On Aug. 8, 2003, the FCC issued an important victory to Georgia cable operators in a decision granting a pole attachment “terms and conditions” complaint against Georgia Power. The order, turning back another effort of affiliates of the Atlanta-based Southern Company to topple lynchpins of pole attachment regulation, rejected nearly every challenged provision of a pole attachment agreement that Georgia Power compelled cable operators to execute. The Bureau also affirmed a broad swath of FCC pole attachment “terms and condition” precedent and, significantly, reinstated the prior pole attachment agreement that Georgia Power had attempted to terminate three years earlier.
Background
In mid-2000, Georgia Power Company notified Georgia cable operators that it planned to terminate their long-standing pole attachment agreements. The utility informed cable operators that if they wished to remain on Georgia Power poles, they would have to execute a substantially revised pole attachment agreement (“New Agreement”). After several months of failed negotiations, Georgia Power refused to extend the term of the existing Agreement, notified cable operators that they would be “deemed” to have accepted the terms and conditions of the New Agreement, and prohibited further attachments and upgrades until cable operators signed the New Agreement. On Jan. 17, 2001, the Cable Television Association of Georgia (“CTAG”), on behalf of its members, filed a complaint at the FCC.
The Bureau's Decision
In its order, the FCC’s Enforcement Bureau (“Bureau”) made the following findings:
No Recovery Of Open-Ended Administrative Fees, Including $150 Up-Front Application And Unauthorized Attachments Charges
The Bureau denied Georgia Power’s attempt to recover “open-ended” administrative expenses associated with enforcing the New Agreement, including attorneys’ fees, finding that separate recovery of such fees outside amounts recovered in the annual pole rental rate would permit “double recovery.” The Bureau also rejected the utility’s up-front, prepaid $150 per pole makeready fee that Georgia Power required before it would permit access to its poles. The Bureau emphasized that Georgia Power may only seek reimbursement for actual costs incurred in permitting attachments to its poles and ordered Georgia Power to refund those fees already paid by cable operators. In addition, the Bureau also struck Georgia Power’s multifaceted unauthorized attachment fee that included elements for: back rent from the date of the last inspection; ten percent of back rent amounts as an administrative fee; interest at eight percent above the prime rate; and all out-of-pocket expenses, including legal fees. While the Bureau noted that unauthorized attachment penalties are not unreasonable per se, it expressed concern that the unauthorized attachment provisions here could result in cable operators “grossly overcompensat[ing]” the utility.
No Prior Written Consent For Overlashing Is Required
The Bureau also invalidated as “unjust and unreasonable on its face” Georgia Power’s requirement that cable operators obtain prior written consent from Georgia Power before overlashing to their present attachments. The Bureau noted the Commission’s prior pronouncements that no prior consent was required for overlashing and observed that Georgia Power’s prior agreement allowed overlashing on one day’s (or no) notice unless the overlashing created a bundle in excess of 6 inches. With this order’s reinstatement of the prior agreement that the utility attempted to cancel in 2000, this “6-inch rule” is once again in effect.
No Separate Agreement or Compensation for Rights-of-Way and Easements
The Bureau dismissed Georgia Power’s requirement that cable operators negotiate separate agreements and ompensation to obtain access to Georgia Power’s rights-of-way and private easements, explaining that the Pole Attachment Act requires utilities to provide cable television systems with access to any rights-of-way the utilities own or control.
Rejection of Georgia Power’s “Safety Defense”
The Bureau rejected Georgia Power’s principal defense that the terms and conditions of the New Agreement were justified because of numerous safety and engineering violations allegedly committed by cable operators. The Bureau observed that Georgia Power failed to explain how safety concerns provided the foundation for the new clauses, and that the purported “evidence” of cable operators’ supposed safety violations failed to establish that cable operators were responsible for widespread or egregious safety violations.
The FCC Rejected Numerous Other Provisions In The Agreement
- Inspection Rights: The Bureau rejected as overbroad Georgia Power’s provision allowing for pole inspections upon any violation (and not just safety violations) of the Agreement. The Bureau also held that the costs of any routine inspections must be allocated among all attachers and the utility could not force cable operators to pay the entire cost of routine inspections.
- Security Interests: The Bureau rebuffed Georgia Power’s indeterminate bond, access to financial records, and security interest requirements as unnecessary and promoting “arbitrary and anticompetitive conduct” that is at odds with the Pole Attachment Act.
- Indemnities/Limits of Liability: The Bureau held that Georgia Power’s “safety defense” does not support demands for indemnification, without reciprocity for the pole licensee. The Bureau also concluded that Georgia Power failed to provide any support for a six-month limit on claims against Georgia Power or cable operators’ right to defend any claims against them, which Georgia Power had sought to control.
- Force Majeure: The Bureau rejected as unreasonable Georgia Power’s refusal to provide a reciprocal force majeure clause.
- Rate Adjustments: The Bureau found that Georgia Power’s provision permitting rate adjustments at the end of the year to be applied to the current year’s pole rentals violated the Commission’s 60 days’ advance-notice rule.
- Termination: The Bureau found that Georgia Power had not justified its provision allowing it to terminate agreements upon 90 days’ notice, noting that such time was insufficient for the parties to re-negotiate the Agreement.
- Pole Replacements, Drop Poles And Makeready Costs: The Bureau determined that the parties had not sufficiently attempted to negotiate matters concerning pole replacements, treatment of drop poles and costs of subsequent makeready caused by Georgia Power, and ordered good-faith negotiation of these provisions.
Notwithstanding, the Bureau sustained two aspects of the new Agreement and called for clarification of another. First, the Bureau upheld Georgia Power’s Assignment clause, noting that the utility has a right to know the identity of attachers on its poles and the provision prohibits Georgia Power from unreasonably withholding or denying its consent. Second, the Bureau concluded that Georgia Power’s provision for annual inspections was not necessarily unreasonable. But, as explained above, allowing for inspections upon the occurrence of any violation of the agreement, not just a safety violation, was unreasonable and the costs of the routine inspections must be booked to the maintenance costs account and allocated among all attachers, not just paid for by the cable operator. Third, the Bureau ordered Georgia Power to clarify that the New Agreement’s requirement that cable operators’ workers sign a personal injury release does not apply in cases where Georgia Power is grossly negligent or engages in willful misconduct.
Conclusion
The Bureau’s decision, which is subject to further review by the Commission or reconsideration by the Bureau, is available on the FCC’s website at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-03-2613A1.doc. Please do not hesitate to contact us with any questions or if you would like a copy of the decision.