Utilities Ask FCC to Apply Telecom Pole Attachment Rate to VoIP; Request Would Double or Triple Most Cable Operator Pole Rents in 30 States

On Aug. 17, a group of utilities (Southern Company, American Electric Power, Duke Energy Corporation, and Excel Energy) asked the FCC to apply the higher telecommunications rate to pole attachments used by cable operators to provide interconnected Voice over Internet Protocol service in the 30 states where pole attachments are regulated by the FCC. This is part of the utilities’ ongoing effort to increase cable operators’ pole attachment rental payments and could affect national efforts to increase broadband deployment and adoption. If the utilities prevail, many cable systems will see their annual rental payments to pole owning utilities double or triple, greatly increasing local operating costs.

The issue is not a new one. The 1996 Telecom Act established two rates for communications attachments to utility poles where one had existed previously; one for attachments used to provide cable service, and a second, higher rate for attachments used to provide telecommunications service. When cable operators began providing Internet access service in addition to cable television service, utilities claimed that the new technology was an “information service” not covered by the statute and so attachments used to provide the service could be assessed unregulated, much higher attachment rates. The FCC rejected that claim and instead ruled that pole attachments used to provide commingled cable television and cable modem Internet services would be subject to the cable rate and not the higher telecommunications rate, a decision upheld by the Supreme Court.

Once cable operators began providing interconnected VoIP services over their cable modem connections, utilities claimed entitlement to the higher telecommunications rate, this time alleging that VoIP is a telecommunications service and functionally similar to traditional phone service, so it should be subject to the higher pole attachment rate.

The Petition for Declaratory Ruling (“Petition”) is the latest effort by the utilities to charge the higher telecommunications pole attachment rates for what would be the substantial majority of a cable television system’s attachments. In the Petition, the utilities raise long discredited arguments that the cost-based cable attachment rate is a vestige of a prior regulatory era favoring a “nascent” industry but now functions as “subsidy” to undeserving cable operators. The utilities have regularly argued that the telecom rate more fairly allocates the costs of the utility pole, and contend that as a “replacement technology” for and competitor to traditional phone service, VoIP should not only have traditional phone service regulations applied to it, but the telecommunications pole attachment rate as well. In the last engagement around these issues, the FCC received overwhelming evidence that keeping pole attachments rents reasonable is a key to broadband deployment.

We expect that the Commission will place the petition on public notice with comments due 30 days thereafter. Please let us know if you have any questions or would like to formally respond to the Petition.