Regulation Inflates Broadband Prices

Before the
Federal Communications Commission
Washington, D.C. 20554

COMMENTS OF HANCE HANEY
DIRECTOR & SENIOR FELLOW – TECHNOLOGY & DEMOCRACY PROJECT
DISCOVERY INSTITUTE
The Commission is obviously on solid ground with its tentative conclusion that the “critical need to create even-handed treatment and incentives for broadband deployment would warrant the adoption of a uniform rate for all pole attachments used for broadband Internet access service.” [1]

It is absurd that broadband service providers who are telecommunications carriers are forced to pay pole attachment fees which, as Time Warner Telecom contends, are 272 percent higher than competitors who are cable operators. [2] As everyone knows, the utility furnishing the poles incurs the same costs whether the broadband provider is a telecommunications carrier or a cable operator.

The enormous disparity between the two charges reflects the fact there was one distinct regulatory history for telecommunications carriers and another for cable operators which produced different political compromises. The artificial disparity in pole attachment charges that is the subject of this proceeding of course highlights the danger of allowing a government agency to micromanage a dynamic sector of the economy.

There is an urgent need to eliminate this disparity now that cable operators offer voice services, telecommunications carriers over video services and both offer broadband Internet access services.

First, the Commission should adopt a unified pole attachment charge. Second, if possible it should avoid launching a new rate proceeding which could lead to years of uncertainty and tend to chill, rather than to promote, investment in broadband infrastructure.

There are already two lawful rates – notwithstanding the fact they are 272 percent apart if Time Warner Telecom is correct – from which the Commission can choose. It should naturally choose the lower rate, for it seems that to do otherwise would force broadband consumers to subsidize electric utility companies.

The key issue in this proceeding is whether the pole attachment rates cable operators currently pay are noncompensatory. Presumably they are not, or the Commission would never have approved them. Or if the Commission unlawfully did approve noncompensatory rates, a court would have overturned them.

Nevertheless, the Commission apparently believes that the rates cable operators now pay in fact do not fully compensate utilities (because the cable rate formula does not include unusable space). Yet the Commission cites no evidence for this. There is nothing in the NPRM which justifies the loaded and inflammatory question whether the cable rate results in a subsidy to cable operators “at the expense of electric consumers.” [3]

Obviously, no one ought to be subsidizing someone else’s customers or shareowners. But hopefully someone at the Commission is open-minded enough to be considering alternative possibilities for why there is such a huge disparity in the current pole attachment charges. For example, isn’t it possible that the rates which telecommunications carriers pay overcompensate utilities? There is at least an equal chance the Commission bungled by setting one set of rates too high as there is that it set another too low. Or maybe the Commission is acknowledging that it bungled both times when it tentatively concludes that a new unified rate should be “higher than the current cable rate, yet no greater than the telecommunications rate.” [4]

In any event, based on the absence of relevant citations in the NPRM this tentiative conclusion seems entirely premature.

Respectfully submitted,

/s/

Hance Haney
Senior Fellow
Director – Technology & Democracy Project
Discovery Institute

1015 15th Street, NW
Suite 900
Washington, D.C. 20005
Mar. 7, 2007

/sep

[1]Implementation of Section 224 of the Act; Amendment of the Commission’s Rules and Policies Governing Pole Attachments, WC Docket No. 07-245, Notice of Proposed Rulemaking, FCC 07-187 (Nov. 20, 2007) available at < 07-187A1.pdf>http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-
07-187A1.pdf> (NPRM) at para. 36.
[2] “Time Warner Telecom Calls for FCC to Eliminate Discriminatory Pricing of Pole Attachment Fees for Broadband Service Providers” (press release) available at
< http://www.twtelecom.com/Documents/Announcements/News/2006/Pole.pdf>.
[3]NPRM at para. 19; Statement of Chairman Kevin J. Martin.
[4]NPRM at para. 36.