FCC Adopts Comprehensive Pole Attachment Reform
Kelley Drye Client Advisory
On April 7, 2011, the FCC unanimously adopted an Order that comprehensively overhauls its pole attachment rules. Among other things, the Order spells out more specific rights and obligations for pole owners and attachers regarding access. The Order also substantially modifies the attachment rates for non-ILEC telecommunications companies attaching to investor-owned utility poles in the 30 states where the FCC regulates pole attachment rates, terms and conditions. The Order:
- Establishes four-stage timelines to govern most steps of the pole attachment applications and make-ready processes for both wireline and wireless attachments.
- Gives applicants certain rights to use utility-approved independent contractors if survey or make-ready timelines are not met;
- Provides wireless carriers with more clearly defined access to poles, including pole-tops;
- Reduces the disparity between current telecommunications and cable rates, by reinterpreting the telecommunications rate formula, which has the effect of lowering it to levels effectively on a par with the cable rate, in most cases;
- Adopts new guidelines that could increase penalties for unauthorized attachments;
- Declines to make the telecommunications rate available to ILECs;
- Allows incumbent LECs to file complaints regarding the reasonableness of attachment rates on a case-by-case basis.
The new rules become effective 30 days after publication in the Federal Register. Electric utilities have already signaled their intention to appeal various aspects of Order, including the revised telecom pole rate formula, the provision of expanded pole rights to ILECs, and certain make-ready reforms designed to benefit wired and wireless attachers.
Timelines and Other Measures Governing Access to PolesThe new rules create specific timelines for different phases of the pole attachment process and give attachers in the communications space the ability to complete most surveys and make-ready work using utility-approved contractors if certain deadlines are missed.
Application and Make-Ready Timeline - The Order adopts a four-stage timeline that, for most wireline attachment requests, provides a maximum of 148 days for attachers to access utility poles. This timeline applies to requests for attachments in the “communications space” on a pole. These general timelines (discussed below) will apply to applications for up to the lesser of 0.5 percent of the utility’s total poles or 300 poles within a state on a monthly basis. Somewhat longer survey and make-ready periods (an additional fifteen days) will apply to cumulative monthly requests between 300 and 3,000 attachments or up to 5.0 percent of the utility’s total poles. Even larger orders are subject to negotiation rather than Commission-mandated timelines. The rule-based timelines only apply to pole attachments under Section 224, and do not apply to Section 224 ducts, conduits, and other right-of-way.
- Survey: The FCC retains and refines the current rule that requires pole owners to respond in detail to “complete” requests for access to poles within 45 days; any denial must include a written explanation of the specific capacity, safety, reliability or engineering concern on which the pole owner based its denial.
- Estimate: The new rules require pole owners to tender an estimate of make-ready charges to attachers within 14 days of receiving the results of the engineering survey.
- Acceptance: The Order allows applicants14 days to accept a tendered estimate of make-ready charges and provide payment.
- Make-Ready Work: Once estimated make-ready charges have been paid, pole owners must complete make-ready work within 60 days (with exceptions for large orders or for “good and sufficient cause,” such as emergencies requiring federal disaster relief).
For wireless attachments located above the communications space on a pole, a longer make-ready period of 90 days (or 135 days for larger orders between 300 and 3,000 attachments) applies.
Coordination and efficient management of the make-ready process required - After an attacher has paid for make-ready work, but before work has begun, pole owners are required to provide prompt written notice, providing certain informational requirements, to all entities with existing attachments that may be affected by the planned make-ready work.
Remedy - Utility-approved contractors or FCC complaint - Attachers may hire approved contractors to perform surveys if the pole owner does not complete this task within 45 days. Similarly, if make-ready is not completed within 60 days, a pole owner (prior to the expiration of the 60-day period) must notify the attaching party that it intends to complete all remaining work within 15 days. In such cases, the pole owner has an additional 15 days to complete make-ready. If the work is unfinished at the end of the 15-day extension, then the attacher may assume control of make-ready and may hire utility-approved contractors to complete the work. Utilities are required to make available a list of contractors authorized to perform surveys and make-ready work in the communications space. The contractor remedy does not apply for wireless attachments above the communications space - the only recourse for missed timelines involving such attachments is an FCC complaint.
Revised Telecom Pole Rate FormulaThe Order modifies the telecommunications rate formula in a way designed to set the rent within a “zone of reasonableness.” The cable attachment rate formula was not modified by the Order. The Order provides a new telecommunications rate formula intended to produce a “just and reasonable telecom rate” that, as a practical matter, is expected to result in the new telecom rate approximating a pole owner’s existing cable rate. The Order rejected utility arguments that the language and legislative history of the Pole Attachment Act require that the telecommunications rate be higher than the current cable rate.
The Order provides that the rent charged for commingled services provided by cable and telecom attachers cannot exceed the new telecom rate. The Order does not disturb the Gulf Power decision, which applies the cable rate to information service attachments, and the FCC leaves VoIP service unclassified. The FCC stated that to the extent there are disputes about which rates apply to commingled services under current law, the Order does not resolve those disputes.
Enforcement ProcessThe Order implements a number of changes to the current enforcement procedures, including new pre-complaint procedure requirements, rules that give attachers greater flexibility when they may commence litigation before the FCC, and rules that will encourage arbitration prior to litigation. The FCC declined to weaken its “sign and sue” policy, which protects attachers from take-it-or-leave-it pole attachment agreements and allows them to challenge the provisions of existing agreements as unlawful, even though the attachers ostensibly entered the agreements voluntarily.
Procedures - The FCC adopted an “executive level negotiation” requirement as a prerequisite to filing a pole attachment complaint with the FCC, which requires the complaining party to certify that it held or attempted to hold negotiations between senior executives with authority to resolve the dispute from it and the other party.
Informal dispute resolution - The FCC held that including alternative dispute resolution processes in pole attachment agreements would not be unreasonable as long as such provisions do not prevent an attacher from seeking relief at the FCC.
Remedies - The Order allows the FCC to require refunds or payments of pole attachment rents or other amounts owed as far back in time as the relevant statue of limitations will permit, rather from the date the complaint is filed.
Unauthorized attachments - The Order removes the cap equal to five years’ back rent for financial penalties for unauthorized attachments under new and amended attachment agreements. In response to utility concerns that this rule did not provide an adequate deterrent, the Order finds it presumptively reasonable for new or renewed pole agreements to include contract terms that follow the Oregon PUC’s approach to penalties for unauthorized attachments (which includes self reporting, participating in joint walk-outs, notice, cure, specific identification of poles claimed to be unauthorized, and a “joint use forum” dispute resolution process) so long as the agreement also contains associated attacher protections similar to those afforded under Oregon law. The FCC made clear that other approaches to penalties for unauthorized attachments may also be found reasonable. To encourage pre-planning and coordination among pole owners and attachers, enforcement proceedings will take into account the nature and extent of such communications between the parties.