Category: Legal

Dish to Sprint: Tough! We’re headed to the alter with Clearwire!

Posted on by Dr. Jonathan L. Kramer

It didn’t take long for Dish to fire off a public response to Sprint’s compliant to block Dish’s takeover of Clearwire.  Here’s what Dish had to say, short and sweet:

“Sprint’s lawsuit is a transparent attempt to divert attention from its failure to deal fairly with Clearwire’s shareholders, as well as to exploit its majority position to block Clearwire’s shareholders from receiving a fair price for their shares. DISH is confident that its superior offer, which has been unanimously recommended by the Clearwire Board, including the majority appointed by Sprint, will be upheld and Clearwire shareholders will be free to realize the 29 percent premium represented by the DISH offer.”

Link to Dish’s press release.

I’m already getting my popcorn ready to have at hand when I read Dish’s answer to Sprint’s complaint.  This has all the makings of a great Lifetime Channel movie.

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Sprint to Dish and Clearwire: Your Marriage is Not Gonna Happen

Posted on by Dr. Jonathan L. Kramer
Perhaps the new corporate logo? (Yeah, this is a parody.)
Perhaps the new corporate logo?  Not if Sprint has its way in court.  (Yeah, this logo is my parody.)

Sprint today filed suit in the Court of Chancery in Delaware to block the sale of Clearwire to to Dish Network.  The 45-page verified complaint aims to not only stop the sale, but to ding Dish for tortious interference with Sprint’s rights under its merger agreement with Clearwire.

Most telling in the complaint is Sprint’s assertion that “DISH wants spectrum.” (para. 3.)   How very true of both suitors.

Sprint’s complaint is summarized in the press release below.

Below the press release is the “Nature of the Action” section of the complaint. Below that is a link to the 45-page complaint.

As of the initial posting of this message, neither Dish nor Clearwire has yet released any public comments on Sprint’s complaint.  I’m sure Dish’s reply will be most entertaining.

June 17, 2013

Sprint Files Lawsuit Against DISH Network Corporation and Clearwire Corporation Citing the Illegality of the DISH Tender Offer for Clearwire

If Completed, Tender Offer Would Violate Delaware Corporate Law, Sprint’s Bargained-For Rights and the Rights of the Strategic Investors Under the Charter and Equity Holders Agreement

Lawsuit Contends that the Tender Offer is Structurally and Actionably Coercive

OVERLAND PARK, Kan. (BUSINESS WIRE), June 17, 2013 – Sprint (NYSE:S) announced today that it has filed a complaint in the Delaware Court of Chancery against DISH Network Corporation (NASDAQ:DISH) and Clearwire Corporation (NASDAQ: CLWR) asking the Court to prevent the consummation of the DISH tender offer for Clearwire. Sprint believes the transaction violates Delaware law and the rights of both Sprint and Clearwire’s other strategic investors under Clearwire’s charter and under the Equity Holders Agreement (“EHA”). In addition to seeking to enjoin the tender offer, Sprint’s lawsuit seeks to rescind certain parts of the tender offer agreement and seeks declaratory, injunctive, compensatory and other relief.

In its complaint, Sprint outlines why DISH’s tender offer violates the rights of Sprint and other Clearwire stockholders under Clearwire’s governing documents and Delaware law. It also details how DISH has repeatedly attempted to fool Clearwire’s shareholders into believing its proposal was actionable in an effort to acquire Clearwire’s spectrum and to obstruct Sprint’s transaction with Clearwire. Among the points the suit makes:

  • Sprint and the strategic investors invested billions of dollars in cash and assets to form Clearwire. They entered into a shareholders agreement that established their governance rights (the Equity Holders Agreement (EHA)) as to nominating and electing directors, amending the charter and bylaws, issuance of stock, and other governance matters.
  • Under Clearwire’s charter and the EHA, the DISH Tender Offer (together with the Investors Rights Agreement (IRA) and a related Note Purchase Agreement (the “NPA”)), cannot be completed without the approval of holders of at least 75% of Clearwire’s outstanding voting securities, nor without the approval of Comcast Corp., neither of which approvals have been obtained. Completion of the tender offer without such approvals is unlawful.
  • DISH’s Tender Offer, if completed, would violate Delaware corporate law and Sprint’s and the strategic investors rights under the Charter and EHA by vesting DISH with a veto power over fundamental corporate events that Delaware law places in the control of the directors or shareholders and that the EHA details how many directors and shareholders are required for action.
  • The IRA requires Clearwire to place and maintain a number of DISH designees on its board of directors in breach of the provisions in the EHA permitting Sprint to nominate 7 directors, the Significant Investors Group to nominate several other directors, and the nominating committee to nominate the remainder.
  • The IRA violates the Charter by purporting to grant DISH pre-emptive rights that are explicitly prohibited by the Charter.
  • The DISH Tender Offer is unlawfully coercive because it threatens to leave non-tendering shareholders holding shares in a company subject to governance deadlocks or substantial damage awards to DISH if Clearwire is unable to deliver on the unenforceable promises set forth in the IRA and NPA.
  • Sprint is asking for Clearwire’s Charter and the EHA to be enforced by not letting Clearwire sign the IRA or the NPA and by enjoining the tender offer.

Here’s the “Nature of the Action” section of Sprint’s complaint:

1. This action seeks declaratory, injunctive, compensatory and other relief arising from a tender offer launched by DISH for the stock of Clearwire (the “DISH Tender Offer”). The DISH Tender Offer is structurally and actionably coercive and is conditioned upon an agreement with Clearwire that is set to be approved by the Clearwire board of directors (the “Clearwire Board”) that violates and converts the rights of Sprint and other Clearwire stockholders under Clearwire’s governing documents and Delaware law. This action also seeks compensatory relief for DISH’s tortious interference with Clearwire’s performance of its merger agreement with Sprint.

2. Sprint has been a substantial stockholder of Clearwire since its formation in 2008. After lengthy negotiations, on December 17, 2012, Sprint and Clearwire announced a merger agreement whereby Sprint would acquire the outstanding Clearwire stock that it does not already own (the “Sprint Merger Agreement”). Sprint and Clearwire also entered into a financing agreement under which Sprint would provide Clearwire with much-needed financing (the “Interim Financing Agreement”).

3. DISH wants spectrum. Clearwire has spectrum but has struggled financially. Before entering into the Sprint Merger Agreement, Clearwire sought to engage DISH in discussions, but DISH refused to negotiate and did not make a meaningful proposal. After the announcement of the Sprint Merger Agreement, however, DISH feared that by solving Clearwire’s financial problems, a combination of Sprint and Clearwire would eliminate DISH’s negotiating leverage to acquire spectrum on the cheap, so DISH embarked on a plan to tank the merger.

4. Because the Sprint Merger Agreement was conditioned on the approval of a majority of Clearwire’s minority shares, DISH’s strategy focused on fooling Clearwire’s minority stockholders into believing they might obtain a better price from a transaction with DISH. Thus, starting in late December 2012, DISH began making a series of public proposals to make tender offers for a minority position in Clearwire at prices higher than that offered under the Sprint Merger Agreement – in exchange for Clearwire selling DISH key spectrum assets at a bargain price. DISH also insisted that it obtain substantial governance rights from Clearwire. The Clearwire Board rightly recognized that its fiduciary duties did not permit it to sell key assets at a discount in exchange for a tender offer that would benefit only a minority of stockholders, and also rightly recognized that it could not grant DISH the governance rights DISH sought without violating the rights of Sprint and other Clearwire stockholders under Clearwire’s governing documents and Delaware law. So Clearwire repeatedly rejected DISH’s proposals as “not actionable.” DISH appeared to give up on Clearwire and instead turned its attention to making a public proposal to acquire Sprint. Nevertheless, DISH’s repeated public proposals to Clearwire had fooled many Clearwire minority stockholders into believing a higher price might be available from DISH.

5. On May 29, 2013, just two days before Clearwire stockholders were set to vote on Sprint’s proposed merger with Clearwire (the “Sprint-Clearwire Merger”), DISH re-appeared with a publicly announced tender offer at a higher price – the DISH Tender Offer. The DISH Tender Offer was no longer conditioned upon a purchase of spectrum at a bargain price, but was still conditioned upon obtaining governance rights that Clearwire had previously recognized it had no power or right to give. Nevertheless, because DISH is successfully fooling Clearwire’s minority stockholders into voting against the Sprint-Clearwire Merger, leaving Clearwire with no solution to its looming financial crisis, the Clearwire Board panicked and its changed position.

6. Thus, Clearwire reversed course and intends to execute agreements containing the very same governance provisions that it previously recognized it could not legally grant. As described further below, Clearwire is set to enter into an Investor Rights Agreement (the “IRA”) and a Note Purchase Agreement (the “NPA”) with DISH that violate Sprint’s rights under an Equityholders’ Agreement entered into by Sprint, Clearwire and others in 2008 (the “EHA”) and also violate Delaware law and Clearwire’s governing documents – facts previously acknowledged by the Clearwire Board and communicated to DISH.

7. Execution and delivery of the IRA is a condition to the DISH Tender Offer. The IRA purports to grant DISH governance rights, including the purported right to force the Clearwire Board to nominate a slate of directors with guaranteed DISH representation, the purported right to veto amendments to Clearwire’s charter (the “Clearwire Charter”) and bylaws, the purported right to veto any change of control of Clearwire, and purported preemptive rights over any new issuance of Clearwire securities, with certain exceptions. The IRA is invalid and unenforceable because it violates Sprint’s rights under Delaware law and the EHA, which is incorporated into the Clearwire Charter.

8. The NPA is also invalid and unenforceable. Clearwire intends to enter into the NPA in connection with the DISH Tender Offer. The NPA purports to compel Clearwire to issue either exchangeable or non-exchangeable notes, with a structure designed to coerce Sprint to vote to amend the Clearwire Charter. The issuance of exchangeable notes by Clearwire would not be permitted without an amendment to the Clearwire Charter, which could not be accomplished without Sprint’s approval. The nonexchangeable notes (that Clearwire would issue to DISH if Sprint does not approve an amendment to the Clearwire Charter) pay an enormous 12% interest rate, require a commitment fee payable in cash, and carry priority in bankruptcy. Combined with DISH’s other holdings of Clearwire debt, the non-exchangeable notes would give DISH the ability to drive Clearwire into bankruptcy so DISH can take control of Clearwire’s spectrum assets. Thus, not only are Sprint and the other parties to the EHA being deprived of their preemptive rights under the EHA, but Sprint is also being coerced into amending the Clearwire Charter to allow for the issuance of more Clearwire shares in order to avoid the issuance of the non-exchangeable notes.

9. All that is bad enough. But the DISH Tender Offer is also structured to coerce Clearwire’s minority stockholders, to the detriment of Sprint, to tender their stock to DISH or else be left holding stock in a corporation that will be handicapped by unlawful corporate governance restrictions, onerous debt provisions, and potentially be subject to massive money damages claims payable to DISH – an entity which has everything to gain from a failure of Clearwire. Because Sprint owns a majority of Clearwire stock and, as stated, is not a seller, the DISH Tender Offer cannot be followed by a back-end merger with the same consideration and therefore is structurally coercive.

10. As a result, this action seeks equitable relief to prevent consummation of the DISH Tender Offer, and to enjoin or rescind the execution and delivery of the IRA  and the NPA.

11. This action also seeks compensatory and other relief to remedy DISH’s wrongful interference with Sprint’s contractual rights, economic advantage and business relations. DISH intentionally and improperly interfered with the performance of the Sprint Merger Agreement and the Interim Financing Agreement between Clearwire and Sprint, thereby preventing performance, causing performance to be more expensive and burdensome, and ultimately threatening the wrongful termination of the Sprint Merger Agreement.

12. Defendants’ acts already have injured Sprint and Sprint’s rights which will further be irreparably injured without immediate relief from this Court.

Click here to download Sprint’s Complaint.

*     *     *

Separately but related to the Clearwire deal, DISH Network announced earlier today the expiration last Friday of the mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”) in connection with the tender offer by DISH Acquisition Holding Corporation, a wholly-owned subsidiary of DISH, to purchase all outstanding shares of Class A Common Stock of Clearwire Corporation , including any shares of Class A Common Stock issued in respect of outstanding shares of Class B Common Stock, for $4.40 per share.

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AT&T’s “Uniform Wireless Communications Infrasturcture Act” in Missouri

Posted on by Dr. Jonathan L. Kramer
Missouri Coat of Arms
Missouri Coat of Arms

Salus AT&T suprema lex esto

The latest attempt by the wireless industry, and specifically AT&T, to bypass any rational zoning process, is in Missouri.

House Bill 331,  “[t]o repeal sections 67.1830, 67.1836, 67.1838, 67.1842, 392.415, 392.420, and 392.461, RSMo, and to enact in lieu thereof twenty-two new sections relating to telecommunications” is a massage land grab the likes of which have not been seen elsewhere.

The Bill, which flew through the state legislature and is now sitting on Governor Nixon’s desk, would effective deregulate wireless communications from any effective local review or public participation.

Yesterday (Sunday, June 16), the Kansas City Star newspaper’s editorial urged Governor Nixon to veto the bill, saying “As much as Missouri needs to encourage a robust technology infrastructure, the placement of towers shouldn’t run roughshod over the wishes of communities or property owners. Yet that’s exactly what a bill on Gov. Jay Nixon’s desk enables cellphone service providers to do.” “There is no evidence that cities and counties in Missouri were making it unduly difficult to erect towers. House Bill 331 is simply a proactive move by corporate interests to have their way.”  Read the entire editorial here.

The following is the legislature’s analysis of the bill as sent on to Governor Nixon.

SS HB 331 — UTILITIES

This bill changes the laws regarding infrastructure facilities deployment.

PUBLIC UTILITY RIGHT OF WAY PERMITS

The bill allows public utilities to have permit denials by political subdivisions heard in court if they believe a violation of existing law has occurred. Courts must act in an expedited manner by moving disputes over public right of way under Sections 67.1830 to 67.1848, RSMo, to the front of the docket. If a political subdivision does not act on a permit application within 31 days, then the application will be deemed approved. If a public utility has legally been granted access to a political subdivision’s right of way since August 28, 2001, they are not required to obtain a new permit.

UNIFORM WIRELESS COMMUNICATIONS INFRASTRUCTURE DEPLOYMENT ACT

The bill establishes the Uniform Wireless Communications Infrastructure Deployment Act to encourage and streamline the deployment of broadband facilities and to help ensure that robust wireless communication services are available throughout Missouri. The bill:

(1)    Prohibits an authority as specified in the bill with jurisdiction over wireless communications infrastructure from taking specified actions that could result in a non-uniform market for wireless service in Missouri. The prohibition does not include state courts having jurisdiction over land use, planning, or zoning decisions made by an authority. The prohibitions include:

(a)    Requiring an applicant to submit information about or evaluate an applicant’s business decisions with respect to its designed service, customer demand for service, or quality of its service to or from a particular area or site;

(b)    Evaluating an application based on the availability of other potential locations for the placement of wireless support structures or wireless facilities including, without limitation, the option to add wireless infrastructure to existing facilities instead of constructing a new wireless support structure or for substantial modifications of a support structure or vice versa;

(c)    Dictating the type of wireless facilities, infrastructure, or technology to be used by the applicant by requiring an applicant to construct a distributed antenna system in lieu of constructing a new wireless support structure;

(d)    Requiring the removal of existing wireless support structures or wireless facilities, wherever located, as a condition for approval of an application;

(e)    Imposing environmental testing, sampling, or monitoring requirements or other compliance measures for radio frequency emissions on wireless facilities that are categorically excluded under the Federal Communications Commission’s rules for radio frequency emissions under 47 CFR 1.1307(b)(1) or other applicable federal law;

(f)    Establishing or enforcing regulations or procedures for RF signal strength or the adequacy of service quality;

(g)    Rejecting an application in conformance with 47 U.S.C. Section 332(c)(7)(b)(4), in whole or in part, based on perceived or alleged environmental effects of radio frequency emissions;

(h)    Imposing any restrictions with respect to objects in navigable airspace that are greater than or in conflict with the restrictions imposed by the Federal Aviation Administration;

(i)    Prohibiting the placement of emergency power systems that comply with federal and state environmental requirements;

(j)    Charging an application fee, consulting fee, or other fee associated with the submission, review, processing, and approval of an application that is not required for similar types of commercial development within the authority’s jurisdiction.   Fees imposed by an authority for or directly by a third-party entity providing review or technical consultation to the authority must be based on actual, direct, and reasonable administrative costs incurred for the review, processing, and approval of an application. In no case should total charges and fees exceed $500 for a collocation application or $1,500 for an application for a new wireless support structure or for a substantial modification of a wireless support structure. An entity with jurisdiction or any third-party entity cannot include within its charges any travel expenses incurred in a third-party’s review of an application, and in no event can an applicant be required to pay or reimburse an authority for consultation or other third-party fees based on a contingency or result-based arrangement;

(k)    Imposing surety requirements, including bonds, escrow

deposits, letters of credit, or any other type of financial surety, to ensure that abandoned or unused facilities can be removed unless the authority imposes similar requirements on other permits for other types of commercial development or land uses;

(l)    Conditioning the approval of an application on the applicant’s agreement to provide space on or near the wireless support structure for authority or local governmental services at less than the market rate for space or to provide other services via the structure or facilities at less than the market rate for the services;

(m)    Limiting the duration of the approval of an application;

(n)    Discriminating or creating a preference on the basis of the ownership, including ownership by the authority, of any property, structure, or tower when establishing rules or procedures for siting wireless facilities or for evaluating applications;

(o)    Imposing any requirements or obligations regarding the presentation or appearance of facilities including, but not limited to, those relating to the kind or type of materials used and those relating to arranging, screening, or landscaping of facilities if the requirements are unreasonable;

(p)    Imposing any requirements that an applicant purchase, subscribe to, use, or employ facilities, networks, or services owned, provided, or operated by an authority, in whole or in part, or by any entity in which an authority has a competitive, economic, financial, governance, or other interest;

(q)    Conditioning the approval of an application on, or otherwise requiring, the applicant’s agreement to indemnify or insure the authority in connection with the authority’s exercise of its police power-based regulations; or

(r)    Conditioning or requiring the approval of an application based on the applicant’s agreement to permit any wireless facilities provided or operated, in whole or in part, by an authority or by any entity in which an authority has a competitive, economic, financial, governance, or other interest, to be placed at or connected to the applicant’s wireless support structure;

(2)    Allows authorities to continue to exercise zoning, land use, planning, and permitting authority within their territorial boundaries with regard to the siting of new wireless support structures, requirements, and with regard to applications for substantial modifications of wireless support structures.  The authority must review, within 120 days of receiving an application to construct a new wireless support structure or within the additional time as may be mutually agreed to by an applicant and an authority, the application as to its conformity with applicable local zoning regulations and advise the applicant in writing of its final decision to approve or disapprove the application. Applications will include a copy of a lease or other agreement from the property owner evidencing a right to pursue the application. The authority must, within 120 days of receiving an application for a substantial modification of wireless support structures, review the application as to its conformity with applicable local zoning regulations and advise the applicant in writing of its final decision to approve or deny the application. Procedures for extending these deadlines and fixing deficiencies are also specified in the bill. A party aggrieved by the final action of an authority or its inaction may bring an action for review in any court of competent jurisdiction;

(3)    Requires an application for additions to or replacement of wireless facilities to be reviewed for compliance with applicable building permit requirements. Applications will include a copy of a lease or letter or agreement from the property owner evidencing the applicant’s right to pursue the application.   The authority must, within 90 days, review the application as to its conformity with applicable building permit requirements and consistency with the provisions of the act and advise the applicant in writing of its final decision to approve or deny the application.   However, procedures for expediting or extending the deadline and for fixing deficiencies are also specified in the bill. With regard to collocation applications the overall deadline is 45 days with procedures for notification and remedy of deficiencies specified in the bill;

(4)    Specifies that the provisions of the bill do not authorize an authority, except when acting solely in its capacity as a utility, to mandate, require, or regulate the placement, modification, or attachments of any new wireless facility on new, existing, or replacement poles owned or operated by a utility or expand the power of an authority to regulate any utility;

(5)    Prohibits an authority from instituting a moratorium on the permitting, construction, or issuance of approval of new wireless support structures, substantial modifications of wireless support structures, or attachments to existing facilities of wireless communication infrastructure if the moratorium exceeds six months and if no good cause is shown. A moratorium must not affect pending applications;

(6)    Prohibits an authority from charging a wireless service provider or wireless infrastructure provider any rental, license, or other fee to locate a wireless support structure on an authority’s property in excess of the current market rates for rental or use of similarly situated property. An authority may not offer a lease or contract to use public lands to locate a wireless support structure on an authority’s property that is less than 15 years in duration. A process for the resolution of any disputes over fair market value lease payments using appraisers appointed by both parties is also specified in the bill; and

(7)    Prohibits applicants for wireless facility permits from having the power of eminent domain or the right to compel any private or public property owner, the Department of Conservation, or the Department of Natural Resources to lease or sell property or locate wireless facilities on existing structures.

RAILROAD FACILITY UTILITY CROSSINGS

The bill establishes procedures for utilities regulated by the Missouri Public Service Commission or rural electric cooperatives, municipal utilities, and specified nonprofit electrical corporations in third classification counties, to construct a facility as specified in the bill through a railroad right-of-way.

The bill specifies that a utility must be deemed to have authorization to commence a crossing activity 30 days from the mailing of the notice, completing the engineering specifications, and payment of the fee, absent a claim of special circumstances. The utility may propose an amended crossing proposal if special circumstances exist.     The land management company and the utility must maintain and repair its own property within the railroad right-of-way and bear responsibility for its own acts and omissions, except that the utility must be responsible for any bodily injury or property damage that typically would be covered under a standard railroad protective liability insurance policy.  A utility must have immediate access to a crossing for repair and maintenance of existing facilities in case of emergency. Applicable engineering standards must be complied with for utility facilities crossing railroad rights-of-way.    The engineering specifications must address the applicable clearance requirements as established by the National Electrical Safety Code and the American Railway Engineering and Maintenance of Way Association.

Unless otherwise agreed by the parties and subject to Section 389.588, a utility that locates its facilities within the railroad right-of-way for a crossing, other than a crossing along a state highway, must pay the land management company a one-time standard crossing fee of $1500 for each crossing plus the costs associated with modifications to existing insurance contracts of the land management company. The standard crossing fee must be in lieu of any license, permit, application, plan review, or any other fees or charges to reimburse the land management company for direct expenses incurred by the land management company as a result of the crossing. The utility must also reimburse the land management company for any actual flagging expenses associated with a crossing in addition to the standard crossing fee.

The provisions of the bill cannot prevent a land management company and a utility from otherwise negotiating the terms and conditions applicable to a crossing or the resolution of any disputes relating to the crossing and cannot impair the authority of a utility to secure crossing rights by easement through the exercise of the power of eminent domain.

If a utility and land management company cannot agree that special circumstances exist regarding a particular crossing, the dispute must be submitted to binding arbitration in accordance with the commercial rules of arbitration in the American Arbitration Association.  However, each party may also pursue relief in a court of proper jurisdiction and the winning side must be awarded attorney fees. If a dispute involves only compensation associated with a crossing, the utility may proceed with the installation of a crossing while the arbitration is pending.

The bill does not modify any power of condemnation or grant the exercise of eminent domain power to any entity.

The provisions of the bill apply to a crossing commenced prior to August 28, 2013, if an agreement concerning the crossing has expired or is terminated and to a crossing commenced on or after August 28, 2013.

EMERGENCY INFORMATION REQUESTS

The bill provides immunity from suit for providers of communication related services for providing information to law enforcement officials or agencies under Section 392.415.

PRICE CAP WAIVERS

The bill allows specified telecommunications companies that are currently regulated by the Missouri Public Service Commission and have maximum price caps to seek a waiver from the commission for the price cap regulations in the same manner waivers are currently granted for other rules and regulations.

MISCELLANEOUS TELECOMMUNICATION PROVISIONS

The bill also makes the following changes to telecommunication regulations:

(1)    Allows a telecommunications company to include any, all, or none of its rates for any, all, or none of its retail services in a tariff filed with the commission;

(2)    Exempts specified telecommunications companies that hold a state charter or are licensed to do business under Chapter 392 from most rules and regulations relating to the retail services under Chapter 386, except the companies may voluntarily comply with the commission’s orders, rules, or statutes by notifying the commission. Telecommunications companies are still required to collect the universal service fund surcharge; report the intrastate telecommunications service revenues necessary to calculate the commission assessment, universal service fund surcharge, and telecommunications programs under Section 209.255; and comply with the emergency location requirements;

(3)    Exempts broadband and other Internet protocol-enabled services from the regulations under Chapters 386 and 392 except that voice over Internet protocol services must comply with the fees and registration requirements enforced by the commission under Section 392.550;

(4)    Specifies that the commission retains jurisdiction over all matters delegated to it by federal law and the bill does not modify these duties in any way; and

(5)    Allows telecommunications companies to register with the commission and obtain certification using the same process as used for voice over Internet protocol service under Section 392.550.3.

Click here for the full text of HB 331.

If Governor Nixon signs this legislation into lex, the existing Missouri state motto “Salus populi suprema lex esto” should change to “Salus AT&T suprema lex esto”.

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Jonathan Awarded LL.M IT/Telecom Law Degree

Posted on by Dr. Jonathan L. Kramer

 

StrathclydeI’m very pleased to share with all of you, my friends, that I have received the attached letter confirming my award of a Masters of Law in Information Technology and Telecommunications Law degree.

This marks the culmination of my legal studies with Strathclyde University School of Law in Glasgow.

To earn my degree, I spent two years on coursework; wrote some 24 separate research papers spanning some 45,000 words regarding Internet and Telecom law from a U.S. and European perspective.  Then I wrote my 25th and final paper: my 42-page dissertation on the skimpy 145 words contained in Section 6409(a) of the Middle Class Tax Relief and Job Creation Act of 2012 and its expected impacts on wireless siting jurisprudence in the Ninth Circuit.

I earned a 90/100 grade on my dissertation, an unusually high score for which I was very grateful, especially to Christina Spirelli at Strathclyde.

I also know I would not have earned such a high score without the helpful critiques…call them repeated verbal body slams…of my two dissertation draft readers, Natalia Shparber and Robert (“Tripp”) May, III.

Education is a wonderful thing.  Pass the word on…

graduation_approval_llm_20130522
You may click on the image
above to enlarge and read it.
The highlights in the letter are mine.

 

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U.S. Supreme Court Upholds FCC Shot Clock

Posted on by Dr. Jonathan L. Kramer

Just released this morning is the U.S. Supreme Court decision that, on a 6-3 vote, upholds the FCC Shot Clock.

The decision is linked below.

“SCALIA, J., delivered the opinion of the Court, in which THOMAS, GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed an opinion concurring in part and concurring in the judgment. ROBERTS, C. J., filed a dissenting opinion, in which KENNEDY and ALITO, JJ., joined.”

Many will offer their view of the decision, which is essentially a reaffirmation of the Chevron Deference rule.  For now, I’ll leave it to you, the readers, to reach your own conclusions.

What we know, now, is that the FCC Shot Clock is here to stay.

What we expect now is that the FCC will move to a rulemaking or declaratory ruling regarding Section 6409(a) [47 U.S.C 1455(a)]

Jonathan

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CPUC General Order 170 Redux

CPUC General Order 170 Redux

Posted on by Dr. Jonathan L. Kramer

CPUC SealWhat agency should evaluate compliance with the California Environmental Quality Act (CEQA) as it applies to telecom firms:  Local governments or the CPUC?  That burning question is at the heart of what agency is best able to protect the public by evaluating CEQA considerations related to telecom construction.

Historically, the California Public Utilities Commission has generally issued blanket CEQA exemptions to telecom firms, without public notice, for project that scope from one street corner to hundreds of miles of construction in the public right of way.

In December 2010, the CPUC issued General Order 170, that purported to grant itself specific rights related to CEQA reviews of telecom projects.  A year later, in December 2011, responding to various petitions for rehearing, the Commission rescinded GO170.

Late today, the Commission issued a ruling (attached at the bottom of this post) to rehear the matter, and to take additional evidence from the public.  The CPUC’s ruling setting a new hearing cycle, albeit it a very short cycle, is attached to this post. The current schedule is at opening responses are due on May 31, 2013, with reply comments due on June 14, 2013. The Commission plans to issue a decision in this case sometime during the Summer of 2013.

If you represent a local government, or you are a citizen with an interest in preserving CEQA review of telecom projects with the local government agency closest to the issues underpinning environmental protection, then you should focus your attention on this proceeding.  The Commission has asked the public to evaluate and respond to five specific questions set out in the document.

I’ll have more on this in the coming days.

Jonathan

CLICK HERE: Order Instituting Rulemaking on the Commission’s own motion into the application of the California Environmental Quality Act to applications of jurisdictional telecommunications utilities for authority to offer service and construct facilities.

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Assembly Bill 162 in a Cocoon for 2013. Now what?

Assembly Bill 162 in a Cocoon for 2013. Now what?

Posted on by Dr. Jonathan L. Kramer
AB 162 will try to re-emerge in January 2014. Let's take the time now to educate our electeds.
AB 162 will try to re-emerge in January 2014. Let’s take the time now to continue to educate our electeds.

Now that Assembly Bill 162 has been removed from California’s legislative agenda for 2013, it’s vital that we remember that the Bill is not dead; it is merely awaiting a rebirth in some form in 2014.

Because of the reality of re-emergence, we need to continue to educate Assembly Member Holden and his staff about the inherent unintended consequences of this seemingly simple, yet  highly technical legislation.

Coupled with education, we must work with  elected officials in the Assembly and Senate to show them that there is no significant special problem for AB 162 to try and fix.

Finally, we need to continue monitoring what  happens at the federal level with Section 6409(a).  That legislation, which has serious constitutional deficiencies,  will be vicariously defended by the wireless industry.  We also need to track that happens with the pending U.S. Supreme Court decision regarding the FCC’s Shot Clock in the Arlington case.

Thanks are due to hundreds of constituents, local governments, and staffers who all came together to work with Mr. Holden to explain why AB 162 as proposed and then amended is not in the best interests of the people of California.

We also owe genuine thanks to Mr. Holden for hearing those many voices and pulling back his Bill…for now…rather than forcing a slug-out in Sacramento.

It’s true…bad facts do make bad law.

Jonathan

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Assembly Bill 162 Pulled – Will Not Come Back Until At Least 2014

Posted on by Dr. Jonathan L. Kramer

Hot news just in:  AB 162 has been pulled from this year’s legislative calender.

This means that the Bill will not come up for consideration until at least next January.

Many people; many local associations; and many local governments have been instrumental in achieving this result, and they all deserve thanks.

This, however, is not a time to gloat; this is a time to educate the elected who were not aware of what was happening, and to continue to educate the elected who were in the loop about the important issues, both policy and technical, which surround this discussion.

Education is vital because AB 162 is not dead; merely pushed to next year’s legislative calendar.  Our goal should be to work to showing the various parties why this Bill should be withdrawn from any future consideration.

Thanks to all who helped get out the word…don’t give up now…there’s still the Bill out there.

Jonathan

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Amended Assembly Bill 162 To Be Heard May 1

Posted on by Dr. Jonathan L. Kramer

Assembly Bill 162, as amended on 4/23 (see my post here about those awful amendments)  has been re-referred to the Assembly’s Local Government Committee.  It will be heard on Wednesday, May 1, 2013.

flashingwipepinIt is vital that your views on AB 162 be communicated to your electeds before the hearing.

For local governments, formal opposition letters addressed to the Committee and your electeds are a customary and proper route.  I recommend you publish those letters on your local government web site home page to alert your residents to this Bill and your position on the it.

For the public, communicating your views to your state electeds is critical.  If you don’t know who your state representatives are, visit and enter your home address at THIS SITE.

Here is a list of the Assembly’s members of the Local Government Committee, and their State Capitol contact information:

Committee Members District Office & Contact Information
Katcho Achadjian (Chair) Rep – 35 Contact Assembly Member Katcho Achadjian

Capitol Office

P.O. Box 942849, Room 4098, Sacramento, CA 94249-0035;  (916) 319-2035
Marc Levine (Vice Chair) Dem – 10 Contact Assembly Member Marc Levine

Capitol Office

P.O. Box 942849, Room 2137, Sacramento, CA 94249-0010;  (916) 319-2010
Luis A. Alejo Dem – 30 Contact Assembly Member Luis A. Alejo

Capitol Office

P.O. Box 942849, Room 2117, Sacramento, CA 94249-0030;  (916) 319-2030
Steven Bradford Dem – 62 Contact Assembly Member Steven Bradford

Capitol Office

P.O. Box 942849, Room 5136, Sacramento, CA 94249-0062;  (916) 319-2062
Richard S. Gordon Dem – 24 Contact Assembly Member Richard S. Gordon

Capitol Office

P.O. Box 942849, Room 4126, Sacramento, CA 94249-0024;  (916) 319-2024
Melissa A. Melendez Rep – 67 Contact Assembly Member Melissa A. Melendez

Capitol Office

P.O. Box 942849, Room 4009, Sacramento, CA 94249-0067;  (916) 319-2067
Kevin Mullin Dem – 22 Contact Assembly Member Kevin Mullin

Capitol Office

P.O. Box 942849, Room 3126, Sacramento, CA 94249-0022;  (916) 319-2022
Marie Waldron Rep – 75 Contact Assembly Member Marie Waldron

Capitol Office

P.O. Box 942849, Room 5128, Sacramento, CA 94249-0075;  (916) 319-2075

Now is the time to make your voice heard.   Oppose AB 162, the Wireless Industry Public Exclusion Act.

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Assembly Bill 162 Wireless Bill Amended – Analysis

Posted on by Dr. Jonathan L. Kramer

Assembly Bill 162, The Wireless Collocation Bill, Amended by its Author –

BILL IS NOW FAR WORSE FOR THE PUBLIC AND LOCAL GOVERNMENTS

[Updated 4/24/13 7:28 p.m. – Added link to PDF version of this analysis.  See link at bottom of this page]

As a reminder, on March 21, 2013, Assembly Bill 162 was dropped into the hopper in Sacramento to impose severe new rules requiring mandatory and lightning fast wireless collocation approvals or defaults by California local governments.  Assembly Member Holden is the Bill’s sponsor.

Yesterday, Assembly Member Holden amended AB 162 to facially address some of the concerns raised by local governments. The proposed changes, however, are largely cosmetic and in most cases legally ineffective as to actually addressing local government concerns, as I will discuss in detail below.  That said, Mr. Holden also took the opportunity to go beyond the cosmetic changes by introducing new language to his Bill that would actually extend the impact of the proposed state legislation far beyond that intended by the federal legislation, Section 6409(a) of the Middle Class Tax Relief Act of 2012.

To view the past and current versions of the bill, visit http://tinyurl.com/wireless162.

Here is my analysis [1] of each of yesterday’s amendments to AB 162:

1. Added a new section readjusting the numbering of the subsequent sections. The new Section 1 provides a legislative purpose and intent for the Bill:

SECTION 1. The Legislature hereby finds and declares all of the following:

(a) Nearly one in every three Californians communicates only via a cellular device and does not own or operate a landline telephone.

(b) Of the 240,000,000 calls to telephone number 911 for emergency assistance placed nationwide each year, 70 percent now originate from cellular devices.

(c) In 2010, 5 percent of all 911 calls originating from cellular devices were dropped, resulting in 8,400,000 dropped 911 calls.

(d) Recognizing the public’s shift toward cellular telephone use, the Legislature passed Senate Bill 1375 (Chapter 332 of the Statutes of 2010), authorizing telephone corporations to deactivate 911 emergency service from any landline telephone not subscribing to paid telephone service.

(e) Given the increased reliance on cellular phones, maintaining signal strength and call reliability for 911 calls from cellular telephones is critical to protecting public safety and saving lives of Californians.

(f) The Final Report of the National Commission on Terrorist Attacks Upon the United States (known as the 9/11 Commission Report) identified the lack of coordination among first responder agencies and communication challenges in the 9/11 attacks and emphasized the need for uniform and reliable communications for all first responders.

(g) The federal Middle Class Tax Relief and Job Creation Act of 2012 (Public Law 112-96) creates a framework for the public sector to partner with commercial providers to leverage the private sector’s investments in broadband technologies to efficiently deploy an interoperable broadband network for public safety.

(h) The federal Middle Class Tax Relief and Job Creation Act of 2012 (Public Law 112-96) allocated seven billion dollars ($7,000,000,000) for grants to states to build the nationwide public safety broadband network.

(i) The Federal Communications Commission has found that delays by local governments in approving ministerial requests have delayed the implementation of next-generation broadband services for consumers and first responders.

(j) It is the intent of the Legislature to increase network capacity on existing wireless structures in order to serve the needs of safety personnel and the people of the state.

AB 162 now seems to also benefit public safety services, but as will be discussed below, the benefit is illusory.

2. Section 2(a) of the bill has been amended to read,

Notwithstanding any other law, and pursuant to Section 6409 of the federal Middle Class Tax Relief and Job Creation Act of 2012 (47 U.S.C. Sec. 1455), a local government shall approve and may shall not deny any eligible facilities request for a modification of an existing wireless telecommunications facility or structure that does not substantially change the physical dimensions of the wireless telecommunications facility or structure.

The bolded changes now make this section inconsistent with Section 1455(a) by replacing “may” with “shall,” but far more importantly, the addition of “or structure” extends the definition of a wireless telecommunications facility to include the structure below the base station and/or antenna.

Why is the reference to ‘structures’ so important to the wireless industry? Because by adding “or structure” the overall height of an existing office building with wireless antennas on the roof must now be counted towards the 10% increase permitted for the wireless site.  Say that there is a 10 foot tall antenna enclosure on the roof of a 15 story building (call the building 150 feet tall). Under the prior language of AB 162, the height of the antenna enclosure could increase by 10 percent, or only 1 foot.  By including the “or structure” language, the non-discretionary increase in height would be 16 feet (10% of the 150 foot building plus the 10 foot tall antenna enclosure above the roof).

3. Section 2(b) is amended to read:

The failure to act on an eligible facilities request within 45 90 days of receipt of a request shall be deemed an approval of the request. The 45 90 days shall be tolled if the request is determined to be incomplete. If the request is determined to be incomplete, the local government shall comply with subdivision (c) of Section 65943 of the Government Code.

4. Section 2(d)(1) is added to the definitions:

(1) “Collocation” means the mounting of the wireless telecommunications facility and related equipment on an existing tower, building, or structure for the purpose of transmitting or receiving signals for telecommunications or public safety services.

The new definition above extends the reach of collocation to include buildings and structures, with the negative impact already described.  However, this definition goes far beyond the prior poorly crafted language to extend AB 162’s reach to all “telecommunications or public safety services.”

Neither “telecommunications” or “public safety services” are defined in AB 162, but would arguably extend AB 162’s collocation provisions and benefits to any type of radio communications (telecommunications) including without limitation AM/FM/TV stations, commercial two-way radios, point-to-point microwave, WI-FI, amateur radio, radar, CB radio, etc.

5. Section 2(d)(2) of the definitions now reads:

“Public safety broadband communications system” means any regional interoperable communications system, the nationwide public safety broadband network, the first responder analog-D block, or any other government-operated communications system used by first responders or emergency management systems.

Given that the Section 2(d)(2)(D), just discussed, has no real new value to local governments, Section 3 merely acts as a limitation on—rather than an extension of—local government authority.  General government radio communications, such as between permit inspectors and the permit department, or between any non-emergency personnel are excluded by the limiting language in Section 3.

6. Section 4(A) and 4(C), defining “Substantially change” are amended to read:

(A) The mounting of the proposed antenna on the wireless telecommunications facility or structure would increase the existing height of the wireless telecommunications facility by more than 10 percent, or by the height of one additional antenna array with separation from the nearest existing antenna not to exceed 20 feet, whichever is greater, except that the mounting of the proposed antenna may exceed the size limits set forth in this subparagraph if necessary to avoid interference with existing antennas.

…

(C) The mounting of the proposed antenna would involve adding an appurtenance to the body of the wireless telecommunications facility or structure that would protrude from the edge of the wireless telecommunications facility more than 20 feet, or more than the width of the wireless telecommunications facility at the level of the appurtenance, whichever is greater, except that the mounting of the proposed antenna may exceed the size limits set forth in this subparagraph if necessary to shelter the antenna from inclement weather or to connect the antenna to the wireless telecommunications facility via cable.

As before, the addition of “or structure” in (A) and (C) operationalize the expansion of AB 162’s height benefit for wireless carriers by including the height of an underlying structure or building into the calculation of the permitted 10% increase.   Interestingly, by adding “or structure” to (C), antennas will now be permitted to extend horizontally from the roof and perhaps as far as to violate setbacks and even property lines.

Section 4(D)’s former language is struck and replaced as shown below:

(D) The mounting of the proposed antenna would involve excavation outside the current wireless telecommunications facility site, defined as the current boundaries of the leased or owned property surrounding the wireless telecommunications facility and any access or utility easements currently related to the site.

 (D) The eligible facility request fails to comply with all existing aesthetic requirements imposed by a local government for the specific facility subject to the request. Nothing in this section shall be construed to require that any new aesthetic enhancements to be made to an eligible facility that were not existing requirements at the time the eligible facility request was made.

The deletion of the former (D) language now means that any excavation outside the current wireless telecommunications facility site, defined as the current boundaries of the leased or owned property surrounding the wireless telecommunications facility and any access or utility easements currently related to the site, would not constitute a substantial change to the existing site thereby pulling a collocation project out of the scope of AB 162’s mandatory approval requirement.  Accordingly, if an excavation outside the current wireless telecommunications facility site is proposed as part of a collocation—even if the excavation extends to another property—a local government would be barred from denying the otherwise qualifying project.  This new language is a backdoor way of adding new utility routes to the mandatory approval requirement of AB 162.

Turning now to the replacement (D) language, it says in essence that a collocation is not one that “fails to comply with all existing aesthetic requirements imposed by a local government for the specific facility subject to the request.”

Translated into English, the language just discussed appears to say that if a current site that was required by its original approval to be camouflaged is not, in fact, constructed to meet the aesthetic requirements set out in the original permit, then the site is not subject to AB 162.

On its face, the new (D) language would be a good provision for the public were it not for the fact that this new language is completely preempted by 47 U.S.C. 1455(a), the federal law.

Recall that AB 162 will be subject to the sweeping preemption of Section 1455(a), which begins by saying “Notwithstanding section 704 of the Telecommunications Act of 1996 (Public Law 104–104) or any other provision of law…” (emphasis added).  As the federal law would clearly preempt any non-compliant provision in state law, a wireless applicant would likely successfully argue that AB 162 notwithstanding, it has a preemptive federal right to modify a site taking it from camouflaged to bare steel, if the carrier so elects, and therefore AB 162’s aesthetic protection language is without legal effect.  The choice would be with the applicant as to whether it wishes to comply with this provision of AB 162, not that it must comply with this provision.  Should the applicant so choose to avoid this provision of AB 162, it would be as if the new proposed (D) language was not even a part of AB 162.

To make the industry’s benefit clear by the camouflage provision in (D), even if the proposed (D) language were legally enforceable (or if an applicant elected not assert its federal rights preempting this portion of AB 162), any addition to an existing camouflaged site could not be required by a local government to be camouflaged.

To understand the scope and size of this massive loophole in the amendment to AB 162, consider the following before photograph and after-simulation of an existing wireless site in Los Angeles.  The simulated modification would be subject to a mandatory approval under AB 162 without the ability of a local government to condition the addition to be camouflaged:

 

Caption
Photo/Photo Simulation by Jonathan Kramer

The net result of the new (D) language is that the camouflage benefit of the existing project (the before photo above) would be destroyed by AB 162 as currently amended.

Conclusions and Recommendations

AB 162 as proposed in March was a massive attack on local government authority to control wireless siting.  As now amended in April, it is truly a wolf-in-sheep’s-clothing.  The Bill now appears to provide benefits to local governments and the public, yet each of those benefits is either without value, or illusory.  The wolf part is the inclusion of the “structure” element far-and-away exceeding the scope of the existing federal law.

This Bill, as now amended, is also far worse than the federal law, 47 U.S.C. § 1455(a), in the new privileges it would grant.

Ultimately, AB 162 is fatally flawed, inconsistent with federal law, and cannot be saved by amendments.  It should be vigorously opposed by local governments and their constituents who are interested in remaining engaged in wireless siting matters in California.

Please feel free to share this analysis with interested local government parties and the public at large.

Continuing updates regarding AB 162 will be available at here at http://CellTowerSites.com.  For now, and especially now, I continue to call this legislation the WIPE ACT (the Wireless Industry Public Exclusion Act).

Finally, please download a PDF of the bulk of this message and share it with your friends and elected officials:  Please  CLICK HERE.
Jonathan

[1] Note: The opinions contained in this communication are solely those of Jonathan L. Kramer, Esq., and do not necessarily reflect those of any client or friend of this firm.  I’m pretty sure they don’t reflect the views of the wireless industry.

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