Michael Shonafelt

Subscribe to Michael Shonafelt: eMailAlertsEmail Alerts
Get Michael Shonafelt: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


Article

An Old Law Meets a New Technology

Traditional right-of-way access rights apply to wireless telephone technology

Recent legal judgments are going to have a real impact on companies' abilities to place antennas in our cities and countryside. What does it all mean?

In the year 1850, Vice President Millard Fillmore replaced a deceased Zachary Taylor as President of the United States, Congress was struggling to keep the Union from self-destructing over the issue of slavery, and the nation was being wired from coast to coast for the telegraphic age.

The deployment of Samuel F. B. Morse's revolutionary new technology posed interesting questions for the young nation. Among them was what role states' rights would play in the context of the overriding national interest in facilitating a nationwide telegraph network without regard for state lines. Some states bristled at the idea that a telegraph company with a national charter could run roughshod through local streets and highways, stabbing poles and stringing lines along the way, without regard for state lines or the concerns of state sovereignty. Such states sought to exercise their power to say "no" to the telegraph companies' requests for entry, or to exact onerous fees or to impose conditions on the companies as they saw fit. Other states understood the federal interest in the deployment of a seamless telegraph network and realized they had something to gain from the installation of such networks within their own borders.

While the threat to national deployment of a telegraph system came from assertions of state sovereignty, the threat to the provision of intrastate telegraph services came from the municipalities and political subdivisions of the state. Cities and counties jealously guarded their powers in order to maintain the health, safety, and welfare of the citizens within their jurisdictional boundaries. Such powers could be wielded by local governments to exclude telegraph poles and the tangle of telegraphic lines from the municipal rights-of-way. Because many states realized the threat posed by the barriers that cities and counties could raise, they enacted their own statutes to ensure the municipalities could not obstruct the development of telegraph networks.

California was one such state. Shortly after its admittance to the Union, the California State Legislature, on April 22, 1850, enacted a statute allowing telegraph companies to "construct lines of telegraph" along any public road. The ordinance restricted local governments from asserting their authority in a manner that resulted in the exclusion of telegraph service from the city streets and highways. Telegraph companies were thereby vested with a statewide franchise, allowing them to fulfill their national mandate to provide a seamless system, without regard for local efforts to block entrance into municipal markets.

By 1905, the telegraph networks had largely been built, and the 1850 law was becoming as forgotten as the issues that had led to its enactment. But the old code books would soon be dusted off for a new era: that of the telephone. Telephone corporations soon found themselves faced with the same issues and challenges faced by telegraph companies 50 years earlier, and state legislatures scrambled to adopt the old solution to the new problem. In 1905 California amended its telegraph law to extend the protections of the statewide telegraph franchise to telephone corporations. The law, added to the California Civil Code at section 536, would later end up in the California Public Utilities Code at section 7901. At least 21 other states in the union enacted virtually identical laws designed to protect the burgeoning telephone industry's effort to install poles and lines in the public rights-of-way.

California Public Utilities Code Section 7901 is but one example of a number of state statutes that allow telegraph or telephone corporations to construct "lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this State" in such manners as "not to incommode the public use of the road or highway." Armed with such a statutory shield, telephone corporations have been able to construct their networks on public roads and highways for almost 100 years, without being subject to onerous local exactions or obstacles. In the years since 1905, the California courts have determined that California's law, Section 7901, sets aside telephone services as a matter of state, not municipal, concern. As a consequence, local governments cannot impose their own local franchise requirements, set up prerequisites to market entry in municipal jurisdictions, or impose excessive fees as a condition for entry into local markets. Section 7901 does not completely eclipse local control, however. Municipalities can still exercise "reasonable control" as to the time, place, and manner of construction in the public streets.

Enter the wireless age. In 1996, President Bill Clinton signed into law the Telecommunications Act of 1996, otherwise known as the Telecom Act. Since that time, wireless telecommunications providers have seized the federal policy embodied in that Act of encouraging the rapid deployment of a nationwide wireless telecommunications network. The Act is designed to facilitate the acceleration of advanced telecommunications technologies, reduce state and local barriers to market entry, increase competition among carriers, and drive down the costs of accessing such technologies for all Americans.

The Telecom Act has opened the floodgates of wireless technology all over the Nation, but it has not proven to be a panacea for all the ills facing the new technology. In a curious reprise of 1850 and 1905, wireless providers find their efforts to deploy their systems thwarted in city council chambers and before local land use boards. Local authorities all over the nation, haunted by the specter of an explosion of wireless antennas choking their streets and highways, are telling wireless providers to check their federal mandates at the door. With the proliferation of applications for new installations, some cities and counties view their permitting authority as a new means to generate revenue. They have insisted on up-front or periodic payments of compensation, in various forms, for the use of local streets and highways for such installations, and have justified these impositions on sundry lines of reasoning in order to deny the continuing applicability of Section 7901. Delay in processing has become a too-frequent tactic of persuasion. Wireless telecommunications companies, faced with fierce competition, revenue needs, contractual deadlines to deliver new service, and a clear pattern of rapidly eroding market share if not among the first to reach new markets, came under great pressure to accede to local demands. In short, wireless providers have been thinking globally, while stubbing their toes locally.

The Telecom Act has not always had a quick answer for such circumstances. As some federal courts have noted, the Telecom Act is not a model of clarity. Nor has the Act benefited from the development of consistent case law to fill in the gaps left by Congress - a process that requires many years for key cases to work their way through the court system. Given the erratic, inconsistent, and plodding pace of the development of Telecom Act jurisprudence, many carriers are doing what their technological counterparts did 100 years ago - dusting off the old code books and seizing upon laws laid down for the opening of the telegraphic age.

As in 1905, Section 7901 is beginning to awaken from a long slumber. The old law is providing a new solution to 21st century technology. Evidence of the new role that section 7901 will play comes out of the Court of Appeal of California in a recent case entitled Williams Communications, LLC v. City of Riverside. In the Williams case, Williams Communication sought a permit to install in the streets of the City of Riverside fiber optic lines designed to carry digital voice, data, video, and Internet transmission services. But Riverside conditioned issuance of the permit on payment to the city of $750,000 ($1.50 per lineal foot of conduit) as compensation for use of the streets, in addition to the usual permit fees and charges. Williams Communications sued, claiming that the $750,000 exaction violated Section 7901 and another relatively new related law (California Government Code Section 50030) requiring that fees for installation of telecommunications facilities in the public rights-of-way be commensurate with the reasonable costs of providing the service for which the fee is charged. The court of appeal agreed with Williams and held that the exaction was illegal under Sections 7901 and 50030. It rejected the city's argument that Section 7901 did not apply to Williams' technology and awarded reimbursement to Williams of the full exaction. In so doing, the court affirmed Williams' right to use the city rights-of-way without having to comply with such burdensome local entry requirements. Williams was the first California case in 40 years to interpret Section 7901 for a new technological era in which modern fiber optic lines facilitate not only traditional telephone service but the merged transmission of digitized voice, images, and data.

While the Williams case deals with landline services, its reasoning applies equally to wireless providers. This is particularly true for wireless companies that rely on the deployment of small-scale microcell technologies expressly for use in the public rights-of-way. Unlike larger macrocell antenna sites, which generally are installed on private property, companies utilizing microcell technology frequently rely on existing utility poles in the public rights-of-way to mount small panel antennae designed to transmit radio frequencies along and around routes of travel.

Williams - and Section 7901 - extend to all firms that are "telephone corporations" under California law. The case confirmed that telecommunications companies that register with the California Public Utilities Commission, such as Williams, are deemed to be "telephone corporations." Given the Telecom Act's elimination of state regulatory barriers to wireless providers, however, wireless companies often do not register as telephone corporations with the California Public Utilities Commission. Nevertheless, these wireless companies may be recognized as telephone corporations entitled to the benefits of Section 7901, provided they establish that status through means other than registration with the Public Utilities Commission. Because the legislative policies behind Section 7901 and similar laws of other states are as pertinent to the wireless age as they were to the telegraphic and telephonic eras, a serious dispute as to whether wireless providers qualify as "telephone corporations" for the purpose of Section 7901 does not appear to loom large on the horizon. In fact, the California Public Utilities Commission has already opined that, regardless of the lack of a registration requirement, the term "telephone corporation" can be extended to carriers that transmit signals without the use of telephone lines.

By seizing on the rights carved out long ago for telegraph and telephone corporations, wireless companies can more easily and more quickly deploy their networks in the public rights-of-way of the state, without being subject to onerous local regulations and fee exactions. The Williams case heralds the revitalization of those rights - the application of an old law to a new technology.

More Stories By Fred Kessler

Fredric Kessler, a Los Angeles-based partner with Nossaman Guthner Knox & Elliott, LLP, is a member of the firm's Infrastructure practice group. He has more than 25 years of experience in telecommunications transactions, infrastructure development and transactions, and real estate matters for institutional clients in the private sector and public agencies.

More Stories By Michael Shonafelt

Michael Shonafelt is an attorney in the Los Angeles office of the law firm of NParker Milliken. He practices in the areas of environmental, land use, and political law. His experience includes representation of wireless telecommunications companies in matters pertaining to land use entitlements and the Telecommunications Act of 1996.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.