Utilities, Telcos Digest Potential New Rules on Pole Attachments
Telcos and cable companies would pay the same rates as each other for attaching to utility companies’ poles under proposed FCC rules, but whether other aspects of the rules for attachments represent a change or a codification of current practice is unclear, lawyers said in a Law Seminars International briefing Wednesday. The order and further rulemaking follows through on chapter six of the National Broadband Plan, they said.
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There is something “fundamentally weird” about telco and cable rates’ differing for the same service, said Eric Langley of Balch & Bingham, who represents utility owners. But he sees legal problems in making the lower cable rate the new ceiling rather than the floor. The history of the Telecom Act shows that Congress expected telco attachments to yield higher rates than cable attachments, he said. The new rate formula would significantly reduce compensation, Langley said. The current formula allows a factor of 35 percent for a carrying charge. But the FCC proposes to remove taxes, depreciation and rate of return from the carrying charge, which would reduce the factor to about 12-15 percent, he said.
John Seiver of Davis Wright, who represents attachers, said a higher rate for telcos is unjustified, because they're no more expensive to host than cable. Because the attachment is in “unusable space” for the utility, the rent the telecom pays is “gravy,” he said.
Pole owners are happy that a provision dealing with the “sign and sue” problem moves in the right direction, though not as far as they want, Langley said. In the past, particularly in the early 2000s, a pole owner would sign what it thought was a contract negotiated in good faith only to have renters sue over “unreasonable” provisions, he said. Pole owners were concerned that renters were cherry-picking the provisions they liked after the fact, he said. He compared it to going to a restaurant and asking for substitutions after the meal arrives, then complaining about the prices after the check arrives. Pole owners will never be comfortable with the rule, which is unorthodox in business circles, but the proposed changes strike more of a balance, he said. Seiver, however, tweaked the restaurant analogy. He said the situation is more akin to a restaurant in the desert charging people $100 for a glass of water.
As for rules about how and when attachments can be made, they might or might not represent changes, Langley said. The two rules say that a utility must allow attaching entities to use the same attaching techniques it uses and that the attaching entity has a right of timely access. The order said the FCC doesn’t intend to broaden the circumstances under which certain techniques are used, Langley said. Yet some language in the order could indicate that the circumstances are being expanded, he said. Seiver said he sees the rule as an administrative recommendation supporting current practice. He doesn’t think the FCC order gives clear guidance on changing out poles, so he sees it as “fertile ground for continuing disputes.” Still, he said, “I don’t think the FCC wants to micromanage pole construction techniques.” It’s up to the utilities and attachers to come to agreements, he said.
The new, specific timetables for the make-ready process could prove tricky if broadband deployment really takes off, Langley said. Pole owners won’t be dealing with one-off attachment requests but large jobs involving dozens or hundreds of poles, so a 45-day performance period gets complicated, he said. But the FCC has asked for comments about the feasibility of the 45 days and what circumstances if any should stop the clock, he said. There’s an additional 30-day period when multiparty coordination is required, an acknowledgment that pole owners can’t always get current attachers to move promptly, he said.