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Cable’s Pole Position Upheld in D.C. Court

3/05/2012 12:59 AM Eastern

Washington — Power companies have taken yet another
legal blow in their efforts to get cable operators to pay more to
hook up to utility poles.

But cable’s victory was an undercard match, with the
main event yet to come: the same court’s decision on the
Federal Communication Commission’s change to the telecom
rate, part of its broadband-adoption reforms.

The U.S. Court of Appeals for the D.C. Circuit, in Gulf Power
vs. the FCC
, last week upheld the agency’s regime for the
price that cable and telecom companies pay to connect to
utility poles as “just and reasonable.” The court also upheld
the FCC’s interpretation of what qualifies as no room on the
pole.

DECADES-LONG FIGHT

Congress has directed the FCC to set a reasonable range of
compensation for pole attachments and has discretion to set
rates within that range.

Power companies can refuse connection, per the original
1978 pole-attachment law. But that right of refusal was narrowed
in the 1996 Telecom Act to cases of insufficient capacity
or specific exceptions for things like safety and reliability.

The U.S. Supreme Court upheld the FCC’s pole-attachment
compensation regime in 1987.

Following the 1996 act modifi cation, Gulf Power and other
utilities raised their rates beyond the maximum amount.
Cable operators challenged the increase and the FCC ruled
in their favor. It is that decision Gulf Power was challenging
in the petition that has now been denied.

“The Gulf Power case is the latest example of a court upholding
the FCC’s efforts to keep pole-attachment rates
reasonable,” Rick Chessen, the National Cable & Telecommunications
Association’s senior vice president of law and
regulatory affairs, said in reaction.

“As the FCC’s National Broadband Plan recognized,
allowing utility companies to charge excessive poleattachment
rates would impede the national goal of ubiquitous
broadband deployment. We support the FCC’s continuing
efforts to reduce the cost of broadband deployment and
have intervened on the commission’s behalf in yet another
court appeal brought by utility companies that are trying to
preserve their ability to impose excessive rates.”

A three-judge panel of the D.C. Circuit last week said it was
denying the appeal for a couple of reasons.

First was that Gulf Power’s challenge was essentially moot
because the 11th Circuit in the Alabama Power case (2002)
had already ruled on a similar challenge. Because Alabama
Power and Gulf Power were both owned by Southern Co.,
the court found the doctrine of “issue preclusion” applies,
which bars relitigating the same case in a similar court.

Gulf Power had also argued there was a new issue,
because the FCC had applied that 11th Circuit decision
on pole capacity too narrowly.

The D.C. Circuit wasn’t having any of that, either. It upheld
the agency’s interpretation that a pole isn’t necessarily
at capacity just because a utility company might have to rearrange
some connections to make room.

“[T]he necessity of make-ready work before attaching a
new cable does not, by itself, entail expanding” a pole’s capacity
or indicate that capacity was insufficient. Anyone who
has had to rearrange plates in a dishwasher to fit in one more
item, or to reconfi gure plugs on a power strip to attach one
more electronic device, knows that such ‘make-ready’ work
does not expand the device’s capacity (in the normal sense
of those words), but merely makes possible a more efficient
use of existing capacity.”

FCC chairman Julius Genachowski said in a statement he
was “pleased that the court affirmed the FCC’s order encouraging
rapid and widespread broadband build-out by providing
fair access to unused space on utility poles.”

A Southern Co. representative said the company was reviewing
the decision and contemplating options, which could
include appealing the three-judge decision to the full panel.

“This was an important victory for the industry,” cable attorney
Dan Brenner said of the Gulf Power decision, “reaffi
rming that Congress’ rate statute is constitutional and the
FCC’s calculation was affirmed.”

Brenner noted that the next big case will be court’s review
of the 2011 decision to make the telecom rate roughly
equivalent to the cable pole attachment rate, substantially
reducing pole rental rates and simplifying disputes as to the
nature of an attachment.

WHY FCC BACKS CABLE

As Genachowski indicated in his comment on Gulf Power,
the FCC has been trying to make it easier for cable and telco
operators to get pole access as one way to boost the broadband
build-out.

Last April, for example, the agency declared that cable operators
would not have to pay a higher pole-attachment rate
for telecom offerings.

Utility companies have long been fighting the cap on payments
and Congress’s decision not to let them deny access
unless there is no room on the pole.

Utility firms petitioned for review of the Gulf Power decision
and took the FCC to court over the new telecom pole attachment
rate. The D.C. Circuit last August denied a stay of
that new rate formula, and it went into effect in June.

The FCC filed briefs at the D.C. Circuit court on Feb. 17.
The cable industry’s briefs are due March 5, then the power
companies get their shot. Oral arguments will likely come
in late April or early May.

September