FCC Revisits NCTA's Demands for Utility-Funded Pole Replacements

The FCC has released a draft Second Further Notice of Proposed Rulemaking (FNPRM) in its Wireline Broadband Deployment docket (WC Docket No. 17-84), which revisits and builds on proposals made in NCTA’s 2020 Petition for Declaratory Ruling to shift pole replacement costs from attachers to pole owners – even in cases where a pole would not have been replaced “but for” the need to create capacity for a new attachment. Such proposals are a dramatic departure from the decades-old cost apportionment principles reflected in Section 224 of the Communications Act (the Pole Attachment Act) and in the FCC’s rules and orders – all of which require attachers to reimburse pole owners if a pole must be replaced to accommodate a new attachment. In 2020, the FCC rejected NCTA’s Petition, and discretely clarified that a utility pole owner may not require a new attacher to pay the entire cost of a pole replacement if the replacement is not “solely necessitated” by the new attacher’s pole access request.

The purpose of the FNPRM is to identify factual scenarios in which a pole replacement may not be “solely necessitated” by a pole access request, and to develop new cost allocation principles that would require utility pole owners to pay a proportionate share of total pole replacement costs based on cost causation principles. The FCC also wants to identify factual scenarios in which pole replacements necessitated by new third-party attachers benefit utility pole owners, such that pole owners should be required to contribute to the total pole replacement costs based on the value of the benefit that they receive. In both cases, the FCC requests specific proposals on how relative benefits should be quantified, and how pole replacement costs should be apportioned between utility pole owners and communications attachers.

While the FNPRM does not provide tentative rule amendments, it presents for comment a presumption that utility pole owners directly benefit from all pole replacements precipitated by a pole access request, and offers to establish standards for when and how utility pole owners should be required to share in the total cost of pole replacements. Importantly, the FNPRM reiterates that the FCC cannot mandate utility pole owners to replace poles to create capacity for new attachments, and urges commenters to consider whether a particular solution would expedite pole attachment approvals without increasing denials for lack of capacity.

Specific questions raised in the FNPRM are:

• Under what circumstances is a pole replacement “solely necessitated” by a new attachment request? If a pole is replaced exclusively to create capacity for a new attachment, how should the term “capacity” be defined?
• Under what circumstances does a utility pole owner benefit from a pole replacement that was otherwise “solely necessitated” to create capacity for a new attachment? How should the FCC differentiate between “direct” benefit and “indirect” benefit, if at all?
• If a utility pole owner benefits from a pole replacement that was precipitated by a new attachment request, how should the value of that benefit be quantified? How should the FCC apportion transfer costs for attachers that do not benefit from the pole replacement?
• How should the FCC address scenarios in which a utility pole owner installs an “enhanced” pole in response to a pole replacement request (that is, a new pole that is taller or stronger than the replaced pole, is “storm hardened,” complies with updated construction standards, provides excess capacity for the utility’s use or use by other third party attachers, etc.)?
• What are the relative costs and benefits to a utility pole owner when a pole is retired before the “end of life”?
• What is the impact of NCTA’s cost apportionment proposal on annual pole rental rates? Except where a pole replacement is solely necessitated by a new attachment request, should pole replacement costs be covered by annual rates, rather than by make-ready fees?

The FCC asks commenters to provide detailed data in support their proposals, and to consider the impact of their proposals on (1) the ability of utility pole owners to recover costs they incur to provide pole attachments; (2) the ability of attachers to obtain just and reasonable pole attachment terms; (3) the likelihood of pole attachment disputes; (4) the likelihood that pole access requests will be denied in cases where a pole replacement is required; and (5) the FCC’s broadband deployment objectives.

In addition to those items specifically related to pole replacement costs, the FNPRM also requests comment on:

• Whether utility pole owners should be required to provide information about the physical condition of their poles and pole replacement processes to attachers.
• Whether pole attachment complaints that arise from “unserved areas” should be prioritized for placement on the FCC’s Accelerated Docket.
• Whether the FCC should provide “additional clarity” with respect to the scope of refunds available in pole attachment complaint cases.

The FCC will consider adopting the FNPRM on March 16, 2022. If adopted, due dates for comments and reply comment will be published shortly thereafter. The FNPRM proposes to provide 30 days for filing initial comments and 15 additional days for filing reply comments.

Please contact any attorney in our Utilities practice group if you have questions about the FNPRM or its likely impact on utility pole owners.