FCC chairman Julius Genachowski believes that if utility companies reduce their attachment rates, it will make it easier for service providers to expand broadband services to more subscribers.
The FCC estimates that that pole attachment fees are about 20 percent of the total cost of deploying fiber optic cable needed for broadband networks. Every year large service providers including Verizon (NYSE: VZ) and AT&T (NYSE: T) pay about $20 per foot while competitive carriers and independent ILECs pay $10 and cable companies pay about $7 per foot, per pole.
With its Pole Attachments Order issued today, the FCC has not only reduced the timeline telecom providers to attach communications equipment (network electronics and fiber cable) to utility poles, but also setting the rate for attachments by telecommunications companies at or near the rate paid by cable companies.
By lowering the attachment rates and attachment timelines, the FCC believes that it will be able to expand availability of affordable broadband set under the National Broadband Plan.
Not surprisingly, telecom and utility industry groups are divided on the topic.
The USTelecom trade group thinks that the ruling will eliminate a cost barrier to invest in areas that have been typically cost prohibitive to build out in the past.
"It changes how far out you can go," said USTelecom Policy Vice President Glenn Reynolds in a Politico article. "Where you have those long, long loops, it's one of the biggest cost drivers. In effect, it turns those places from uneconomic to serve to economic to serve."
However, the Utilities Telecom Council (UTC) thinks that the new ruling offers no benefits to broadband consumers and poses potential safety risks.
"Utilities support broadband deployment but not at the expense of electric consumers and the safety of critical infrastructure," said William R. Moroney, UTC President and CEO in a release responding to the new order. "Unfortunately, the FCC rules adopted today perpetuate rate subsidies for the cable industry and extend them to carriers that provide broadband services. Ultimately, these subsidies are borne by electric utility customers; and it is far from clear whether broadband consumers will see any discount on their bill. Moreover, the new rules impose additional access requirements that threaten to run roughshod over utility safety and engineering practices."
For more:
- Politico has this article
- see the FCC release
- see the UTC release
- Here's FierceCable's take
Related articles:
FCC vote gives small cable operators a win at the poles
Utilities: Cable should pay telecom rate for pole attachments
Ofcom lays out BT's open access fiber plans