On November 24, 2015, the FCC’s five Commissioners unanimously approved an Order on Reconsideration, which revises the federal pole attachment rate formula to better equate the telecommunication rate to the cable rate. 

Background.  Previously, the telecommunications rate formula presumed three attachers in rural areas and five attachers in non-rural areas.  The presumption was rebuttable, but the result was that the rate for telecommunications attachments could be as much as 70 percent higher than the rate for cable attachments.  In 2011, the NCTA, COMPTEL, and tw telecom filed a Petition for Reconsideration seeking to eliminate the disparity and other complexities that the presumption created.

Order on Reconsideration.  Last week’s Order revises the telecommunications formula, adopting a cost allocation formula based on the number of attachers to the pole and removing the presumption of three attachers in rural areas and five attachers in urban areas.  Further, the Order redefines “cost” for purposes of the telecommunications rate as a percentage of fully allocated costs that will depend on the average number of attaching entities in a given service area.  The Order also adopted specified cost allocation factors based on the number of attachers.  The Order notes that the result is the fulfillment of the FCC’s goal of bringing cable and telecommunication rates into parity. 

What it Means.  The Order is significant given the FCC’s decision earlier this year to reclassify broadband Internet access service (“BIAS”) as a telecommunications service.  Following reclassification, which took effect June 12, cable operators providing BIAS were subject to the higher telecommunications rate.  (For our coverage on the effects of reclassification, see here.)  Last week’s Order should eliminate the disparity between the cable rate and the telecommunications rate.

The Order applies only to those pole owners covered by the Federal Pole Attachment Act—local exchange carriers and public utilities.  It does not apply to municipally owned utilities or co-ops.

The Order will take effect 30 days after it’s published in the Federal Register.

If you have any questions regarding the Order or pole attachment agreements in general please contact Bruce Beard at (314) 394-1535 or bbeard@cinnamonmueller.com.