Pole Attachment Rate Dispute: Industry Groups Push Back Against FCC's Two-Step Methodology

Strategic Insights -

The cable TV industry, telephone companies, and electric utility interests have filed a joint petition with the Federal Communications Commission (FCC) to reconsider the agency's two-step methodology for setting pole attachment rates. The methodology, introduced in February, categorizes pole space as either "usable" or "unusable" to determine the cost of attachments. Industry groups argue that the approach is too simplistic and could lead to artificially high rates for attaching parties. "The Commission's initial approach would discourage, not promote, facilities deployment because it would offer conduit owners a way by which they could shift the vast majority of their conduit costs to would-be attaching parties, and set artificially high occupancy rates," said the National Cable Television Association. Telephone companies also want to use a different rate methodology when attaching cable TV operators that offer Internet access services, while electric utility interests claim that the FCC's rule allowing third-party overlashing without pole owners' consent constitutes a "taking" in violation of the Fifth Amendment of the U.S. Constitution.

Key Takeaways:

  • The cable TV industry, telephone companies, and electric utility interests have filed a joint petition to reconsider the FCC's two-step methodology for setting pole attachment rates based on "usable" and "unusable" space.
  • The National Cable Television Association argued that the Commission's initial approach would discourage facilities deployment by allowing conduit owners to shift costs to attaching parties, leading to artificially high occupancy rates.
  • Telephone companies want to use a different rate methodology when attaching cable TV operators that offer Internet access services.
  • Electric utility interests claim that the FCC's rule allowing third-party overlashing without pole owners' consent constitutes a "taking" in violation of the Fifth Amendment of the U.S. Constitution.
  • The FCC has started a separate rulemaking on specific rates pole owners may charge, which includes considering third-party overlashing rates.
  • The U.S. Telephone Association and Bell Atlantic Corp. agree that pole owners should be able to backbill cable TV operators that fail to give prior notice of their provisioning of telecom services using their existing attachments.
  • U S WEST, Inc. opposes the decision to allow third-party overlashing with only the consent of the attaching entity, citing concerns about rate setting and notification.
  • Edison Electric Institute and UTC, The Telecommunications Association, argue that the FCC's rules on pole attachment rates are unclear and may lead to future complications.

Statistics:

  • According to the Communications Act, the FCC must implement new pole attachment rules by February 8, 1998.
  • The Act requires a five-year phase-in period for rate increases, with one-fifth of the total increase added each year, beginning February 8, 2001.
  • Cable Services docket 97-151 requires the FCC to implement new pole attachment rules by February 8, 1998.
  • Cable Services docket 97-98 is a separate rulemaking on specific rates pole owners may charge.

Sources:

  • TR (February 9) - Pole Attachment Rate Dispute: Industry Groups Push Back Against FCC's Two-Step Methodology
  • TR (March 17 and July 7, 1997) - Cable Services Docket 97-98: Separate Rulemaking on Specific Rates Pole Owners May Charge
  • National Cable Television Association (NCTA) - Comments on Pole Attachment Rate Methodology
  • U.S. Telephone Association (USTA) - Comments on Pole Attachment Rate Methodology
  • Edison Electric Institute and UTC, The Telecommunications Association - Comments on Pole Attachment Rate Methodology
  • Bell Atlantic Corp. - Comments on Pole Attachment Rate Methodology
  • U S WEST, Inc. - Comments on Pole Attachment Rate Methodology
  • MCI Telecommunications Corp. - Comments on Pole Attachment Rate Methodology
  • Teligent, Inc. - Comments on Pole Attachment Rate Methodology
  • ICG Communications, Inc. - Comments on Pole Attachment Rate Methodology
  • Communications Act (as amended) - Section 224(e)