American and Canadian courts rule on utility pole access by cable companies

Echoing an argument currently underway in Canadian courts, the U.S. Supreme Court has declared that the Federal Communications Commission has the right to set fees that utilities charge cablecos for pole access. A similar appeal from the Canadian Cable Television Association is before the Canadian Supreme Court. Lorne Abugov of Osler, Hoskin & Harcourt and Dana Frix of O’Melvany & Myers offer Network Letter their assessment of the ruling and what it means for the North American telecom market. With the expansive deployment of new communications technologies in the last decade, telephone and electrical utility poles have become an increasingly sought-after resource by cable, internet and other service providers, and a growing potential source of revenue for pole owners. In this context, both the American and Canadian courts have recently considered the authority of their federal communications regulators to regulate access to existing utility support structures. This past summer, the Canadian Federal Court of Appeal determined in Barrie Public Utilities v. Canadian Cable Television Association1 that the Canadian Radio-television and Telecommunications Commission’s (CRTC’s) statutory authority to regulate support structure access does not extend to poles owned by provincially-regulated electric utilities. In contrast, in National Cable & Telecommunications Association, Inc. v. Gulf Power Co. the Supreme Court of the United States recently confirmed the Federal Communications Commission’s (FCC’s) authority to regulate the access by cable Internet operators and wireless telecom carriers to any existing utility poles. United States Under the Pole Attachments Act, the FCC is required to regulate the "rates, terms, and conditions" for pole attachments and to provide that such rates, terms, and conditions are "just and reasonable."2 In 1998, the FCC issued its Pole Attachments Order, in which it concluded that it has jurisdiction to regulate rates for pole attachments used to provide commingled services (e.g., combined cable and internet services) as well as attachments of wireless equipment. The Pole Attachments Order was challenged by pole-owning utilities and overturned by the Eleventh Circuit. On January 16, 2002, the Supreme Court reversed the Eleventh Circuit, and found, based on the plain-language of the Act, that the FCC has jurisdiction to regulate the rates associated with both pole attachments used for commingled services and those used to provide wireless services. The Act defines a pole attachment as "any attachment by a cable television system or provider of telecommunications services to a pole, duct, conduit, or right-of-way owned or controlled by a utility." 3 The Supreme Court noted that the dispositive issue is therefore whether the entity seeking to install the pole attachment is a cable or telecommunications service provider – the functionality of the attachment is irrelevant. The Supreme Court found that the commingling of service does not change the fact that the attaching was done by a cable or telecommunications service provider. The Supreme Court further dismissed the argument that the FCC was precluded from asserting jurisdiction over pole attachments used to provide commingled services because the Act provides only two specific formulas for determining pole attachments rates (Section 224(d)(3) — "attachment used by a cable tele-vision system solely to provide cable services" and Section 224(e)(1) "pole attachments used by telecommunications carriers to provide telecommunications services"). The Supreme Court ruled similarly on the narrow issue of whether some attachments by wireless telecommunications providers – those, presumably, which are composed of distinctively wireless equipment – are excluded from coverage of the Act. The Supreme Court found that a provider of wireless telecommunications service is a "provider of telecommunications service." Therefore, an attachment used in the provision of wireless services is clearly a "pole attachment" under the Act. Impact of the Supreme Court’s Decision In addition to clearly establishing the FCC’s jurisdiction to set just and reasonable rates for pole attachments used in the provision of commingled and wireless services, the Supreme Court’s decision in this case is a significant boost to the FCC, which in recent history has found its decisions all-too-frequently second-guessed by the courts. The Supreme Court did not decide the issue of whether the rates established by the FCC are themselves lawful, and it is reasonable to expect that this issue will be back before the courts in the near future. In addition, the issue of the proper regulatory classification of Internet services, an issue that has widespread implications that extend well beyond pole attachments, remains unresolved. Canada On July 13, 2001, Canada’s Federal Court of Appeal allowed an appeal from a decision of the CRTC and determined that subsection 43(5) of the Telecommunications Act4 does not give the CRTC the statutory authority to grant cable television companies access to poles owned by provincially regulated power utilities. Subsection 43(5) allows a person who provides services to the public to apply to the CRTC for access to the supporting structure of a transmission line constructed on a highway or other public place. The Federal Court of Appeal’s decision in Barrie Public Utilities v. CCTA centred on the interpretation of the term "transmission line" since subsection 43(5) does not explicitly indicate whether this term includes electrical transmission lines. The Court of Appeal concluded that based on the statutory context of subsection 43(5), Parliament did not intend the term "transmission line" to refer to electrical power lines. The Federal Court of Appeal noted that read literally, subsection 43(5) could apply very broadly, including to situations in which neither the person seeking access nor the transmission line owner is a federal undertaking. The Court of Appeal reasoned that it could not have been Parliament’s intention to give the CRTC a power that could fall outside both the CRTC’s mandate to regulate telecommunications and broadcasting and Parliament’s legislative jurisdiction under the Constitution Act, 1867. Given this constitutional difficulty, the Court of Appeal concluded that Parliament intended the term "transmission line" to be limited to the transmission lines of Canadian carriers or distribution undertakings, and not to include the transmission lines of power utilities. However, the Court of Appeal did not directly consider whether it would be within Parliament’s constitutional jurisdiction to explicitly authorise the CRTC to regulate access by federal undertakings to poles owned by provincially-regulated utilities. The Court of Appeal found further support for a restricted interpretation of the term "transmission line" in the use of the term in the other subsections of section 43 and in the legislative history of subsection 43(5). Finally, the Federal Court of Appeal rejected the CRTC’s reliance on the policy objectives set out the Telecommunications Act and the Broadcasting Act and stressed that the CRTC neither has the plenary power to implement these policy objectives, nor do the policy objectives themselves confer jurisdiction on the CRTC. Impact of the Federal Court of Appeal’s Decision The Federal Court of Appeal’s decision is notable for the lack of deference it afforded the CRTC and for the fact that it did not directly consider the constitutional issues that arise from federal undertakings seeking access to poles owned by provincially-regulated utilities. On September 28, 2001, the CCTA filed an application for leave to appeal Barrie Public Utilities v. CCTA to the Supreme Court of Canada. The Supreme Court’s decision on whether or not to hear the appeal is expected in the coming months. Footnotes:1. (2001), 202 D.L.R. (4th) 272 (FCA)2. 47 U.S.C. §224.3. Id §224(a)(4) (emphasis added).4. 1993, c. 38, ss. 1-76, as amended

American and Canadian courts rule on utility pole access by cable companies

News | 01/29/2002 5:00 am EST

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