Transcript BHLG_MMUA_Poles_(11-06-14)

Minnesota Municipal Utilities Association
Legal Seminar
November 6, 2014
Sean Stokes
The Baller Herbst Law Group, P.C.
2014 P Street, N.W.
Washington, D.C. 20036
(202) 833-0166
[email protected]
www.Baller.com
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National Issues
• Background on Federal Law
• National Broadband Plan and FCC Order
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Federal Access Rules
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Federal Attachment Formulae
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APPA Work Book
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WireIess
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Section 224 of Communications Act of 1978; Was
Re-enacted and extended in 1996 (47 U.S.C. 224)
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Regulates rates, terms and conditions of access to
utility poles, ducts and conduits for attachments by
“telecommunications carriers” and “cable systems”
• Applies to Wireless Providers
• Does not apply to stand-alone broadband or dark fiber
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States can “reverse preempt” and adopt own rules;
21 have done so; many follow federal framework
and apply FCC rulings as benchmarks
• Minnesota has not reverse preempted
“Pole Attachment”
“The term ‘pole attachment’ means any
attachment by a cable television system or
provider of telecommunications service to a pole,
duct, conduit, or right-of-way owned or controlled
by a utility.”
47 U.S.C. § 224(a)(4).
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The term ''utility'' means any person who is a local
exchange carrier or an electric, gas, water, steam, or
other public utility, and who owns or controls poles,
ducts, conduits, or rights-of-way used, in whole or in
part, for any wire communications. Such term does
not include any railroad, any person who is cooperatively
organized, or any person owned by the Federal
Government or any State.”
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“The term ''State'' means any State . . . or any political
subdivision, agency, or instrumentality thereof.”
47 U.S.C. §§ 224(a)(1), (a)(3).
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Congress in both 1978 and 1996 said that rates a
local decision; municipalities and coops have their
own processes to allocate costs and are politically
responsible to consumer-owners
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Therefore, municipalities and coops not subject to
federal access or rate requirements -- FCC affirmed
in April 2011, Report and Order, 07-245.
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Also not subject to federal procedural requirements
• timing and content of responses
• FCC complaint processes
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Some states incorporate federal standards into state law
– e.g., Missouri, Texas and Colorado
• Minnesota does not regulate attachments to municipal poles
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Federal standards often invoked by state PSCs, courts
and attachers
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Section 253 barriers to entry related to use of public
rights-of-way (47 U.S.C. 253)
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Municipal providers have rights as attachers
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In some instances FCC rates are higher than utility
currently gets
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FCC has recommended in NBP that Congress remove
the municipal exemption (more on this next slide)
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NBP– “Poles and Holes” are barriers to wider broadband availability
and use
• Basic assumption: Lower infrastructure costs => lower
broadband fees => greater adoption of broadband
• Proposed Federal/State/Local government Task Force to address
ROW issues – to start soon
• NBP recommends that the FCC “establish rental rates for pole
attachments that are as low and close to uniform as possible,
consistent with [s]ection 224 of the [Act], to promote broadband
deployment.”
• Proposed removal of municipal and coop exemption to achieve
uniformity, and predictability – this would require Congressional
action.
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Before the R&O, the FCC had relied on guidelines
and case-by-case enforcement
Now, specific rules of broad, general applicability
Specifically, the FCC has adopted a four stage
process:
(1) survey; (2) estimate; (3) attacher acceptance;
(4) performance; and, if needed, attaching entity
self-help
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FCC adopted a 4-stage process:
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Survey -- 45 days from complete application
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Estimate – 14 days
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Applicant response – 14 days
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Make ready – 60 days (105 days large orders)
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90 days for wireless above electric
Attaching entity may perform make-ready
itself if deadlines not met, but not wireless
above electric
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Utility is required to notify all existing attaching
entities whose attachments may be affected:
 Specify where and what make-ready will be
done;
 Indicate that make-ready must be completed
within
60 days after notification (105 days for larger
orders) for attachments in the communications
space, or 90 days for wireless attachments (135
days for larger orders);
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If a utility does not meet deadline to complete a survey
or make-ready, an attacher may use contractors to
complete work in the communications space.
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A utility must make available a current list of
contractors that it authorizes to perform surveys or
make-ready on its poles
If a utility fails to provide a list of approved contractors,
attachers may use contractors that have the “same
qualifications, in terms of training, as the utility’s own
workers.”
Contractors subject to supervision and direction by
both utilities and attachers; if disputes, utility prevails
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Cable systems providing “only” cable service use
“cable formula” under Section 224(d)(3)
Cable systems do not lose the benefit of the cable
formula by providing “information services,”
including Internet access
Telecommunications carriers and cable systems that
provide telecom services use “telecommunications
formula” under Section 224(e)(1) (but what is VoIP?)
Telecommunications formula yields substantially
higher rates than cable formula, but neither yields
full cost recovery
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Average height of pole is 37.5 feet
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Average usable space is 13.5 feet
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Cable and telecom attachments occupy 1 foot of
usable space
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40” clearance between electric and communications
space charged to electric utility
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“Net cost of bare pole” calculated by formula in
Appendix B to FCC R& O, 2 FCC Rcd 4387 (1987)
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“Carrying charges” are expenses of owning and
maintaining poles without pole attachments, including
administrative, maintenance and depreciation
expenses, a return on investment, and taxes
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NBP concludes that high pole attachment rates deter
broadband deployment, adoption, and use
NBP recommends that the FCC “establish rental rates
for pole attachments that are as low and close to
uniform as possible, consistent with [s]ection 224 of
the [Act], to promote broadband deployment.”
NBP finds that “[a]pplying different rates based on
whether the attacher is classified as a ‘cable’ or a
‘telecommunications’ company distorts attachers’
deployment decisions.”
NBP recommends eliminating municipal exemption
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Section 224(e) won’t let FCC move everyone to cable
rate, so FCC modifies telecom formula to exclude
portion of capital costs of the pole
• Assumes that capital costs arising from the makeready process are already captured
• Assumes attachers only responsible for a de
minimis portion of other capital costs, because
pole owner would have incurred most of such
costs anyway
• FCC removes or reduces capital, depreciation,
return on investment, and taxes from “carrying
charges”
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In urban areas utilities can recover 66% of the
pre-existing telecom rate;
In non-urban areas utilities recover 44% of the
pre-existing telecom rate
New rate yields an amount that is approximately
the same as the cable rate formula
Rate applies to wireless
Not clear whether new rate is retroactive to existing
agreements
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R&O affirms general principle of nondiscrimination
• Attaching entities have right to space and cost
saving practices – e.g., “boxing” and “bracketing”
(extension arms) – if utility uses/allows them in
similar circumstances for communications
attachments
• Utilities retain right to limit use when necessary
to ensure safety, reliability, and sound
engineering
• Presumption in favor of use that utility can rebut
on a pole-by-pole or class-of-pole basis
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Prior to filing a complaint there must be
“executive-level discussions” between the
parties.
Unauthorized attachments penalties up to
five times the current annual rental fee
per pole
“Sign and Sue” rule retained
ILECs have right to “just and reasonable”
rates and can file complaints with the FCC
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If they want
broadband so bad
why don’t the
municipals just get
out of the way and let
us build?
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Reasoned approach that gives public power
utilities flexibility to meet their own unique
needs/circumstances
Process
• APPA Oversight (Kumar, Hyland, Waterhouse)
• APPA Member Task Force
• Baller Herbst, Baker Tilley, Atlantic Engineering
• Policy discussions, drafts, conference calls, reach
out to utilities in litigation, etc.
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Contents of New Workbook
• Model Agreement
• Instructions
• Rate Calculator
• Permitting Process
• Engineering Documents and Diagrams
• State-by-State summary of state laws
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Model Agreement is a master agreement subject to
individual permits.
Agreement is revocable, non-exclusive, license
providing non-discriminatory access for similar
attachments.
Unlike FCC, Agreement provides access for pure
broadband or dark fiber providers
Provides for far greater flexibility than FCC rules in
processing applications and completing make-ready
work. Gives utility more discretion.
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The shared-cost recovery formula charges the
same rate for all similar attachments.
The shared-cost recovery formula allocates the
safety space to all users of the pole as common
space and apportions the common space evenly
among all pole users, including the pole owner.
The updated Rate Calculator automatically
calculates rates under the shared-cost recovery
formula and the FCC’s formulas.
Work Book provides rationale for choices and
examples.
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Applies to all wireline attachments – cable, telecom,
broadband, dark fiber
Starts with FCC Original Telecom Formula but
allocates the safety space as support space shared
by all users
Allocates support space among all users including
pole owner on per capita basis
Up to utility whether to apply rate to wireless
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Wireless carriers are increasingly looking to place
wireless attachments on utility poles and street
lights
◦ DAS – Distributed Antenna Systems (above electric)
◦ Small Cell
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Different operational issues
◦ Safety, interference, space, power
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Different rate issues
◦ Occupies greater space, may preclude additional use
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TA 96 Act preserves state/local authority on
wireless zoning – Section 704 (47 U.S.C.
§ 332(c)(7).)
◦ Denials be in writing and supported by substantial evidence
◦ Shot clock – act on tower co-location siting requests within
90 days all others within 150 – Upheld, City of Arlington v.
Federal Communications Comm’n, 133 S. Ct. 1863 (2013).
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Section 6409(a) of the Middle Class Tax Relief and
Job Creation Act of 2012, 47 U.S.C. § 1455(a),
◦ Local gov. must approve requests to modify existing wireless
tower or base station that does not involve a substantial
modification
◦ FCC Report and Order WT Docket No. 13-238
◦ Does not apply to access to local government owned
facilities such as poles or street lights
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