The FCC Must Monitor State Regulation of Pole Attachments to Further Broadband Deployment

Pole attachments are attracting increased attention because of their importance to promoting the deployment of broadband facilities, including those financed by the Broadband Equity, Access, and Deployment (BEAD) program. As part of BEAD’s efforts to expand broadband coverage into all unserved and underserved areas, providers will have to obtain approval to work on millions of poles. The time and cost associated with this task will have a large effect on a project’s success in bringing Internet coverage to new households.

Last week the FCC’s Wireless Competition Bureau issued a Public Notice and Press Release regarding state regulation of pole attachments. The Notice informed states of their responsibilities for state regulation. These include:

•     Issuing rules and regulations implementing the state’s regulatory authority.
• Regulating rates, terms, and conditions of pole attachments.
• Establishing procedures for resolving disputes.

The Notice also requested public comments on how the FCC should ensure that state regulation is effective. This includes whether the Commission has a duty to review state certifications to ensure the regulatory regime is adequate to meet the requirements of the Communications Act of 1934. The FCC also seeks comments on what else it can do to ensure that attachers in state-regulated states are not subject to unnecessary costs and delay.

As I wrote in a previous blog, ownership and regulation of poles is not always straightforward. According to one study and analysis, pole regulation is “scattershot” and “highly fragmented.” Poles are owned by a number of different entities including utilities, local exchange companies, and government entities. Poles in many states are regulated by states, not the federal government.

The FCC regulates most poles under Section 224 of the Communications Act of 1934. Its rules lay out processes and timelines for attachers and pole owners when the former seek to attach communications infrastructure to poles. However, the provision gives states the option of “reverse-preemption” by certifying that they will regulate pole attachments in their state. As of now, 23 states and the District of Columbia have taken this option.

The FCC’s Notice is important because pole attachments can have a large impact on project cost and completion. According to the above study, BEAD-funded projects will touch an estimated 3,954,030 utility-owned poles across 2,053 electric utility service territories. Current plans are for aerial fiber to cover 188,287 miles. Pole-related costs for BEAD projects could range from $534 million to $4.63 billion. The authors find that many of the poles involved are not regulated by the FCC. It is clear that the availability of pole attachments on reasonable terms is important to furthering broadband deployment.

The Commission also seeks information on how it can improve the regulation of pole attachments in the states that have chosen to regulate attachments themselves. One way is to ensure that any adjudications are timely and effective. Delays in obtaining permits can have a significant impact on the cost and even viability of broadband deployments, including BEAD projects. This request is timely given the history of the dispute between Comcast and Appalachian Power Company. Appalachian Power sought to charge Comcast for the full replacement cost of damaged poles even when a portion of the damage was caused by third parties. Comcast demurred. The FCC quickly issued a judgment favoring Comcast. However, several months later the dispute is still delaying work. Both parties have filed documents alleging that the other party is not abiding by the judgment. Rulings that come late or that cannot be enforced will do little to address the problem.

Another possibility is to allow non-deployment BEAD funds to be used to give states the resources they need to provide effective permitting. BEAD funding represents a huge increase in the effort to extend Internet coverage. As the FCC notes, increased investment has led to extensive new deployments in recent years, resulting in a significant increase in pole attachment applications for large numbers of utility poles. Many states and localities may lack the personnel and experience needed to deal with this sudden increase in volume.

In conclusion, the FCC is wise to focus on the issue of state regulation. State rules should be essentially equivalent to FCC regulations to ensure that attachers in reverse-preemption states do not experience prolonged delays and unreasonable costs. As the Notice says: “[S]tate pole attachment regulation can either advance [ubiquitous deployment of next-generation broadband] through clear and effective rules or become a roadblock to such deployment if a state adopts a pole attachment regime that is incomplete or unclear or fails to adopt pole attachment regulations in the first instance.”

Broadband availability is closely linked to economic growth in a particular area. It benefits everyone when the regulatory reviews needed to effect deployment speed this benefit rather than delay it.

Do Pole Attachment Issues Threaten BEAD Projects?

On May 12 researchers Alex Karras and Michael Santorelli of the Advanced Communications Law & Policy Institute at New York Law School published a report and analysis of the cost of getting access to utility-owned poles as part of the deployment costs under the historic Broadband Equity, Access, and Deployment (BEAD) Program. The bottom line is that projects funded by BEAD are expected to lay 188,287 miles of aerial fiber on 3.9 million poles within 2,053 separate electric utility service territories. Using rough estimates, the estimated pole costs that BEAD contractors will have to pay in order to attach to poles range from $534 million to $4.63 billion nationwide.

Every BEAD deployment contractor had to estimate actual pole attachment costs as part of the application process. The study’s authors were not trying to duplicate these estimates. However, the range of estimates could be a sign that actual costs will vary widely. In a situation where contractors are facing tight deadlines and where actual costs are uncertain, pole attachment issues could become the focus of a lot of deployment problems. Coming on top of a renewed legal battle between Comcast and Appalachian Power Company, the large range of attachment prices shows that there is tremendous room for disagreement between broadband contractors and pole owners.

 

According to the report, pole ownership and regulation follow a “scattershot” approach. Electric cooperatives play a disproportionate role. Although they only serve 13% of electric customers, about 40% of BEAD aerial fiber will be deployed across their territories. The FCC has jurisdiction over poles owned by investor-owned electric utilities (IOUs) in 27 states. In the other 23 states, IOU poles are regulated by state public utility commissions. Regulation of poles owned by cooperatives and municipal electric utilities differs among states. The authors speculate that: “[i]n states where cooperatives and municipal electric utilities are unregulated, there are few guardrails in place to provide predictability and consistency in how pole-related costs are set, increasing the chances that BEAD subgrantees could encounter higher-than-expected pole fees from these entities.”

Electric utility pole issues have a significant effect on broadband deployment. The National Telecommunications and Information Administration (NTIA) has tried to address regulatory problems by extending the reach of the FCC’s rules. The FCC recently showed its willingness to act quickly in resolving pole disputes by expediting its decision in a dispute between Comcast and Appalachian Power Company. Comcast alleged that Appalachian Power was charging it for pole damage that was caused by third parties. The Commission ruled that Appalachian Power could only charge Comcast for the incremental cost of its project.

However, Comcast recently approached the Commission complaining that Appalachian Power was refusing to abide by its ruling. Thus, it remains to be seen whether tougher action by the FCC or NTIA will translate into a quicker, less contentious process that lowers cost or whether it leads to a rise in litigation that slows everything down.

Using a variety of independent studies, the researchers chose low, medium, and high estimates of pole costs depending on whether a pole just needs equipment added or whether it needs replacement. Their estimates are limited to electric utility-owned poles, which constitute about 70% of the total. Including all poles would raise the price significantly. The estimates for the cost per touched pole were $75 (low), $175 (base), and $450 (high). The estimates for the percentage of poles that will have to be replaced were 3% (low), 4% (base), and 8% (high). Finally, the estimates for the cost of replacing a pole were $2,000 (low), $3,500 (base), and $9,000 (high). Using the base assumptions produced an estimate of $1.25 billion or roughly 6 percent of BEAD deployment funds. The boundary estimates were $534 million (low) and $463 billion (high). This leaves a lot of room for disagreement between BEAD contractors and pole owners.

What can be done? The NTIA requires cooperatives and municipal utilities that participate in the BEAD program as subgrantees to comply with FCC pole attachment rules as a condition of accepting BEAD funding. The rules cap rates and charges that pole owners can impose on contractors. They also create timelines for processing applications and require regular progress reports. The authors also advocate letting states use some of the remaining $21 billion in nondeployment BEAD money to offset unexpected pole attachment costs. They point to successful models in Texas and North Carolina as good examples. State regulators could also rationalize pole issues as well as the accompanying permitting, rights of way, and easement issues that accompany them.

With proper policies in place, broadband providers around the country will soon be engaged in a major deployment effort to significantly expand coverage to unserved and underserved areas. In a project of this scope, problems are inevitable. But many of these problems, including pole attachments, can be managed better if regulators and broadband providers perform proper due diligence, build strong relationships, and create transparent, predicable processes.

FCC Rules on the Comcast/Appalachian Power Dispute: Speeding Decisions, Reducing Costs and Expanding Broadband

Over the last year the FCC has prioritized regulatory reform to speed decision-making and reduce costs associated with broadband deployment. Its February 5^th decision in a private dispute between Comcast Cable Communications and Appalachian Power Company (APCO) furthers these goals by promising to resolve legal issues faster. Specifically, its decision in the Comcast dispute indicates that, where possible, the Commission will use its adjudicatory powers to resolve disputes as early as possible, allowing deployment to proceed. Even parties that lose a particular case should welcome this reform as it saves them time and money from a pursuing a losing cause.

The dispute centered around Comcast’s use of utility poles owned by APCO. Existing laws generally allow broadband providers to place their equipment on poles owned by others. In return, pole owners have a right to be compensated for any necessary costs. Agreement on how to apply this general rule to specific cases can be contentious, however. In this case APCO argued that Comcast should pay the full cost of replacing poles that would have needed replacement anyway. Apparently, third parties had damaged some of the poles. Even though these poles would have to be replaced anyway, APCO insisted Comcast pay the full cost. Comcast argued it should only have to pay for costs that benefited it.

The Commission’s order was significant because it used new powers, proposed by the Free State Foundation, to reach its decision. Specifically, the FCC used an "accelerated docket" process meant to speed up broadband expansion. It also used a Rapid Broadband Assessment Team (RBAT) of FCC personnel which was formed in 2023 to “expedite the resolution of pole attachment disputes.” The RBAT determined the facts upon which the Commission made its judgement. In brief, the Commission unanimously ruled that Comcast was not responsible for bearing the burden of paying the costs that were caused by a third-party. Comcast was only responsible to the extent that it benefited from any pole replacement.

I applaud this for two reasons. The first concerns the substance of the Commission’s decision. Comcast should not bear responsibility beyond the marginal cost of its installations. To require more would unnecessarily increase the cost of broadband deployment which the Commission is supposed to further. In fact, since Comcast is undertaking this project as part of the federal Broadband Equity Access and Deployment Program, the additional costs would be partially funded by taxpayers. The decision also increases the ability of market forces to influence the final cost borne by each party.

The second reason is the use of an expedited process to resolve the dispute. The Commission was able to render its decision within 60 days of Comcast’s complaint. The presence of an experienced and neutral decision-maker promises to significantly reduce the cost of resolving future FCC pole attachment disputes. Finally, by providing parties with greater certainty about how it will rule, the FCC can encourage settlements. That should benefit everyone.

CTIA Once Again Asks FCC to Declare that Light Poles Are "Poles"

In a letter dated June 7, 2024, CTIA urges the Commission to at long last clarify that the term "pole" in Section 224 of the Communications Act encompasses both utility poles and light poles. Doing so, it argues, will "bring uniformity to the pole attachment and broadband deployment processes leading to more and faster broadband being available to more people."

In a 2019 Petition for Declaratory Ruling, CTIA asked the FCC, among other things, to "declare that the term 'pole' in Section 224 includes light poles and that utilities must afford nondiscriminatory access to light poles on rates, terms and conditions consistent with Section 244 and the Commission's implementing pole attachment rules."

And while the Wireline Competition Bureau did issue a Declaratory Ruling in July 2020 addressing other aspects of CTIA's petition, it sidestepped this particular topic, writing in a footnote that "[w]e do not address CTIA's request concerning light poles in this Declaratory Ruling, and this issue remains pending."

In light of rapidly growing demand for 5G, including fixed wireless access home broadband, CTIA once again is seeking clarification from the FCC that the reference in Section 224(f)(1) to "any pole, duct, conduit, or right-of-way owned or controlled by" a utility includes light poles.

Light poles and other "street furniture," it turns out, are "well-suited" for the attachment of small cells, which are predicted to make up more than 80 percent of infrastructure deployments going forward. This is especially true in areas where power lines are buried underground and, consequently, utility poles are not available.

Given the current uncertainty, however, CTIA reports that "wireless providers that have sought access to light poles have faced opposition from electric utilities, including flat denials of access, as well as attachment charges that exceed lawful rates." A ruling by the Commission that "any pole" includes a light pole, it maintains, "will serve the public interest by preventing disputes with electric utilities over this issue, thereby removing barriers to wireless deployment."