This case raises several important questions concerning the burgeoning wireless telecommunications industry and the interpretation and application of the Telecommunications Act, 47 U.S.C. § 151 et seq. (TCA). Omnipoint is a wireless telecommunications provider that claims that there is a gap in the wireless telecommunications services available to remote users in Easttown Township, Pennsylvania. Omnipoint sued the Zoning Hearing Board (ZHB or Zoning Board) in the United States District Court for the Eastern District of Pennsylvania, claiming that the ZHB violated the prohibition and anti-discrimination provisions of the TCA by denying Omnipoint's request for a variance to locate a telecommunications tower in a residential district. See 47 U.S.C. § 332(c)(7)(B)(i). Furthermore, Omnipoint alleges that the ordinance under which its variance application was denied violates Pennsylvania law because it is either de jure or de facto exclusionary and fails to provide a "fair share" of Township land for telecommunications uses.

The District Court initially issued a writ of mandamus ordering the ZHB to grant a variance because the Court held that the ZHB decision relied exclusively on aesthetic concerns in its denial and not on substantial evidence supporting rejection. 72 F. Supp. 2d 512 (E.D.Pa.1999). We vacated this writ and remanded the case to the District Court for reconsideration in light of APT Pittsburgh Ltd. v. Penn Township, 196 F.3d 469 (3d Cir.1999). See Omnipoint Communications Enterprises, L.P. v. Zoning Hearing Bd. of Easttown Township, 248 F.3d 101 (3d Cir.2001) (Omnipoint I). On remand, Magistrate Judge Hart (MJ) denied Omnipoint's claims because he concluded that Omnipoint had failed to establish a "significant gap" or unreasonable discrimination under the TCA, or unconstitutional exclusion under Pennsylvania law. We affirm in part, vacate in part, and remand to the Magistrate Judge for further proceedings.

Omnipoint is a licensed provider of wireless digital telephone communications services. As such, it uses a low power radio signal that is transmitted between a portable telephone and an Omnipoint antenna. The antenna then feeds the radio signal to an electronic device that is located nearby. In turn, that device connects the signal to an ordinary telephone line and routes it anywhere in the world. The combination of antenna and equipment is known as a cell site. Because of the low radio signal used by Omnipoint, the range of the cell site is quite small. For example, in Easttown Township, the maximum coverage of a cell site is two miles. When a wireless communication facility (WCF) is not available to cover a specific geographic area, customers who live in or travel through that area will experience unreliable service, dropped calls, or an inability to connect to the Personal Communication Service (PCS) network.1

Omnipoint sought to place a PCS tower in Easttown Township because of the gap in its wireless service. Omnipoint hoped to construct a 110-foot stealth flagpole designed PCS tower, 24 inches in diameter at the base and tapering to 16 inches at the top.2 The fiberglass flagpole structure is designed to incorporate the telecommunications antennae which would be invisible from the outside. For this flagpole, Omnipoint leased space on land owned by the Or Shalom Synagogue, located in an area zoned as residential. Under Easttown's zoning ordinance, a communications tower is not a permissible use in residential districts and no residential structure may be higher than thirty-five feet.3

Omnipoint applied to Easttown Township's Zoning Hearing Board for use and height variances. It also challenged the validity of the zoning ordinance under Pennsylvania law and the TCA. Omnipoint alleged that the extant ordinance prohibited or effectively prohibited wireless service in violation of the TCA. ZHB held three public hearings on the applications at which a number of local citizens complained that the stealth tower would be an eyesore. ZHB issued a detailed written decision denying Omnipoint's application and stating that the ordinance was valid under both Pennsylvania and federal law.

The District Court granted Omnipoint's motion for summary judgment in part and ordered ZHB to grant Omnipoint's application. 72 F. Supp. 2d 512 (E.D.Pa.1999).4 We vacated that decision. On remand, the parties consented to have the case proceed in a bench trial before the U.S.M.J. See 28 U.S.C. § 636(c); Fed.R.Civ.P. 73.5 The parties supplemented the record with expert reports and testimony regarding telecommunications services in Easttown. Omnipoint's principal witness, radio frequency engineer Paul Dugan, supervised drive tests in which approximately six hundred forty actual calls were made using eight cell phones of various providers. Dugan asserted that a signal strength of "negative 85 dbm" was necessary for reliable service.6 On April 1, 2002, the MJ entered judgment in favor of ZHB. See 189 F. Supp. 2d 258 (E.D.Pa.2002). The MJ found that Omnipoint had failed to establish a correlation between the negative 85 dBm standard and users' actual ability to access the national telephone network. The MJ placed significant weight on his finding that mobile phones other than Omnipoint's experienced problems only 1.96% of the time in Easttown. See 189 F.Supp.2d at 265. He also concluded that the ordinance was not exclusionary. Omnipoint timely appealed.7

In Penn Township, we established a two-prong test to determine if the decision of a local zoning authority has "the effect of prohibiting the provision of personal wireless services." 47 U.S.C. § 332(c)(7)(B)(i)(II). A service provider must first "show that its facility will fill an existing significant gap in the ability of remote users to access the national telephone network." Penn Township, 196 F.3d at 480. If this burden is met, the provider must still prove "that the manner in which it proposes to fill the significant gap in service is the least intrusive on the values that the denial sought to serve." Id.

We now turn to the first prong of that test to determine whether there is a significant gap in the ability of remote users to access the national telecommunications network. We focus, therefore, on the service available to all remote users of all services in the specific area where Omnipoint asserts there is a significant gap in reliable service offered to remote wireless users by the existing providers. There must be a gap from the users' perspective, rather than from a particular provider's perspective. See Nextel W. Corp. v. Unity Township, 282 F.3d 257, 265 (3d Cir.2002). A gap in the service provided by one provider is not sufficient for a prohibition of service claim under 47 U.S.C. § 332(c)(7)(B)(i)(II) if the telecommunications needs of users in the community as a whole are served.

Regrettably, the MJ misapplied the Penn Township test here.8 The relevant figure to be analyzed in determining whether there is a significant gap is a consideration of all the existing remote users in the southern area of Easttown Township. Dugan testified: "I know without question that this area in Southern Easttown Township within the footprint of the proposed facility is currently lacking coverage." A consideration of all users must include existing Omnipoint users at the time of the inquiry. Omnipoint is not a newcomer: it is already an existing licensee in Easttown Township. Omnipoint has an existing facility in the business district. This is not a case where a newcomer seeks to have its potential customers calculated as existing users. On the contrary, it is a provider who seeks to expand its service to existing customers by remedying a significant gap in the southern area of Easttown Township.

The proper test, therefore, for determining whether there is a significant gap is to look at all wireless telephone users, including the plaintiff's customers. Instead, the MJ looked only at non-Omnipoint users and found that non-Omnipoint users experienced problems only 1.96% of the time in Easttown Township. See 189 F.Supp.2d at 265. Based on this finding, the Magistrate Judge erroneously concluded that Omnipoint had failed to carry its burden of proving a significant gap.

The relevant figure in the Penn Township analysis is the aggregate, including Omnipoint users and including calls outside Easttown Township, but within each provider's WCF's coverage area. Under the proper standard, the MJ's 1.96% figure understates the actual call failure rate. Omnipoint places the number at approximately 5.5%.9

Thus, Omnipoint may be able to carry its burden of showing a significant gap in service. Cf. Cellular Tel. Co. v. Zoning Bd. of Adjustment of Harrington Park, 90 F. Supp. 2d 557, 565 (D.N.J.2000) (holding that a call failure rate of five to seven percent is a significant gap). The statement in Penn Township that proof of a relevant gap in service requires a provider "to include evidence that the area the new facility will serve is not already served by another provider," is somewhat puzzling in light of the preceding statement pertaining to a provider's proof that its facility will fill an existing significant gap in the ability of remote users to access the national telephone network. Standing alone, evidence that an area "is not already served by another provider" would seem to prohibit any provider from serving an area already served by another provider. It would promote monopolization and thus conflict with the pro-competitive objectives of the TCA. Because Penn Township relied heavily on "the most thoughtful discussion [it] found in the recent opinion" in Sprint Spectrum, L.P. v. Willoth, 176 F.3d 630 (2d Cir.1999), we turn to that opinion for illumination.

The Willoth court described as "untenable" the proposition that "once personal wireless servers are available somewhere within the jurisdiction of a state or local government ... the state or local government could deny any further application with impunity." Id. at 641. Thus, the court did not intend to foreclose proof of a significant gap in service because of the mere presence of one or more telecommunication providers in the jurisdiction. The puzzling Penn Township statement—evidence that the area served by the new facility "is not already served by another provider"—can only refer to an area without any significant gap in service by an existing provider.

Any other interpretation effectively would allow the existence of older, less functional cellular networks to impede the development of new, digital technologies like PCS and undermine competition in the telecommunications industry, thereby impairing Congressional policy. That policy, as expressed in TCA, seeks to create a "procompetitive, de-regulatory national policy framework designed to rapidly accelerate private sector deployment of advanced telecommunication and information technologies and services to all Americans by opening all telecommunications markets to competition." H.R. Conf. Rep. No. 104-458, at 113 (1996), reprinted in 1996 U.S.C.C.A.N. 10, 124.

Therefore, this case will be remanded to the Magistrate Judge for reconsideration under the legal standard set forth in this opinion.10

The Magistrate Judge found as a fact that Omnipoint's stealth flagpole was the least intrusive of the possible alternatives. See 189 F.Supp.2d at 262. We do not disturb this finding because it is not "clearly erroneous." See Warner-Lambert Co., 204 F.3d at 89 n. 1. The Township cites the ZHB's original findings that Omnipoint considered few other sites and approached a horse farmer but did not follow up. ZHB's brief also criticizes Omnipoint for not engaging in studies to assess the visual and auditory impact of the flagpoles on the neighboring properties.

Magistrate Judge Hart found that the horse farmer was not interested in leasing the property and that Omnipoint considered other sites but did not choose them because Omnipoint was involved in unrelated litigation with the owners. See 189 F.Supp.2d at 262-63.11 Thus, the MJ's finding that the stealth flagpole was the least restrictive alternative is not clearly erroneous.

In Pennsylvania, a land use restriction is a valid exercise of a municipality's police power when it promotes public health, safety, and welfare and is substantially related to the purpose it purports to serve. See Kirk v. Zoning Hearing Bd. of Honey Brook, 713 A.2d 1226, 1229 (Pa. Commw.1998). A zoning ordinance is presumed valid and a party challenging it has a heavy burden of proving its invalidity. See Penn Township, 196 F.3d at 475. This presumption can be overcome by proof that the ordinance totally excludes an otherwise legitimate use. See Farrell v. Worcester Township Bd. of Supervisors, 85 Pa.Cmwlth. 163, 481 A.2d 986, 989 (1984).12 Exclusionary ordinances take two forms: de jure and de facto. De jure exclusion exists where "the ordinance, on its face, totally bans a legitimate use." Id. De facto exclusion exists "where an ordinance permits a use on its face, but when applied acts to prohibit the use throughout the municipality." Id.13 The MJ held that Easttown Township Ordinance 160-80 was neither de jure nor de facto exclusionary. We agree.

The ordinance is not facially exclusionary. As interpreted, it does not totally ban a legitimate use. Although the ordinance did not explicitly provide for telecommunications towers, the ZHB twice granted variances for telecommunications towers in the business district under a catch-all provision. 189 F. Supp. 2d at 266. Omnipoint argues that a telecommunications tower does not fall within the catch-all provision because it is not of the same "general character" as any of the enumerated uses. However, the ZHB's interpretation of a municipality's zoning ordinance is entitled to weight because it reflects the construction of a statute by an entity charged with its execution and application. See Sprint Spectrum v. Zoning Hearing Bd. of Mahoning Township, 46 Pa. D. & C.4th 187, 192 (CCP 2000). Furthermore, simply because an ordinance does not expressly permit a use does not necessarily mean that it negates that use. Cf. APT Pittsburgh Ltd. P'ship v. Lower Yoder Township, 111 F. Supp. 2d 664, 670 (W.D.Pa.2000). Otherwise, the TCA would force localities to enshrine every change in the telecommunications industry into local ordinances at an unrealistically rapid rate. See id.

The ordinance was not de facto exclusionary either. Omnipoint argues that the height restrictions contained in the zoning ordinance effectively prohibit the establishment of functional telecommunication facilities in Easttown Township. The ordinance contained a thirty-five foot height restriction in residential areas and a fifty-foot height restriction in business districts. See 189 F.Supp.2d at 267. The Magistrate Judge rejected this argument because the ZHB had previously granted height variances for communications facilities. Id. at 268; see also Penn Township, 196 F.3d at 476 (explaining that "to succeed in its exclusionary zoning claim ... [the Plaintiff] had to prove that no other telecommunications provider, including itself, could build a functional tower ...").14

Omnipoint's alternative argument under the "fair share" principle also fails. The "fair share" principle applies when an ordinance only partially excludes a land use. An ordinance is exclusionary when a municipality fails to provide for its "fair share" of a legitimate land use such as multi-family dwellings. See Surrick v. Zoning Hearing Bd. of the Township of Upper Providence, 476 Pa. 182, 382 A.2d 105 (1977). Local political units must plan for and provide land-use regulations that meet the legitimate needs of all categories of people who may desire to live within its boundaries. See id. at 108.15

Omnipoint contends that East-town Township fails to provide a "fair share" allowance for telecommunications uses. The B-Business District comprises only 1.1% of the total area of Easttown Township.16 The relevant inquiry is whether Omnipoint has carried its "heavy burden" of showing that the needs of the community's residents are not being adequately served. See Montgomery Crossing Assoc. v. Township of Lower Gwynedd, 758 A.2d 285, 289 (2000); Schubach v. Silver, 461 Pa. 366, 336 A.2d 328, 335 (1975). Other telecommunications providers have been able to serve the needs of their customers by placing towers within the business district. To overcome the presumption that the ordinance is constitutional, Omnipoint would have had to show a causal link between the small area of land zoned for business use and the community residents' inability to meet their needs. This, it failed to do.

In its original complaint, Omnipoint alleged that ZHB's denial of Omnipoint's application constituted a violation of 47 U.S.C. § 332(c)(7)(B)(i)(I) because ZHB unreasonably discriminated against "providers of functionally equivalent services." Judge Katz denied this claim on the ground that Omnipoint had not shown discrimination, reasonable or otherwise. See 72 F.Supp.2d at 515 n. 3. In its cross-appeal of Judge Katz's decision, Omnipoint did not include the court's finding on the discrimination issue. Omnipoint I, 248 F.3d at 103. The MJ ruled that this discrimination issue was not properly before him because it had not been presented to the panel on the first appeal. See 189 F.Supp.2d at 270.

Omnipoint argues that a cross-appeal is only required when the appellee advances an issue on appeal that aspires to alter the trial court's decision. Cf. New Castle County v. Hartford Accident & Indem. Co., 933 F.2d 1162, 1205 (3d Cir. 1991). Appellee is free to assert any alternative theory in support of the District Court's decision, even without a formal cross-appeal. See id.; see also Scott v. Univ. of Delaware, 601 F.2d 76, 91-92 (3d Cir.1979) (Adams, J., concurring).

The discrimination issue is properly before us and we now reject Omnipoint's argument on the merits. The TCA prohibits unreasonable discrimination against "providers of functionally equivalent services." 47 U.S.C. § 332(c)(7)(B)(i)(I). The TCA does not prohibit all discrimination against providers, only unreasonable discrimination. See AT & T Wireless PCS v. Virginia Beach, 155 F.3d 423, 427 (4th Cir.1998).

In Nextel, we explained that the purpose of the "unreasonable discrimination" language of § 332(7)(B)(i)(I) is to ensure that once the municipality allows the first wireless provider to enter, the municipality may not unreasonably exclude subsequent providers who similarly wish to enter and create a competitive market in telecommunications services. See Nextel, 282 F.3d at 264 n. 6. Nextel creates a two-part test for determining if a zoning board has unreasonably discriminated. First, the plaintiff must show that the relevant providers are functionally equivalent. Second, the plaintiff must show that the government body unreasonably discriminated. Id. at 266.

The equivalency of function relates to the telecommunications services the entity provides rather than to the technical particularities of its operations. See id. at 266 n. 13. We hold that Omnipoint is functionally equivalent to the other telecommunications providers that were granted variances in Easttown Township.

Omnipoint's discrimination claim fails under the second part of the test. Permitting the erection of a communications tower in a business district does not compel the ZHB to permit a similar tower at a later date in a residential district. See Sprint Spectrum L.P. v. Willoth, 176 F.3d 630, 639 (2d Cir.1999); see also H.R. Conf. Rep. 104-458, at 208, reprinted in 1996 U.S.C.C.A.N. at 222 ("the conferees do not intend that if a State or local government grants a permit in a commercial district, it must also grant a permit for a competitor's 50-foot tower in a residential district"). The two communications towers that existed in Easttown at the time of Omnipoint's application were both located in areas zoned for business rather than residential use. See 72 F.Supp.2d at 515 n. 3. Thus, the ZHB's denial was not unreasonable and Omnipoint's § 332(c)(7)(B)(i)(I) challenge fails.17

Omnipoint dedicates a significant portion of its brief to a direct attack on Penn Township. It points to the TCA, which seeks to create a "pro-competitive, de-regulatory national policy framework designed to rapidly accelerate private sector deployment of advanced telecommunication and information technologies and services to all Americans by opening all telecommunications markets to competition." H.R. Conf. Rep. No. 104-458, at 113 (1996), reprinted in 1996 U.S.C.C.A.N. 124; see also Nextel, 282 F.3d at 264 n. 6. Omnipoint argues that Penn Township undermines Congress' purpose of creating a competitive market for telecommunications services and has the effect of privileging first entrants with antiquated technology over subsequent entrants who could promote consumer welfare by creating competition and offering superior services. We decline to address this question because a panel cannot overrule existing Third Circuit precedent. See 3d Cir. Internal Operating Proc. 9.1.

Accordingly, the Magistrate Judge's order granting summary judgment for the ZHB is affirmed except as to its holding that there is no significant gap in telecommunications service in Easttown Township. As to this holding, we remand to the Magistrate Judge for further proceedings consistent with this opinion. Two-thirds of the costs are taxed against the appellant.

SLOVITER, Circuit Judge, Concurring.

I have reservations that the majority's decision remanding so that evidence of problems faced by Omnipoint users may be included in the determination whether there is a significant gap may not be consistent with our holding in APT Pittsburgh Ltd. v. Penn Township, 196 F.3d 469 (3d Cir.1999). If every licensee who seeks to construct a communications tower were able to compel recalculation of the evidence as to the availability of wireless communications services to remote users because its users have a dead spot in communications, the Township Zoning Boards may receive numerous such requests for a new study which may entail additional time and expense. Moreover, the residential areas may be populated by unsightly towers, however disguised. This situation was addressed by the Penn Township court as follows:

[I]t is necessary for the provider to show more than that it was denied an opportunity to fill a gap in its service system. In order to show a violation of subsection 332(c)(7)(B)(i)(II) under Willoth, an unsuccessful provider applicant must show two things. First, the provider must show that its facility will fill an existing significant gap in the ability of remote users to access the national telephone network. In this context, the relevant gap, if any, is a gap in the service available to remote users. Not all gaps in a particular provider's service will involve a gap in the service available to remote users. The provider's showing on this issue will thus have to include evidence that the area the new facility will serve is not already served by another provider.

Second, the provider applicant must also show that the manner in which it proposes to fill the significant gap in service is the least intrusive on the values that the denial sought to serve. This will require a showing that a good faith effort has been made to identify and evaluate less intrusive alternatives, e.g., that the provider has considered less sensitive sites, alternative system designs, alternative tower designs, placement of antennae on existing structures, etc.

Id. at 480 (emphasis added) (footnote omitted).

Omnipoint appears to present precisely the situation encompassed by the above language in Penn Township. Moreover, the fact that Omnipoint failed to raise the issue of the gap calculation in its principal brief and reserved it for its reply brief when the Township Zoning Board did not have the opportunity to answer suggests that it was an afterthought. It is not clear whether this argument as to the gap calculation was raised before the Magistrate Judge at some time. It was not raised at the hearing and is not considered in his comprehensive opinion.

Nonetheless, I concur because it is clear from the majority's opinion that on remand the Township Zoning Board will have the opportunity to challenge Omnipoint's calculations. Under the circumstances, I urge the Magistrate Judge to give the Township ample leeway to do so.