Pole Attachments and Rights-of-Way: Rights and Opportunities

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1 Pole Attachments and Rights-of-Way: Rights and Opportunities UTC Telecom 2005 May 23, 2005 Long Beach, California Jeffrey L. Sheldon McDermott Will & Emery LLP th Street NW Washington, DC Boston Brussels Chicago Düsseldorf London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C McDermott Will & Emery. McDermott operates its practice through separate legal entities in each of the countries where it has offices.

2 Presentation Overview Key Rate Related Issues Other Revenue-Related Issues FCC Mediation Trend Issues in Pending FCC Pole Attachment Cases Other Open Issues and Related Rulemakings 2

3 Pole Attachment Timeline Pre-1978: No Pole Attachment Jurisdiction Pole Attachment Act Passed FCC Implementation of 1996 Act 1996 Telecommunications Act Passed, Amending Pole Attachments Act Challenges to FCC Rulemakings, Dockets 96-98, 97-98, , in 11 th Cir., DC Cir., U.S. Supreme Court Pole Attachment Responsibility Moves to Enforcement Bureau, Phase in of Telecom Rate Begins Emphasis on Mediation, Negotiation 3

4 47 U.S.C. Sec. 224 Scope of the Law What it Reaches: Investor-owned electric, gas, steam or other public utilities ILECs Must own or control poles, ducts, conduits or rights-ofway used, in whole or in part, for any wire communications Telecommunications carriers and Cable systems Wireline and Wireless Attachments What it Doesn t Reach Municipal or Cooperatively-owned utilities Joint Use Arrangements 4

5 47 U.S.C. Sec. 224 What it Covers Mandatory Access New in 1996 Law Rates: Cable Rate Telecom Rate New in 1996 law Other Terms and Conditions Certain Exceptions Apply Utilities May Deny Access For Safety Reliability Generally Applicable Engineering Purposes Insufficient Capacity New in 1996 Law 5

6 Rate Issues Major Rate Issues Decided Since 1996 Constitutionality of Rate Formulas (5th Amendment Takings) 11th Circuit Holds Rate Formulas Constitutional Except Perhaps When Poles Are at Full Capacity and there is an Alternate Buyer Standard Being Applied By FCC (Florida Cable Telecom Association v. Gulf Power) FCC Has Jurisdiction Over Rates, Terms & Conditions for Wireless Attachments FCC Has Jurisdiction Over Attachments for Internet Services Provided by Cable Companies 6

7 Rate Issues Threshold Rate Question: What is Status of the Attacher? CATV Telecommunications Other What rate can I charge? Impact of service qualification Cable Operators Must Give Notice When Providing Telecom Services 7

8 Rate Issues Combination Rate Source Formula Cable 224(d) Statute Telecommunications 224(e) Statute Cable/Telecom 224(e) FCC Order Cable/Internet 224(d) Gulf Power II Telecom/Internet Wireless Undetermined Undetermined Undetermined 224(e) 8

9 Rate Issues Applying Presumptions for Number of Attaching Entities Ambiguous Language in FCC Rule, Orders 3 Attachers in Non-Urbanized Areas (< 50,000 population) 5 Attachers in Urbanized Areas (= 50,000 population) No Practical Guidance by Agency on Application of Standard 9

10 Major Rate Issues Remaining Treatment of VoIP Services Is it Telecommunications or Information Service or Something Else? How to Calculate Rates for Wireless Attachments Wi-Fi Attachments Just Compensation Broadband Services: DSL/BPL Internet Access 10

11 Overlashing Overlashing May require advance notice of overlashing in pole attachment contracts Attachers need not obtain advance approval May not collect pole attachment fees from third-party attachers Presence of Overlashed cable does not affect rate unless overlashed cable carries telecommunications service where original attachment was cable only 11

12 Transmission Transmission Facilities If any part of the facility (a pole, duct, conduit or right of way) is used for local distribution, it is within the Pole Attachment Act and within the FCC's jurisdiction to regulate. If the electric facility is (1) used solely as a transmission "tower" or an "interstate transmission facility," and (2) regulated by FERC, then it is beyond the FCC's jurisdiction. No agency application of this standard to date 12

13 Make-Ready Make-Ready Survey Costs Construction Costs Third Party Workers Correction of Violations Notice to Other Attachers, Cost Sharing Document Retention Issues justifying expenses, pole history/nesc compliance 13

14 Unauthorized Attachments Unauthorized Attachments Reasonable Penalty Permitted (Five years of back rent, or rental to the date of the last audit, plus interest) Costs for inspections solely to assess the presence of unauthorized attachments may be charged to the attacher 14

15 Mediation Trend Reassignment of authority over pole attachments from Cable Services Bureau to Enforcement Bureau marks change in FCC treatment of cases to more mediationfocused resolution and fewer formal decisions Enforcement Bureau pole attachment staff background: formerly tasked with Common Carrier disputes under Section 201 of the Communications Act, which are largely resolved through mediation. This philosophy has now been imported into the pole attachment arena. Housed in the Market Disputes Resolution Division (MDRD) 15

16 Mediation Trend Pre-Complaint Mediation Purpose and Goals Satisfies good faith settlement requirement under the FCC s rules (47 C.F.R. Sec (k) Attempt to narrow and resolve issues if possible to focus/streamline any issues that end up in a formal complaint Post-Complaint Mediation Purpose and Goals Conserve Commission resources and allow companies to find a mutually agreeable resolution; avoid repeat or ongoing disputes More expedient than resolution by formal decision Promotes de-regulatory, commercial resolutions of conflicts 16

17 Mediation Trend Is there any guidance on the horizon? FCC Enforcement Trend: Mediation and Negotiated Settlement Before and After a Complaint is Filed (No written decisions issued) 9 out of the last 10 pole attachment Orders issued by the Enforcement Bureau have been non-substantive dismissals of cases pursuant to negotiated settlement agreements among the parties American Fiber v. KCPL PAA Status of Fiber Provider FiberTech v. Duquesne PAA Status of Fiber Provider, Cost of engineering surveys RCN v. PECO Make-ready and engineering costs Virginia Cable v. VEPCO Make-ready costs, Telecom rate elements, burdens (average number of attachers) No Substantive Orders issued since November 2003 No Substantive Orders, No Appellate Review 17

18 Issues in Pending Cases Just Compensation (Florida Cable Ass n v. Gulf Power) Application of the Telecommunications Rate (Texas Cable v. CenterPoint, CenterPoint v. Texas Cable) Utility Engineering Standards and Inspection Practices (ACTA v. Entergy Arkansas) 18

19 Just Compensation Florida Cable Telecommunications Ass n v. Gulf Power Co. (EB ) Background Alabama Power v. FCC Before seeking just compensation, utility must show: Pole is at full capacity; and either: another buyer is waiting in the wings, or the utility has a higher-valued use for the space. Cert. Denied, October

20 Just Compensation Florida Cable Telecommunications Ass n v. Gulf Power Co. (EB ) Designated for Hearing before Administrative Law Judge Richard Sippel Proceeding in Discovery Interrogatories exchanged Each seeking detailed information on the opposing parties networks and infrastructure Focus on capacity of poles Pole count proceeding over cable companies objection Hearing Scheduled March 28,

21 Telecom Rate Application CenterPoint/Time Warner (2 Cases) Supplemental briefing completed in November 2004 Is the Telecom Rate charged according to the character of the attachment, or the character of the entity? CenterPoint s contamination theory Offering v. Used to Provide services 21

22 Telecom Rate Application Who is a telecommunications carrier? Certification by the State authority Provision of cable modem services Provision of VoIP Use of/option to use network by an affiliate Telecom Rate Issues - Average Number of Attaching Entities/Burden of Proof When must the FCC s presumptions be used? Who must rebut them? 22

23 Engineering and Inspections ACTA v. Entergy Arkansas Sample safety inspections conducted as a result of damages and outages traceable to cable plant Full Inspections conducted after sample inspections showed high incidents of engineering violations of the pole agreement and NESC standards Cable Operators primarily object to: Overall cost of inspections Apportionment of costs Engineering standards in excess of the NESC 23

24 Engineering and Inspections Who is entitled to dictate engineering standards? Does the FCC have jurisdiction or expertise to regulate? Are standards in excess of the NESC reasonable? Should cable operators be entitled to dictate who a utility uses to inspect its facilities? May safety inspections be conducted more than one year after installation, or outside of the routine inspection process? 24

25 Other Controversies Wireless Attachments Are within the Pole Attachments Act Rates must be just and reasonable Reasonableness determined on a case-by-case basis No formula or agency application of standard Recent Public Notice reminding utilities of their obligations to wireless providers as the FCC is aware of a number of wireless disputes 25

26 FCC Action Related Rulemakings Broadband over Power Lines IP-Enabled Services NPA on Tower Siting 26

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