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New Pole Attachment Regulations Could Change Electric Utility Company Income and Practice

November 26, 2007

The Federal Communications Commission has requested industry comments on new rules for the use of utility poles by cable television systems, telephone companies and Internet service providers.  The FCC said it was acting to promote broadband Internet usage and to ensure a competitive communications environment.  Changes proposed by the FCC will shift costs among pole users and owners and could affect utilities' control over 100 million utility poles.   

Ominously for electric utilities, the FCC notice of proposed rulemaking seeks comment on whether incumbent local telephone companies, known as ILECs, should receive the benefit of regulated access to poles and low rental rates for use of the poles.  Only cable companies and competitive local exchange carriers (CLECs) have such protected rights and limited rates under current law.  As a result, some utilities charge ILECs higher pole attachment rents than other attachers. The ILECs have complained that because they offer the same services as the CLECs and cable companies with regulated rates, they should pay the same pole attachment rates. The ILECs are lobbying vigorously for regulation. 

The FCC also has asked for comment on proposals from attaching companies that would limit pole owners' control over the type and timing of attachments to their poles.  The FCC has asked for information on utilities' cost of providing pole space for communications companies.  

The FCC announced that it has tentatively decided that all attachers entitled to regulated access to poles should pay a single rate. Winners under a single rate might include CLECs that now pay a higher rate than cable companies, and the losers would include cable companies that benefit from the lowest possible rate. Utilities whose current attachers mainly pay the lower "cable rate" could see revenue increases. On the other hand, utility companies may find themselves subsidizing new classes of pole tenants, such as wireless telephone companies and Internet service providers. 

Comments on the FCC proposals will be due shortly after the holidays.  Bracewell & Giuliani LLP is advising its utility clients on strategies for responding to the FCC proposals and dealing with the financial and operational changes that will follow the rulemaking.