Policy

Cable’s New Pole Problems

9/07/2010 5:04 AM Eastern

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.

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