New Cell Sites in Jeopardy?Monday, September 15, 2008
Last week there was an action in the Ninth U.S. Circuit Court of Appeals in San Francisco that could have huge implications for any company that needs to construct new cell sites, whether for an existing system or Clearwire's WiMAX system, the cable operators who own wireless spectrum but have not built their systems and, in fact, virtually anyone who needs to build out more tower sites.
What happened was that on September 11, this court voted 11-0 to uphold San Diego County' s limits on placement, size and design of towers and poles used for providing cell phone service and wireless Internet connections. It also voted by unanimously to discard a standard that the court itself had established in 2001 that barred local governments from adopting any restrictions that "may have the effect of prohibiting wireless services." This action was based on the fact that, according to the court, it misinterpreted federal law when it issued the earlier ruling, and that local governments can regulate wireless towers and poles as long as they don't actually prohibit wireless service within their borders or create a "significant gap in service coverage" [emphasis added].
The attorneys for some of the cities and counties on the "winning" side commented that this gives them the ability to even-handedly control the environment in our neighborhoods. The ruling requires poles to be camouflaged in residential areas and to have set height limits, and requires companies to submit a visual impact analysis and allow a zoning board to deny an application if it is inconsistent with the character of the community.
It is unclear if this new ruling will be appealed or if the FCC will intercede in the finding, but this could make the placement of cell sites even more problematic, more expensive and take longer. One positive aspect of this, perhaps, would be that network operators might establish more cell site sharing and in some areas, even network sharing.
At a time when almost every network in the country, including Clearwire, the cable companies and others that now own AWS and/or 700-MHz spectrum, could be adversely affected as they set about building out their systems. And I have to wonder about the phrase "that local governments can regulate wireless towers and poles as long as they don't actually prohibit wireless service within their borders or create a 'significant gap in service coverage'" [emphasis added]. Does this mean that if AT&T, for example, has a tower site that covers an area that is approaching customer saturation and wants to build more sites in order to increase capacity, it will be thwarted because it already provides "coverage" in the area? (Building more sites is one of the few ways in which capacity of a network can be increased.)
What will happen to companies such as Clearwire that will need more sites in a given city or county to provide adequate coverage because they are operating at 2500 MHz instead of 850 or 1900 MHz? What will happen to the value of the AWS 2/3 spectrum that is supposed to be auctioned next year and requires coverage of 95% of the U.S. population by year ten and also requires the winner to provide free 786-Kbps Internet access? I had originally projected the ten-year cost of that network to be in the $40-43 billion range, including the cost of the spectrum. I have to believe that if these new rulings remain on the books, two things will happen. First, the value of the spectrum will decrease because of the issue of building out sites. Second, the time involved in building the sites will increase as will the cost. It may be that these rulings could have such an adverse effect on this spectrum that no one will show up to bid on it.
I live in a city that makes it really tough to plan and develop new cell sites. The one that went in on a hillside above me a couple of years ago took more than three years from selecting the location to final approvals and construction. There are two communities near me that have made it almost impossible to install wireless services-Montecito, home of the rich and famous, and Hope Ranch, another wealthy community that does not want any towers at all in their area. Of course, the residents complain about their cell phone coverage all the time. Perhaps things in Hope Ranch will change now that Craig McCaw and his family have a home there, but from my perspective, these rulings enable areas like these to continue stonewalling the wireless companies.
My experience is that most of the wireless companies are already suggesting camouflaged towers and poles, and the recent additions in our community are difficult to spot even if you know where to look. Of course, the cost of these "hidden towers" is higher than simply building a 200-foot tower and sticking antennas on it. Those who live in California especially have probably never driven from Cincinnati to Dayton, Ohio along the Interstate. Once you crest the hill and head down into Dayton, you see many cell sites, all with 200-foot towers (actually 199 feet to meet requirements). Some are in residential areas, but they were built a long time ago and I imagine even in Dayton new towers have to not look like towers.
These rulings might prompt the use of more microcells that can be mounted on existing poles, and even femtocells that are located in our homes and offices to extend wide-area coverage indoors. There is a company that, while still in virtual stealth mode, has been working with the wireless industry, cities and counties to help solve some of the tower placement issues among other things and perhaps it will be able to help the wireless companies and cities and counties to come to some type of agreement.
I also have to wonder what impact these rulings will have on the new (renewed) push by the FCC to put the 700-MHz D Block back on the auction block. You might remember that this block was supposed to have been auctioned to a single network operator that would then work with the public safety community and develop a network that would use commercial technologies and provide good coverage for the first responder community. They, too, will need a lot of cell sites across the country to provide the type of coverage first responders need.
I can appreciate the cities' and counties' desires to keep their skylines from becoming cluttered with towers, even though their power and telephone poles are pretty unsightly. But their citizens are demanding better service, faster connections and fewer dropped calls. At the recent CTIA show, it was announced that the United States has passed the 85% penetration mark-in other words, 85% of our population is using wireless devices on wide-area networks. This number will grow to more than 300% as we begin carrying more than one device per person and wireless is built into many different types of consumer appliances. Add to this that a growing percentage of 18-25 year olds do not own a wired phone any longer, choosing instead to use their wireless phones as their only contact point, and it is easy to see that the demand for towers will increase with each passing year.
It is not clear what the wireless industry's response will be to these rulings but for now, the cities and counties feel like they have won several major battles and that they can be heavy-handed with the wireless industry-even at the expense of poor coverage or dropped calls and data sessions. The industry has not done a very good job of educating people about the relationship between towers and cell phone services; this is usually done only during public planning meetings and then only to the small group of people who show up, mostly to protest the building of a new tower near them. My own experience with many of these protesters is that they show up to protest most changes, believing that they will "destroy their way of life," and at least here, many of them are older, retired and have never owned or used a cell phone.
I have dusted off a white paper I wrote several years ago called "Why We Need More Cell Towers" and I am going to update it based on these new rulings. I hope it might have at least some impact on what will happen next because I suspect the cities and counties are really going to be flexing their muscles from here on out.
Andrew M. Seybold