Cable, Telcos Urge FCC To Push Pole Rates Down; Utilities Disagree

Cable and telco interests are pressing the FCC to take further steps to harmonize at lower levels the pole-attachment rates they pay, while power companies, which own most of the poles, oppose such changes, according to comments filed Thursday in docket 07-245 responding to a commission public notice. FCC action is needed to reduce some pole-attachment rates for telecom providers and prevent rate hikes for cable companies now classified as telecom providers, the cable and telco parties said. But power companies said they must be able to recover their costs and warned that new FCC action lowering rates could prompt further litigation.

NCTA, which along with Comptel and Level 3 asked the FCC to reconsider a 2011 pole-attachment order's cost-allocation formula, said granting its petition would "promote broadband deployment by ensuring that all broadband providers are eligible for the lowest possible pole-attachment rates, while still fairly compensating pole owners." The 2011 order aimed to drive down traditionally higher telecom pole-attachment rates to levels paid by cable operators. But NCTA and others said the gap sometimes remained because power companies challenge FCC assumptions about the number of lines attached to their poles (of five and three lines in urban and rural areas, respectively), which helps determine the per-line costs/rates.

Comptel and Level 3 said that unlike the cable formula, the FCC's 2011 telecom formula included a rebuttable presumption on the number of attaching parties. "So when a pole owner calculates a rate for telecommunications providers using fewer attaching parties than the Commission's presumptions, a telecommunications carrier can be charged upwards of 70% more than a cable operator to attach to the same pole," Comptel and Level 3 said. Verizon said power companies were frustrating the intent of the FCC with inputs that "inflate" the telecom rate.

In order to harmonize the telecom and cable rates at lower levels, NCTA urged the FCC to "specify the cost allocator to be used in all cases, whether or not the presumptions are used." The American Cable Association, Comcast, Comptel, ITTA, Level 3 and Verizon all backed the NCTA push.

The cable parties also voiced concern that power companies will be able to demand cable companies pay the higher telecom rates for virtually all their pole attachments because of the commission's recent net neutrality order reclassifying broadband access as a telecom service under Title II of the Communications Act. ACA said its members were already receiving notice from power companies that they would be charged the higher telecom rates. Comcast noted an NCTA estimate that cable could pay more than $200 million extra annually. NCTA noted the FCC had cautioned in its order against any such rate hikes as "unacceptable as a policy matter."

One communications attorney voiced optimism the FCC will take steps to prevent power companies from raising pole-attachment rates. “The FCC signaled in the Open Internet order where it wants to go with this. It does not want to see rate increases,” said the attorney. “This is simple addition. If the FCC doesn’t fix this, rates will go up.” A telecom attorney said FCC action to shield broadband providers from rate increases could be seen as “low hanging fruit.”

In joint comments opposing the NCTA petition, six power companies said the broadband reclassification gave the FCC the opportunity to unify telco and cable pole-attachment rates under a single telecom rate. However, they said it would not only be unfair to do so at a lower rate, but it wouldn't promote broadband because pole-attachment costs constitute less than 1 percent of cable/telco operating costs. "The Commission should decline petitioners’ invitation to 'pile on' through further reductions to an already-reduced rate that has little bearing on broadband deployment," said Ameren, American Electric Power Service, Duke Energy, Oncor Electric Delivery, Southern Company and Tampa Electric.

The power companies said the FCC's 2011 order, which they had unsuccessfully challenged in court, had cost them millions of dollars already in cost recovery. While the FCC had some discretion to interpret the meaning of "cost," adopting petitioners' proposal "would render the space allocation in Section 224(e)(2) completely inoperative and superfluous" and "violate basic cannons of statutory construction," they said. Any further changes should be considered in a new rulemaking, they said.

The Utilities Telecom Council said broadband deployment hadn't accelerated since the 2011 order despite pole-attachment rate reductions, but the cost of broadband service to consumers had gone up as the pole-attachment savings weren’t being passed along. "All of the promised benefits of reduced rates for pole attachments have proven empty," UTC said. "Now, the same industry that promised those benefits is claiming that if the Commission doesn't further revise the telecom rate formula that utilities will raise their rates and providers won't be incented to deploy broadband." Power company representatives had no additional comment.

Wireless interests also weighed in. PCIA supports the recon petition, the wireless infrastructure group said. Since the FCC’'s 2011 order was issued, distributed antenna system providers have seen “increased efficiencies in the pole-attachment process, including lower, more equitable attachment rates, increased use of pole tops, and improved predictability in the design and implementation of DAS,” PCIA said. The petition would move the rules another step in the right direction, producing telecom attachment rates that ‘generally will recover the same portion of pole costs as the current cable rate, PCIA said.

Crown Castle, which owns and operates more than 40,000 towers and 11,000 DAS and small cell installations, also supported changes to the rules. Crown Castle said it makes frequent use of utility poles and has worked out some 300 current agreements nationwide. Crown Castle has found many utilities willing to negotiate reasonable rates, but there are exceptions, including one Midwestern electric utility that insists that pole-top attachment rates aren't covered by the FCC. The utility’'s proposed pole-top attachment rate is $2,000 annually, “nearly 200 times the telecom attachment rate of $10.07 urban or $10.13 rural,” Crown Castle said. A different operating utility affiliate of the same utility holding company wants to charge $1,500 per pole-top, more than 167 times the fiber rate of $8.96, the company said.

UTC said if rates were actually rising, cable/telco companies would have filed complaints. However, Crown Castle said that while it and other potential attachers can pursue the FCC complaint process, the commission's time and resources should be reserved to adjudicate good-faith disputes, not to address disputes caused by utilities ignoring the rules.