Nevada Bell Forced to Slash Pole Rates

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Federal regulators handed Nevada cable operators a major
victory by ordering Nevada Bell to slash its annual pole-attachment rates by 82 percent.

On June 18, the Federal Communications Commission's
Cable Services Bureau declared the telco's annual rate of $6.95 for space on each of
its 46,473 poles in Nevada to be "unreasonable."

It ordered the rate reduced to $1.26 per pole, per year, or
exactly what the Nevada State Cable Television Association insisted was the proper rate in
the 1996 complaint that it filed with the FCC.

Moreover, the bureau gave Nevada Bell 30 days to refund --
with interest -- the portion paid by cable operators in excess of $1.26 per pole, per
year. The refunds will date back to February 1996, when the company's annual rate was
$4 per pole.

It was not immediately clear how much those refunds would
cost the telco, since it was charging some operators the new $6.95 rate, while others were
paying the old $4 rate.

"But it's going to be a substantial amount of
money," one industry source said.

Nevada Bell has 30 days from the date of the CSB order to
ask the bureau to reconsider its mandate. Failing that, it could petition the full
commission to overturn its staff's decision.

An attorney for Nevada Bell said the company has not
decided whether to appeal.

Officials at the NSCTA also declined to comment, pending
Nevada Bell's next move.

NSCTA lawyers downplayed the outcome of the
association's FCC case, calling it a "run-of-the-mill FCC pole-attachment
decision."

"The staff simply agreed that we had come up with the
right number," said Gardner Gillespie, an attorney with Hogan & Hartson, the
Washington, D.C.-based law firm that represented the industry group.

Sources inside the FCC, however, said the decision did not
mean that the agency sided with the cable industry, but rather that the NSCTA's
financial analysis was in line with the agency's methodology for setting
pole-attachment rates.

"The number that we came up with happened to agree
with what the cable operators were proposing," an agency official said. "It was
simply a matter of doing the math."

The official said Nevada Bell challenged the agency on two
counts.

First, it disagreed with the CSB's way of calculating
net-deferred-operating-income taxes when setting pole-attachment rates, offering an
alternative method that the bureau rejected.

"They wanted to change our formula to suit their own
purposes," the CSB official said.

The telco also objected to the agency's usual practice
of presuming that a pole contains 13.5 feet of usable space. However, it lost that
argument when it failed to provide sufficient data to support its position, the FCC
insider said.

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