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TechnologyDaily Mobile
The Dirty Work Of Broadband
by Teri Rucker
As telecommunications firms try to crisscross the country with fiber-optic cable to provide high-speed Internet access, they are facing numerous roadblocks on city streets. Companies say they are losing valuable time to municipal regulation, but cities say they are just protecting their property. The result has been a spate of litigation and state legislative intervention.
Sources say the problems companies face at the state and local levels are ironic given the congressional push to wire America, particularly rural and underserved areas, but because many of the issues touch upon state and local sovereignty issues, Congress is not getting involved.
"Management of the streets is very local," said Diane Barlow, an attorney with Casey, Gentz & Sifuentes in Austin, Texas, who represents telecom companies in their disputes with municipalities. "I think Congress and the FCC have been loathe to take on cities. It is not a very politically viable issue."
Government In The Right-Of-Way
Telecom firms are looking for the most direct way to reach customers, leaving them to negotiate with cities for permission to install their fiber optics. Cities hold the key to the public right-of-way, which is the right to cross property from one parcel of private land to another. The right-of-way may involve a specific grant of land or an "easement," which is a right to pass across another party's privately owned land.
The rules vary across the country, and negotiations are "done on a state-by-state basis and a company-by-company basis," meaning that work must be duplicated in each city to adhere to that location's particular rules, according to an industry source. "It is extremely complicated."
Public rights-of-way generally are the areas where other service infrastructure, such as gas and water mains and sometimes the wiring for telecommunications service, is installed. In order to dig up the streets to install their wiring, telecom companies have to negotiate with city officials, and those officials have been imposing onerous regulations, lawyers who represent the telecom companies say. The companies themselves refuse to comment.
"Municipalities are delaying competitive entry by having overly burdensome and onerous restrictions on access to the rights-of-way," said Tiki Gaugler, a regulatory attorney for the Association for Local Telecommunications Services.
Mind If I Dig Here?
Cities require a good deal of information from firms that want to dig, often requesting detailed information on a firm's corporate structure and investors, and its business plan. Asking for pertinent information such as "engineering plans, traffic-disruption plans and where they're going to put the orange cones in the street -- that is legitimate," Barlow said, but the rest of the information is unnecessary and time-consuming to compile.
The U.S. Court of Appeals for the 9th Circuit agreed in a decision this spring, saying that the argument that corporate structural information and the like is faulty. It "has the flavor of the old children's ditty, 'Oh your ankle bone is connected to your leg bone,'" Judge Margaret McKeown wrote. "... This is simply too tenuous a connection to the 'management of rights-of-way.'"
In California, cities often require a telecom firm to enter a franchise agreement before it can build its network, despite a statewide law that says telecom firms have the right to access public rights-of-way, said Jeffrey Karp, a partner at the Washington law firm, Swidler, Berlin, Shereff, Freidman.
Cities say the law applies only to firms offering telephone service and not data, Internet access or any other non-voice communications services, he said. Companies also must battle environmental and other interest groups and burdensome city rules to build their networks, he said. In California there is a "double-barreled attack that is undermining the efforts by Congress to open up traditionally closed markets to competition and the desire to do that through facilities-based competition," Karp said.
Sure, But It Will Cost You
Even more burdensome is the fee structure some municipalities have charged telecom firms, Barlow said. Regardless of how much of the right-of-way is being used, the average fee request was 5 percent of gross revenue.
Fees should be "tied to the costs incurred by the city to maintain its right-of-way" and linked to the amount a firm uses, she said. "Cities have developed a strong dependence on revenue from telecom providers. In the old days, with a monopoly provider, it was a steady, secure source of revenue for city governments."
But cities justify their fees by noting the myriad problems of traffic disruptions and the inadvertent cutting of water, electricity and cable lines as problems that can arise when telecom companies begin digging up the streets.
Cities also have required telecom companies to offer free or reduced-rate services to the city and for city buildings such as libraries and schools in exchange for permission to install their fiber optics. The 9th Circuit Court also overruled that policy, saying the requirement that a firm offer "most-favored-community status" has "no relation to management of the rights-of-way."
The situation improved in Texas when the state legislature intervened, setting statewide policy for access to the rights-of-way, Barlow said, but implementing the fee structure lawmakers devised is still complex. A handful of other state legislatures, such as those in Florida, Ohio and Virginia, also have set state policy to make competitive entry into the telecom market easier, Karp said.
But getting reasonable deals often comes down to persuading city officials that the companies are providing residents with a much-wanted service that will have long-term economic benefits, both Barlow and Karp said.
Back in Washington
The FCC does have some authority over city policy under Section 253 of the 1996 Telecommunications Act. The act bars all state and local regulations that "prohibit or have the effect of prohibiting" a company's ability to provide telecom services. However, the act also grants a "safe harbor" to cities and states to govern their rights-of-way and to charge reasonable compensation for their use.
"What is considered a rights-of-management authority and what is fair and reasonable compensation is where the rubber meets the road in trying to work through these issues," Karp said.
The 9th Circuit Court gave great discretion to the FCC. The decision noted that the act assigns certain aspects of telecom regulation to the federal government and that "Congress has narrowly circumscribed the role of state and local governments in this arena."
Currently, the FCC is considering a request by CitySignal to preempt three cases in Ohio cities where competitive carriers are fighting for what they call treatment equal to the local incumbent firm. The proceeding has been before the commission for more than a year, but it is unclear when a decision will be made, according to the FCC.
That decision could affect companies across the country, but Barlow is concentrating on the local battles. "I don't hold out hope for a national policy," she said. "In the interim, we can work on a state and city level."
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