The price of power

The cable industry is trying to persuade the Supreme Court to preserve caps on pole-attachment fees, but much more is at stake than the size of cable systems' yearly bills to power and phone companies. Wireless telecom providers, telephone companies, landlords and communications-tower owners all have a stake in the battle and in winning a court decision that will give them the upper hand in the market for broadband services.

At issue is an April 2000 federal appeals court ruling that eliminates pole-attachment price caps when cable companies add high-speed Internet service to their traditional video-programming offering.

The cable industry has enjoyed caps on pole-attachment costs since 1978, when Congress ordered the FCC to limit the fees. In 1996, Congress expanded the FCC's authority to cap pole rates charged by any provider of "telecommunications services," without spelling out exactly what businesses fall under that label. In response, the FCC two years later ruled that cable companies are entitled to the price protection after they add Internet service.

After the court ruled that Internet providers do not qualify as telecommunications services, several power companies tried to raise their annual per-pole rates from roughly $5 to as much as $40. The FCC and the National Cable Television Association appealed the decision, and the high court is expected to rule on the case next year. In the meantime, the Atlanta court barred pole owners from jacking up rates pending the Supreme Court ruling.

Depending on how the justices rule, their decision could also be a key factor on other hot issues pending separately before the FCC and the courts, such as whether cable companies must open their high-speed networks to competing Internet providers and whether landlords must permit any wireless provider to connect to their facilities.

Ironically, a win on the pole-attachment issue may hurt cable's chances of fighting off open-access rules if the justices deem Internet provision to be a telecommunications service, because that would put the cable high-speed networks under the same antidiscrimination rules as telephone digital-subscriber lines, which must be open to all ISPs.

The regulators, represented by the Justice Department, argue that all cable pole attachments are subject to price caps regardless of the type of service. The FCC hasn't said how it will define cable Internet service yet.

The FCC also worries that the Atlanta court's ruling, by arguing that the FCC has no power to dictate access terms for wireless operators, will jeopardize additional rules requiring building owners to permit wireless communications providers to connect to their properties.

The wireless industry, of course, has come down on the FCC's side. Building and tower owners are asking the court to strike down the FCC rules claiming they pose a threat to private-property rights. "The commission has no authority over entities that are not engaged directly in the provision of telecommunications services," wrote attorneys for the Real Access Alliance, a coalition of landlords, investment trusts, homebuilders and other real-estate-related organizations.

Owners of communications towers and other types of antennae also are attacking the FCC's application of pole caps to wireless services, fearing they will be forced to cut their own fees to stay competitive. "There is a highly competitive market devoted to siting wireless equipment," the Site Owners and Managers Alliance wrote last week.

Finally, the telephone industry is getting in the fight, ostensibly on the side of the cable industry. But a close look at its arguments suggests it is actually trying to convince the court to define cable Internet as a telecommunications service and force the industry to provide open access to ISPs just as telephone DSL providers are required to do. "Cable operators have a measurable and unfair advantage in competition for customers," wrote the U.S. Telecom Association and Verizon last week.