FCC Approves ILEC Shift to GAAP Accounting, Mitigates Pole Rate Impact

At today’s open meeting the FCC adopted a Report and Order that streamlines and eliminates Part 32 accounting requirements governing price-cap carriers, allowing them instead to rely on GAAP accounting methods and thus eliminate the need to maintain two sets of accounting books. In doing so, however, the FCC acknowledged the important role that Part 32 cost data plays in calculating the maximum permitted rates that telecommunications carriers may charge cable companies and other telecom carriers for pole attachments.

Accordingly, the rules the FCC adopts attempt to mitigate any impact the accounting change may have on pole attachment rates by, among other things, requiring pole owners that switch to GAAP-based pole rates to establish an implementation rate differential based on the last full year that Part 32 data is used, which rate differential would then be phased in over a twelve year period. (Carriers can also keep using Part 32 and start a 12 year phase-in later.) In addition, attaching entities will have access to the carrier’s underlying state-specific accounting information for three years, so that they may themselves monitor the transition.

In doing so, however, the FCC acknowledged the important role that Part 32 cost data plays in calculating the maximum permitted rates that telecommunications carriers may charge cable companies and other telecom carriers for pole attachments.

Chairman Pai reiterated his commitment to ensuring that pole rates are set at levels that continue to promote broadband deployment and to monitoring carrier pole attachment rates and taking action if doing so becomes necessary. We will provide additional details about the Report and Order as it related to pole attachment rates when the text is released.