Cable’s New Pole Problems

FCC’s Actions Could More Than Double Attachment Fees

By John Eggerton -- Multichannel News, 9/6/2010 12:01:00 AM

Washington — Some cable operators are worried they might have to pay hundreds of millions of dollars in additional pole-attachment fees as a byproduct of the Federal Communications Commission’s proposed reclassification of broadband service.

While the FCC generally is on the same page as cable operators when it comes to reducing the agency-regulated fees that cable operators pay power utilities to attach their plant to electric poles, there is reason for concern about unintended consequences.

The issue of the price of sharing utility poles has come up twice in the past several weeks, both in regards to the FCC’s proposal to reclassify broadband access service as a separate Title II telecommunications service, subject to some common-carrier regulations, and in comments to the FCC on a separate inquiry into bringing the attachment rate paid by telcos more in line with cable as a way to spur broadband deployment.

PRICE COULD DOUBLE
The American Cable Association, whose members are mostly the rural operators who use plenty of those poles, has argued that if the FCC reclassifies broadband transmission as a separate service, rather than as commingled with television, its cable-operator members will be compelled to pay the telecom rate.

That rate is often double what cable pays, said attorney Daniel Brenner of Hogan Lovells, who filed comments last week in the FCC’s pole-attachment inquiry.

Under the FCC’s current poleattachment regime, a cable company that delivers cable and Internet service over the same plant is charged the lower cable- TV attachment rate. If Title II reform separates those services — and classifies cable-modem service as telecommunications — the ACA is concerned that its cable-operator members could be charged the higher telcommunications rate for any portion of their infrastructure the FCC deems to be telecom-related.

The good news is that the FCC is currently trying to lower that telecom rate. But it has yet to make that a binding regulation, as witnessed by comments two weeks ago on what it should do.

So even if the ACA and others are preaching to the choir, they are taking no chances.

Anecdotally, Tyrone Garrett of Sikeston, Mo.-based cable operator SEMO Communications told the FCC he could face a three-fold increase in his pole-attachment rate if the FCC reclassifies broadband transmission as a telecommunications service.

One pole owner’s rate would increase to $35 per pole per year, from $9, according to Garrett. If such an increase held true for all 4,200 poles on which SEMO rents, attachment fees would jump from $37,000 per year to $147,000.

SEMO said the prospect of absorbing that kind of increase has delayed plans to expand broadband to rural areas.

NewWave Communications rents space on 220,786 poles. That MSO’s president, James Gleason, told the FCC that reclassification would up the rate from at least one pole owner to $37 from $9 per pole. Extrapolated over all attachments, that would be an increase to $8.1 million from about $1.98 million per year, which would force New- Wave to “evaluate” whether it could continue serving the rural areas it already reaches.

Big cable operators also are worried about the possible cost spike. In comments earlier this year for seventh-largest-cable operator Bright House Networks, Brenner pointed out that having to pay the higher telecom rate for, say, an Ethernet connection to a school can cost another $220,000.

Bright House was speaking the FCC’s language when it talked about delivering service to a school, one of the anchor institutions the agency wants to connect to broadband. In the pole-attachment proceeding, the FCC indicated that it wanted to lower and align the cable and telecom rates as part of the National Broadband Plan’s goal of speeding broadband adoption.

Brenner said the FCC proposal is that the telecom rate would “almost always” be no higher than the cable rate. “Certainly the commission is not intending, whatever they do on Title II, to eliminate this important proposal to reduce pole rates,” he said.

The pole-attachment issue is one in which the Genachowski commission has been positively inclined toward cable. That’s because the industry’s interest in lower rates is on the right side of the broadband deployment issue, said Brenner.

If the FCC does forbear from the pole-attachment regulations in Title II, one veteran cable attorney said, that would mean the agency would no longer set the rates for cable or telecom pole attachments and utility pole owners could charge whatever they want.

CORRECTABLE ‘ACCIDENT’
That would work against the FCC’s goal of lowering rates to spur broadband, which is why the attorney, who asked not to be identified, thinks the FCC made a mistake in not including the pole-attachment section — 224 — among those it would apply.

Fixing that “accident” should be easy, the attorney said. “All they have to do is say: ‘We’re going to resolve broadband in this way and it is not going to involve forbearing from 224.’ ”

The FCC did ask in its reclassification proposal whether or not it had the power to forbear from the pole-attachment section, so it is thinking about it. “The FCC has made it clear in its National Broadband Plan and Pole Attachment proceeding that its goal is to set pole attachment rates that are as low and uniform as possible,” said an FCC spokesman.

The FCC will also need to follow through on its proposal to lower the telecom rate, which cable operators will have to pay for whatever portion of their service the FCC concludes is delivering Internet-access service.