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The FCC Should Quickly Implement the Pole Attachment Recommendations in the National Broadband Plan to Encourage Broadband Deployment, While Fairly Compensating Pole Owners

Pole attachment fees are a significant cost associated with deploying and operating broadband networks. To facilitate broadband deployment, the National Broadband Plan (NBP) recommends that rates for pole attachments “be as low and as close to uniform as possible.” After emphasizing that the cable rate formula (articulated in Section 224(d) of the Communications Act) is “just and reasonable” and “fully compensatory for utilities,” the NBP recommends that the Federal Communications Commission (FCC) “revisit its application of the telecommunications carrier rate formula to yield rates as close as possible to the cable rate.”

NCTA supports this recommendation and other infrastructure-related NBP recommendations, including amending Section 224 to require cost-based rates from all pole owners, improving pole attachment and make-ready dispute resolutions, improving coordination of government construction projects, and reducing fees for access to federal property.

For over 30 years, the courts, the FCC, and state regulators have repeatedly found that the cable rate formula fully and fairly compensates pole owners for pole costs.

The Supreme Court, many other courts, the FCC, and state regulators have upheld the formula used to calculate cable pole attachment rates as just and reasonable. They all have found that the rate fully compensates utilities for the appropriate amount of all pole-related costs attributable to the attaching party, including administrative, maintenance, and tax expenses, as well as depreciation and a rate of return (see attached list of cases). The FCC, with the approval of the Supreme Court, has determined that the cable rate formula is also appropriate for attachments that are also used for cable broadband service. In addition to allowing for fair rent payments, the cable formula provides the flexibility necessary for pole owners to recover extraordinary costs (like those incurred from weather events like ice storms, hurricanes and tornados). Attaching parties also separately pay the pole owner for the “make-ready” costs attributable to attachment of facilities on the pole.

The cable rate formula encourages broadband deployment, particularly in rural areas with low household densities, and should be applied to all similarly situated broadband providers.

The pole attachment rate formula applicable to cable modem service has been a success and has helped enable cable operators to reach 93% of the country. Deployment of new facilities and upgrades to existing service will continue to be needed, so the FCC must ensure that broadband providers continue to pay only the reasonable costs for attachments. Applying this formula to all similarly situated broadband providers will further encourage broadband deployment. Conversely, applying the telecom rate formula to cable operators would overcompensate pole owners and double or triple the rate cable operators pay for every pole attachment used in providing broadband service. This approach would penalize past investments in broadband by raising the associated pole attachment rates and discourage future investments, especially in rural areas where the ratio of homes passed to poles is greatest.

FCC rules already ensure that the safety and integrity of poles are protected.

Safety and reliability of the electrical grid and the broadband networks are of paramount concern to pole attachers, utilities and consumers. Accordingly, FCC rules expressly allow utilities to deny access to poles “for reasons of safety, reliability and generally accepted engineering purposes.” Ensuring fair attachment rates for broadband will not compromise safety and integrity.

Over the past three decades, the current cable pole attachment regime has facilitated the growth and development of cable networks while ensuring fair compensation for pole owners. It has been consistently upheld despite repeated challenges by electric utilities. NCTA supports the NBP’s conclusion that all similarly situated broadband providers should have the opportunity to attach under the same rates, terms, and conditions that pole owners currently make available to cable operators.

Examples of FCC, State and Court Decisions Confirming the Reasonableness of Cable Rate Formula

Supreme Court
NCTA v. Gulf Power, 534 U.S. 327 (2002) – affirming FCC decision to apply the cable rate formula to attachments used by a cable operator to provide broadband services
FCC v. Florida Power, 480 U.S. 245 (1987) – finding that FCC regulation of pole attachment rates is not an unconstitutional taking of property and that the cable rate formula is not confiscatory

Courts of Appeals
Alabama Power v. FCC, 311 F.3d 1357 (11th Cir. 2002), cert. denied, 124 S.Ct. 50 (2003) – affirming FCC’s decision that utility’s rates were unreasonable and that the cable rate formula provides just compensation and is not an unconstitutional taking of property
Southern Co. Services v. FCC, 313 F.3d 574 (D.C. Cir. 2002) – affirming FCC’s implementation of changes to Section 224 that were adopted as part of the Telecommunications Act of 1996
Texas Utilities Electric Co. v. FCC, 997 F.2d 925 (D.C. Cir. 1993) – affirming FCC’s decision to apply cable rate formula to non-video attachments
Monongahela Power v. FCC, 655 F.2d 1254 (D.C. Cir. 1981) – affirming FCC’s original rules implementing the cable rate formula contained in Section 224(d)

Federal Communications Commission

A) Rulemakings

Implementation of Section 703(e) of the Telecommunications Act of 1996; Amendment of Rules and PoliciesGoverning Pole Attachments, 16 FCC Rcd 12103 (2001) (Consolidated Reconsideration Order) – rejecting utilities’ arguments that regulation of pole attachment agreements no longer is necessary and reaffirming the validity and importance of the FCC’s rate formulas
Implementation of Section 703(e) of the Telecommunications Act of 1996; Amendment of Rules and Policies Governing Pole Attachments, 15 FCC Rcd 6453 (2000) (Fee Order) – reaffirming the use of rate formulas based on historical costs and declining to modify the usable space presumptions
Implementation of Section 703(e) of the Telecommunications Act of 1996; Amendment of Rules and Policies Governing Pole Attachments, 13 FCC Rcd 6777 (1998) (Telecom Order) – establishing the telecom rate formula and deciding that the cable rate formula will continue to apply when a cable operator provides commingled cable and Internet services
Amendment of Rules and Policies Governing the Attachment of Cable Television Hardware to Utility Poles, 2 FCC Rcd 4387 (1987) – making minor adjustments to the cable rate formula and clarifying that make-ready fees may not recover costs already recovered in the annual pole rental fee
Petition to Adopt Rules Concerning Usable Space on Utility Poles, 56 Rad. Reg. 2d 707 (1984) – declining to reconsider assumptions underlying the cable rate formula adopted in 1978-80

B) Adjudications*

FCTA v. Gulf Power, 22 FCC Rcd 1997 (ALJ 2007) – rejecting utility arguments that poles were at full capacity and therefore it was appropriate to charge an unregulated attachment rate
FCTA v. Gulf Power, 18 FCC Rcd 9599 (EB 2003) – granting complaint that utility violated FCC rules by unilaterally imposing attachment rate and finding that payment of rent based on cable rate formula plus make-ready expenses exceeds just compensation
Teleport Communications Atlanta v. Georgia Power, 16 FCC Rcd 20238 (EB 2001), affirmed 17 FCC Rcd 19859 (2002) – granting complaint that utility violated FCC rules by using its own formula to calculate pole attachment rates rather than using cable or telecom rate formula and reaffirming that both formulas provide just compensation to pole owners
RCN Telecom Services of Philadelphia, Inc. v. PECO Energy Co., 17 FCC Rcd 25238 (EB 2002) – rejecting utility’s $47.25 pole attachment rate as unjust and unreasonable and calculating a maximum just and reasonable annual cable rate of $6.79 per pole attachment
Nevada State Cable Television Ass'n v. Nevada Bell, 17 FCC Rcd 15534 (EB 2002) – affirming a Cable Services Bureau Order that calculated a maximum per pole attachment rate of $1.26 for poles owned by Nevada Bell
Cable Television Ass'n of Georgia v. BellSouth Telecommunications, 17 FCC Rcd 13807 (EB 2002) – finding unjust and unreasonable an annual pole attachment rate of $5.03 and setting the proper rate at $4.27
ACTA v. Alabama Power, 15 FCC Rcd 17346 (EB 2000), affirmed 16 FCC Rcd 12209 (2001) – granting complaint that utility’s proposed attachment rate was unreasonable and affirming that cable rate formula plus the payment of make-ready expenses provides the pole owner with compensation that exceeds the just compensation required under the Constitution
TCTA v. GTE Southwest, 14 FCC Rcd 2975 (CSB 1999) – reaffirming that a utility cannot recover in make-ready charges any costs that it recovers through the annual pole fee
Time Warner Entertainment v. Florida Power & Light Co., 14 FCC Rcd 9149 (CSB 1999) – rejecting a pole attachment rate of $6.00 as unjust and unreasonable and calculating the maximum just and reasonable rate at $5.79 per pole
Texas Cable & Telecommunications Association, et al. v. Entergy Services Inc., et al., 14 FCC Rcd 9138 (CSB 1999) – ordering Entergy to reimburse cable company complainants the difference between the parties prior negotiated rate of $3.50 and a non-negotiated rate of $4.34 per pole charged by Entergy
Heritage Cablevision v. Texas Utilities Electric Co., 6 FCC Rcd 7099 (1991) – finding that it is unreasonable for a pole owner to charge a cable operator higher pole attachment rates for attachments that carry commingled cable and data services; see also Selkirk Communications v. Florida Power & Light, 8 FCC Rcd 387 (CCB 1993); WB Cable Assoc. v. Florida Power & Light, 8 FCC Rcd 383 (CCB 1993)

State Public Utility Commissions

Alaska
In the Matter of the Consideration of Rules Governing Joint Use of Utility Facilities and Amending Joint-Use Regulations Adopted Under 3 AAC 52.900 – 3 AAC 52.940, Order Adopting Regulations, 2002 Alas. PUC LEXIS 489 (Alas. PUC Oct. 2, 2002) – finding that the cable rate formula “provides the right balance given the significant power and control of the pole owner over its facilities” and that “changing the formula to increase the revenues to the pole owner may inadvertently increase overall costs to consumers . . . .”
California
Order Instituting Rulemaking on the Commissions Own Motion Into Competition of Local Exchange Service, R.95- 04-043, I.95-04-044, Decision 98-10-058, 1998 Cal. PUC LEXIS 879, pp. 53-56, 82 CPUC 2d 510 (Oct. 22, 1998)
(internal citations omitted) – finding “that the adoption of attachment rates based on the [cable rate] formula provides reasonable compensation to the utility owner, and there is no basis to find that the utility would be lawfully deprived of any property rights.”
Connecticut
Petition of the United Illuminating Company for a Declaratory Ruling Regarding Availability of Cable Tariff Rate for Pole Attachments by Cable Systems Providing Telecommunications Service and Internet Access, Docket No. 05-06-01, pp. 5-6, 2005 Conn. PUC Lexis 295 (Dep’t of Pub. Util. Control 2005) – upholding cost-based attachment rate and finding that the provision of additional services by a cable operators does not impose costs on the pole owner.
District of Columbia
Formal Case No. 815, In the Matter of Investigation Into The Conditions For Cable Television Use of Utility Poles In The District of Columbia, Order No. 12796 (2003) – finding that FCC regulations should be followed in determining reasonable rates
Massachusetts
A Complaint and Request for Hearing of Cablevision of Boston Co., D.P.U./D.T.E. 97-82 at 18-19 (Apr. 15, 1998) – finding that FCC formula “meets Massachusetts statutory standards as it adequately assures that [the utility] recovers any additional costs caused by the attachment of [] cables . . . while assuring that the [attachers] are required to pay no more than the fully allocated costs for the pole space occupied by them.”
Michigan
In the Matter of the Application of Consumer Power Company, Case Nos. U-10741, U-10816, U-10831 at 27, 1997 Mich. PSC Lexis 26 (1997), rehg denied, 1997 Mich. PSC LEXIS 119 (April 24, 1997), affd Detroit Edison Co. v. Mich. Pub. Serv. Commn, No. 203421 (Mich. Court of Appeals, Nov. 24, 1998); affd Consumers Energy Co. v. Mich. Pub. Serv. Commn, No. 113689 (Mich. Sup. Ct. Aug. 31, 1999) – adopting FCC standard and finding that the FCC cable rate formula aligns pole rates in Michigan “more closely with other states that already adhere to this standard.”
New Jersey
Regulations of Cable Television Readoption with Amendments: N.J.A.C. 14:18, Docket No. CX02040265 (2003) – affirming use of a cost-based attachment rate and adopting the FCC formula
New York
In the Matter of Certain Pole Attachment Issues Which Arose in Case No. 94-C-0095, 997 N.Y. PUC Lexis 364 (1997) – adopting FCC approach to pole attachments
Proceeding on Motion of the Commission as to New York State Electric & Gas Corporations Proposed Tariff Filing to Revise the Annual Rental Charges for Cable Television Pole Attachments and to Establish a Pole Attachment Rental Rate for Competitive Local Exchange Carriers, Case 01-E-0026 (2001) – rejecting a higher telecom rate formula based on concerns that competition would suffer
Ohio
Re: Columbus and Southern Electric Company, 50 PUR 4th 37 (1982) – adopting the FCC cable formula for attachments by cable operators
Oregon
Oregon Rulemaking to Amend and Adopt Rules in OAR 860, Divisions 024 and 028, regarding Pole Attachment Use and Safety, AR 506; 510 at p. 10 (2007) – adopting FCC cable rate formula and finding that “the cable formula has been found to fairly compensate pole owners for use of space on the pole.”
Utah
In the Matter of an Investigation into Pole Attachments, 2006 Utah PUC Lexis 213 (2006) – adopting the FCC cable rate formula following a comprehensive pole attachment rulemaking, later codified at UTAH ADMIN. CODE R746- 345-5(A) Pole Attachments (2006).
Vermont
Vermont Policy Paper and Comment Summary on PSB Rule 3.700 (2001) at 6 – finding that a reduction in pole attachment costs to cable companies will lead to increased deployment of advanced services and “lead to cable services becoming available in some additional low-density rural areas. . . . [Thus creating] even more value for Vermonters as cable TV companies are increasingly offering high-speed Internet service to new customers.”

* This list only includes examples of adjudications following the Supreme Court’s 1987 decision in Florida Power. There are literally dozens of decisions prior to Florida Power applying the cable rate formula and finding that rates proposed by utilities were unreasonable.

 

Article Source: http://www.ncta.com/IssueBriefs/Pole-Attachments.aspx?view=2