D.C. Circuit Upholds FCC Pole Attachment Order
The FCC 2011 pole attachment order was upheld unanimously by the U.S. Court of Appeals for the D.C. Circuit on Tuesday (http://1.usa.gov/XAuJD3). The FCC had found that ILECs were included in the protections of Section 224 of the Communications Act, which gives advantages to some companies that seek to attach cables and network equipment to utility poles. Even though the order in some places “reverses decades-old Commission policy,” the commission met the required “modest demands for changing its policy,” Senior Judge Stephen Williams wrote for himself and Judges David Tatel and David Sentelle. “Upholding its decision follows ineluctably."
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The order gave ILECs the ability to share the benefits of some of Section 224’s provisions, reformulated the ceiling on the rate that pole-owning utilities can charge telecom carriers seeking to make attachments, and moved back the date when compensatory damages start to accrue in favor of parties filing successful complaints against utilities. American Electricity Power Services Corp. (AEP) challenged the order, arguing Congress intended to exclude ILECs from the category of “telecommunications carrier” that can benefit under the statute.
Working in the mathematical language invoked by AEP, Williams laid out several equations to uphold the commission’s view that ILECs are “providers of telecommunications services” for purposes of Section 224. He said that’s even though the statute stated that “for purposes of this section, the term ’telecommunications carrier’ (as defined in section 153 of this title) does not include any incumbent local exchange carrier as defined in section 251(h) of this title.”
FCC Chairman Julius Genachowski, “pleased” with the ruling, called the order “one of a number of important actions the Commission has taken to reduce barriers to broadband deployment and accelerate billions of dollars of investment in 21st century infrastructure.” The ruling “is a win for American consumers,” said NCTA President Michael Powell. “By reducing the cost of attaching equipment and wires to utility poles, the changes adopted by the Commission in 2011 will help promote the deployment of broadband and telecommunications networks by cable operators and other providers."
AEP said it’s “disappointed” with the ruling. “The end result is that our recovery of pole costs will decline, placing an inequitable portion of the cost of maintaining utility poles on electric utilities and our customers when other utilities benefit,” a spokeswoman said. AEP hasn’t made a decision about next steps, she said.
The ruling has financial implications for telcos that will see savings on pole attachments over time under the FCC rules, said Stifel Nicolaus analysts David Kaut and Christopher King. The “most potential upside” goes to the ILECs, which have said they're being overcharged by up to $350 million a year, the analysts said. Providers making new broadband deployments could also benefit from new deadlines and other steps to ease the process of attaching lines and other equipment to pole tops, they said.
"This regulatory backstop gives ILECs new leverage to negotiate pole-attachment terms with power companies, though its use remains untested,” Kaut and King said. “If the ILECs file complaints, the FCC said they would have to show they are similarly situated to other broadband providers, and the fact that many have joint-use agreements with power companies would be a factor for consideration, which could lessen rate cuts some.” The process will take time, as some current pole-attachment agreements could delay the impact of the FCC changes, the analysts wrote. “ILECs probably will often not get their rates pushed all the way down to the cable level, but the gap will narrow over time."
USTelecom President Walter McCormick called the decision “a win for competition, a win for consumers, and win for broadband deployment. Assuring that incumbent local exchange carriers have access to the federal statutory protections of just and reasonable pole attachment rates was a key objective of Chairman Genachowski’s Broadband Acceleration Initiative, and today’s action by the D.C. Court of Appeals provides the certainty and predictability that is so important to investment.” President Jonathan Adelstein of PCIA, which intervened in the case on behalf of the commission, said the order “is working as intended to provide the wireless infrastructure industry essential tools to meet skyrocketing consumer demand for wireless data.”