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Missouri cities resist legislation that would change control over telecom companies

Friday, February 28, 2014 | 7:47 p.m. CST; updated 2:15 p.m. CST, Monday, March 3, 2014
The Cameron Public Library has been waiting for a year to get faster Internet. But because CenturyLink won't pay the franchise and application fees, the city of Cameron won't let the company lay a new broadband wire. Smaller cities like Cameron depend on franchise fees to help fund day-to-day expenses.

*CORRECTION: The House Utilities Committee passed a series of bills on Feb. 24. An earlier version of this story incorrectly identified that date. 

JEFFERSON CITY — Cellphone users can expect to see faster service and better coverage as wireless technologies advance in the next decade, but the benefits could come at a cost to cities.

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On Feb. 24*, the House Utilities Committee overwhelmingly passed a series of contentious bills that could make major changes to the state's utility law. They passed the House Rules Committee the next day.

The five bills, sponsored by Sen. Brad Lager, R-Savannah, touch on everything from the future of broadband to municipal autonomy. Local governments control utilities in their areas, but these bills seek to create a uniform process.

The legislation has roots in two bills from 2013, House Bills 331 and 345, which were signed into law by Gov. Jay Nixon but stopped from going into effect by Cole County Circuit Judge Pat Joyce.

A portion of House Bill 331 caught Joyce's attention because it related to land use at railroad crossings. She determined the bill violated the Hammerschmidt rule, which requires legislation to be about a single subject.

Legislators are now attempting to pass the issues again by breaking House Bills 331 and 345 into five bills, the most disputed of which address application fees, utility pole rental fees and land used by utility companies, otherwise known as rights-of-way.

Telecommunications representatives and lobbyists say the bills would make it easier for the companies to do business, but representatives of local governments fear losing control and important sources of revenue.

Although the bills are expected to pass the legislature with large majorities — last year House Bill 331 passed the Senate 30-0 and the House of Representatives 139-7 — municipalities aren't backing down.

A question of fairness

A framed copy of House Bill 331 hangs on the wall facing its sponsor, Rep. Rocky Miller, R-Osage Beach. It was the first bill he sponsored that was signed into law.

Miller sponsored only one of the communications bills this session, but since so much of the language carried over, he is well-versed in all of them.

Senate Bill 650, whose companion is House Bill 1454, would cap what governments can charge telecom companies for application fees — $500 for additions to existing towers and $1,500 for a new Wi-Fi tower or for substantial modification to one.

Missouri lets municipalities control how much to charge for tower permits. The average fee ranges from $300 to $500, Miller said, but some places, like his hometown of Osage Beach, want much more.

Charges in Osage Beach have gone up to $5,000 in addition to $8,500 in consulting fees. Miller questioned whether it's fair to charge telecom companies more in a small town.

The Senate bill is meant to ensure statewide uniformity in the application process, but Richard Sheets of Missouri Municipal League, a local-government lobbyist group, opposes it.

Small towns have to hire outside help to evaluate where Wi-Fi towers should go because they don't employ full-time engineers, Sheets said, adding that any remaining money is returned.

He also took issue with what he considered the gutting of municipal control over wireless infrastructure. With some exceptions, Senate Bill 650 would bar communities from evaluating tower applications based on the quality of service or availability of other locations. It would also prohibit them from choosing the type of infrastructure installed.

The bill is "a pre-emptive strike" by telecom companies ahead of wireless expansion, Sheets said.

The future of wireless

As mobile devices suck up more data, providers will need more transmitters. To fill demand, the industry is moving from big cellphone towers to distributed antenna systems, small rod-like antennas that relay information to a hub before it is beamed to a wireless tower.

The antenna systems can be placed relatively inconspicuously on buildings or poles in dense areas. In Columbia, indoor nodes could alleviate usage spikes during football and basketball games.

Illustration by PANQIAN YANG/Missourian

When distributed antenna systems started to gain traction, regulators at the federal, state and local levels were unsure about how it should be regulated, said Srividya Kannan Ramachandran, a New York-based telecommunications and distributed antenna systems expert, in an email.

In her master's thesis on the new antennas, Ramachandran said that local government zoning rules treated the systems like cellphone towers, leading to a patchwork of rules and regulations that don't encourage "nontraditional technologies like DAS."

Ramachandran said that the antenna systems would improve wireless broadband connectivity and speed and that she thought wireless companies using the antenna systems should have the same pole access as more established communications providers.

"If the wireline ILECs (incumbent local exchange carriers) can install boxes on utility poles, the wireless DAS providers should be treated the same way," she wrote.

At the very least, she said, local decisions regarding the antennas should not violate the Communications Act of 1996, which blocks state or local governments from prohibiting telecom companies from providing services.

In 2008, there were "200,000 cell sites in the entire country," Ramachandran said in her thesis, and the number "is expected to grow exponentially in the coming years."

If the state takes over control of these regulations, local governments may lose a lot of money from pole attachment fees.

Coming to a utility pole near you

Utility poles need oversight, and oversight costs money.

Utilities that attach to the poles must pay a fee, and the money goes into the city's utility fund to recoup service costs. But another telecom bill, Senate Bill 653, could keep cities from collecting that revenue at all.

Depending on the contract, companies pay between $4 and $20 per pole per year in Independence, Mo., but the average is around $8, said Jim Franklin, the city's power engineering manager.

When cable expansion began, pole rental rates were kept low based on Federal Communications Commission guidelines to encourage infrastructure expansion into underserved areas, Franklin said. But the rates didn't take into account all the costs to build and maintain the poles, and Franklin questioned whether they keep up.

AT&T has been paying Independence the same rate since 1962. 

Two years ago, the city recalculated its rental fees based on the handbook of the American Public Power Association, an organization that lobbies for publicly owned utilities, and found its rate should be just above $29.

The city has terminated all communications utilities contracts since then, but it is allowing companies to provide service at their old rates while it negotiates new ones.

So far, distributed antenna systems haven't made it to Independence, but Franklin said the city will charge for the attachments.

Independence doesn't want to gouge anyone, he said. He just wants to make sure "everyone pays their fair share."

For Ric Telthorst, president of telecom lobbying group Missouri Telecommunications Industry Association, these varying rates and contracts create problems for carriers negotiating contracts.

The problem is twofold, he said. First, there is the cost of attachment, and then there is the hassle of installation. He said he thinks Senate Bill 653, which would streamline pole attachment regulations, would benefit consumers without sacrificing local planning and zoning.

The bill does three main things:

  • Prohibits municipalities from charging wireless providers differently from other telecom utilities, which would make future antenna system expansion easier.
  • Prohibits municipalities from denying a pole attachment except for safety concerns or lack of capacity, which would streamline installation.
  • Changes the dispute process between cities and providers from binding arbitration to a court ruling. Courts are often more expensive than arbitration, said Sandy Davidson, an MU communications law professor. Smaller municipalities that may have challenged companies through arbitration may not have enough money to bring a suit. Companies would be able to continue attaching to poles during legal disputes.

A right to the right-of-way

Ninety-eight percent of Missouri has access to broadband, including 92 percent of rural Missouri, said Ryan Burns, public information officer for Missouri's Office of Administration, in an email.

Senate Bill 649, one of the new telecom bills, would help pave the way for more expansion by banning "franchise fees," or the cost cities impose for doing business, for all telecom companies except cable providers. It also spells out the reasons right-of-way permits can be denied.

Supporters say it would speed up infrastructure installation, but opponents say it strips local control of designating the right-of-way and takes away revenue.

In the city of Cameron, which is north of Kansas City, the library has been waiting for a year to get faster Internet.

The library, which already has broadband access, recently bought three computers, bringing its total to 17. Nine are for public use, three are for the library's catalog system, one is devoted to genealogy research, and the remaining four are for staff. The library added wireless service a year ago, and now the Internet can be slow.

The library wanted to double its speed to 3 megabits per second (Mbps), so it applied for a discount through the E-rent Program offered through the Missouri Research and Educational Network, or MOREnet, which provides Internet services to libraries and schools.

After applying to MOREnet, the library ran into a snag.

The city of Cameron had requested all telecom providers to pay a onetime $2,500 right-of-way user agreement application fee, and CenturyLink, the broadband provider that MOREnet was going to work with, was the only company that refused to sign, City Manager Mark Gaugh said.

Doug Galloway, the director of CenturyLink's government affairs in Missouri, took issue with the franchise and application fees, calling them "extortion" of behalf of cities. The current application process also takes a large amount of time, he said, which inhibits expansion.

CenturyLink is suing Cameron in federal court.

Smaller cities like Cameron and Fulton depend on franchise fees to help fund day-to-day expenses.

In Fulton, the fees make up $350,000 to $400,000 of the total $43 million budget, City Manager Bill Johnson said.

They go into the general fund, which pay for police, fire protection, and parks and recreation, Johnson said, and without them, "they will suffer."

Supervising editor is Stephanie Ebbs.


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