Scottsdale, Arizona’s “wireless encroachment fees” violate the concept of free “right-of-way” in federal and state law, according to a lawsuit filed against the city by a telecommunications company.
NextG Networks of California Inc. filed suit in the Maricopa County Superior Court, claiming Scottsdale does not have authority to rope wireless companies in to pay the same fees designed for companies that dig trenches and lay miles of wire.
A pretrial conference for the suit has been scheduled for June. NextG argues that its wireless “nodes” — mostly antennas — should not be subject to a permitting process and fee for every separate installation, which are numerous. A competitor to NextG, NewPath Networks, won a legal challenge to such fees in Colorado in April.
A Revenue Grab
Scott Testa, professor of business administration at Cabrini College in Philadelphia, says this dispute boils down to “the need of the city to raise additional revenue.
“Government is looking for additional revenue in order to provide services, and cell phone and related companies are good targets for this,” Testa said, pointing to additional taxes on cigarettes and alcohol as well as right-of-way fees and other taxes.
“If those fees are too high, companies will just push those fees on to the customers,” he added. “The higher the prices are, the less the demand is going to be.”
Testa says municipalities like Scottsdale should think about the benefits of imposing such fees on technology companies over what is good for the citizens and the community as a whole.
“If the fees are too high, communities can lose the advantage of a more robust communications infrastructure,” he said.
Updating Right-of-Way Law
Testa added that the idea of right-of-way needs to be updated for the modern communications age. He pointed out that some municipalities have other restrictions for wireless companies, like requirements to “camoflage” cell towers.
Though the concept of “right of way” needs to be unpdated, any changes should occur at the local level rather than there being some type of federal standard, Testa said.
An Uneven Playing Field
Eric M. Page, partner in the Richmond, Virginia, office of LeClairRyan, a corporate consultant law firm, said that right-of-way regulation has become a pressing issue because non-local wireless companies are often competing with incumbent local carriers. But right-of-way rules can create an uneven playing field “that is counter intuitive from an economic sense,” he said.
“Having a few different rights of way [taxing] structures of different technologies makes very little economic sense,” Page said. “The Telecommunications Act of 1996 created a law that provided some competition, by the results of that law are mixed. Government shouldn’t promote one technology over another.
“But governments are strapped for cash and are looking for ways to provide essential services such as police and water,” Page added. “So rights of way fees are likely to continue to be a targeted source of revenue.”
Phil Britt ([email protected]) writes from South Holland, Illinois.