CABLE WINS AT SUPREME COURT IN POLE ATTACHMENT CASE
Supreme Court ruled 6-2 Wed. that cable operators were entitled to low, regulated rates when they used utility or telephone poles to string fiber carrying data. Ruling in FCC v. Gulf Power and National Cable Telecom Assn. v. Gulf Power means Gulf Power and other utilities that own poles can’t charge what they describe as “market rates” for space on those poles -- as high as $50 per pole per year. That compares with yearly charges of $5-$6 at current regulated rates. Cable companies had said if they were charged higher rates they would have no choice but to pass through those costs to their customers, perhaps raising rates as much as $2 per month per subscriber. NCTA hailed decision, saying it would make Internet access more affordable and make broadband deployment more attractive to companies. American Cable Assn. (ACA) also praised decision, saying it would save many independent cable operators in rural areas from going out of business. FCC Chmn. Powell said if decision had gone other way it would have “derailed the broadband revolution.”
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Justice Anthony Kennedy, writing for majority, said attachments at issue fell within “heartland” of law that gave FCC authority to regulate rates charged for pole attachments. Congress originally passed law on attachments in 1978, then updated it in 1996 Telecom Act. That update led to confusion over whether Congress intended that Internet and data fall under imprimatur of cable service or telecom service or some other as-yet-undefined animal that would have no regulatory protection. Gulf Power said, and 11th U.S. Appeals Court, Atlanta, agreed, data-over-cable wasn’t a protected cable service but an unprotected information service. Supreme Court reversed 11th Circuit and restored FCC’s power to decide issue.
FCC is weighing how to classify cable Internet, and despite that lack of certainty, high court said “the addition of a service does not change the character of the attaching entity,” meaning that just because cable companies had added Internet services to lines already carrying cable, that didn’t change how those lines should be treated. Utility said “any attachment” by cable company couldn’t literally mean “any attachment,” such as clotheslines or billboards, but court said statute imposed no specific limiting principle on FCC’s jurisdiction. Court also said attachments by wireless companies were rate-protected telecom services.
Justices William Rehnquist, John Stevens, Antonin Scalia, Ruth Ginsburg and Stephen Breyer joined Kennedy in his opinion. Justice Clarence Thomas concurred in part and dissented in part, and Justice David Souter joined him. They disagreed with majority’s finding that FCC had regulatory authority even though agency hadn’t yet decided how to classify Internet-over-cable. Thomas said he would have vacated Appeals Court decision and remanded case to FCC with instructions to “clearly explain the specific statutory basis on which it is regulating rates” for commingled cable services. Justice Sandra O'Connor recused herself, as she does in telecom matters.
Powell said he was “pleased” court rejected an interpretation of law that “could have raised the rates that consumers pay for high-speed Internet access services and derailed the broadband revolution.” NCTA Pres. Robert Sachs called decision “great news” for consumers, particularly those in rural areas. “For them especially, the prospect of higher pole attachment rates just because they would be introducing cable modem service would have been an impediment to broadband deployment,” said Sachs, who got word of decision during interview with Communications Daily. ACA Pres. Matthew Polka, who represents hundreds of independent cable operators, said one member in rural Georgia recently complained that his yearly pole rents would increase to $78,000 from $9,000 if Supreme Court ruled for Gulf Power. “This is going to help save a lot of companies,” Polka said, adding that unfavorable ruling would have “stopped the deployment or had a great chilling effect on deployment of broadband.” Association for Local Telecom Services (ALTS) said decision was especially helpful to carriers seeking to provide service to residential and small business customers in apartments and office buildings. Ruling gives FCC “the green light to take necessary action to ensure that competitive carriers have reasonable access to buildings and rooftops,” ALTS said.
Spokesman for Gulf Power said his company was disappointed by ruling, but would continue to pursue other legal cases seeking what he called “just compensation” for pole attachments. USTA Pres. Walter McCormick said he was disappointed court didn’t address regulatory status of advanced services by cable companies, which compete with USTA’s members. “This is an issue of enormous importance to future of our economy and American consumers and we will continue to push to have this issue resolved by Congress or the FCC,” he said. Media Access Project (MAP) called verdict “the right decision, but not the right reasoning.” MAP agreed with Thomas and Souter that FCC must make a decision on underlying question of how to define cable service. MAP wants cable operators to open their lines to competing ISPs. Group filed amicus brief not supporting either side, on behalf of Consumers Union, Consumer Federation of America, United Church of Christ and Center for Media Education.