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5G Infrastructure Rollout:

A Brief Comparison Between UK and US Approaches to Regulation

03 July 2019

The fifth generation of cellular wireless services, 5G, will usher in a new era of communications. Countless more devices will be connected at significantly higher speeds than on predecessor networks, with essentially no latency. The coming impact of 5G is still unknown, but it is expected by many that 5G will enable use cases for connected and autonomous vehicles and numerous other technologies under the umbrella of the "Internet of Things".

The rollout of 5G infrastructure presents numerous unique obstacles for telecom operators, infrastructure providers, landowners, municipal authorities and government regulators.  The high frequencies used for certain 5G services only travel short distances, particularly "millimetre wave" frequencies above 30 gigahertz that are seen as critical for high bandwidth services. These high frequencies are also not as capable at penetrating through structures as lower frequencies.  The result is that 5G deployment in cities must rely on a large number of "small cell" installations on lamp-posts, buildings, street furniture, lawns, etc., rather than traditional telecom towers and poles.  These small cells must be connected by dense fiber network installations This requires operators to negotiate with numerous local property owners, councils and municipalities to deploy sufficient fixed and mobile infrastructure to provide the coverage required to rollout 5G.  Policymakers and regulators, determined to win what the Federal Communications Commission (the FCC) called "the global race to 5G," have implemented varying regulations to facilitate 5G deployments.

This article will briefly compare the national legal frameworks adopted in the U.K. and the U.S. to hasten the development in 5G infrastructure, both of which are subject to continued scrutiny and development.  

U.K.

The rollout of 5G and full fiber networks are key policy objectives of the U.K.'s Department for Digital, Culture, Media and Sport (DCMS). The publication of DCMS's 5G Strategy in March 2017 coincided with the allocation of £1.1 billion (roughly US$1.4 billion) of funding from the National Productivity Investment Fund (NPIF) to digital infrastructure. DCMS also established separate but related programmes  to run 5G testbeds and trials and to stimulate demand for full fiber networks, with each programme providing access to matched funding from the NPIF.

Historically, telecom network rollouts in the U.K. have been hampered by high costs and delays associated with securing access to land and obtaining planning approvals to deploy digital infrastructure. The Telecommunications Act 1984 (replaced by the Communications Act 2003) introduced an Electronic Communications Code (the Old Code) with the intention of streamlining this process. Operators can apply to Ofcom for powers (Code Powers) to perform works on public land without acquiring licenses that would otherwise be necessary, and with immunities from certain planning laws. The Old Code also provided a framework for operators with Code Powers to negotiate agreements (Code Agreements) with private landowners to gain access to their land and to exercise rights to deploy "electronic communications apparatus" (Code Rights). However, deficiencies in the Old Code allowed landowners to wield control over operators, including by preventing operators from upgrading and sharing installed apparatus or assigning their Code Agreements. Landowners also routinely used a right to receive "fair and reasonable" consideration as a means to extract ransom rents from operators. It did not help that in one of the few cases relating to the Old Code, it was described as "one of the least coherent and thought-through pieces of legislation on the statute books". 

As part of a suite of reforms, the Digital Economy Act 2017 introduced a new Electronic Communications Code (the New Code) that took effect on 28 December 2017, replacing the Old Code. The New Code is operator-friendly and was designed so that operators can quickly secure access to land from site owners or "occupiers" in a cost-effective manner, to exercise a broader set of Code Rights. It was also designed to address deficiencies in the Old Code by:

  • providing operators with inalienable Code Rights to upgrade and share electronic communications apparatus and to assign Code Agreements, subject to certain restrictions; 
  • introducing a "no scheme" rule for rent valuations so that rental charges are set without having regard to the operator using the land for deploying infrastructure. The no scheme rule has dramatically reduced rental charges, with the first rent valuation case under the New Code leading to a reduction of the annual rent from £13,250 to £1,000 (the operator had offered a nominal rent of £1); and
  • allowing operators who cannot quickly reach a Code Agreement with occupiers to apply to the Upper Tribunal for an order determining the agreement terms, including the rent valuation, with interim orders or temporary Code Rights being available in some cases. It is difficult for occupiers to resist these applications, except in limited circumstances such as where a planned redevelopment of the land or neighbouring land would be prevented if the requested access were to be granted.

The U.K. also implements reforms required by member states of the European Union (EU). The Communications (Access to Infrastructure) Regulations (the ATI Regulations) came into effect on 31 July 2016 to implement Directive 2014/61/EU. The ATI Regulations provide a framework for operators to seek access to a variety of physical infrastructure types (rather than land) to deploy networks. The European Economic Communications Code (EECC) entered into force on 20 December 2018 and must be transposed into domestic law by 21 December 2020. Regardless of the outcome of Brexit, we can expect to see further competition and access reforms flowing from the EECC.

In other reforms, Ofcom recently required Openreach, the wholesale arm of BT, to publish a reference offer for Physical Infrastructure Access. This means that Openreach must provide communications providers with access to its duct and pole networks on regulated terms and pricing to facilitate the deployment of digital infrastructure. This is another route for operators to roll out 5G networks including the fiber that is required to feed 5G transmitters. 

U.S.

In the U.S., the FCC has been leading the government's efforts to develop a national regulatory regime for 5G deployment.  The FCC's Declaratory Ruling and Third Report and Order which became effective in January 2019 (the Order), interprets the Telecommunications Act of 1996 as granting the FCC authority to (i) pre-empt state and local requirements that materially inhibit the ability of an entity to provide telecommunication or personal wireless services; and (ii) require localities to authorise requests to build small cell sites within a reasonable period.

In particular, the Order, in connection with the construction and approval of small cell sites:

  • requires fees charged by state or local authorities to:
      o be reasonably approximate to the state or local authority's costs;
      o only factor "objectively reasonable" costs; and
      o be no higher than similarly situated competitors;
  • establishes a presumption of reasonableness for fees charged below a certain threshold and requires a showing of local cost variances for fees exceeding that threshold;
  • mandates local authorities to respond to applications within a "deadline" of 60 days for existing structures and 90 days for new construction – expiration of which affords the applicant expedited relief in court but does not mean that applications are deemed granted;
  • prohibits certain local non-fee restrictions, such as aesthetic, spacing, undergrounding or in-kind requirements; and
  • requires state and local governments to act in capacity as regulatory authority only.

The Order is part of the FCC's 5G FAST Plan, which has resulted in other deregulatory actions, such as exempting small cell wireless facilities from various federal historical and environmental reviews.  Many state legislatures have also passed legislation to curb municipality authority and place restrictions on the fees charged. Some municipalities have passed ordinances in relation to 5G infrastructure, but the bulk of the regulatory development has occurred on the national level.

Response to the Regulations

The Order and New Code have provided fertile ground for disputes.  

In the U.K., a large number of disputes have arisen between operators and landowners over the terms of Code Agreements (including rental costs), and between operators and local authorities over ambiguous wording in the New Codes especially relating to lamp-posts and street furniture. This resulting litigation has clogged up the Upper Tribunal and ironically is likely to cause delays in the construction of small cell sites and dense fiber. Operators have also expressed concern over exclusive concessions granted by local authorities to deploy network infrastructure. Code Rights do not cover network infrastructure (i.e. it is not possible to seek access to other operators' infrastructure under the New Code) so these concessions may hinder wider 5G deployment if operators have to seek access from each concessionaire to install network infrastructure. Some operators have even labelled the exclusive concessions as anti-competitive.

In the U.S., over 20 cities and counties sued the FCC in federal courts questioning the FCC's authority.  Moreover, several mobile service providers have filed petitions for review in appellate courts, alleging that the failure to include a "deemed granted" remedy for the expiration of the regulatory deadlines was arbitrary and capricious.  The cases have been consolidated and transferred to the Ninth Circuit.  The petitioners' motion to stay the Order pending the outcome of litigation was denied, and the Order has been effective since 14 January 2019.