Clarity Offered by FCC on How Utilities Can Show Poles Are Full
The FCC offered clarity on how utilities can show their poles are full and so can’t be used by cable operators, telcos or others to attach equipment at low rates. An order approved by the commissioners and released Wednesday sided with four cable operators in a challenge to an administrative law judge (ALJ) ruling that was brought by a utility in Florida. It resolved a case dating to a 2000 complaint the operators filed against a unit of Southern Co. over whether the company’s Gulf Power utility can charge rates above what cable companies usually pay to use space on thousands of poles in the state. A 2007 ruling by Chief FCC ALJ Richard Sippel, in favor of the cable operators, was upheld by the commission.
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It’s the first FCC ruling to interpret a 2002 appeals court decision on what showing utilities must make to seek higher rates, cable lawyers said. As such, the order has some precedential value, especially since it comes on the heels of an order last week allowing the cable rate to be used by a larger number of attachers (CD April 8 p3). That order was footnoted in the decision (http://xrl.us/bjogzh). It listed Comcast, Cox Communications and Mediacom as plaintiffs. What’s now Bright House Networks, though not listed in the decision, also was a plaintiff, said Davis Wright lawyer John Seiver, who represented the Florida Cable Telecommunications Association during an ALJ hearing on the case.
The latest order said Gulf Power didn’t make the required showing under Alabama Power Co. v. FCC, in which the 11th U.S. Court of Appeals in Atlanta set forth how utilities can show their poles are at capacity. The case said utilities must show all capacity is used and also that another would-be attacher wants space or that the utility could put it to a more valuable use, if they want to get paid beyond the cable rate. That was $6 per pole annually, versus the $38.06 the utility wanted. There are about 150,000 poles affected by the case, said Seiver. That means about $4.81 million a year was at stake, he said.
"Our customers are subsidizing part of the cost of these cable operators’ pole attachments,” said a Gulf Power spokesman. The utility is trying to keep customers’ bills down, he said. Gulf Power is reviewing the ruling before deciding how to proceed, the spokesman said. Spokespeople for the cable companies had no comment.
Gulf Power didn’t show its poles were full or that anyone else wanted to lease space on them, besides the plaintiffs, the FCC said. It upheld the ALJ’s finding that “Gulf Power failed to show either that another potential user of the Cable Operators’ space was waiting in the wings or that Gulf Power would have been able to put the space to a higher-valued use in its own operations.” The defendant relied on a survey of poles that assumed they were at capacity and new attachments would violate safety codes, the regulator said. “We reject that assumption.”
A pole can’t be deemed at capacity if a new fixture could be accommodated by doing additional work, such as rearranging existing attachments, the agency said. It condoned the practices of boxing, installing gear on both sides of the pole at the same height, and bracketing, or extending the pole. “The fundamental flaw in Gulf Power’s evidentiary case is that Gulf Power assumed that a pole is at full capacity whenever any make-ready work would be required to accommodate a new attachment, and did not differentiate between poles that would require mere repositioning of existing attachments or use of conventional attachment techniques versus poles that would require replacement,” the FCC said.
"When a utility can make room for a new attachment using conventional techniques” such as boxing or bracketing, “there is usable physical space on the pole,” the commission said. “A pole has insufficient capacity only when there is no usable space.” The order agreed with the defendant that safety codes can be used to determine if there’s free space. “But that is not grounds for reversal of the ALJ’s ultimate finding that Gulf Power failed to meet its burden of proof,” since a utility can’t assume attachments are “static,” the order said. “If a utility could accommodate a new attachment by repositioning existing attachments or by using attachment methods to the same extent that that Gulf Power itself uses such methods, in full compliance with applicable safety codes, the pole is not at full capacity."
"This case once again shows that the cable rate is fully compensatory,” said cable lawyer Dan Brenner of Hogan Lovells, who works on pole attachment issues but wasn’t part of this case. “There was no reason to provide any higher rate above the regulated rate.” The ruling also shows how the FCC applies the 11th Circuit’s ruling to what utilities must do if they want more money, he said. Coming five days after the industrywide pole attachment order, the new ruling “seems like they were wrapping up pending pole matters,” Seiver said of the FCC. “This was the first challenge to try to fit within the Alabama Power exceptions” for how utilities can seek higher compensation, above the cable rate, he said. It’s the only pending case Seiver said he’s aware of, where an ALJ ruled but the commission hadn’t decided whether to adopt the ruling.