PUBLIC VERSION Before the Federal Communications Commission Washington, DC 20554 ) VERIZON VIRGINIA LLC and ) VERIZON SOUTH INC., ) ) Complainants, ) Docket No. ) File No. v. ) ) VIRGINIA ELECTRIC AND POWER ) COMPANY d/b/a DOMINION VIRGINIA ) POWER, ) ) Respondent. ) ) POLE ATTACHMENT COMPLAINT VERIZON VIRGINIA LLC and VERIZON SOUTH INC. By Counsel: Kathleen M. Grillo William H. Johnson Of Counsel Roy E. Litland VERIZON 1320 N. Courthouse Rd. 9th Floor Arlington, VA 22201 (703) 351-3060 [email protected] [email protected] Christopher S. Huther Claire J. Evans Wiley Rein LLP 1776 K Street NW Washington, DC 20006 (202) 719-7000 [email protected] [email protected] Date: August 3, 2015 PUBLIC VERSION TABLE OF CONTENTS POLE ATTACHMENT COMPLAINT .......................................................................................... 1 I. JURISDICTION AND PARTIES....................................................................................... 4 II. FACTS AND ARGUMENT ............................................................................................... 7 A. Verizon Is Entitled To Just And Reasonable Pole Attachment Rates. ....................8 1. The Rates Dominion Has Billed And Continues To Demand From Verizon Far Exceed The Rates Charged Verizon’s Competitors. ...............8 2. The Joint Use Agreement Rates Are The Result Of Dominion’s Superior Bargaining Power. .......................................................................11 3. Dominion Refused To Agree To A Just And Reasonable Rate In Negotiations. ..............................................................................................13 B. Verizon Is Comparably Situated To Its Competitors That Occupy Space On Dominion’s Poles And Should Receive The Same Rental Rate. .....................17 C. The Joint Use Agreement Does Not Provide Unique Benefits That Justify Charging Verizon A Rate Higher Than The New Telecom Rate. .........................20 1. The Provisions Asserted By Dominion Do Not Provide Verizon A Material Advantage Over Its Competitors. ................................................20 (a) Notification Of Subsequent Attachments To A Joint Use Pole ............................................................................................... 21 (b) Unauthorized Attachment Fees ..................................................... 22 (c) Per-Pole Rental Rate ..................................................................... 24 (d) Engineering And Administrative Labor ........................................ 25 (e) Late Payment Surcharges .............................................................. 26 (f) Surety Bond .................................................................................. 27 (g) Escrow Deposit ............................................................................. 28 2. Dominion Cannot Justify A Higher Rate Based On The Benefits Alleged By The Power Company In The Verizon Florida Proceeding..................................................................................................29 (a) Permitting New Attachments ........................................................ 29 (b) Post-Installation Inspections ......................................................... 31 (c) Location Of Facilities On Dominion’s Poles ................................ 32 (d) Pole Height.................................................................................... 34 PUBLIC VERSION (e) Pole Replacements ........................................................................ 35 (f) Insurance And Indemnification ..................................................... 37 (g) Make-Ready Costs ........................................................................ 37 3. Verizon Bears Higher Costs For Pole Access Under The Joint Use Agreement. .................................................................................................38 D. Verizon Significantly Overpaid Dominion For Any Unique Benefits Provided Under The Parties’ Prior Agreements. ...................................................39 E. The Commission Should Set Verizon’s Just And Reasonable Rate And Refund Verizon’s Overpayments. ..........................................................................42 1. Verizon Should Be Charged The New Telecommunications Rate Because It Is Comparably Situated To Its Competitors. ............................43 2. Verizon Should Be Refunded The Millions Of Dollars That It Has Paid Over And Above The New Telecom Rate. ........................................46 3. At Most, Verizon Should Be Charged The Pre-Existing Telecom Rate And Receive A Refund Of Its Overpayments. ..................................48 III. COUNT I – UNJUST AND UNREASONABLE POLE ATTACHMENT RATES ....... 49 IV. RELIEF REQUESTED ..................................................................................................... 51 CERTIFICATE OF SERVICE ..................................................................................................... 53 PUBLIC VERSION Before the Federal Communications Commission Washington, DC 20554 ) VERIZON VIRGINIA LLC and ) VERIZON SOUTH INC., ) ) Complainants, ) Docket No. ) File No. v. ) ) VIRGINIA ELECTRIC AND POWER ) COMPANY d/b/a DOMINION VIRGINIA ) POWER, ) ) Respondent. ) ) POLE ATTACHMENT COMPLAINT Virginia Electric and Power Company (“Dominion”) charges Verizon Virginia and Verizon South (collectively, “Verizon”) a rental rate that is than the new telecom rate applicable to Verizon’s competitors. It does so pursuant to two essentially identical Joint Use Agreements (collectively, the “Joint Use Agreement”) that took effect in 2011 and include terms and conditions that are, at best, comparable to those in Dominion’s license agreements and are in many ways disadvantageous relative to them. The Joint Use Agreement, like Dominion’s license agreements, requires Verizon to pay for the costs But the Joint Use Agreement also requires Verizon to in order to access Dominion’s poles. These unique costs ensure that Verizon is, at best, a party to a pole attachment agreement with “terms and conditions that leave 1 PUBLIC VERSION it ‘comparably situated’ to competitive LEC or cable attachers.”1 As a result, “‘competitive neutrality counsels in favor of affording incumbent LECs the same rate as the comparable provider,’ i.e., the New Telecom Rate or the Cable Rate.”2 Verizon instead pays a rental rate that is 3 The ramifications of this competitive disparity are extraordinary. Since the effective date of the Pole Attachment Order, Verizon has paid up to more in gross rent each year than it would have paid at the Commission’s new telecom rate.4 And its overpayments did not begin with the Pole Attachment Order. For decades, it has paid far more than its competitors for comparable pole attachment terms and conditions. The Commission’s 2011 Order—and the Enforcement Bureau’s 2015 decision applying the Order in the Verizon Florida proceeding—make clear that this competitive disparity must end, as it both distorts competition and discourages broadband deployment. But Dominion has stonewalled and rebuffed Verizon’s efforts to negotiate a just and reasonable rental rate for nearly twenty-two months. Since October 2013, Verizon has done everything possible to negotiate the just and reasonable rate from Dominion to which it is entitled under the 2011 Order, through exhaustive emails, letters, and conference calls, face-to-face meetings with 1 Verizon Florida LLC v. Florida Power and Light Company, Memorandum Opinion and Order, 30 FCC Rcd 1140, 1142 (¶ 7) (EB 2015) (“Verizon Florida”) (quoting Implementation of Section 224 of the Act; A National Broadband Plan for Our Future, Report and Order and Order on Reconsideration, 26 FCC Rcd 5240, 5336 (¶ 217) (2011), aff’d Am. Elec. Power Serv. Corp. v. FCC, 708 F.3d 183 (D.C. Cir. 2013), cert. denied, 134 S. Ct. 118 (2013) (“Pole Attachment Order” or “Order”)). 2 Id. (emphasis added). 3 Ex. A ¶ 25 (Affidavit of Mark S. Calnon, Ph.D. (July 31, 2015) (“Calnon Aff.)). 4 Id. ¶ 26. 2 PUBLIC VERSION Dominion executives, and most recently even in a private mediation attended by more than a half dozen Dominion executives and lawyers. All to no avail: for a full year of negotiations, Dominion did not even offer Verizon a different rental rate; when it finally did, Dominion proposed a rate increase. Dominion has based much of its intransigence on a claim that Verizon enjoys “cost savings, as compared to its CLEC competitors, through beneficial provisions of the Joint Use Agreement[].”5 There are no such “cost savings,” however, that justify charging Verizon competitively higher rental rates, let alone rental rates that are per pole higher than the Commission’s new telecom rate. A review of the benefits asserted by Dominion6 and those that the Enforcement Bureau asked the parties to analyze in the Verizon Florida proceeding7 shows that Verizon is, at most, advantaged over its competitors by 8 This trivial amount is far surpassed by the costs that Verizon—but not its competitors—bears in order to access Dominion’s poles, which must also be accounted for in setting a just and reasonable rate.9 The Commission should promptly reject Dominion’s effort to preserve its excessive and increasing rates, find that the rates that Dominion has charged Verizon are unjust and unreasonable, and set Verizon’s rate for the comparable (or less advantageous) terms and 5 Ex. 17 at 2 (Letter from A. Hahn, Dominion, to S. Mills, Verizon (Feb. 20, 2014)) (emphasis in original).