Local government telecommunications policy checklist for 2023

In recent years, local governments have faced the twin challenges of addressing the broadband needs of families, businesses and schools—made urgent by the COVID-19 pandemic—while simultaneously defending their regulatory authority and property rights against federal actions that prioritize nationwide infrastructure deployment over local control of land use and local public property. At the same time, communications markets, technologies and business practices continue to evolve at a rapid pace. Successful advocacy before Congress, the Federal Communications Commission (FCC) and the courts has tempered or reversed some recent industry efforts damaging to local interests. But there are new threats and opportunities on the horizon. This overview will catch you up on where we are now and what’s ahead for 2023.

Capitalizing on broadband funding opportunities
Chief among opportunities in 2023 is for local governments to tap into federal dollars available for broadband. Federal laws enacted in 2021, the American Rescue Plan Act and the Infrastructure Investment and Jobs Act, created new broadband funding and grant programs. Local governments are eligible for some of these programs, and some will be administered through the states. Some of the most important funding programs include:

• Affordable Connectivity Program (ACP)
• American Rescue Plan Act (ARPA) Coronavirus State & Local Fiscal Recovery Funds
• Broadband Equity, Access, and Deployment (BEAD) Program
• Digital Equity Act Program

Resources can help communities pursue affordable broadband access to all their constituents, residential and business alike. Building strong relationships with state partners and agencies will be key, as will careful attention to compliance with grant funding requirements and grant conditions.

Protecting cable/video service franchise fee revenues from offsets
In 2023, it is expected that long simmering cable franchise fee issues between local governments and cable operators will return to the FCC in a remand proceeding. In 2019, the FCC issued a cable franchising order that, among other things, allowed offsets against franchise fees for franchise requirements such as providing an institutional network or I-Net for local government use, and complimentary cable services to government buildings. A successful court challenge by local governments resulted in 2021 in the appeals court substantially limiting the amount of in-kind offsets that cable operators could claim against franchise fees (rejecting the FCC’s market rates in favor of marginal costs). One of the FCC commissioner seats is vacant, once the current nominee is confirmed, the FCC will consider revisions to its rules to conform with the court’s decision.

In the meantime, localities should beware that the cable operators are already making demands of local jurisdictions based on their own interpretations of the FCC’s rules and the court’s decision—interpretations that are skewed in the cable operator’s favor. In this fluid environment, it is imperative that local governments seek their own advice rather than relying on cable operators. Moreover, the court did not alter FCC rulings requiring operators to notify franchising authorities if they intend to claim offsets (which are optional, not required), and directing that franchise terms must be renegotiated within a reasonable period of time (they do not automatically take effect). Where cable operators seek marginal cost offsets local governments should seek proof where appropriate, unless the amount proposed is minimal. The Cable Act requires cable operators to pass through to their subscribers costs recouped from offsets as reductions in franchise fees.

Monitoring cable/video services revenues and the rise of video streaming services
The FCC’s “mixed use” rule that limits local authority and constrains franchise fee assessments along with changing cable industry business models also requires close attention in 2023. There is no question that a broad formulation of the rule gives operators incentives to shift revenues to “non-cable” services and it is possible the FCC will address it in 2023.

Likewise, increased consumer reliance on video streaming, coupled with cable operator changes in accounting practices, are re-categorizing revenues and reducing cable franchise fees. Enforcing and monitoring your current franchise agreement can make a big financial difference. Local governments have shown an appetite for pursuing these revenues via numerous pending lawsuits seeking to capture a portion of video streaming revenues through state video franchising statutes, with little success so far. But the same industry trends underlying these changes could cause state legislatures to revisit laws based on outdated industry frameworks and take a fresh look at how best to manage and have the communications industry pay its fair share for access to local public rights-of-way for their infrastructure. Local governments should be part of that conversation.

Implementing new wireless siting rules
After an onslaught of new FCC rules and court reviews in recent years, the top issues around wireless siting have largely moved from fighting against new federal rules and state laws, to addressing implementation challenges and litigation under those new rules and laws, with one exception. After a lengthy abeyance, the litigation over the FCC’s 2020 ruling permitting a much wider range of wireless site modifications to take advantage of the federal rules short-cutting local procedures has restarted; briefing will be completed this spring by April 2023.

Updated codes, processes and forms continue to offer a local government the best protection in processing applications consistent with federal shot clocks and avoiding federal deemed granted remedies and litigation. While much of the focus in recent years has been on implementing code changes to fill in gaps in regulation to address small cell deployments in the public rights-of-way, local governments should give attention to updating their traditional land use and zoning rules for wireless siting outside the public rights-of-way in 2023.

Protecting local governments’ rights to manage and obtain fair compensation for use of the public rights-of-way
If the communications industry has its way, state and federal legislatures and regulators will continue promoting 5G and broadband infrastructure deployment at the cost of local government revenues and control of their streets. In the last Congress, House Republicans unveiled their “Boosting-Broadband-Connectivity-Agenda” (a 28-bill package with elements hostile to local government interests), but it did not advance and it is unclear whether it will be reintroduced and pursued more vigorously in Congress’s new session given a new Republican majority in the House.

What local government leaders need to do in 2023:

1. Access new and existing federal dollars and programs to ensure broadband is fully deployed and affordable.
2. Ensure local wireless regulations and procedures are consistent with federal and state wireless rules while continuing to press against on-going proposals to further restrict local authority.
3. Ensure that local cable franchise renewals take full advantage of litigation victories and prevent cable operator attempts to avoid their obligations to communities.
4. The current rules came from local and state lawmakers. New threats to local authority and budgets, and the false narrative upon which they are based will influence the policy process if local leaders do not engage. Therefore, local leaders should:
   • Engage in the policymaking process early and often and join with other local governments in resisting these efforts to cast local government authority as a “barrier” and indirectly subsidize the broadband industry at the expense of local communities.
   • Share with federal and state elected officials the local government perspective, including successes achieved in bringing broadband to residents, opposition to broadband agendas. Call upon state and national associations to champion local government’s cause.
   • Consider applying to become a member of the FCC’s Intergovernmental Advisory Committee or IAC. The FCC implements federal laws that profoundly impact local control, the IAC is one way to influence that process. The FCC is currently soliciting nominations for two-year terms, nominations are due in early April 2023.

Gail A. Karish is a partner at Best Best & Krieger LLP who focuses on telecommunications, assisting city and county clients in California and across the U.S. with a wide range of regulatory and transactional matters involving broadband and fiber networks, cable and telecom franchising, wireless communications and public-private partnerships. Gail also represents public agencies before the Federal Communications Commission, state utility commissions, and the courts.