High Court Goes Up A Pole

Supreme Court decision could impact how fast wired and wireless high-speed Internet services are deployed. If utilities price pole attachments out of reach, cable operators and wire-free phone firms could drop data transport plans—opting for TV and voice services only.

by Patricia Fusco ISP-Planet Managing Editor [January 23, 2001]

The Supreme Court this week agreed to rule whether cable and wireless firms that also transport broadband Internet traffic could still pay reduced rates when linking their networks over lines affixed to utility poles.

At issue is a 1996 amendment that allows the Federal Communications Commission to regulate fees paid to utility companies for pole access. Arguments may potentially disintegrate into a rent-fixing rumble over pole-top real estate that would come for a premium fee, should the Supreme Court decide in favor of the plaintiffs.

Relevant details
For the past 22 years, the FCC has determined the amounts that telephone and electric utilities could charge cable and wireless firms to attain what could arguably be called "pole position." The law was enacted in response to complaints that utilities were exploiting their lofty status in the public domain by demanding that monopolistic prices be paid.

Congress amended the law five years ago as part of the Telecom Act of 1996. Since then, cable TV companies, then cellular phone firms, and finally Internet service providers jostled for access to utility poles—each player scrambling for a key that would unlock access to new markets.

In 1998, as consumer demand for cable TV and cellular phone services increased dramatically, the FCC adopted rules extending its government-sanctioned pole pricing plan to cover cable TV and wireless communications companies.

Coûte que coûte
Thirteen utility companies challenged federal regulators authority to fix pole prices for cable and wireless firms. On April 11, 2000, the U.S. Court of Appeals for the 11th Circuit issued a 2-1 decision in favors of the utilities, subsequently endorsing the telephone and electric companies' rights to implement a "cost what it may" pricing scheme. The ruling has come to be known as the "Gulf Decision."

The court held that the FCC lacks authority to include wireless carriers and ISPs as part of the "nondiscriminatory access" provisions of Section 224. The majority concluded that utility poles are not a bottleneck for wireless systems and that the Act does not grant the FCC authority to regulate pole pricing.

The court also agreed with the Petitioners that the FCC has no authority to regulate pole attachments for Internet services. In doing so, the court chose to enforce the explicit of language of the 1996 Act, which calls for two rates for pole attachments.

Purloined public domain
The ruling completely rejected the Commission's approach to extend pricing privileges to Internet services provided by cable systems. In doing so, the 11th Circuit Court equated the Commission's formula for computing attachment pricing and mandatory overlashing with thievery—effectively taking utilities property without just compensation.

One judge partially dissented with the majority's determination that the FCC lacks authority to regulate attachments by wireless carriers and ISPs. Judge Carnes agreed with the ruling on all points, except for its conclusions about the FCC's authority to regulate pole attachments of wireless carriers and Internet service providers.

In Judge Carnes's view, the plain language of the statute mandates a conclusion agreeing with the FCC's interpretation of the word "any" used in definition of the term "pole attachment." Based on this definition, the FCC has authority to regulate all attachments, of any kind, including appliances used to provide wireless and Internet services.

Broadband impasse
The FCC petitioned that reviews be made of both the Gulf Power and the FCC v. Iowa Utilities Board cases. Christopher Wright, FCC general counsel, said the Commission is pleased that the Supreme Court granted both petitions.

"In both of these cases, Congress decided that utilities owning bottleneck facilities must lease them to competitors at reasonable rates," Wright said.

"The FCC contends that the rules the FCC adopted will speed the deployment of high-speed Internet access service and the development of competition in all communications markets."

Wayward interpretations
AT&T Spokesperson Jim McGann said the company concurred with the National Cable Television Association's position on the case.

Robert Sachs, NCTA president, said the Supreme Court’s decision to review the Gulf Power pole attachment case is good news for the cable industry.

"In Gulf Power, the 11th Circuit Court of Appeals held that rates for pole attachments used for commingled video and Internet access are not subject to the rate protections afforded by the Pole Attachment Act,” Sachs said.

“We believe that the Supreme Court will find that the 11th Circuit decision was contrary to the plain meaning of the pole attachment statute," Sachs added. "It also frustrates one of the central purposes of the 1996 Telecommunications Act—encouraging deployment of Internet and other advanced services.”

Legal advisors for the utility companies said the 1996 law means that cable companies forfeit their government subsidy when they deliver high-speed Internet services over coaxial or wireless attachments traversing their poles.

And so it is—the manifest destiny of 3G wireless and broadband cable access in the U.S. will be determined by the Supreme Court.

Who would have guessed that the same pole-to-pole system for binding the nation's networks together could place the costs of providing of broadband communication services in the hands of Con Ed and others?

The cases are the National Cable Television Association v. Gulf Power Co., 00-832 and the FCC v. Gulf Power Co., 00-834.

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