Earlier this year Squire Patton Boggs hosted the International Institute of Communications’ (IIC) Telecommunications and Media Forum (TMF), which took place in Miami. The IIC is an international non-profit organization that brings together regulators, policy-makers and industry representatives to promote open dialogue and shape the public policy agenda in the telecommunications, media and technology sector. The TMF was a two-day conference that focused on Latin America and examined the policy frameworks that can best promote infrastructure deployment, investment, and innovation for the digital economy in that region. In attendance were representatives from regulatory agencies from across Latin America; the Federal Communications Commission; the International Development Bank; other regional organizations; carriers; broadband providers; and telecom equipment manufacturers who are invested in Latin America.
One of the panels at the TMF focused on digital infrastructure and the policy choices that can lead to sustained investment and innovation at the network, service and applications level. SPB partner Eduardo R. Guzmán, a member of the firm’s global Communications Group, participated as a panelist in that discussion. He focused his remarks on the state of wireless network infrastructure in Latin America and the need for reforms to lower the costs of deploying the infrastructure that Latin American providers will need to expand coverage and set the table for 5G networks. Below is a Q&A with Eduardo that summarizes the key points he made at the TMF on this critical issue for the evolution and expansion of telecommunications service in Latin America.
Why is discussing barriers to wireless infrastructure deployment critical in Latin America?
Because wireless networks will be they key drivers of broadband deployment in Latin America. Mobile devices connected to wireless networks already are by far the preferred mode of access to the Internet in the region, and smartphone adoption is only expected to increase that trend. At the same time, Latin America still faces significant challenges when it comes to extending connectivity in rural and remote areas, and 4G adoption and coverage are still lagging behind when viewed in terms of total usage, coverage or in comparison to smartphone adoption rates (which are steadily increasing in Latin America). And stagnant average revenue per user and real limitations at the customer base level to pay for premium services has historically affected investment in the region and is likely to delay the rollout and adoption of 5G. In this climate, reducing the costs of infrastructure deployment is critical and needs to be discussed more broadly.
What do we mean by “wireless infrastructure”?
In the traditional model of wireless network deployments, it referred to constructing massive tower structures, attaching large antennas to these towers, and connecting these sites to the network via a fiber or other transmission facilities. But as the world moves toward 5G networks, the infrastructure components and network needs will change. Instead of traditional antennas, providers will be increasingly deploying much small pieces of hardware, commonly known as microcells. Instead of deploying one large antenna to cover an expansive area, providers will be deploying dozens of these microcells within a a reduced area as part of a much more dense deployment and lower latency. And instead of relying on massive towers, providers will be looking at a variety of structures of different sizes on which to attach these microcells—structures that will range from specially designed light posts, to structures in the public right-of-way between highways, all the way to creative spaces in privately-owned buildings.
What are the barriers to the efficient deployment of this wireless infrastructure?
The barriers to cost-efficient deployment of wireless infrastructure in Latin America are best seen at two levels. The first level involves inconsistent and asymmetrical policies across Latin American countries, which often are borne out of a political struggle between national government and local municipalities and townships. Attempts to implement harmonious policies nationwide often generate concerns that the national government may encroach on areas that have been traditionally regulated by local governments—a concern that can have constitutional dimensions in many countries in Latin America, where many local governments consider their powers over infrastructure siting to be protected. At heart this is a political and constitutional discussion more than a regulatory one—and one that Latin American regulators may not fully control.
The second level involves specific conduct and policies—whether imposed at the national level or the local level—that are detrimental to the efficient deployment of wireless infrastructure. These includes extreme actions such as complete moratoria on deployments of any infrastructure, but also includes measures such as excessive fees for the use of rights-of-way, requiring major zoning reviews to replace existing equipment with similarly-sized equipment, requiring carriers to conduct (and submit for review) business feasibility studies as a condition for the deployment of equipment, discriminating against telecommunications providers vis-a-vis other utilities (which often are government-owned), de facto denials (i.e., not acting on an application for months and even years), and attempts to impose burdensome regulations when the owner of a private building enters into an agreement with a carrier for deployment of infrastructure in its property.
What is the Challenge?
There is a dire need for comprehensive reform to simplify the regulatory process, reduce costs (both in terms of fees and the amount of time that it takes to deploy infrastructure) and bring uniformity at the national level to the complex and sometimes overlapping set of rules that apply whenever a telecom provider seeks to deploy wireless infrastructure components. The real challenge is political: this is a process that pits national authorities against local authorities and tests the limits of the power of national regulators to bring uniformity and efficiency within their boundaries.
Recent events in the U.S. highlight the challenge that Latin America faces in this regard. The Federal Communications Commission, the national telecommunications regulatory agency in the U.S., already enjoys certain advantages that many regulators in Latin America do not necessarily enjoy. These include a federal statute that requires state and local governments to act on any request for the use of rights-of-way for wireless service within a reasonable amount of time and prohibits state and local governments from denying requests for access in certain circumstances. Drawing on this authority, the FCC has started an administrative proceeding that is exploring various options, including preempting local authority and establishing timeframes under which applications are deemed approved if the state or local government does not take action. Even with these advantages, the reform process at the FCC has been drawn out and has faced substantial opposition from local and municipal governments and other stakeholders, and it still remains uncertain how expansive the FCC’s preemption authority may be in this area. Many states in the US have moved ahead with their own efforts to enact legislation, but many of those efforts are headed to litigation. Even then, this trend would not necessarily promote a consistent, national policy as it relates to wireless infrastructure deployment.
The need for reform is arguably greater in Latin American than in the US. While in the US the regulatory reform is seen as a necessary step in the race to 5G, in Latin America lowering the costs of wireless infrastructure deployment and promoting additional coverage are critical for the rollout of 4G and the expansion of high speed internet service by the preferred mode of access of the the Latin American consumer: wireless. The challenges are also greater, however, because many national regulators in the region may find themselves concluding that they lack the preemptive powers that the FCC enjoys and/or facing constitutional disputes with local governments.
In light of this, countries in Latin America should start now the painstaking work of pushing for the national—and if necessary, constitutional—reforms necessary to streamline and reduce the costs of the regulatory process that applies to deployment of wireless infrastructure. Among the items that should be considered on a priority basis are:
- Establishing uniform rules on a nationwide basis to govern the deployment of infrastructure.
- Modifying existing processes to recognize that 5G networks and the new generation of wireless services will rely on the deployment of smaller and more ubiquitous infrastructure—a sharp contrast to the large towers and clunkier antennas that characterized earlier wireless infrastructure deployments.
- Adopting the principle that applications for access to rights-of-way and/or for installation of wireless equipment in public or private lands are deemed approved after a certain period of inaction after filing.
- Consolidating the approval process in one government agency or entity.
- Avoiding unreasonably delays and excessive fees, especially as it relates to the deployment of the smaller infrastructure and equipment that will be the linchpin of 5G.
- Taking advantage of the property owned by national government—whether national government or state government—to kickstart the reform process.
- Providing incentives to state and local government that wish to be trailblazers in the reform process.
- Establishing expedited and specialized dispute resolution procedures to deal with any disagreements between providers and government entities.
The challenge for Latin American countries in this context is ultimately a political one wrought with complexities and potentially conflicting interests. The time is now to implement the reforms needed to allow Latin America to catch up and clear the way for new evolutions in the future.
 Here is a link to the event’s page: www.iicom.org/events/telecommunications-and-media-forum/item/miami-2018.