We must lower regulatory barriers and allow higher-quality broadband to reach more Americans
It’s easy to forget about the network of antennas and wires that allows your smartphone to connect to Twitter or your television to tune into Monday Night Football. However, government regulations on this kind of network infrastructure can drastically impact your broadband speed — and how much you pay for it.
When federal, state and local governments get it right, consumers reap the benefits of high-quality broadband and the economic gains it brings. When they get it wrong, the regulations can erect costly barriers to broadband deployment, resulting in slower service, less coverage and higher prices. All levels of government, therefore, should work to lower regulatory barriers and allow higher-quality broadband to reach more Americans.
One of the most significant barriers to broadband deployment is the fees charged to broadband providers to attach cables or antennas to existing infrastructure, like telephone poles. Charging high fees for access to these public rights of way is a shortsighted, underhanded way of raising government revenue that hampers citizens’ ability to get access to broadband.
This problem is particularly acute with the ongoing rollout of 5G wireless services. Compared to the current 4G environment, 5G deployment requires companies to significantly densify networks using small wireless facilities usually no larger than a backpack. Charging the same fees for small cells as for the 200-foot towers that characterize 4G coverage is nonsensical and an unnecessary impediment to deployment.
In addition to administrative fees to deploy broadband, regulatory delays present another formidable barrier. When local governments — or even competing broadband companies — can cause the approval process to drag on for over a year, competition suffers — along with potential users of the new service.
These harms are not merely hypothetical. High fees and delays have already stifled deployment in many areas. For example, one mobile provider recently told the FCC that Los Angeles County’s high fees and yearlong review process has prevented the company from deploying small cells in that region. Meanwhile, the city of Los Angeles has seen significant deployment in part due to its cheaper, quicker review process.
Internet access is not the only service that faces regulatory barriers. To provide cable video service in a jurisdiction, broadband companies must acquire franchise agreements that involve paying fees of up to 5 percent of their gross revenue to the local franchising authority (LFA). Localities can also require additional payments in the form of in-kind contributions that do not count toward the 5-percent cap. Worse, many LFA’s use their authority over cable video service to regulate other services that the broadband provider may offer, such as internet access. These costs not only directly translate into higher prices for consumers, they also reduce competition, leaving consumers with fewer, lower-quality options.
Many states have taken steps to address the barriers described above. For example, Oklahoma has capped fees for attaching small cells to existing structures at $200 each for the first five cells and $100 each thereafter. Kansas has helpfully set a “shot clock” that requires regulators to make a decision on a permit application within 30 days. States such as Arizona, Indiana and North Carolina have also adopted 5G-enabling legislation.
Not every state has been so proactive, however. California and New York, for instance, do not have caps on what municipal governments can charge. The result has been exorbitant fees like those recently imposed by San Jose, which is charging $1,500 per small cell. While large wireless carriers may be willing to pay such a high price to access major population centers, high deployment costs result in less overall coverage as investment capital gets routed into local treasuries rather than into deploying broadband.
The FCC can help prevent such harmful practices. This week, the commission will vote on the latest of several orders that prevent states from charging excessive fees for small-cell deployment. It will also set shot clocks for administrative review of applications for new deployments. The FCC will also vote on an order to limit the demands state governments can make in cable franchise agreements.
These two steps will significantly lower regulatory barriers and allow more consumers to get higher-quality services at lower prices. However, the FCC can only do so much; its efforts should be matched by state and local efforts to lower barriers even further. Clearing regulatory barriers and streamlining approval processes will unleash private capital to give all Americans the best chance of getting high-speed broadband as soon as possible.
