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FCC limits fees cities can charge for 5G deployment

The Federal Communications Commission says new rules will cut red tape. Critics say they weaken municipalities' ability to negotiate with big carriers.

FCC Commissioners Jessica Rosenworcel and Michael O'Rielly, Chairman Ajit Pai and Commissioner Brendan Carr.

FCC Commissioners Jessica Rosenworcel and Michael O'Rielly, Chairman Ajit Pai and Commissioner Brendan Carr.

FCC

The Federal Communications Commission voted Wednesday to limit how much local governments can charge wireless companies to attach small radios to utility poles when deploying next-generation 5G service.

The three Republicans on the FCC said the plan will streamline the process for installing 5G gear and save wireless providers an estimated $2 billion, which can be used to build networks in rural parts of the country.

"Streamlining small-cell rules will help close the digital divide by making it cost-effective for the private sector to provide coverage in more rural places," said Commissioner Brendan Carr, who led the effort to reform the rules. "We win the race to 5G not when New York or San Francisco get 5G coverage, but when all Americans -- regardless of where they live -- have a fair shot at next-gen access."

But FCC Commissioner Jessica Rosenworcel, the only Democrat on the panel, criticized her colleagues for not working with local governments to draft rules that would take into account the needs of individual communities.

"Instead of working with our state and local partners to speed the way to 5G deployment, we cut them out," Rosenworcel said.  "We tell them that going forward Washington will make choices for them -- about which fees are permissible and which are not, about what aesthetic choices are viable and which are not, with complete disregard for the fact that these infrastructure decisions do not work the same in New York, New York, and New York, Iowa."

Rosenworcel also called the new rules an "extraordinary federal overreach" that will lead to lawsuits that could hinder efforts to lead in 5G.

"I do not believe the law permits Washington to run roughshod over state and local authority like this," Rosenworcel said. "And I worry the litigation that follows will only slow our 5G future."

5G is the next generation of cellular technology, which is expected to greatly enhance the speed, coverage and responsiveness of wireless networks. To put it in perspective, you'll be able to download a season's worth of any TV show in just seconds.

The promised speeds are far faster than what most people can get at home, but 5G will also better power the growing family of connected devices in our lives. The launch of 4G gave us Uber, Snapchat and livestreaming video. 5G potentially opens the door even wider to new innovations, like remote surgery and self-driving cars.

Creating consistent rules nationwide

So what do the FCC's new rules do? First, they prevent cities and towns from charging more than it costs them to process applications and manage rights of way, which the FCC estimates at $270 a year per cell site. New York City charges as much as $5,100 a year in some neighborhoods but as little as $148 a year in areas where it's trying to encourage broadband deployment, according to a report by Bloomberg. On average, carriers pay about $500 per pole per year, according to a report published this summer by the FCC's Broadband Deployment Advisory Committee.

The new rules are based on bills passed in 20 states that make it easier to put up so-called small-cell radios. Traditionally, carriers used 200-foot towers to broadcast signals throughout an area. But because 5G technology transmits signals over shorter distances -- several city blocks versus several miles -- cells and radios are as small as backpacks. Because more radios are needed, they're often deployed on existing structures, such as light poles or buildings.

To help carriers cut through red tape, states have passed laws limiting the fees localities can charge to process construction and permit applications for small cells. They also require local governments to approve or reject small cell deployments in a set period of time.

Now the FCC wants to make those policies consistent across the country. The Republicans on the commission say the new rules are necessary to ensure the US leads in 5G.

"In the global race to 5G, the stakes are high -- it is about economic leadership for the next decade," Carr said. "The smart infrastructure policies we adopt today strengthen America's role as a tech and economic leader, while ensuring that every community benefits from 5G."  

CTIA, the lobbying group for the wireless industry, says reducing 5G deployment times alone could boost the US economy by $100 billion over the next 36 months. A blog post by Meredith Attwell Baker, who runs the group, also said other studies show that limiting the fees local communities can charge will "free up over $2.3 billion in private capital investment to deploy 5G further and faster."

More funds for rural broadband?

Some cities and towns in rural areas are hopeful reducing carriers' costs in big cities will free up cash that can be used to expand networks in hard-to-reach areas of the country. On Monday, Carr released statements from more than a dozen state and local leaders supporting the proposal.

"I believe that by reducing the high regulatory costs in the urban areas would leave more dollars to development in the rural areas," Duane Ankney, a Republican state senator for Montana, said in a statement. "Establishing timelines by modernizing the permitting process would also help in building out into the rural areas."

But local government officials argue the rules will prevent them from performing basic oversight of these networks. And they say restricting fees could make it harder to fund local programs that ensure underserved parts of their communities get access to broadband.

For example, San Jose, California, was able to negotiate a deal with AT&T, Verizon and Mobilitie to contribute $24 million over the next 10 years to the city's Digital Inclusion Fund, which was designed to close a digital divide that's prevented more than 95,000 residents from getting broadband Internet service at home.

San Jose officials told the FCC in a letter last week that the new rules could jeopardize the types of deals it made with the providers building its "smart streetlight" network.

"By limiting the amount of fees, the FCC is unfairly shifting the financial burden to cities," San Jose Mayor Sam Liccardo said in the letter. "Cities will be forced to absorb the true cost of reviewing the small-cell installations by taking funds away from essential services and programs to cover the costs to perform small-cell deployment reviews."

Rosenworcel said the FCC's actions on Wednesday could "undermine these agreements -- and countless more just like them." She noted that several municipalities across the country have asked the FCC to halt its actions. Specifically, she said the National Governors Association and the National Conference of State Legislatures, as well as the United States Conference of Mayors, the National League of Cities, the National Association of Counties, and the Government Finance Officers Association have spoken out against what she called the FCC's invasive federal overreach.

"In other words, every major state and municipal organization has expressed concern about how Washington is seeking to assert national control over local infrastructure choices and stripping local elected officials and the citizens they represent of a voice in the process," Rosenworcel said.   

She also said she's skeptical that the $2 billion in projected cost savings as a result of this rule change will be poured into building rural broadband. She noted that there's no commitment to the FCC from wireless providers to invest this money in rural markets, nor have wireless carriers signaled to Wall Street that they expect to spend more money in rural areas.

"As Ronald Reagan famously said, 'trust but verify.'" Rosenworcel said. "You can try to find it here, but there is no verification. That's because the hard economics of rural deployment do not change with this decision."

Coming next year: Qualcomm is making 5G in phones a reality.

What is 5G?: Here are the basics on the next-gen wireless tech.