Milwaukee County, Wisconsin, is currently experiencing firsthand the consequences of the Federal Communications Commission’s (FCC's) 2018 preemption of local governments’ authority to regulate 5G infrastructure in their cities. With its initial handful of applications for new small cell transmitters just submitted to the county board by Verizon under the new rules, local officials are grappling with a host of limitations — including fee caps, shorter timing windows, and right of way exemptions — which outline clearly a problem more and more communities will face in the coming months and years.

Less Say, Less Money

We pointed out when the FCC handed down the order in the fall of 2018 that it represented a significant giveaway to wireless carriers while placing additional restrictions and financial burdens on local regulators, most of which are county boards and city departments. Among the most troublesome of the order’s provisions are new 60- and 90-day approval windows for the installation of infrastructure on existing and new wireless facilities, a limitation to annual fee scales for small cell sites set between $100-250, a right now enjoyed by wireless providers to place infrastructure on municipally owned poles and traffic lights, and a rule that says if regulating authorities don’t get to an application within 60 days it automatically becomes approved. The 9th U.S. Circuit Court of Appeals upheld the fee cap in a ruling last Wednesday.

The merger between T-Mobile and Sprint is moving forward, notwithstanding legal opposition from multiple state attorneys general. In a recent article, Christopher Mitchell Director of the Institute for Local Self-Reliance's Community Broadband Networks Initiative, and Paul Goodman, Technology Equity Director from The Greenlining Institute, explained the tenuous reasoning behind the recent court decision and why they expect nothing good for subscribers and the state of competition as this deal comes to fruition.

We've shared the article in full here; you can also read it at The Greenlining Institute website.

EXPECT BROKEN PROMISES FROM T-MOBILE/SPRINT MERGER

By Christopher Mitchell and Paul Goodman

Earlier this week, a federal judge dismissed a lawsuit to stop the proposed merger between T-Mobile and Sprint. As a result, it’s highly likely that by the end of the year, Sprint will no longer exist, and that AT&T, Verizon, and T-Mobile will be the only major wireless providers in the United States. The judge’s decision is 170 pages long but boils down to this: The judge believes that even though T-Mobile will have the ability to increase prices, it won’t, because T-Mobile promised not to.

What, Exactly, has T-Mobile Promised?

The same things that communications providers have promised us for decades when drumming up support for a merger—lower prices, the creation of thousands of jobs, and new and exciting service offerings. As a result, the company argues, T-Mobile will have the size and resources to transform itself into a company like AT&T.

It’s that last sentence that’s particularly troubling. In 2018, AT&T purchased Time Warner Media, arguing that doing so would result in lower prices, the creation of thousands of jobs, and new and exciting product offerings. Which sounds fantastic, except for the fact that AT&T failed to deliver on those promises:

In the past few years, states around the U.S. have made incremental changes in their laws to ease restrictions on municipalities and cooperatives interested in developing high-quality Internet network infrastructure. When communities in Connecticut wanted to exercise their right to space on utility poles at no cost, however, pole owners objected. After a drawn out review of the state's "Municipal Gain" law, local communities have finally obtained the decision they've pursued to develop cost-effective publicly owned fiber optic municipal networks.

Process, Procedure, and PURA

In 2016, the state's Office of Consumer Counsel (OCC) turned to Connecticut's Public Utility Regulatory Agency (PURA) and asked the agency to clarify a 110-year-old state law regarding utility poles in municipal rights-of-way (ROW). In Connecticut, about 900,000 of the poles are scattered throughout the state and are prime locations for fiber optic cables for improved connectivity. Most of the poles belong to Verizon, Frontier, one of the state's electric providers, or are jointly owned by two or more of them.

The Municipal Gain Law was created in the early 1900s to give local communities reserved space with no attachment fee on the poles in order to hang telegraph wires. As telephone and other technologies evolved that required wiring, municipalities wanted to take advantage of the space. There were several lawsuits between pole owners and municipalities over the years with pole owner interests usually losing out to the needs of the public. By 2013, it became clear that amending the law to allow communities to access the municipal gain space "for any use" made sense and the state legislature made the statutory language change. Local communities saw the change as an opportunity to string fiber in the space, establishing publicly owned infrastructure on which they could partner with private sector providers for improved local connectivity.

Plans for Holston Electric Cooperative to offer television service as part of its Fiber-to-the-Home (FTTH) network deployment are on pause following allegations from the east Tennessee co-op that broadcasting company Nexstar Media Group refused to engage in “good faith” negotiations over retransmission consent agreements.

Holston Electric Cooperative established its broadband subsidiary, HolstonConnect, in late 2017 after a state law change removed restrictions on rural electric co-ops. Currently, HolstonConnect is in phase one of its FTTH project, which will bring high-quality Internet access to underserved communities in Rogersville, Surgoinsville, and nearby areas. Subsequent deployments will connect the remainder of the cooperative’s service territory, partially aided by federal funding from last year’s Connect America Fund phase II reverse auction.

From the start, the co-op planned to offer a “triple play” of broadband, voice, and video services. However, failure to come to an agreement with Nexstar, one of the nation’s largest station operators, over access to essential local channels has delayed the delivery of television services to HolstonConnect subscribers. In early March, Holston filed a complaint against Nexstar with the Federal Communications Commission (FCC), arguing that the broadcasting company demanded exorbitant fees and unfair station tying arrangements during negotiations with the co-op.

“Failure to Negotiate in Good Faith”

To carry popular television programming, networks must sign cable retransmission consent agreements with regional station operators. The FCC requires that these companies behave in “good faith” and make tangible efforts to engage in negotiations.

Located only 30 miles east of Houston, it’s hard to believe that Mont Belvieu, Texas, ever had poor Internet access. Faced with complaints from residents and businesses, city officials decided to deploy fiber and bring fast, affordable, reliable gigabit connectivity directly to the community via MB Link.

How to Fix the Problem

While it’s not far from the center of a large metro area, Mont Belvieu still maintains a rural character. The town’s history is based in the oil and natural gas industry, which began in the early 1900s. As City Manager Nathan Watkins told Christopher Mitchell in episode 326 of our podcast, approximately 85 percent of natural gas liquids in the U.S. travel to Mont Belvieu for processing. With more than 10,000 miles of pipeline within their salt domes, the town of 8,000 has become a centerpiece of oil and natural gas processing.

Before MB Link, the community dealt with a patchwork of services offered by several different providers. Even though more than one provider operated in town, they didn’t compete with each other. Without competition, ISPs had no impetus to improve services. Residents complained about DSL download speeds of 1.5 Megabits per second (Mbps) and cable Internet access download speeds topping out at 5 Mbps. There were even premises that could not obtain Internet access because ISPs reported saturated networks and were not willing to make investments to serve more subscribers.

In 2016, a feasibility study in Mont Belvieu revealed that 60 percent of residents and 79 percent of businesses felt that local Internet access wasn’t adequate for their needs. In the same survey, 90 percent of residents and 100 percent of business respondents opined that high-speed Internet access is an essential service in the same manner as electricity and water.

In May, Connecticut’s Public Utility Regulatory Agency (PURA) struck a blow at local authority when the ruled that communities could not use their protected utility pole space for municipal fiber deployment. Big cable and telephone companies cheered, broadband advocates and communities that need better connectivity decided to take action. Now, PURA faces lawsuits that challenge the decision from the Office of Consumer Counsel (OCC), the Connecticut Conference of Municipalities (CCM), and at least three local communities that just want high-quality Internet access.

Long Wait

The focus of the controversy is Connecticut’s Municipal Gain Space Law, which was first established in the early 1900s to guarantee municipalities the ability to hang telegraph wires. The municipal gain space is a location on all utility poles — publicly or privately owned — situated in the public right-of-way. After multiple law suits over the years in which cities and the state typically won, Connecticut’s legislature finally amended the language of the law to allow government entities to use the municipal gain space for “any use” in 2013.

Almost two years ago, we reported on the petition filed by the OCC and the State Broadband Office (SBO) with PURA asking for clarification on the law, which included establishing clear-cut rules on using the municipal gain space for fiber optic deployment. They felt the rules needed cleaning up because some incumbents in Connecticut were still finding ways to thwart competition and stop or delay plans for municipal fiber deployment. 

In addition to using restrictive pole attachment agreements, incumbents were exploiting the lack of definition in the statute to slow make-ready work, question who pays for make-ready work, and generally delay municipal projects. Time is money and losing momentum can drive up the cost of of a project, which in turn erodes a community's will to see it realized.

The Decision in Question

A bill making its way through the Colorado General Assembly is tackling one of the tools that big incumbent ISPs use to secure their positions as monopoly Internet access providers - the right of first refusal. If HB 1099 passes, and other states see the savvy behind this approach, community leaders and advocates for a competitive broadband market will be able to put a chink in the monopoly armor.

Update: HB 1099 passed the Legislature and the Governor signed the bill into law on April 2nd, 2018. Yay!

A Familiar Story

ISP entrepreneurs, cooperatives that want to offer high-quality Internet access, and entities planning publicly owned projects know the story. Grants are available, usually for an unserved or underserved area that the incumbent DSL provider has ignored. Said entity invests the time and money into developing a plan and applying for the grant, feeling good about the fact that they will likely be able to serve this community that no one else seems to want to serve. 

They apply for the grant, may even receive a preliminary approval, BUT then the incumbent ISP exercises its right of first refusal, which throws a very big wrench into the plans of the ISP entrepreneur, cooperative, or entity.

In June 2017, we interviewed Doug Seacat from Clearnetworx and Deeply Digital in Colorado who told us the story of how his company had applied for and won grant funding through the Colorado Broadband Fund to develop fiber Internet network infrastructure near Ridgway. CenturyLink exercised its right of first refusal, which meant that unless Seacat could change the mind of the board that considered the appeal, CenturyLink would get the funding rather than Clearnetworx.

In Detroit, AT&T is facing a formal FCC complaint accusing the telecom giant of deploying discriminatory “digital redlining” tactics. This is the second such complaint filed against the telecommunications giant since the first of the year.

Demanding Equality in Connectivity

The complaint filed by civil rights attorney Daryl Parks says the FCC violated the Communications Act which forbids unjust and unreasonable discrimination. A month earlier, Parks filed a similar complaint on behalf of three Cleveland residents. In both instances, Parks and community members maintain that AT&T is withholding high-speed Internet from minority neighborhoods that have higher poverty rates.

These complaints fall under Title II of the Communications Act, which contains not only net neutrality rules but important consumer protections regarding discrimination. Title II SEC. 202. [47 U.S.C. 202] (a) clearly specifies:

It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.