Industry Issues
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Broadband
Development May
Be Better Than Some Suggest
At
least one broadband group believes
that the United States
is getting better at broadband deployment.
The National Telephone and Information
Administration (NTIA) released an
optimistic report of the level of affordable broadband access in the United
States.
The report concludes that, “a reasonable
assessment of the available data indicates that the objective of
affordable
access for all has been realized to a very great degree.” However Richard Russell,
Deputy Director for
Technology in the Executive Offices of the President admits, “There’s
still a
lot more that needs to be done.”
Broadband
access has been a sore point for the United States,
as it lags behind
other nations according to international surveys.
However, the FCC reported that by the
end of
2006, ninety-nine percent (99%) of zip codes received broadband service
by at
least one provider. According
to the
study, the broadband environment is growing increasingly competitive,
and many
of the government’s policies, including clearing away regulatory
obstacles and
freezing state and local taxes on Internet access, have contributed to
this
growth
In the past
six years broadband lines have grown nationally from 6.8 million to
82.5
million. The
difficultly in these
surveys is defining broadband access.
For example, the FCC defines broadband
as a 200 kilobit connection. Some
people believe that this definition is
too low. However,
even those who
disagree admit broadband access has greatly improved.
Although
work remains to be done, North Carolina
has made significant progress.
The E-NC Authority
has reported that 83% of North
Carolinians now have the capability to obtain
broadband service, which is a significant achievement.
Fortunately,
for our North
Carolina
customers, CarolinaLink member companies have set the pace for
broadband
deployment. Although
our service areas
are among the most rural in the State, virtually all of our members
have access
to broadband services. That
is an
enviable achievement.
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The issue of pole attachment
rates
seems to keep recurring. The
current
version impacts telephone, cable, and other companies that need to
attach
facilities to poles owned by electric membership corporations and
perhaps
municipalities. In
some cases, the use
of underground facilities is also affected.
The issue concerns pole attachment rates
and efforts by electric
membership cooperatives (EMCs) and perhaps others who are seeking,
apparently
on the advice of consultants that stand to benefit from increased
commission
payments, to increase significantly the charges assessed against
telephone
companies, CATV companies and broadband providers.
Unlike traditional investor owned
electric
utilities that are subject to the FCC’s pole attachment formula, there
are no
regulations concerning electric membership corporations and their pole
attachment rates. The
FCC set a formula
for establishing rates, but statutes excluded cooperatives. Many companies
have expressed concerns that
EMCs are seeking significant price increases for these attachments. In several instances, EMCs
are terminating
existing pole attachment agreements and seeking new rates as much as
300%
higher than current rates. These
rates
are for pole lines, which EMCs sometimes locate along highway rights of
way
with the permission of the State.
One reason
for recurrence of this problem may be a 4th
circuit Court of Appeals
case, Time Warner v. Carteret-Craven Electric Membership
Corporation. In
this case, the 4th circuit
found no controlling authority in federal regulations or state
statutory or
state common law to regulate the prices that cooperatives may charge
for
attachments. In
this case,
Carteret-Craven terminated a 1997 agreement, which charged $6 per pole
and
demanded that Time Warner increase its payment.
This case should cause major concern for
other companies seeking to
attach facilities to existing lines.
This
problem should be a concern for all companies, which have or may in the
future
have pole attachment agreements with EMCs.
As stated, there are currently no
regulations concerning these rates,
and often times in rural areas, the EMCs own the vast majority of the
poles in
their territory. This
is a problem that
could become very expensive for utility companies in North Carolina. It is also a deterrent to
the deployment of
broadband technology into un-served and under served rural areas.
Certainly, no party should object to
paying its fair share for its use
of the pole. However,
pole lines are
granted by easements either through the right of eminent domain or the
threat
of eminent domain. The
lines should not
be used as private “fiefdoms” to exact unreasonable tolls from other
parties
that are likewise providing essential services to the public. If the problem continues,
the General
Assembly, as other states have done, should consider legislation for
providers
not covered by existing rules that assures that the public rights of
way are
available to all providers of essential services on fair and reasonable
terms.
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An
affiliate of Time Warner has filed a lawsuit
in the Federal District Court of Eastern North Carolina. The lawsuit challenges a
decision of the
NCREA, which found that the Time Warner affiliate was acting (sometimes
through
an intermediary) as an information service provider rather than a
telecommunications service provider.
Traditional telephone companies are
generally required to interconnect
and provide number portability to telecommunications services providers. The same obligation does
not extend to
information service providers. The
issue
is one that is playing out in regulatory agencies, legislatures and
courts
around the country. An
information
service provider ordinarily refers to an entity that provides Internet
service. As
technologies converge,
information service providers are usually capable of providing some
type of
telephone service. The
telephone service
might be traditional landline service, telephone service over the
Internet or
wireless service. The
problem results
because companies that provide service over the Internet do not have
the same
legal restrictions and status as telephone companies.
In essence, they seemingly want to be an
Information Service provider when it suits their needs but claim the
status
(without the same obligations) of a telephone company when that works
best. The NCREA
recognized the distinction and ruled
that three Coalition member companies are not obligated to provide
number
portability to what the NCREA recognized as an entity that did not meet
the
requirements of being a telecommunications service provider.
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For
many
years, wireless companies and small telephone companies were part of three-party agreements
with large telephone
companies in which traffic was originated at one end, transited over
the network
of a larger telephone company and terminated at the other end. The larger company
compensated the company
that terminated the traffic. As
the
industry changed, larger companies abandoned that responsibility and
new
processes had to be developed so that traffic could continue to be
delivered
between wireless companies and small telephone companies. Clearly, it is impractical
in all cases for
facilities to be built to connect all wireless companies and all small,
rural
telephone companies. For
that reason,
the N.C. Utilities Commission ruled that large companies still have an
obligation to transit traffic between companies.
The Commission also noted, quite
correctly,
that is virtually impossible for all companies to have a specific
interconnection agreement with all other companies.
However,
in
many cases, individual interconnection agreements are being pursued and
the
process seems endless. Cases
are still
pending before the Utilities Commission and the NCREA, which will
ultimately
determine how and where the networks will be interconnected and the
price for
such interconnection. In
the meantime,
companies still continue to deal with uncertainties related how and
when the
outstanding interconnection issues will be resolved.
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On December
12, 2007, the North Carolina Utilities Commission issued a lengthy,
complex
Order in an
arbitration proceeding
between some small, rural local telephone companies and certain
wireless
providers. In the
Order, the Commission
decided more than 25 unresolved issues remaining between the parties. Although it is impossible
to discuss all of
those issues in this article, two issues are of particular importance.
First, the
Commission approved reciprocal compensation rates that are applicable
for calls
placed between the companies. Although
many companies were able to settle the reciprocal compensation issues,
the
companies involved in the proceeding were unable to reach agreement and
submitted the compensation issue to the Commission for final resolution. The second issue deals
with the point of
interconnection between the companies.
In resolving this issue, the Commission
affirmed an earlier ruling that
the point of interconnection can be at any reasonable point within the
service
area of the local telephone company.
The
ruling followed
established Commission
precedent, which recognized the adverse impact and impracticality of
small
companies having to haul traffic over long distances outside of the
company’s
own network.
Commission
Chairman Edward Finley departed from Commission precedent and dissented
on the
interconnection issue citing a case issued by the 10th
Circuit Court
of Appeals. The
10th Circuit
decision is not binding
legal precedent
on the Commission. Fortunately,
the
majority of the Commission recognized the hardship and impracticality
of such a
policy on small, rural companies and upheld previous Commission
decisions.
While the
Commission has issued an order in this case, the final outcome is far
from
certain. Several
parties have issued
comments and objections to the proposed order. Further action by the
Commission
is anticipated and this controversy is likely to continue for some time.
Anyone
wishing to learn more about the issues addressed in the case should
visit the
Commission’s website at www.ncuc.commerce.state.nc.us. The information can be
accessed by searching
for Docket No. 61, Sub 95 under Docket Information.
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