POLE ATTACHMENT ISSUES UNDER PURA 2005

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					POLE ATTACHMENT ISSUES UNDER
          PURA 2005
     Texas Public Power Association‟s
        Pole Attachment Workshop

               March 8, 2006
                Sean Stokes
     The Baller Herbst Law Group, P.C.
            204 P Street, N.W.
          Washington, D.C. 20036
              (202) 833-0166
           sstokes@Baller.com
             www.Baller.com
Federal Pole Attachment
Regulations -- 47 U.S.C. § 224
• Regulate rates, terms and conditions of
  access for utility pole attachments by
  telecommunications carriers and cable
  operators
           “Pole Attachment”

“The term „pole attachment‟ means any attachment
by a cable television system or provider of telecom-
munications service to a pole, duct, conduit, or
right-of-way owned or controlled by a utility.”

                          47 U.S.C. § 224(a)(4).
Public Power Exemption -- “Utility”
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 person owned by...any State.”

“The term ''State'' means any State . . . or any
political subdivision, agency, or instrumentality
thereof.”
                          47 U.S.C. §§ 224(a)(1), (a)(3).
Implications of the Municipal Exemption

• Municipals are not subject to federal access rules
• Municipals are not subject to federal rate
  requirements, including distinctions among
  providers
• Municipals are not subject to federal procedural
  requirements
   – timing and content of responses to requests for access
   – 60-day written notice of changes
   – complaint processes
  Attachment Rules Under PURA 2005
• 54.204(a)(3) and (b)(2) of Texas Code -- municipals may
  not discriminate in favor or against a certificated
  telecommunications provider regarding a municipal pole
  attachment or underground conduit rate or term.
• 54.204(c) of Texas Code -- municipal utility may not
  charge any entity, regardless of the nature of the
  services provided by that entity, a pole attachment
  rate or underground conduit rate that exceeds the fee
  that the utility would be permitted to charge under rules
  adopted by the FCC under 47 U.S.C 224(e).
• By September 1, 2006, municipally owned utilities
  must charge a single, uniform pole attachment or
  underground conduit rate to all entities that are not
  affiliated with the municipality.
       Implications of New Texas Rules
•   Adopts federal pole rate formula as benchmark
•   Things to know about federal rate rules
•   FCC rates apply only when negotiations fail
•   FCC Rules rely heavily on rebuttable presumptions
•   Telecom Act distinguishes by:
     – Types of providers (e.g, cable system vs. telecom vs.
       carrier, Information service) but not between
       technologies (wire and wireless).
     – Texas law applies uniformly to any entity regardless
       of service.
     – Types of space -- usable or unusable
             What Formula Applies
• Under federal pole rules:
   – CATV systems that use pole attachments “solely to provide
     cable service” remain subject to the Section (d)(3) cable
     formula
      • Cable formula is incremental cost approach
   – Telecom carriers and CATV systems that provide telecom
     services are subject to new “Section (e)(1)” formula
      • Section (e) formula is fully allocated cost approach.
• Texas utilizes section “e” formula for all providers.
       Section (d)(3) “cable-only” Formula
Maximum Rate =

Space occupied by CATV x Net Cost of x Carrying
  Total Usable Space     Bare Pole     Charges
      Key Assumptions and Definitions

• Average height of pole is 37.5 feet
• Average usable space is 13.5 feet
• Cable attachment occupies 1 foot
• 40” clearance between electric and communications space
  charged to electric utility
• “Net cost of bare pole” calculated by formula in Appendix
  B to FCC R& O, 2 FCC Rcd 4387 (1987)
• “Carrying charges” are expenses of owning and
  maintaining poles without pole attachments, including
  administrative, maintenance and depreciation expenses, a
  return on investment, and taxes
         The Section (e)(1) Pole Formula
             (New Texas Formula)
  Maximum Rate = Unusable Space Factor + Usable Space Factor

                           Unusable Space =

2/3 x Unusable Space x Net Cost of Bare Pole x Carrying Charge
        Pole Height     Number of Attachers          Rate

                             Usable Space =

Space Occupied by Attachment x Total Usable Space x Net Cost x Carrying
   Total Usable Space            Pole Height       Bare Pole Charge Rate
 Additional Assumptions for Allocating
            Unusable Space
• Attaching entities include all providers of cable or telecom
  services, including pole owners, ILECs and government
  entities
   – Under Texas this may also include non-cable, non-
     telecommunications service providers.
• Each attacher uses same amount of space, regardless of
  number, size, location of attachments
• Each utility can calculate presumptive average number of
  attaching entities for rural, urban or urbanized areas, based
  on U.S. Census Bureau definitions
• Overlashing does not count as separate attachment.
               Conduit Formulas
 Maximum Conduit Rate = Conduit Usable + Conduit Unusable
   Per Linear Foot       Space Factor      Space Factor

 Conduit Usable Space Factor =

1/2 x     1 duct         x       Net Linear Cost   x Carrying
     Average No. Ducts,           Usable Space        Charge
     Less Adjustment for                               Rate
      Maintenance Ducts

 Conduit Unusable Space Factor =

2/3 x Net Linear Cost of Unusable Conduit Space x Carrying
                 Number of Attachers             Charge Rate
  Conduit Definitions and Assumptions
• Conduit systems are structures that provide physical
  protection for cables and are usually multiple-duct
  structures with standardized diameters
• Formulas for poles apply, with appropriate modifications
• Each party in conduit is counted as one attaching entity,
  regardless of number of cables or amount of duct space
  occupied
• All costs of construction of conduit system are included as
  either usable or unusable space, except costs attributable to
  deteriorated space
• FCC presumes each cable or telecom attacher occupies 1/2
  of a duct
         IMPLEMENTATION
• September 1, 2006 – uniform rate requirement
   – Incumbent providers with lower rates will likely resist
     raising rates and argue impairment of contract
   – Incumbents with higher rates will likely demand the
     lower rates – impairment of contract may not be a
     defense to munis since action is by State.
   – In either case review when, and under which conditions
     current agreements terminate/allow for rate changes.
• Under federal rules can always agree to different rate –
  Texas at a minimum would allow for a lower rate than
  FCC.
• Just because FCC rate being used as proxy does not give
  FCC jurisdiction over rates of TPPA members.