Holding that municipalities had ‘very limited and proscribed role...

providers to pay application fees, file detailed disclosure of matters such as maps, corporate policies and financial and technical qualifications and provide cities with network capacity. In challenge to ordinances brought by Qwest, court ruled that Sec. 253 of Telecom Act barred all state and local regulations that “prohibit or have the effect of prohibiting” any company’s ability to provide telecom services unless regulations fell with statute’s “safe harbor” provisions relating to local regulation of rights-of-way. “The preemption is virtually absolute and its purpose is clear -- certain aspects of telecommunications regulations are uniquely the province of the federal government and Congress has narrowly circumscribed the role of state and local governments in this arena,” court said. Three-judge panel conceded that Act didn’t define management of public rights-of-way, but said it relied, as several federal courts had done, on FCC interpretation as meaning “control over rights-of-way itself, not control over companies with facilities in the rights-of-way.” Finding that several provisions violated Sec. 253, court struck down: (1) Requirement that companies submit lengthy and detailed application form to enable cities to determine financial soundness, technical qualifications and legal ability to provide telecom services. Such requirements aren’t related to regulation of public rights-of-way, court said. “The upshot of the application process is to regulate the provision of telecommunications services rather than to regulate the rights-of- way.” (2) Requirements for reporting transfer of ownership and stock. Although cities may want to “have a right to know” who owns shares in the telecom companies that use rights-of-way, court said, municipal regulation of stock transfers “extends far beyond management of rights-of-way.” (3) Requirements that franchisees offer “most-favored-community” statutes (best available rates and terms) and provide free or excess capacity for use of cities. Those requirements bear no relation to rights-of-way management, but focus solely on rates, terms and conditions of service, court said. (4) Provisions giving cities “unfettered” discretion to grant, deny or revoke franchise based on “unnamed factors.” Grant went far beyond limits of anything city deemed to be in public interest, court said, holding that such ordinances were too vague and too broad to comply with Sec. 253. Referring to cities’ argument that stock ownership was linked to company’s financial well-being that ultimately could affect its use of rights-of-way, court said: “Under this semantic 2-step, Sec. 253 will have no limiting principle. The safe harbor provisions would swallow whole the broad congressional preemption. Municipalities could regulate nearly any aspect of the telecommunications business.”