FCC Clarifies Burden on State and Local Governments Under Section 253

Originally Published January 21, 2021

By Vince Rotty

As the FCC, wireless providers, and state and local governments continue to try to find an appropriate regulatory balance that ensures the safe and rapid deployment of 5G wireless services, many state and local governments have expressed concerns about their ability to manage their public rights-of-way.[1] Although 47 U.S.C. § 253 (“Section 253”) prohibits state and local governments from “prohibit[ing] or hav[ing] the effect of prohibits the ability of any entity to provide any interstate or intrastate telecommunications service,” it does not preempt state and local governments from “manag[ing] the public rights-of-way or [requiring] fair and reasonable compensation from telecommunications providers.”[2]

In a 2018 declaratory ruling (the “2018 Small Cell Declaratory Ruling”), the FCC interpreted Section 253 to mean that state and local governments could not charge fees to wireless providers above certain safe harbors without showing that: “(1) the fees are a reasonable approximation of the state or local government’s costs, (2) only objectively reasonable costs are factored into those fees, and (3) the fees are no higher than the fees charged to similarly situated competitors in similar situations.”[3] The FCC’s safe harbor fees are: “(a) $500 for non-recurring fees, including a single up-front application that includes up to five Small Wireless Facilities, with an additional $100 for each Small Wireless Facility beyond five, or $1,000 for non-recurring fees for a new pole (i.e., not a collocation) intended to support one or more Small Wireless Facilities; and (b) $270 per Small Wireless Facility per year for all recurring fees, including any possible [right-of-way] access fee or fee for attachment to municipally-owned structures in the [rights-of-way].”[4]

In 2019, Clark County, Nevada adopted an ordinance that required a service provider to pay:

• a recurring Master Wireless Use License Fee of 5% of gross revenues collected each calendar quarter;
• a Wireless Site License Fee (ranging from $700/year/facility to $3960/year/facility) for each Small Wireless Facility installed in the public rights-of-way, with an automatic annual fee increase of 2% per year; and
• an Annual Inspection Fee of $500 per Small Wireless Facility installed in a county rights-of-way.[5]

Verizon shortly thereafter filed a petition with the FCC asking the FCC to issue a ruling preempting Clark County’s ordinance under Section 253.[6]

Before the FCC could issue a ruling, Clark County amended its ordinance to remove the fees in question and asked the FCC to dismiss Verizon’s petition.[7] In dismissing the petition, the FCC did not comment on whether Clark County’s original ordinance complied with Section 253 but did provide several key clarifications of the 2018 Small Cell Declaratory Ruling:

• The burden is on state and local governments to show that fees above the FCC’s safe harbors comply with Section 253.
• Whether a wireless provider has already deployed facilities or is already providing telecommunications services is irrelevant to the issue of whether a new fee structure prohibits or has the effect of prohibiting the provision of telecommunications services in violation of Section 253.
• The FCC expressed a strong presumption against gross revenue fees being cost-based, reasonable, and therefore compliant with Section 253.

If your municipality has not yet adopted a small cell ordinance or has questions about an ordinance that has already been adopted, please reach out to a Bradley Law, LLC attorney.

[1] See What Are Small Cell Facilities, and Why Are They in the Public Rights-of-Way (Aug. 21, 2018), https://www.bradleylawmn.com/broadband/what-are-small-cell-facilities-and-why-are-they-in-the-public-rights-of-way/.

[2] 47 U.S.C. § 253.

[3] Petition for Declaratory Ruling that Clark County, Nevada Ordinance No. 4659 is Unlawful Under Section 253 of the Communications Act as Interpreted by the Federal Communications Commission and is Preempted, Order at ¶ 2, WT Docket No. 19-230 (Jan. 14, 2021) (“Clark County Order”). See also Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment et al., WT Docket No. 17-79, WC Docket No. 17-84, Declaratory Ruling and Third Report and Order, 33 FCC Rcd 9088, 9103, 9138 paras. 36, 97 (2018) (“2018 Small Cell Declaratory Ruling”), affirmed in part, City of Portland v. United States, 969 F.3d 1020, 1038 (9th Cir. Aug 12, 2020), en banc review denied City of Portland v. FCC, Case No. 18-72689 (9th Cir. Oct. 22, 2020).

[4] 2018 Small Cell Declaratory Ruling at 9129.

[5] Clark County Order at ¶ 3.

[6] Petition for Declaratory Ruling that Clark County, Nevada Ordinance No. 4659 Is Unlawful under Section 253 of the Communications Act as Interpreted by the Federal Communications Commission and Is Preempted (filed Aug. 8, 2019), https://ecfsapi.fcc.gov/file/1080871091743/Verizon%20-%20Petition%20for%20Declaratory%20Ruling%2008082019.pdf. See also 47 U.S.C. § 253(d).

[7] Letter from Gerard Lavery Lederer, Counsel to Clark County, to Ajit Pai, Chairman, FCC, et al., WT Docket No. 19-230 (filed Dec. 16, 2020).