FCC clarifies rule for allocating pole replacement costs, adopts new rules aimed at faster dispute resolution, and seeks comment expediting pole access

On December 15, 2023, the Federal Communications Commission (FCC) released the text of its long awaited Fourth Report and Order, Declaratory Ruling, and Third Further Notice of Proposed Rulemaking addressing pole replacement cost allocation and other pole access issues that have heretofore hindered timely, cost-effective broadband deployment, including to unserved and underserved areas in the United States.

Through its Report and Order and Declaratory Ruling, the FCC helps to advance deployment of broadband infrastructure and make the pole attachment process faster, more transparent, and more cost-effective by: (1) clarifying that utilities may not charge communications attachers for pole replacement costs when a pole already requires replacement for any reason other than a lack of capacity to accommodate the new attachment, thereby expanding the definition of a "red-tagged pole;" (2) providing additional examples of circumstances where a pole replacement is not "necessitated solely" by an attachment such that the utility must share in the cost of the replacement; (3) clarifying attachers' right to access information regarding utility easements; (4) clarifying that pole owners must meet the FCC's timelines for processing attachments to up to 3,000 poles, even when the project exceeds the 3,000 pole threshold; (5) implementing a new intra-agency, expedited process for the FCC's handling of pole access complaints; and (6) imposing additional record retention and disclosure requirements on pole owners to address a potential attacher's need for more information about the poles that it plans to use as part of its broadband buildout.

In recognition that additional rule changes may still be needed to ensure that poles do not stand in the way of ensuring broadband for all, the Third Further Notice of Proposed Rulemaking (FNPRM) seeks comment on other pole-related issues that hinder timely broadband deployment, including: (1) whether the FCC should take further action to facilitate the processing of pole attachment applications where more than 3,000 poles are at issue; (2) whether the FCC should modify its self-help rules to enable attachers to access poles more quickly; and (3) the impact of contractor availability when attachers seek to use their own resources when conducting self-help or make-ready work. Comments and reply comments on the FNPRM are due by February 13, 2024 and February 28, 2024, respectively.

Background

In its 2018 Wireline Infrastructure Order, the FCC ruled that pole owners may not charge new attachers for the cost of replacing "red-tagged" poles. At that time, the FCC defined a red-tagged pole as one that is "found to be non-compliant with safety standards and placed on a replacement schedule." As explained by the FCC, requiring attachers to pay for work they did not cause is inconsistent with the FCC's long-standing principle that a new attacher is only responsible for the actual costs incurred to accommodate its attachment. Despite this clear directive, as broadband providers undertook the first wave of significantly funded rural broadband deployment projects, they continued to encounter utilities seeking to shift the cost of replacing aging, failing pole plant to attachers through the pole attachment make-ready process.

As a result, in July 2020, NCTA – The Internet & Television Association (NCTA) filed a Petition for Declaratory Ruling asking the FCC to clarify Section 1.1408(b) of the FCC's rules by adopting an objective cost-sharing methodology for assigning pole replacement costs when a pole replacement is not necessitated solely by an attachment. In January 2021 the FCC's Wireline Competition Bureau (WCB) issued a Pole Replacement Declaratory Ruling denying NCTAs's specific methodology request, finding that it required a rulemaking process, but clarifying that when a pole replacement is not "necessitated solely" by a new attachment, new attachers may not be required to bear pole replacement costs in their entirety.

Despite these two rulings, significant continuing disagreement remained as to when a pole owner should pay for red-tagged poles and when a replacement was not "necessitated solely" by a new attacher. And there were also continuing concerns from attachers that pole owners were forcing attachers to pay 100 percent of the costs to replace older, weaker, shorter poles with new, stronger, and (typically) taller poles, thereby resulting in significant betterment to the pole owner at the unfair expense of broadband attachers.

As a result of this continuing disagreement and attachers' concerns, the FCC released in March 2022 its Second Further Notice of Proposed Rulemaking seeking comment on whether the agency should further clarify its pole attachment rules – specifically with regard to the allocation of pole replacement costs and other ways to avoid and more quickly resolve pole replacement and related attachment disputes. The Report and Order and Declaratory Ruling addresses these and other issues.

Further Clarifying the FCC's Pole Replacement Cost Allocation Rules

Recognizing the continuing controversy surrounding what a pole owner may and may not charge an attaching party if a pole replacement is not "necessitated solely" by the attacher – such as when a pole is "red-tagged" by the pole owner for future replacement – the FCC through its Declaratory Ruling clarifies certain pole replacement terms. As discussed below, through these clarifications, the agency removes any doubt that pole owners, and not attachers, are responsible for pole replacement costs where a pole has been identified for replacement for any reason other than lack of capacity to accommodate the new attachment(s) and confirms that utilities may not pass on to attachers the cost of replacing a defective pole beyond the incremental cost of any taller or stronger pole needed to support the attacher's new facilities.

First, the FCC concludes that its prior "red-tagged" pole definition – under which a pole only qualified as red-tagged if it was marked as out of compliance with safety standards and placed on a utility's replacement schedule – was too narrow. The agency thus clarifies that, for purposes of its pole replacement policies, a "red-tagged" pole is one that the utility has or should have identified as needing replacement for "any reason other than the pole's lack of capacity to accommodate a new attachment." This includes poles where there is a preexisting condition preventing the addition of a new attachment or where the pole owner has already identified the pole for replacement.

Second, the FCC clarifies when a pole replacement is not "necessitated solely" by an attachment by providing a non-exhaustive list of examples, including where: (1) a pole replacement is necessitated by road expansions/moves, property development, in connection with storm hardening, or similar government-imposed requirements; (2) a pole replacement is required pursuant to applicable law; (3) the current pole fails applicable engineering standards, such as those contained in the National Electric Safety Code (NESC); (4) a pole replacement is required because of the utility's previous or contemporaneous change to its internal construction standards; or (5) the current pole is already on the utility's internal replacement schedule, regardless of when the replacement is scheduled to take place. The FCC also specifies that, if a defective pole must be substituted with a taller pole to accommodate a new attachment, the attacher is responsible only for "the incremental cost of a taller or stronger pole needed to support its new facilities," rather than the entire expense of an equivalent pole, and such incremental costs must be documented. Each of these clarifications will help eliminate utility-attacher disputes and speed the pole access negotiation process.

Additionally, the FCC clarifies that, for attachers to effectuate their right of access under Section 225(f) of the Communications Act, utilities are required to provide potential attachers with a copy of a utility's easement before the utility can refuse to let the attacher share that easement or require the attacher to obtain its own easement. Additionally, in response to concerns raised by some attachers that pole owners were refusing to process certain large pole attachment applications in accordance with the FCC's timelines, the Declaratory Ruling clarifies the applicability of its timelines to the first 3,000 poles in an application that exceeds 3,000 poles. Only the poles exceeding the 3,000 threshold may be negotiated by the pole owner. This should help to ensure that pole owners either process the poles in a timely manner, or allow attachers to use qualified contractors to perform the work.

Accelerating the Resolution of Pole Access Disputes

Recognizing the continued delay in resolving pole access disputes and the compounding negative effect this delay has on broadband deployment, the FCC through its Report and Order amends its existing rules by establishing an intra-agency rapid response team – the Rapid Broadband Assessment Team (RBAT) – to provide coordinated review and assessment of not just utilities' express denials of attachment applications, but any pole attachment dispute that a party alleges is impeding or delaying broadband deployment. RBAT will be comprised of FCC Enforcement Bureau and WCB personnel, and is tasked with swiftly assessing information provided by disputing pole owners and attachers to suggest a process for resolving the dispute – including through mediation, the FCC's Accelerated Docket, and/or through "any other action" RBAT determines will help the parties resolve their dispute.

Both pole owners and attachers are permitted to seek RBAT review. To do so, the complaining party must notify via phone and written notice the Chief of the Enforcement Bureau's Market Disputes Resolution Division and complete an online form further outlining the dispute. RBAT will then arrange an initial meeting with the parties "as soon as practicable" and, at its discretion, may request from the respondent a written response to the complainant's allegations. RBAT may also request that one or both parties provide the team with "documentation or other information" relevant to the dispute. At or following the initial meeting, RBAT will propose what it believes might be the most effective way to resolve the dispute.

Under the new RBAT process, RBAT holds the authority to determine if a dispute (or any portion thereof) is appropriate for resolution via the FCC's Accelerated Docket. To determine if this is the case, RBAT must assess the "totality" of the following criteria: (1) whether the complainant states a claim for violation of the Communications Act or FCC rules; (2) whether the complaint's expedited resolution is likely to advance broadband deployment; (3) whether the parties have exhausted all other reasonable settlement opportunities; (4) whether the dispute includes new or novel issues; (5) the complexity of the issues; and (6) the need and extent of any discovery that must take place. Each of these criteria is to be reviewed with an eye towards the benefits and obstacles of resolving the complaint within the Accelerated Docket's 60-day timeframe.

Requiring Further Transparency Via the Exchange of Pole Inspection Information

The FCC also issues new rules requiring pole owners to retain and furnish attachment applicants with additional information beyond the pole cost information they must already share under the FCC's existing regulations, including those pertaining to pole attachment rates, or as part of their obligation to provide access upon just and reasonable terms and conditions. This specific additional information includes the utilities' most recent "cyclical pole inspection reports" – defined as "any report that a utility creates in the normal course of its business that sets forth the results of the routine inspection of its pole during the utility's normal pole inspection cycle" – or any intervening "periodic reports" – defined as "any report that a utility creates in the normal course of its business that sets forth the results of the inspection of any of its poles outside the utility's normal pole inspection cycle." Notably, the FCC declined pole owner efforts to narrow the scope of inspection reports covered by the rule, recognizing that a visual inspection may not necessarily provide all the information that would be desired by an attacher. Pole owners are required to provide this information for all the poles covered by the submitted attachment application within 10 business days of an attachment applicant's request. Pole owners also must retain copies of the applicable cyclical or periodic pole inspection reports until a superseding report covering the poles at issue is created.

In response to concerns from attachers that pole owners may use the new rule narrow the scope of information previously provided, the FCC clarifies that these new pole transparency rules are a floor rather than a ceiling, encouraging utilities to "voluntarily share pole-related information that is reasonably available and that they track in the normal course of business, both before and after receiving attachment applications." The agency also warns utilities that it will continue to monitor the record in this proceeding to ensure pole owners are not withholding available pole-related information, and it reserves the right to later determine if additional information sharing mandates may be required.

FNPRM on Other Pole-Related Issues

Understanding that the various federal and state initiatives allocating funding to further broadband deployment will result in significant numbers of new attachments and attachment applications, the FCC through its FNPRM seeks comment on ways to further facilitate the application approval and make-ready processes. Those specific items the FCC seeks comment on include:

• Large Orders: Whether, to facilitate the processing of pole attachment applications submitted in large numbers, the FCC should, as it proposes, amend its Section 1.1411 to provide utilities with an additional 90 days for make ready requests exceeding 3,000 poles or 5 percent of the utility's poles in a state.
• Self-Help: Whether the FCC should modify its self-help rules to enable prospective attachers to access poles more quickly, such as by requiring a utility to notify an attacher within 15 days of application receipt that it will not be able to conduct the survey within the required 45-day period.
• Use of Contractors: The impact of contractor availability when attachers seek to use their own contractors when conducting self-help or one-touch make-ready for surveys and make-ready work, and whether the FCC should amend its rules to make it easier for attachers to use their own contractors for these purposes.

Conclusion

The FCC's Report and Order and Declaratory Ruling should help to resolve many issues related to pole replacement and attachment disputes in a manner that will speed broadband deployment. We expect the public, stakeholders, and the FCC to be engaged as outcomes from this item take shape – and particularly as NTIA and states ramp up their broadband construction grant programs and further distribution of taxpayer money to expand and enhance the nation's broadband networks.

The FCC's new rules will take effect 30 days after their publication in the Federal Register, while the clarifications offered in the Declaratory Ruling take effect immediately upon publication.

[View source.]