Supreme Court Slams Door on Excessive Utility Fees

In a 6-2 decision Wednesday, the U.S. Supreme Court ruled utility companies cannot charge excessive fees to broadband Internet service providers for the use of their poles.

The ruling is a major victory for broadband providers. Had the ruling gone the other way it would have had a direct impact on what broadband service providers charge and, therefore, the number of new subscribers they could expect to sign up, said Amy Cohn, director of corporate communication at Cox Communications.

“It would have discouraged us from continuing to roll out the service in other areas,” said Cohn. “But this ruling, by preserving the existing cost containments, strongly encourages us to continue our deployment of broadband services, which was our intent all along.”

In one case, a utility providing Cox with pole connections sent the company a letter stating it intended to raise its per-pole usage rates for lines carrying co-mingled services by $32 dollars, said John Spalding, vice president and assistant general council at Cox. Today’s ruling will keep this from happening, he said.

There are currently 6.4 million broadband Internet service subscribers in the U.S. who get their service through cable operators. About 3 million get similar services from telecommunications companies via digital subscriber line (DSL).

Wednesday’s decision overturns an Eleventh Circuit Court of Appeals ruling that the Federal Communications Commission (FCC) did not have the authority to regulate what utilities charge cable, telecommunications and wireless telecommunications providers that supply high-speed Internet service over the same lines or equipment that carry other signals for the use of their poles.

The two groups have been fighting an off-and-on fee battle since the late 1970’s when a law was passed limiting what utilities could charge for the use of their poles.

Writing for the majority, Chief Justice Rehnquist said that since utilities are charging companies for the attachment of lines and equipment and not the signals those lines and equipment carry, the FCC is within its jurisdiction to regulate prices under The Pole Attachments Act.

“No one disputes that a cable attached by a cable television company to provide only cable television service is an attachment ‘by a cable television system’,” wrote Rehnquist. “The addition of high-speed Internet service on the cable does
not change the character of the entity the attachment is ‘by’. And that is what matters under the statute.

Because ‘by’ limits pole attachments by who is doing the attaching, not by what is attached, an attachment by a “cable television system” is an attachment ‘by’ that
system whether or not it does other things as well.”