Beginning in late April 2008, all cable television operators will be required to provide specific customer notices in monthly bills to educate customers about the digital television (DTV) transition. All cable operators and other multichannel video programming distributors (MVPDs) should take immediate steps to comply with the notification requirements outlined in this post.

The FCC's rules state that the notices “must be provided as part of an information section on the bill or bill notice itself or on a secondary document mailed with the bill or bill notice, in the same language or languages as the bill or bill notice.” Notices must be in “clear and conspicuous print” and convey at least the following specific information about the DTV transition:

1. After Feb. 17, 2009, a television receiver with only an analog broadcast tuner will require a converter box to receive over-the-air broadcasts with an antenna because of the nation's transition to digital broadcasting. Analog-only TVs should continue to work as before with cable and satellite TV services, gaming consoles, VCRs, DVD players, and similar products.
2. Information about the DTV transition is available from www.dtv.gov or this MVPD at [insert the telephone number and website of the MVPD if available], and from www.dtv2009.gov or 1-888-DTV-2009 for information about subsidized coupons for digital-to-analog converter boxes.

Additionally, the notices must explain clearly what effect, if any, the DTV transition will have on the customer's access to the MVPD's service and explain that analog sets not connected to an MVPD service may need additional equipment, such as a converter box, or may have to be replaced.

If a customer does not receive a paper version of either a bill or a notice of billing, an MVPD must provide that customer with equivalent monthly notices in whatever medium or format the customer receives monthly billing information.

Because the FCC's notification requirement is expected to take effect by late April, all cable operators and other MVPDs should move quickly to comply with the requirements. The precise effective date will become known only after the FCC's order appears in the Federal Register and the rules are approved by the OMB—which is expected to occur as early as next week. Consequently, to ensure compliance, all cable operators should arrange to include the required notice in all customer bills that are issued after April 23, 2008.

If you have any questions about these new monthly notification requirements, or need assistance in preparing the notifications, please contact us.

For more information, please contact:

James F. Ireland, jayireland@dwt.com
Fred W. Giroux, fredgiroux@dwt.com
Steven J. Horvitz, stevenhorvitz@dwt.com

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.

Copyright © 2008, Davis Wright Tremaine LLP.

Read the full article: www.dwt.com/practc/communications/bulletins/02-08_FCCReleases.htm.

We advised previously that the revised and significantly expanded CPNI regulations affecting all telephone service providers (including wireless, cable telephony and VoIP service providers), was scheduled to become fully effective on Dec. 8, after OMB approval. As we have also advised, the FCC has signaled its intention to issue harsh penalties of $100,000 or more to violators.

Auction 73 seminar - Nov. 20, 2007
Auction 73 application filing deadline,  Dec. 3, 2007; 6:00 p.m.
Auction 73 upfront payment deadline, Dec. 28, 2007; 6:00 p.m.
Auction 73 begins, Jan. 24, 2008

Revised 700 MHz band plan

The FCC adopted a revised band plan for the “Lower” and “Upper” 700 MHz bands. In general, the 700 MHz band encompasses spectrum from 698 MHz to 806 MHz. Some of the spectrum within this band previously was auctioned and licensed by the FCC. In the upcoming auction, the FCC will divide the total of 62 MHz being auctioned among five spectrum blocks. Some specifics for each of these blocks are:

Block Bandwidth/Pairing Frequencies Market Type/Size

The FCC also adopted several revisions to the public safety spectrum allocations within the 700 MHz band that are not reflected on the chart above. Specifically, existing 700 MHz band public safety spectrum allocations were shifted slightly, and the spectrum itself was re-designated from wideband to broadband use. Finally, the FCC also shifted the existing 700 MHz Guard Band spectrum allocations, and reduced the size of the Guard Band B Block licenses.

Performance requirements

Since the late 1990s, the FCC has imposed a “substantial service” performance requirement on most types of commercial wireless licensees in order for licensees to receive a license renewal expectancy. While the specific requirements of this standard vary by type of wireless service, under the prior Upper 700 MHz band rules, the substantial service test would have been met if a personal communications services (PCS) licensee provided coverage reaching 20 percent of the population in the license area before the expiration of the initial 10-year license term. For the new 700 MHz licenses, the FCC adopted the following new, more stringent performance requirements.

• Smaller geographic market-area licensees (Economic Area licenses and Cellular Market Area licenses) will be required to provide service to cover at least 35 percent of the geographic area of the licensed market within four years of license issuance (by Feb. 17, 2013); and 70 percent of the geographic area by the end of the license term (by Feb. 17, 2019).
  
  
• Large multistate region (REAG) market licensees will be required to provide service to cover at least 40 percent of the population of the licensed market within four years of license issuance (by Feb. 17, 2013); and 75 percent of the population by the end of the license term (by Feb.17, 2019).
  
  
• The FCC did not identify specific build-out requirements for the nationwide Upper D block license. This licensee will be required to partner with an adjacent Public Safety Broadband Licensee, and to negotiate a Network Sharing Agreement to be approved by the FCC, which will govern construction deadlines, among other issues.
  
  
• If a licensee does not meet the four-year performance benchmarks, the FCC will reduce its license term from 10 to eight years, thereby imposing an accelerated construction schedule.
  
  
• If a licensee fails to meet the end-of-term construction requirements, the FCC will automatically reclaim any unserved areas of its license area and re-license those areas.

Open access

One of the more controversial aspects of the FCC’s new rules is its decision to impose “open platform” requirements on the winning bidder of the 22 MHz Upper C Block license. In response to proposals made by public interest groups and potential new wireless market entrants such as Google, the FCC decided to impose certain limited open-access requirements in the form of special service rules. These rules require Upper C Block licensees to allow their customers to use any device to access the wireless network, or to transmit any wireless application over the spectrum, provided the device or application is in compliance with technical standards necessary for the security of the wireless network.

Despite aggressive lobbying, the FCC refused to impose additional open-access obligations requiring Upper C Block licensees to make spectrum available to third parties on a wholesale/leased basis, or to impose interconnection requirements. In adopting these first-ever wireless open-access rules, the FCC stated that the rules would facilitate “innovation at the edge of the network” by allowing the development of hardware and applications such as Wi-Fi or VoIP compatibility that may have been restricted by wireless carriers under their current authority to exercise strict control over spectrum pursuant to existing license authorizations.

Despite recent rumors that the FCC might weaken these newly adopted open-access requirements via a declaratory ruling, FCC Chairman Kevin J. Martin recently advised Congress that the Commission has no plans to modify the new C Block open access rules.

Public Safety/Private Partnership

As mentioned above, the FCC will require that the winner of the 10 MHz Upper D Block nationwide license form a Public Safety/Private Partnership with an adjacent nationwide Public Safety Broadband Licensee, to develop a shared, interoperable broadband network for both public safety and commercial use. Under the new rules, public safety will have priority access to the Upper D Block commercial spectrum in times of emergency, and the commercial licensee will have preemptible, secondary access to the adjacent public safety broadband spectrum.

The FCC has already begun accepting applications for the Public Safety Broadband Licensee.

Auction procedures

The FCC adopted three noteworthy changes to its auction procedures for Auction 73. First, in order to reduce the potential for anti-competitive bidding behavior, the Commission will use anonymous bidding for the auction, regardless of any pre-auction assessment of how competitive the auction will be. Under the rules for Auction 73, until bidding ends, the FCC will only release the names of entities that have filed applications to bid in the auction. Unlike past auctions, the FCC will not release: 1) the licenses that bidders have applied to bid on; 2) bidders’ upfront payment amounts or bidding eligibility; or 3) any other information that could identify a bidder.

Second, the FCC will use package bidding procedures to auction the 12 Upper C Block REAG licenses, in order to assist bidders that are seeking to create a nationwide footprint. Under the FCC’s new procedures, bidders may bid on any one of the 12 REAG licenses individually, or they may place a bid on any combination of three pre-defined “packages” of C Block licenses. Bidders will not be allowed to choose their own package of C Block licenses to bid on.

Finally, the FCC established reserve prices for this auction. These prices will allow the FCC to decline to award licenses within a spectrum block if the sum of all high bids for licenses in that block does not meet the FCC-established aggregate reserve price for that block. The reserve prices adopted for each block are: Block A - $1.8 billion; Block B - $1.37 billion; Block C - $4.6 billion; Block D - $1.3 billion; and Block E - $900 million.

Auction 76

The Commission also announced that it will promptly re-auction any licenses not assigned by Auction 73 in a subsequent auction designated as Auction 76. While the FCC will use the same aggregate reserve prices in Auction 76, it will modify the performance or access requirements imposed on the licenses in the re-auctioned block. If the FCC determines that it is necessary to conduct Auction 76 due to Auction 73 reserve prices not being met, the FCC will announce the start date for Auction 76 within five business days after bidding ends in Auction 73. In addition, Auction 76 will begin within three weeks of the FCC’s Auction 76 announcement. Participation in Auction 76 is limited to applicants that qualified to bid in Auction 73, who file a separate, abbreviated application for Auction 76 by the Auction 73 application filing deadline of Dec. 3, 2007.

Status of legal challenges

The FCC’s Second Report and Order, in which it adopted final rules for Auction 73, was released on Aug. 10, 2007. Several petitions for reconsideration of the Second Report and Order were filed on Sept. 24, 2007, and remain pending at the FCC. It is expected to issue its reconsideration order prior to the start of Auction 73. In addition, the Commission’s new open-access requirements are the subject of a legal challenge filed in the federal appeals court in Washington, D.C.

For more information, please contact:

Theresa Cavanaugh, Washington, D.C., (202) 973-4200, terrycavanaugh@dwt.com
Chris Fedeli, Washington, D.C., (202) 973-4200, chrisfedeli@dwt.com

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.

Copyright © 2007 | Davis Wright Tremaine LLP

The new rules were adopted at a meeting that was delayed 12 hours while the commissioners negotiated the details of the final decision. The full text of the Commission’s action has not been released, and it may be weeks before it becomes publicly available. The text of the final order undoubtedly will reveal details of the actions that are not evident now. However, based on the FCC’s formal news release and the statements made by the commissioners at the meeting and in their accompanying press releases, we can provide the following summary of these important FCC actions.

Digital Must-Carry Rules

The Communications Act requires that cable operators carry the primary video signal of all local broadcasters that elect must-carry. With the ongoing transition to digital broadcasting, in order to ensure that cable subscribers without digital televisions or set-top boxes would not lose their ability to view local television signals, many cable operators whose systems were not all-digital already had begun carrying both the analog and digital signals of the most popular broadcast stations. These operators had been planning to continue such carriage after the 2009 digital transition. However, cable operators opposed the FCC’s proposed dual-carriage mandate, preferring instead to carry both analog and digital signals voluntarily according to marketplace demand; the cable industry already had reached a dual-carriage agreement with non-commercial broadcasters. In contrast, commercial broadcasters argued that a federal mandate was necessary to ensure that their signals would remain viewable to all cable subscribers after the digital transition.

The order finally adopted by the FCC embraced a compromise position offered by the National Cable & Telecommunications Association and imposes less drastic requirements on the cable industry than initially proposed by the Commission. Under the FCC’s initial proposal, dual-carriage of broadcast signals would have been required indefinitely until a cable system was fully converted to digital, so that all subscribers could view digital signals with set-top boxes; all-digital systems would be required only to carry the digital signal, so long as they provided necessary set-top boxes to subscribers. Instead, the FCC imposed only a three-year dual-carriage requirement on non-digital cable systems, although it is subject to renewal by the Commission at the end of that period. As initially proposed, the Commission also adopted a requirement that, post-transition, cable operators carry the high-definition broadcast streams of must-carry broadcasters’ signals, which therefore may result in some cable systems being subject to a triple-carriage requirement.

Cable systems with less than 552 MHz of capacity may request a waiver of the Commission’s dual-carriage requirements. While the cable industry had requested a blanket waiver for these systems, the FCC will instead review the waivers on a case-by-case basis. This decision prompted a dissent from Commissioner Jonathan S. Adelstein, who favored the blanket waiver so that small systems could spend their money on operations rather than on pursuing waiver requests. The Commission also will issue a Further Notice of Proposed Rulemaking seeking ways to minimize the economic impact on small cable operators of complying with the new obligations.

The Commission also had proposed in its NPRM a requirement that cable operators pass-through all of the bits in a digital broadcast stream, which the cable industry had viewed as a back-door attempt to impose a “multicast must-carry” rule that essentially would require carriage of several streams of different content from each broadcaster encompassed within all of the bits in a digital broadcast stream; the FCC had twice before rejected such proposals. Cable operators also contended that such a requirement would have prevented them from using digital compression technologies to conserve bandwidth that could be better used for carriage of non-broadcast networks or other services, such as high-speed Internet and VoIP telephone. The “all-bits” proposal was rejected by the FCC, which chose instead to maintain the existing requirement that signals be carried with “no material degradation,” i.e., with a picture quality as good as that of any other programming carried by the cable system.

Program Access and “Tying” of Program Services

The prohibition on exclusive cable network programming agreements, enacted as part of the 1992 Cable Act, was originally scheduled to sunset on Oct. 5, 2002. However, Congress authorized the FCC to extend the prohibition upon a finding that it “continues to be necessary to preserve and protect competition and diversity in the distribution of video programming.” In 2002, the FCC extended the prohibition for five years until Oct. 5, 2007, and with yesterday’s unanimous vote, the ban is extended another five years, to Oct. 5, 2012.

Section 628(c)(2)(D) of the Communications Act and Section 76.1002(c) of the FCC’s rules generally prohibit exclusive contracts for satellite cable programming between vertically integrated programming vendors and cable operators in areas where a cable operator is providing service. Thus, the rules require that any satellite cable programming service in which a cable operator has an attributable ownership interest (defined as five percent or more) must make that programming service available to “alternative” multichannel video program distributors (MVPDs), including DBS providers, ILECs providing cable service, SMATV systems and wireless cable operators that compete with the vertically integrated program network’s cable operator affiliates.

Despite the significant industry developments that have occurred since 2002—including continued subscriber growth by DBS providers, DBS “exclusive” programming, and the increase in the provision of competing MVPD service by ILECs, most notably, Verizon and AT&T—the FCC found that the ban “remains necessary for viable competition in the video distribution market.” The Commission concluded that vertically integrated programming “is some of the most popular programming available today, for which there are not good substitutes.” The Commission also voted to amend its program-access complaint procedures, to require disclosure to complaining parties of the affiliation agreements of vertically integrated program networks against whom they file program-access complaints.

The FCC also issued an NPRM seeking comment on two further, significant changes to its program access complaint procedures. First, the FCC is requesting comment on whether to allow complainants to seek a temporary stay of any proposed changes to existing contracts that are the subject of a program-access complaint. Such a rule, if adopted, would allow the Commission to order MVPDs and program networks engaged in a dispute to maintain the status quo during the pendency of a complaint proceeding. Second, the NPRM seeks comment on creating an arbitration-type step in the complaint process, whereby the Commission may request that the parties submit their “best and final” offer proposals for the rates, terms and conditions under review.

The NPRM also seeks comment on whether it should extend the Commission’s program-access rules, including the exclusive contract ban, to terrestrially delivered cable programming, as the DBS industry, ILECs and other alternative MVPDs have advocated. The cable industry and cable networks have opposed rule extension on the ground that it would exceed the FCC’s authority under the governing statute.

Finally, the NPRM opens an inquiry into whether the FCC should prohibit wholesale “programming tying arrangements,” which are defined as “the practice of some programmers to require MVPDs to purchase and carry undesired programming in return for the right to carry desired programming.” The NPRM asks whether the Commission should require “all programming services to be offered on a stand-alone basis to all MVPDs.” Such a rule would have broad implications for the television programming industry, and would significantly alter the economic relationship between MVPDs and program networks. Language used in Chairman Kevin J. Martin’s accompanying statement also suggests the possibility that he may intend to extend this inquiry to a possible retail à la carte requirement, an approach he has long championed and that cable operators and program networks have strenuously resisted. The FCC under then-Chairman Michael Powell conducted an inquiry into à la carte and issued a report concluding that it would not benefit most consumers and would harm program diversity. After his ascension to chairman, Kevin Martin requisitioned a “Further Report” on à la carte that disputed some of the prior report’s conclusions, though it did so without soliciting additional comment or adducing any new evidence. The new NPRM may be an attempt to build a record more supportive of Chairman Martin's interest in advancing à la carte options.

Davis Wright Tremaine will be filing comments in response to the FCC’s Program Access NPRM on behalf of certain clients. For further information or to participate in these FCC proceedings, please contact:

Burt Braverman, Washington, D.C., (202) 973-4200, burtbraverman@dwt.com
John Seiver, Washington, D.C., (202) 973-4200, johnseiver@dwt.com
David Oxenford, Washington, D.C., (202) 973-4200, davidoxenford@dwt.com
Robert Corn-Revere, Washington, D.C., (202) 973-4200, bobcornrevere@dwt.com
Maria Browne, Washington, D.C., (202) 973-4200, mariabrowne@dwt.com

This advisory is a publication of the Communications Group of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent developments in the communications industry. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.

Copyright © 2007, Davis Wright Tremaine LLP.

The text of the FCC’s Order has not yet been released, so the specific details of the new auction rules are not yet known. We have summarized the key elements of the FCC’s News Release below, and will issue further advice when the FCC’s final 700 MHz Auction order is released.

The FCC adopted a revised band plan for the “Lower” and “Upper” 700 MHz bands. In general, the 700 MHz band encompasses spectrum from 698 MHz to 806 MHz. Some of the spectrum within this band previously was auctioned and licensed by the FCC. In the upcoming 700 MHz auction, the FCC will auction a total of 62 MHz of spectrum, divided among five spectrum blocks. Some of the specifics for each of these spectrum blocks are:

Block	Bandwidth/Pairing	Frequencies	Market Type/Size
Lower A Block	12 MHz/2 x 6 MHz	698-704 MHz/ 728-734 MHz	EA -Economic Area (larger than CMAs)
Lower B Block	12 MHz/2 x 6 MHz	704-710 MHz/ 734-740 MHz	CMA - Cellular Market Areas (smallest market size)
Lower E Block	6 MHz/Unpaired	722-728 MHz	Economic Area
Upper C Block (Open Access)	22 MHz/2 x 11 MHz	746-757 MHz/ 776-787 MHz	REAG – Large multi-state regions of US
Upper D Block (Public/Private)	10 MHz/2 x 5 MHz	758-763 MHz/ 788-793 MHz	Nationwide License

The FCC also adopted several significant revisions to the public safety spectrum allocations within the 700 MHz band.

Performance Requirements

The FCC adopted new, more stringent build-out and performance requirements for the new 700 MHz licensees. The performance requirements described below were strongly opposed by the wireless industry.

• For smaller geographic market-area licenses (such as Economic Area licenses and Cellular Market Area licenses), licensees will be required to provide service to cover at least 35 percent of the geographic area of the licensed market within four years of license issuance; and 70 percent of the geographic area by the end of the license term.

• For the larger, REAG market licenses, licensees will be required to provide service to cover at least 40 percent of the population of the licensed market within four years of license issuance; and 75 percent of the population by the end of the license term.

• The FCC did not identify specific build-out requirements for the nationwide Upper D block license. This licensee will be required to partner with an adjacent Public Safety Broadband Licensee, and to negotiate a Network Sharing Agreement to be approved by the FCC, which will govern construction deadlines, among other issues.

• If a licensee does not meet the four-year performance benchmarks, the FCC will reduce its license term from ten to eight years, thereby imposing an accelerated construction schedule.

• If a licensee fails to meet the end-of-term construction requirements, the FCC will automatically reclaim any unserved areas of its license area and re-license those areas.

Open Access

One of the more controversial aspects of the FCC’s new rules is its decision to impose “open platform” requirements on the winning bidder of the 22 MHz Upper C Block license. Specifically, the Upper C Block licensee will be required to provide a platform that will allow customers, device manufacturers, third-party application developers and others to use the device and applications of their choice on this spectrum block, subject to the condition that these devices and applications do not harm the network.

Public Safety/Private Partnership

As mentioned above, the FCC will require that the winner of the 10 MHz Upper D Block nationwide license form a Public Safety/Private Partnership with an adjacent nationwide public safety licensee, to develop a shared, interoperable broadband network for both public safety and commercial use. Under the new rules, public safety will have priority access to the Upper D Block commercial spectrum in times of emergency, and the commercial licensee will have preemptible, secondary access to the adjacent public safety broadband spectrum.

Auction Procedures

The FCC adopted three noteworthy changes to its auction procedures for the 700 MHz auction. First, the FCC will use anonymous bidding for the auction, regardless of any pre-auction assessment of how competitive the auction will be. Second, the FCC will use “package bidding” procedures to auction the 12 Upper C Block REAG licenses, to assist bidders that are seeking to create a nationwide footprint. Finally, the FCC directed its staff to establish “reserve prices” for this auction. These prices will allow the FCC to decline to auction the 22 MHz Upper C Block license if the newly imposed open access requirements on this spectrum depress bidding to an unacceptably low level.

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For more information, please contact:

Theresa Cavanaugh, Washington, D.C., (202) 973-4257, terrycavanaugh@dwt.com
Chris Fedeli, Washington, D.C., (202) 973-4274, chrisfedeli@dwt.com

Finally, and importantly, VoIP providers will now be required to contribute a percentage of their interstate revenues into the federal TRS Fund, and to file FCC Form 499-A (used to calculate such contributions, as well as Universal Service Fund and other contributions) on an annual basis. In turn, VoIP providers will be eligible for compensation from the fund for the TRS services they provide.

The FCC once again declined to classify VoIP as a “telecommunications” service subject to the panoply of regulations applied to providers of such services, but instead found that “[b]ecause consumers have a reasonable expectation that interconnected VoIP services are replacements for traditional phone service, the same disability access protections that currently apply to telephony must apply to interconnected VoIP.” This pronouncement fits the FCC’s pattern over the past two years of applying a growing variety of public-safety, consumer-protection and law-enforcement-related obligations on interconnected VoIP services. The FCC has already imposed 911/E911, universal service, CALEA (wiretapping) and, most recently, CPNI (subscriber privacy) obligations on interconnected VoIP services.

FCC Chairman Kevin Martin has stated that the agency will “continue to evaluate” the applicability of other telephone-type obligations to VoIP, including numbering and other consumer protection measures, in order to “protect the interests of consumers and establish a competitively neutral playing field for competing services.” Interconnected VoIP providers and equipment manufacturers thus may expect additional FCC regulation in the future.

The details of these new regulatory requirements and contribution obligations are complex in their applicability and implementation. For further information, please contact one of the below-listed DWT attorneys.

Footnote

¹ If the requirement is not “readily achievable,” the provider must ensure that the service is compatible with existing devices or specialized customer premise equipment (CPE) commonly used by individuals with disabilities to achieve access. A provider also must ensure, if readily achievable, that information and documentation provided in connection with an interconnected VoIP service is accessible. A manufacturer of equipment or CPE designed to provide interconnected VoIP service must ensure, if readily achievable, that the equipment is designed and fabricated to be usable by individuals with disabilities. If such compliance is not readily achievable, the manufacturer must ensure that the equipment is compatible with existing devices or specialized CPE commonly used by individuals with disabilities to achieve access, if such compatibility is readily achievable. A covered manufacturer also must ensure that information and documentation provided in connection with covered interconnected VoIP equipment or CPE is accessible—again, if such accessibility is readily achievable.

For more information, please contact:

This advisory is a publication of the Communications Group of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent developments in the communications industry. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.

Copyright © 2007, Davis Wright Tremaine LLP.

NextG filed for preliminary injunction, alleging that the County’s zoning requirements violated its federal rights and prevented it from meeting obligations requiring NextG to construct facilities for customers by specified dates.

In granting NextG’s motion for preliminary injunction, the court identified four common elements that result in preemption of a local ordinance by Section 253: “(1) a complicated application process (including reporting of financial information) and high fees; (2) a public hearing on the application; (3) imposition of criminal and civil sanctions for violations; and (4) unfettered discretion to approve or deny the application, or revoke a permit once issued.” The court found that all of the common elements were present in the County’s zoning requirements, which required submission of a variety of detailed plans, maps, and any other information that the County might require, and put the burden on the applicant to prove such “subjective and imprecise concepts” as: “health, peace, and comfort” of area residents; “use, enjoyment or valuation of property;” and “public health, safety or general welfare.” The court found that these requirements were “so burdensome and Byzantine as to erect a barrier to providing telecommunications services.” The court also found that the highly burdensome application process was complicated by two separate public hearing requirements, including one that was not codified, and by the imposition of criminal and civil sanctions. Finally, the court found that the County’s zoning ordinance “provides unfettered discretion to County officials at multiple points in the approval process, including discretion to ultimately deny the application, the ‘ultimate cudgel’ in the preemption analysis.”

The court rejected the County’s arguments that its zoning code (1) does not require a franchise, and (2) is of general applicability. The court noted that the County’s “not a franchise” argument was recently rejected by the Ninth Circuit in Sprint Telephony PCS, L.P. v. County of San Diego. The court held that the deciding characteristic is not the label attributed to the requirement, but whether the requirement has the effect of prohibiting the provision of telecommunications services. For similar reasons, the court also found the general applicability of the zoning requirements to be irrelevant, stating that Section 253(a) “plainly preempts not only statutes that may ‘prohibit’ the provision of services on their face, but also that ‘have the effect’ of prohibiting the provision of services in their application…”

The court also rejected the County’s argument that its zoning requirements constituted “management” of the public rights-of-way within the “safe harbor” of Section 253(c). The court found that the requirements went beyond management of the right-of-way because they incorporated unrelated factors such as the “use, enjoyment and valuation of adjoining property, and the peace, comfort and welfare of neighbors.” Of perhaps even greater importance, the court found that County’s broad discretion to deny an application on amorphous factors, such as “good zoning practice” and “functional development design,” as well as the County’s discretion to request whatever additional information it wanted from the applicant, also exceeded the County’s management of the right-of-way. Lastly, the court found that the zoning requirements exceeded the Section 253(c) safe harbor because they discriminated against wireless facilities.

Having found NextG likely to succeed on the merits of the case, the court held that absent the requested relief, NextG would suffer irreparable harm to its goodwill and reputation. The court noted that “[t]he wireless telecommunications industry is capital-intensive and consists of only a small number of major players, so the inability to dispatch services and the resulting loss of current revenue could result in insufficient funding for future projects and inhibit Plaintiff’s ability to grow its business.” The court rejected the County’s argument that NextG brought the harm upon itself by agreeing to unrealistic contractual commitments, holding that NextG should not be required to build into its contracts time to comply with an invalid permit process and that the harm stems from the passage of the requirements, not from NextG’s contractual obligations.

The NextG v. Los Angeles County decision provides further support for the proposition that local governments cannot impose burdensome and open-ended zoning codes on wireless telecommunications providers. The decision reiterates that federal policy promoting the rapid deployment of competitive and advanced telecommunications networks must not be thwarted by a patchwork quilt of local requirements and the fickle winds of local politics.

Footnote

¹ NextG also made claims under Sections 7901 and 7901.1 of the California Public Utilities Code. However, finding that federal law was dispositive on the issues presented, the court declined to consider whether the zoning ordinance was also preempted by state law. The scope of local government’s authority over wireless telecommunications facilities in the public rights-of-way under Section 7901 and 7901.1 is presently at issue before the California Supreme Court in Sprint Telephony PCS v. County of San Diego.

For more information, please contact: