FCC Investigating Cost of Pole Replacements

The FCC recently issued a Second Notice of Proposed Rulemaking concerning the allocation of costs when replacing poles to accommodate adding fiber or other communications wires communications devices to poles. The traditional rule has been that the new attacher must pay for 100% of the cost of make-ready, including the cost of pole replacement if there is not sufficient room to add a new wire or device (like a small cell).

In January 2021, the FCC issued an order that clarified that it is unreasonable for a new attacher to automatically have to pay the full cost of swapping a pole. This current NPRM now asks the industry for comments to clarify some of the stickier situations that arise out of trying to allocate the costs of pole replacement. For example, the NPRM asks for comments on the following situations and questions:

  • How do you determine the extent to which a pole owner will benefit from a pole replacement? There are plenty of cases where poles are clearly at the end of life and should have been replaced by the pole owner as a part of routine maintenance.
  • What standards or formulas should be applied to calculate the amount that a pole owner should be responsible for?
  • How should any new rules handle having to replace a pole that is not near the end of economic life – what the FCC is calling early pole replacement.
  • Will requiring pole owners to pay a share of pole replacement negatively impact the negotiation between telecom companies and pole owners?
  • Is there any mechanism that can be used to minimize disputes or to expedite the resolution of disputes?
  • Finally, the FCC is looking at the question of pole attachment rates and asks if there should be refunds to pole attachers if a finding is made that pole attachment rates are too high?

The FCC is asking the right questions. Carriers wanting to add wires or devices to poles have had two common complaints – the process takes too long and is too expensive.

The dilemma faced by the FCC is that anything other an iron-clad, non-debatable formula for allocating costs for pole attachments will make the timelines worse. If there is even a sliver of a chance for the costs to be negotiated, there will be a lot of disputed negotiations that will be to be resolved by regulators – and that will inevitably add even more time to the pole attachment process.

Let’s put this into perspective with a few examples. I know of several rural electric cooperatives where the poles are in dreadful condition. The poles are old, short, and starting to rot and fall down. I know fiber builders who have walked away from bringing fiber in these areas because they were told that practically every pole must be replaced – at a cost of $20,000 or more per pole. A fair finding might be that these cooperatives should pay for 100% of the cost of pole replacement since it is needed for the electric grid – it’s something they should have been doing anyway. Should a new attacher pay a penalty because pole owners had no pole maintenance and replacement plan? But these cooperatives are in poor counties, and the cooperatives don’t feel they can afford to replace the poles. An order that makes the cooperative quickly replace all of the poles could be an unaffordable burden. There may be no winners in this kind of dispute.

Remember that all pole owners are not neutral parties. Some poles are owned by telcos or by a utility that plans to offer broadband. In both cases, the pole owner has a financial incentive to delay or drive away potential pole attachers who are competitors. These owners might avail themselves of every possible delay that comes from any regulatory established timeline to settle disputes on the pole replacement issue.

For every one of the questions that the FCC is asking, there are real-life examples of sticky situations that are hard to resolve. A solution cannot include a dispute resolution process, or bad actor pole owners are going to fight every pole replacement request.

The very questions that the FCC is asking would lead to the grounds for a dispute. For example, what party can determine the condition of a given pole and if a pole owner will benefit from a free replacement? Who is to define what an early pole replacement looks like – in a way that can’t be disputed? Regulators must be cringing when they read this NPRM because they know they will be flooded with individual disputes over single poles filed by a fiber builder that wants a fast resolution.

Even the simplest solution I can think of would lead to disputes. Consider a solution that uses a formula that determines the share of costs allocated to the pole owner by the age of the pole – the older the pole, the more a pole owner pays. I can promise even that will lead to arguments about the age of a given pole.

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