FCC Strikes Unlawful Utility Pole Attachment Rate
In a case of first impression, the FCC has rebuffed electric utility efforts to undermine the FCC approach to pole rents under the Pole Attachment Act. The Southern Company’s Alabama Power subsidiary had unilaterally terminated all pole contracts and tendered replacement contracts increasing the previous rate of $7.47 to $38.81. In so doing, the utility contended that the 1996 amendments to the Pole Attachment Act fundamentally changed the law. Because parties may now obtain access to poles under a new provision of Section 224, Alabama Power contended that existing attachments required a higher compensation for “takings” under Gulf Power I (discussed in advisories dated September 10, 1999 and March 10, 1998). Alabama Power also contended that any attachments capable of supporting Internet access were entirely unregulated under the Gulf Power II decision (discussed in our advisory dated April 12, 2000).
The FCC rejected Alabama Power’s approach completely. It agreed with the cable operators that cable operators attaching under prior contracts do not need to exercise mandatory access rights to remain attached to the poles. It held that the FCC’s formula provides just compensation under the Constitution, even for “takings.” The current rate, it held, was more than adequate to cover all fully allocated costs under any scenario. The FCC held that it was premature to conclude that Internet-capable attachments are outside of pole regulation because no mandate has issued from the Gulf Power II decision and is still on reconsideration. It voided the $38.81 pole rate and continued the current rate pending further negotiations between the parties, as was requested by the cable operators. It placed Alabama Power under a bargaining order, requiring the utility to negotiate a new rate in good faith under the FCC’s formula, and negotiate a new pole agreement. Finally, the FCC ordered Alabama Power to permit the cable operators to remain attached to the poles.
During the course of the case, Alabama Power had also refused to provide a cost justification for its rate, claiming confidentiality of the data. The Commission warned the utility that it is “never appropriate” to withhold such data from an attaching party or to tender confidentiality agreements that include waivers of rights to seek FCC redress. Because APCO had eventually provided the data under a revised confidentiality agreement, the FCC refrained from ordering a public release of the data for now, but stated that it was “hard put to find justification” for the utility’s theory of confidentiality.