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A primer on pole attachments.

Late last year, NTCA sent letters to Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi asserting that broadband deployment will stimulate our national economy and urging elected officials to include provisions in a stimulus package that will promote the building of a nationwide broadband network. NTCA recognizes that pole attachments are critical components for broadband deployment.

A pole attachment, as defined in the Pole Attachment Act of 1978 (47 U.S.C. Section 224, or Section 224), is "any attachment by a cable television system or provider of telecommunications service to a pole, duct, conduit or right of way owned or controlled by a utility." NTCA members have reported mixed results in negotiating pole attachment contracts with utilities, including rural electric cooperatives. A member from Kentucky complained about the high price per pole his company had to pay even though the telco was not connecting to the pole but to the ground plate. Another member in Indiana had a simple yet expensive solution: "Bury all the plant."

What can we learn from the pending FCC docket on federal broadband pole attachment rates, terms and conditions? An examination of one state's proceedings to create state pole attachment rules and the experiences of several NTCA members sheds light on this important issue and provides pointers to consider when negotiating pole attachment agreements.

A Federal Framework

Congress enacted the Pole Attachment Act of 1978 to regulate the rates that utilities can charge for pole attachments. Section 224 of the act does not require utilities to offer access to their poles, but if they do provide access to their poles, the utilities must ensure the rates are just and reasonable. This section also allows the commission to regulate pole attachments if not regulated by a state. Municipally or cooperatively owned poles are exempted from Section 224. Wireless carriers, however, are subject to Section 224.

The commission's formula for computing pole attachment rates for cable operators results in a lower rate than that generated by the formula specified for telecommunications carriers. The commission also decided that cable operators providing commingled video/Internet services would pay the lower cable pole attachment rate, instead of the higher telecommunications rate.

This rate disparity between cable and telco providers for pole attachments created significant controversy at the commission as cable companies and telcos became fierce competitors. Complaints to the commission also centered on Section 224's failure to give incumbent local exchange carriers (ILECs) the same pole attachment access rights that competitive local exchange carriers (CLECs) and cable television systems had. Now, cable, ILECs, CLECs, wireless, municipalities and utilities have a new battle front at the commission: What is the appropriate rate for broadband pole attachments?

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The FCC Investigation

The FCC opened a docket to determine the appropriate rate for broadband connections and pole attachments. On November 20, 2007, the FCC released its notice of proposed rulemaking (NPRM) seeking comment on changes to its implementation of Section 224. In the NPRM, the commission seeks to promote pro-competitive and deregulatory goals while reducing the need of parties to complain to the commission about Section 224 violations. The commission asks:

* Are existing pole attachment rates appropriate?

* Does Section 224 give ILECs the tight to regulate rates they pay for pole attachments?

* Should the commission adopt rules regarding nonprice terms and conditions regarding Section 224 access rights?

The FCC wants NPRM comments to focus on three issues: 1) the rate broadband Internet access providers must pay for attachments; 2) protection of ILECs from unreasonable pole attachment rates; and 3) any other terms and conditions of attachment that may be unreasonable. The commission also seeks comment on its tentative conclusion that all broadband Internet access service attachments should be subject to a rate higher than the current cable rate but less than or equal to the telecommunications rate, regardless of the platform over which the services are provided.

This NPRM resulted from many complaints about pole attachments. For example, Fibertech asked for open rulemakings regarding standard practices for pole and conduit access, and U.S. Telecom wanted ILECs to be able to regulate pole attachment rates. NTCA, responding to the NPRM, urged the FCC to establish a dispute resolution process where ILECs could seek redress for unreasonable rates, terms and conditions imposed by utilities. Currently, no such process exists.

To avoid regulatory disparity, Time Warner asked the FCC to adopt the same pole attachment rate for both cable television systems and telecommunications systems to avoid regulatory disparity. AT&T claimed that electric utilities refuse to renegotiate outdated joint-use arrangements, and that electric utilities now use more pole space, and incumbent LECs less pole space, than has historically been the case. U.S. Telecom asserted that the percentage of poles owned by electric utilities has increased significantly since 1996, and that electric utilities leverage the growing imbalance in pole ownership.

Sprint, a CLEC, encouraged the commission to set a shot clock for utility companies to reach a decision on pole attachment applications. PCIA, the wireless infrastructure group, urged the FCC to keep the tops of poles available for wireless distributed antenna system boxes. The Utilities Council, filing for electric and gas companies that own poles, asked the commission to impose high broadband attachment prices and avoid unreasonable access requirements.

The comment period for this NPRM (WC Docket 07-245) has closed, but commenters can still file ex parte comments. This NPRM directly would affect pole attachments in those states that do not currently regulate pole attachments, and may affect indirectly the existing rules and future state proceedings on pole attachments should states choose to follow whatever approach the commission selects.

The New Hampshire Experience

Nineteen states and the District of Columbia have certified to the commission under its rules on pole attachments that they accept jurisdiction over pole attachment rates, terms and conditions: Alaska, California, Connecticut, Delaware, District of Columbia, Idaho, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Utah, Vermont and Washington. Certification by a state prevents the commission from regulating pole attachment matters in that state.

The most recent state to certify is New Hampshire. The New Hampshire Public Utilities Commission (NHPUC) is now conducting a rulemaking proceeding to set its state rates, terms and conditions for pole attachments. Judging from the state commission's procedural schedule, the number and types of issues presented, and the industry segments advocating in the proceeding, setting these rates and terms is not an easy process.

The NH PUC, in its state proceeding, DRM 08-004--PUC 1300 Pole Attachments--Regular Rates and DRM 07-119 (Interim Rules), proposed interim rules that define terms; set pole access, notice and installation standards and obligations to negotiate; establish dispute resolution procedures; and require just and reasonable attachment rates. A new aspect of pole attachment regulation for New Hampshire is that rural electric cooperatives also would be statutorily covered by the rules.

NTCA Member Experiences Are Varied

Some NTCA members have strong opinions about pole attachment issues. A Montana attorney described the prolonged efforts of his NTCA member company in renegotiating an existing pole attachment contract with a large, statewide public utility. The contract "was in fact quite oppressive, in my humble opinion, and contained provisions not in the existing agreement." After many weeks, he was informed that the utility not only wanted higher rates, but also a new agreement. "I asked them to clarify the agreement by removing references to generic terms that simply did not apply to my client's business," he said. "More than two years later, I have never received any further reply or communication ... [and] my client has never signed their demanded new agreement."

Another NTCA member explained the difficulties his Kentucky company now faces in dealing with electric cooperatives on rate and ground-wire attachment issues because of recent pole attachment litigation that favored electric co-ops over telco attachers in his federal jurisdiction. The 4th U.S. Circuit Court of Appeals in "Time Warner v. Carteret Craven Electric Cooperative" was faced in 2007 with Time Warner's claim that Carteret-Craven Electric's $20 per pole fee (increased from $6 per pole during negotiations to renew an existing contract) was an excessive and discriminatory rent for pole attachments. Time Warner claimed the rent increase violated North Carolina common law. The 4th Circuit held in favor of the electric co-op, finding that North Carolina's common law duty requiring an electric public utility to charge reasonable and nondiscriminatory rates for electric service "does not clearly apply to pole-attachment agreements, and we are not free to extend North Carolina common law to hold that it does."

Another NTCA member has had no pole-attachment issues because the co-op's territory "generally was the same for the electric co-op with the same members."

An attorney for another NTCA member said, "The agreements are 'take it or leave it.' We have few attachments (with the utility), so it is not an issue."

An attorney for several NTCA telcos said he has seen telcos place their cable underground rather than negotiate with electric co-ops for pole attachments.

Negotiation Pointers

NTCA members and others that have faced negotiating pole attachment contracts, which can run over 40 pages in length, made the following suggestions:

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* If your state does not currently regulate pole attachments and thus falls under the federal regulation regime, consider pushing for an industry consensus on state regulation. That way you will know where the players may stand on the various issues, and you may achieve more favorable terms at the state level.

* Should your state commission decide to certify pole attachment authority, look to the New Hampshire example and others in your neighboring states for time frames, players and issues.

* Watch the increasing trend toward "hidden" charges. As one NTCA member said, "In addition to the rental rates, the trend is to include additional charges for application fees, make-ready costs, security costs, inspection costs, insurance costs, etc. While the FCC has said a reasonable application fee might be appropriate, those additional costs should generally be included in the rental rate."

* Electric cooperatives may be in a rush to renegotiate existing pole attachment agreements with rural telco coops, perhaps in recognition of new rules that the commission may adopt regarding broadband connections.

* When you rebuild your plant, bury everything possible. That pretty much avoids the whole pole-attachment issue.

* Sometimes it is less expensive to pay for the actual pole attachments rather than fight the utility.

RELATED ARTICLE: A POLE ATTACHMENT TIMELINE IN NEW HAMPSHIRE

The New Hampshire Public Utilities Commission (NH PUC) pole attachment timeline to consider these rules is described below.

* July 16, 2007: State Legislature and governor pass a law authorizing NH PUC to regulate pole attachments.

* January 18, 2008: NH PUC opens pole attachment rulemaking docket; issues public notice for comments from interested parties on interim pole attachment rules and sets technical session.

* February 22, 2008: NH PUC certifies to the FCC that it regulates pole attachments.

* February 27, 2008: NH PUC conducts technical session on interim rules; reviews petitions to intervene.

* March 5, 2008: Comments filed by the members of the New Hampshire Telecommunications Association (NHTA) (rural ILECs) se TEL (CLEC), Public Service Company of New Hampshire (PSNH) (electric utility), National Grid (electric/gas utility), Oxford Network (ILEC), Fairpoint (ILEC), Version NH (ILEC), New England Cable & Telecommunications Association (cable association) and several municipalities.

* June 16, 2008: NH PUC releases draft rules, seeks and receives additional comments.

* October 31, 2008: November 3, 2008: NH PUC circulates final staff rule proposals.

* December 2, 2008: NH PUC staff releases report on technical session and rulemaking process. NHTA, National Grid, Fairpoint, PSNH, New England Cable & Telecommunications Association Inc., and municipalities file supplemental comments. Decision is pending.

Karlen Reed is NTCA's regulatory counsel. She can be reached at kreed@ntca.org.
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Author:Reed, Karlen
Publication:Rural Telecommunications
Date:Mar 1, 2009
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