As set forth in notes buried in the Code of Federal Regulations, these rules were not effective pending approval by OMB, to be followed by notice from the FCC of that approval. The Commission’s publications in the Federal Register on August 26 and August 27, 2013, now make these rule provisions immediately effective and enforceable.

As a practical matter, many industry participants may have proceeded as though these rules were already in effect or may have had analogous contractual obligations, but the rules’ formal effectiveness gives them teeth backed by potential enforcement before or by the Commission. Recent changes to the FCC pole attachment rate formulas that were upheld earlier this year brought the attachment rates for telecommunications carriers closer to those of cable operators under certain conditions, but in many circumstances there can still be a considerable difference in the two rates. For this reason, the National Cable and Telecommunications Association ("NCTA") brought a petition for reconsideration, which is still pending, in an attempt to bring the telecommunications carrier rate down to the cable operator rate in virtually all situations. Until that happens, if ever, where a cable operator is also providing telecommunications it will often be relevant whether the offering meets the definition of “telecommunications services,” both with regard to the rate paid and whether notice to the pole owner is required. Many cable operators may already be under a contractual obligation to notify pole owners when they begin to provide telecommunications services, but the Commission’s August 27 announcement now makes notice an effective obligation under the rules with attendant potential enforcement ramifications.

Similarly, this week’s Federal Register notices make formally effective rules not only regarding the content of complaints regarding pole attachments and access to other rights of way, which parties have been using as a guideline for more than a decade, but also the regulatory obligation of pole owners to make available information, upon request, regarding rates, terms, and conditions. More to the point, the now effective third sentence of Rule 1.1404(j) provides that a utility, within 30 days of receiving a request, must supply a cable television operator or telecommunications carrier information the utility relied upon to establish a rate, term, or condition for attachment to or occupation of the utility’s pole, conduit, duct, or other right-of-way. On its face, this obligation extends not only to annual attachment or conduit fees but charges for make ready and other non-recurring activities.

Again, as a practical matter many utilities have been in the practice of providing information to attachers regarding their annual attachments fees, but the now formally effective rule may prove another arrow in the quiver of existing and would be attachers questioning the level of any of a utility’s charges.

The American Electricity Power Services Corporation and other electric utility companies (“Petitioners”) challenged three aspects of the FCC’s Report and Order. (1) The Report and Order interpreted Section 224(b)(1) of the Act, which authorizes the Commission to regulate the rates, terms and conditions of “pole attachments” and assure that they are “just and reasonable,” to apply to incumbent local exchange carriers (“ILECs”) as “providers of telecommunications services.” Building on this interpretation, the Report and Order enabled ILECs to bring complaints before the FCC against investor-owned utility pole owners on whose poles they are attached, even though the statute excludes ILECs from the definition of “telecommunications carrier” for purposes of Section 224. (2) The Commission adopted a new pole attachment rate formula applicable to telecommunications carriers (the “telecom rate formula”) specifically designed to bring the telecom rate down to the same level as that paid by cable operators when the FCC’s presumed number of attachers is used in the telecom rate formula. (3) The Report and Order modified the FCC’s rules, which had limited to compensatory damages to be awarded only from the date of a complaint to the FCC going forward, to allow damages to be awarded for a period prior to the date of the complaint consistent with the applicable statute of limitations.

The Court denied all three challenges in their entirety, applying Chevron deference to the Commission’s interpretations. The Court’s opinion, quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009), underscored that where the FCC modifies its regulations, as it did in the Report and Order, the hurdle the Commission must clear is a “modest” one. Specifically, the Commission “need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better.”

First, the Court upheld the extension to ILECs by the 2011 Report and Order of complaint rights regarding the justness and reasonableness of rates, terms, and conditions applicable to ILEC pole attachments. The decision turned on the proper interpretation of the term “provider of telecommunications services” as used in Section 224. The Court agreed with Petitioners that in Section 153 of the Act, the term “telecommunications carrier” generally equates to the “term provider of telecommunications services,” and both terms include ILECs. But the Court disagreed with petitioners that the exclusion by Section 224 of ILECs from the definition of “telecommunications carrier” for purposes of that section commensurately narrowed the term “provider of telecommunications services” as used in that section as well. The Court found that where Section 224 uses the term “provider of telecommunications services” rather than the term “telecommunications carrier,” specifically in Section 224(b)(1), the FCC’s interpretation that Congress meant to include ILECs in the firmer term was entitled to deference. The Court went so far as to say it “very much doubt[ed] if the prior interpretation [of Section 224(b)(1) by the Commission to exclude ILECs from that subsection’s benefits] was reasonable.” But, even assuming that that earlier reading was reasonable, the Court found that, as required by the Fox case, the Commission offered sufficient reasons for the change in its interpretation of the statute and, thus, in the content of the FCC’s rules.

Second, the Court affirmed the Commission’s decision to adopt telecom rates under Sections 224(d) and (e) that the agency designed to be substantially equivalent to cable operator rates when the FCC’s presumed numbers of attachers was used. The Report and Order set the telecom rate as the higher of the pre-Report-and-Order telecom formula rate times a newly adopted “cost factor” – 66% for urban poles, and 44% for rural poles – or a rate aimed at covering all costs caused by an attachment. (Typically, the first result would be higher.) Petitioners contended unsuccessfully that, the use of the term “cost” in Section 224(e), must be interpreted such that the telecom rate formula will allow for recovery of fully allocated cost. Although the Court noted that the provisions of Section 224 limit Commission authority when adopting regulations to ensure that pole attachment rates are “just and reasonable,” in the case of the permissible telecom rate formula, the Court concluded that the operative term “cost” was undefined and ambiguous. For these reasons, the Court recognized the Commission’s discretion to interpret “cost” and establish a telecom rate formula resulting in rates substantially equal to the rates paid by cable operators in order to pursue the policy objective of removing non-cost-based distortions between telecom carrier and cable operator pole attachment rates. The Court, applying Fox, stated that the FCC’s decision must stand “[i]n the absence of some feature of the law or facts that contradicts the Commission’s effort to eliminate that distortion.”

Third, the Court affirmed the Commission’s decision to revise its earlier determination that attachers, when they have been overcharged by pole owners under Section 224, are entitled to refunds only starting at the date of the initial complaint. The Court made short shrift of the Petitioners’ challenge to the decision in the Report and Order to now determine refund periods “consistent with the applicable statute[s] of limitations.” The Court found the Petitioners’ challenge had “no serious statutory basis” and that the Commission adequately explained its reasons for the change in its rules to satisfy Fox, namely to remove the disincentives of parties to negotiate prior to filing a pole attachment complaint.

Now that the Court has decided the appeal, the stage is set for lobbying and for the Commission to rule on the two pending petitions for reconsideration filed following the adoption of the Report and Order. One, filed by the National Cable & Telecommunications Association and others seeks to modify even further the telecom rate formula to better align the telecom rate with the cable rate when the average number of attachers on poles differs from the traditional rebuttable presumptions of three in non-urban areas and five in urban areas. The other pending petition, filed by the Coalition of Concerned Utilities, seeks a number of minor but substantive rule changes in electric utilities’ that would be in favor when faced with attachment requests. Activity surrounding these petitions had been minimal pending the appeals following the initial comment period.

In addition, it remains to be seen whether the Court's decision upholding the complaint rights of ILECs will lead to a wave of ILEC complaints at the Commission. To date, only one such complaint has been filed, by Frontier West Virginia v. Appalachian Power Co. in June 2012, and it remains pending. Some ILECs may have been waiting to see how the appeal would be decided before deciding whether to pull the trigger and file. But before that happens, it is reasonable to expect that electric utilities will seek resolutions without adjudication rather than face unwelcome FCC precedent regarding rates, terms and, conditions in cases of joint use and ownership.