telecommunications law update: whats up with wireless facility regulation? franchise fee revenue...
TRANSCRIPT
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Telecommunications Law Update:What’s up with Wireless Facility Regulation?
Franchise Fee Revenue OptionsOregon City Attorneys Association
Annual Continuing Legal Education ProgramMay 4, 2013 ♦ Redmond, Oregon
Presented by Pamela J. Beery and Nancy L. Werner
Beery Elsner & Hammond, LLP
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Wireless Facility Siting UpdateIt’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”)
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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 jurisdiction
Applied to wireless facilities in the Ninth Circuit in Sprint Telephony PCS v. County of San Diego, 543 F.3d 571 (2008) (cert. denied)
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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
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Overview of applicable law (cont’d)
Leading court decisions under § 332• MetroPCS v. San Francisco, 400 F.3d 715 (9th Cir.,
2005)
• 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
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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 tower
• 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…
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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
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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 deployment
• 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 impacted
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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 equipment
• On an “existing wireless tower or base station”
• Provision is often referenced as “Section 6409”
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State legislatures follow suit…
Not Oregon as of yet
Map of states in handout
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Recommendations
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
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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 way
Provide a streamlined administrative mechanism to address applications
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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
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Overview of Applicable Law (cont’d)
Potential State Law Preemptions
ORS 221: • Limits privilege taxes on “telecommunications
carriers” 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 revenue
• 221.515 limits the “privilege tax” on telecom carriers for use of ROW to 7% of revenue from exchange access services
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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 221.515
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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
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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. § 253(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).)
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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))
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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))
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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).)
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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
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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
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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
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 preemption
• Watch HB2455
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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 providers
• 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?
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Recommendations
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 telecom
Could capture lost revenue from owners of other facilities, such as electric service suppliers and gas providers
LOC has a model ordinance to consider
Keep an eye on HB 2455 and Court of Appeals