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Cable Operators Push FCC on Poles

MSOs: Utilities Already Seeking Title II -Driven Rate Hikes 6/15/2015 8:00 AM Eastern
TakeAway

Cable operators warn that Title II classification of Internet access could bring massive pole-fee hikes.

WASHINGTON — Cable operators said they are facing steep pole-attachment increases that could run into the hundreds of millions of dollars — just another one of the bones they have to pick with the Federal Communications Commission’s move to reclassify cable broadband- Internet service as a telecom offering subject to common-carrier regulations.

 

A pair of cable lobbying groups — the American Cable Association and the National Cable & Telecommunications Association — are urging the FCC to act ASAP on a petition from NCTA and Comptel to ensure the FCC’s effort to lower pole-attachment rates really does that in a world where ISPs are regulated under Title II of the Communications Act.

 

The ACA said utility pole owners have begun informing its members — mainly smaller, independent cable operators — that attachment rates could go up as much as 80% in the wake of the reclassification of broadband ISPs as telecoms under Title II. Its assertion came in comments on the FCC’s request last month for more input on the petition. The NCTA, which represents larger MSOs, cited an example of an 81% increase.

 

STEEP POLE CLIMB

 

The industry-wide boost in rates under Title II could be $200 million, the NCTA estimated.

 

Telecoms have historically paid pay more for those attachments than cable operators. In the interest of promoting broadband, though, the FCC in 2011 tried to harmonize the rates by lowering the telecom rate to match cable’s.

 

In practice, that move turned out not to have worked “in all circumstances,” said cable operators, and pole owners were given a cost-allocation alternative that allowed them to still charge a higher rate. MSOs asked the FCC to fix that, but it has yet to act on a petition.

 

As of June 12, cable broadband became a telecom service subject to those potentially higher rates. The ACA and the NCTA had urged the FCC to fix the problem before it took action on new network-neutrality rules.

 

In a filing with the FCC, the ACA said “as long as the FCC fails to take the action on a petition by the National Cable & Telecommunications Association and others to shield cable operators from pole hikes, pole owners can levy higher attachment rates, deterring investment and broadband deployment by affected cable operators.

 

“[T]he consequence of the reclassification decision is that cable operators, including ACA members, that have not provided and do not otherwise provide a telecommunications service, potentially face much higher pole-attachment rates,” the ACA said.

 

The NCTA said fixing the problem would promote broadband deployment, which, along with broadband adoption is the FCC’s current regulatory focus. It cited Vyve Broadband, a small, mostly rural cable operator that it said had recently received a notice from an electric utility “that its telecommunications attachment rate was increasing to a level that is 81% higher than its cable attachment rate.” That rate would apply to 27,000 poles, the NCTA said — it takes Vyve more than an average of three poles to reach its rural subscribers.

 

That increased cost “significantly increases the cost of operating its existing network and reduces its ability to expand the reach of that network to new customers,” the NCTA said.

 

Comcast said that one pole owner, American Power, recently notified the MSO that, as a telecom, its going pole-attachment rate would be $21.65 — a 72% increase over the cable rate of $12.54.

 

The FCC declined to forbear from the pole-attachment rate provisions in Title II, but the NCTA pointed out that in the network neutrality order, the regulator did caution that “any increase in the rates” prompted by the reclassification would be “unacceptable as a policy matter.”

 

But given its American Power notice, Comcast said: “While the commission’s efforts to rein in pole-attachment rate increases triggered by the Open Internet Order ’s reclassification … are appreciated, the reality is that such pole rate increases are coming.”

 

INTENTIONS VS. REALITY

 

NCTA president and CEO Michael Powell raised the issue of what the FCC wanted to happen after Title II reclassification and what would happen in a call with reporters where he laid out his legal argument against Title II.

 

While it’s all well and good to claim “this and that won’t happen,” Powell said, no one should be mollified by such an assertion.

 

Not surprisingly, the Utilities Telecom Council has told the FCC to reject the petition.

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