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Supreme Court Ruling On FCC Joint Use Utility Pole Rules

POSTED BY: Ashley Little on 01.7.2014

supreme_court_rulesPartnerships between electric utility companies and telecommunication providers have existed for almost a century as the need for utility pole space, combined with the limited number of utility poles that can exist along any given street, has created the concept of joint use for the same sets of poles. (This often involves the ownership of a pole by one company who then rents space on the pole to another company, referred to as an “attacher.”) As the demand for utility space on poles has grown, so have the Federal Communications Commission’s (FCC) regulations for these poles, and the rates for attaching to them.

The most recent ruling came in October 2013 when the United States Supreme Court declined to hear an appeal from a group of electric utilities that objected to new pole attachment rules adopted by the FCC in 2011. The new rules give the FCC jurisdiction over disputes between incumbent local exchange carriers (ILECs, telecom companies that have only began providing services after the passage of the Telecommunications Act of 1996) and their electric utilities about their joint use agreements.

So what does this mean for joint use utility pole owners? Let’s take a look back at how the industry evolved to this most recent ruling to sort it out.

It all started back to the 1970s when cable companies were first widely assuming access on utility poles. Up until this time, companies involved in joint use utility poles were basically allowed to set the terms of these relationships themselves. When they began demanding large fees for access to their poles, however, Congress enacted the federal Pole Attachments Act in 1978, which directed the FCC to “regulate the rates, terms, and conditions of pole attachments to provide that such rates, terms, and conditions are just and reasonable.” It was designed only to give cable companies wider access to utility poles by setting maximum rates. In 1996, the Telecommunications Act amended the Pole Attachments Act to include regulations for all public utilities (providers of telecommunications services in addition to electric, gas, water, steam, etc.), but it specifically excluded ILECs. The result? Cable attachers paid the lowest rates and ILEC attachers paid the highest rates of all.

Fast forward to 2011, when the FCC reformed its pole attachment rules to include jurisdiction over ILECs and 2013 when the Supreme Court upheld these new rules. With the new FCC regulation, the standard attachment fee of $7 per foot of vertical space could be extended to ILECs, which could mean a great loss of revenue for pole owners. This will only happen based on a case-by-case review and the FCC stated that it would consider evidence of unequal bargaining power as well as competitors’ rates. It could also mean more ILECs looking to get into joint use partnerships (and more rental revenue) since they have the support of the FCC. The new rules also include increased penalties for unauthorized attachments, which could reduce this occurrence — a definite positive for utility pole owners. Remember, certain states regulate pole attachments at the state level, so it’s still not clear if the new FCC rules will have any sort of effect on companies in these areas.

Like most aspects of the utilities industry, effective communication offers the greatest assurance of successful joint use pole attachment ventures. It is especially important to keep records of this communication, as the law opens the opportunity for joint use case reviews. As time moves forward and rules change, the need for effective communication between pole owners and pole attachers will always remain.

Topics: Utility Asset Management

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