News

Think Tank: Pole Rates Can Spur Broadband

1/02/2009 7:00 PM Eastern

Uniform, lower rates for attaching broadband equipment to utility poles for all telecommunications providers would spur broadband deployment, especially in rural areas, according to a new policy paper by the Phoenix Center for Advanced Legal & Economic Public Policy.

The nonprofit think tank concluded that the “current, complicated rate structure” charged by incumbent utilities causes “inefficient investment decisions and generally results in less broadband deployment.” A uniform pricing structure would benefit consumers and increase social welfare, the organization opined.

Pole-attachment rates paid by cable operators and other telecommunications providers that place plant onto telephone poles are set by the Federal Communications Commission or state utility agencies. The rates, which now average in the mid teens in cents per pole, are set by determining how much the bare pole costs the utility that owns it, then dividing the cost of ongoing maintenance among the pole's users.

For years, the companies that own the poles have argued that their usage rates do not reflect modern costs. Also, they argue, cable companies that now sell telecommunications services should pay those higher use rates — not lower cable rates — for pole use.

“The convergence of communications networks has many implications, with one being that the regulated prices for pole attachments should likewise converge,” said George Ford, co-author of the study and chief economist at the Phoenix Center. “Having different rate structures for cable and telephone companies might have made sense when Congress and the FCC established this system 30 years ago, when networks offered very different services. Today, economically efficient pricing implies the pole rate should be common for all broadband providers, and also be much lower than the rates charged today.”