AT&T Wants FCC to Eliminate Pole Attachment ‘Rate Disparity,’ Says 4th Circuit Brief

The order “fails to eliminate the rate disparity between AT&T and its competitors,” said the brief, redacted to hide what AT&T pays Duke annually compared with what rival carriers pay “for use of comparable space on the exact same poles,” said the brief. The FCC reached this “incorrect result” by finding AT&T “is materially advantaged over its competitors due to traits shared by all traditional telephone companies,” it said.

Those traits include “the standard location” of AT&T’s cables on poles and its “contractual pole access rights,” said the brief. The FCC also allows Duke “to manipulate an input to the pole attachment rate formula solely to achieve a higher rate for AT&T,” it said. Those findings “cement rate disparities based on regulatory classifications,” and they contradict the federal pole attachment statute “and FCC regulations, precedent, and policy,” it said.

Duke refuses to reduce the rates it charges AT&T, “arguing that the FCC should have walked away from decades of precedent to preserve Duke’s unreasonably high rates,” said the brief. “The FCC correctly rejected Duke’s continued resistance to the statute and established FCC law and policy,” it said. The 4th Circuit should deny Duke’s own petition for review, grant AT&T’s petition, and direct the FCC to confirm that the same just and reasonable pole attachment rate applies equally to AT&T and its competitors, it said.

The FCC said, “for reasons at odds with its regulation, precedent, and policy,” AT&T “must pay rates calculated using the old telecom rate formula, far higher than the new telecom rates its competitors pay,” said the brief. The commission reached that conclusion by saying the joint use agreement (JUA) between AT&T and Duke granted the carrier “material benefits not available to AT&T’s competitors,” it said.

But the JUA terms that the FCC said were benefits “are the very traits that constitute an ILEC,” said the brief. Defining benefits to include those ILEC traits “predetermines the outcome of the analysis,” it said. It also precludes ILECs “from ever qualifying for the new telecom rate,” and it “contravenes” the FCC’s “express presumption” that ILECs “are comparable to -- and should pay the same pole attachment rates as -- their competitors,” it said.

The FCC said AT&T must pay rates “that far exceed even the default old telecom rate,” said the brief. The FCC achieved this result by allowing Duke to calculate pole attachment rates for AT&T using a “number of attaching entities” input into the rate formula that’s lower than the input Duke uses to calculate rates for AT&T’s competitors located on the same poles, it said. “This is confounding, since the number of attaching entities physically attached on any pole does not change based on which attacher’s rates are being calculated,” it said. It shouldn’t change “as a formula input either,” it said. Allowing Duke to “selectively vary that input and use a lower value to artificially inflate the pole attachment rate AT&T pays is contrary to principles of competitive neutrality,” it said.

The FCC decision to set rates for AT&T using the old telecom rate formula and a uniquely applied number of attaching entities input “created the very type of competitive rate disparity the FCC has long said it was eliminating,” said the brief. Without explanation for this “obvious disconnect,” the FCC set AT&T’s rates “far above” the rates Duke charges the carriers’ competitors “to use the exact same poles,” it said. “Duke challenges even this rate reduction, returning to arguments the FCC and courts have repeatedly rejected.”