TWT White Paper Attacks Alleged Pole-Attachment Discrimination

Telecom Policy Report, Jan 22, 2007

According to Time Warner Telecom, current FCC pricing rules allow utilities to charge "telecommunications carrier" broadband providers like itself as much as 272 percent more than non-telecommunications carrier competitors to deploy fiber-optic infrastructure, even though telecom carrier attachments reportedly "impose no greater costs or burdens on pole owners than the attachments of non-telecommunications carriers that are subject to lower rates."

As such, the Littleton, Colo.-based carrier filed a white paper with the Federal Communications Commission last week, calling for the elimination of discriminatory regulations governing fees charged for pole attachments for fiber-optic cable used to deliver broadband communications services to businesses. The white paper also is in response to two open dockets -- In the Matter of The Petition of the United States Telecom Association for Rulemaking to Amend Pole Attachment Rate Regulation and Complaint Procedures (RM-11293) and a Petition for Rulemaking of Fibertech Networks LLC (RM-11303).

TWT provides broadband information and telecommunications services over fiber it deploys or leases. The carrier says access to poles "is usually the most efficient and often the only means of deploying these fiber transmission facilities." It relies on "hundreds of thousands of pole attachment arrangements" that cost millions annually. As it moves forward to expand its footprint, TWT knows its costs for pole attachments will expand as well.

The carrier has two kinds of pole-attachment contracts. In areas where it leases

fiber from cable companies, usually from Time Warner Cable (a former affiliate), the cable company attaches its own cables to poles. Under its fiber agreements with cablecos, TWT is obligated to pay any increases in pole- attachment fees cablecos are charged as a result of TWT's provision of service over cableco fiber. In areas not covered by such leasing arrangements, TWT has forged its own deals with utility-pole owners.

"Time Warner Telecom along with broadband telecommunications carrier service providers across the country are charged significantly higher pole attachment fees than competitors providing identical broadband services simply because they are classified as telecommunications carriers," says Paul Jones, senior vice president/general counsel at Time Warner Telecom. "These rules are contrary to the notion of providing a 'level playing field' for all competitors. While not the original intent, these rules are forcing competitive broadband service providers to pay, industry-wide, tens of millions of dollars in fees that non-carrier providers do not. On behalf of all broadband service providers and their customers, we are calling on the FCC to exercise its authority under the 1996 Telecommunications Act to end the inequity among competitive broadband providers as a result of the discriminatory and anti-competitive rules currently in place."

In its white paper, TWT lauds the FCC for continuing its pursuit of a "level playing field" as a critical component of promoting Congress' policy objective, codified in Section 706, that advanced services be deployed in a timely manner. "Unfortunately, in its quest to eliminate unjustified differences in its treatment of broadband competitors, the Commission has overlooked one particularly egregious source of market distortions: discriminatory pole attachment rates," it continues. "The Commission's existing pole-attachment rules, as interpreted by the utilities, arbitrarily cause telecommunications carriers to pay pole attachment rates that are as much as two to three times higher than non-telecommunications carriers using the same poles and providing many of the same services as their carrier competitors. This is because a firm that uses a pole attachment to provide a telecommunications service is, by virtue of its provision of such service, deemed subject to a much higher pole attachment rate than firms that use pole attachments to provide only non- telecommunications services."

The FCC's Equation

According to TWT, the FCC has a Telecom Service Rate Formula and a Cable Rate Formula for calculating pole-attachment costs. The paper says the only difference between the two is the manner in which the costs associated with the unusable portion of the pole are allocated. "In the Cable Rate Formula, the costs of the unusable portion of the pole are allocated based on the percentage of the total usable space occupied by an attachment. The Telecom Service Rate Formula divides those costs by the total number of attachers and then multiplies that amount by two thirds," it adds.

Here's how TWT says the Telecom Service Rate Formula is calculated:

Maximum Rate = Space Factor x Net Cost of a Bare Pole x Carrying Charge Rate

Where "Space Factor" = Space Occupied (2 x Unusable Space)

(3 x Number of Attaching Entities)

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Pole Height

"The dollar amount yielded by the Space Factor equation in this formula is consistently