Time Warner Cable fights rural NC co-ops on utility pole fees

Time Warner Cable says it’s being bullied by five North Carolina electric cooperatives and is accusing the rural monopolies of charging outrageous fees for letting the cable company lease space on utility poles.

Time Warner has sued the rural co-ops at the N.C. Utilities Commission, asking the commission to help resolve ongoing contract disputes over fees the co-ops charge for leasing space on some 75,000 utility poles in North Carolina. The disputes result from utility pole lease contracts that expired in recent years and are bogged down in negotiations.

Time Warner is also accusing the co-ops of stonewalling, coercion, retaliation and other strong-arm tactics. The company says the co-ops have threatened to cut off Time Warner’s electric service, threatened to impose penalties in the millions of dollars, and even threatened to call the local sheriff on a Time Warner technician performing repair work during a service outage.

“Despite TWC’s good-faith efforts to negotiate a just and reasonable rate, the parties have reached an impasse,” Time Warner said in its complaint against the South River Electric Membership Corp.

“Once cable operators have constructed their aerial networks on existing pole infrastructure,” Time Warner wrote, “they are essentially captive because it would be prohibitively expensive and impractical (or impossible) to rebuild those networks underground or to install their own poles.”

Time Warner, which was recently acquired by Charter Communications, declined to comment on its dispute. The N.C. Electric Membership Corp., the statewide trade group that’s assisting the co-ops in their negotiations, also declined to comment.

Rural co-ops typically serve several counties and are too small to generate their own power. Of the five charged by Time Warner, the biggest, EnergyUnited EMC serves 122,850 households and businesses, while Surry-Yadkin EMC serves 26,800 customers.

In an affidavit filed last month with the Utilities Commission, the co-op trade group’s general counsel, Richard Feathers, said Time Warner is the only telecommunications company in North Carolina that has contract disputes with the co-ops over utility pole attachment fees.

Still, such conflicts between utilities and telecoms are hardly unknown nationwide. Google encountered similar problems in California this year where the company is seeking access to utility poles to support its blazing fast Internet service.

In the North Carolina disputes, more details could be forthcoming from the co-ops this week. Three of the co-ops are scheduled to file responses to Time Warner’s charges by Friday. Two co-ops have July 6 deadlines to respond to Time Warner’s allegations.

Lower Duke fees

The case is unusual because the N.C. Utilities Commission doesn’t regulate cable providers or rural electric co-ops in the state. But last year the state legislature expanded the commission’s regulatory functions to include dispute resolution on utility pole fees.

Based on standard protocol of the commission, which operates like an judicial panel, the commissioners would hold hearings on the matter and issue a ruling.

Duke Energy’s utility poles are far more numerous in the state but Duke’s fees are not in dispute because they are dictated by a federal formula, resulting in charges between $5 and $7 per pole per year, said Duke spokesman Jeff Brooks. Time Warner is urging the Utilities Commission to adopt the Federal Communications Commission formula as a model for the co-ops as well.

The five co-ops in the Time Warner dispute are charging as high as $23.60 per pole per year by Carteret-Craven EMC, according to the cable carrier’s complaints. The lowest charge is $6.06 a year per pole by South River EMC, but South River is invoicing $17.40 per pole against Time Warner for future collection.

The federal formula is not popular in the utility industry, where it is widely believed that electricity providers are being forced to subsidize broadband extensions into rural areas that lack high-speed Internet access.

“The FCC has artificially capped what a utility can charge for a pole attachment rate,” said Martha Duggan, who handles regulatory affairs for the National Rural Electric Cooperative Association. “It comes out of the FCC’s desire to see more broadband service in America.”

‘Bald retaliation’

According to the Tennessee Valley Authority’s pole attachment policy, finalized in February, the federal formula requires cable companies to pay 7.4 percent of the annual pole operating cost. The traditional telecom formula is 11.2 percent in urban areas and 16.9 percent in rural areas for attaching telecom equipment on utility poles.

In its filings, Time Warner describes the co-ops as local bullies who rely on threats and intimidation. For example, Jones-Onslow EMC refused to provide information on which its fees are based, Time Warner alleged.

“Instead, the Cooperative has attempted to force TWC to knuckle under by threatening to halt its business and, recently, by breaching the parties’ agreement with trumped-up demands for purported unauthorized attachment penalties.”

In 2015, Time Warner alleged, Jones-Onslow demanded Time Warner pay more than $1 million for more than 3,000 unauthorized pole attachments. Jones-Onslow increased the claim to almost $1.5 million before offering to settle for $834,122.65, Time Warner said.

Time Warner decried the tactic as “bald retaliation.” Time Warner is paying Jones-Onslow’s utility pole attachment rate of $20.93 per pole, but only “under protest.”

John Murawski: 919-829-8932, @johnmurawski