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Pole Attachment Rates – Recent Developments

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									             Pole Attachment Rates –
             Recent Developments
                                    TPPA 2011 Annual Meeting
                                          July 25, 2011




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701
512-474-1492 aherrera@herreraboylelaw.com
                                                               1
                                   Introduction
                                      Alfred R. Herrera

                                   Herrera & Boyle, PLLC

                                816 Congress Ave., Suite 1250

                                    Austin, Texas 78701

                                     512-474-1492 (ofc)

                                     512-474-2507 (fax)

                            aherrera@herreraboylelaw.com
Herrera & Boyle, PLLC,
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492
aherrera@herreraboylelaw.com
                                                                2
                                  OVERVIEW
   Federal Law Plays a Key Role:


         Cable Rate – Pole Attachment Act of 1978, § 224(d)

         Telecom Rate – Federal Telecom Act of 1996, § 224(e)




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com       3
                      Two Rate Formulas
    Cable Formula (Pre-Jun. 8,
        2011):

   Max. Rate = (Space Occupied By CATV ÷ Tot. Useable
     Space) X Net Cost of Bare Pole X Carrying Charges




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com   4
                      Two Rate Formulas
   Telecom Formula (pre-Jun. 8, 2011) – Two Steps:
   Step One:
  Space Factor = Space Occupied + [(2/3 X (Unusable Space ÷ No. of
    Attaching Entities)/Pole Height)



   Step Two:
  Space Factor X Net Cost of a Bare Pole X Carrying Charge Rate =
    Maximum Rate


Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com          5
              Federal & State Regulatory
                     Framework
    FCC prefers use of utility’s own data to determine rates
    But can use certain presumptions for inputs to formula
    Municipally Owned Utilities Excluded from Regulation
        by Federal Communications Commission




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com      6
      State Regulatory Framework
    Public Utility Regulatory Act, § 54.204
         Applies only to municipally owned utilities
         Prohibits discrimination against certificated
          telecommunications providers
         Beginning Sep. 1, 2006, requires single, uniform rates for
          all attaching entities
         Rates may not exceed rates resulting from application of
          FCC’s Rules
         PUCT has jurisdiction to ensure compliance



Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com             7
      State Regulatory Framework
    Public Utility Regulatory Act, § 54.205

         Municipality has right to receive “reasonable
            compensation for use of its property




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com   8
                                                 FAQs
     Who may attach? Typically cable companies & telecom
         companies.
     Can access be denied, and if so, when? Not very easily.
     What controls – agreement or PURA? Unclear.
     What can we charge? No more than max. rate allowed by
         FCC rules.
     Can costs of audit for counting number of poles attaching
         entity attached to, be passed on to pole attacher? Yes.
     Can we charge for providing information regarding
         availability of pole space? Yes.


Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, TX
78701 512-474-1492 aherrera@herreraboylelaw.com                    9
                                                 FAQs
     Can we charge a penalty for unauthorized
         attachments? Yes.

     Who pays for modifications to accommodate a new
         attachment? Party that benefits.

     Can we reserve capacity for future expansion? Yes.




Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, TX
78701 512-474-1492 aherrera@herreraboylelaw.com                    10
    PUCT Activity Regarding Pole
               Rates
    Previously Limited to Setting Rates in “Interconnection
        Agreements” Between incumbent local exchange
        carrier (“ILEC”) and competitive local exchange carrier
        (“CLEC”)



    Cost basis for Interconnection Agreement rates is “total
        element, long-run, incremental costs” (“TELRIC”)




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com        11
                    CPS Energy Petition
    Jan. 2009 – CPS Energy files petition with PUCT
        asking PUCT to determine if its rates are in compliance
        with PURA, § 54.204(c)
         Whether exceed the FCC’s maximum allowable rate; and
         Whether conform to non-discriminatory and uniform-
            charge provision

    Case of first impression




Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com    12
                    CPS Energy Petition
    Scope of Proceeding
         What data may PUCT review?
         Role that FCC’s Presumptive inputs play?
         Extent of PUCT’s authority?
             Determination of the reasonableness of MOU’s inputs to
              formula?
             Limited to accepting inputs which MOU’s Board has already
              found reasonable?
         Which version of FCC’s Rules applies?



Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com             13
                            PUCT’s Rulings
    May assess reasonableness of MOU’s inputs.


    Only relevant data are those data for MOU.


    Not clear on what role FCC’s presumptive inputs will play.


    PUC concluded new rules FCC adopts apply automatically
        upon effective date of new rule

Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com        14
                           Back to the FCC
    FCC on Apr. 7, 2011 adopted new “Telecom Formula”
        and effective June 8, 2011
    FCC’s goal is to drive “Telecom Rate” closer to “Cable
        Rate”
    Effect is to reduce Telecom Rate by one-third
         If have same inputs, and those inputs produce rate of
            $15.00 under “old” rule, new rate is $10.00

    Also, new maximum rate is higher of applying the 66%
        factor to “old” Telecom Formula, or new rule that
        excludes carrying costs from formula

Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com        15
                           Back to the FCC
    Recall that Congress chose to exclude MOUs (and Co-
        ops) from FCC regulation – Pole Attachment Act does
        not apply to MOUs



    But … also recall that PUCT concluded that under
        PURA, § 54.204(c), as FCC changes its rules, those
        changes automatically apply to MOUs in Texas from
        effective date of new rule



Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com    16
           Effect on Pole Attachment
                     Rates
    Expect cable industry to be more active/assertive
    Expect push to re-negotiate pole attachment
        agreements with goal of achieving material reductions
        in pole attachment rates

    Greater use of FCC’s rules and order as “guidelines” to
        form contracts in Texas

    Unclear whether existing agreements need to be
        modified


Herrera & Boyle, PLLC
816 Congress Ave., Suite 1250
Austin, TX 78701 512-474-1492 aherrera@herreraboylelaw.com      17

								
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