- Inside Wiring and Abandoned Cabling: An Update
- February 21, 2006
- Law Firm: Holland & Knight LLP - Washington Office
For many years, inside wiring and abandoned cable have been "out of sight, out of mind," both literally and figuratively. Recent legal changes, however, have brought these issues to the forefront, and have direct bearings on building owners and service providers alike.
The first major development in this area was a revision to the National Electrical Code in 2002, mandating the removal of all abandoned cabling from buildings. As adopted, the amended NEC applied to all abandoned optical fiber cable, communications cable, coaxial cable and network-provided broadband communications cable, and required the removal of the "accessible portion" of such facilities from ducts, plenums, or other horizontal and vertical riser and air-handling spaces. The revised Code defined the term "abandoned cable" broadly to apply to all cable that is "not terminated at equipment other than a connector and not identified for future use with a tag." As applied to wiring, the Code defined the term "accessible" to mean "capable of being removed or exposed without damaging the building structure or finish or not permanently closed in by the structure or finish of the building."
At the time of its adoption, the commercial and legal impact of the Code revision was largely unknown. As various commenters observed, the new mandate did not specify who had the burden of removing abandoned cables, or specify any timetable. Nor did the revised Code provide any direction as to how abandoned cables should be disposed. Moreover, while some provisions of the Code required the removal of "accessible portions" of cables, other provisions do not contain such qualifying language.
The legal effect of the Code revisions was likewise unclear since the Code itself is only an industry guideline. In order for it to have legal force, it must be formally adopted by a state or local governmental authority (Authority Having Jurisdiction or AHJ). While AHJs had historically adopted prior versions of the NEC, many had done so only partially, and the extent to which the new revisions would be ratified was initially unknown. Commenters predicted that, over the course of time, greater clarity on these issues would emerge, as legislative bodies considered whether to adopt the revised Code in whole or in part, and with the next scheduled revision of the Code in 2005.
Since then, if anything, the problem of abandoned cables and inside wiring has become even more complex. The latest revision of the NEC, adopted last year, left the abandoned cable provisions of the 2002 version virtually intact. Thus, many questions regarding the application of the Code in the marketplace have been left unresolved.
From a legal perspective, however, much has changed. At present, according to the National Fire Protection Association which drafted the NEC, all but eight states (Arizona, California, Illinois, Kansas, Missouri, Mississippi, Virginia and West Virginia) and the District of Columbia have adopted the 2002 NEC or 2005 NEC. In California, state law obligates the lessors of residential properties to ensure that inside telephone wiring "meets the applicable standards of the most recent national Electrical Code," and in various states local jurisdictions have adopted the code in whole or in part on their own.
FCC Rules -- Inside Wiring
The FCC's rules governing inside telephone and cable wiring impact building owners and service providers also. Under the FCC's rules, inside telephone wiring is largely deregulated. The rules make clear, however, that telephone wiring within the premises is the responsibility of the property owner, unless the property owner and service provider agree otherwise. The Commission's rules also require a provider of wireline telecommunications services to comply with a request of a multi-unit premises owner to relocate the demarcation point to the building's minimum point of entry. Providers of wireline telecommunications services must negotiate terms in good faith and complete the negotiation within 45 days after a request. Failure by the wireline service provider to negotiate in good faith may result in the lodging of an administrative complaint.
Cable Wiring Rules
The FCC's cable wiring rules address the issue of abandoned cable more directly, and distinguish between cable home wiring (i.e., inside and between the customer's premises and the demarcation point, which is generally about 12 inches from the customer's premises) and home run wiring (from the demarcation point to the cable junction box). In the case of cable home wiring, upon the voluntary termination of cable service by a subscriber in a multiple dwelling unit (MDU), the cable operator may not remove the cable home wiring unless it gives the subscriber the opportunity to purchase the wiring at the replacement cost, the subscriber declines, and neither the MDU owner nor an alternative multi-channel programming distributor (MVPD), has provided reasonable advance notice to the incumbent provider that it would purchase the cable home wiring if and when a subscriber declines. If the cable system operator is entitled to remove the cable home wiring, it must then remove the wiring within seven days of the subscriber's decision, under normal operating conditions, or make no subsequent attempt to remove it or to restrict its use. The cost of the cable home wiring is to be based on the replacement cost per foot of the wiring on the subscriber's side of the demarcation point multiplied by the length in feet of such wiring, and the replacement cost of any passive splitters located on the subscriber's side of the demarcation point. For purposes of this rule, the MVPD may be not only a cable television provider, but may also be a provider of direct broadcast satellite services and home satellite dishes, a broadband service provider, a wireless cable system using frequencies in the multichannel multipoint distribution service, a private cable or satellite master antenna television system, or a broadcast television service.
If the MVPD fails to comply with the above procedures, it will be deemed to have relinquished immediately any and all ownership interests in the home wiring; thus, the operator will not be entitled to compensation for the wiring and may make no subsequent attempt to remove it or restrict its use. If the MVPD complies with the procedures, and, at that point, the subscriber agrees to purchase the wiring, constructive ownership over the home wiring will transfer to the subscriber immediately, and the subscriber will be permitted to authorize a competing service provider to connect with and use the home wiring.
Where the subscriber terminates cable service but will not be using the home wiring to receive another alternative video programming service, the incumbent cable operator or MVPD must properly cap off its own line in accordance with the FCC's signal leakage requirements. The operator is prohibited from using any ownership interests it may have in property located on the subscriber's side of the demarcation point, such as molding or conduit, to prevent, impede, or in any way interfere with a subscriber's right to use his or her home wiring to receive an alternative service. In addition, incumbent MVPDs must take reasonable steps within their control to ensure that an alternative service provider has access to the home wiring at the demarcation point.
Home Run Wiring Rules
The FCC's home run wiring rules distinguish between the disposition of such wiring on a building-by-building basis, on the one hand, and on a unit-by-unit basis on the other.
If the cable company owns the home run wiring, and does not have a legally enforceable right to remain on the premises against the wishes of the property owner, the owner may give the cable company (or other MVPD) a 90-day written notice that its access to the entire building will be terminated. The cable company will then have 30 days to notify the owner in writing of its election as to all the home run wiring inside the building. The cable company may elect to remove the wiring within 30 days of the end of the 90-day notice period or within 30 days of the date of actual termination, whichever occurs first. In the alternative, the cable company may elect to abandon the wiring. The third and final election available to the cable company is to sell the wiring to the building owner. If the election to sell is made, the cable company and the owner have 30 days from the date of election in which to negotiate a price. If no price is agreed upon, the cable company must elect to remove the wiring, to abandon the wiring, or to submit the price determination to binding arbitration. In the alternative, if the cable company fails to comply with the foregoing deadlines, the cable company will be deemed to have abandoned its home run wiring at the end of the 90-day notice period.
Under the FCC's unit-by-unit rules, when a cable company (or other MVPD) owns the home run wiring in a MDU and does not have a legally enforceable right to maintain any particular home run wire dedicated to a particular unit on the premises against the MDU owner's wishes, the MDU owner may permit multiple cable companies (including MVPDs) to compete for the right to use the individual home run wires dedicated to each unit in the MDU. The MDU owner must provide at least 60-days written notice to the cable company of the owner's intention to invoke this procedure. The cable company will then have 30 days to provide a single written election to the owner. The cable company, under the unit-by-unit rules, may elect to remove the particular home run wires from each subscriber who chooses an alternative cable provider's service. The cable company may elect to abandon the wiring, or the cable company may elect to sell the wiring to the owner. If the incumbent provider elects to sell the home run wiring, the incumbent provider and the MDU owner or alternative provider have 30 days from the date of election to negotiate a price. During this 30-day negotiation period, the parties may arrange for an up-front lump sum payment in lieu of a unit-by-unit payment. If the parties are unable to agree on a price during this 30-day time period, the incumbent provider must elect either to abandon without disabling the wiring; to remove the wiring and restore the MDU consistent with state law; or to submit the price determination to binding arbitration by an independent expert. If the cable company fails to comply with any of the above deadlines, the home run wiring will be considered abandoned, and the cable company may not prevent an alternative cable provider from using the home run wiring immediately to provide service.
Location of the Demarcation Point for Cable Wiring
Among the critical differences between the FCC's rules for cable home wiring, on the one hand, and home run wiring on the other, is who may purchase wiring from the cable company and on what terms. Under the cable home wiring rules, wiring may be purchased by either the subscriber, the MDU owner or the alternative MVPD, and the cost of the wiring is based on the replacement cost per foot of the wiring on the subscriber's side of the demarcation point multiplied by the length in feet of such wiring. In the case of home run wiring, the purchasing party is either the MDU owner or the alternative MVPD, and the purchase price is subject to an arm's length negotiation. Typically, this purchase price is substantially greater on a per foot basis than the price for cable home wiring. This fact can present a barrier to potential competing service providers, effectively frustrating the purpose of the Commission's rule.
In certain cases, however, the MDU owner or alternative MVPD may be able to purchase home run wiring using the less costly cable home wiring formula. Their ability to pursue this option hinges on the FCC's definition of "cable home wiring," "home run wiring," and the location of the demarcation point when wiring is physically inaccessible at this point. Under the FCC's rules, the demarcation point, which is the point that home run wiring separates from cable home wiring, is 12 inches outside where the cable wire enters the subscriber's dwelling unit, unless the wire at that point is "physically inaccessible." "Cable home wiring" begins at the demarcation point and runs within the subscriber's unit. "Home run wiring," by contrast, typically runs from the cable operator's junction box to the demarcation.
For purposes of these rules, however, the wiring at a demarcation point is "physically inaccessible" if it (a) would require significant modification of, or significant damage to, pre-existing structural elements; and (b) would add significantly to the physical difficulty and/or cost of accessing home wiring. In such circumstances, the length of a subscriber's cable home wiring, priced at the lower per foot replacement rate, can be substantially greater than 12 inches outside the subscriber's dwelling unit, and could extend as far as the operator's junction box. Effectively, under this circumstance, the length of the cable home wiring equal to the combined lengths of cable home wiring and home run wiring in buildings where wiring at the standard demarcation point was physically accessible.
What's at Stake for Building Owners
According to some estimates, there are over 45 billion feet of plenum cable in place in buildings nationwide, and the cost of removal of abandoned infrastructure can be substantial. Failure to comply could result in denied certificates of occupancy, payment of re-permitting fees, assessment of fines for inspection violations and other financial penalties, and even the risk of criminal charges. In addition, insurance coverage for a building could be jeopardized if it is determined to be "out of code."
Given these potential liabilities, and the substantial health and safety risk which abandoned cables can pose, building owners should be proactive in addressing these issues. Among the measures which owners should consider are the following:
Conduct an Inside Wiring Audit
Building owners should know the location and status of all inside wiring and cables before building inspectors or insurance adjusters pay a visit, and ensure that their infrastructure meets current Code requirements. As Darlene Pope of CRE Partners has observed, an audit may take time and effort, but if it's done right, you won't have to do it again. A well-executed audit will also enable the building owner to identify which cables the NEC requires them to remove, and which cables may be retained, either because they are currently in use, or because they have been or can be identified for future use with a tag. To the extent specific cables must be removed, a proper audit may also enable the building owner to identify the party responsible for the original installation of the cabling, and provide a possible cause of action for recovery of costs. Finally, a proper audit will inform the building owner as to whether wiring at demarcation points within its building is "physically inaccessible" for FCC rule purposes.
Amend Leases and License Agreements
Although leases and license agreements between building owner and telecommunications, information and cable service providers typically contain provisions for the removal of equipment upon expiration of leases, they are often silent with respect to the removal of inside wiring. Building owners should review their existing contracts to determine whether they adequately address the issues, and seek to amend them where possible to reflect AHJ adoption of NEC requirements. Building owners should also ensure that agreements with new service providers contain provisions requiring the parties to acknowledge that there are no abandoned wires, as defined by NEC, within the premises at the time of commencement of the agreement; that cabling installation and removal will meet applicable NEC and other legal requirements, and that the service provider will, at its own cost, remove all wiring it has installed, unless otherwise directed by the building owner.
Maximize Future Use
As noted, the NEC defines a cable as abandoned only if it is "not terminated at equipment other than a connector and not identified for future use with a tag." Cable which can be identified for future use and is appropriately tagged is thus not "abandoned" and need not be removed. Given this permissible status, building owners should attempt to maximize future use of otherwise abandoned cable by making it available to new providers where possible. In this context, since the FCC's rules permit a cable provider whose service contract has been terminated to either remove existing wiring, sell it to the MDU owner, or abandon it, MDU owners seeking to ensure continuity of service should weigh the technical and financial merits of these three options from their perspective, and the extent to which the associated costs can be shifted to or shared by old or new providers. For their part, incumbent cable operators should understand that the option of abandoning cabling in a building may not be cost-free.