On the surface, the 9th U.S. Circuit Court of Appeals’ decision to reverse a three-judge panel and hand San Diego County a surprise victory over Sprint Nextel Corp. is just another in a series of conflicting court rulings on antenna siting. But legal wrangling over the federal-state jurisdiction question represents but one of many policy challenges facing a tower industry otherwise well positioned to leverage the infusion of new spectrum into the market and consumer demand for multimedia content on wireless devices.
The mix of court rulings on antenna siting has created a steady level of uncertainty for the tower sector – led by American Tower Corp., SBA Communications Inc., and Crown Castle International Corp. – and by extension wireless carriers large and small. The legal quandary over whether and when federal law pre-empts local and state ordinances is apt to continue, though the Supreme Court may one day devine some clarity on the issue.
The 9th Circuit dealt with a long-running dispute between the parties over a 2003 ordinance governing visibility and location of wireless facilities.
“The ordinance does not effectively prohibit Sprint from providing wireless services. Therefore, the [1996 telecom] act does not pre-empt the country’s wireless telecommunications ordinance,” stated the court in a 19-page opinion. A U.S. district court barred the enforcement of San Diego County’s antenna-siting ordinance last year, a ruling upheld by a three-judge panel of the 9th Circuit earlier this year. But the decision was overturned after a rehearing by the full court.
Cellphone and tower industry associations have not indicated whether they will petition the Supreme Court to review the 9th Circuit ruling.
Zoning, backup power concerns
The turnabout comes as the Federal Communications Commission considers a request by wireless trade association CTIA to resolve questions about time frames in which zoning authorities must act on siting requests and other obstacles faced by the wireless industry in securing local approvals for base station and tower placements. The FCC recently extended the deadline for comments on CTIA’s petition until Sept. 29.
But jurisdiction is just one of the major policy challenges for tower companies and wireless operators. There is also the question of the FCC’s backup power ruling, which was put on hold earlier this year by the U.S. District Court of Appeals for the District of Columbia Circuit in a wireless industry legal challenge that is moving toward a critical juncture.
The controversy is before Bush administration budget officials, which must decide whether information collection requirements of the backup power rule comply with the Paperwork Reduction Act. The tower and cellular sectors insist the FCC overstepped its authority in mandating eight-hour backup power sources for every cell site.
The OMB review process gives carriers and tower companies – which regard the eight-hour backup rule and accompanying guidelines as unnecessarily onerous – a fresh opportunity to debate the issue.
Public comments on the information collection requirements of the backup power rule must be submitted to the OMB by Oct. 9.
Even if the OMB rules against the FCC on the information collection matter, the commission – as an independent government agency – could overrule the Bush administration.
Millions at stake
Tower and cellular companies are highly concerned about the millions of dollars they say it will cost them to adhere to the backup power rule, though cost is not part of the legal argument and remains a touchy issue for wireless and tower companies that would like to avoid appearing resistant to making the capital expenditures necessary to avoid the kind of communications failures caused by Hurricane Katrina in 2005 and powerful storms since then.
Regardless of whether the backup power rule remains intact or goes, the tower industry is likely to have significant financial exposure if the number and intensity of tropical storms continues to increase.
The backup power rule was approved last year, following recommendations in 2006 by the Independent Panel Reviewing the Impact of Hurricane Katrina on Communications Networks. The FCC responded to protests by partially modifying the rule and extending auditing and compliance deadlines. But the move didn’t quell industry protests.
Bird concerns
The tower industry also must confront conservationists whose staying power and financial resources have been brought to bear in court and FCC battles over how to protect migratory birds from tower collisions. It is a long-running, still-unsettled feud occurring at the intersection of communications and environmental laws. But for the tower industry, it is much more than a policy squabble with the American Bird Conservancy, the Defenders of Wildlife, the National Audubon Society and the Forest Conservation Council. The financial implications are huge, especially if federal regulators decide to require lighting changes on towers.
Conservationists point to studies showing avian mortality could be reduced drastically by requiring new towers to be outfitted with pulsing white or red lights (rather than steady burning red lights), requiring red lights on existing towers to be retrofitted with pulsing lights, restricting the use of guy wires and other measures.
The tower industry and wireless operators say federal intervention is unnecessary because the rate of avian morality due to towers claimed by conservation groups has not been adequately substantiated. Possible lighting modifications – aside from the cost factor – implicate industry compliance with the Federal Aviation Administration, state and local regulations.
Meantime, with debate over the migratory birds and tower remaining far from resolved, conservationists want the FCC to enact a freeze on all tower registrations and re-registrations until the agency complies with environmental statutes – including the National Environmental Policy Act, the Endangered Species Act and the Migratory Bird Treaty Act – at issue in litigation.
Mounting issues
On a separate front, the wireless infrastructure industry – represented by industry association PCIA – and CTIA are pressing telecom policymakers to develop uniform national guidelines to end what they regard as discriminatory and inequitable access to utility poles for antenna-siting purposes.
Tower companies and cellular operators, too, are being scrutinized more closely insofar as protecting workers from tower falls and radio-frequency radiation emitted by base stations.
Legal and policy challenges aside, market dynamics appear favorable for the tower industry in coming years.
On Friday, Zacks Equity Research offered a bullish outlook for American Tower by reaffirm its buy rating for the tower company.
“Overall performance has been driven by substantial demand for more tower space to facilitate high-speed data services and mobile video, along with 3G and WiMAX technologies,” Zacks stated.
