Tackling the Telecom Giants

Rewriting the 1996 reform law could make it better. It could also make it worse.
January 2001
By Jonathan Walters  |  Senior Editor
A Senior Editor of Governing, Jonathan has been covering state and local public policy and administration for more than 30 years.

When it comes to being clumsy, complicated and unfriendly to local government, there isn't much that beats the 1996 Telecommunications Act, passed by Congress in the name of cutting telecommunications companies loose to do their thing.

In the years since the Act has been law, a couple of things the companies have been busiest doing with their newfound freedom are figuring out how to use the law's preemption of local land-use control to build cell towers across the country, on the one hand; and avoiding payment to local governments for tearing up, using or otherwise encumbering public rights of way, on the other.

The question for local public officials at the moment is whether they want to revisit the Act and try to make it a little more local government-friendly. While the law isn't up for reauthorization right now, there's discussion of reopening it to make changes that would allow the so-called "Baby Bells" to deliver data for Internet service carriers over long-distance phone lines. If that issue is raised, local interests could seek other amendments.

Given what the law has meant so far, one might conclude that local government officials would be anxious for another crack at it. However, the prospect of reopening the issue presents a real dilemma.

Circumstantially, the case for going back in and trying to create more rights for localities might seem to be open and shut. Exhibit A is the nation's capital, where telecom companies have torn up every major street in the city (every one with telecom market potential, at least), leaving the local government holding the bag when it comes to smoothing out the ungodly series of asphalt scars left behind in the cable cuts' wake. Bad for many city taxpayers, good for any business remotely related to realigning the front end of cars. Meanwhile, the city is squaring off with a telecom company interested in putting a huge cell tower atop one of D.C.'s few and cherished hill tops.

Then there are the issues that surround franchise and right-of-way fees. A recent federal court ruling puts local government's ability to collect these fees from telecom companies in some doubt. In AT&T Corp. v. City of Portland (Oregon), the court ruled that high-speed data carried by cable wasn't the same as actual cable service. While that may seem like hair--or wire--splitting of the nerdiest technical and legal sort, the distinction was immediately pounced on by Cox Communications Inc., one of the nation's largest high-speed Internet service providers. Using the federal court's newly minted distinction between cable and Internet service, the company immediately stopped paying cable fees to more than a dozen local governments. It claimed that, under the court's definition, it was only in the Internet access business, not the cable service business.

So given the rather outrageous behavior exhibited by telecoms toward localities, who could doubt the benefits of reopening the 1996 law? Juan Otero, for one. Otero follows telecommunications issues for the National League of Cities, and he's arguing that the devil that localities know may actually be less dangerous than the devil into which the 1996 law might transmogrify should an ever-savvier, wealthier and more powerful telecom industry get to stick its pitchfork deep into the flanks of Congress again.

A safer option, Otero argues, would simply be for local government to start acting a little tougher with the companies on its own. While it's true that, in the five years since the law was passed, many localities have been rolled by telecom interests, quite a few others have held their ground, using the law's lack of clarity and prescription to seize a little leverage.

On the cell-tower front, for example, cities and towns that have enacted tough regulations have found courts more than willing to uphold them. Localities have quite a bit of leeway in determining where these monsters will go and what they'll look like--in fact, whether they'll be built at all. The U.S. Supreme Court recently declined to hear a case involving outright denial of an antenna to a phone company by Newtown Township in Pennsylvania. The upshot of the case: Individual cellular phone companies don't have an absolute right to put up towers in order to complete their coverage of a given area.

In the case of roadwork, this, too, has proved to be a function of how savvy and tough localities are in negotiating things such as right-of-way payments and repaving costs. It is not primarily a function of any explicit deficiency in the 1996 law. In fact, it is the states that present local government with the most serious obstacle in trying to collect this money. It's the states, after all-- not Congress--that essentially dictate to localities what they can tax and at what rates.

What it all amounts to is that localities might want to think twice about any major effort to revisit the 1996 law--assuming they are given any choice in the matter. Indeed, the energy they'd spend battling telecommunication companies nationally might be better spent playing a little intelligent hardball closer to their own backyards.