Sprint Approved ‘Trial’ for Contractor Mobilitie to Build Wireless Sites Without Completing Regulatory Compliance (SUBSCRIPTION REQUIRED)

Related Documents:
Text of Sprint memo
Baltimore DOT Notice of Violation and Fine for unapproved installation
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Background on FCC proposal to streamline small cell siting

 

Event Driven Takeaways

  • According to an internal Sprint email dated April 25 and obtained by Event Driven, Sprint Corp. appears to have initiated a trial in February under which Sprint granted its wireless infrastructure contractor, Mobilitie, permission to commence construction on “mini macro” and “monopole” wireless site installations “without necessarily securing certain build prerequisites.” The trial concluded at the end of March.
  • “Mini macro” and “monopole” site installations are types of wireless infrastructure sites designed to build a better network through cell site densification and cost reductions as part of indebted Sprint’s “turnaround” plan.
  • Sprint determined that the trial had not demonstrated any tangible benefits in getting new sites “on-air” more quickly that would outweigh the “reputational risk” of commencing construction without first securing all regulatory approvals. Sprint concluded that, going forward, Mobilitie must obtain “full AZP” (acquisition, zoning, permitting) for new sites.
  • “We take regulatory compliance at all levels very seriously. As soon as we learned about this issue, we took immediate action to gather the facts. Until that process is complete, it would be inappropriate to comment further,” Sprint’s head of corporate communications said.
  • Cities have fined Mobilitie in the past and made it remove unauthorized cell site installations.
  • The FCC began a rulemaking process on April 20 to streamline new wireless infrastructure deployment, partly in response to a request from Mobilitie in late 2016.

Sprint Corp. initiated a “trial” during the first quarter to allow its wireless infrastructure contractor to commence construction on new wireless sites without full regulatory compliance, according to an internal email from Chris Mills, Sprint’s Vice President of Network Development, obtained by Event Driven.

Sprint, the fourth largest U.S. wireless carrier, found that the “reputational risk” of not “fully completing regulatory compliance” for these wireless sites was not offset by sufficient “tangible on-air benefit” for its network, according to the email. The email concludes that Sprint’s infrastructure contractor, Mobilitie LLC, may no longer build new sites without “full AZP.” The term “full AZP” appears to reference an acronym meaning site acquisition, zoning and permitting used by Clearwire, which Sprint acquired in 2013.

It’s unclear how many wireless sites were constructed, or where, during the trial.

In response to a request for comment, Lisa Belot, Sprint’s manager of corporate communications, told Event Driven: “We take regulatory compliance at all levels very seriously. As soon as we learned about this issue, we took immediate action to gather the facts. Until that process is complete, it would be inappropriate to comment further.”

Mobilitie’s Jason Caliento, senior vice president for network strategy, told Event Driven that it “follows all regulatory requirements at all times. Even in trial deployments that may include internal exceptions for items like temporary power or backhaul, we follow all regulatory requirements.”

The email “confirms what we’ve anecdotally heard, that they have been installing equipment without going through the formal permitting process,” Steve Traylor, executive director and general counsel for the National Association of Telecommunications Officers and Advisors (NATOA), a trade organization that advises local governments on communications policies and services. told Event Driven.

The email doesn’t explicitly mention deployment in the public rights-of-way, the use of which is governed by local, county and state laws that require entities to obtain permission to install equipment and follow safety codes. However, Sprint and Mobilitie are widely known to be partnering on a wireless infrastructure project that focuses on facilities deployed in the right-of-way.

“We have the ability to go and basically put our small cells, and in many cases our macro cells, utilizing right of way, in which the rent that you pay when you get an approval, it is significantly, significantly below the rent that you pay to a tower company,” Sprint CEO Marcelo Claure said at a Jan. 6 CitiGroup Inc., conference in Las Vegas.

Deployment in rights-of-way requires local permits and zoning approvals to verify new sites are properly engineered and safe. “These laws are taken seriously in virtually every jurisdiction” Dr. Jonathan Kramer, a wireless engineer and managing partner of Telecom Law Firm, P.C., a firm advising governments on wireless permitting matters, told Event Driven.

“The memo, if true, suggests that Sprint and Mobilitie—and perhaps dozens of other companies—conspired to intentionally violate government[al] safety laws and codes,” Kramer said. “Given that Mobilitie and Sprint operate nationally, the alleged memo is quite likely to attract the scrutiny of many state attorneys general,” various state public utility commissions, the FCC and the SEC, Kramer said.

 

Sprint’s Network Densification Project

Even though Sprint seems to have called a halt to future wireless site construction without full regulatory compliance, that the company would have authorized a trial of it in the first place speaks to two factors: One, Sprint very much needs such mini macros, monopoles and other wireless infrastructure including small cells, to be installed as fast as possible to be able to better use its vast spectrum holdings.

“Mini macro” refers to wireless facilities primarily used by Sprint and Mobilitie that are taller and can transmit signals farther than typical “small cells” but are smaller than traditional macro wireless towers, according to Ken Schmidt, a telecom attorney and president of Steel in the Air, Inc., a consulting firm for property owners leasing to wireless providers.

“Sprint prefers mini-macros because Sprint intends to use their own 2.5GHz spectrum for wireless backhaul instead of using wired backhaul with fiber or copper like AT&T, T-Mobile or Verizon use,” Schmidt told Event Driven by email. But the antennas used for Sprint and Mobilitie’s wireless backhaul deployment need to be placed high up to avoid interference or signal loss due to buildings or dense foliage, hence their use of mini-macros as well as monopoles up to 120-feet tall, Schmidt said.

The trial also speaks to the fact that Sprint, Mobilitie and many others in the wireless industry may still be frustrated with what they describe as a burdensome patchwork of regulations at the state and local level that’s hampered Sprint’s and other carriers’ rollout of new wireless facilities.

Sprint’s ongoing network densification project, focused on small cells and other wireless infrastructure, is a critical component of what CEO Marcelo Claure has called his “five-year turnaround plan” for the indebted company.

Since becoming CEO in 2014, Claure has been trying to hoist the company out of a precarious financial position, including more than $34 billion in debt as of Dec. 31, 2016. Sprint’s financial debt to equity was 1.112 as of Dec. 31, 2016. That was more than double that of its chief competitors for the same period, with AT&T Inc. at 0.483, T-Mobile US Inc. at 0.585 and Verizon Communications at 0.504.

 

 

Claure said Jan. 6 that company is “on track” with its small cell deployment. In the second half of 2016, Sprint submitted “thousands and thousands of permits in many different counties, municipalities and cities,” Claure said. He described the company’s “toolkit” of wireless site designs as including nano cells, small cells and mini macro cells.

“We are very satisfied with the percentage of approvals that we’re getting. And I would say this coming year, 2017, is for sure going to see even further improvements to our network as we start rolling out our small cells,” Claure said.

Claure may have expressed satisfaction in public, but the wireless industry is lobbying the FCC and state lawmakers to make small cell deployment much easier. The industry is hopeful lawmakers and regulators will smooth the way for small cells, instead of having to deal with a kaleidoscope of local regulations.

Mobilitie and CTIA, the wireless industry trade group, describe the permit process as cumbersome. Mobilitie and other wireless industry members have criticized some cities for creating difficult regulatory hurdles to small cell deployment, or for seeking to charge what they characterize as excessive costs to obtain permits and authorizations.

“There needs to be legislation that facilitates a rollout of dense sites and networks from a federal side, but each state has to define within that how they’re going to implement it,” Sprint’s Chief Financial Officer, Tarek Robbiati, said on March 7 at a Deutsche Bank conference in Palm Beach, FL.

The FCC began a rulemaking process April 20 to make it easier and less expensive to deploy new wireless sites. It also convened the first meeting of the new Broadband Deployment Advisory Committee (BDAC) on April 21 to examine ways to achieve the same goal. Sprint’s Chief Technology Officer, Dr. John Saw, sits on the committee.

 

Local Opposition

It would seem that changes can’t come soon enough for Mobilitie. In the past year, the privately held company has faced significant opposition from municipalities and other entities, including the U.S. Conference of Mayors and the NATOA, among a coalition of other governmental groups, due to its interactions with municipalities and aspects of its infrastructure design for Sprint, including up to 120-foot monopoles in the rights-of-way. Some, including the Georgia Municipal Association, have found constructive ways to work with the company after initially rejecting some of its proposals.

In the past, Mobilitie has been forced to remove installations that weren’t fully permitted and made to pay fines to municipalities for some of its deployments.

On Feb. 23, Mobilitie lost an appeal before the Board of Adjustment of the City of Denison, TX, forcing Mobilitie to remove a more than 84-foot pole from the right-of-way. The city said Mobilitie had mischaracterized the pole as a utility pole, when it should have been characterized as a “tower” for the purpose of zoning applications. The decision determined Mobilitie also failed “to comply with all local laws and regulations.”

On March 17, 2016, the Baltimore Department of Transportation fined Mobilitie for failing to obtain a permit, failing to make the pole’s location safe, and for failing to identify the owner of the structure, among other violations. Mobilitie removed the pole, which was placed in a handicapped access ramp for a sidewalk, according to pictures accompanying the fine.

–Lydia Beyoud