Academic journal article Federal Communications Law Journal

Ameren Corp. V. FCC: No. 16-1683, 2017 WL 3224187 (8Th Cir. July 31, 2017)

Academic journal article Federal Communications Law Journal

Ameren Corp. V. FCC: No. 16-1683, 2017 WL 3224187 (8Th Cir. July 31, 2017)

Article excerpt

In Ameren Corp. v. FCC, (1) the United States Court of Appeals for the Eighth Circuit. denied a petition for review by utility companies of a November 2015 FCC order that governed the rates utility companies may charge telecommunications providers for attaching their networks to utility-owned poles. (2) The FCC's order equitized the rates utility companies could charge telecommunications and cable providers. (3) The Eighth Circuit panel held that the 2015 order was a permissible construction of the Pole Attachments Act. (4)

The debate over rates for pole attachments has gone on for several decades. Congress first addressed this issue by enacting the Pole Attachments Act. (5) This legislation gave the FCC the authority to determine whether pole attachment rates by providers of cable and telecommunications providers are "just and reasonable." (6) The statute also set forth a lower and an upper bound for "just and reasonable" rates. (7) The lower bound rate "assures a utility the recovery of not less than the additional cost of providing pole attachments." (8) The upper bound rate was "determined by multiplying the percentage of the total usable space... which is occupied by the pole attachment by the sum of the operating expenses and actual capital costs of the utility attributable to the entire pole." (9) The FCC set the upper bound rate, known as the Cable Rate, by multiplying the space factor (the space occupied by an attachment divided by the total useable space on the pole), the net cost of a bare pole, and a carrying charge rate. (10)

Initially, Section 224 applied to only cable providers. (11) However, Congress amended Section 224 as part of the Communications Act rewrite in 1996, expanding the FCC's authority to cover pole attachments by telecommunication providers. (12) Until 2011, the FCC determined the "cost" for the Telecom Rate the same as for the Cable Rate. The FCC also calculated the space factor differently by apportioning two-thirds of the costs of the unusable space. This resulted in the Telecom Rate often being higher than the Cable Rate. Industry stakeholders began to voice concern that the risk of having to pay the Telecom Rate possibly deterred cable providers from expanding their services. (13)

The FCC attempted to implement equalization between the two rates in an April 2011 order. (14) The order reinterpreted the word "cost" in the underlying statute and defined it as 66 percent of the pole's fully allocated cost for an urban area, and 44 percent of a non-urban area. Under this order, the Telecom Rate approximated the Cable Rate.

Electric utility companies challenged this rule in court, alleging it was inconsistent with Section 224. (15) Specifically, the utilities' argued that "cost" in Sec. 224(e) must mean the fully allocated costs of a pole, and not 66 or 44 percent of the pole's fully allocated costs as set forth in the April 2011 order. (16) The D.C. Circuit upheld the April 2011 rule and rejected the utilities' petition for review. (17) The D.C. Circuit, applying Chevron analysis, held that the term "cost" in Sec. 224(e) is ambiguous, and the FCC's interpretation of the statute was reasonable in attempting to pursue equalization between the Cable Rate and the Telecom Rate. (18)

Despite the April 2011 order, the FCC found in 2015 that the order had failed to equalize the Telecom and Cable rates. …

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