U.S. Court of Appeals Denies Challenge to FCC Pole Attachment Payment Regime

2/27/2012 10:57 AM Eastern

The U.S. Court of Appeals has upheld the Federal Communications Commission regime for the price cable and telecom companies pay for connecting to utility poles as "just and reasonable."

The FCC is directed by Congress to set a reasonable range of compensation and gives the FCC discretion within that range. Power companies can refuse connection -- per the original 1978 pole attachment law, but that was narrowed in the 1996 Telecom Act to cases of insufficient capacity or specific exceptions for things like safety and reliability. The Supreme Court upheld the FCC's pole attachment compensation regime in 1987.

Following the 1996 act modification, Gulf Power and other utilities raised their rates beyond the maximum, cable operators challenged the increase and the FCC ruled in favor of cable operators. It is that decision Gulf Power was challenging in the petition that has now been denied.

A three-judge panel of the D.C. Circuit last week said it was denying the appeal for a couple of reasons. First was that it held that Gulf Power's challenge was essentially mute because the 11th Circuit in the Alabama Power case (2002) had already ruled on a similar challenge, and since Alabama Power and Gulf Power, were both owned by Southern Company, the court ruled that the doctrine of "issue preclusion" applies, which bars re-litigating the same case in a similar court.

Gulf Power had also argued that the court had a new issue in front of it because the FCC had applied that 11th circuit decision on when a pole was at capacity too narrowly.

The D.C. Circuit was having none of that, either. It upheld the FCC interpretation that the fact that a utility company might have to rearrange some connections to make room did not mean the pole was at capacity.

"[T]he necessity of make-ready work before attaching a new cable does not, by itself, entail expanding" a pole's capacity or indicate that capacity was insufficient. Anyone who has had to rearrange plates in a dishwasher to fit in one more item, or to reconfigure plugs on a power strip to attach one more electronic device, knows that such 'make-ready' work does not expand the device's capacity (in the normal sense of those words), but merely makes possible a more efficient use of existing capacity."

"I'm pleased that the Court affirmed the FCC's order encouraging rapid and widespread broadband build-out by providing fair access to unused space on utility poles," FCC chairman Julius Genachowski said. A Southern Co. spokesperson was reviewing the decision at press time. Southern could appeal the panel decision to the full court.

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