This is the second post in a two-post series on small cell facilities and the implications of the Declaratory Ruling and Third Report and Order (the “FCC Order”) that was adopted by the Federal Communications Commission (the “FCC”) in September.  The first post described small cell facilities, the reasons for the FCC Order, and included a discussion regarding the review standard adopted by the FCC.  This post discusses the fee standards and “shot clocks” that were adopted by the FCC in response to concerns raised by the wireless industry regarding excessive and unreasonable fees charged by municipalities, unequal treatment of small cell facilities compared to other utility facility installations, and lengthy review time periods for applications.

The FCC recognized that the fees charged by municipalities with respect to the deployment of small cell facilities can materially limit or inhibit the ability of the wireless service providers to compete.  Such fees are a critical issue for the industry since it is estimated that hundreds of thousands of small cell facilities will be deployed in the near future.  Excessive or unreasonable fees could serve to effectively prohibit the deployment of small cell facilities by rendering the proposed deployment economically infeasible.

The FCC Order addresses three types of fees charged by municipalities: (1) fees for access to the public rights-of-way; (2) fees for the use of governmental property located in the public rights-of-way; and, (3) application review fees.  The FCC Order provides that any of the above fees charged by a municipality must meet three conditions: (1) the fees must be a reasonable approximation of the municipality’s costs; (2) only “objectively reasonable costs” may be considered when determining the fees; and, (3) the fees can’t be higher than the fees charged to “similarly-situated competitors in similar situations.”  The FCC Order notes that municipalities, when calculating the fees, are not permitted to include unreasonably high costs charged by third party consultants or experts even though they may be costs incurred by the municipalities.  The FCC noted that if a municipality chooses to incur unreasonable costs, they are not permitted to pass those costs through to the providers.

To assist both the municipalities and the industry, the FCC Order then provides what it has determined are “presumptively reasonable” fees that can be charged.  The safe harbor fees are: (1) $500 for an application that proposes up to five small cell facilities and an additional $100 for each proposed facility beyond five; and, (2) $270 per year for any recurring fee such as a right-of-way access fee or a fee charged for access to a municipal structure located in the right-of-way.  Municipalities may charge a higher fee but only if the higher fee meets the three conditions stated above.

In addition, the FCC adopted two new “shot clocks” for small cell facilities which set presumptively reasonable timeframes for municipalities to review and act on an application.  If a municipality fails to act on an application within the required timeframe it is considered a “failure to act” under Section 332 of the federal Telecommunications Act of 1996.  Municipalities now have sixty days to review and act on an application proposing to collocate a small cell facility on an existing structure and ninety days to review and act on an application that is proposing new construction for a small cell facility.  Failure by a municipality to comply with the new shot clocks would not only be a “failure to act” under the Telecommunications Act, it also would be a presumptive prohibition on the provision of wireless service.

The FCC Order also tackles some typical ordinance requirements.  First, requirements based on aesthetics are not preempted if they are: (1) reasonable; (2) no more burdensome than those applied to other types of infrastructure deployments; and, (3) published in advance.  The FCC noted that imposing “secret” aesthetics requirements on applicants that require them to “guess at what types of deployments will pass aesthetics muster substantially increase providers’ costs without providing any public benefit or addressing any public concern.”  The FCC also stated that ordinances requiring that all or part of a small cell facility must be located underground could rise to the level of an effective prohibition if they materially inhibit the deployment of wireless service.  Lastly, the FCC stated ordinances imposing spacing requirements between facilities must be reviewed under the same standards as aesthetics requirements.

The FCC Order will be effective on January 14, 2019.  Municipalities and municipal organizations as well as wireless service providers have already filed appeals challenging provisions of the FCC Order.  Please feel free to contact any member of the McNees Wallace & Nurick Land Use Group for assistance with any land use or development issues and/or if you have any questions regarding this post.