[Davisgig] Fwd: Blair Levin: FCC Small Cell Draft Order Would Exacerbate the Digital Divide

Robert Nickerson rob at omsoft.com
Wed Sep 19 09:28:57 PDT 2018


Governor Brown vetoed a bill last year that would do exactly this, 
eliminate local jurisdiction over rights of way and light poles for more 
cell phone small cells.
This order would set mandatory inexpensive rates for light pole leases 
for huge cell phone companies, and remove the local jurisdiction from  
the decision making process.
Yuck.

RAN.


-------- Forwarded Message --------
Subject: 	Blair Levin: FCC Small Cell Draft Order Would Exacerbate the 
Digital Divide
Date: 	Wed, 19 Sep 2018 12:39:29 +0000
From: 	Coalition for Local Internet Choice <Catharine at localnetchoice.org>
Reply-To: 	Coalition for Local Internet Choice 
<Catharine at localnetchoice.org>
To: 	Robert <rob at omsoft.com>



Blair Levin: FCC Small Cell Draft Order Would Exacerbate the Digital Divide
Blair Levin: FCC Small Cell Draft Order Would Exacerbate the Digital Divide

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Earlier this week, CLIC advisor Blair Levin sent CLIC and NATOA 
leadership a letter detailing his concerns with the FCC’s draft small 
cell order, an order that preempts local authority while purporting to 
advance broadband deployment. Blair’s letter describes why the draft 
order will have the opposite impact and is likely to exacerbate the 
digital divide while tying the hands of local governments to build 
collaboration with the private sector. Excerpts of Blair’s analysis are 
below, and the full letter is here 
<https://localnetchoice.us8.list-manage.com/track/click?u=09c6fc743c87e862042edd5d5&id=1cb3c3505e&e=d1bb241e3d>.

*/Blair Levin:/*

This is in response to your request for my view of the FCC’s pending 
order, proposing to cap the fees that state and local governments may 
charge for small cell attachments. According to the FCC’s draft order, 
these// price-caps will save the industry $2B in costs to operate in 
metropolitan areas—which will translate into $2.5B in new wireless 
investment, primarily in rural areas. This letter summarizes my thoughts 
on aspects of the draft order.

[On Wall Street and in Washington, DC], I’ve interacted with numerous 
investors, carriers, and localities, and that experience leads to my 
concerns with the FCC’s argument:

*First, focusing on state and local government fees and process is a 
distraction from the real obstacles to accelerated and ubiquitous 
deployment of next generation mobile services, *which are that broadband 
deployment economics are very challenging and have to be addressed at 
all levels of government and through creative collaboration with the 
private sector. Fees for access to public property represent only one of 
many, many costs of doing business a carrier will encounter. A focus on 
reducing or eliminating one (relatively marginal) cost of doing business 
does not solve the challenging economics of broadband deployment and 
serves only to obscure the true challenges….

*Second, local governments have a strong recent track record of 
endeavoring to enable and facilitate broadband deployment, *as the 
Google Fiber experience conclusively demonstrated. Vilifying them based 
on fees for use of public property is not only a distraction, but also 
unfair. Indeed, rather than acknowledging that carriers have a proven 
ability to negotiate advantageous fees with localities, the FCC’s draft 
order infantilizes carriers by preempting state and local government, 
presumably on the theory that carriers cannot protect themselves in 
negotiations with states and localities. This is absurd….. Tying the 
hands of localities and states is self-defeating – it stops them from 
using creative partnering strategies (as they have successfully done in 
cities like San Jose, CA and Lincoln, NE) to find ways to improve 
broadband outcomes…. Thus, despite the FCC’s rhetoric, the proposal will 
likely exacerbate, rather than alleviate, the digital divide.

*Third, the FCC’s draft order is based on a fallacy that no credible 
investor would adopt and no credible economist endorse: *that reducing 
or eliminating costs for small cell mounting on public property in 
lucrative areas of the country (thus reducing carriers’ operating 
costs), will lead to increased capital expenditures in less lucrative 
areas– thus supposedly making investment more attractive in rural areas.

That simply is not how investment decisions are made…. My experience on 
Wall Street is that neither analysts nor investors regard this FCC 
action as likely to lead to increased deployment in non-economically 
attractive areas, which most on Wall Street would consider an irrational 
act… In short, while the FCC may ignore reality, the carriers and Wall 
Street understand that increasing profitability in Market A will not 
make Market B more attractive for investment. Market B will still be an 
area that is unprofitable or otherwise unattractive for investment, and 
the new requirement that Market A subsidize carriers by reducing fees 
will not benefit Market B under these circumstances….

*Finally, let me note something I discuss at length in the attached 
speeches: the draft order presents a framework in which industry gets 
all the benefits (reduced fees to access state and local property) with 
no obligations to reinvest the resulting profits in rural 
broadband*—even though the purported rationale for the reduced fees is 
that they will lead to new investment. At the same time, states and 
localities will be forced by federal mandate to bear all the costs and 
receive no guaranteed benefits.

In short, my response to your request is that I am deeply troubled by 
the FCC’s draft order, the options it ignored, and the fallacious logic 
on which it rests. And I’m particularly concerned about the prospect of 
unelected federal officials in Washington DC mandating how, and at what 
price, state and local elected officials can manage their own 
property—all for the benefit of a select group of companies that are 
under no obligations to reinvest these mandated public subsidies in new 
deployment.

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