Rights-of-way Regulatory Authority After Denver v. Qwest

• Publication year: 2001
• Pages: 103

30 Colo.Law. 103 Colorado Lawyer 2001.

2001, July, Pg. 103. Rights-of-Way Regulatory Authority After Denver v. Qwest

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103

Vol. 30, No. 7, Pg. 103

The Colorado Lawyer
July 2001
Vol. 30, No. 7 [Page 103]

Specialty Law Columns
Government and Administrative Law News
Rights-of-Way Regulatory Authority After Denver v Qwest
by Kenneth S. Fellman

On February 26, 2001, in City and County of Denver v. Qwest et al. ("Denver"),1 the Colorado Supreme Court issued the first appellate ruling interpreting CRS §§ 38-5.5-101 et seq., commonly referred to as Senate Bill 10 ("S.B. 10"). The Court ruled that management of local streets with respect to usage of those streets by telecommunications companies was a matter of mixed state and local concern. Therefore, because material sections of Denver's right-of-way regulatory ordinance conflicted with S.B. 10, the ordinance was preempted. This article addresses the background of S.B. 10, Denver's right-of-way ordinance, the arguments raised in the litigation, and the scope of local government authority regarding management of public rights-of-way in light of the Court's decision

Legislative Background

In 1996, the passage of two significant items of legislation impacted the telecommunications industry and its interaction with local governments: the Telecommunications Act of 1996 ("TA")2 and S.B. 10. The TA was the most sweeping comprehensive set of amendments to the Communications Act of 19343 since its enactment. The general purpose of the TA was to encourage competition in the provision of all communications services by limiting regulation and removing state and local barriers to competition.

Specifically, § 253 of the TA significantly impacts local governments by (1) prohibiting state and local barriers to telecommunications providers' entry into the telecommunications business and (2) requiring that all state and local regulations be non-discriminatory and competitively neutral. It also preserves local authority over public rights-of-way, including the right to recover fair and reasonable compensation for private use of such public property.4

The Colorado General Assembly passed S.B. 10, notwithstanding the federal balance of encouraging competition through deregulation while preserving local government authority to recover fair and reasonable compensation for rights-of-way use. The Colorado legislation goes further than the federal legislation by granting special privileges to telecommunications companies to use public rights-of-way. S.B. 10 promotes the TA's goals of open competition, elimination of barriers to entry, and requirements for non-discriminatory regulations. In addition, S.B. 10 provides that local governments cannot require telecommunications providers to obtain a franchise to use public rights-of-way. S.B. 10 also prohibits local governments from charging reasonable compensation (rent) for telecommunications providers' private use of public rights-of-way.5 S.B. 10 limits local government charges to fees related to the direct costs incurred as a result of the private use of the public rights-of-way. Other significant requirements of S.B. 10 are as follows:

1. Telecommunications providers are granted a right to occupy public rights-of-way without additional authorization or franchise from local governments.6

2. Local governments are prohibited from imposing any tax, fee, or charge on telecommunications providers for the right or privilege to use a public right-of-way, other than license or permit fees reasonably related in time and occurrence to the costs directly incurred by the local government.

3. Local governments are prohibited from collecting any taxes, fees, or charges through the provision of in-kind services as a condition of consent to use public rights-of-way.8

4. Local government police power is preserved.9

S.B. 10 and the prohibition against charging franchise fees applies to telecommunications providers, but it does not apply to cable television operators.10 Therefore, under S.B. 10, local governments in Colorado may not require telecommunications providers to obtain a franchise or charge fees in excess of the actual costs of telecommunications providers' use of public rights-of-way. However, franchises and reasonable compensation in the form of franchise fees still can be required of cable operators.

Background

Prior to 1967, most Colorado municipalities required franchises of the local telephone company, Mountain Bell. However, that standard changed with City of Englewood v. The Mountain States Telephone and Telegraph Company.11 In City of Englewood, the Court held that the creation and maintenance of a statewide telephone network was a matter of statewide concern that overshadowed any municipal interest in managing local streets. The Court further held that once Mountain Bell had received initial authority to place its facilities in local streets, it need not do so again. Therefore, local governments could not require Mountain Bell to obtain a renewal franchise from the City of Englewood.

The telecommunications industry has changed over the past thirty-four years, which may raise the question of whether the finding of statewide concern in City of Englewood still is valid. Today, instead of one company providing a telecommunications network to all of Colorado, multiple companies can pick and choose their markets. Providers can ignore certain communities or use a community's streets but not provide that community with service. This raises a question of whether local government management of telecommunications companies' use of local streets in a competitive environment is a matter of statewide...