Telecom Law Update - Beery Elsner & Hammond LLP

Telecommunications Law Update:
What’s up with Wireless Facility Regulation?
Franchise Fee Revenue Options
Oregon City Attorneys Association
Annual Continuing Legal Education Program
May 4, 2013 ♦ Redmond, Oregon
Presented by Pamela J. Beery and Nancy L. Werner
Beery Elsner & Hammond, LLP
Wireless Facility Siting Update
It’s complicated…
 The Foundation: 1996 Telecom Act
 New FCC Regulations
• The “Shot Clock Rule” (2009) – now at the US
Supreme Court
• Two new FCC “Notices of Inquiry”
 Acceleration of Broadband Deployment (WC Docket
11-59) – the “PROW NOI”
 Reassessment of Radio Frequency Exposure Limits
(ET Docket 13-84)
• FCC “Guidance” (January, 2013)
• More FCC action likely….
 And last but not least: 2012 Federal
Collocation Statute (“Section 6409”)
Overview of Applicable Law
 TCA of 1996: 47 USC § 253
• The “no barriers to entry” law
• The legal standard: local regulations cannot
individually or in combination “prohibit or effectively
prohibit” the provision of wireless service in the
Applied to wireless facilities in the Ninth Circuit in Sprint
Telephony PCS v. County of San Diego, 543 F.3d 571
(2008) (cert. denied)
Overview of applicable law (continued)
 TCA of 1996: 47 USC § 332(c)(7)
• Preserves local zoning authority except:
 Local regulations may not unreasonably discriminate
among providers
 Local regulations may not have the effect of
prohibiting personal wireless service
 Reasonable time limitations apply to applications
 Written decision is required
 RF concerns are not a basis for denial
Overview of applicable law (cont’d)
 Leading court decisions under § 332
• MetroPCS v. San Francisco, 400 F.3d 715 (9th Cir.,
• T-Mobile USA, Inc. v. City of Anacortes, 572 F.3d
987 (9th Cir., 2009)
• Sprint PCS v City of Palos Verdes Estates, 583
F.3d 716 (9th Cir., 2009)
 A note of caution: New York SMSA Limited
Partnership, et al. v. Town of Clarkstown, New
York, 612 F3d 97 (2010) – regulation
impliedly preempted
New FCC Developments
 The 2009 “shot clock” rule requires speedy
action on wireless applications
• 90 days for collocation requests – defined as one
that does not “substantially increase” the size of a
• 150 days for new sites
• Creates a “reasonable time” burden of proof shift to
a local government as a defense in a court
challenge under the rule
 No denial just because “one or more carriers
already serve a given geographic market”
 FCC authority to issue the rule challenged…
New FCC Developments (cont’d)
 City of Arlington, Texas, et al. v. FCC, 668
F3d 229 (CA5, 2012)
• US Supreme Court granted certiorari 10/5/12
• Oral arguments held 1/16/13
• Decision anticipated soon
New FCC Developments (cont’d)
 2011 PROW NOI
• Still pending
• FCC inquiry about federal control of pricing and
wireless siting practices as a means of expediting
• Extensive input from local government by national
organizations and local communities
 2013 RF NOI
• Issued 3/29/13, in comment period for 150 days
• Sweeping inquiry regarding FCC role in regulating
RF emissions, how they are measured, regulated
• Too early to say whether zoning regulations will be
And Congress wades in…
 Middle Class Tax Relief and Job Creation Act
of 2012…includes 47 USC § 1455(a) (2/23/12)
• Mandates approval of certain applications for
collocation, removal or replacement of transmission
• On an “existing wireless tower or base station”
• Provision is often referenced as “Section 6409”
State legislatures follow suit…
 Not Oregon as of yet
 Map of states in handout
Consider review and potential update of your
zoning regulations
• Make a good local record and know the boundaries
• Balance increasing focus on residential
communication capacity against community values
• Be wary of regulating specific technologies
(example: the new DAS proliferation, see New York
SMSA v. Clarkstown, 612 F.3d 97 (2010)
• Two recent examples: Salem and Redmond
Recommendations (cont’d)
Consider evaluating your regulation of rights
of way generally; both as to wireless and
other providers
 Address aesthetic concerns
 Address compensation for use of City rights of
 Provide a streamlined administrative
mechanism to address applications
Overview of Applicable Law
Home Rule – Oregon Constitution, Art. XI,
Sec. 2
 Start with the premise that a city with a home
rule charter has authority to impose taxes and
fees on telecommunications providers unless
there is an applicable preemption
– See Jarvill v. City of Eugene, 289 Or. 157, 168-69,
613 P.2d 1 (1980); US West Communications, Inc.
v. City of Eugene, 336 Or. 181, 186 (2003)
 Then look for applicable preemptions
Overview of Applicable Law (cont’d)
Potential State Law Preemptions
 ORS 221:
• Limits privilege taxes on “telecommunications
 Does not apply to competitive providers
• 221.450 limits the “privilege tax” on telecom carriers
for use of ROW without a franchise to 5% of gross
• 221.515 limits the “privilege tax” on telecom carriers
for use of ROW to 7% of revenue from exchange
access services
Overview of Applicable Law (cont’d)
 ORS 221 (cont’d):
• HB 2455 (2013):
 Address potential discrepancy between incumbents
and competitive providers (including VoIP) due to
preemption in ORS 221.515
 Original bill adds competitive providers to limitation in
ORS 221.515; expands revenue base to all revenue
not just exchange access services, but rate is left
blank. If blank is filled in, likely to be considerably less
than 7%
 Proposed amendments to HB 2455 would repeal ORS
Overview of Applicable Law (cont’d)
Oregon Constitution Article I, § 32
 “All taxation shall be uniform on the same
class of subjects within the territorial limits of
the authority levying the tax”
 Lane County trial court in Eugene v. Comcast
used this as a basis to strike down a Eugene
fee based on lack of uniform application of a
tax on internet access services
 Case is on appeal
Overview of Applicable Law (cont’d)
Telecommunications Act of 1996
Preempts local regulations that prohibit or have the
effect of prohibiting the provision of telecom services
(47 U.S.C. § 253(a))
Preserves local authority to regulate the ROW, and to
receive fair compensation for that use (47 U.S.C. §
In the 9th Circuit, it is clear that franchise fees are not
preempted; different fees for different providers (e.g.,
ILECs v. CLECs) are not preempted unless it has the
effect of prohibiting service and does not fall into safe
harbor of § 253(c) (See Sprint v. San Diego County,
543 F.3d 571 (9th Cir. 2008).)
Overview of Applicable Law (cont’d)
Cable Communications Policy Act of 1984
Franchise fees on cable operators capped at
5% of gross revenue (47 U.S.C. § 542)
 Does not preempt exercise of home rule
authority to assess a fee on other services
provided by cable operators
 Cannot rely on Cable Act to assess non-cable
fees or otherwise regulate cable operators’
telecom services through the cable franchise
(47 U.S.C. § 541(b)(3))
Overview of Applicable Law (cont’d)
Internet Tax Freedom Act
Imposes a moratorium on taxes on internet access
services through 2014 (47 U.S.C. § 151 (note))
Moratorium has been extended several times; assume
it will be extended again
Exempts VoIP from the moratorium (47 U.S.C. § 151
(note), ITFA § 1105(5)(D))
Preempted “tax” does not include fees assessed “for a
privilege or benefit conferred” and excludes “any
franchise fee or similar fee imposed” pursuant to the
Cable Act or Telecom Act (47 U.S.C. § 151 (note),
ITFA § 1105(8))
Potential Revenue Options
Incumbent Providers
 Long-term owner of facilities; traditionally has
a franchise and pays franchise fee
 ORS 221.515 limits franchise fees for use of
ROW by incumbents to 7% of exchange
access services
 Can capture additional revenue through a fee
on the provision of service, not for use of
ROW (See US West Communications, Inc. v.
City of Eugene, 336 Or 181, 186 (2003).)
Potential Revenue Options (cont’d)
Competitive Providers
Facility owners should get franchise, license or other
authorization to place facilities in ROW and pay
associated fees
• Consider per foot fee for providers that do not serve
customers in city
• Consider a fee of the greater of a percentage of
revenue or a per foot fee
• Service Providers that do not own facilities are
subject to a fee for provision of service to customers
ORS 221.515 does not apply
But watch HB 2455 and upcoming Court of Appeals
decision in Eugene v. Comcast regarding Article I § 32
Potential Revenue Options (cont’d)
Wireless Providers
 No applicable preemption
• Section 253 of the Telecom Act applies to wireless
providers, but preemption only applies if the tax/fee
is such that it has the effect of prohibiting the
provision of services
• Sprint v. San Diego County sets a high bar for
showing an effective prohibition
 Challenge is political
• Industry funds opposition to tax and referral efforts
Potential Revenue Options (cont’d)
Voice over Internet Protocol
Subset of competitive providers
Often cable operators use cable system to provide
VoIP, usually without franchise (other than the cable
franchise) or paying franchise fee/privilege tax
Subject to same requirements as other competitive
Providers often cite Internet Tax Freedom Act or Cable
Act as preemptions; these do not preempt
Also cite lack of classification of VoIP under federal
law/FCC rules; no classification = no applicable
• Watch HB2455
Potential Revenue Options (cont’d)
Internet Access Services
Internet Tax Freedom Act preempts taxes on services but not
on use of the ROW
Trial court in Eugene v. Comcast reached this conclusion;
watch for the Court of Appeals decision
Few Oregon cities are charging fees for ROW use by internet
Potential legal challenges if attempt to do so
Potential political concerns as internet access is often viewed as
an important economic development tool
Issue is coming up more frequently as entities install facilities
exclusively for data/internet access
Phone and cable companies expect level playing field
Precedent for allowing free use of ROW for internet?
Evaluate your telecom tax and fee structure
 Fees for both use of ROW and provision of
service maximize the providers and services
to which fees apply
• City of Eugene has a time- and court-tested model
• Consider applying the fees to all utilities, not just
 Could capture lost revenue from owners of other
facilities, such as electric service suppliers and gas
 LOC has a model ordinance to consider
Keep an eye on HB 2455 and Court of

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