FCC's Enforcement Bureau Grants Florida Cable Operators' Pole Attachment Complaint Against Gulf Power
On Tuesday, May 13, 2003, the Federal Communications Commission’s Enforcement Bureau released an Order granting the pole attachment rate complaint filed by the Florida Cable Telecommunications Association (“FCTA”) and its cable operator members against Gulf Power Company. The Order resoundingly rejected Gulf Power’s legal and factual bases for challenging the FCC’s regulation of pole attachments and was consistent with the Commission’s previous orders in Alabama Cable Telecommunications Ass’n v. Alabama Power Company1 and the Eleventh Circuit’s November 2002 decision affirming those orders.2 It also was consistent with prior Commission orders in Teleport Communications Atlanta, Inc. v. Georgia Power Company.3 Yesterday’s Order represents an important victory for Florida cable operators faced with the threat of dramatically higher utility pole attachment rental rates. It is expected that Gulf Power will seek intermediate review before the full Commission.
Background
In June 2000, Gulf Power informed Florida cable operators that it was terminating its long-standing utility pole attachment contracts and unilaterally imposed new contracts with new pole attachment rates of $38.06 per pole, more than 500 percent above the existing pole attachment rates. On July 10, 2000, FCTA filed a pole attachment Complaint with the FCC’s Cable Services Bureau demonstrating that the exorbitant new pole rates violated 47 U.S.C. § 224 and 47 C.F.R. § 1.1401 et seq., and that there was no merit to Gulf Power’s argument that the “just compensation” required by the Constitution entitles Gulf Power to a higher pole attachment rate than that calculated under Section 224 and the FCC regulations.
Gulf Power Order
In the Order, the Bureau held that Gulf Power completely failed to justify its $38.06 pole attachment rate and directed Gulf Power to permit cable operators to remain attached to its poles at their existing contract rates, i.e., $5.00 - $6.20, pending negotiation of new agreements and rates pursuant to the federal cable formula under section 224. The Bureau also ordered that Gulf Power issue refunds where cable operators had paid amounts in excess of their previous rates.
The Bureau recognized that cable operators had met their burden of establishing a prima facie case, but that Gulf Power had failed to establish that it received less than its incremental costs in permitting cable operators’ attachments. The Bureau relied on the Commission’s and the Eleventh Circuit’s Alabama Power decisions in concluding that the cable formula, together with the payment of makeready expenses, affords more than just compensation. (see advisory dated November 15, 2002). The Bureau also rejected Gulf Power’s reproduction-cost methodology and its attempts to include unrelated cost accounts and alternative pole heights.
Responding to Gulf Power’s jurisdictional challenge, the Bureau held that the FCC retains jurisdiction over pole complaints by cable systems carrying Internet services, an issue that Gulf Power lost at the U.S. Supreme Court in NCTA v. Gulf Power4 (see advisory dated January 16, 2002). The Bureau also denied Gulf Power’s claim that the case was a breach of contract action and not properly before the Commission, holding that the Commission’s regulation of pole attachment rates, terms and conditions includes evaluating the reasonableness of a utility’s practices in executing a pole agreement’s provisions. Further, the Bureau flatly rejected Gulf Power’s claim that its filing of a Petition for Review of the Alabama Power decision at the Eleventh Circuit Court of Appeals, before the Bureau even issued its Order concerning FCTA’s complaint against Gulf Power, divested the FCC of jurisdiction to hear and decide the complaint. Noting that Gulf Power’s argument “border[ed] on the frivolous,” the Bureau rejected this argument as moot, given the Eleventh Circuit’s dismissal of Gulf Power as a party to the earlier appeal for lack of standing.
The Bureau reiterated its position that parties are not required to engage in prolonged, fruitless negotiations when their positions are sufficiently far apart, as was the situation between Gulf Power and the cable operators. Finally, the Bureau noted that pole owners may reasonably terminate pre-1996 Act voluntary agreements with attachers, but must always grant access to their poles. Because such a termination must be reasonable, i.e., not abusive, and new pole attachment rates under mandatory access will still be calculated in conformity with the federal cable formula under Section 224, we do not believe that this determination by the Bureau harms attachers.
Please let us know if you have any questions concerning this or any related matter or would like a copy of the Bureau’s Order.
Footnotes:
1 Alabama Cable Telecommunications Ass’n v. Alabama Power Co., 15 FCC Rcd 17346 (2000), aff’d 16 FCC Rcd. 12209 (2001).
2 Alabama Power Co. v. FCC, 311 F.3d 1357 (11th Cir. 2002), petition for certiorari pending.
3 16 FCC Rcd 20238 (2001), aff’d 17 FCC Rcd. 19859 (2002), appeal pending sub nom. Georgia Power Co. v. FCC, No. 02-10222-BB (11th Cir., argued May 1, 2003).
4 534 U.S. 327 (2002).