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NARUC BPL Report

Date: Feb 16, 2005


The National Association of Regulatory Utility Commissioners ("NARUC") yesterday released its Report analyzing technology, security and regulatory issues pertaining to Broadband over Power Line ("BPL"). A copy of the Report is available on the NARUC website at:

http://www.naruc.org/associations/1773/files/bplreport_0205.pdf

Much to the relief of electric utilities and BPL providers, the Report advocates a light handed approach to BPL regulation, at least for now. A summary of the regulatory discussion of NARUC's Report follows. If you would like additional information on any of these issues, please let us know.

Cost and Revenue Allocation

If used for commercial broadband service, the direct costs of BPL and distribution system common costs attributable to BPL should not be supported by core utility ratepayers.

The situation differs somewhat, but not entirely, if BPL is used for internal utility purposes.

Many States already have rules in place to implement appropriate cost allocation and revenue sharing.

Affiliate Transactions

State regulators are concerned about the cross-subsidization of BPL affiliates.

The Structural Separation approach (full separation of utility and affiliate businesses) appears flawed.

The Functional Separation approach (using accounting rules to allocate costs and prevent cross-subsidization) is an alternative.

If BPL deployments use arm's-length transactions between the utility and BPL service provider, as many currently do, "many if not most" of the affiliate transaction issues could become moot.

No evidence exists currently that utilities are profiting unfairly at the expense of ratepayers.

Easements and Rights-of-Way

Little concern was voiced by utilities or BPL providers. [Utilities should pay more attention to this issue - see K&H's White Paper entitled "Broadband Over Power Line: Easements, Rights-of-Way and Related Issues," available on the K&H website at: http://www.khlaw.com/index.cfm?fuseaction=publications.showPubDetail&pubID=1153"]

Pole Attachments

If a utility provides access to affiliates, including a BPL provider, it must provide similar access to its utility poles to other requesters under uniform rates, terms and conditions. [This conclusion may be at odds with federal and state pole attachment regulation - see K&H's White Paper entitled "Broadband Over Power Line: Pole Attachment, Antitrust and Access Issues," available on the K&H website at: http://www.khlaw.com/index.cfm?fuseaction=publications.showPubDetail&pubID=1150"]

Pole attachments should be allowed where appropriate and rates should not operate as a barrier to entry by new BPL providers.

Provider Access

The degree, if any, to which BPL providers, cable companies and telecom companies should be required to carry other providers on their systems appears to be a key issue facing Congress in its Telecom Act rewrite.

Competing BPL providers are not requesting mandatory access to existing BPL facilities at this time, because the technology is new and cannot support more than one provider.

[For an analysis of this access issue, see K&H's White Paper entitled "Broadband Over Power Line: Pole Attachment, Antitrust and Access Issues," available on the K&H website at: http://www.khlaw.com/index.cfm?fuseaction=publications.showPubDetail&pubID=1150"]

Licensing and Telecom-Type Regulation

It is conceivable that State regulations applicable to VoIP and the Internet would apply to BPL. These regulations currently range from no requirements at all for entry to full economic regulation.

Entry requirements should be consistent across broadband providers.

Universal Service Fund

BPL providers, like VoIP providers, do not currently contribute to the Universal Service Fund, but this issue may be addressed by Congress.

If you would like additional information about our services, or know of someone who would like to receive these utility telecommunications developments, please contact Tom Magee at 202-434-4128 or magee@khlaw.com.