Eliminating Property Access Negotiations - The FCC’s OTARD Expansion Proposal and San Francisco’s Police Code Article 52

Eliminating Property Access Negotiations - The FCC’s OTARD Expansion Proposal and San Francisco’s Police Code Article 52

On April 12, 2019, the FCC’s Wireless Bureau released a Notice of Proposed Rulemaking (“NPRM”) concerning the extension of the OTARD rule to cover antenna devices that are used as “hub” transmitters serving customers not located at the antenna site.

In September of last year, we published a series of blog entries exploring this issue in some detail. See https://www.kandutsch.com/blog/uncategorized/wireless-facility-siting-issues-small-cells-and-otard-rules-part-i, and following entries. As described on our blog, the issue arises from a confluence of historical accidents, driven by the evolution of technology and parallel public policies that are now seen as conflicting.

The primary technological driver has been the rapid rise of wireless platforms as a supplement to and eventual replacement of wired platforms for pay television, Internet access and voice services. Following enactment of the Telecom Act of 1996, the FCC promulgated two sets of rules dealing with the placement of wireless devices on private or public property. On the one hand, the Over-the-Air-Reception-Device (“OTARD”) rules were intended to protect from almost all local regulation the placement of consumer reception devices by customers of a wireless service like satellite television. On the other hand, Section 704 of the Telecom Act preserved the ability of local governments to regulate the placement of large and obtrusive structures used in the transmission of wireless signals. Back then, things seemed clear: local regulation of wireless reception devices is extremely limited, while local authority over wireless transmission devices is preserved.

Inevitably, however, technology evolved in ways that muddy the once-clear distinction between reception and transmission devices, and therefore the regulatory schemes governing their placement. What rules apply to devices that are used to both receive and transmit wireless signals?

To understand the implication of the FCC’s proposal to expand OTARD protection to “carrier hub” facilities, imagine a world in which an MDU resident has the right to lease space on an apartment balcony to a wireless carrier for placement of radio relay devices over the landlord’s objection. Imagine a world in which your neighbor has the right to erect a 50-foot cell tower in his front yard and there’s nothing that either you or the city can do to stop it, as long as minimal safety-related criteria are met.

The driving force behind the WISPA proposal, adopted by the FCC in the NPRM, is the exponential increase in the number of hub or signal relay stations required to deploy advanced wireless networks such as 5G, which utilize extreme high-frequency bands in the radio spectrum. Because high-frequency wavelengths are very short, the wave form is easily distorted; consequently, higher frequency waves do not travel as far as a lower-frequency waves. Shorter travel distances mean more base stations – a lot more. Where to put them, if not on someone else’s public or private property?

As discussed here - https://www.kandutsch.com/blog/uncategorized/wireless-facility-siting-issues-small-cells-and-otard-rules-part-iii-triton-network-systems - the FCC has already stretched the scope of the OTARD rule almost to its breaking point by ruling that a wireless antenna relaying signals via a mesh network can be an OTARD device despite the fact that it serves remote customers, as long as at least one customer is located at or near the antenna site. In the NPRM the Wireless Bureau proposes to take the crucial additional step of eliminating the requirement that there be at least one customer at the antenna site so that the OTARD rules protects not only reception devices but transmission hubs as well. To take that step would mean, among other things, that OTARD can no longer be viewed primarily as a pro-consumer measure. On the contrary, the FCC is proposing to transform a rule that allows consumers to install small reception devices in their homes into a license to wireless carriers to install anything they want (provided it does not exceed OTARD’s one meter diameter limit) anywhere they want, so long as the site is owned or leased by the carrier. If the proposal becomes a final rule, OTARD would have to be seen as a powerful route by which wireless telecommunications and data carriers may escape not only traditional principles of property law, but also the reach of almost all traditional police power regulation at the local level.

The FCC’s rationale for expanding OTARD coverage is as simple as it is circular: 5G networks require dense deployment of smaller antennas across provider networks closer to customers. Because more antenna and relay devices are needed, fewer regulatory restrictions and hurdles are tolerable. The policy justification for preempting local authority over wireless facilities siting is also familiar - easing regulatory restrictions on the installation of hub and relay antennas will “spur investment” in next generation wireless networks. In fact, the exact same logic was used just a few months ago when the FCC issued its Declaratory Ruling and Third Report and Order in September 2018 limiting the fees that can be imposed on carriers for deploying small cell antennas in the public right of way. There is ample reason to be skeptical of carrier claims that relief from regulatory burdens is the key to bridging the digital divide.[1]

OTARD expansion can be seen in the same light as another recently-enacted “forced access” measure – San Francisco Police Code Article 52, which allows any qualified ISP, upon the request of at least one MDU resident, to not only install facilities in the building without negotiating an access deal with the building’s owner, but also to confiscate the existing in-building wiring for its own use, as long as “just and reasonable compensation” is paid to the owner. The shared, somewhat condescending and evidence-free presumption behind both the FCC’s OTARD expansion proposal and San Francisco’s Article 52 is that carriers are not capable of negotiating reasonable deals with municipal governments (in the case of OTARD) or with multi-family property owners (in the case of Article 52). Therefore, the government must intervene in ways that place the entire burden on municipal governments and on multi-family property owners, and confer the entire benefit on carriers.

In fact, both proposals go beyond simply correcting a perceived (but unproven) imbalance in traditional property access negotiations, because both rules actually prevent property owners from working with telecom carriers at all. That is true because both OTARD expansion and Article 52 deprive property owners and local governments of the one effective tool they possess in their dealings with carriers, which is the power to withhold – and therefore to grant – access to real property for the purpose of siting wireless broadband facilities. Why would a telecom carrier bother to negotiate or even talk with a local planning board or with the owner of an MDU building (or owners’ association in the case of a condominium) about access when access is mandated under the law without negotiation? Is it a good idea to basically eliminate municipal government and apartment owners as a voice in discussions concerning the siting of wireless broadband facilities? In theory (if not in practice) locally elected municipal officials, and to a lesser but still non-negligible extent apartment owners and HOAs, are supposed to represent their constituents, who are voting city residents on the one hand and MDU residents on the other hand. What happens to those represented when you exclude the representative from access negotiations? Is it reasonable to assume that telecom carriers – which are among the most hated corporations year after year https://assets.documentcloud.org/documents/4482254/ACSI-Telecommunications-Report-2018.pdf ) – actually speak for those constituents’ interests more effectively than do elected city officials and landlords?

To assess the plausibility of this proposition, consider the case of those consumers most in need of representation – consumers in under-served areas that are mostly neglected by cable and telco carriers. What reason is there to believe that the cost savings realized by a carrier by virtue of not having to negotiate access to desirable locations will be invested in the deployment of networks in less desirable areas? Or will the elimination of the need to negotiate property-access deals simply lead to more cherry-picking of facilities siting locations – and therefore, of prime service coverage areas – by carriers who can safely ignore less attractive locations?

For example, in the City of San Francisco a telecom carrier may well see a benefit in using Article 52 to become the second, third or even the fourth ISP in a high-end MDU building, but no benefit at all in competing for customers in affordable housing. Article 52 is supposed to expand the ISP options available to residents living in MDUs, but the only MDU residents whose options will expand are those who happen live in locations where ISPs can justify an investment in becoming the second, third or fourth competitor for customers within the building. In other words, Article 52 expands options for consumers who already have multiple options. What about consumers who happen to live in less attractive areas? Who represents customers in affordable housing if not the property owner, who can negotiate a bulk agreement with an ISP giving residents always-on Internet service at a discounted rate? But that owner’s ability to negotiate a bulk discount with any ISP is undermined by the mere existence of Article 52 because that law prevents the owner from contractually granting exclusive use of home run wiring to a bulk service provider.

Similarly, OTARD expansion will no doubt relieve carriers of the financial and other burdens associated with negotiating facilities siting deals with city governments in densely populated areas where return on investment is almost guaranteed. But what guarantee is there that these cost savings will be invested in deployment of wireless facilities in sparsely populated, lower income or rural areas? Under Section 332 (c)(7) of the Communications Act, carriers negotiate with municipalities for access to potential sites for cell phone towers and other facilities; access to more lucrative areas may be conditioned on the carrier’s commitment to build out networks in less lucrative locations. By preempting almost all municipal jurisdiction over facilities siting decisions, OTARD expansion would in effect do away with those negotiations altogether.

[1] Predictions that repeal of Network Neutrality rules in June 2018 would “spur investment” have proven to be wrong. See for example https://www.techdirt.com/articles/20190124/10370741459/comcast-network-investment-drops-despite-repeated-claims-killing-net-neutrality-would-trigger-investment-wave.shtml.