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Court Upholds FCC Move to Lower Rates for Telecom Pole Attachments

Wednesday, February 27, 2013

By Paul Barbagallo  

The U.S. Court of Appeals for the District of Columbia Circuit upheld the Federal Communications Commission's 2011 decision to order changes to the rates that utilities can charge telecommunications providers to string their wires on utility poles, in what amounts to a small victory for the FCC as the agency continues to encourage the spread of high-speed internet access throughout the country (American Electric Power Service Corp. v. FCC, D.C. Cir., No. 11-1146, 02/26/13).

In the ruling handed down Feb. 26, a three-judge panel of the court said the FCC had met the “modest demands” for explaining the changes and therefore “upholding its decision follows ineluctably.”

Among the most notable changes the FCC made was setting a new rate that utility-pole owners can charge to telecom providers--$7 per foot per year, about the same as what cable operators pay.

As the agency explained, past decisions by the commission had yielded rates for cable operators of about 7.4 percent of the annual pole cost, with rates for telecom providers ranging between 11.2 percent and 16.9 percent. In trying to eliminate the disparity, the FCC gave utilities the option of charging the higher of either the cable rate, or the original “telecom rate” with a cost factor multiplied by fractional coefficients--66 percent for urban poles, and 44 percent for rural poles.

The FCC also required utilities to allow telecom providers to attach lines and equipment to poles within 148 days of a request, and within 178 days for wireless antennas.

Response to Distortion of Competition

American Electric Power and other power companies filed suit to overturn the FCC's decision, but the court said the agency was justified to act.

“Although [American Power] challenges this policy justification, they offer neither theory nor fact to contradict the commission's fundamental proposition that artificial, non-cost-based differences in the prices of inputs among competitors are bound to distort competition, handicapping the disfavored competitors and at the margin causing market share and capital to flow to less efficient firms,” Judge Stephen F. Williams wrote for the court.

Over the past 10 years, some utility companies have sharply raised their pole-attachment rates, charging what government officials and telecom providers say is the equivalent of monopoly rents.

The former Bell operating companies claim they have been overcharged by up to $350 million a year.

The issue has been of critical importance to the FCC's “Broadband Acceleration Initiative.” The agency's 2010 National Broadband Plan highlighted the current pole-attachment process as a potential hindrance to increased broadband build-out.

In a statement, USTelecom Association President and CEO Walter B. McCormick Jr. said the ruling now “provides the certainty and predictability” to invest in expanding networks.

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