After kicking open a door to potential annual pole attachment rental increases in the hundreds of millions of dollars when it adopted its February 2015 Net Neutrality order, the Federal Communications Commission yesterday released an order unanimously granting a four-year-old petition for reconsideration. A number of cable, broadband, and telecommunications industry players filed the petition to eliminate pole-attachment rate disparities and complexities between “rural” and “urban” areas and between and among various defined classes of electronic communication providers. Yesterday’s ruling eliminates remaining loopholes that could have dramatically raised cable operator pole rentals and electric-utility windfalls resulting from the FCC’s February 2015 Net Neutrality order (which we analyzed here) that defined “Broadband Internet Access Service” as a “telecommunications service.” Specifically, yesterday’s ruling (addressing the petitions of the National Cable and Telecommunications Association, COMPTEL, and tw telecom inc.), refined the Commission’s interpretation of the statutory term “cost” to eliminate rate disparities between applications of the “cable” rate defined by section 224(d), and the “telecom” rate set forth at section 224(e). In a nutshell, the Order adopts scalable cost adjustment factors that apply no matter the average number of attachments. This change decouples the adjustment factors from the Commission’s presumptions of 3 and 5 entities per pole in non-urban and urban areas, creating new adjustment factors for poles with 2 and 4 entities (as well as anything in between). In so doing, the Order ensures that the telecom rate approximates the cable rate, even where utility owners survey their pole attachments to rebut the Commission’s presumptions. These are the factors that the Commission adopted yesterday:
- 66% for poles with 5 attaching entities
- 56% for poles with 4 attaching entities
- 44% for poles with 3 attaching entities
- 31% for poles with 2 attaching entities
Where pole owners conduct their own survey and arrive at an entity figure that is fractional (a non-integer), the Commission determined that “the percentage cost allocator will be located between the whole numbers at the point where it most closely approximates the cost used in the cable rate formula.” While we are continuing to review yesterday’s Order on Reconsideration, on its face it brings further clarity, rationality and economic efficiency to the Commission’s pole attachment rules by eliminating a loophole left by the 2011 Order that was poised for exploitation. Please call a Sheppard Mullin communications attorney if you have questions about how yesterday’s FCC order might affect your business