THE INFRASTRUCTURE PROVISIONS OF THE FCC S NATIONAL BROADBAND PLAN

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1 MARCH 26, 2010 THE INFRASTRUCTURE PROVISIONS OF THE FCC S NATIONAL BROADBAND PLAN Pole Attachments Public Rights-of-Way THE INFRASTRUCTURE PROVISIONS OF THE FCC S NATIONAL BROADBAND PLAN Chapter 6 of the FCC s National Broadband Plan ( Plan ) is devoted to infrastructure. By infrastructure, the Plan means both existing private infrastructure like utility poles and conduits and public rights-of-way (public roads, bridges and tunnels), as well as state and local governments permitting and zoning rules governing placement and installation of broadband facilities. This part of the Plan is likely to have the most direct, and potentially adverse, impact on municipal and co-op utilities, and on state and local governments. The Plan targets access to infrastructure both monetarily and in terms of the time required to gain access as a significant cost (up to 20%) of broadband deployment. The Plan then proceeds to make several recommendations, all designed to reduce infrastructure costs by cutting fees and by placing time limits, or shot clocks, on the time within which infrastructure owners should grant access to broadband providers. Pole Attachments The Plan makes five recommendations relating to pole attachments: 1 The FCC should establish pole attachment rates that are as low and close to uniform as possible, consistent with the Pole Attachment Act, 47 U.S.C. 224, to promote broadband deployment. 1 We use pole attachments to refer collectively not only to pole attachments, but also to conduits and utility-owned easements and rights-of-way, as the Pole Attachment Act, 47 U.S.C. 224, does.

2 The FCC should implement rules that will lower the cost of the pole attachment make-ready process. The FCC should establish a comprehensive timeline for each step of the Section 224 access process and reform the process for resolving disputes regarding infrastructure access. The FCC should improve the collection and availability of information regarding the location and availability of poles, ducts, conduits and rights-of-way. Congress should consider amending Section 224 of the Act to establish a uniform access and rate policy for all poles, ducts, conduits and rights-of-way. These recommendations share an obvious and, for pole owners, troublingly common theme: To reduce pole attachment fees and make-ready charges, and to make utilities act more quickly on broadband providers pole attachment requests. Because municipal and co-op utilities are currently exempt from the federal Pole Attachment Act, 47 U.S.C. 224, and because Section 224 also calls for different pole attachment fee formulas for telecommunications attachments than for cable attachments, the Plan s pole attachment recommendations fall into two general categories: Those that the FCC believes it can implement without amendment to the Act and those it believes will require Congress to amend the Act. Steps the Plan Suggests the FCC Can Take Now The Plan s fundamental recommendation is that, to promote broadband deployment, the FCC should establish pole attachment rates that are as low and close to uniform as possible consistent with Section 224. The Plan claims that the problem of high pole attachment fees can be particularly acute in rural areas. Section 224 currently requires different, and higher, rates for telecommunications attachments than for cable TV attachments. While recognizing that the FCC cannot merge the telecom and cable attachment rates into one until Section 224 is amended, the Plan does suggest that until then, the FCC can, through a rulemaking, lower the current telecom attachment rate to be much closer to the cable attachment rate. The Plan asserts that the cable attachment rate has been in place for 31 years and is just and reasonable and full compensatory for utilities. The utility industry, in contrast, has long argued, with considerable force, that the cable attachment rate, originally designed to subsidize the then-embryonic cable industry, is artificially low and has survived only because it is offset by the historically higher telecom attachment rate. If the telecom attachment rate were lowered, many utilities believe pole attachment rates as a whole would become non-compensatory and compel utility rate payers to subsidize broadband providers. In addition to recommending lower and more uniform pole attachment rates, the Plan also makes recommendations concerning the pole attachment make-ready process and make-ready costs. It recommends that the FCC institute rulemakings to (1) lower pole make-ready costs; (2) give attachers 2

3 the right to use cost-saving attachment techniques and approved contractors, and to link payment for make-ready work to performance of the work, rather than requiring upfront payment by attachers; and (3) set a series of shot clocks on the make-ready process, within which utilities must act on attachment requests and issue permits. The Plan further recommends that the FCC should serve as a clearinghouse of data on pole attachment costs and availability throughout the nation. A final, but important, note: While Section 224 does not currently apply to municipal utilities and co-ops, many of the Plan s pole attachment recommendations would impact them, even if the muni/co-op exemption is not repealed. Under the laws of several states, muni/co-op pole attachment rates and practices are subject to Section 224 standards, and even in states where that is not true, many municipal utility and co-op pole attachment agreements incorporate FCC pole attachment rates. As a result, if the FCC were to drastically lower pole attachment rates, that could, in many cases, force the lowering of many municipalities and co-op s current pole attachment rates, even if the Act s muni/co-op exemption is not repealed. Steps the Plan Suggests Require Congressional Action The Plan makes two recommendations that it recognizes would require amendment of Section 224, and thus an act of Congress, to carry out. First, the Plan recommends that, to make federal pole attachment policy uniform across the nation, Congress should repeal the muni/co-op exemption from the Pole Attachment Act. This, of course, would be a radical change for municipal utilities and co-ops, even in those states that currently apply the FCC rate formula to those utilities. The reason: Municipal utilities and co-ops would, for the first time, become subject to complaints before the FCC by telecom and cable companies unhappy with the municipal utility s or co-op s pole attachment rates or practices. The plan further proposes that the FCC be empowered to impose monetary damages on utilities that violate its pole attachment rules. Second, the Plan recommends that Congress amend Section 224 to eliminate its current bifurcated cable and telecom pole attachment rate formulas and replace them with a single, uniform and low pole rate formula for all communications-related attachments, be they for broadband, telecom or cable. Read in light of the Plan s other pole attachment recommendations, this one could only lead to significantly lower pole attachment revenue for utilities. Public Rights-of-Way The Plan makes only a single recommendation with respect to public rights-of-way ( ROW ) used by broadband providers: The FCC should establish a joint task force with state, Tribal and local policymakers to craft guidelines for rates, terms and conditions for access to public rights-of-way. 3

4 Underlying this recommendation, however, are a series of Plan observations about local government ROW fees and practices that should be of concern to local governments. The Plan states that there is a wide diversity among state and local policies regarding ROW compensation and access, noting that ROW compensation ranges from a simple rental fee, to per-foot rentals, one-time payments, in-kind payments, assessments against general revenues, and rental rates based on local real estate market value appraisals. Although the Plan does not, as many local governments feared, specifically advocate cost-based fees, it does lean in that direction. The Plan, for instance, speaks favorably of state laws, like those in Michigan and Missouri, that have limited local ROW fees to costs, as well as state laws, like those in South Carolina, Illinois and Florida, that have eliminated ROW fees in favor of a state-administered tax on all communications services. Revealing its apparent preference for cost-based fees, the Plan also recommends that Congress pass a law permitting federal agencies to set cost-based, rather than rent-based, ROW fees for federal property. And finally, the Plan goes out of its way to criticize local ROW fee structure[s] based solely on market value because, according to the Plan, such a fee structure supposedly would not typically take into account the benefits that the public as a whole would receive from increased broadband deployment. But the Plan punts, at least for a time, the ultimate decision on ROW fees and management to a to-be-formed Task Force, composed of representatives of state, local and Tribal government representatives. The Task Force is to perform the following tasks and report to the FCC within six months: Investigate and catalog current state and local ROW practices and fee structures. Identify ROW and infrastructure policies and fees that are consistent with the national public policy goal of broadband deployment and those that are inconsistent with that goal. Identify and articulate ROW construction and maintenance practices that reduce overall capital maintenance costs for both government and users and that avoid unnecessary delays, actions, costs and inefficiencies related to the construction and maintenance of broadband facilities along public ROW. Recommend appropriate guidelines for what constitutes competitively neutral, nondiscriminatory and fair and reasonable ROW practices and fees under 47 U.S.C Recommend a process for the FCC to use to resolve disputes under Section 253 to expedite resolution of public ROW disputes under Section 253. The Section 253 focus given to the Task Force s mission by the Plan is especially worrisome. It seems clear that the FCC will be looking to establishing its own ROW compensation guidelines and shot clocks applicable to all local governments nationwide. Unfortunately for local governments, the FCC 4

5 already has a pending proceeding, Level 3 Communications, Docket No , that it might well decide to use as a vehicle to place limits on state and local governments ROW authority. Chapter 6 of the Plan is available at: FOR ADDITIONAL INFORMATION PLEASE CONTACT ANY MEMBER OF THE PRACTICE BELOW: James Horwood jim.horwood@spiegelmcd.com Tillman Lay tim.lay@spiegelmcd.com Gloria Tristani gloria.tristani@spiegelmcd.com For more than 40 years, Spiegel & McDiarmid has advised and represented local governments, non-profit community groups, and municipal and cooperative utilities on a variety of telecommunications, cable television and other communications law matters. If you would prefer not to receive future editions of the Informational Memos, please click here to unsubscribe. spiegel@spiegelmcd.com 5