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Five Missouri bills highlight rifts between telecom companies, cities

Five Missouri bills highlight rifts between telecom companies, cities

March 9th, 2014 by Casey Bischel, in News

As mobile devices suck up more data, providers will need more transmitters. To fill demand, the industry is moving from big cellphone towers, as pictured above, to Distributed Antenna Systems, which are small, rod-like antennae that relay information to a hub before it is beamed to a wireless tower.

Cellphone users in Missouri can expect to see faster service and better coverage as wireless technologies advance in the next decade, but the benefits could come at a cost to cities.

Last week, the House and Senate passed final versions of four of five bills seeking to make the expansion easier, and sent them to Gov. Jay Nixon.

The Senate approved the fifth on Feb. 6, and it's on the House debate calendar for a final vote.

The governor has two weeks to decide whether to sign or veto them, once they officially are delivered to him.

The five bills, sponsored by Sen. Brad Lager, R-Savannah, touch on everything from the future of broadband to municipal autonomy.

Local governments currently control how utilities use the community's rights of way, inside their borders, but Lager's bills seek to create a uniform process statewide.

This year's legislation has direct roots in two House bills from 2013, House Bills 331 and 345, which were signed into law by Gov. Jay Nixon but blocked from going into effect by Cole County Presiding Circuit Judge Pat Joyce.

In a lawsuit filed by several Missouri cities, Joyce determined that a portion of House Bill 331 violated the state Constitution's requirement, in Article III, Section 23, that "no bill shall contain more than one subject which shall be clearly expressed in its title."

Many lawmakers, lobbyists and Capitol observers call that the "Hammerschmidt Rule," because of a 1994 state Supreme Court ruling in a 1993 lawsuit filed Columbia resident Bob Hammerschmidt against Boone County government.

The lawsuit argued the Legislature's passage of an elections law in 1993 violated the constitutional restriction, so it couldn't authorize a special election in Boone, or any other, county.

To avoid the constitutional problem which Joyce cited, lawmakers this year considered the same issues by breaking last year's two bills into five separate measures - with the most disputed addressing application fees, utility pole rental fees and land used by utility companies, otherwise known as rights-of-way.

Telecommunications representatives and lobbyists say the bills would make it easier for the companies to do business, but representatives of local governments fear losing control and important sources of revenue.

Lawmakers have passed the bills with large majorities. But the municipalities say they aren't backing down.

A question of fairness

A framed copy of House Bill 331 hangs on the wall facing its sponsor, Rep. Rocky Miller, R-Osage Beach. It was the first bill he sponsored that was signed into law. He has co-sponsored bills that were passed, but never was the lead sponsor.

Miller sponsored only one of the communications bills this session, but, since so much of the language carried over from last year, he is well-versed in all of them.

Senate Bill 650 would cap what governments can charge telecom companies for application fees - $500 for additions to existing towers and $1,500 for a new Wi-Fi tower or for substantial modifications to one.

Missouri currently lets municipalities control how much to charge for tower permits, with the average fee ranging from $300 to $500, Miller said.

But some places, like his hometown of Osage Beach, want much more.

Charges in Osage Beach have gone up to $5,000, in addition to $8,500 in consulting fees. Miller questioned whether it's fair to charge telecom companies more in a small town.

Senate Bill 650 is meant to ensure statewide uniformity in the application process, but Richard Sheets, director of the Missouri Municipal League, which lobbies for cities and towns, has opposed it.

Small towns have to hire outside help to evaluate where Wi-Fi towers should go, because they don't employ full-time engineers. Sheets said any money left over is returned.

He also took issue with what he considered the gutting of municipal control over wireless infrastructure. With some exceptions, Senate Bill 650 would bar communities from evaluating tower applications based on the quality of service or availability of other locations.

It also would prohibit the local governments from choosing the type of infrastructure installed.

The bill is "a pre-emptive strike" by telecom companies ahead of wireless expansion, Sheets said.

The future of wireless

As mobile devices suck up more data, providers will need more transmitters. To fill demand, the industry is moving from big cellphone towers to Distributed Antenna Systems, which are small, rod-like antennae that relay information to a hub before it is beamed to a wireless tower.

The antenna systems can be placed relatively inconspicuously, on buildings or poles in dense areas.

When distributed antenna systems first started to gain traction, regulators at the federal, state and local levels were unsure about how it should be regulated, said Srividya Kannan Ramachandran, a New York-based telecommunications and DAS expert, in an email.

In her master's degree thesis on the new antennas, Ramachandran said local government zoning rules treated the systems like cellphone towers, leading to a patchwork of rules and regulations that don't encourage "nontraditional technologies like DAS."

Ramachandran said the antenna systems would improve wireless broadband connectivity and speed.

She thinks wireless companies using the antenna systems should have the same pole access as more established communications providers.

"If the wireline ILECs (incumbent local exchange carriers) can install boxes on utility poles, the wireless DAS providers should be treated the same way," she wrote.

At the very least, Ramachandran said, local decisions regarding the antennas should not violate the Communications Act (of 1996), which blocks state or local governments from prohibiting telecom companies from providing services.

In 2008, there were "200,000 cell sites in the entire country," Ramachandran said in her thesis, and the number "is expected to grow exponentially in the coming years."

If the state takes over control of these regulations, local governments may lose a lot of money from pole attachment fees.

Coming to a utility pole near you

Utility poles need oversight, and oversight costs money.

Utilities that attach to the poles must pay a fee, and the money goes into the city's utility fund to recoup service costs, Ewell Lawson, a lobbyist, explained. But Senate Bill 653 could keep cities from collecting that revenue, at all.

Depending on the contract, companies pay between $4 and $20 per pole, per year, in Independence, but the average is around $8, said Jim Franklin, the city's power engineering manager.

He said when cable expansion began, pole rental rates were kept low based on Federal Communications Commission guidelines to encourage infrastructure expansion into under-served areas.

But the rates didn't take into account all the costs to build and maintain the poles, and Franklin questioned whether they keep up.

AT&T has been paying Independence the same rate since 1962.

Two years ago, the city recalculated its rental fees based on the handbook of the American Public Power Association, an organization that lobbies for publicly owned utilities - and found its rate should be just above $29.

The city has terminated all communications utilities contracts since then, but it is allowing companies to provide service at their old rates while it negotiates new ones.

So far, a DAS system hasn't made it to Independence, but Franklin said the city will charge for the attachments.

Independence doesn't want to gouge anyone, he said. He just wants to make sure "everyone pays their fair share."

For Ric Telthorst, president of the Missouri Telecommunications Industry Association, a telecom lobbying group, these varying rates and contracts create problems for carriers negotiating contracts.

The problem is twofold, he said.

First, there is the cost of attachment, and then there is the hassle of installation.

Telthorst said he thinks Senate Bill 653, which would streamline pole attachment regulations, would benefit consumers without sacrificing local planning and zoning.

The bill does three main things:

• Prohibits municipalities from charging wireless providers differently from other telecom utilities, which would make future DAS expansion easier.

• Prohibits municipalities from denying a pole attachment except for safety concerns or lack of capacity, which would streamline installation.

• Changes the dispute process between cities and providers from binding arbitration to a court ruling.

Courts often are more expensive than arbitration, said Sandy Davidson, an MU communications law professor.

Smaller municipalities - that may have challenged companies through arbitration - may not have enough money to bring a suit. Companies would be able to continue attaching to poles during legal disputes.

A right to the right-of-way

Currently, 98 percent of Missouri has access to broadband, including 92 percent of rural Missouri, Ryan Burns, public information officer for Missouri's Office of Administration, wrote in an email.

Senate Bill 649, another one of the new telecom bills, would help pave the way for more expansion by banning "franchise fees," or the cost cities impose for doing business, for all telecom companies except cable providers.

It also spells out the reasons right-of-way permits can be denied.

Supporters say it would speed up infrastructure installation, but opponents say it strips local control of designating the right-of-way - and takes away revenue.

In the city of Cameron, which is north of Kansas City, the library has been waiting to get faster Internet speeds for a year.

The library already has broadband access, and recently bought three computers, bringing its total to 17.

Nine are for public use, three are for the library's catalog system, one is devoted to genealogy research, and the remaining four are for staff.

The library added wireless service a year ago, but now the Internet can be frustratingly slow.

The library wanted to double its speed to 3 megabits per second (Mbps), so it applied for a discount through the E-rent Program offered through the Missouri Research and Educational Network, or MOREnet, which provides Internet services to libraries and schools.

But, after applying to MOREnet, the library ran into a snag.

The city of Cameron had requested all telecom providers to pay a one-time, $2,500 right-of-way user agreement application fee, and CenturyLink - the broadband provider that MOREnet was going to work with - was the only company that refused to sign, City Manager Mark Gaugh said.

Doug Galloway, the director of CenturyLink's government affairs in Missouri, took issue with the franchise and application fees, calling them "extortion" on behalf of cities.

The current application process also takes a large amount of time, he said, which inhibits expansion.

So, CenturyLink is suing Cameron in federal court.

Smaller cities like Cameron and Fulton depend on franchise fees to help fund day-to-day expenses.

In Fulton, the fees comprise $350,000 to $400,000 of the total $43 million budget, City Manager Bill Johnson said.

The fees go into the general fund, which pay for police, fire protection, and parks and recreation, Johnson said.

Without that revenue from the fees, he added, the services "will suffer."