by Shirley S. Fujimoto and Jeffrey L. Sheldon, Fish & Richardson
The Federal Communications Commission (FCC) on April 7 unanimously adopted new rules governing telecommunications and cable attachments to electric utility poles. These rules, which reduce the cost of attachment and streamline the process for attaching entities, will have significant regulatory, administrative, operational and financial impacts for electric utilities.
The rules come out of a 2009 congressional directive to the FCC to develop a National Broadband Plan to encourage the nationwide deployment of broadband services and to remove barriers to infrastructure investments. The FCC concluded that the existing pole access rules and attachment rates were obstacles to the widespread deployment of broadband services. The FCC’s rules, which incorporate certain state practices that were adopted earlier in New York, Oregon and Utah, will apply in states that do not regulate pole attachments but also could be influential in states that have asserted jurisdiction to regulate pole attachments.
While the FCC’s new rules are great for telecom and cable providers, they could challenge utilities. Pole owners should review the FCC’s order to evaluate the impact on their specific operations. In the meantime, here is what you need to know now.
New Telecom Rate
The FCC drastically revised the rate formula that telecommunications providers pay to attach to electric utility poles to lower the rate to approximately the same level as cable operators. The FCC adopted a range of rates: a lower-bound rate where the cost of capital expenses such as depreciation, rate of return and taxes no longer will be permitted and an upper-bound rate where costs for third-party attachments are reduced to 66 percent or 44 percent of the current telecom rate, depending on whether the poles are in urban or rural areas.
The FCC adopted a four-stage timeline that utilities must meet for processing wired and wireless pole attachment access requests. These provide for a maximum of 148 days from submission of the request through completion of make-ready for attachments in the communications space and 178 days for wireless attachments above the communications space. The FCC’s timeline allows additional time for large projects and flexibility for utilities to stop the clock for good and sufficient cause during the make-ready process or before providing a make-ready estimate if the parties have not entered into a master agreement.
The timelines include: 45 days for survey and engineering study to determine whether and where the attachment is feasible and what make-ready work is required; 14 days for a utility to provide an estimate of make-ready charges to the attaching entity; 14 days for an attacher to accept the estimate; and 60-75 days for make-ready for attachments in the communications space or 90-105 days for make-ready for wireless pole top attachments.
Attacher’s Remedy if Deadline is Missed
If a utility does not meet the deadline to complete a survey or make-ready for attachments in the communications space, a prospective attacher may hire a contractor approved by the utility to conduct the survey or complete the make-ready, including rearranging existing attachments on the pole. The prospective attacher must invite the utility to accompany and consult with the contractor, and the utility retains final decision-making authority on matters of capacity, safety, reliability and generally applicable engineering concerns. For attachments of wireless equipment above the communications space, the prospective attacher does not have a self-help contractor remedy but may file an FCC complaint. In such a complaint case, the utility will be required to overcome a presumption that it did not provide access on just and reasonable terms and conditions.
The FCC clarified that a utility may not impose a blanket prohibition against wireless pole top attachments. While a utility has the right to deny access to wireless attachments by a telecommunications provider, any denials must be specific regarding the particular attachment or attachments and the particular pole or poles at issue. Wireless attachers also may use contractors to attach a wireless antenna above the communications and associated safety space if they use contractors with proper qualifications that the utility has approved to perform such work. Utilities are not required to keep a separate list of contractors for this purpose but must be reasonable in approving or disapproving contractors.
Incumbent local exchange carriers (ILECs), who previously did not qualify for regulated rates, now will have the right to file a complaint with the FCC if they believe their rates, terms or conditions for attachment to electric utility poles are unjust or unreasonable.
These new rules will be difficult for the utilities industry, but it is widely expected that they will be subject to future FCC review and court challenges brought by stakeholders with divergent interests.