Unlike most monthly Commission meetings, none of the items on the October agenda initiate new proceedings or propose new rules. Instead, the items focus on implementation of a number of policies prioritized under Chairman Pai. FCC regulatory activity will likely slow in the aftermath of the election. As a result, the October agenda may represent the FCC’s final push for any major reforms in the near-term. However, on October 15, Chairman Pai did announce his intention to move forward with a rulemaking to interpret the meaning of Section 230 of the Communications Decency Act. You will find more details on the significant October meeting items after the break:

Restoring Internet Freedom Order Remand: The draft Order on Remand would respond to the remand from the D.C. Circuit in Mozilla Corp v. FCC, which upheld a majority of the FCC’s decisions on broadband Internet access service regulation and classification in the 2017 Restoring Internet Freedom Order, but remanded three issues back to the agency for further consideration. The FCC would address each issue and find that its initial conclusions in the 2017 order promote public safety communications, facilitate broadband infrastructure deployment through pole attachment rights, and allow the Commission to continue to provide Lifeline support conditioned on providing broadband internet access service. The agency would find there is no basis for departing from these original conclusions and that any negative effects on these sectors resulting from its classification of broadband Internet access service in the 2017 order would be limited or otherwise outweighed by the benefits of the “light-touch” regulatory framework for broadband.

Establishing a 5G Fund for Rural America: The draft Report and Order would adopt the 5G Fund using a two-phase reverse auction targeting support for deploying 5G networks in areas without an unsubsidized provider of either 4G LTE or 5G mobile broadband. Proposed in an April 2020 Notice of Proposed Rulemaking (“NPRM”), the draft Order would adopt a 10-year term of support and an overall budget of $9 billion for the 5G Fund. Phase I of the auction would make available up to $8 billion, with $680 million set aside for bidders offering to serve Tribal lands, and Phase II would make at least $1 billion available to target deployment facilitating adoption of precision agriculture technologies. The FCC would adopt its proposal to determine which areas would be eligible for 5G Fund support from data collected through the upcoming Digital Opportunity Data Collection, and would impose performance requirements on carriers continuing to receive legacy mobile high-cost support.

Unlicensed Wireless Opportunities in TV White Spaces: The draft Report and Order would adopt changes to the Part 15 unlicensed device rules, as proposed in the Commission’s February 2020 NPRM, to expand the ability of white spaces devices to deliver wireless broadband services in rural areas. The Order would increase the maximum permissible power for fixed white space devices operating on TV channels 2-35 in “less congested areas” and allow higher-power mobile operations within defined geographic areas. The FCC would also adopt rule changes to facilitate the development of narrowband Internet of Things devices and services in the TV bands.

Streamlining Approval of Wireless Infrastructure Modifications: The draft Report and Order would revise the Commission’s section 6409(a) rules to provide for streamlined state and local review of tower modifications that involve limited ground excavation or deployment beyond site boundaries. The rule revision would establish that, for towers not located in the public rights-of-way, a modification of an existing site needing ground excavation or deployment of up to 30 feet will not be disqualified from streamlined processing on that basis. The draft Order would also promote accelerated deployment of 5G and other advanced wireless services by facilitating the collocation of antennas and associated equipment on existing infrastructure, while preserving the ability of state and local governments to manage and protect local land-use interests.

Modernizing Unbundling and Resale Requirements: The draft Report and Order would eliminate and modernize unbundling and resale requirements for incumbent local exchange carriers (“LECs”). The FCC would eliminate certain unbundling requirements for specific broadband-capable loops, subject to reasonable transition periods, in more densely populated areas, but preserve unbundling requirements in less densely populated areas without sufficient evidence of competition. The draft Order would also forbear from the avoided-cost resale obligation for non-price cap carrier incumbent LECs, subject to a three-year transition period.

The Telecommunications Act of 1996 (the “Act”) introduced numerous regulatory provisions designed to prevent BOCs from leveraging their monopoly status to disadvantage competitor long distance providers and some requirements subsequently were applied to independent incumbent local exchange carriers. Certain provisions have automatically sunset and, over time, the FCC eliminated or forbore from enforcing many, but not all, of the requirements. USTelecom has sought forbearance from BOC obligations on several occasions including, prior to the current request, in a 2014 request that all BOCs receive forbearance from all remaining Section 272 obligations in all regions. If adopted in its current form, the draft Order would forbear from enforcing three requirements, including effectively eliminating the remaining Section 272 obligations.

First, independent RoR carriers currently are subject to structural separations requirements for their in-region long distance services. The FCC rule Section 64.1903 separate long distance affiliate requirement was designed to prevent independent RoR carriers from misallocating local and long-distance operational costs, a practice that could result in overearnings or increased rates for competitors relying on critical service inputs from the independent RoR carriers. Describing the structural separations requirement as burdensome and ineffective at preventing cost misallocation, the draft Order instead cites to regulatory and marketplace changes, and Commission enforcement mechanisms as sufficient to address cost misallocation concerns. The Commission notes the existence of “numerous accounting, cost allocation and separations requirements” that act to require separate accounting, prevent cross-subsidization of services, and prescribe cost allocation procedures. The draft Order asserts that, should these methods fail, the RoR carriers are subject to investigation and enforcement pursuant to several provisions of the Act. Finally, the draft asserts that Commission rule changes and increasing RoR carrier conversion to price cap regulation has reduced the incentive, and made it easier to identify, cost misallocation. Unlike prior Commission forbearance grants of the structural separations requirement, the draft Order does not propose special access charge imputation filing or performance metric reporting requirements on independent RoR carriers. Consistent with the Commission’s prior forbearance of the imputation condition for price cap LECs and because, as discussed below, the performance metric reporting requirements are proposed to be forborne for BOCs and price cap LECs, the Commission proposes to forbear them for RoR carriers also.

Second, the draft Order proposes to grant forbearance from the Section 272(e)(1) provisioning interval requirement and related special access performance metric reporting requirement. Although not requested by USTelecom, the Commission takes the opportunity to propose forbearance of similar provisions and reporting requirements applied to price cap LECs. Section 272(e)(1) of the Act prohibits BOCs from discriminating in the speed at which the BOC provisions telephone exchange service and exchange access to unaffiliated carriers as compared to fulfilling requests for the BOC or its own affiliates. The special access performance metric reporting was intended to assist in enforcing Section 272(e)(1)’s nondiscrimination requirement. USTelecom had sought similar forbearance in 2014 and the proposed grant marks a departure from the Commission’s 2015 order denying USTelecom’s 2014 request for forbearance from all remaining Section 272 BOC obligations (“2015 USTelecom Forbearance Order”).

Similar to the justification for the structural separations forbearance for RoR carriers, the draft Order relies on the presence of existing regulations, enforcement mechanisms, and marketplace changes as supporting the proposed forbearance. The FCC explains that Sections 201 and 202 of the Act prohibit unreasonably discriminatory behavior and Section 251(b)(1) has been interpreted as prohibiting discriminatory provisioning of services for resale. The 2015 USTelecom Forbearance Order previously asserted that Sections 201 and 202 were insufficient to protect competition. Responding to opposition references to the 2015 decision on this point, the draft Order characterizes the prior statements regarding Sections 201 and 202 as “outdated,” particularly in light of later Commission orders including the 2017 Business Data Services Order. The Commission’s Section 208 complaint process and Market Disputes Resolution process are mentioned as additional methods of preventing discriminatory provisioning. The draft Order also notes that facilities-based competition, including in the business data services market, supports elimination of the BOC and price cap LEC provisioning safeguards and renders unpersuasive commenter concerns regarding possible BOC and price cap LEC motives to discriminate. USTelecom did not seek forbearance from Sections 272(e)(2) and (4), the last remaining Section 272 provisions applicable to a BOC’s Section 272 separate affiliate. However, the draft Order suggests those provisions essentially will become irrelevant because, upon forbearance of the special access performance metric reporting requirement, there will be no reason for a BOC to continue operating a Section 272 long distance affiliate.

The draft Order’s third proposed forbearance grant would relieve BOCs of the Section 271(c)(2)(B)(iii) requirement to provide nondiscriminatory access to pole attachments in accordance with Section 224 of the Act. Like the structural separations issue, this request received little attention in proceeding comments. The FCC explains that Section 271(c)(2)(B)(iii) is typically applied as a condition for BOCs seeking to provide in-region long-distance service. Because the draft Order finds the provision to be redundant of Section 224, which remains in effect, the FCC proposes to forbear from enforcement of Section 271(c)(2)(B)(iii). The draft Order highlights that the only distinction between Section 271(c)(2)(B)(iii) and Section 224 is the former statute’s 90-day complaint period, which the Commission notes has never been used for a Section 271 pole attachment complaint. The FCC asserts there is no need to single out BOCs for “duplicative pole access regulation” in light of pole ownership competition from electric service providers and the nondiscrimination safeguards in Section 224. Commenter observations that BOCs have been using enforcement remedies to obtain pole access were considered insufficient to support retaining Section 271’s duplicative enforcement remedy.

Finally, the Commission expressly declined to rule on USTelecom’s forbearance request regarding Section 251(c) obligations applicable to UNEs and resale. This issue has garnered the most attention, including staff briefing requests from the House Commerce Committee and House Communications Subcommittee, opposition filings from many industry members, and potentially more than 8,000 letters, many individualized, from consumers. Industry members opposing UNE and resale forbearance have asserted a variety of concerns, including that the petition was procedurally deficient because it was not “complete-as-filed”, the lack of “economically viable alternatives” for certain UNEs, and USTelecom’s failure to provide granular, localized data to support assertions of market competition.

The few comments supporting USTelecom’s petition asserted the presence of facilities-based competitors and the decline in use of UNEs, particularly as consumers seek higher-speed services, and argued the Commission is not required to “undertake any particular geographic or product market analysis” when reviewing a forbearance request. In light of the significant and ardent positions on potential UNE/resale forbearance – including sustained ex parte communications, as recently as yesterday, with the Commission – it’s not surprising that the Commission has chosen to delay deciding on this issue. Rather, addressing the issue in a footnote, the FCC notes that the UNE/resale request remains pending, subject to an August 2, 2019 statutory deadline, and that the draft Order should not be “construed as prejudging” the issue. The Commission does appear to be moving on the request, however, as just last week it released a Public Notice stating that the Commission intends to incorporate into the USTelecom forbearance proceeding confidential and highly confidential information submitted in the BDS proceeding. The Public Notice notes that USTelecom “relies on the Commission’s analysis of the data submitted in the BDS proceedings for the factual basis of its forbearance request” and the Commission expects that the BDS data “will significantly enhance the Commission’s ability to analyze competitive facilities deployment.” Consequently, we expect the Commission will take up this request in a future order.

The draft Order is subject to change before being released, so be sure to check back for any updates on the final Order.

Specifically, under the new OTMR regime, new attachers with “simple” wireline attachments (i.e., do not require relocation of existing equipment or service outages) would be allowed to perform and control most of the work to prepare a pole to hold new facilities without relying on the pole owner. The rule will apply to pole attachments governed by federal law, which applies in thirty states that do not regulate pole attachments themselves. The draft emphasizes that its new OTMR process is not a requirement and that parties are welcome to negotiate alternative solutions. The FCC also plans to codify its existing precedent that utilities cannot require an attacher to seek utility approval before “overlashing” new facilities to current attachments, but utilities can require prior notice before the attacher does such work. The FCC also plans to eliminate disparities between the pole attachment rates paid by incumbent telecommunications carriers versus cable and other telecommunications attachers. In particular, the agency intends to establish a presumption for newly-negotiated pole attachment agreements between incumbent carriers and utilities that an incumbent carrier will receive comparable pole attachment rates, terms, and conditions as a similarly-situated non-incumbent carrier or a cable television system providing telecommunications services.

The Declaratory Ruling portion of the draft item clarifies the FCC’s interpretation of Section 253(a) of the Communications Act as prohibiting a state or locality from adopting any moratoria on telecommunications infrastructure deployment. This federal preemption would apply not only to express moratoria, such as laws or regulations prohibiting deployments, but also de facto moratoria that can “effectively halt or suspend” consideration of telecommunications service permits or applications without explicitly banning them. The FCC explained that actions on the part of a state or locality that merely involve some delay do not represent preempted moratoria; instead the action would need to result in a significant or unreasonably long wait.

Rulemakings directed at accelerating broadband deployment generally have drawn bipartisan support and have been a hallmark of the Pai FCC from the beginning. The Chairman clearly sees reducing barriers to pole access for new attachments as critical to densifying networks in advance of 5G deployments. However, utilities and other pole owners likely will continue their pushback against the FCC OTMR proposals, seeking additional checks to ensure pole attachments conform to safety standards.

The National Historic Preservation Act (“NHPA”) requires the FCC to account for the effect of any proposed “undertakings” on historic properties, including the siting of poles, including replacement poles, for communications facilities. Where undertakings are not exempt, parties must comply with detailed NHPA procedures, including consultation, information collection, and review requirements. The FCC previously exempted some pole replacements from these obligations, but it limited the exception to “towers” originally constructed for the sole or primary purpose of supporting communications antennas. By contrast, replacements for poles constructed for other purposes, such as for electric utility lines, required full NHPA review. Carriers and pole owners criticized the distinction between towers and other poles, noting that no such distinction exists for pole replacements on federal lands. However, some state historic preservation officers and Tribal authorities warned that unchecked pole construction could disturb archeological resources and other protected sites.

The new rule exempts additional pole replacements from NHPA review if they meet certain criteria:

• Not a Tower: The pole being replaced can hold utility, communications, or related transmission lines but was not originally constructed for the sole or primary purpose of supporting communications antenna.
• Proximity to Original Pole: The replacement pole must be located no more than ten feet away from the original pole. This represents a relaxation of the FCC’s original proposal, which would have required the replacement pole to be inserted in the same hole as the original pole. However, Commissioner O’Rielly explained that a replacement pole often must be constructed near the original pole while it still stands so that electric wires and other attachments can be transferred safely.
• Prohibiting New Disturbances: The replacement pole must not cause any new “ground disturbance,” although the item recognizes that most rights-of-way will have been disturbed previously by the construction of the original pole or other infrastructure.
• Restricting Extensions: The replacement pole may exceed the height of the original pole by no more than five feet or ten percent of the original pole’s height, whichever is greater.
• Preserving Aesthetics: The replacement pole must be “consistent” with the quality and appearance of the original pole. The FCC initially indicated that the replacement pole must use the same material as the original pole, but it now will allow a change in material (e.g., replacing a wooden pole with a metal pole) so long as the replacement does not result in a significant aesthetic change. The exemption also does not apply when the original pole is itself a historic property.

The FCC anticipates that the additional exemption will not affect historical properties but will spur network densification with small cell facilities to meet rising consumer demand for wireless data and support next-generation 5G services. However, the FCC also recognized that significant reforms to pole siting requirements and coordination with affected stakeholders like Tribal authorities is still necessary to accelerate deployment. As a result, it remains to be seen whether the bipartisan front shown by the FCC here will hold in the face of future, more controversial, wireless infrastructure reforms to come out of the Commission’s infrastructure proceedings.

The new pole replacement exemption will take effect within 30 days of the Report and Order’s publication in the Federal Register.

The Louisville OTMR ordinance provides in part that a new “Attacher may relocate or alter the attachments or facilities of any Pre-Existing Third Party User as may be necessary to accommodate [the] Attacher’s Attachment using Pole Owner approved contractors.” If the relocation is not reasonably likely to result in a customer outage, the new attacher under the ordinance does not need to provide existing attachers notice before undertaking the work. Existing attachers and pole owners have fourteen days after the work is completed to inspect the work at the new attacher’s expense. The Metro Council adopted the ordinance to minimize traffic disruptions and other encumbrances that result from pole attachment make-ready work.

In upholding the ordinance and finding that the City acted within its jurisdictional authority, the court rejected three main arguments proffered by AT&T. First, AT&T claimed that the ordinance was adopted in violation of a state statute that vests exclusive authority in the Kentucky Public Service Commission to regulate the “rates and services of utilities.” The court found that the ordinance was enacted pursuant to a carve-out in the statute which allows cities to retain police powers because, rather than regulating pole attachments, the ordinance “prescribes the ‘method or manner of encumbering or placing burdens on’ public rights-of-way” and was justified by a desire to minimize traffic burdens. The court justified its characterization of the city’s activity because “Louisville Metro has an important interest in managing its public rights-of-way to maximize efficiency and enhance public safety.”

Second, AT&T claimed that the Louisville Metro Council, by modifying existing ordinance language, violated its own procedures for amending the municipal code because it failed to “specifically repeal[]” an existing code chapter or section. The court was unpersuaded, finding that the Metro Council’s “strike-through and underscoring method” was a reasonable approach that complied with the city’s procedural requirement.

Finally, AT&T asserted that the ordinance was preempted by federal law and regulations pertaining to access to pole attachments. The court rejected this argument, observing simply that federal pole attachment requirements are not applicable in Kentucky because the state’s notice to the Federal Communications Commission that it had “reverse preempted” the federal pole attachment statute under Section 224 of the Communications Act of 1934, as amended, extended even to pole access matters that the State commission does not directly regulate.

We expect that AT&T will file an appeal with the Sixth Circuit Court of Appeals.

The Wireline Infrastructure Proceeding complements another docket that is looking at wireless broadband infrastructure, also adopted at the FCC’s April 20 Open Meeting. Please review our blog and advisory on the wireless counterpart for details on those proceedings.

The FCC seeks comment in the NPRM on proposed regulatory measures to better facilitate deployment, maintenance, and upgrading of wireline broadband networks in three basic areas. First, the Commission seeks to

• reform and shorten the timelines for new attachers to gain access to poles;
• examine more extensively the use of approved third-party contractors to do make-ready work;
• create greater transparency about make-ready charges and streamline the make-ready process;
• consider a pole-attachment complaint shot clock for Commission decisions; and
• facilitate the attachments of incumbent local exchange carriers to poles at rates more comparable to competitive local exchange attachers.

The NOI focuses on issues of preemption of state and local laws affecting broadband deployment and copper retirement. The Commission makes a number of inquiries regarding the scope of its legal authority. The NOI also looks at state laws that govern copper retirement.

Finally, the RFC seeks input on several discrete issues concerning the discontinuance process under Section 214 of the Act beyond those raised by the NPRM, specifically of what constitutes the scope of a “service” for Section 214 purposes.

In our client advisory on the Commencement of the Wireline Infrastructure Proceeding, we discuss in depth key proposed modifications and topics on which the Commission seeks comment.

Comments are due 30 days after publication in the Federal Register and reply comments are due 60 days after publication.

Now that the effective date is set, questions may be raised in discussions between attachers and pole owners as to the proper effect of the revised formulas on rates that will be or have already been assessed in calendar year 2016. Resolution of any such questions will turn on a variety of factors including, among others, the pertinent provisions of the parties' existing agreements.

For more information about these rule updates, please read our advisory.