III. FCC Order 18-133: DECLARATORY RULING, Annotated
Wire-America annotations are in green boxes throughout this page.
Footnotes are in blue boxes.
¶30. In this Declaratory Ruling, we note that a number of appellate courts have articulated different and often conflicting views regarding the scope and nature of the limits Congress imposed on state and local governments through Sections 253 and 332. In light of these diverging views, Congress’s vision for a consistent, national policy framework, and the need to ensure that our approach continues to make sense in light of the relatively new trend towards the large-scale deployment of Small Wireless Facilities, we take this opportunity to clarify and update the FCC’s reading of the limits Congress imposed. We do so in three main respects.
Wire-America: A “clarification and update of an FCC reading” means that the FCC is only providing guidance and stating preferences. It does not mean that what the FCC writes can change any rulings in the US Courts of Appeals.
The FCC can only regulate when it properly sources its authority to do so. The US Supreme Court justices sum that up succinctly in City of Arlington v. FCC, 569 U.S. 290, 133 S. Ct. 1863, 185 L. Ed. 2d 941, 24 Fla. L. Weekly Supp. 189 (2013)
“The fox-in-the-henhouse syndrome is to be avoided not by establishing an arbitrary and undefinable category of agency decision-making that is accorded no deference, but by taking seriously, and applying rigorously, in all cases, statutory limits on agencies’ authority.”
- Where Congress has established a clear line, the agency cannot go beyond it; and
- Where Congress has established an ambiguous line, the agency can go no further than the ambiguity will fairly allow.”
Here is the clear line that Congress established in the 1996 Telecommunications Act, which regulated only telecommunications service. Telecommunications is defined as
“the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.”
Telecommunications is only wireless phone calls, not wireless information service, which is defined as
“the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.”
The Telecommunications Act of 1996 added a National Wireless Telecommunications Siting Policy:
Section 332(c) (47 U.S.C. 332(c)) is amended by adding at the end the following new paragraph:
(7) Preservation of local zoning authority. —
- (A) General authority. — Except as provided in this paragraph, nothing in this Act shall limit or affect the authority of a State or local government or instrumentality thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities.
- (B) Limitations. — [which lists five narrow items that are preempted from local authority’s decisions regarding the placement, construction, and modification of facilities for personal wireless service, which is defined as “commercial mobile services, unlicensed wireless services, and common carrier wireless exchange access services.”]
¶31. First, in Part III.A, we express our agreement with the views already stated by the First, Second, and Tenth Circuits that the “materially inhibit” standard articulated in 1997 by the Clinton-era FCC’s California Payphone decision is the appropriate standard for determining whether a state or local law operates as a prohibition or effective prohibition within the meaning of Sections 253 and 332. 32. Second, in Part III.B, we note, as numerous courts have recognized, that state and local fees and other charges associated with the deployment of wireless infrastructure can effectively prohibit the provision of service. At the same time, courts have articulated various approaches to determining the types of fees that run afoul of Congress’s limits in Sections 253 and 332. We thus clarify the particular standard that governs the fees and charges that violate Sections 253 and 332 when it comes to the Small Wireless Facilities at issue in this decision. Namely, fees are only permitted to the extent that they represent a reasonable approximation of the local government’s objectively reasonable costs, and are non- discriminatory.71 In this section, we also identify specific fee levels for the deployment of Small Wireless Facilities that presumptively comply with this standard. We do so to help avoid unnecessary litigation, while recognizing that it is the standard itself, not the particular, presumptive fee levels we articulate, that ultimately will govern whether a particular fee is allowed under Sections 253 and 332. So fees above those levels would be permissible under Sections 253 and 332 to the extent a locality’s actual, reasonable costs (as measured by the standard above) are higher.
Wire-America: The FCC expressed its agreement with certain Circuits’rulings. So what? The FCC lacks the authority to impose one Circuit’s ruling on a different Circuit. The California Payphone decision is NOT the standard test for effective prohibition in most Circuits, not even in the Ninth Circuit, which includes Idaho and California.
¶33. Finally, in Part III.C, we focus on a subset of other, non-fee provisions of state and local law that could also operate as prohibitions on service. We do so in particular by addressing state and local consideration of aesthetic concerns in the deployment of Small Wireless Facilities. We note that the Small Wireless Facilities that are the subject of this Declaratory Ruling remain subject to the Commission’s rules governing Radio Frequency (RF) emissions exposure.72
A. Overview of the Section 253 and Section 332(c)(7) Framework Relevant to Small Wireless Facilities Deployment
¶34. In Sections 253(a) and 332(c)(7)(B) of the Act, Congress determined that state or local requirements that prohibit or have the effect of prohibiting the provision of service are unlawful and thus preempted.73 Section 253(a) addresses “any interstate or intrastate telecommunications service,” while Section 332(c)(7)(B)(i)(II) addresses “personal wireless services.”74 Although the provisions contain identical “effect of prohibiting” language, the Commission and different courts over the years have each employed inconsistent approaches to deciding what it means for a state or local legal requirement to have the “effect of prohibiting” services under these two sections of the Act. This has caused confusion among both providers and local governments about what legal requirements are permitted under Sections 253 and 332(c)(7). For example, despite Commission decisions to the contrary construing such language under Section 253, some courts have held that a denial of a wireless siting application will “prohibit or have the effect of prohibiting” the provision of a personal wireless service under Section 332(c)(7)(B)(i)(II) only if the provider can establish that it has a significant gap in service coverage in the area and a lack of feasible alternative locations for siting facilities.75 Other courts have held that evidence of an already-occurring or complete inability to offer a telecommunications service is required to demonstrate an effective prohibition under Section 253(a).76 Conversely, still other courts like the First, Second, and Tenth Circuits have endorsed prior Commission interpretations of what constitutes an effective prohibition under Section 253(a) and recognized that, under that analytical framework, a legal requirement can constitute an effective prohibition of services even if it is not an insurmountable barrier.77
73 47 U.S.C. §§ 253(a), 332(c)(7)(B)(i)(II).
74 Id. The actions in this proceeding update the FCC’s approach to Sections 253 and 332 by addressing effective
prohibitions that apply to the deployment of services covered by those provisions. Our interpretations in this proceeding do not provide any basis for increasing the regulation of services deployed consistent with Section 621 of the Cable Communications Policy Act of 1984.
75 Courts vary widely regarding the type of showing needed to satisfy the second part of that standard. The First, Fourth, and Seventh Circuits have imposed a “heavy burden” of proof on applicants to establish a lack of alternative feasible sites, requiring them to show “not just that this application has been rejected but that further reasonable efforts to find another solution are so likely to be fruitless that it is a waste of time even to try.” Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 40 (1st Cir. 2014); accord New Cingular Wireless PCS, LLC v. Fairfax County, 674 F.3d 270, 277 (4th Cir. 2012); T-Mobile Northeast LLC v. Fairfax County, 672 F.3d 259, 266-68 (4th Cir. 2012) (en banc); Helcher v. Dearborn County, 595 F.3d 710, 723 (7th Cir. 2010) (Helcher). The Second, Third, and Ninth Circuits have held that an applicant must show only that its proposed facilities are the “least intrusive means” for filling a coverage gap in light of the aesthetic or other values that the local authority seeks to serve. Sprint Spectrum, LP v. Willoth, 176 F.3d 630, 643 (2d Cir. 1999) (Willoth); APT Pittsburgh Ltd. P’ship v. Penn Township, 196 F.3d 469, 480 (3d Cir. 1999) (APT); American Tower Corp. v. City of San Diego, 763 F.3d 1035, 1056-57 (9th Cir. 2014); T-Mobile USA, Inc. v. City of Anacortes, 572 F.3d 987, 995-99 (9th Cir. 2009) (City of Anacortes).
¶35 In this Declaratory Ruling, we first reaffirm, as our definitive interpretation of the effective prohibition standard, the test we set forth in California Payphone, namely, that a state or local legal requirement constitutes an effective prohibition if it “materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.”78 We then explain how this “material inhibition” standard applies in the context of state and local fees and aesthetic requirements. In doing so, we confirm the First, Second, and Tenth Circuits’ understanding that under this analytical framework, a legal requirement can “materially inhibit” the provision of services even if it is not an insurmountable barrier.79 We also resolve the conflicting court interpretations of the effective prohibition’ language so that continuing confusion on the meaning of Sections 253 and 332(c)(7) does not materially inhibit the critical deployments of Small Wireless Facilities and our nation’s drive to deploy 5G.80
¶36. As an initial matter, we note that our Declaratory Ruling applies with equal measure to the effective prohibition standard that appears in both Sections 253(a) and 332(c)(7).81 This ruling is consistent with the basic canon of statutory interpretation that identical words appearing in neighboring provisions of the same statute generally should be interpreted to have the same meaning.82 Moreover, both of these provisions apply to wireless telecommunications services83 as well as to commingled services and facilities.84
¶37. As explained in California Payphone and reaffirmed here, a state or local legal requirement will have the effect of prohibiting wireless telecommunications services if it materially inhibits the provision of such services. We clarify that an effective prohibition occurs where a state or local legal requirement materially inhibits a provider’s ability to engage in any of a variety of activities related to its provision of a covered service.85 This test is met not only when filling a coverage gap but also when densifying a wireless network, introducing new services or otherwise improving service capabilities.86y by rendering a service provider unable to provide an existing service in a new geographic area or by restricting the entry of a new provider in providing service in a particular area, but also by materially inhibiting the introduction of new services or the improvement of existing services. Thus, an effective prohibition includes materially inhibiting additional services or improving existing services.87
77 See Puerto Rico Tel. Co. v. Municipality of Guayanilla, 450 F.3d 9, 18 (1st Cir. 2006) (Municipality of Guayanilla); TCG New York, Inc. v. City of White Plains, 305 F.3d 67, 76 (2d Cir. 2002) (City of White Plains); RT Communications v. FCC, 201 F.3d 1264, 1268 (10th Cir. 2000) (“[Section] 253(a) forbids any statute which prohibits or has ‘the effect of prohibiting’ entry. Nowhere does the statute require that a bar to entry be insurmountable before the FCC must preempt it.”) (RT Communications) (affirming Silver Star Tel. Co. Petition for Preemption and Declaratory Ruling, 12 FCC Rcd 15639 (1997)).
78 California Payphone, 12 FCC Rcd at 14206, para. 31. A number of circuit courts have cited California Payphone as the leading authority regarding the standard to be applied under Section 253(a). See, e.g., County of San Diego, 543 F.3d at 578; City of St. Louis, 477 F.3d at 533; Municipality of Guayanilla, 450 F.3d at 18; Qwest Corp. v. City of Santa Fe, 380 F.3d 1258, 1270 (10th Cir. 2004) (City of Santa Fe); City of White Plains, 305 F.3d at 76. Crown Castle argues that the Eighth and Ninth Circuit cited the FCC’s California Payphone decision,but read the standard in an overly narrow fashion. See, e.g., Letter from Kenneth J. Simon, Senior Vice Pres. and Gen. Counsel, Crown Castle, et al., to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17-79 at 12 (filed June 7, 2018) (Crown Castle June 7, 2018 Ex Parte Letter); see also Smart Communities Comments at 60-61 (describing circuit split). Some commenters cite selected dictionary definitions or otherwise argue for a narrow definition of “prohibit.” See, e.g., Smart Communities Reply at 53. But because they do not go on to dispute the validity of the California Payphone standard that has been employed not only by the Commission but also many courts, those arguments do not persuade us to depart from the California Payphone standard here.
79 See, e.g., City of White Plains, 305 F.3d at 76; Municipality of Guayanilla, 450 F.3d at 18; see also, e.g., Crown Castle June 7, 2018 Ex Parte Letter at 12. Because the clarifications in this order should reduce uncertainty regarding the application of these provisions for state and local governments as well as stakeholders, we are not persuaded by some commenters’ arguments that an expedited complaint process is required. See, e.g., AT&T Comments at 28; CTIA Reply at 21. We do not address, at this time, recently-filed petitions for reconsideration of our August 2018 Moratoria Declaratory Ruling. See, e.g., Smart Communities Petition for Reconsideration, WC Docket No. 17-84 & WT Docket No. 17-79 (filed Sept. 4, 2018); New York City Petition for Reconsideration, WC Docket No. 17-84 & WT Docket No. 17-79 (filed Sept. 4, 2018). Nor do we address requests for clarification and/or action on other issues raised in the record beyond those expressly discussed in this order. These other issues include arguments regarding other statutory interpretations that we do not address here. See, e.g., CTIA Reply at 23 (raising broader questions about the precise interplay of Section 253 and Section 332(c)(7)); Crown Castle June 7, 2018 Ex Parte Letter at 16-17 (raising broader questions about the scope of “legal requirements” under Section 253(a)). Consequently, this order should not be read as impliedly taking a position on those issues.
80 See, e.g., Crown Castle June 7, 2018 Ex Parte Letter at 11-12 (arguing that “[d]espite the Commission’s efforts to define the boundaries of federal preemption under Section 253, courts have issued a number of conflicting decisions that have only served to confuse the preemption analysis sunder section 253” and that “the Commission should clarify that the California Payphone standard as interpreted by the First and Second Circuits is the appropriate standard going forward”); see also BDAC Regulatory Barriers Report at p. 9 (“The Commission should provide clarity on what actually constitutes an “excessive” fee for right-of-way access and use. The FCC should provide guidance on what constitutes a fee that is excessive and/or duplicative, and that therefore is not “fair and reasonable.” The Commission should specifically clarify that “fair and reasonable” compensation for right-of way access and use implies some relation to the burden of new equipment placed in the ROW or on the local asset, or some other objective standard.”). Because our decision provides clarity by addressing conflicting court decisions and reaffirming that the “materially inhibits” standard articulated in the Commission’s California Payphone decision is the appropriate standard for determining whether a state or local law operates as an effective prohibition within the meaning of Sections 253 and 332, we reject arguments that our action will increase conflicts and lead to more litigation. See e.g., Letter from Michael Dylan Brennan, Mayor, City of University Heights, Ohio, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17-79, at 2 (filed Sept. 19, 2018) (stating that “…this framing and definition of effective prohibition opens local governments to the likelihood of more, not less, conflict and litigation over requirements for aesthetics, spacing, and undergrounding”).
81 See infra Part III.A, B.
82 See County of San Diego, 543 F.3d at 579 (“We see nothing suggesting that Congress intended a different meaning of the text ‘prohibit or have the effect of prohibiting’ in the two statutory provisions, enacted at the same time, in the same statute. * * * * * As we now hold, the legal standard is the same under either [Section 253 or 332(c)(7)].”); see also, e.g., Puerto Rico v. Franklin Cal. Tax-Free Trust, 136 S. Ct. 1938, 1946 (citing Sullivan v. Stroop, 496 U.S. 478, 484 (1990) (reading same term used in different parts of the same Act to have the same meaning); Northcross v. Board of Ed. of Memphis City Schools, 412 U.S. 427, 428 (1973) (per curiam) (“[S]imilarity of language . . . is . . . a strong indication that the two statutes should be interpreted pari passu”); Verizon Comments at 9-10; AT&T Reply at 3-4; Crown Castle June 7, 2018 Ex Parte Letter at 15.
83 Common carrier wireless services meet the definition of “telecommunications services,” and thus are within the
scope of Section 253(a) of the Act. See, e.g., Moratoria Declaratory Ruling, FCC 18-111, para 142 n.523; see also, e.g., League of Minnesota Cities Comments at 11; Verizon Reply at 9-10. While some commenters cite certain distinguishing factual characteristics between wireline and wireless services, the record does not reveal why those distinctions would be material to whether wireless telecommunications services are covered by Section 253 in the first instance. See, e.g., City of San Antonio et al. Comments, Exh. A at 13; Virginia Joint Commenters Comments at 5, Exh. A at 45-46. To the contrary, Section 253(e) expressly preserves “application of section 332(c)(3) of this title to commercial mobile service providers” notwithstanding Section 253—a provision that would be meaningless if wireless telecommunications services already fell outside the scope of Section 253. 47 U.S.C. § 253(e). For this same reason, we also reject claims that the existence of certain protections for personal wireless services in Section 332(c)(7), or the phrase “nothing in this chapter” in Section 332(c)(7)(A), demonstrate that states’ or localities’ regulations affecting wireless telecommunications services must fall outside the scope of Section 253. See, e.g., Virginia Joint Commenters Comments, Exh. A at iii, 45-46; Smart Communities Comments at 56. Even if, as some parties argue, the phrase “nothing in this chapter” could be construed as preserving state or local decisions on the placement, construction, or modification of personal wireless service facilities from preemption by other sections of the Communications Act, Section 332(c)(7)(A) goes on to make clear that such state or local decisions are not immune from preemption if they violate any of the standards set forth in Section 332(c)(7)(B)–including Section 332(c)(7)(B)(i)(II)’s ban of requirements that “prohibit or have the effect of prohibiting” the provision of service, which is identical to the preemption provision in Section 253(a). Thus, states and localities may charge fees and dispose of applications relating to the matters subject to Section 332(c)(7) in any manner they deem appropriate, so long as that conduct does not amount to a prohibition or effective prohibition, as interpreted in this Declaratory Ruling or otherwise run afoul of federal or state law; but because Sections 332(c)(7)(B)(i)(II) and 253(a) use identical ”effective prohibition” language, the standard for what is saved and what is preempted is the same under both provisions.
84 See infra para. 40 (discussing use of small cells to close coverage gaps, including voice gaps); see also, e.g., Moratoria Declaratory Ruling, FCC 18-111, para 145 n.531; Restoring Internet Freedom, Declaratory Ruling, Report and Order, and Order, 33 FCC Rcd 311, 425, para. 190 (2018); Letter from Andre J. Lachance, Associate General Counsel, Verizon to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17-79 at 3 (filed Sept. 19, 2018) (confirming that “telecommunications services can be provided over small cells and Verizon has deployed Small Wireless Facilities in its network that provide telecommunications services.”); Letter from David M. Crawford, Senior Corporate Counsel, Fed. Reg. Affairs, T-Mobile, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17- 79 at 1 (filed Sept. 19, 2018) (stating that “small wireless facilities are a critical component of T-Mobile’s network deployment plans to support both the 5G evolution of wireless services, as well as more traditional services such as mobile broadband and even voice calls. T-Mobile, for example, uses small wireless facilities to densify our network to provide better coverage and greater capacity, and to provide traditional services such as voice calls in areas where our macro site coverage is insufficient to meet demand.”); Letter from Henry G. Hultquist, Vice President, Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17-79 at 1 (filed Sept. 20, 2018) (“AT&T has operated and continues to operate commercial mobile radio services as well as information services from small wireless facilities…”); see also, e.g., Coastal Communications Service v. City of New York, 658 F. Supp. 2d 425, 441-42 (E.D.N.Y. 2009) (finding that a restriction on advertising on newly-installed payphones was subject to Section 253(a) where the advertising was a material factor in the provider’s ability to provide the payphone service itself). The fact that facilities are sometimes deployed by third parties not themselves providing covered services also does not place such deployment beyond the purview of Section 253(a) or Section 332(c)(7)(B)(i) insofar as the facilities are used by wireless service providers on a wholesale basis to provide covered services (among other things). See, e.g., T-Mobile Comments at 26. Given our conclusion that neither commingling of services nor the identity of the entity engaged in the deployment activity changes the applicability of Section 253(a) or Section 332(c)(7)(B)(i)(II) where the facilities are being used for the provisioning of services within the scope of the relevant statutory provisions, we reject claims to the contrary. See, e.g., Colorado Communications and Utility Alliance et al. Comments at 15-16; City of San Antonio et al. Comments, Exh. A at 12; id., Exh. C at 13-15. Because local jurisdictions do not have the authority to regulate these interstate services, there is no basis for local jurisdictions to conduct proceedings on the types of personal wireless services offered over particular wireless service facilities or the licensee’s service area, which are matters within the Commission’s licensing authority. Furthermore, local jurisdictions do not have the authority to require that providers offer certain types or levels of service, or to dictate the design of a provider’s network. See 47 U.S.C. § 332(c)(3)(A); see also Bastien v. AT&T Wireless Servs., Inc., 205 F.3d 983, 989 (7th Cir. 2000).
85 By “covered service” we mean a telecommunications service or a personal wireless service for purposes of Section 253 and Section 332(c)(7), respectively.
86 See, e.g., Crown Castle Comments at 54-55; Free State Foundation Comments at 12; T-Mobile Comments at 43- 45; CTIA Reply at 14; WIA Reply at 26; Crown Castle June 7, 2018 Ex Parte Letter at 13-14; Letter from Kara Romagnino Graves, Director, Regulatory Affairs, CTIA, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17- 79, at 8-9 (filed June 27, 2018) (CTIA June 27, 2018 Ex Parte Letter). As T-Mobile explains, for example, a provider might need to improve “signal strength or system capacity to allow it to provide reliable service to consumers in residential and commercial buildings.” T-Mobile Comments at 43; see also, e.g., Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, WT Docket Nos. 13-238, et al., Notice of Proposed Rulemaking, 28 FCC Rcd 14238, 14253, para. 38 (2013) (observing that “DAS and small cell facilities[ ] are critical to satisfying demand for ubiquitous mobile voice and broadband services”). The growing prevalence of smart phones has only accelerated the demand for wireless providers to take steps to improve their service offerings. See, e.g., Twentieth Wireless Competition Report, 32 FCC Rcd at 9011-13, paras. 62-65.
87 Our conclusion finds further support in our broad understanding of the statutory term “service,” which, as we explained in our recent Moratoria Declaratory Ruling, means “any covered service a provider wishes to provide, incorporating the abilities and performance characteristics it wishes to employ, including to provide existing services more robustly, or at a higher level of quality—such as through filling a coverage gap, densification, or otherwise improving service capabilities.” Moratoria Declaratory Ruling, FCC 18-111, para. 162 n.594; see also Public Utility Comm’n of Texas Petition for Declaratory Ruling and/or Preemption of Certain Provisions of the Texas Public Utility Regulatory Act of 1995, Memorandum Opinion and Order, 13 FCC Rcd 3460, 3496, para. 74 (1997) (Texas PUC Order) (interpreting the scope of ‘telecommunications services’ covered by Section 253(a) and clarifying that it would be an unlawful prohibition for a state or locality to specify “the means or facilities” through which a service provider must offer service); Crown Castle June 7, 2018 Ex Parte Letter at 10-11 (discussing this precedent). We find this interpretation of “service” warranted not only under Section 253(a), but Section 332(c)(7)(B)(i)(II)’s reference to “services” as well.
¶38. Our reading of Section 253(a) and Section 332(c)(7)(B)(i)(II) reflects and supports a marketplace in which services can be offered in a multitude of ways with varied capabilities and performance characteristics consistent with the policy goals in the 1996 Act and the Communications Act. To limit Sections 253(a) and 332(c)(7)(B)(i)(II) to protecting only against coverage gaps or the like would be to ignore Congress’s contemporaneously-expressed goals of “promot[ing] competition[,] . . . secur[ing] . . . higher quality services for American telecommunications consumers and encourage[ing] the rapid deployment of new telecommunications technologies.”88 In addition, as the Commission recently explained, the implementation of the Act “must factor in the fundamental objectives of the Act, including the deployment of a ‘rapid, efficient . . . wire and radio communication service with adequate facilities at reasonable charges’ and ‘the development and rapid deployment of new technologies, products and services for the benefit of the public . . . without administrative or judicial delays[, and] efficient and intensive use of the electromagnetic spectrum.’”89 These provisions demonstrate that our interpretation of Section 253 and Section 332(c)(7)(B)(i)(II) is in accordance with the broader goals of the various statutes that the Commission is entrusted to administer.
88 Preamble to the Telecommunications Act of 1996, Pub. Law. No. 104-104, § 202, 110 Stat. 56 (1996). Consequently, we reject arguments suggesting that the provision of some level of wireless service in the past necessarily demonstrates that there is no effective prohibition of service under the state or local legal requirements that applied during those periods or that an effective prohibition only is present if a provider can provide no covered service whatsoever. See, e.g., City and County of San Francisco Comments at 25-26; Virginia Joint Commenters Comments, Exh. A at 31-33. Nor, in light of these goals, do we find it reasonable to interpret the protections of these provisions as doing nothing more than guarding against a monopoly as some suggest. See, e.g., Smart Communities Comments, WC Docket No. 17-84, at 8-9 (filed June 15, 2017) cited in Smart Communities Comments at 57 n.141
¶39. California Payphone further concluded that providers must be allowed to compete in a “fair and balanced regulatory environment.”90 As reflected in decisions such as the Commission’s Texas PUC Order, a state or local legal requirement can function as an effective prohibition either because of the resulting “financial burden” in an absolute sense, or, independently, because of a resulting competitive disparity.91 We clarify that “[a] regulatory structure that gives an advantage to particular services or facilities has a prohibitory effect, even if there are no express barriers to entry in the state or local code; the greater the discriminatory effect, the more certain it is that entities providing service using the disfavored facilities will experience prohibition.”92 This conclusion is consistent with both Commission and judicial precedent recognizing the prohibitory effect that results from a competitor being treated materially differently than similarly-situated providers.93 We provide our authoritative interpretation below of the circumstances in which a “financial burden,” as described in the Texas PUC Order, constitutes an effective prohibition in the context of certain state and local fees.
¶40. As we explained above, we reject alternative readings of the effective prohibition language that have been adopted by some courts and used to defend local requirements that have the effect of prohibiting densification of networks. Decisions that have applied solely a “coverage gap”- based approach under Section 332(c)(7)(B)(i)(II) reflect both an unduly narrow reading of the statute and an outdated view of the marketplace.94 Those cases, including some that formed the foundation for “coverage gap”-based analytical approaches, appear to view wireless service as if it were a single, monolithic offering provided only via traditional wireless towers.95 By contrast, the current wireless marketplace is characterized by a wide variety of offerings with differing service characteristics and deployment strategies.96 As Crown Castle explains, coverage gap-based approaches are “simply incompatible with a world where the vast majority of new wireless builds are going to be designed to add network capacity and take advantage of new technologies, rather than plug gaps in network coverage.”97 Moreover, a critical feature of these new wireless builds is to accommodate increased in-building use of wireless services, necessitating deployment of small cells in order to ensure quality service to wireless callers within such buildings.98
¶41. Likewise, we reject the suggestion of some courts like the Eighth and Ninth Circuits that evidence of an existing or complete inability to offer a telecommunications service is required under 253(a).99 Such an approach is contrary to the material inhibition standard of California Payphone and the correct recognition by courts “that a prohibition does not have to be complete or ‘insurmountable’” to constitute an effective prohibition.100 Commission precedent beginning with California Payphone itself makes clear that an insurmountable barrier is not required to find an effective prohibition under Section 253(a)..101 The “effectively prohibit” language must have some meaning independent of the “prohibit” language, and we find that the interpretation of the First, Second, and Tenth Circuits reflects that principle, while being more consistent with the California Payphone standard than the approach of the Eighth and Ninth Circuits..102 The reasonableness of our interpretation that ‘effective prohibition’ does not require a showing of an insurmountable barrier to entry is demonstrated not only by a number of circuit courts’ acceptance of that view, but in the Supreme Court’s own characterization of Section 253(a) as “prohibit[ing] state and local regulation that impedes the provision of ‘telecommunications service.’”.103
¶42. The Eighth and Ninth Circuits’ suggestion that a provider must show an insurmountable barrier to entry in the jurisdiction imposing the relevant regulation is at odds with relevant statutory purposes and goals, as well. Section 253(a) is designed to protect “any entity” seeking to provide telecommunications services from state and local barriers to entry, and Sections 253(b) and (c) emphasize the importance of “competitively neutral” and “nondiscriminatory” treatment of providers..104 Yet focusing on whether the carrier seeking relief faces an insurmountable barrier to entry would lead to disparities in statutory protections among providers based merely on considerations such as their access to capital and the breadth or narrowness of their entry strategies..105 In addition, the Commission has observed in connection with Section 253: “Each local government may believe it is simply protecting the interests of its constituents. The telecommunications interests of constituents, however, are not only local. They are statewide, national and international as well. We believe that Congress’ recognition of this fact was the genesis of its grant of preemption authority to this Commission.”106 As illustrated by our consideration of effective prohibitions flowing from state and local fees, there also can be cases where a narrow focus on whether an insurmountable barrier can be shown within the jurisdiction imposing a particular legal requirement would neglect the serious effects that flow through in other jurisdictions as a result, including harms to regional or national deployment efforts.107
90 California Payphone, 12 FCC Rcd at 14206, para. 31.
91 Texas PUC Order, 13 FCC Rcd at 3466, 3498-500, paras. 13, 78-81; see also, e.g., Crown Castle June 7, 2018 Ex Parte at 10-11, 13.
92 Crown Castle June 7, 2018 Ex Parte Letter at 13.
93 See, e.g., Texas PUC Order, 13 FCC Rcd at 3466, 3498-500, paras. 13, 78-81; Federal-State Joint Board on Universal Service; Western Wireless Corporation Petition for Preemption of an Order of the South Dakota Public Utilities, Declaratory Ruling, 15 FCC Rcd 15168, 15173, paras. 12-13 (2000) (Western Wireless Order); Pittencrieff Communications, Inc. Petition for Declaratory Ruling Regarding Preemption of the Texas Public Utility Regulatory Act of 1995, Memorandum Opinion and Order, 13 FCC Rcd 1735, 1751-52, para. 32 (1997) (Pittencrieff), aff’d, Cellular Telecomm. Indus. Ass‘n v. FCC, 168 F.3d 1332 (5th Cir. 1999); City of White Plains, 305 F.3d at 80.
94 Smart Communities seeks clarification of whether this Declaratory Ruling is meant to say that the “coverage gap” standard followed by a number of courts should include consideration of capacity as well as coverage issues. Letter from Gerard Lavery Lederer, Counsel, Smart Communities and Special Districts Coalition, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 17-79, Att. at 17 (Sept. 19, 2018) (Smart Communities Sept. 19 Ex Parte Letter). We are not holding that prior “coverage gap” analyses are consistent with the standards we articulate here as long as they also take into account “capacity gaps”; rather, we are articulating here the effective prohibition standard that should apply while, at the same time, noting one way in which prior approaches erred by requiring coverage gaps. Accordingly, we reject both the version of the “coverage gap” test followed by the First, Fourth, and Seventh Circuits (requiring applicants to show “not just that this application has been rejected but that further reasonable efforts to find another solution are so likely to be fruitless that it is a waste of time even to try”) and the version endorsed by the Second, Third, and Ninth Circuits (requiring applicants to show that the proposed facilities are the “least intrusive means” for filling a coverage gap) See supra n. 75. We also note that some courts have expressed concern about alternative readings of the statute that would lead to extreme outcomes—either always requiring a grant under some interpretations, or never preventing a denial under other interpretations. See, e.g., Willoth, 176 F.3d at 639-41; APT, 196 F.3d at 478-79; Town of Amherst v. Omnipoint Communications Enterprises, Inc., 173 F.3d 9, 14 (1st Cir. 1999); AT&T Wireless PCS v. City Council of Virginia Beach, 155 F.3d 423, 428 (4th Cir. 1998) (City Council of Virginia Beach); see also, e.g., Greenling Comments at 2; City and County of San Francisco Reply at 16. Our interpretation avoids those concerns while better reflecting the text and policy goals of the Communications Act and 1996 Act than coverage gap-based approaches ultimately adopted by those courts. Our approach ensures meaningful constraints on state and local conduct that otherwise would prohibit or have the effect of prohibiting the provision of personal wireless services. At the same time, our standard does not preclude all state and local denials of requests for the placement, construction, or modification of personal wireless service facilities, as explained below. See infra III.B, C.
95 See, e.g., Willoth, 176 F.3d at 641-44; 360 Degrees Commc’ns Co. v.Board of Supervisors of Albemarle County, 211 F.3d 79, 86-88 & n.1 (4th Cir. 2000) (Albemarle County); see also, e.g., ExteNet Comments at 29; T-Mobile Comments at 42; Verizon Comments at 18; WIA Comments at 38-40. Even some cases that implicitly recognize the limitations of a gap-based test fail to account for those limitations in practice when applying Section 332(c)(7)(B)(i)(II). See, e.g., Second Generation Properties v. Town of Pelham, 313 F.3d 620, 633 n.14 (4th Cir. 2002) (discussing scenarios where a carrier has coverage but insufficient capacity to adequately handle the volume of calls or where new technology emerges and a carrier would like to use it in areas that already have coverage using prior-generation technology). Courts that have sought to identify limited set of characteristics of personal wireless services covered by the Act essentially allow actual or effective prohibition of many personal wireless services that providers wish to offer with additional or more advanced characteristics. See, e.g., Willoth, 176 F.3d at 641-43 (drawing upon certain statutory definitions); Cellular Tel. Co. v. Zoning Bd. of Adjustment of the Borough of Ho-Ho- Kus, 197 F.3d 64, 70 (3d Cir. 1999) (Borough of Ho-Ho-Kus) (concluding that it should be up to state or local authorities to assess and weigh the benefits of differing service qualities); Albemarle County, 211 F.3d at 87 (citing 47 CFR §§ 22.99, 22.911(b) as noting the possibility of some ‘dead spots’); cf. USCOC of Greater Iowa, Inc. v. Zoning Bd. of Adjustment of the City of Des Moines, 465 F.3d 817 (8th Cir. 2006) (describing as a “dubious proposition” the argument that a denial of a request to construct a tower resulting in “less than optimal” service quality could be an effective prohibition). An outcome that allows the actual or effective prohibition of some covered services is contrary to the Act. Section 253(a) applies to any state or local legal requirement that prohibits or has the effect of prohibiting any entity from providing “any” interstate or intrastate telecommunications service, 47 U.S.C. § 253(a). Similarly, Section 332(c)(7)(B)(i)(II) categorically precludes state or local regulation of the placement, construction, or modification of personal wireless service facilities that prohibits or has the effect of prohibiting the provision of personal wireless “services.” 47 U.S.C. § 332(c)(7)(B)(i)(II). We find the most natural interpretation of these sections is that any service that meets the definition of “telecommunications service” or “personal wireless service” is encompassed by the language of each provision, rather than only some subset of such services or service generally. The notion that such state or local regulation permissibly could prohibit some personal wireless services, so long as others are available, is at odds with that interpretation. In addition, as we explain above, a contrary approach would fail to advance important statutory goals as well as the interpretation we adopt. Further, the approach reflected in these court decisions could involve state or local authorities “inquir[ing] into and regulat[ing] the services offered—an inquiry for which they are ill-qualified to pursue and which could only delay infrastructure deployment.” Crown Castle June 7, 2018 Ex Parte Letter at 14. Instead, our effective prohibition analysis focuses on the service the provider wishes to provide, incorporating the capabilities and performance characteristics it wishes to employ, including facilities deployment to provide existing services more robustly, or at a better level of quality, all to offer a more robust and competitive wireless service for the benefit of the public.
96 See generally, e.g., Twentieth Wireless Competition Report, 32 FCC Rcd at 8968; see also, e.g., T-Mobile Comments at 42-43; AT&T Reply at 4-5; CTIA Reply at 13-14; WIA Reply at 23-24; Crown Castle June 7, 2018 Ex Parte Letter at 15. We do not suggest that viewing wireless service as if it were a single, monolithic offering provided only via traditional wireless towers would have reflected an accurate understanding of the marketplace in the past, even if it might have been somewhat more understandable that courts held such a simplified view at that time. Rather, the current marketplace conditions highlight even more starkly the shortcomings of coverage gap- based approaches, which do not account for other characteristics and deployment strategies. See, e.g., Twentieth Wireless Competition Report, 32 FCC Rcd at 8974-75, para. 12 (observing that “[p]roviders of mobile wireless services typically offer an array of mobile voice and data services,” including “interconnected mobile voice services”); id. at 8997-97, paras. 42-43 (discussing various types of wireless infrastructure deployment to, among other things, “improve spectrum efficiency for 4G and future 5G services,” “to fill local coverage gaps, to densify networks and to increase local capacity”).
97 Crown Castle June 7, 2018 Ex Parte Letter at 15; see also id. at 13 (“Densification of networks will be key for augmenting the capacity of existing networks and laying the groundwork for the deployment of 5G.”); id. at 15-16 (“When trying to maximize spectrum re-use and boost capacity, moving facilities by just a few hundred feet can mean the difference between excellent service and poor service. The FCC’s rules, therefore, must account for the effect siting decisions would have on every level of service, including increasing capacity and adding new spectrum bands. Practices and decisions that prevent carriers from doing either materially prohibit the provision of telecommunications service and thus should be considered impermissible under Section 332.”). Contrary approaches appear to occur in part when courts’ policy balancing places more importance on broadly preserving state and local authority than is justified. See, e.g., APT, 196 F.3d at 479; Albemarle County, 211 F.3d at 86; City Council of Virginia Beach, 155 F.3d at 429; National Tower, LLC v. Plainville Zoning Bd. of Appeals, 297 F.3d 14 (1st Cir. 2002); see also, e.g., League of Arizona Cities et al. Joint Comments at 45; Smart Communities Reply at 33. As explained above, our interpretation that “telecommunications services” in Section 253(a) and “personal wireless services” in Section 332(c)(7)(B)(i)(II) are focused on the covered services that providers seek to provide —including the relevant service characteristics they seek to incorporate—not only is consistent with the text of those provisions but better reflects the broader policy goals of the Communications Act and the 1996 Act.
98 See WIA Comments at 39; T-Mobile Comments at 43-44.
99 See, e.g., County of San Diego, 543 F.3d at 577, 579-80; City of St. Louis, 477 F.3d at 533-34; see also, e.g., Virginia Joint Commenters Comments, Exh. A at 39-41. Although the Ninth Circuit in County of San Diego found that “the unambiguous text of §253(a)” precluded a prior Ninth Circuit approach that found an effective prohibition based on broad governmental discretion and the “mere possibility of prohibition,” that holding is not implicated by our interpretations here. County of San Diego, 543 F.3d at 578; cf. City of St. Louis, 477 F.3d at 532. Consequently, those decisions do not preclude the Commission’s interpretations here, see, e.g., Verizon Reply at 7, and we reject claims to the contrary. See, e.g., Smart Communities Comments at 60.
100 City of White Plains, 305 F.3d at 76 (citing RT Commc’ns, 201 F.3d at 1268); see also, e.g., Municipality of Guayanilla, 450 F.3d at 18 (quoting City of White Plains, 305 F.3d at 76 and citing City of Santa Fe, 380 F.3d at 1269); Crown Castle June 7, 2018 Ex Parte Letter at 12; Verizon Aug. 10, 2018 Ex Parte Letter, Attach at 5. Indeed, the Eighth Circuit’s City of St. Louis decision acknowledges that under Section 253 “[t]he plaintiff need not show a complete or insurmountable prohibition,” even while other aspects of that decision suggest that an insurmountable barrier effectively would be required. City of St. Louis, 477 F.3d at 533 (citing City of White Plains, 305 F.3d at 76).
101 In California Payphone, the Commission concluded that the ordinance at issue “does not ‘prohibit’ the ability of any payphone service provider to provide payphone service in the Central Business District within the meaning of section 253(a),” but went on to evaluate the possibility of an effective prohibition by considering “whether the Ordinance materially inhibits or limits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.” California Payphone, 12 FCC Rcd at 14205, 14206, paras. 28, 31. In the Texas PUC Order, the Commission found that state law build-out requirements would require “substantial financial investment” and a “comparatively high cost per loop sold” in particular areas, interfering with the “statewide entry” plans that new entrants “may reasonable contemplate” in violation of Section 253(a) notwithstanding claims that the specific new entrants at issue had “‘vast resources and access to capital’ sufficient to meet those added costs. Texas PUC Order, 13 FCC Rcd at 3498, para. 78. The Commission also has expressed “great concern” about an exclusive rights-of-way access agreement that “appear[ed] to have the potential to adversely affect the provision of telecommunications services by facilities-based providers, in violation of the provision of section 253(a).” Minnesota Order, 14 FCC Rcd at 21700, para. 3. As another example, in the Western Wireless Order, the Commission stated that a “universal service fund mechanism that provides funding only to ILECs” would likely violate Section 253(a) not because it was insurmountable but because it would “effectively lower the price of ILEC-provided service relative to competitor-provided service” and thus “give customers a strong incentive to choose service from ILECs rather than competitors.” Western Wireless Order, 15 FCC Rcd at 16231, para. 8.
102 We discuss specific applications of the California Payphone standard in the context of certain fees and non-fee regulations in the sections below; we leave others to be addressed case-by-case as they arise or otherwise are taken up by the Commission or courts in the future.
103 Verizon Communications, Inc. v. FCC, 535 U.S. 467, 491 (2002) (emphasis added); see also, e.g., Level 3 Communications, Petition for a Writ of Certiorari, Level 3 Communications, LLC v. City of St. Louis, No. 08-626, at 13 (filed Nov. 7, 2008) (“[T]he term ‘[p]rohibit’ commonly has a less absolute meaning than that adopted below, and properly refers to actions that ‘hold back,’ ‘hinder,’ or ‘obstruct.’” (quoting Random House Webster’s Unabridged Dictionary 1546 (2d ed. 1998)). We thus are not compelled to interpret ‘effective prohibition’ to set the high bar suggested by some commenters based on other dictionary definitions. Smart Communities Petition for Reconsideration, WC Docket No. 17-84, WT Docket No. 17-79 at 7 (filed Sept. 4, 2018). Because we are unpersuaded that the statutory terminology requires us to interpret an effective prohibition as satisfied only by an insurmountable barrier to entry, we likewise reject commenters’ attempts to argue that “effective prohibition” must be understood to set a higher bar by comparison to the “impairment” language in Section 251 of the Act and associated regulatory interpretations of network unbundling requirements taken from that context. Id at 6. In addition, commenters do not demonstrate why the statutory framework and regulatory context of network unbundling under Section 251—and the specific concerns about access by non-facilities-based providers to competitive networks underlying the court precedent they cite—is sufficiently analogous to that of Section 253 and Section 332(c)(7)(B)(i)(II) that statements from that context should inform our interpretation here. See, e.g., AT&T Corp. v. Iowa Utilities Bd., 525 U.S. at 392. In responding to these discrete arguments raised in a petition for reconsideration of the Moratoria Declaratory Ruling that bear on actions we take in this order we do not thereby resolve any of the petition’s arguments with respect to that order. The requests for relief raised in the petition remain pending in full.
104 47 U.S.C. § 253(a), (b), (c).
105 See, e.g., Texas PUC Order, 13 FCC Rcd at 3498, para. 78 (rejecting claims that there should be a higher bar to find an effective prohibition for providers with significant financial resources and recognizing that the effects of the relevant state requirements on a given provider could differ depending on the planned geographic scope of entry).
106 TCI Cablevision of Oakland County, Inc. Petition for Declaratory Ruling, Preemption and Other Relief Pursuant to 47 U.S.C. §§ 541, 544(e), and 253, Memorandum Opinion and Order, 12 FCC Rcd 21396, 21442, para. 106 (1997) (TCI Cablevision Order).
107 See infra Part III.B.