Attention Attachers: You May Be Leaving Money on the Pole

Broadband deployment is expensive.  But, as you build out or expand a network or capacity, deployment may be costing your company more than it should. From pole attachment rental rates, to make-ready charges, inspection and audit fees, and unauthorized attachment penalties, pole owners have numerous opportunities to impose fees and charges that are not permitted or exceed permitted regulated levels. And, all too often, companies pay pole owner invoices without realizing they have reason to dispute the charges.

To ensure that your company is paying “just and reasonable” rates, fees and charges, companies should consider implementing processes to check fees and charges on invoices before they are paid. Specifically, you should look at:

Pole Attachment Rental Rates: Pole attachment rent is usually billed in advance annually or semi-annually. Annual rental rates for investor-owned utilities typically are capped by federal or state law (depending if they are in a state regulated by the FCC or a state public utility commission). Poles owned by municipalities or cooperatives in some states are also subject to laws regulating pole attachment rental rates. When you are dealing with tens or hundreds of thousands of poles, a rate that that exceeds the legal cap by even $1 can result in substantial overpayments to the pole owner, which in some instances (e.g., a telephone company), is a direct competitor to your company.

Application Fees: Pole owners often require attachers to pay an “application fee,” either per pole or per application, to purportedly cover the costs incurred by the pole owner in processing pole attachment applications. These fees can add significant costs to a broadband deployment project. And, unless these fees cover “actual costs” associated with the process (such as for pre-construction surveys), they are often not legal. Companies should pay close attention to any fees associated with application processing to make sure they are legal, and, if so, reasonably associated with the cost of the action performed by the pole owner.

Make-Ready Charges: In addition to charging annual pole rent, pole owners are allowed to charge attachers for work the utility performs to accommodate an attachment so it is in compliance with safety standards, such as rearranging existing facilities on the pole or replacing the pole. So-called “make-ready” charges can vary dramatically depending on the pole owner or the contractor employed by the pole owner to do the work. It is important to scrutinize these charges to ensure the charges are “reasonable,” as required by most laws. For example, should a pole replacement cost $2,500 or $25,000? What is reasonable? Pole owners also charge for inspections and surveys to assess the necessary make-ready work. In doing so, they often collect significant data about their own facilities, as well as the facilities of others. Are they sharing the detailed results of those surveys with you? Have they provided detailed billing information so that your company can verify the reasonableness of the charges? Should you be paying to collect data that does not benefit you? Even if the charge is specified in the contract it may be subject to challenge before the appropriate state or federal regulatory authority.

Audit and Inspection Fees: Pole attachment agreements often include provisions assigning the costs of audits (to count attachments for billing purposes) and inspections (to check for safety compliance) to attachers. Yet rarely do pole owners include attachers in the process of designing the audit/inspection, selecting a contractor to perform these functions, negotiating the cost, or executing the audit/inspection. Without such attacher oversight, audit and inspection charges can be substantial. In addition, unless attachers are involved in the process, the pole owner often will not share the results that the attacher paid for. In addition, much of the information collected is of great benefit to a pole owner, who can use the information to either collect more rent or develop its own assessment of where to deploy competitive fiber. And, many times, the costs for these audits/inspections are also rolled up in annual rent charges. If so, they should not be charged again as a direct cost to the attacher. Companies should take steps to ensure they are involved in the audit and inspection process – both at the planning and execution stages, to ensure reasonable charges and accurate results.

Unauthorized Attachment Penalties and Safety Violations: Rarely is an audit performed in which a pole owner doesn’t discover what it claims to be numerous attachments in excess of the number of permitted (or billed) attachments. Too often the excess is the result of changed policies (previously unlicensed service drops later being deemed to require permits), overly broad definitions of what constitutes a billable attachment (including ancillary equipment the FCC considers to be included in the one foot charged for the mainline attachment), and faulty inspection work (e.g., contractors misidentifying attachments belonging to another attacher as yours). Similarly, it is rare that a pole owner does not discover safety violations where an attacher’s facilities are too close to power or otherwise not compliant with the NESC, even in instances where the later addition of power facilities caused the violation. Before paying for unauthorized penalties and correction work, companies should analyze how the audit or inspection was performed. For example, how was “attachment” defined for purposes of an audit? Companies might  consider performing their own verifying survey or a statistically reliable sample of the pole owner audit or inspection to assess the accuracy of the pole owner’s  results to ensure the company is not paying unauthorized attachment penalties for someone else’s attachments or to correct  safety violations not caused by you.

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