UTC and EEI filed a joint opposition to the petition for reconsideration or clarification ("petition") by the National Cable and Telecom Association (NCTA), COMPTEL and tw telecom inc., which seeks to further reduce the rate for telecommunications attachments on utility poles. UTC and EEI explained that the Federal Communication Commission (FCC) should reject the petition because it is procedurally defective and proposes relief that is contrary to the statute, arbitrary and capricious.

UTC and EEI stated that the petition is procedurally defective because it proposes a new rate structure that is beyond the scope of the FCC's pole attachment order, which could have been proposed at an earlier stage in the proceeding. They then explained that the petition is contrary to the statute, arbitrary and capricious because it would introduce five or six definitions of "cost" into the rate formula that have no basis in the statute or case law or economic theory; these different percentages would effectively nullify the provisions in the statute that apportion the cost of the unusable space among attaching entities and which guarantee cost recovery of 2/3ds of the unusable space costs. UTC and EEI also opposed the Petition for proposing alternative relief that would lower the telecom rate down to either the cable rate or a rate that excludes capital costs, whichever is higher. They explained that the Petition presents no new facts that would justify reconsideration of this alternative relief which is akin to the relief that the Commission already considered and rejected.

Yesterday, the Federal Communications Commission filed a “Motion to Hold Case in Abeyance” with the U.S. Court of Appeals for the District of Columbia Circuit, arguing that pending petitions for reconsideration of the FCC’s April 7th pole attachment order touch on issues that are currently pending before the court. The FCC further argues that the FCC’s decision on those pending petitions for reconsideration could potentially conflict with any decision by the court. As a legal matter, the FCC claims that “it is a common practice for the reviewing court, on request by the agency or by other parties, to hold its review proceeding in abeyance pending agency action on the petitions for reconsideration.” Moreover, the FCC argues “that approach makes sense in these circumstances,” because allowing FCC to address the issues on reconsideration first would “simplify judicial review by resolving issues that the Court otherwise would need to address, or by clarifying or providing additional analysis of issues that remain in dispute,” and it would “mitigate the possibility of piecemeal (and possibly inconsistent) judicial review…” For more information, contact the UTC Legal/Regulatory Department.

While the FCC has not released its actual Report and Order on pole attachments, based on the FCC’s press release that was issued today the new rules will harm utilities in many ways, and help them in one way. Specifically, the FCC will reportedly will establish a deadline of up to 148 days for utility companies to allow pole attachments in the communications space, with a maximum of 178 days allowed for attachments of wireless antennas on pole tops, and an extra 60 days for large orders. In addition, the FCC is lowering the rate for attachments by telecommunications companies to a rate that is at or near the existing cable television rate; and it will clarify that this rate also applies for wireless attachments. The FCC will also allow ILECs to file complaints with the FCC regarding the rates, terms and conditions of pole attachments, but – and this is a big but – it won’t entitle ILECs to a regulated rate schedule. It clarified that utilities must explain the denial in terms of the specific capacity, safety, reliability, or engineering concerns; and it encouraged negotiated resolution of disputes and pre-planning and coordination between pole owners and attachers, which will be taken into account in any enforcement action. Finally – and this is good news – it will remove the cap on penalties for unauthorized attachments.

In several different ex parte filings during the last week at the Federal Communications Commission (FCC), UTC and other electric utility industry groups opposed FCC expansion of pole attachment regulation of ILEC pole attachment rates. UTC explained that giving regulated rates for ILEC attachments would be “contrary to the statute and congressional intent and would undermine critical infrastructure by abrogating joint use agreements that are fundamentally based upon cost sharing and parity of pole ownership.” This followed filings by the Alliance for Fair Pole Attachment Rules (including, American Electric Power Service Corporation, Duke Energy Corporation, Entergy Services, Inc., Florida Power & Light Company, Progress Energy, and Southern Company) and the Edison Electric Institute, which focused their opposition on regulated rates for ILECs. The Alliance quoted the FCC’s own determination in 1998 that ILECs have “no rights” under Section 224 with respect to the poles of other utilities, and EEI contradicted carrier claims that Section 224(b) provides regulated rates for ILECs as “providers of telecommunications services” even though Section 224(a)(5) excludes ILECs as “telecommunications carriers” for purposes of pole attachments.

Most recently, PEPCO CEO Joseph Rigby filed a letter with the FCC expressing safety and reliability concerns, stating that “[w]hile I fully support the National Broadband Plan’s goal of improving our communications infrastructure to make low-cost, high speed Internet available to all Americans, I want to be certain that this does not come at the expense of critical infrastructure. He explained that “our electric grid is a complex system that – although resilient – remains susceptible to factors beyond a utility’s control ranging from the weather to the strain or unauthorized attachments.” He urged the FCC to “consider these concerns carefully and ensure protections are in place to guarantee that critical electric infrastructure is not compromised by promoting attachments without adequate resources to mitigate this new strain on utility systems.”

Yesterday, the FCC held a “Broadband Acceleration Conference” which included a keynote address by FCC Chairman Genachowski, who announced that the FCC was launching a Broadband Acceleration Initiative designed to reduce regulatory barriers, “such as barriers to accessing utility poles, rights-of-way, and sites for wireless towers.” As part of this Initiative, the Chairman explained that in April the FCC would be initiating a Notice of Inquiry on rights-of-way, and that it would be issuing an Order on pole attachments. Read more »

The Edison Electric Institute filed a Report and Supplemental Declaration that provides an economic analysis of the FCC's pole attachment rate policies. It concludes that the existing rates for cable television and telecommunications attachments significantly subsidize the communications industry and discourage electric utilities from making investments in distribution infrastructure. The Report further concludes that these subsidies and their dampening effect on infrastructure investment would be exacerbated if pole attachment rates were based on marginal costs as proposed in an economic study filed by the cable television industry. Specifically, the Report finds that the existing rates do not account for the full capital and operating costs of pole attachments and that make ready charges, which recover incremental costs, only cover a "small fraction" of electric utility costs associated with pole attachments. The Report also finds that proposed reductions to various carrying charge elements of the FCC’s rate formulae (including the maintenance, interest and administration elements) would exacerbate the subsidy. Declaring that the FCC's presumption of attaching entities in urban and non-urban areas "do not reflect reality" thus subsidizing the cost of pole attachments further. For more information, contact the UTC Legal/Regulatory Department.

A capacity crowd of utilities, including 48 people representing 32 companies and trade associations, met with the FCC this week to describe real-world issues throughout the pole attachment process. The meeting included presentations from a panel of utility representatives, including Ameren Services Company American Electric Power, Baltimore Gas and Electric, CenterPoint Energy, Dominion Virginia Power, Duke Energy, Florida Power and Light Georgia Power, National Grid, Oncor Electric Delivery, PPL Electric Utilities, and Tampa Electric Company. Many other utilities were in attendance to provide their views during questions and answers following the presentations.

During the course of the two-hour plus meeting, utilities explained that pole attachments involves a complex process of permitting, engineering, inspection and auditing, and that utilities and pole attachments are unique –defying cookie-cutter regulatory solutions. Utilities also explained that imposing such regulatory solutions won’t promote broadband deployment; instead, the FCC should be promoting cooperation between pole owners and attachers. Finally, utilities illustrated numerous safety violations and debunked the myth that pole attachments don’t overload poles. Representatives from the FCC’s Wireline Competition Bureau and Enforcement Bureau, as well as from Commissioner McDowell’s office were on hand and asked a variety of questions ranging from the joint use process to make ready to wireless attachments. For more information, contact the UTC Legal/Regulatory Department.

At long last, the FCC’s latest order on pole attachments was published in the Federal Register and will officially go into effect on September 2, 2010.  The order comes almost a month after the FCC’s further notice of proposed rulemaking was published in the Federal Register, even though the order and the further notice were released simultaneously by the FCC back on May 20, 2010.  By way of background, the order clarifies that communications providers have a statutory right to use space-and cost saving techniques that are consistent with pole owners’ use of those techniques.  The order also establishes that providers have a statutory right to timely access to poles.  As a practical matter this order means that a pole does not have “insufficient capacity” if it can accommodate a new attachment through boxing and extension arms and bracketing; and it means that utilities are obligated to provide timely “make ready”, regardless of whether the FCC ultimately adopts specific timelines, as proposed in its further notice of proposed rulemaking.

In a related development, the FCC also published in the Federal Register a correction to its proposed telecom rate formula in its further notice of proposed rulemaking.  Specifically, the correction substitutes the term “maintenance and administrative carrying charge” for the term “maximum carrying charge” in the proposed telecom rate formula.

In the wake of the FCC's announcement last week that it intends to adopt an order and further rulemaking on pole attachments during its May 20, 2010 open commission meeting, UTC and other utility industry advocates have been meeting with the FCC to express their continued opposition to rate subsidies and new access requirements for pole attachments that would threaten safety and reliability of critical infrastructure.

UTC met with FCC commissioners, their staff, and the staff at the Wireline Competition Bureau and urged the FCC not to adopt many of the recommendations in the FCC's National Broadband Plan (NBP). Specifically, UTC opposed recommendations for a broadband rate based upon the current rate for cable television attachments and recommendations for one-size-fits-all standards and timelines for access as well as the establishment of a pole attachment database that would be publicly accessible and searchable. UTC and utility representatives explained such a database would be impractical and would take resources away from the deployment of broadband. UTC has been informed that many if not all of the NBP recommendations will be included as part of the further rulemaking, but the order itself will address nondiscriminatory access for pole attachments in general, rather than imposing specific requirements.