Co-op, cable company spar over attachment fees

Executives at Flathead Electric Cooperative want to revisit an arrangement put in place in the 2001 legislative session that they say is unfairly costing the cooperative a lot of money.
The subject — pole attachments — is arcane, involving fees paid by telecommunications or cable companies that string their delivery lines along Flathead Electric’s utility poles.

By ALAN CHOATE
The Daily Inter Lake

http://www.dailyinterlake.com/articles/2004/11/22/business/bus01.txt

Cable provider Bresnan Communication currently pays less than half as much as CenturyTel for access to the poles, said FEC general manager Ken Sugden. He says that’s unfair, since the cable company is adding services sych as Internet access and VoIP, or voice over Internet protocol, that put it in competition with the phone company.

Bresnan officials, however, said FEC is trying to undo an arrangement they agreed to in 2001. The fact that more information is passing through cable lines has nothing to do with the amount of space they take up on the utility’s poles, said Doug Johnson, Bresnan’s general manager for western Montana..

The issue has sparked Federal Communication Commission hearings and legal action before the U.S. Supreme Court. Sugden, however, is seeking a change in the state law that keeps Bresnan’s rate lower. He said the cooperative wants to meet with the cable company to try to find a resolution.

"We don’t want to go in the Legislature arguing with Bresnan," Sugden said. "We want the law changed."

An argument is likely, however, said Johnson.

A law passed in 2001 allowed FEC, which had purchased local assets from PacifiCorp, to add that company’s former customers to its membership. Before the change, the cooperative had to operate two utility companies — an expensive endeavor — since it wasn’t allowed to do business in urban areas.

The cable company — TCI Cablevision at the time — opposed changing the law and succeeded initially in derailing the legislation, Johnson said. They objected because the proposal would have freed the co-op from federal regulations governing pole attachment charges for cable companies, and Johnson said the increases would be substantial — as much as $200,000 a year.

The cable company agreed to drop its opposition if FEC kept the federal pole attachment formula in place. The bill became law, but the co-op’s been trying to change it ever since.

Sugden maintains that the rate cap amounts to a subsidy of $100,000 a year for Bresnan by the cooperative’s 44,500 members. FEC’s latest newsletter asks those members to lobby legislators to change the law.

"We feel pole attachment contracts should be a business relationship between private companies or individuals," states the newsletter article. "The state should not interfere when businesses choose to legally interact."

Johnson, however, said the regulated rate structure already guarantees FEC an 11.25 percent return on pole rentals, and said eliminating the regulation would put Bresnan at the co-op’s mercy.

"Flathead Electric is a monopoly," he said. "We can’t run our cable system without using their poles."

Still, he noted that legislation undoing the rate cap made it as far as the state Senate floor in 2003: "They’re a very powerful lobby. I think they have a good chance of succeeding … no one knows what could happen in the Legislature."

Reporter Alan Choate may be reached at 758-4438 or by e-mail at [email protected]