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FCC Proposes Vast Changes to the Federal Regulatory
Scheme Governing Cable, Broadband and Telecommunications Pole
Attachment Rates, Terms and Conditions
By Maria
T. Browne, Jill
M. Valenstein, James
W. Tomlinson, and Chris
Fedeli
[November 2007]
On Nov.
20 the FCC released a Notice of Proposed Rulemaking (NPRM) addressing
pole attachment rental rates, certain terms and conditions of
pole access, and whether Incumbent Local Exchange Carriers (ILECs)
are entitled to the protections of Section 224 of the Communications
Act ("Pole Act"). The NPRM puts in play long-standing
FCC rules and regulations, including the well-established "cable
rate" formula, and proposes to reconsider and possibly
revise significant aspects of the long-settled cost-based approach
to setting pole rates. Although the FCC reached different conclusions
in earlier rulemakings, the momentous changes and rate increases
proposed in the NPRM are purportedly based on the FCC's obligation
to promote competition and the deployment of broadband infrastructure.
The NPRM
was adopted in response to two separate rulemaking petitions.
The first petition, submitted in Oct. 2005 by the United States
Telecommunications Association (USTA), requests the FCC to permit
ILECs to seek recourse at the FCC when negotiations with electric
pole owners fail, and to adopt the "telecom rate"
formula as the "just and reasonable" default rate
for ILECs when attaching their facilities to electric utility
poles. The second petition, filed by Fibertech Networks in Dec.
2005, requests that the FCC adopt "seven standard practices"
to facilitate pole and conduit access for third-party attachers.
In addition, Time Warner Telecom, Inc. filed a "White Paper"
earlier this year in both proceedings, advocating a single rate
formula for cable and telecommunications attachments "in
order to remove regulatory bias from investment decisions regarding
deployment of broadband and other services."
Pole attachment rates
The NPRM
tentatively concludes that the rate for pole attachments used
for "broadband Internet access service" should be
a single rate that is "higher than the cable rate, yet
no greater than the telecommunications rate." This proposal,
if adopted, would result in higher rates for cable operators
providing video and cable modem service and would reverse the
FCC's 1998 decision (upheld by the Supreme Court in the Gulf
Power decision) to apply the cable rate to attachments by cable
operators offering broadband Internet access services. The NPRM
appears to preserve the "cable rate" for attachments
"solely used to provide cable service."
The Commission
asks for extensive data relevant to its reassessment of pole
attachment rental rates. Specifically, the Commission requests
data about the difference in pole attachment rates paid by cable
operators, CLECs and ILECs, as well as the number of poles being
used by these entities. The Commission also requests data on
the average number of attaching entities on utility poles-a
figure that has a strong and direct bearing on calculating telecom
pole attachment rates because that rate includes additional
allocation of costs related to unusable space based on the number
of attachers. Poles with more attachers have lower rates than
poles with fewer attachers.
The NPRM
asks whether the cable rate fairly compensates pole owning utilities
and should continue to apply when cable operators provide services
in addition to cable. However, the Supreme Court, the D.C. and
Eleventh Circuits, the FCC, and an FCC ALJ have all answered
these questions in the affirmative (indeed finding in some cases
that the cable rate more than justly compensates pole owning
utilities for hosting third-party attachments) as utility challenges
to FCC rules and adjudications on rates, terms and conditions
have been raised over the years. Nevertheless, the NPRM expresses
an assumption that the cable rate is somehow a "subsidized"
rate.
The NPRM
also seeks comment on how a single rate for both cable and telecom
attachments could be implemented when the statute calls for
two rates, citing heavily to arguments raised by Time Warner
Telecom in its White Paper. While the FCC dismisses Time Warner
Telecom's argument that the single rate it proposes should be
the cable rate, the FCC does cite to TWT's argument that the
statute requires nondiscrimination in rates as support for the
FCC's own proposal to adopt a single rate, however a rate that
would fall somewhere above the cable but goes no higher than
the telecom rate. In a separate statement, Commissioner Mc Dowell
expressed concern that the FCC's statutory obligations be met,
recognizing that Section 224 contemplates two different rental
rates for cable system and telecommunications carrier attachments.
The Commission
also inquires about how pole attachment rates affect the deployment
of broadband services, and how the differences in pole attachment
fees paid by the various communications providers affect competition-e.g.,
between cable and telecom companies.
The NPRM
does not address whether VoIP should be classified as a telecommunications
service for pole attachment rental purposes. However, the issue
would be rendered moot for pole rental purposes if the FCC ultimately
rules that the provision of cable broadband Internet service
subjects all system attachments to a single higher pole attachment
rate.
ILEC rights and rates under section 224
In response
to the USTA Petition, the FCC asks whether ILECs are correct
that they are eligible to invoke the FCC's complaint procedures
and obtain the same telecommunications pole rate as other non-ILEC
third party attachers. Although the Pole Act excludes ILECs
from specific protections of Section 224, and the ILECs' ownership
of poles themselves has historically provided protection against
electric utility abuses, USTA argued that non-parallel terms
in certain sections of Section 224 indicated that Congress did
not intend to exclude ILECs from all rights to just and reasonable
pole attachment rates, terms and conditions under Section 224.
The FCC asks for comment on this interpretation and its authority
to grant ILECs relief.
Wireless attachments
The FCC
has previously ruled that devices used by wireless and telecommunications
providers, such as antennas and related equipment, constitute
"attachments" that are entitled to the protections
of Section 224, a decision that was upheld by the U.S. Supreme
Court in NCTA v. Gulf Power. In the NPRM, the Commission requests
comment on the rates applied to wireless attachments, specifically
whether it should adopt a rate formula specifically for wireless
pole attachments or whether a wireless pole attachment rate
should be a multiple of the per foot telecommunications rate
based upon the amount of space occupied. The Commission also
asked if pole owners should receive a higher attachment rate
for pole-top access. As discussed below, the Commission also
requested broad comment on safety and reliability issues pertaining
to third-party attachments as well as make-ready and access
conditions, which may impact wireless providers' access to poles
and specifically pole-tops.
Make-ready and access conditions
The FCC's
pole regulations currently have limited provisions regarding
the terms and conditions of access and the process of modifying
poles and conduit to accommodate third party attachments-i.e.,
the make-ready process. Such matters typically have been determined
on a case-by-case basis through adjudications at the FCC. Fibertech
raised the reasonableness of utilities' pole access conditions,
citing poor performance by utilities including delayed response
times and the prohibition of certain construction techniques.
The Commission broadly requests comment on a number of issues
relating to make-ready and the terms and conditions of access,
including: surveys of poles and conduits; timeliness in the
performance of make-ready; the use of specific construction
practices such as boxing and extension arms; the use of contractors
to perform make-ready work; access to in-building ducts, conduits
and rights-of-way; the use of drop poles; and other issues pertaining
to the process of obtaining access to utility poles. In addition
the FCC seeks comment on whether it should modify the process
by which attachers have signed agreements to gain access, but
are still afforded the right to challenge rates, terms and conditions
in order to not be forced to forego access and the ability to
provide service while the FCC adjudicates a complaint.
The Commission
also requests broad comment on "practices of attachers
that have the potential to adversely impact the safety and reliability"
of electric power delivery, including the prevalence of unauthorized
attachments. The Commission requests comment on whether the
Commission should adopt and enforce specific safety requirements
or safety codes such as the NESC. Finally, the Commission requests
comment on whether rules, presumptions and guidelines are preferable
to case-specific adjudications on safety issues. As a final
matter on the adjudications issue, the NPRM requests comment
on how the FCC might expand the use of pre-complaint mediation
to help resolve pole attachment disputes without the need for
commencing the adjudicative process.
Comments
are due 30 days after publication of the NPRM in the Federal
Register, which has not yet occurred. Davis Wright Tremaine
will be filing comments in this proceeding on behalf of its
clients. Please let us know if you would like further information
regarding the NPRM, and if you would like to participate in
comments we will be filing with the FCC.
For more information, please contact:
Paul
Glist, Washington, D.C., (202) 973-4200, paulglist@dwt.com
Wes
Heppler, Washington, D.C., (202) 973-4200, wesheppler@dwt.com
John
Seiver, Washington, D.C., (202) 973-4200, johnseiver@dwt.com
Jay
Ireland, Washington, D.C., (202) 973-4200, jayireland@dwt.com
Maria
Browne, Washington, D.C., (202) 973-4200, mariabrowne@dwt.com
Scott
Thompson, Washington, D.C., (202) 973-4200, scottthompson@dwt.com
Jill
Valenstein, Washington, D.C., (202) 973-4200, jillvalenstein@dwt.com
James
Tomlinson, Washington, D.C., (202) 973-4200, jimtomlinson@dwt.com
Chris
Fedeli, Washington, D.C., (202) 973-4200, chrisfedeli@dwt.com
Mark
Trinchero, Portland, Oregon, (503) 241-2300, marktrinchero@dwt.com
This advisory is a publication of Davis Wright Tremaine LLP.
Our purpose in publishing this advisory is to inform our clients
and friends of recent legal developments. It is not intended,
nor should it be used, as a substitute for specific legal advice
as legal counsel may be given only in response to inquiries
regarding particular situations.
Copyright
© 2007, Davis Wright Tremaine LLP.
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