Verizon (NYSE: VZ) has become embroiled in a pole attachment battle with Virginia-based power company Dominion, arguing that the power company requires it to pay more for pole access than its CLEC competitors.
Under the terms of the agreement the telco has with Dominion -- a large part of which was redacted in an FCC filing -- Verizon said it has to pay for not only license agreements, but also access to the utility's poles.
According to Verizon's estimates, Dominion has owned 65 percent of the joint use poles since 2006 when negotiations for the Joint Use Agreement of the poles began, in January 2011 when the Joint Use Agreement took effect, and when Dominion sent its 2014 rent invoice.
"The Joint Use Agreement, like Dominion's license agreements, requires Verizon to pay for the costs," and "the Joint Use Agreement also requires Verizon to in order to access Dominion's poles," Verizon said. "These unique costs ensure that Verizon is, at best, a party to a pole attachment agreement with "terms and conditions that leave it 'comparably situated' to competitive LEC or cable attachers."
The telco claims that since the FCC passed its Pole Attachment Order in 2011, it has paid more in "gross rent" than it would have paid at the FCC's new telecom rate and the higher rates will inhibit new broadband build outs.
"For decades, it has paid far more than its competitors for comparable pole attachment terms and conditions," Verizon said. "The Commission's 2011 Order -- and the Enforcement Bureau's 2015 decision applying the Order in the Verizon Florida proceeding -- make clear that this competitive disparity must end, as it both distorts competition and discourages broadband deployment."
Following a year of negotiations with Dominion that began in October 2013, Verizon said that the utility proposed a rate increase.
Dominion has based much of its intransigence on a claim that Verizon enjoys "cost savings, as compared to its CLEC competitors, through beneficial provisions of the Joint Use Agreement," Verizon said. "There are no such "cost savings," however, that justify charging Verizon competitively higher rental rates, let alone rental rates that are per pole higher than the Commission's new telecom rate."
Pole attachment rates have become a key issue for incumbent telcos like Verizon and competitors alike.
In June, Level 3 Communications and COMPTEL asked the FCC to grant the pending petition from reconsideration of the regulator's 2011 Pole Attachment Order.
Although the FCC's 2011 order recognized that there was a disparity in the rate formulas used for cable and telcos could have "negative implications for competition and broadband deployment," COMPTEL and Level 3 said the regulator needs to make further clarifications.
- see this FCC filing (.pdf)
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