Why Is the Supreme Court Talking to T-Mobile?

The Supreme Court will hear T-Mobile's case against a Georgia city, which could change how wireless companies receive cell tower permits.

May 6, 2014 at 1:00PM

Earlier this week, the Supreme Court said it would hear T-Mobile's (NASDAQ:TMUS) arguments on why local governments should provide reasons for why cellular tower permits are denied. While it may not change anything for T-Mobile's current tower permits, the implications could change policies for the entire U.S. wireless industry.

Make rejections more official
When T-Mobile and other carriers are denied a request for a new cell tower in a local municipality, a federal law requires that the company be told in writing and provided with the reasons why. The Supreme Court is now hearing T-Mobile's case because of a spat between the company and a town in Georgia, which denied T-Mobile a cell tower back in 2010.

Roswell council members said it provided the company with a denial in writing and that the reasons were evident in the council's public minutes. One of the council members said in a meeting that "other carriers apparently have sufficient coverage in this area,"and there weren't any laws requiring the city of Roswell to "level the field for inferior technology."

But T-Mobile disagreed that minutes from the meeting were sufficient and a federal court ruled in the company's favor and ordered the town to issue the permit. The disagreement between the city of Roswell and T-Mobile was similar to another permit denial the company experienced in Milton, Ga.

In the end, the federal court used the rule against the city of Roswell and said the town needed to provide T-Mobile with a cell tower permit. Not surprising, the city then appealed the ruling and now the issue has made its way to the Supreme Court.

The industry implications 
T-Mobile is obviously looking for a win in this case so it can build new towers and possibly access areas where it was previously denied. A ruling in its favor might enable carriers to win cell tower permits if a town incorrectly denies those permits. 

The Supreme Court won't hear T-Mobile's case until October, so don't expect any real news on the subject until later this year. For T-Mobile, it could ultimately mean a few extra towers in places they've previously been denied, which would obviously be a good thing for the company's network. But any ruling in T-Mobile's favor would be good for other wireless carriers as well, so it's not as if there's a huge upside to this if T-Mobile wins.

On the other hand, if the Supreme Court rules against T-Mobile, it could make it a bit harder for the company to win permits, but again the ruling would be applied to all wireless carriers. Investors shouldn't put too much stake into either ruling, but instead keep an eye out for how the company adapts to any changes once they're issued by the court.

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