The use of utility company poles by cable companies and other communications providers has been regulated by the Federal Communications Commission since 1978. The FCC recently adopted new regulations that reduce pole rental charges and expand access to poles by attachers. The goal of the FCC is to promote the availability of broadband service by lowering the overall cost for use of poles by broadband and other communications providers. The new regime will be subsidized by utilities and will require careful review of traditional operations and contract policies.
The loss of pole revenues under the new rules will force utilities to undertake more active management of pole attachments to minimize the loss. At the same time, the utilities have been given an expanded right to collect penalties for unauthorized attachments, meaning that active management of pole plant can identify the free riders and generate new income from past rents, interest and penalties. Finally, because the FCC adopted a new “shot clock” for completion of attachers’ requested attachments, with penalties for pole owners’ failure to meet deadlines, utilities must organize contracts and pole attachment approval procedures to efficiently process applications.
Rents. Pole rents for attachers are determined by cost-based formulas. Rates vary depending on whether an attacher is a cable, telecommunications company or other type of attacher. The new rates reduce the cost for telecom attachers by up to 60% by changing the cost components of the formula and making other changes. The maximum rates for cable company attachers will remain at low levels. The FCC expects that most rates will be reduced to the old cable rate levels.
Unauthorized Attachments. In surveys, utility companies have found as much as one third of the attachments on their poles are not authorized. Not only do these unauthorized attachments represent a loss of revenue to the utilities, they cause unknown risk to utility linemen, the public, and legitimate attachers. Prior law severely limited the recovery of past rents from newly-discovered attachments and made it difficult for pole owners to collect penalties for unauthorized use of their poles. The new regulations give utilities more flexibility to establish penalty provisions in their agreements and give significant tools to a utility to force attachers into compliance.
Engineering. In the new regulations, the FCC agreed to expand the rights of attachers to make use of attachment procedures that utilities traditionally banned, such as “boxing” attachments and using cross-arms. Over the objections of utility companies, the attachers were also given expanded rights to use the tops of poles for wireless attachments. Pole owners may still prevent use of certain techniques on safety and engineering grounds, but attachers have new rights to challenge such grounds.
Telephone Company Access. Incumbent local exchange carriers are specifically excluded from pole attachment regulation, leaving those companies without the protection of regulated rates for their attachments. The new FCC regulations confer a limited, if controversial, degree of supervision over terms imposed on these attachers by pole owners.
FCC Proceedings and Going Forward. In later notes, we will describe the efforts of the affected industries to modify the FCC’s new pole regime and provide some guidance for decision-making under the new regulations.