BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1027 - Buchanan Hearing Date:
July 5, 2011 A
As Amended: June 28, 2011 FISCAL B
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DESCRIPTION
Current federal law directs the Federal Communications
Commission (FCC) to ensure that rates, terms, and conditions for
telecommunications attachments to utility poles are just and
reasonable but exempts publicly owned utilities (POUs).
Current law requires the California Public Utilities Commission
(CPUC) to regulate pole attachment rates charged by
investor-owned utilities (IOUs) and establishes a formula
consistent with the FCC formula for setting that rate if an IOU
and cable company cannot agree on a rate.
This bill requires a POU to make appropriate space and capacity
on and in its utility poles and support structures available for
use by a cable television corporation, video service provider,
or telephone corporation pursuant to reasonable terms and
conditions.
This bill specifies that its provisions do not apply to pole
attachment contracts entered into prior to January 1, 2012,
unless a contract does not specify a fee.
This bill specifies that its provisions do not apply to a
jointly owned pole if the joint owner other than the POU has
sole control of the space requested.
This bill requires a POU to respond to a request for a use of a
pole or support structure within 45 days of receipt of the
request or 60 days if the request is for more than 300 poles,
and, if it denies a request, to provide a reason for the denial
and remedy to gain access.
This bill specifies a timeline for a POU to provide a cost
estimate to a requester, for a requester's response to that
estimate, for notice to existing attachers, and for completion
of make-ready work prior to the attachment, and provides that
the timeline dates may be extended under special circumstances
upon agreement of the parties.
This bill authorizes a POU to deny a request because of
insufficient capacity or safety, reliability, or engineering
concerns, which may take into account the impact of granting the
request on an approved project for future use by the POU of its
utility poles or support structures for delivery of its core
utility services.
This bill provides that, if it becomes necessary for the POU to
use space or capacity on or in a support structure occupied by
the cable company, the cable company shall either pay all costs
for rearrangements necessary to maintain the pole attachment or
remove its equipment at its own expense.
This bill requires the governing body of a POU to determine the
annual pole attachment fee pursuant to the formula specified in
this bill.
This bill specifies that a POU's annual pole attachment fee
shall not exceed an amount determined by multiplying the
percentage of the total usable space that would be occupied by
the attachment by the annual costs of ownership of the pole and
its supporting anchor, with a rebuttable presumption that a
single attachment occupies one foot of usable space and an
average pole contains 13.5 feet of usable space.
This bill specifies that a POU's annual fee for use of a support
structure not exceed the POU's annual costs of ownership of the
percentage of the volume of the capacity of the structure
rendered unusable by the equipment of the cable company.
This bill defines "annual costs of ownership" as the sum of the
annual capital costs and annual operation costs of the pole or
support structure, which shall be the average costs of all
similar utility poles or structures owned or controlled by the
POU.
This bill prohibits a POU from charging a fee that exceeds
actual costs and requires the legislative body of a POU to
ensure that neither customers of the POU or cable company are
subsidized by that fee.
This bill authorizes a POU to charge a one-time fee to process a
request for attachment based on actual costs and a one-time fee
for a rearrangement requested by a cable company and to impose a
penalty for unlawful attachment.
This bill requires the governing body of a POU, before adopting
or increasing a fee, or changing terms and conditions of access,
to hold at least one open and public meeting, provide notice of
the meeting least 14 days prior to the meeting, make available
at least 10 days prior to the meeting data indicating its cost
to grant a request and rationale for any changes in terms and
conditions of access.
This bill requires that action to adopt or increase a fee or
adopt or change terms and conditions of access be taken solely
by an ordinance or resolution or contract approved by the
legislative body and prohibits the legislative body of the POU
to delegate the authority to another entity or board.
This bill requires that an action adopting or increasing a fee
be at a regularly scheduled public meeting no earlier than 30
days after the initial public meeting and that the action be
effective no sooner than 60 days after the action.
This bill specifies that any person or entity may protest the
adoption of a fee or terms and conditions of access with written
notice within 30 days of the action that specifies the facts and
legal theory of the protest.
This bill provides that a person or entity subject to a fee,
term or condition of access, or a trade association representing
them, may bring legal action challenging the fee, term, or
condition and that this action be commenced within 120 days of
the effective date of the action adopting it.
This bill authorizes a person or entity subject to a pole
attachment fee, or trade association representing them, to
request an audit in order to determine whether a fee exceeds the
amount reasonably necessary to cover the costs of use of the
pole or support structure, requires the requester to pay for the
audit, and authorizes the person or entity to retain an
independent auditor for this purpose, and requires the POU to
adjust the fee if the audit determines it does not meet the
requirements of this bill.
General Orders of the CPUC establish standards for overhead and
underground utility structures.
This bill requires any use of a utility pole or support
structure by a cable company to comply with CPUC General Orders
95 and 128 and all other applicable provisions of law.
BACKGROUND
History of Shared Use of Poles - Since providers of electric and
telephone service first began stringing wires on poles across
America, shared use of poles and other utility infrastructure
has been the most efficient and practical way for both providers
to reach their customers. Most utility poles are jointly owned
by the local electric utility and telephone local exchange
carrier or are subject to a joint pole agreement that allocates
space for each user and apportions costs pursuant to a formula.
Electric utilities with sole ownership of poles typically have
provided access to telephone companies and charge an annual fee
for use of specified "communications" space on the pole.
The advent of the cable television industry in the 1970s
introduced a new player seeking access to utility poles for
stringing cables to reach customers. Concern that utilities
charging cable companies excessive pole attachment rates would
stifle the fledgling industry led Congress to enact the Pole
Attachment Act of 1978, adding Section 224 to the Communications
Act of 1934, which directs the FCC to ensure that rates, terms,
and conditions for pole attachments by cable television systems
are just and reasonable, except where such matters are regulated
by a state. In response, the California Legislature enacted
Section 767.5 of the Public Utilities Code giving the CPUC
responsibility to regulate pole attachment rates charged by IOUs
and establishing a formula for setting that rate if an IOU and
cable company cannot agree on a rate.
The Pole Attachment Act of 1978 exempted POUs, as does
California's law because POUs are not regulated by the CPUC.
Thus, neither federal nor state law requires POUs to provide
access to their poles or restricts the amount a POU can charge
for attachment.
Broadband Deployment Requires Access to Poles - In recognition
that access to broadband is essential to virtually every aspect
of modern life, breaking down barriers to broadband deployment
and adoption has become a national and state priority. The
FCC's National Broadband Plan released in March 2010 identified
the expense and delay in obtaining access to utility poles as a
major barrier to broadband deployment and recommended that
Congress adopt a nationwide policy for access to poles, ducts,
conduits, and rights-of-way. Accordingly, in April 2011, the
FCC reformed its pole attachment rules to streamline access and
establish attachment rates that compensate utilities for their
actual costs of providing access. Although these rules continue
to exempt POUs, the FCC has recommended that Congress amend the
Pole Attachment Act of 1978 to eliminate this exemption.
Several states, including West Virginia, Colorado, Kentucky,
North Carolina, Oregon, Washington, Texas, and Virginia, have
enacted pole attachment laws making rate provisions similar to
the FCC's applicable to POUs.
POU Attachment Rates - While pole attachment rates charged by
IOUs generally range from under $3 to $15, the rates some POUs
charge cable companies have been as high as $75 in recent years.
Cable companies claim that POUs are charging rates beyond their
actual costs and are using pole attachment fees for general fund
revenue, especially in recent years during the economic
downturn. However, some POUs claim that their attachment rates
are high due to unique local requirements and lack of economies
of scale enjoyed by IOUs.
COMMENTS
1. Author's Purpose . According to the author, this bill
creates parity by requiring POUs to provide cable and
telephone companies access to utility poles and support
structures at rates, terms and conditions the same as those
applicable to IOUs, ensures an open and public process for
setting fair pole attachment rates, and will increase
affordable access to broadband in communities served by
POUs.
2. Promoting Broadband Deployment . This bill is consistent
with the FCC's recent decision, in accordance with the
National Broadband Plan, to streamline access and reduce
costs for attaching broadband lines to utility poles across
America. As observed by the FCC, the impact of excessively
high pole attachment rates can be particularly acute in
rural areas, where there often are more poles per mile than
households. These rural areas are also the most likely to
be unserved by broadband, as indicated by the CPUC's state
broadband map. Thus, this bill is a complement to other
state efforts to bring broadband to unserved areas of
California through projects funded by the California
Advanced Services Fund and broadband grants from the
American Recovery and Reinvestment Act of 2009.
3. Balancing Right of Access and POU Requirements . This
bill for the first time creates an affirmative duty for
POUs to provide cable and telephone companies access to
utility poles and support structures and requires that this
access be on reasonable terms and conditions with a rate
based on the POU's actual costs. It also appropriately
balances POU requirements by authorizing a POU to deny a
request for access because of insufficient capacity,
safety, reliability or engineering concerns, or possible
impact on an approved project for future use for delivery
of its core utility service. It also provides for
rearrangement or removal of attachments if necessary and
authorizes a penalty for unlawful attachments.
The bill requires a POU, if it denies a request, to give
the reasons for the denial and the remedy to gain access.
The bill also establishes timelines that are consistent
with the FCC rules for a POU to respond to a request for
access, provision of cost estimate, requester's acceptance
or rejection of the cost estimate, and notification and
coordination with third-party attachers for make-ready
work.
4. Establishing Attachment Fee . This bill establishes a
formula for setting a pole attachment annual fee that is
based on actual costs and that does not result is a subsidy
of either the POU or the requesting cable or telephone
company. The fee is determined by multiplying the
percentage of the total usable space occupied by the pole
attachment by the annual costs of ownership of the pole and
its supporting anchor, based on a rebuttable presumption
that an average utility pole has 13.5 feet of usable space
and each communications attachment occupies one foot of
usable space. Thus, the annual fee would be 7.45 percent
of the annual costs for each communications attachment.
According to information provided by POUs and the
California Municipal Utilities Association, this formula
will result in an annual fee higher than some POUs
currently charge, but lower than the current fee of other
POUs such as Los Angeles Department of Water and Power
(LADWP) and Modesto Irrigation District. LADWP claims that
the formula will result in substantial reduction of its
current annual fee of about $48, which is based on charging
a cable company for about one-third of its usable space
given an average of 2.5 attachers per pole.
5. Joint Pole Exemption . The bill provides that a jointly
owned pole is not covered by this bill if a joint owner
other than the POU has the sole control of the space that
would be used by the requesting cable or telephone company.
This exemption is significant because an estimated
two-thirds of POU poles are jointly owned poles. However,
the language may be overly broad because the joint owner
(typically the local exchange carrier) and the POU share
ownership of the pole but only one of them can control
access to the communications space used for pole
attachments. Moreover, it is the author's intent that a
jointly owned pole is exempt only from the fee-setting
section of the bill, not the obligation to provide access
and other provisions. Thus, the author and committee may
wish to consider amending the bill on page 7, lines 3 to 8,
inclusive, as follows:
A jointly owned pole including the cost of the
pole on the books of the local publicly owned
electric utility, is not included within the
requirements of this part section, if a joint
owner other than the local publicly owned
electric utility has the sole control of the
access to the space that would be used by the
cable television corporation, video service
provider or telephone corporation.
6. Governing Body Establishes Fee . Although the bill
establishes the formula for calculating the annual
attachment fee, it expressly provides that the governing
body of the POU shall determine this fee pursuant to that
calculation. The bill also requires that action taken by a
POU to adopt or increase this fee shall be taken solely by
an ordinance or resolution adopted, or by a contract
approved by the POU legislative body. It prohibits the POU
legislative body from delegating the authority to adopt or
increase this fee or term or condition of access to another
entity or board. It is the author's intent that this
provision would prevent a POU from assigning the task of
setting pole attachment fees to a manager or other
official. However, this provision could be interpreted as
restricting municipalities such as Los Angeles, Alameda and
Riverside, which each have a utility board appointed by its
city council. Thus, the author and committee may wish to
consider amending the bill to clarify that the prohibition
on delegation does not preclude action by a utility board
appointed by a city council and does not interfere with a
city council's existing authority over its appointed
utility board.
7. Technical Amendments . This bill contains multiple
references to a POU "governing board" and "legislative
body" without a clear basis for the distinction.
"Governing board" is commonly used to refer to the entity
that governs a POU. "Legislative body" is defined in the
Brown Act open meeting law as the governing body of a local
agency, including a board created by charter or ordinance
of a legislative body such as a city council. In order to
avoid confusion and adequately clarify the delegation
prohibition, the author and committee may wish to consider
amending the bill to use "governing board" consistently and
define that term for purposes of this bill.
8. Ratepayer Impact . This bill could result in POUs that
currently charge higher pole attachment rates than allowed
under the formula established in this bill increasing rates
to make up for lost revenue from pole attachment fees. On
the other hand, it could result in lower rates for
telephone and broadband service if cable and telephone
companies are not charged excessively high pole attachment
rates.
ASSEMBLY VOTES
Assembly Floor (70-4)
Assembly Appropriations Committee (17-0)
Assembly Local Government Committee
(9-0)
Assembly Utilities and Commerce Committee
(13-0)
POSITIONS
Sponsor:
California Cable & Telecommunications Association
Support:
AT&T
California Association of Competitive Telecommunications
Companies
California Communications Association
Charter Communications
Comcast Cable
Cox Communications
CTIA-The Wireless Association
Frontier
Time Warner Cable
Oppose:
California Municipal Utilities Association
City of Burbank (unless amended)
City of Glendale Water & Power (unless amended)
City of Pasadena
City of Riverside (unless amended)
Los Angeles Department of Water & Power
Modesto Irrigation District
Southern California Public Power Authority
Turlock Irrigation District
Jacqueline Kinney
AB 1027 Analysis
Hearing Date: July 5, 2011