http://www.politico.com/news/stories/0411/52665.html
FCC aims to lower power pole fees
To most of us, power poles look like ugly sticks in the ground. But to Federal Communications Commission Chairman Julius Genachowski, they look like a broadband delivery device.While power poles don’t command a lot of respect, they command a lot of money. Cable and phone companies pay the utilities a fee for the equipment they nail to the poles, and with millions of poles dotting the American landscape, that money adds up. Genachowski wants to lower the fees telecommunications companies pay, seeing that as one way to encourage broadband expansion.
The commission is expected to move in that direction Thursday, when it is likely to approve an order to effectively lower the price many telecommunications companies pay to attach wires and other devices to the utility poles.
“Genachowski has set top priorities for the agency: unleashing spectrum, reforming and modernizing the Universal Service Fund, accelerating broadband deployment and promoting competition,” said Zachary Katz, an adviser to the chairman. “This is a strong and balanced order that will significantly reduce barriers to both wired and wireless broadband deployment.”
In its National Broadband Plan, the commission estimates that pole attachments amount to 20 percent of the total cost of deploying fiber-optic cable. Generally, large telecom companies, such as AT&T and Verizon, pay about $20 per foot of pole real estate every year. Their smaller competitors pay about half that, and cable companies pay about $7 per foot for each pole every year.
There are about 134 million poles in the U.S., according to the FCC. However, the commission has jurisdiction over only about 50 million of those poles — many are regulated by states or are exempt because co-ops, municipalities or nonutility companies own them.
Compared with the cable rate, the traditional phone companies claim they are being overcharged by up to $350 million a year for their attachments to poles that are under the commission’s authority.
It’s unclear exactly what the commission plans to do Thursday, but one official said the effective rate is likely to be lowered for traditional phone companies, their direct competitors and cable companies.
While industry and commission sources expect the panel to lower the pole attachment rates for phone companies, that process could be different for the traditional phone companies than for their newer competitors and cable companies.
The commission doesn’t have to lower rates to reduce the cost of pole attachments. It is likely to set strict timelines and other requirements that will make it easier and cheaper for broadband providers to use the poles. If power companies don’t adhere to those requirements, telecom companies can appeal to the commission to get the rate lowered.
In addition, the FCC is expected to allow mobile phone companies to attach devices to the top of the poles, but it gives power companies the ability to control who works in the space where the high-tension wires run.
“We don’t want anyone to get electrocuted,” said one commission aide.
In theory, lowering the pole attachment rate would allow telecom companies to extend their infrastructure into areas that lack broadband access.
“It changes how far out you can go,” said USTelecom Policy Vice President Glenn Reynolds. “Where you have those long, long loops, it’s one of the biggest cost drivers. In effect, it turns those places from uneconomic to serve to economic to serve.”
Power companies, on the other hand, claim that driving down the pole-attachment rate is simply a transfer payment from one industry to another.
“It shifts the cost to the electricity consumer from the ones who want to attach to the pole,” said Aryeh Fishman, Edison Electric Institute’s regulatory legal affairs director.
Power companies contend that telecom companies and the FCC underestimate the technical and legal difficulties of changing the rate.
“There’s a range of factors that come into play with a pole and what goes onto a pole,” said Gregory Obenchain, manager of distribution operations and standards at EEI. “A pole is not just a widget. You can’t just buy a pole and put it into the ground.”
Soil conditions, wind, the threat of traffic, the amount of weight and the height at which it’s carried have to be considered before planting a pole. Adding more lines or other equipment could affect the reliability of a pole.
Add to that the series of contractual agreements for different companies to carry each other’s equipment, and it ends up creating a knottier problem, the power companies argue.
Telecom companies contend that those arguments are intended to complicate the situation.
“The needs of the power company dictate the pole,” Reynolds said. “If you look at it, that pole is not going to be 1 inch shorter. By their own industry standards, there are certain height and certain space requirements before you can attach anything else.”
Telecom companies contend that the variable rates put them at a competitive disadvantage.
“The rates the cable guys pay more than compensates the pole owner,” Reynolds said.
As to the concern that the telecom companies will just take the money and run, FCC officials are taking a trust-but-verify approach.
“There is some skepticism here,” noted one FCC official. “There are good reasons to believe a significant amount of the savings will be spent on building out broadband, especially in rural areas.”
The official said scrutiny will continue.
“If a year or two goes by and we don’t see the benefits, the commission could revisit the issue and reconsider the arguments,” the official said.
