CTIA, USTelecom Tell 10th Circuit Communications Act Preempts Santa Fe’s 2% Fee

It's "well-established" that excessive municipal fees “can hamper communications infrastructure deployment” in violation of Sections 253 and 332 of the Communications Act, said CTIA and USTelecom in a 10th U.S. Circuit Appeals Court amicus brief Friday (docket 22-2131). It supports NMSurf’s appeal to reverse the district court’s upholding of a local telecom law requiring a 2% gross revenue-based franchise fee in Santa Fe (see 2211230073).

Though NMSurf isn't a member of CTIA or USTelecom, the groups “have a critical interest in the correct interpretation” of Sections 253 and 332, said their brief. Those sections of the statute “help promote a burgeoning, competitive communications marketplace by eliminating barriers to the deployment of telecommunication and wireless facilities and reducing the costs to consumers associated with excessive fees charged by state and local governments,” it said.

NMSurf’s appeal “involves a small, local communications provider with a limited customer base,” said the brief. But the 10th Circuit’s decision “could have a significant impact on the U.S. communications industry as a whole, far outstripping the consequences to the parties” before the court, it said. The decision has the potential to affect the fees local jurisdictions are able to charge CTIA and USTelecom members to do business, and with it their ability to provide “top-tier service throughout the country through improved infrastructure and expansion into underserved markets,” it said.

When “aggregated” across the state, circuit or country, the impact from the kinds of fees confronting NMSurf in Santa Fe “can be profound,” said the brief. “The ability of communications providers to deploy infrastructure is paramount to our ability as a nation to keep pace with technological development and remain connected as a society.” The need for “rapid and continuous” infrastructure deployment is “precisely why” the FCC and the courts have spent so much time applying Sections 253 and 332 “to specific cases, issues, and questions in the area of infrastructure deployment,” it said.

Santa Fe has imposed a “non-cost-based fee” on a carrier using fiber cable -- “infrastructure that is critical to modern networks,” said the brief. “NMSurf is correct that this fee is inconsistent with Section 253,” it said. “It would be in line with the law of this circuit,” plus FCC precedent, and the congressional objectives embodied in the 1996 statute, for the 10th Circuit to decide the city’s 2% gross revenue fee is preempted by federal law, it said. The fee is “wholly unrelated” to Santa Fe’s costs and telecom providers’ use of the public rights-of-way, it said.

If the 10th Circuit reacesh “a different result,” it should do so on “as narrow grounds as possible,” said the brief. Doing so would “avoid broader, industry-wide effects on the ability of providers to deploy infrastructure,” it said.

Sections 253 and 332 are “central to the vision” of the 1996 statute, said the brief. They “expressly preempt municipal regulation that would otherwise interfere with the important federal prerogatives” that the statute seeks to promote, it said. The courts and the FCC “have consistently recognized that local fees can have the effect of prohibiting the provision of service” in violation of Sections 253 and 332, it said.

The 10th Circuit previously “invalidated local fees” under the scope of Section 253, said the brief. It said in a 2004 decision that Santa Fe’s fee provisions nearly quadruple Qwest’s cost of doing business, and that “such a massive increase in cost was prohibitive to Qwest’s ability to operate,” it said.

Based on that precedent, the district court in 2013 said in Qwest v. City of Santa Fe that Section 253 preempted a 3% gross revenue fee imposed by a Santa Fe ordinance, said the brief. “Other federal court decisions from all over the country have reached similar results.” In deciding fees could be preempted under federal law, numerous courts recognized that fees “must, at a minimum, bear at least some relationship to a local jurisdiction’s costs to pass muster,” it said. “Those fees that are wholly unrelated to costs are barred by statute.”