Pole Replacements Divide Owners, Attachers at N.Y. PSC

New York state can speed broadband deployment by requiring pole owners to share pole replacement costs with attachers, cable companies said in comments last week at the New York Public Service Commission. Pole owners disagreed, suggesting using the influx of state and federal broadband funding to pay for replacements. Some other attachers urged the PSC to act quickly on less controversial issues in docket 22-M-0101, especially with the FCC considering similar issues in its docket 17-84.

Pole owners forcing attachers to pay the full cost of pole replacements slowed broadband deployment, said Charter Communications. During one rural New York project to reach about 149,000 residents and businesses, "Charter faced unexpectedly high construction costs driven by pole replacement requirements, as well as major initial challenges obtaining access to utility poles,” Charter said. Changes to pole replacement cost allocation can “maximize the effectiveness” of the coming federal funding, it said.

For more equitable cost sharing, the New York PSC should consider three proposals before the FCC, said Charter. The cable company’s favorite is one in which pole owners would be reimbursed for poles’ “net book value,” it said. "Utilities would be responsible ... for the initial outlay of funds to purchase and install a new, standard replacement pole, and would then recover that initial investment over time from both rater payers and attachers, in proportion to their respective use of the new pole.” Charter signaled it wouldn’t oppose two other approaches: reimbursing pole owners in proportion to the pole's remaining useful life or treating replacement poles as capital expenditures that could be recovered from electric ratepayers and attachers through pole rental fees.

Disputes about pole replacement costs delay broadband, and replacements can take many months and sometimes years, said Altice: Finding ways "to avoid poles requiring replacement also takes considerable time to implement, all while unserved and underserved consumers wait for service they should already have received.” Attachers should bear a reasonable, proportionate share of costs to replace poles not already needing replacement, Altice said. "Pole owners obtain substantial benefits from poles that are replaced during the make-ready process,” like “receiving a valuable asset over which they maintain rights of ownership, control, and preferential access.” Replacement poles are stronger and taller and have more capacity, which pole owners can use to get more rental revenue, Altice added.

Altice supported Charter’s proposal. "Where the precise value of the retired pole is not available, the average net-book value produced using the New York Rate Formula provides a fair proxy, since it reflects all the utility’s poles, including those that are brand new and those that have been depreciated,” it said. “Another option ... would be to defer adoption of a cost sharing mechanism until such time as the FCC concludes its rulemaking.”

"Rather than make the attacher responsible for the full cost of the pole, the appropriate cost that should be allocated to the attacher is an approximation of the remaining lifespan of the pole being replaced,” commented Extenet, a wireless infrastructure company.

Pay for pole replacements with state and federal broadband funding, proposed Central Hudson, Con Edison and five other utilities. “This is a more equitable approach compared to implementing new cost sharing methodologies that require the electric utilities and their customers to subsidize unregulated competitive broadband companies.”

The joint utilities prefer using government support to their earlier proposal “to socialize the costs of third-party pole replacements among existing and future attachers through pole attachment rates,” they said. The utilities agreed with PSC staff that the rates could double in three to five years under that plan. While it would be more equitable than making electric customers pay, “this untested approach could bring about unintended consequences with potential adverse impacts to safety, reliability and access to affordable broadband that go beyond the excessive cost issues identified by" staff, they said.

Don't shift pole replacement costs to owners, said Verizon. That "would have an even more severe impact on companies such as Verizon than it would have on electric utilities, because of the significant competitive and financial challenges that Verizon faces in the State, and because it is not able to shift these costs to ratepayers through the rate-case mechanism.” Companies seeking to attach broadband facilities “have access to governmental funding and are able to pass on the costs to or share them with the ultimate beneficiaries of their broadband deployment programs -- their end-user customers,” it said. “There is no basis for creating what amounts to a universal service fund for such companies.”

The New York PSC should rule by Dec. 31 on pole attachment issues that have more consensus in the record, said Greenlight Networks. Those include the reconciliation process, use of standard agreements, clarifying rules and one-touch, make-ready, it said. Considering the "more challenging" pole replacement issue in a subsequent phase of the proceeding could allow the PSC to benefit from possible FCC guidance. Other telecom companies, including GoNetspeed agreed the PSC should act this year. “This proceeding is ripe for decision.”