FCC Relieves Qwest, Verizon, and AT&T from Filing Financial Reports

On Friday, Dec. 12, the FCC released its anticipated Qwest Forbearance Order, the latest in a string of decisions announced this year eliminating almost all FCC financial accounting and reporting obligations for Qwest, Verizon, and AT&T. The relief is conditioned on a requirement that the carriers continue to file data with the FCC necessary to set pole attachment rates in the 30 states where the FCC regulates them. However, the Order eliminates the requirement to file such data with the FCC, as of next April, for the other 20 states and the District of Columbia.

The absence of state-specific cost data from the FCC in these states could impair future calculation and review of pole attachment rates. The Order creates a need for state public service commissions (PSCs) to adopt their own pole rate data filing regulations. Communications providers with attachments to telephone company-owned poles in states where attachments are not regulated by the FCC may now need additional protections to ensure rates remain reasonable.

Background

Pole attachment rates have been set based on historical costs since 1978 for cable system attachments, and since 1996 for telecommunications and wireless attachments. The rates are derived from a formula applicable to both electric utility- and telephone company-owned poles, with electric utility pole rates based on data in reports filed with the Federal Energy Regulatory Commission and telephone company pole rates based on data in the FCC's required Automated Reporting Management Information System (ARMIS) reports.

For the last 20 years carriers have filed ARMIS reports detailing telephone network service and infrastructure cost, quality, and operational data. The FCC found that these reports are no longer necessary in light of the change from rate-of-return or cost-based price regulation to a “price cap” basis for most interstate telephone service offerings. However, the FCC recognized the continued need for publicly filed pole cost information in order to review pole attachment rates and prevent or adjudicate disputes between pole owners and attachers.

The ARMIS reports generally provide separate data on a state-by-state basis. Because the FCC only regulates pole attachment rates and practices in those states that have not separately certified to regulate pole attachments,¹ the Order requires Qwest, Verizon, and AT&T to continue filing pole attachment cost and rate information in FCC states only. However, the Order will eliminate FCC reporting obligations for these carriers with respect to this pole cost data in the certified states.

Impact of partial elimination of rate-setting data

The FCC Order assures that carriers will continue to file ARMIS pole rate data for all 50 states and the District of Columbia for the upcoming filing period, April 1, 2009.  After that, and dependent on the time frame of FCC decisions on certain telephone carrier compliance plans, the filing of pole rate data with the FCC for distribution pole properties in states that have assumed pole attachment rate jurisdiction will be eliminated. The one-year grace period is intended to give state PSCs sufficient time to consider issuing their own regulations requiring telephone company filing of pole rate data because the absence of the FCC ARMIS state-specific cost data could impair future calculation and review of pole attachment rates in the certified states. To the extent certified state PSCs have not already adopted pole rate data filing requirements, the FCC's Order now creates a need for such rules.

Without continued access to ARMIS-type pole cost information, third-party attachers would have little ability to control or question the rates Qwest, Verizon, or AT&T charge for third-party access to their poles. In eliminating the ARMIS pole data filing requirement for certified states, the FCC suggested that state regulators could require the same information be filed at the state level as necessary for the enforcement of their own pole attachment regulations. Although petitions to reconsider or appeal the FCC decision are possible, the need for continued availability of pole cost data for the certified states should be brought to the attention of the state regulators promptly.

FOOTNOTES

1 The FCC has regulatory jurisdiction over pole attachment rates, terms and conditions in 30 states. Nineteen states plus the District of Columbia regulate pole attachments at the state level, with Arkansas expected to formally assume jurisdiction shortly.