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Crown Castle NG East LLC v. Pennsylvania Public Utility Commission

Commonwealth Court of Pennsylvania

June 7, 2018

Crown Castle NG East LLC and Pennsylvania-CLE LLC, Petitioners
Pennsylvania Public Utility Commission, Respondent

          Argued: February 7, 2018




         The Petitioners in this case operate neutral-host Distributed Antenna System (DAS) networks, which are used by various wireless companies to transport wireless data and voice traffic. For 10 years, the Pennsylvania Public Utility Commission (Commission) certificated DAS networks as public utilities. On March 17, 2017, the PUC issued an Order (DAS Order) in which it reversed its longstanding practice, finding that DAS network operators are not public utilities under the Pennsylvania Public Utility Code (Code)[1] and, therefore, are not within the Commission's jurisdiction. After the Commission denied reconsideration of the DAS Order, Petitioners Crown Castle NG East LLC and Pennsylvania-CLE LLC (together, Crown Castle), petitioned for review of the Commission's Orders. While the facts may be quite technical, the legal principles involved are straightforward. After reviewing the relevant language in the Code, this Court's precedent, the decisions related to the certification of DAS networks by public utility commissions in other jurisdictions, and relevant federal law, we conclude the Commission erred in its interpretation of the Code to exclude DAS network operators from the definition of public utility, and, accordingly, we reverse.

         I. Background

         A. DAS Networks

         Generally, neutral-host DAS networks provide transport services to their Wireless Service Provider (WSP) customers, such as AT&T Wireless or Verizon Wireless, via the networks' fiber optic lines, which run between remote, fixed-point "nodes" and a centrally-located "hub."[2] The DAS network works in conjunction with the facilities and equipment owned by the WSPs and the WSPs' retail customer, the cell phone or smart phone user, to provide transport to wireless communication. DAS networks essentially provide increased coverage and/or capacity within a localized area by collecting wireless traffic from a WSP's retail end-user, transmitting it over the DAS network (typically using terrestrial fiber optic lines) and delivering it back to the WSP's network. An advantage of a DAS network is that it "us[es] components that are a fraction of the size of macrocell deployments, [that] can be installed - with little or no impact - on utility poles, buildings, and other existing structures." In Re: Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, 29 FCC Rcd. 12865, 12867 (F.C.C. 2014) (2014 Wireless Infrastructure Order). "DAS deployments offer robust and broad coverage without creating the visual and physical impacts of multiple macrocells." Id. at 12879. They can be deployed in "densely populated urban areas, where traditional towers are not feasible or in areas, such as stadiums, where localized wireless traffic demands would require an unrealistic number of macrocells." Id. at 12880. DAS networks may be owned and operated by a WSP for the sole use of its customers, or owned and operated by a neutral-host, such as Crown Castle NG East LLC, which may lease its network to multiple WSPs.

         B. The Commission's Treatment of DAS Networks from 2005 to 2015

         Between 2005 and 2015, the Commission granted certificates of public convenience (Certificate) to DAS network operators as competitive access providers (CAPs)[3] on the basis that they were public utilities under subsection (1)(vi) of the definition of public utility under the Code:

(1) Any person or corporations now or hereafter owning or operating in this Commonwealth equipment or facilities for:
*** (vi) Conveying or transmitting messages or communications, except as set forth in paragraph (2)(iv), by telephone or telegraph or domestic public land mobile radio service including, but not limited to, point-to-point microwave radio service for the public for compensation.
(2) The term does not include:
(iv) Any person or corporation, not otherwise a public utility, who or which furnishes mobile domestic cellular radio telecommunications service.

         Section 102 of the Code, 66 Pa. C.S. § 102. At least five DAS network operators, including Crown Castle, [4] were granted Certificates by the Commission during that time period.

         In 2015, during the Commission's consideration of an application for a Certificate filed by the DAS network operator SQF, LLC, (SQF), two members of the Commission began questioning the Commission's historical treatment of DAS network operators as public utilities under subsection (1)(vi) of the Code. See Appl. of SQF, LLC for Approval to Offer, Render, Furnish or Supply Telecomm. Servs. as a Competitive Access Provider to the Pub. in the Commonwealth of Pa., No. A-2015-2490501 (Pa. P.U.C. 2015), Statements of then-Vice Chairman John F. Coleman, Jr., and former-Commissioner Robert F. Powelson.[5] If DAS networks' operators were not public utilities under subsection (1)(vi), they stated, then the Commission did not have jurisdiction to regulate or issue Certificates to those operators. See id.; Section 501 of the Code, 66 Pa. C.S. § 501 (setting forth the Commission's general powers to, inter alia, supervise and regulate all public utilities in the Commonwealth). The Commission granted a Certificate to SQF, but directed the opening of formal proceedings to investigate the question of whether DAS network operators were public utilities over which the Commission had jurisdiction.

         C. The Commission's 2016 Investigatory Proceedings

         In February 2016, the Commission opened a formal investigatory proceeding on the jurisdictional question. In particular, this question was whether DAS network operators were public utilities under subsection (1)(vi) as an entity that conveyed or transmitted messages or communications, as they had been historically treated, or fell within the exclusion from that definition set forth in subsection (2)(iv) for "[a]ny person or corporation, not otherwise a public utility, who or which furnishes mobile domestic cellular radio telecommunications service." 66 Pa. C.S. § 102. The term "mobile domestic cellular radio telecommunications service" is not defined in the Code, but has been considered synonymous with the term "commercial mobile radio service" (CMRS), (Reproduced Record (R.R.) at 18a n.4), which is defined by Section 20.3 of the federal telecommunications regulations (Federal Regulations), 47 C.F.R. § 20.3.[6] Traditionally, it is the WSPs that provide CMRS to their retail cell phone customers, because CMRS is an interconnected, mobile wireless communication service that is provided to the public for profit. Vice Chairman Coleman and Commissioner Powelson suggested that DAS network operators were, in actuality, furnishing CMRS because the services and infrastructure the DAS network operators offered to their WSP customers could not be separated from the federally-regulated CMRS the WSPs offered to their own retail end-users. Under this interpretation, they contended, the services provided by DAS network operators were outside the Commission's jurisdiction.

         The investigation did not include a hearing, and, instead, the Commission requested comments and reply comments from stakeholders regarding whether: "DAS [operators] are public utilities under Pennsylvania law that can be certificated"; "the Commission should or is required to certificate these carriers in furtherance of federal law"; "DAS service is an interstate service, intrastate service, or both"; and "a C[ertificate] is needed to confer property rights to DAS [operators] to site the facilities/equipment used to provide DAS service, including access to rights-of-way and eminent domain."[7] (R.R. at 19a.) Further, the stakeholders were to address in their responses whether DAS network operators furnish CMRS, thereby precluding them from being a public utility under subsection (2)(iv).

          Numerous stakeholders responded. Crown Castle and ExteNet Systems, Inc.[8](ExteNet) and organizations representing DAS network providers and owners of telecommunications facilities, including CTIA - The Wireless Association (CTIA) and PCIA - The Wireless Infrastructure Association (together, Industry Stakeholders), responded with comments. Also responding were the Pennsylvania Municipal League, the Pennsylvania State Association of Township Supervisors, the Pennsylvania State Association of Boroughs, and the Pennsylvania State Association of Township Commissioners (together, Municipal Stakeholders). Finally, the Office of Consumer Advocate (Consumer Advocate) offered comments.

         Industry Stakeholders indicated that DAS network operators should retain their status as public utilities under subsection (1)(vi) as intrastate telecommunications service providers, as they historically have been treated by the Commission and numerous other jurisdictions. Industry Stakeholders maintained that DAS network operators were not furnishing CMRS because they do not offer mobile or wireless services regulated by the Federal Communications Commission (FCC). Rather, DAS network operators offer wholesale point-to-point transport services to WSPs, similar to those that were considered certificated telecommunications services in Rural Telephone Company Coalition v. Pennsylvania Public Utility Commission, 941 A.2d 751 (Pa. Cmwlth. 2008). Although pursuant to Section 224 of the Federal Telecommunications Act of 1996 (Federal Act), 47 U.S.C. § 224 (addressing pole attachments for wireless facilities), and FCC rulings, DAS network operators should be permitted access to municipal and public utility rights-of-way to install DAS network facilities, Industry Stakeholders stated they often needed to show a Certificate before being granted that access. Even potential clients, they indicated, have requested proof of a DAS network operator's Certificate before entering into an agreement with the operator. Industry Stakeholders also commented that not providing DAS network operators with Certificates, or stripping them of their existing Certificates, could violate Section 253 of the Federal Act, 47 U.S.C. § 253, [9] by impeding the operators' ability to compete in a fair and balanced regulatory environment.

         Municipal Stakeholders took the position that DAS network operators were expressly excluded from the definition of public utilities because they provide interstate CMRS. According to Municipal Stakeholders, DAS network operators provide CMRS because they facilitate traditional CMRS services. They contended that continuing to grant Certificates to DAS network operators is inconsistent with Commission precedent and with Rural Telephone because those operators do not connect to the Public Switched Telephone Network (PSTN) and are primarily interstate telecommunications CMRS falling within the FCC's regulatory purview. Municipal Stakeholders stated that federal law and Pennsylvania's Wireless Broadband Collocation Act[10] amply protects DAS network operators' ability to site DAS facilities within public rights-of-way or on existing public utility facilities, and they were unaware of any municipality or public utility requiring DAS network operators to obtain a Certificate before allowing the placement of DAS facilities. They further claimed that federal law does not require the Commission to issue Certificates to DAS network operators, and the denial or rescission of Certificates to those operators will not violate Section 253 of the Federal Act or any other federal law. Granting Certificates, which confer an exemption from local zoning and the power of eminent domain, to DAS network operators, Municipal Stakeholders stated, would have a detrimental effect on local and state governments.

         Consumer Advocate commented that DAS network operators were better classified as providing interstate wholesale CMRS service than as a public utility. Consumer Advocate posited that the Commission was not required by federal law to issue Certificates to DAS network operators, and that DAS network operators already have access to pole attachments under federal law. However, Consumer Advocate was in favor of each certificated CAP being reviewed to determine whether it otherwise qualified as a public utility.

         Industry Stakeholders submitted responses to the comments of Municipal Stakeholders and Consumer Advocate reiterating their earlier arguments, adding that DAS network operators do not meet the federal definition of CMRS and pointing out that those operators do not provide wholesale or other CMRS services but intrastate transmission or transport path services to wireless carriers. PCIA observed that finding an entity that facilitates traditional CMRS services to be a CMRS provider would re-define numerous providers of non-DAS types of telecommunication services, such as traditional backhaul service[11] providers, as CMRS providers, an outcome that should be avoided.

         II. The Commission's 2017 DAS Order

         After considering the comments and reply comments, the Commission entered the DAS Order on March 17, 2017, [12] reversing its historic treatment of DAS network operators based on the Commission's finding that they were not public utilities because their "facilities furnish mobile domestic cellular radio telecommunications service" and, therefore, were not subject to the Commission's jurisdiction or entitled to a Certificate. (DAS Order at 1, 33, 35.) The Commission provided technological and legal explanations for its conclusion that DAS network operators fall within the exclusion set forth in subsection (2)(iv).

         Technologically, the Commission found that DAS networks consist of: (1) a "[p]owered antenna[] and related signal conversion equipment" to receive and transmit end-user wireless traffic and to convert the information (Node); (2) "[s]ome form of 'terrestrial' transport (most likely fiber) that carries the traffic between the DAS and WSP networks"; and (3) a connector "between the two networks, usually located at the WSP's switch or carrier hotel" (Hub). (Id. at 11.) The DAS network antennas are located on existing utility poles, municipal light posts, buildings, and other structures frequently in a public right-of-way - but, the Commission explained, DAS network operators can also construct their own poles and facilities.

          The Commission found that "DAS networks provide infrastructure on the end-user side of the traditional CMRS carrier's network" by allowing WSPs, which are CMRS carriers and the DAS network's customer, "to expand their networks in a fast, cost-effective, and efficient manner." (Id. at 10-11 (quoting ExteNet's Comment at 2).) The Commission recognized that it is the WSP, not the DAS network operator, that exchanges the voice traffic to the PSTN and is responsible for the hand-off to 911 emergency centers, with other carriers, or the PSTN. Similarly, phone numbers are a part of the WSP's function and are not needed for the operation of the DAS network. Notwithstanding this, the Commission observed that the DAS networks are used to connect the WSP's retail end-user customer with the WSP's network, which, in turn, is connected with the PSTN. (Id. at 22.) Thus, technologically, it found a link between the PSTN and the DAS network.

         Legally, the Commission cited the Code's statutory language, as well as relevant Federal Regulations and FCC rulings, to determine that DAS network operators were outside the Commission's jurisdiction. Looking at the statutory definitions in the Code, the Commission acknowledged that DAS network operators met the initial legal definition of public utility because they operate "facilities that convey or transmit messages or communications." (Id. at 14.) However, the Commission concluded that "DAS networks should be defined by their functionality, " and DAS equipment "plays a vital and active role in the wireless session by providing [the] antenna[s] that directly interface[] with the end-user's wireless device" as it both sends and receives the radio signal. (Id. at 18.) Focusing on this point and the use of the DAS network equipment, the Commission read subsections (1)(vi) and (2)(iv) together and construed the Code's definition of public utility as excluding "any person that operates equipment that 'furnishes mobile domestic cellular radio telecommunications service.'" (Id. (quoting 66 Pa. C.S. § 102).) This definition, according to the Commission, did not require "that the service be a stand-alone offering." (Id.) Turning to the dictionary, the Commission observed that to "furnish" means "to provide" or "to supply." (Id.) Applying those definitions, the Commission concluded that DAS network facilities are used to supply and provide personal wireless services to the WSPs' customers. (Id.) Because DAS network operators operate equipment that is used to furnish CMRS to the WSPs' ...

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