern for voice consumer welfare and for the future financial integrity of the USF. Absent any unlikely intervention by the FCC's Commissioners, the proposed rate will soon kick in.

The 34.5% figure may not be as high as the prediction of a 36.2% rate for the quarter that was recently was made by an analyst – and discussed in Free State Foundation President Randolph May's September 6 blog post, "How Do You Spell 'Unsustainable'? U-S-F!" But 34.5% is unreasonably high and burdensome on voice consumers. The recent rate increase provides another reminder that a future financial derailment of USF remains an alarming realistic concern that Congress should address. 

 

As briefly noted in my blog post from March 15 of this year, "Consumers Still Burdened as FCC Sets USF Surcharge Rate at 29%" – the USF contribution factor is used to determine the line-item surcharge on voice consumers' monthly bills. The surcharges effectively are taxes on voice consumers to pay for USF programs. 

 

On August 25, the Free State Foundation submitted comments to the Universal Service Working Group lead by Senators Luján and Thune. In those comments, we recommended that Congress replace the current USF system with a broadband-oriented regime that is more focused on supporting low-income Americans and more politically accountable. 

SALE Act Would Put Valuable 2.5 GHz Band Spectrum Licenses into Use for 5G

On September 14, Sen. John Kennedy introduced the 5G Spectrum Authority Licensing Enforcement (SALE) Act -- S. 2787. The short and simple bill, if passed, would grant the FCC a 90-day window of authority to process and grant licenses that were won through the Commission's competitive bidding auction for the 2.5 GHz spectrum band.

In March of this year, the FCC's statutory authority to conduct competitive bidding spectrum license auctions lapsed. But what about the Commission's authority to issue licenses that were already won at previously completed auctions? The Commission concluded its 2.5 GHz band auction back in August 2022. It was announced that over 7,800 county-sized licenses were won by 63 bidders. T-Mobile won over 7,100 such licenses and by late September 2022, T-Mobile submitted long-form applications and paid $304 million to the Commission for those licenses. Chairwomen Jessica Rosenworcel reportedly has taken the position that the agency lacks even the authority to issue licenses won – and paid for – in previously completed auctions. As explained in my July 2023 blog post, "FCC's Unreasonable Delay in Withholding 2.5 GHz Band Spectrum Licenses," there is strong basis for disagreement with Chairwoman Rosenworcel's apparent legal conclusion.

The SALE Act would break the impasse and prompt the FCC to finally issue the 2.5 GHz band spectrum licenses to the rightful recipients. In his press release announcing the introduction of the SALE Act, Sen. Kennedy rightly acknowledges that wireless communications are important to his home state of Louisiana, and particularly to rural areas. The same holds true for the rest of the states and their rural areas. Mid-band spectrum is critically important for 5G wireless services. And valuable spectrum licenses that were fairly won at auction and paid for ought to finally be delivered to the auction winners and put into commercial use to benefit Americans.  Sen. Kennedy deserves credit for introducing the SALE Act. Hopefully, the Senate will quickly take up and pass the bill and the House of Representatives will follow suit. 

 

For more on this topic, see Senior Fellow Andrew Long's blog post July 2023 blog post, "Congress Should Reinstate the FCC's Spectrum Auction Authority," as well as his August 2023 blog post, "Commissioner Carr to Congress: Renew FCC's Auction Authority."

 

(Note: This post has been updated to include the Senate bill number and link for the SALE Act, S. 2787.) 

House Commerce Subcommittee to Hold Hearing on Video Marketplace

The House Energy and Commerce Committee's Subcommittee on Communications and Technology will hold a hearing tomorrow at 2 pm ET entitled "Lights, Camera, Subscriptions: State of the Video Marketplace." Promisingly, this hearing will focus, at least in part, on outdated regulations that inappropriately impede traditional video programming distributors' ability to participate in an increasingly competitive marketplace.

When announcing the hearing, House Energy and Commerce Committee Chair Cathy McMorris Rodger (R-WA) and Communications and Technology Subcommittee Chair Bob Latta (R-OH) stated the following:

Over the last decade, the video marketplace has undergone a transformative shift as more media content moves online. The introduction of streaming services expanded the options for consumers to choose where, when, and what content they view. While there is an unprecedented amount of content, like movies, TV shows, and news, available, the rise of these services creates challenges for traditional media providers who continue to compete despite being saddled with regulations. We look forward to discussing the evolution of this market, the steps Congress can take to ensure outdated regulations do not hinder innovation and competition, as well as how to bring the traditional marketplace into the 21st century.

Scheduled witnesses include:

• FuboTV Inc. Board Member and CEO David Gandler (witness testimony)
• National Association of Broadcasters President and CEO Curtis LeGeyt (witness testimony)
• Consumer Reports Senior Policy Counsel and Manager of Special Projects Jonathan Schwantes (witness testimony)
• America's Communications Association – ACA Connects President and CEO Grant B. Spellmeyer (witness testimony)

In a recent post to the Free State Foundation's blog, I presented the latest evidence of longstanding subscriber trends – specifically, that traditional video programming distribution platforms, both facilities-based and virtual, continue to shed customers while countless streaming services add them.

Consequently, and as I argued in "With Pay-TV on the Wane, Legacy Regulations Should Follow," a July Perspectives from FSF Scholars, "consumers have available more than sufficient choices to compel a comprehensive change in course away from government intervention … and toward the exclusive reliance upon efficiently operating market forces."

Perhaps tomorrow's hearing will serve as a significant step in that direction.

USTelecom Reports Record-Breaking Investment Broadband by Providers in 2022

Capital expenditures by U.S. broadband providers surged to $102.4 billion in 2022, according to USTelecom's "2022 Broadband Capex Report." USTelecom's snapshot report was released on September 8 of this year. 

The $102.4 billion annual capex total is up from $86 billion in 2021 and $79.4 billion in 2020. According to USTelecom's 2022 report, U.S. broadband providers have invested over $2.1 trillion in network infrastructure since 1996. In past reports, USTelecom has pointed out that these estimates likely are conservative because they exclude annual investment by small U.S. broadband providers as well as U.S. satellite broadband providers.

Strong private investment in next-generation networks is an intended result of the FCC's free market-friendly broadband policy that has been in place since early 2018. In its Restoring Internet Freedom Order (2018), the Commission recognized that "increased broadband deployment and subscribership require investment, and the regulatory climate affects investment." In that order, the Commission found that "reinstating the information service classification for broadband Internet access service is more likely to encourage broadband investment and innovation" than subjecting broadband Internet access services to public utility regulation." 

 

Following the Senate's confirmation of Anna Gomez to be the fifth Commissioner on September 7, it is widely anticipated that the FCC will be revisiting the statutory classification of broadband Internet access services. But the success of the Commission's existing market-oriented policy in promoting investment – including $102.4 billion in capital investment in broadband by private market providers in 2022 – deserves front-and-center attention when the debate over broadband regulatory policy ramps up. 

How Do You Spell 'Unsustainable'? U-S-F!

According to a report in Communications Daily, the estimable analyst Billy Jack Gregg projects the "USF contribution factor" will likely increase to 36.2% during Q4 2023, making it the “highest quarterly contribution factor in the history of the USF.” Based on two decades of observation, I'd say you can take Mr. Gregg's projections to the bank. Or maybe more appropriately in this instance, prepare to make a bit larger withdrawal from your bank to pay your telephone bill. 

Mr. Gregg stated total revenue collected will also be about $362 million less than the previous quarter.

 

Let me repeat what most readers already know. Revenue collected from the "USF contribution factor" – "surcharge," or "tax" if you want to call a spade a spade – continues to decline as more and more people abandon the traditional telephone services on which the surcharges are assessed. So, the surcharge has increased from 5.6% in 2000 to 12.9% in 2010 to 27.1% in 2020 to the now projected 36.2% for the last quarter of 2023.

You get the picture.

 

The current Universal Service Fund subsidy regime is unsustainable, and it must be meaningfully reformed. This is not to say that there should not be subsidies to support universal service goals, including support for low-income persons and for high-cost areas that otherwise would not be served. It is to say the legacy universal service regime is broken – and clearly unsustainable.

 

It needs to be replaced with a broadband-centric regime that is economically efficient, effective, transparent, and politically accountable. For a roadmap regarding how to accomplish that objective, please see the Free State Foundation's extensive comments submitted on August 25 to Senators Luján and Thune and the Universal Service Working Group.

 

Satellite and Webcasting Royalty Payments at Issue in Copyrighted Music Case

On August 16, a lawsuit was filed for a case called SoundExchange, Inc. v. Sirius XM Radio Inc. Plaintiff SoundExchange's complaint alleges that Sirius XM underpaid royalties for public performance of copyrighted music recordings on its satellite digital audio radio service (SDARS). SoundExchange is a non-profit entity that collects digital performance royalties from statutory license users and distributes them to artists and copyright owners.  

Royalty rates are set by the Copyright Royalties Board (CRB). The CRB separately sets royalty fees for satellite radio and commercial webcasters under the statutory license. As explained in SoundExchange's complaint, regulations provide that "royalties for webcasting are calculated on a per-performance basis rather than as a percentage of gross revenues: the webcasting royalty is assessed for each transmission of a sound recording to a listener, while the SDARS royalty is assessed as a percentage of the revenues the service generates." 

SoundExchange alleges that Sirius XM improperly allocated excessive amounts of revenue to its webcasting service – which requires lower royalty payments – thereby reducing royalties payable for its satellite radio service. Additionally, SoundExchange alleges that an independent audit revealed Sirius XM underpaid royalties, and that regulations require that amount owed – as determined by the auditor – be paid. According to SoundExchange's complaint: "To date, Sirius XM already has unjustifiably withheld more than $150 million in royalties owed to artists and copyright owners under the SDARS statutory license."

The case is likely to be a one-off because Sirius XM is the only provider of SDARS and music webcasting services. But given that Sirius XM has approximately 34 million subscribers and generates significant public performance royalties – not to mention the $150 million in unpaid royalties figure alleged in the complaint – a legal resolution will be tremendously important for copyright owners. 

That said, copyrighted sound recordings are valuable property and it is the role of Congress -- and its delegated authorities at the Copyright Royalty Board -- to provide clear boundary rules defining the scope of exclusive rights and expectancy interests in copyrighted property. Clear rules are a necessary foundation for ensuring that copyright owners can maximize the value and returns for their labors and investment. If nothing else, the case may furnish occasion for more clearly specify for future purposes how revenues and royalties are allocated between SDARS and webcasting services. 

 

This blog post does not express a position on the correct prospective outcome in SoundExchange, Inc. v. Sirius XM Radio Inc. The case is only at its beginning in the U.S. District Court for the Eastern District of Virginia. Sirius XM has not yet filed any detailed pleadings in response to those SoundExchange allegations. Stay tuned. 

Video Subscriber Updates Underscore Ongoing Shift to Streaming

In a July 2023 Perspectives from FSF Scholars, I took aim at the core assumption underlying calls to expand the definition of a "Multichannel Video Programming Distributor" (MVPD) to include virtual substitutes streamed over the Internet (vMVPDs). Contrary to what proponents might have you believe, subscribers cutting the physical cord are not switching en masse to online alternatives. Instead, they're migrating primarily to streaming platforms like Netflix, Hulu, and Amazon Prime.

The latest video subscriber numbers provide further evidence that both facilities-based MVPDs (cable, Direct Broadcast Satellite (DBS), telco TV) and vMVPDs are weathering the impact of a seismic shift in consumer preferences away from the monolithic video "big bundle" to a self-curated collection of more targeted offerings.

Some key data points:

• According to the Leichtman Research Group (LRG), the top cable operators lost 925,532 subscribers during Q2. The two DBS providers, DIRECTV and DISH TV, combined shed nearly 600,000 customers. And Verizon FiOS saw its total drop by 70,000. Overall, LRG found that traditional MVPDs lost 1.61 million customers.
• Wells Fargo analyst Steven Cahall reported even higher traditional MVPD declines: 1.72 million customers, representing 7 percent of the total.
• Overall, LRG saw vMVPD subscriber totals decline in Q2 by 115,000 – despite an estimated 200,000 additional YouTube TV customers. (Note that not all vMVPDs release subscriber data to the public.)
• Steven Cahall, meanwhile, saw vMVPDs add just 8,000 subscribers in Q2.
• Netflix, on the other hand, added 1.17 million customers in the United States and Canada during Q2, for a total of 75.57 million.
• And Hulu added 300,000 subscribers in Q3, for a total of 44 million subscribers.

As I concluded in "With Pay-TV on the Wane, Legacy Regulations Should Follow," the appropriate response to these ongoing trends is to eliminate outdated rules, not expand them:

Put simply, the issue is not that the definition of an MVPD is not sufficiently broad, it's that pay-TV companies confront a marketplace that is dramatically changed…. To fully harness for consumers the benefit-generating engine that is competition, it is time for regulators (and regulations) to step aside and let the marketplace drive optimally efficient outcomes.

AT&T Launches 5G Fixed Wireless Access Service

On Tuesday, AT&T announced the introduction of AT&T Internet Air, its 5G fixed wireless access (FWA) home Internet service, in 16 markets including Los Angeles, Philadelphia, and Detroit. Previously offered only to existing digital subscriber line (DSL) customers in certain areas, the expanded offering of AT&T Internet Air represents yet another milestone in the rapid rise of FWA as a viable competitive alternative to traditional wireline high-speed home Internet access.

In "Fixed Wireless Access Is Boosting Rural Broadband and Consumer Choice," an April 2022 Perspectives from FSF Scholars, FSF Director of Policy Studies and Senior Fellow Seth L. Cooper touted not only FWA's ability "to connect several million Americans in rural and small markets," but also to compete with wireline providers for home Internet customers in more populated markets. This announcement that AT&T is targeting major cities with its FWA service, along with the rapid FWA subscriber gains of T-Mobile, Verizon, and U.S. Cellular, confirm both of those predictions.

Source: AT&T Blog

In a blog post earlier this month, Mr. Cooper highlighted second-quarter FWA subscriber numbers from T-Mobile (509,000 net additions, for a total of 3.7 million), Verizon (384,000 net additions, for a total of 2.3 million, and U.S. Cellular (over 100,000 total subscribers). Notably, these services did not exist prior to 2021.

According to the Leichtman Research Group, T-Mobile and Verizon combined have added over 800,000 FWA subscribers for 5 quarters in a row. In the second quarter of 2023 alone, they added almost 900,000 subscribers – compared to less than 10,000 new cable broadband subscribers and a loss of nearly 62,000 by the top wireline phone companies.

In Comments filed in the FCC's 2022 Communications Marketplace Report proceeding, Free State Foundation scholars argued that the Commission should:

[C]ease its exclusively piecemeal evaluation of broadband marketplace competition that continues to rely on "siloed" service definitions. Instead, it should evaluate competition with a broader "broadband market" definition that takes into account fiber, cable, mobile, FWA, and satellite platforms. This broader outlook would more accurately reflect market realities and be a better guide to formulating Commission policy.

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." 

Support Grows for Extending the Affordable Connectivity Program

The number of households participating in the Affordable Connectivity Program (ACP) has surpassed 20 million – up from over 17 million just three months ago. Fortunately, the chorus of voices urging Congress to replenish the ACP's dwindling coffers, which could run dry early next year, simultaneously grows louder.

The ACP provides eligible households with a one-time subsidy (up to $100) to purchase a connected device and as much as $30 per month ($75 on qualifying Tribal lands) to apply to a broadband service subscription. It was created by Congress in 2021, which appropriated $14.2 billion in a one-time lump sum.

In "FCC Votes to Increase Broadband Subsidy in High-Cost Areas," a recent post to the FSF Blog, I pointed out that the Commission's 4-0 vote at the August Open Commission Meeting to increase the monthly stipend in certain expensive-to-serve areas to as high as $75 will accelerate the date upon which the ACP doles out its last dollar. Likewise, the roughly 3 million additional households that have enrolled in the ACP since May place greater financial stress on the finite funds available.

Calls to extend the ACP's lifespan through additional appropriations have come from multiple directions:

• In a letter last week, 45 members of Congress – 29 Democrats and 16 Republicans – urged House and Senate leadership "to include full funding for the [ACP] in the upcoming government appropriations bill to ensure that households can access the broadband they desperately need" – and concluded that "[f]ailure to extend funding would not only leave millions of families without access to the internet but also hinder our long-term competitiveness as a nation."
• In an August 1, 2023, letter to House Speaker Kevin McCarthy, Office of Management and Budget Director Shalanda D. Young wrote that "the Administration … believes that the Congress must act quickly to ensure continued funding for programs that lower costs for families, such as expanded access to affordable, high-quality child care and high-speed internet."
• In a June 2023 blog post, I highlighted a letter from eight Republican Senators encouraging President Biden to "repurpose a portion of unobligated emergency COVID relief funds to ensure the continuity of funding for [the ACP], while we explore alternative sustainable funding mechanisms and updated parameters."
• At a June oversight hearing held by the House Energy and Commerce Committee's Communications and Technology Subcommittee, FCC Chairwoman Jessica Rosenworcel reportedly described the ACP as "the best program we have ever developed to [address affordability], and we've got to make sure it continues…. If Congress were to fail to appropriate new funds for the Affordable Connectivity Program, we would … cut families off." And in the August 14, 2023, press release marking the 20 million+ ACP enrollment milestone, she stated "[w]e've made too much progress in helping families get online to turn back now."

Free State Foundation President Randolph May also has vocalized his support for the ACP on several occasions (here, here, and here), arguing that Congress should extend it but also "revise the program's eligibility requirements to target its limited resources to those most in need."

Early Activation of Extra Licensed C-band Spectrum Will Enhance 5G Services and Competition

On August 14, Verizon announced that it has gained access to all of the C-band spectrum that it acquired through the FCC's spectrum license auction in March 2021. And today, August 16, it is reported that AT&T has doubled its available licensed C-band spectrum for 5G deployment. Apparently, the C-band spectrum for both providers was cleared ahead of schedule. Consumers will benefit from the network coverage and performance improvements enabled by the activation of valuable C-band (3.7 GHz) spectrum. And this development should enhance the overall competitiveness of the wireless market.

In an October 2022 blog post, I noted findings by OpenSignal that activation of C-band spectrum was leading to improved speeds for Verizon's and AT&T's respective 5G network services. And now with additional C-band spectrum available for use, Verizon and AT&T will significantly boost the speeds and capacity of their 5G service offerings. According to a Verizon press release:

Verizon won C-Band licenses for between 140-200 MHz in all available markets, and began deploying 60 MHz in the first 46 areas in 2022. As the additional spectrum has been cleared by satellite companies outside of the first 46 areas, Verizon has been able to deploy 5G Ultra Wideband using a portion of its licensed bandwidth in many more markets coast to coast. Now, with final clearance from the satellite incumbents, Verizon will be able to use the entirety of its licensed C-band spectrum, an average of 161 MHz coast to coast with some markets accessing a full 200 MHz. Verizon has been deploying equipment that is capable of the full 200MHz of bandwidth, so with a mere software update, customers will start to see the effects of this dramatic increase in bandwidth in the immediate next few days and weeks.

And as observed a news article in FierceWireless, AT&T combines C-band spectrum with 3.45 GHz spectrum nationwide, and its 5G mid-band network now covers over 175 million people, and its nationwide 5G network, including low-band spectrum, covers approximately 290 million people. 

Verizon's press release states its 5G services currently are available to over 222 million people in 359 markets. It also is reported in FierceWireless that Verizon will be operating its 5G network using C-band spectrum at full power in the vicinity of airports. Free State Foundation President Randolph May and I wrote about the FAA's questionable late-in-the-game attempt to halt full use of licensed C-band spectrum by Verizon and AT&T in a November 2021 Perspectives from FSF Scholars, "The FAA Should Stop Interfering With 5G in the C-Band." The FCC has "unified jurisdiction and regulatory power" over commercial spectrum, not the FAA. And that midnight hour dispute regarding C-band spectrum near airports almost certainly would have been avoided had the FAA been more engaged earlier in the Commission's C-band proceeding, when it had ample opportunity to do so. Interagency disputes over spectrum have been too numerous in recent years, and the effect of those disputes is detrimental to the full use of valuable spectrum and timely deployment of next-generation wireless services. As President May and I also wrote a February 2022 Perspectives from FSF Scholars, "Congress Should Require Better Agency Coordination of Spectrum Policy."

Research on 5G and Radar in Lower 3 GHz Spectrum Band Supports Commercial Use

Today, August 15, CTIA released a fascinating short paper that makes the case for authorizing commercial use of the 3.3-3.45 GHz band at full power and on an exclusive licensed basis. The paper, "Successful Military Radar and 5G Coexistence in the Lower 3 GHz Band: Evidence from Around the World," summarizes research from GSMA, CCS Insight, and DLA Piper regarding the co-existence of 5G services with U.S. military radars in the lower 3 GHz band in foreign countries such as Germany, Japan, Mexico, South Korea, and Taiwan.

According to CTIA's paper:

This real-world evidence demonstrates how proven coordination methods are already facilitating simultaneous use of the band by 5G and military radars. Segmenting the band at 3.3 GHz with commercial wireless operating above and military radars tuning below can facilitate near-term coexistence. Coordination techniques—such as retuning, compression, and frequency coordination—provide assurance that 5G networks can be deployed in the U.S. at full power in lower 3 GHz spectrum while maintaining the ability to meet critical government missions that depend on radar systems.

The U.S. needs more mid-band spectrum for commercial use, particularly on an exclusive licensed basis, and to help meet those needs, Congress and the NTIA should prioritize the repurposing spectrum in the lower 3 GHz band. For more on this, see my February 2021 Perspectives from FSF Scholars, "Fast Action on the Lower 3 GHz Band Will Secure America's 5G Future." The coexistence of 5G and U.S. military radar operations in foreign countries identified in CTIA's paper persuasively favors repurposing the 3.3-3.45 GHz band for private commercial use. If 5G and military radar coexist in other countries, they can and should be made to coexist in the U.S. 

 

Also, in order to put lower 3 GHz band spectrum into the hands of private commercial providers of 5G services, the FCC's authority to conduct spectrum license auctions needs to be restored. The House of Representatives should promptly pass H.R. 3565 – the Spectrum Auction Reauthorization Act of 2023. If it becomes law, H.R. 3565 would restore that authority to the Commission. 

Blog Post Provides Update on Legal Battle in Blackbeard's Pirate Ship Case

An August 10 blog post by Stephen Carlisle catches up with the continuing case of Cooper v. Allen, following the Supreme Court's 2020 decision that ruled the Eleventh Amendment barred copyright infringements against states under the Copyright Remedy Clarification Act of 1990. The blog post is titled "State Attempts to Sink Blackbeard Infringement Case by 'Deep Sixing' the Law They Passed to Claim the Copyrights." At issue in the case is the State of North Carolina's unauthorized use of copyrighted video footage created by Mr. Rick Allen of efforts to salvage the pirate Blackbeard's ship, Queen Anne's Revenge.

I first wrote about Cooper v. Allen in an October 2019 Perspectives from FSF Scholars, "States Have No Right to Infringe Copyrights: The Supreme Court Should Enforce the Copyright Remedy Clarification Act." But the Supreme Court saw things differently, concluding that the CRCA's blanket abrogation of state immunity was not proportional or congruent to any proven problem of copyright infringements by states that amounted to unconstitutional injuries. The court's decision left open the door to Congress passing a future statute that is more narrowly targeted to intentional and reckless infringements by states. Language in the court's decision suggested that intentional or at least reckless infringement could come within the reach of the Fourteenth Amendment's Due Process Clause.

Thus, in a July 2020 Perspectives from FSF Scholars, "Congress Should Stop States From Infringing Copyrights," I wrote that the "Congress should craft a statute that will abrogate the sovereign immunity of states from being sued in federal court when they intentionally or recklessly infringe copyrights." To date, no legislation has been introduced in Congress to address intentional and reckless copyright infringements by states. However, in August 2021, the U.S. Copyright Office released a policy study on "Copyright and State Sovereign Immunity." The study explored possible legal bases for addressing infringements by states that may remain for copyright owners following the decision in Cooper v. Allen, such as due process and takings claims. 

 

Despite Mr. Allen's loss on infringement claims against the State of North Carolina in Cooper v. Allen, his takings claims and other claims remain alive in U.S. District Court. Mr. Carlisle's blog post summarizes those claims and describes the "spend your opponent into the ground" litigation strategy that the North Carolina Attorney General and Department of Justice – seemingly aided by the North Carolina General Assembly – appear to be using against a copyright owner who was wrongly denied the exclusive right to use his property and financially harmed by that state. Read Mr. Carlisle's excellent blog post for more. And Godspeed to Mr. Allen in his pursuit of justice.