March 10, 2008

Pole Dance: FCC Considering Raising Rates for Cable Broadband Attachments

Cable's long break from the drudgery of squabbling over pole attachments appears to be over. NCTA came out swinging Fri over a proposal at the FCC that it says could result in a "several hundred million dollar tax on broadband." Judging by NCTA's aggressive stance, expect it to dominate headlines in coming weeks. The Commission has suggested adopting a uniform broadband attachment rate that's higher than the current rate for cable attachments. The FCC argues that cable gets subsidized pole attachment rates, which the industry disputes, citing a Supreme Court decision that affirms its treatment of pole attachments used for cable broadband service. Comments were due on the issue Fri. NCTA said equality is better achieved by lowering others' rates rather than by raising cable's. It also noted that some companies (like incumbent LECs) have more favorable arrangements with pole owners than other companies. Utility companies claim that they bear a disproportionate amount of the cost of poles because the attachment rates assessed don't provide a fair allocation of costs among all users. "The electric consumers are bearing this expense even though they may not be a customer of the attachers," Joplin, MO's Empire District Electric told the Commission Fri. NCTA submitted an economic analysis by Microeconomic Consulting & Research Assoc that found adoption of the FCC's tentative conclusion could raise the price of broadband services by up to $670mln each year, which could equate to a per-customer increase of up to $390 annually in rural areas (rural areas have more poles than urban systems). "After decades of regulatory policy in which the Commission both recognized the connection between regulated pole attachment rates and investment by cable operators and vigorously protected the right to attach at reasonable rates, the [FCC] proposes a stunning change in direction," NCTA said. The FCC hasn't specified what such a single rate would be, only saying it would be "greater than the current cable rate, yet no greater than the telecommunications rate."