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State cable fees fought: Telecom companies call right-of-way payments 'a tax on technology.'(Sacramento Bee, The (CA) (KRT) Via Thomson Dialog NewsEdge) Apr. 23--The California Department of Transportation is dueling with a dozen telecommunications giants over plans to charge the firms millions of dollars for the right to string their fiber-optic cables along state bridges and controlled-access freeways. The dispute, which has been intensifying for more than four years, involves state efforts to boost revenues for highway construction and maintenance by collecting payments from carriers for letting them use the state rights of way. The dispute began on a small scale in 2002, when AT&T, then known as Pacific Bell, went to court after balking at a Caltrans request to pay $1.37 million for the right to lay 22 miles of fiber-optic cable along Highway 101 on the North Coast. AT&T needed permission from the state as part of a 170-mile project that installed a fiber-optic conduit and cable link between Ukiah and Eureka. The dispute intensified last summer after Caltrans won a first-round fight in the U.S. District Court for the Northern District of California, which upheld the agency's right to seek compensation in exchange for granting right of way along the Highway 101. Citing that victory, Caltrans last summer notified major carriers that it would begin to charge $8 per foot each year for permits to use or install fiber-optic cables under the Bay Bridge and eight other Caltrans-operated bridges statewide. The department's plan includes fees for existing fiber cables and conduits installed on the bridges and will be "adjusted" again in 2010, state officials said. Companies that do not want to pay that fee must remove their equipment and cables. The move has enraged the coalition of telecom giants, which includes AT&T Inc., Verizon, Time Warner Cable, Comcast, Frontier, Sprint and Pac-West. The telecommunications industry asserts that Caltrans' demands are "a tax on technology" posing as a fee, explaining that the new costs will hinder company efforts to improve and expand broadband networks. In three private letters written since November, representatives of the 12-member industry coalition complained to Caltrans director Will Kempton, Gov. Arnold Schwarzenegger and his chief of staff, Susan Kennedy, that taxing one kind of infrastructure (broadband) to fund another (highways) is "nonsensical." Neither the governor nor the Legislature approved the plan, they added in their letters. Noting that Schwarzenegger's recent State of the State speech included a pledge to expand and improve California's aging infrastructure, including "digital highways," the coalition said Caltrans' actions are inconsistent. The coalition urged Schwarzenegger, Kennedy and Kempton to step in and resolve the dispute, alleging that the situation is now "critical." In the letters, the coalition says: * Requests for new bridge and highway use permits are being held up, and fees sought by Caltrans are not based on real costs. * AT&T California might not be able to provide services to customers in the San Diego area, including the U.S. Navy and large and small businesses, because it needs to add fiber capacity to its Coronado Bridge equipment but cannot get permits. * Caltrans has ordered Comcast to remove cables and conduits from the west span of the existing Bay Bridge, relocate them to a Caltrans conduit and pay the recurring annual fee or take them down altogether. "Removal of Comcast's facilities threatens emergency 911 and Homeland Security systems, as well as the functioning and large-scale outage protection of the Comcast network in Northern California." The coalition has warned Schwarzenegger's administration that if it does not intervene, California risks losing investment and tax revenue and members "will be forced to seek redress elsewhere." Caltrans Deputy Director Mark DeSio said rates for the North Coast project and the new, higher annual rates it has proposed for toll and former toll bridges and highways are based on "fair market value." He added that "our Bay Bridge fees are based on what BART charges for lines in its tube and on what the Golden Gate Bridge charges." DeSio added that Caltrans would never do anything that endangers safety, adding that AT&T would get its permit for its Coronado expansion if it pays the fees. As the state and industry duke it out, Caltrans is defending its court win before the 9th U.S. Circuit Court of Appeals. AT&T accuses Caltrans of engaging in "monopolistic pricing" when it sought $1.37 million in exchange for North Coast highway rights. Its lawyers also accuse Caltrans of violating the federal Telecommunications Act of 1996, which bars states from adopting requirements that effectively represent a barrier to delivery of telecom services. AT&T has paid the disputed $1.37 million Caltrans wanted into an escrow account pending the final ruling. In a recent interview, AT&T California President Kenneth P. McNeely said that the issue has implications for his customers. "There are ways of finding additional revenue without burdening consumers," McNeely said. "Essentially, these costs are going to end up being passed on to consumers." The U.S. District Court has said that AT&T failed to prove the state's rates for the North Coast project represented a barrier to its ability to provide services. In fact, District Judge Jeffrey S. White's 2005 ruling noted that using 22 miles of Highway 101 saved AT&T $19 million, compared with costlier alternatives. No date has been set for oral arguments in the appeals case. The outcome is being closely watched by both industry and state officials because one company has already complied. Level 3 Communications Inc. of Broomfield, Colo., paid Caltrans one-time payments totaling $9 million for the right to use about 22 miles of right of way to help build its 23,000-mile national network system. DeSio said Caltrans also negotiated agreements with wireless companies back in 1997 before allowing them to install towers and antennas on state property. |