Earlier this week the FCC’s Enforcement Bureau dismissed without prejudice a pole attachment complaint filed by Verizon Florida LLC (“Verizon”) against Florida Power and Light (“FPL”). It was the FCC’s first substantive decision to address incumbent local exchange carrier (ILEC) pole attachment rights since the FCC’s 2011 Pole Attachment Order (“2011 Order”) extending Section 224 rates, terms and conditions protection to ILECs.
The Bureau rejected Verizon’s arguments that its per pole rate of $35.47 – $36.23 should be no more than the rate calculated using the FCC’s revised telecom formula for competitive local exchange carriers (CLECs) ($8.52) or even the rate calculated using the FCC’s pre-2011 telecom rate formula ($12.91) based on FPL’s FERC Form 1 data. The Bureau found that Verizon received other benefits under its Joint Use Agreement with FPL that Verizon did not quantify but that would act as set-offs against the higher rate Verizon was paying. As such, the Bureau held that Verizon was not similarly situated to CLECs paying a lower rate without the same benefits that Verizon has under its Joint Use Agreement. To Verizon’s advantage, the FCC rejected FPL’s arguments that applying the 2011 Order to pre-existing contracts would constitute retroactive rate making. As a final nod to Verizon, the Bureau dismissed the complaint without prejudice such that Verizon could refile its complaint with evidence quantifying the other benefits it receives under the Joint Use Agreement to show, if possible, that those benefits do not justify the higher rate.
In its 2011 Order, the FCC determined that, due to changing market realities, ILECs like Verizon were entitled to just and reasonable pole attachment rates, terms and conditions under 47 U.S.C. § 224(b)(1). However, because ILECs were often differently situated from other telecommunications carriers and cable operators covered by Section 224, the FCC stated that it would evaluate complaints brought by ILECs on a case-by-case basis in light of a number of factors that account for potential differences between ILECs and other attaching entities and their pole rental rates.
For any subsequent or amended complaint Verizon would have to quantify the benefits that it received under the Joint Use Agreement which the FCC said would include: preferential designated space on the pole (the lowest four feet of usable space); installation of taller poles or replacement of poles by FPL to accommodate the four feet of space allotted to Verizon most often without charge to Verizon; no requirement to file applications, pay initial fees, undergo installation inspections or pay inspection fees for attachments; and no requirement to provide insurance, list FPL as an insured, or indemnify FPL. Because those benefits were not quantified, the Bureau found that Verizon had not produced evidence demonstrating that the value of the benefits it received under the Joint Use Agreement was less than the difference between the rental rates it was paying FPL and either of the Telecom Rates it sought to be applied to its attachments to FPL’s poles.