Access to local rights-of-way: a rebuttal.

• Author: Malone, William
• Position: Response to Christopher R. Day, Federal Communication, vol. 54. p. 461, 2002

1. INTRODUCTION II. SECTION 253 WAS NOT INTENDED TO PREEMPT LOCAL AUTHORITY A. Right-of-Way Fees Are Not Limited to Costs B. Differential Compensation Is Not Discriminatory C. The So-Called "Third Tier" of Regulation Is a Red Herring D. Municipal Delay Is Not Prohibition E. The States Have Responded to Right-of-Way Issues in Different Ways III. THE FEDERAL COMMUNICATIONS COMMISSION LACKS JURISDICTION TO ADJUDICATE PROPERTY RIGHTS IV. BOTH PROPOSALS SHOULD BE REJECTED I. INTRODUCTION

   The May 2002 issue of Volume 54 of the Federal Communications Law Journal contained a lengthy article titled The Concrete Barrier at the End of the Information Superhighway: Why Lack of Local Rights-of-Way Access Is Killing Competitive Local Exchange Carriers, by Christopher R. Day, a graduate fellow at the Institute for Public Representation, Georgetown University Law Center, with the assistance of two former colleagues at the law firm of Swidler, Berlin, Shereff, Friedman, LLP, which represents a multiplicity of competitive local exchange carriers ("CLECs"). (1) The thrust of Day's article is that local governments, in franchising use of their rights-of-way, are improperly obstructing development of CLECs in violation of Section 253 of the Telecommunications Act of 1996 (2) (1996 Act), as added to the Communications Act of 1934. Day first proposes that Congress amend Section 253 to create a national fights-of-way access standard. (3) Alternatively, he proposes that the Enforcement Bureau of the Federal Communications Commission ("FCC"), without further legislation, create a "rocket docket" that could resolve fights-of-way access disputes between CLECs and local franchising authorities. (4) The editors of the Journal are to be complimented on the timely publication of an article on an issue that is very hotly contested across the country, and on which the courts have not fully agreed. The factual predicate, which Day marshals for his legislative proposal, and its substance and constitutionality are no less debatable than his construction of Section 253, with which the courts have struggled since 1996. (5) Similarly, the existing statutory and constitutional bases for his alternative administrative proposal are equally dubious. The purpose of this Article is to question the factual and analytical bases of Day's proposals.

   Day offers no persuasive evidence that "lack of local rights-of-way access is killing competitive local exchange carriers." (6) While acknowledging that "some of the blame for the failure of local competition may be placed on failed business models and the withdrawal of venture capital from the market," (7) Day's article charges that the Congress's and FCC's "failure to adequately address municipal rights-of-way access for CLECs" is a "regulatory failure" creating an "inhospitable environment" for CLECs. (8) The view that lack of access to local rights-of-way is a major factor in CLEC failures does not appear to be the prevailing view among CLECs, even in two states that have experienced vigorous right-of-way litigation--Michigan and Maryland. In responding to an earlier survey by the Michigan Public Service Commission to identify barriers to entry, none of the CLECs identified local rights-of-way as an obstacle to the development of competition. (9) Kraemer and May's study, "Local Exchange Competition: Progress in Maryland," concluded that "competition exists in Maryland; there appear to be no barriers to entry." (10)

   Recent publication of a book setting forth an insider's view of the CLEC debacle barely mentions local rights-of-way franchising as a CLEC issue. (11) Rather, because the managers of the CLECs did not grow up in the telephone business, but the inter-exchange carder ("IXC") business, they were simply slow to realize that obtaining rights-of-way across farmland was uncomplicated compared to rights-of-way within a city. (12) In fact, large numbers of CLECs overcame any such urban problems--47 in Atlanta, 38 in Chicago, 46 in Dallas, 38 in Los Angeles, and 45 in New York. (13) McDermott attributes the failures of CLECs to management failures as mundane as incorrect billing. (14) His final chapter anticipating "Rebound" of the industry relies on neither changes in local rights-of-way policies nor amendment of the 1996 Act. (15)

   Day's assumption that local right-of-way franchising is a significant barrier to CLECs is highly questionable as a factual matter. It has been my experience in representing numerous municipalities in right-of-way franchising matters that carriers that have accepted the local franchising process have been readily franchised. After all, for area economic development purposes, local governments are anxious to have competitive telecommunications services available to local businesses and residents are also anxious to derive compensation for their investments in local rights-of-way. (16) It is only those telecommunications carriers, misapprehending the language and intent of Section 253, that resist local franchising or rights-of-way, resist paying compensation based on value instead of on costs, or resist paying compensation partially in-kind that may encounter "concrete barriers" to their exploitation of the public rights-of-way. A mere increase in cost is not a barrier to entry. (17)

2. SECTION 253 WAS NOT INTENDED TO PREEMPT LOCAL AUTHORITY

   Day misconceives the original intent of Section 253(c). In Section II of his article, Day states "the premise that the overarching intent of Section 253 is to eliminate anything that could constitute a barrier to entry in the newly deregulated telecommunications market." (18) Contrary to Day's certitude, such a Section 253(c)-specific premise is at most highly controversial. The interpretational controversy arises in part from the fact that courts say, "Section 253 is quite inartfully drafted and has created a fair amount of confusion." (19) Much of these courts' difficulty in interpreting Section 253 arises out of their failure to recognize that the overall procompetitive purpose of the 1996 Act, as described in the conference report, but not in the act itself, (20) is subservient to the specific purpose of Section 253(c) to preserve local governments' jurisdiction over local rights-of-way. Thus, while Section 253(a) is manifestly designed to carry out the general, procompetitive purpose of the 1996 Act, Section 253(c) carries an interpretational instruction to the courts that nothing in subsection (a) shall affect prior existing authority of the local governments.

   This result is not as strange as it might seem to the uninitiated. In enacting Section 253 in 1996, Congress made a conscious political decision to leave right-of-way franchising in the hands of the local franchising authorities where it has always been. (21) Day criticizes governmental action to date as failing to advance the "pro-competitive, de-regulatory national policy framework" of the 1996 Act, citing the legislative history of the Act. (22) It is commonplace in statutory construction, however, that the general purpose of an act does not control the construction of a provision with a specific legislative purpose. (23) Allowing the general purpose of promoting competition to control the specific provisions of Section 253 improperly "undermine[s] limitations" on federal authority embodied in Section 253. (24) That is the case here. It is apparent from the course of the legislative bill that the purpose dominating the enactment of Section 253(c) was largely the preservation of existing local rights and responsibilities with respect to local rights-of-way. The Guaranty Clause (25) and the Tenth Amendment to the U.S. Constitution require no less.

   In enacting Section 253 of the 1996 Act, Congress adopted a policy of fostering the entry of multiple providers into the local rights-of-way on a free-market basis. But Congress then stepped aside, leaving the traditionally local processes of managing public rights-of-way and collecting compensation for the value of local property under these changed conditions to the local governments, as the regulators and owners of those rights-of-way.

   Underpinning his call for amendment, Day argues under Section III.B. of his article that municipalities have misinterpreted Section 253(a)-(c) as empowering their regulation of rights-of-way, rather than as the "safe harbor" Congress intended. As evidence of their claim to empowerment, he cites Metromedia Fiber Network Services' comments to the FCC. (26) The citation does not satisfy the "best evidence" rule. In point of fact, I know of no instance in which a local government has pursued the claim--with the FCC or with a federal court--that it derives right-of-way franchising powers from Section 253(c) of the Act, rather than from state law.

   Under Section III.B. of his article, Day argues that four local fight-of-way practices violate Section 253 of the Act. Each of the supposed violations of purpose that Day cites were specifically considered by Congress and rejected. Where Congress specifically rejects a particular approach, that approach cannot be a valid interpretation of the statutory text ultimately adopted. (27) As the Supreme Court said in INS v. Cardoza-Fonseca, of Congress's enacting the language from a House bill rather than the language from the companion Senate bill: "Few principles of statutory construction are more compelling than the proposition that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language." (28) Thus, Congress's intent to preserve local authority is embodied in the carefully drawn structure and language of the section.

   The language that became subsection (c) originated by amendment in both houses, but only on the House side was adoption of the amendment accompanied by illuminating controversy. Subsection (c) was first added to the Senate bill, S. 652, in committee markup. (29) The amendment...