Telecommunication giants are asking Kansas lawmakers to bar cities from forcing them to sign wireless franchise agreements, a move the companies say will allow them to offer faster and better internet service for consumers.
Verizon, AT&T and Sprint have joined together to try to stop cities from holding them “hostage” to costly franchise agreements the companies say stymie their ability to expand their networks and set the stage for new technology innovations.
The legislation lays the groundwork for a debate at the Capitol pitting the telecom companies against the cities.
The telecom companies made their case Wednesday before the Senate Utilities Committee during the first day of a two-day hearing. The cities will get to voice their opposition Thursday.
The issue is much broader than wireless franchise fees for telecom companies, said Erik Sartorius, executive director of the League of Kansas Municipalities.
He said the legislation raises questions about how other utilities, such as electric and gas companies, might be treated in the future.
“They may come next and look at this structure and feel they’re being mistreated or not being treated with the same level of respect and care as wireless,” Sartorius said.
The telecom companies believe that cities are doing an end-around a law passed in 2016 that was intended to streamline and expedite deployment of small cell technology — light-weight, low-power devices placed in areas where customers experience connectivity problems.
Usually attached to utility poles, traffic lights and even on buildings, the small cells are now the target of cities seeking to charge franchise fees for their deployment, the telecommunication companies told lawmakers on the Senate Utilities Committee.
The 2016 law — called the Wireless Siting Act — didn’t contemplate wireless franchise agreements. It opened the door for local governments to charge franchise fees for small cell deployment.
The companies said if they knew then what they know now, they would have tried to prohibit the wireless franchise agreements in the 2016 law.
“We were surprised when the cities started requiring these, to be honest with you,” AT&T’s former Kansas president Mike Scott told the Utilities Committee.
“We felt that the Wireless Siting Act that was passed accounted for all the protections that cities currently have,” said Scott, now a consultant.
Cities now charge landline telephone companies a franchise fee for employing their facilities. However, the traditional franchise fee has become outdated in the wireless era and with the development of small cell technology, the telecom executives told the committee.
“City-imposed fees hinder the effectiveness of the 2016 law by allowing unnecessary impediments and burdensome processes to remain in place,” Sprint’s lobbyist Patrick Fucik said in written testimony.
Twenty states have passed or are considering laws encouraging small cell deployment. None of them requires wireless franchise agreements, Scott said.
However, there’s a growing list of cities in Kansas that are requiring wireless franchise agreements for small cell technology, which would enable the development of 5G communications — something compared to going from a four-lane highway to a 10-lane highway in speed, Scott said.
The franchise agreements, the companies said, would create an additional layer of regulation that would vary from city to city. It would delay and slow the deployment of small cell technology. And it could lead to new fees and taxes.
AT&T is not deploying small cell technology in some cities that are demanding franchise agreements. Banning the agreements, Scott said, would remove a roadblock to installing the new technology in cities.
“We need a little help from the Legislature to fix what we believe is a circumvention of the Legislature’s intent back in 2016,” he said.
Scott touted Liberal as one city that is not requiring wireless franchise agreements. He said AT&T is working toward installing small cell technology.
Verizon, meanwhile, singled out the city of Leawood in its written testimony as an example of where the company had trouble reaching an agreement.
The company said that the municipality is trying to add a $25 annual franchise fee for each small cell to a $270 annual charge that was considered as part of a master lease agreement.
The company said in written testimony that it declined to enter into a franchise agreement with Leawood because the city’s fee exceeded a cap imposed by the Federal Communications Commission.
The state’s law governing franchises is 74 years old and does not address wireless providers, Scott said. The cities are relying on that and their home-rule authority to require the agreements, he said.
Republican Sen. Tyson Masterson, chairman of the Utilities Committee, quizzed Scott about the possibility of limited regulations of the telecommunications doing work in the city limits.
“That sense is definitely out there that if this passes, there is nothing that can stop you,” Masterson told Scott.
Scott said that any wireless provider that needs access to the right-of-way for its infrastructure needs to go through the zoning and permitting process.
“There’s no escape from that, and we don’t want to,” Scott said. “We’ll pay the fee. You still have to go through the zoning and permitting process. You still have go down to City Hall and work out these master license agreements, some of which may or may not go to the city commission.”
