[Federal Register Volume 63, Number 48 (Thursday, March 12, 1998)]
[Rules and Regulations]
[Pages 12013-12027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5402]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[CS Docket No. 97-151; FCC 98-20]
Pole Attachments
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Report and Order describes rules and policies concerning a
methodology for just, reasonable and nondiscriminatory rates for pole
attachments, conduits and rights-of-way for telecommunications
carriers. The Report and Order amends our regulations to reflect the
provisions regarding rates for telecommunications carriers in the
Telecommunications Act of 1996 (the ``1996 Act''). The Report and Order
fulfills Congress' mandate in the 1996 Act and will provide guidance to
pole owners, cable operators and telecommunications carriers.
DATES: Effective April 13, 1998, except Secs. 1.1403, 1.1404, 1.1409,
1.1417 and 1.1418 which contain information collection requirements
that are not effective until approved by the Office of Management and
Budget. Sections 1.1403, 1.1404, 1.1409, 1.1417 and 1.1418 of the
Commission's rules will become effective July 30, 1998, unless the
Commission publishes a notice before that date stating that the Office
of Management and Budget (``OMB'') has not approved the information
collection requirements contained in the rules. Written comments by the
public on the new and/or modified information collection requirements
should be submitted on or before May 11, 1998. If you anticipate that
you will be submitting comments, but find it difficult to do so within
the period of time allowed by this notice, you should advise the
contact listed below as soon as possible.
ADDRESSES: A copy of any comments on the information collection
requirements contained herein should be submitted to Judy Boley,
Federal Communications Commission, Room 234, 1919 M St., N.W.,
Washington, DC 20554 or via internet to jboley@fcc.gov.
FOR FURTHER INFORMATION CONTACT: For additional information concerning
the information collection requirements contained herein, contact Judy
Boley at 202-418-0214 or via internet at jboley@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order, CS Docket 97-151, adopted and released February 6, 1998. The
full text of this decision is available for inspection and copying
during normal business hours in the FCC Reference Center (Room 239),
1919 M Street, NW, Washington, D.C. 20554, and may be purchased from
the Commission's copy contractor, International Transcription Service,
(202) 857-3800, 1231 20th Street, NW, Washington, D.C. 20036.
The requirements adopted in this Report and Order have been
analyzed with respect to the Paperwork Reduction Act of 1995 (``1995
Act'') and found to impose new and modified information collection
requirements on the public. The Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public to
comment on the information collection requirements contained in this
Report and Order, as required by the 1995 Act. Public comments are due
May 11, 1998. Comments should address: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Approval Number: 3060-0392.
Title: 47 CFR 1 Subpart J--Pole Attachment Complaint Procedures.
Type of Review: Revision of a currently approved collection.
Respondents: Business and other for-profit entities; State, local
and tribal governments.
Number of Respondents: 1,381 calculated to account for the
following activities: 256 notices regarding removal or termination of
facilities, 10 petitions for stay and 10 responses to petitions for
stay, 1,000 notices that telecommunications services are offered, 50
complaints and 50 responses to complaints, and 5 state certifications.
Estimated Time Per Response: .5-35 hours.
Frequency of Response: On occasion.
Total Annual Burden to Respondents: 3,047 hours, calculated to
account for the following activities: Section 1.1403(c)(1) and (2)
Notices regarding removal of facilities or termination of any service
and notices regarding any increase in pole attachment rates. The
Commission estimates that there are an average of 64 pole attachment
contracts per state. 18 states are certified to regulate the rates,
terms and conditions for pole attachments, while the Commission
maintains jurisdiction in the remaining 32 states. 64 contracts per
state x 32 states = 2,048 estimated contracts. We estimate that these
contracts expire on a 7 to 8 year basis, thus requiring an average of
256 notices to be issued per year. Utilities will undergo an average
burden of 2 hours per notice. 256 notices x 2 hours per notice = 512
hours.
Section 1.1403(d) Petitions for Stay. To account for burden hours
associated with this collection of information, we estimate that 10
petitions of stay may be filed with the Commission within the next year
with an average burden of 4 hours for each petitioner and 4 hours for
each respondent. The burden estimates account for all aspects of the
petition procedure. 10 petitions x 2 parties x 4 hours per party =
80 hours.
[[Page 12014]]
Section 1.1403(e) Cable operator notifications to pole owners upon
offering telecommunications services. We estimate that 1,000 such
notices will annually be made by cable operators who will undergo a
burden of .5 hours per notice. 1,000 notices x .5 hours = 500 hours.
Section 1.1404 Complaints, Section 1.1407 Responses and Replies. We
increase our estimates of both the annual number of complaints that may
be filed with the Commission and the burden associated with the
complaint procedure. We estimate that there may be as many as 50
complaint cases annually filed with the Commission. Parties in
complaint cases are now estimated to undergo an average burden of 35
hours for all aspects of the complaint process, including the filing of
responses and replies. Our estimate also accounts for the burden for
parties to calculate rate formulas and to determine presumptive average
numbers of attachments to poles. The Commission estimates that 50% of
parties that undergo the complaint process will use the services of
outside legal counsel. Parties that use outside legal counsel are
estimated to undergo an average burden of 4 hours to coordinate
information with outside legal counsel. 50 complaint cases; 100
parties. 50 parties (50% of 100) using their own legal staff x 35
hours = 1,750 hours. 50 parties (50% of 40) coordinating information
with outside counsel x 4 hours = 200 hours.
Section 1.1414 State certification. We estimate that 5 states may
file certifications with the Commission each year with an average
burden of 1 hour per certification. 5 x 1 hour = 5 hours.
Total Annual Cost to Respondents: $267,122 calculated to account
for the following activities: Section 1.1403(c) (1) and (2) Notices
regarding removal or termination of facilities. Postage and stationery
costs are estimated to be $2 for each notice. 256 notices x $2 =
$512.
Section 1.1403(d) Petitions for Stay. Filings expenses (postage,
stationery, etc.) for these petitions are estimated to be $5 per party.
10 petitions x 2 parties x $5 = $100.
Section 1.1403(e) Cable operator notifications to pole owners upon
offering telecommunications services. Postage and stationery expenses
are estimated to be $2 for each notice. 1,000 notices x $2 = $2,000.
Section 1.1404 Complaints, Section 1.1407 Responses and Replies.
Filings expenses (postage, stationery, etc.) for these complaints are
estimated to be $20 per party. 50 complaints x 2 parties x $20 =
$2,000. In addition, we estimate that 50% of parties that undergo the
complaint process will use the services of outside legal counsel paid
at a rate of $150 per hour. 50 entities (50% of 100) paying outside
legal counsel $150 per hour x 35 hours = $262,500.
Section 1.1414 State certification. Postage and stationery expenses
for state certifications filed with the Commission are estimated to be
$2 per certification. 5 certifications x $2 = $10.
Needs and Uses: Information collection requirements regarding pole
attachment provisions are used by the Commission to hear and resolve
petitions for stay and complaints as mandated by Section 224.
Information filed has been used to determine the merits of the
petitions and complaints. Additionally, the state certifications are
used to make public notice of the state's authority to regulate the
rates, terms and conditions for pole attachments.
Summary of Report and Order
I. Introduction
1. In this Report and Order (``Order''), the Commission adopts
rules implementing section 703 of the Telecommunications Act of 1996
(``1996 Act'') relating to pole attachments. Section 703 amended
Section 224 of the Communications Act and requires the Commission to
prescribe regulations to govern the charges for pole attachments used
by telecommunications carriers to provide telecommunications services.
Section 703 also requires that the Commission's regulations ensure that
a utility charges just, reasonable, and nondiscriminatory rates for
pole attachments.
II. Background
2. The 1996 Act amended Section 224 in several important respects.
While previously the protections of Section 224 had applied only to
cable operators, the 1996 Act extended those protections to
telecommunications carriers as well. Further, the 1996 Act gave cable
operators and telecommunications carriers a mandatory right of access
to utility poles, in addition to maintaining a scheme of rate
regulation governing such attachments. In the First Report and Order,
CC Docket No. 96-98, Implementation of the Local Competition Provisions
in the Telecommunications Act of 1996 (61 FR 45476, August 29, 1996),
11 FCC Rcd 15499, 16058-107, paras. 1119-1240 (1996) (``Local
Competition Order''), we adopted a number of rules implementing the new
access provisions of Section 224.
3. The rules we adopt in this Order implement the plain language of
Section 224(e). That section provides that the regulations promulgated
will apply ``when the parties fail to resolve a dispute over such
charges.'' Accordingly, and as discussed below, we encourage parties to
negotiate the rates, terms, and conditions of pole attachment
agreements. Although the Commission's rules will serve as a backdrop to
such negotiations, we intend the Commission's enforcement mechanisms to
be utilized only when good faith negotiations fail. Based on the
Commission's history of successful implementation and enforcement of
rules governing attachments used to provide cable service, we believe
that the new rules will foster competition in the provision of
telecommunications services while guaranteeing fair compensation for
the utilities that own the infrastructure upon which such competition
depends.
III. Preference for Negotiated Agreements and Complaint Resolution
Procedures
4. Our rules for complaint resolution will only apply when the
parties are unable to arrive at a negotiated agreement. We affirm our
belief that the existing methodology for determining a presumptive
maximum pole attachment rate, as modified in this Order, facilitates
negotiation because the parties can predict an anticipated range for
the pole attachment rate. We further conclude that the current
complaint procedures are adequate to establish just and reasonable
rates, terms, and conditions for pole attachments. An uncomplicated
complaint process and a clear formula for rate determination are
essential to promote the use of negotiations for pole attachment rates,
terms, and conditions. We are committed to an environment where
attaching entities have enforceable rights, where the interests of pole
owners are recognized, and where both parties can negotiate for pole
attachment rates, allowing the availability of telecommunications
services to expand.
IV. Charges for Attaching
A. Poles
i. Formula Presumptions
5. In determining a just and reasonable rate, two elements of the
pole are examined: usable space and other than usable space. The costs
relating to these elements are allocated to those using the pole. To
avoid a pole by pole rate calculation, the Commission previously
adopted rebuttable presumptions of an average pole height of 37.5 feet,
an average amount of usable space of 13.5 feet, and an average amount
of 24 feet of
[[Page 12015]]
unusable space on a pole. The Commission also established a rebuttable
presumption of one foot as the amount of space a cable television
attachment occupies. These presumptions serve as the premise for
calculating pole attachment rates under the current formula. Until
resolution of the Pole Attachment Fee Notice proceeding CS Docket No.
97-98, we will apply our presumptions as they presently exist and
proceed with the implementation under the 1996 Act of a methodology to
calculate a rate for pole attachments used in the provision of
telecommunications services by telecommunications carriers and cable
operators.
ii. Restrictions on Services Provided Over Pole Attachments
6. In the Notice, we sought comment on whether we disagree with the
utility pole owners that assert that the Commission's decision in
Heritage Cablevision Associates of Dallas, L.P. v. Texas Utilities
Electric Company (``Heritage'') has been ``overruled'' by the passage
of the 1996 Act insofar as it held that a cable system is entitled to a
Commission-regulated rate for pole attachments that the cable system
uses to provide commingled data and video. The definition of ``pole
attachment'' does not turn on what type of service the attachment is
used to provide. Rather, a ``pole attachment'' is defined to include
any attachment by a ``cable television system.'' Thus, the rates, terms
and conditions for all pole attachments by a cable television system
are subject to the Pole Attachment Act. Under Section 224(b)(1), the
Commission has a duty to ensure that such rates, terms, and conditions
are just and reasonable. We see nothing on the face of Section 224 to
support the contention that pole owners may charge any fee they wish
for Internet and traditional cable services commingled on one
transmission facility.
7. Having decided that cable operators are entitled to the benefits
of Section 224 when providing commingled Internet and traditional cable
services, we next turn to the appropriate rate to be applied. We
conclude, pursuant to Section 224(b)(1), that the just and reasonable
rate for commingled cable and Internet service is the Section 224(d)(3)
rate. In specifying this rate, we intend to encourage cable operators
to make Internet services available to their customers. We believe that
specifying a higher rate might deter an operator from providing non-
traditional services. Such a result would not serve the public
interest. Rather, we believe that specifying the Section 224(d)(3) rate
will encourage greater competition in the provision of Internet service
and greater benefits to consumers.
8. We also disagree with utility pole owners that submit that all
cable operators should be ``presumed to be telecommunications
carriers'' and therefore charged at the higher rate unless the cable
operator certifies to the Commission that it is not ``offering''
telecommunications services. We think that a certification process
would add a burden that manifests no benefit. We believe the need for
the pole owner to be notified is met by requiring the cable operator to
provide notice to the pole owner when it begins providing
telecommunication services. The rule we adopt in this Order will
reflect this required notification. We also reject the suggestions of
utility pole owners that the Commission should be responsible for
monitoring and enforcing a certification of cable operators regarding
their status. The record does not demonstrate that cable operators will
not meet their responsibilities. If a dispute arises, the Commission's
complaint processes can be invoked.
iii. Wireless Attachments
9. Wireless carriers are entitled to the benefits and protection of
Section 224. Section 224(e)(1) plainly states: ``The Commission shall *
* * prescribe regulations to govern the charges for pole attachments
used by telecommunications carriers to provide telecommunications
services.'' This language encompasses wireless attachments.
10. Statutory definitions and amendments by the 1996 Act
demonstrate Congress' intent to expand the pole attachment provisions
beyond their 1978 origins. Section 224(a)(4) previously defined a pole
attachment as ``any attachment by a cable television system,'' but now
states that a pole attachment is ``any attachment by a cable television
system or provider of telecommunications service.'' Moreover, in
Section 224(d)(3), Congress applied the current pole attachment rules
as interim rules for ``any telecommunications carrier * * * to provide
any telecommunications service.'' In both sections, the use of the word
``any'' precludes a position that Congress intended to distinguish
between wire and wireless attachments. Section 224(e)(1) contains three
terms whose definitions support this conclusion. Section 3(44) defines
telecommunications carrier as ``any provider of telecommunications
services.'' Section 3(46) states that telecommunications services is
the ``offering of telecommunications for a fee directly to the public *
* * regardless of the facilities used,'' and Section 3(43) specifies
telecommunications to be ``the transmission, between or among points
specified by the user, of information of the user's choosing, without
change in the form or content of the information as sent and
received.'' The use of ``any'' in Section 3(44) precludes limiting
telecommunications carriers only to wireline providers. Wireless
companies meet the definitions in Sections 3(43) and 3(46). In fact,
the Commission has already recognized that cellular telephone, mobile
radio, and PCS are telecommunications services.
11. There is no clear indication that our rules cannot accommodate
wireless attachers' use of poles when negotiations fail. When an
attachment requires more than the presumptive one-foot of usable space
on the pole, or otherwise imposes unusual costs on a pole owner, the
one-foot presumption can be rebutted. In addition, when wireless
devices do not need to use every pole in a utility's inventory, the
parties can agree on some reasonable percentage of poles for developing
a presumptive number of attaching entities. If parties cannot modify or
adjust the formula to deal with unique attachments, and the parties are
unable to reach agreement through good faith negotiations, the
Commission will examine the issues on a case-by-case basis.
iv. Allocating the Cost of Other Than Usable Space
a. Method of Allocation. 12. To determine the rate that a
telecommunications carrier must pay for pole attachments, Section
224(e)(2) provides that:
A utility shall apportion the cost of providing space on a pole,
duct, conduit, or right-of-way other than the usable space among
entities so that such apportionment equals two-thirds of the costs
of providing space other than the usable space that would be
allocated to such entity under an equal apportionment of such costs
among all attaching entities.
This statutory language requires an equal apportionment of two-thirds
of the costs of providing other than usable (``unusable'') space among
all attaching entities. The Commission proposed a methodology to
apportion these costs which translates to the following formula:
[[Page 12016]]
[GRAPHIC] [TIFF OMITTED] TR12MR98.012
13. We adopt our proposed methodology to apportion the cost of
unusable space. We believe this formula most accurately determines the
apportionment of cost of unusable space. As mandated by Congress, it
equally apportions two-thirds of the costs of unusable space among
attaching entities.
b. Counting Attaching Entities. (1) Telecommunications Carriers,
Cable Operators and Non-Incumbent LECs. 14. We will count as separate
entities any telecommunications carrier, any cable operator, and any
non-incumbent local exchange carrier (``LEC''). This approach is
consistent with the language of the statute and comports with Congress'
intent to count all attaching entities when allocating the costs of
unusable space. The statute uses the term ``entities'' not
``telecommunications carriers'' when indicating how the costs of
unusable space should be allocated. We interpret this use to indicate
the inclusion of cable operators as well as telecommunications carriers
when allocating the cost of unusable space.
(2) Pole Owners Providing Telecommunications Services and Incumbent
LECs. 15. We affirm our tentative conclusion that any pole owner
providing telecommunications services, including an incumbent local
exchange carrier (``ILEC''), should be counted as an attaching entity
for the purposes of allocating the costs of unusable space under
Section 224(e)(2). This includes pole owners that use only a part of
their physical plant capacity to provide these services and is
consistent with our recognition that pole attachments are defined in
terms of attachments by a ``provider of telecommunication service.''
Section 224(e)(2) states that the costs of unusable space shall be
allocated on the basis of ``all attaching entities.'' There is no
indication from the statutory language or legislative history that any
particular attaching entity should not be counted.
16. We also believe this conclusion is supported by Section 224(g)
which requires that a utility providing telecommunications services
impute to its costs of providing service an amount equal to the rate
for which it would be liable under Section 224. This section reflects
Congress' recognition that as a provider of telecommunications
services, a pole owner uses and benefits from the unusable space in the
same way as the other attaching entities. Section 224(g) also directs
the utility to impute the costs relating to these services to the
appropriate affiliate, making clear that another entity is using the
facility and should be counted as an attaching entity. We will count
any pole owner providing telecommunications services, including an
ILEC, as an attaching entity for the purpose of allocating costs of
unusable space.
(3) Government Attachments. 17. To the extent that government
agencies provide cable or telecommunications service, we affirm our
proposal that they be included in the count of attaching entities for
purposes of allocating the cost of unusable space. We will not include
government agencies in the count as a separate entity if they only
provide certain attachments for public use, such as traffic signals,
festoon lighting, and specific pedestrian lighting. We conclude that,
where a government agency's attachment is used to provide cable or
telecommunications service, the government attachment can accurately be
described as a ``pole attachment'' within the meaning of Section
224(a)(4) of the 1996 Act. Like a private pole attachment, it benefits
equally from the unusable space on the pole and the costs for this
benefit are properly placed on the government entity or the pole owner.
Since the government attacher and the pole owner have a relationship
that benefits both parties, we are not persuaded that the pole owner is
unfairly absorbing the cost of the government's telecommunications
attachments to the extent the pole owner's franchise so provides. We
will not include a government agency with an attachment that does not
provide cable or telecommunications service as an entity in the count
when apportioning the costs of unusable space because such an
attachment is not a ``pole attachment'' within the meaning of Section
224(a)(4).
(4) Space Occupied on Pole. 18. In suggesting the alternative
approach that entities using more than one foot be counted as a
separate entity for each foot or increment thereof, we sought to ensure
that entities be allocated the costs of the unusable space through a
means reflecting their relative use. The record does not indicate
whether use of more than one foot by an entity will be a pervasive or
occasional circumstance. We agree with those parties that state that
allocating space in such a manner will add a level of complexity, and
not necessarily produce a fairer allocation of the cost of unusable
space. We are also convinced that the alternative proposal is
inconsistent with the plain meaning of Section 224(e) which apportions
the cost of unusable space ``under an equal apportionment of such costs
among all attaching entities.''
19. As another alternative method to apportioning cost equally, MCI
argues that the apportionment of two-thirds of the costs of unusable
space should be based on the number of attachments rather than the
number of attaching entities. Allocating costs by the number of
entities, it argues, would not allocate any unusable space to
overlashings and will result in an incentive for ``speculative''
overlashing by existing attachers. We also will not adopt MCI's
proposal to count attachments instead of attaching entities. The record
does not demonstrate that overlashing leads to distortion of the
allocation of the costs of the pole.
c. Overlashing. (a) Overlashing One's Own Pole Attachment. 20. We
have been presented with no persuasive reason to change the
Commission's policy that encourages overlashing, and we agree with
representatives of the cable and telecommunications industries that, to
the extent that it does not significantly increase the burden on the
pole, overlashing one's own pole attachment should be permitted without
additional charge. To the extent that the overlashing does create an
additional burden on the pole, any concerns should be satisfied by
compliance with generally accepted engineering practices. We note that
we have deferred decision on the issue of the effect any increased
burden may have on the rate the utility pole owner may charge the host
attacher. We believe that the Pole Attachment Fee Notice rulemaking is
a more appropriate forum for resolution of this issue. As stated above,
we affirm our current presumptions for the time being. We also do not
believe that overlashing is an expansion of a pole owners' obligation.
Overlashing has been in practice for many years. We believe utility
pole owners' concerns are addressed by Section 224's assurance that
pole owners receive a just and reasonable rate and that pole
attachments may be denied for reasons
[[Page 12017]]
of safety, reliability, and generally applicable engineering purposes.
(b) Third Party Overlashing. 21. The record does not indicate that
third party overlashing adds any more burden to the pole than
overlashing one's own pole attachment. We do not believe that third
party overlashing disadvantages pole owners in either receiving fair
compensation or in being able to ensure the integrity of the pole.
Facilitating access to the pole is a tangible demonstration of
enhancing competitive opportunities in communications. Allowing third
party overlashing will also reduce construction disruption (and the
expense associated therewith) which would otherwise likely take place
by third parties installing new poles and separate attachments.
Accordingly, we will allow third party overlashing subject to the same
safety, reliability, and engineering constraints that apply to
overlashing one's own pole attachment. Concerns that third party
overlashing will increase the burden on the pole can be addressed by
compliance with generally accepted engineering practices.
22. We believe that when a host attaching entity allows an
overlashing attachment to be installed to its own pole attachment by a
third party for the purposes of that third party offering and providing
cable or telecommunications services to the public, that third party
overlashing entity should be classified as a separate attaching entity
for purposes of allocating costs of unusable space because Congress
indicated that the unusable space was of equal benefit to all attaching
entities. In order to implement the allocation of unusable space, the
third party overlasher will necessarily need to have some understanding
or agreement with the pole owner, and an agreement with the host
attaching entity. Commenters assert that overlashing under these
circumstances should be classified as a separate attachment. We agree.
(c) Lease and Use of Excess Capacity/Dark Fiber. 23. There is
general consensus among cable operators and telecommunications carriers
that the leasing and use of dark fiber by third parties places no
additional spatial or physical requirements on the utility pole. Cable
operators, telecommunications carriers, and utility pole owners all
contend that the use of dark fiber is a pro-competitive,
environmentally sound and economical use of existing facilities. We
agree and conclude that the leasing of dark fiber by a third party is
not an individual pole attachment separate from the host attachment.
Such use will not require payment to the pole owner separate from the
payment by the host attaching entity. We also agree with cable
operators, telecommunications carriers, and utility pole owners that,
if an attachment previously used for providing solely cable services
would, as a result of the leasing of dark fiber, also be used for
providing telecommunications services, the rate for the attachment
would be determined under Section 224(e), consistent with our
discussion regarding restrictions on services provided over pole
attachments.
(d) Presumptive Average Number of Attaching Entities. 24. We
believe that the most efficient and expeditious manner to calculate a
presumptive number of attaching entities is for each utility to develop
its own presumptive average number of attaching entities. Utilities not
only possess this information but have familiarity and expertise to
structure it properly. Based on the record, we think the alternative of
the Commission undertaking a survey is too cumbersome and would not
necessarily enhance accuracy. We do not believe that the Fiber
Deployment Update is an appropriate resource from which to develop the
presumptive average. The Fiber Deployment Update presents data about
fiber optic facilities and capacity built or used by interexchange
carriers, Bell operating companies, and other LECs and competitive
access providers. These data are inadequate for the purposes of
creating a presumptive average number of attaching entities because it
does not include data pertaining to cable operators. Our decision
providing that the utility will establish a presumptive number of
attaching entities is also premised on the information developed
reflecting where the service is being provided, instead of a broad
national average. We think there will be a range of presumptive
averages depending on rural, urban, or urbanized areas. To ensure that
rates are appropriately representative, each utility shall determine a
presumptive average for its rural, urban and urbanized service areas as
defined by the United States Census Bureau.
25. We will require each utility to develop, through the
information it possesses, a presumptive average number of attaching
entities on its poles based on location (urban, rural, urbanized) and
based upon our discussion herein regarding the counting of attaching
entities for allocating the costs of unusable space. A utility shall,
upon request, provide all attaching entities and all entities seeking
access the methodology and information by which a utility's presumption
was determined. We expect a good faith effort by a utility in
establishing its presumption and updating it when a change is
necessitated. For example, when a new attaching entity has a
substantial impact on the number of attaching entities, the utility's
presumptive average should be modified. This method should be
consistent with present practice, as we understand most pole attachment
agreements ``provide for periodic field surveys, generally once every
three to seven years, to determine which entities have attached what
facilities to whose poles.''
26. Challenges to the presumptive average number of attaching
entities by the telecommunications carrier or cable operator may be
made in the same manner as challenges presently are undertaken. The
challenging party will initially be required to identify and calculate
the number of attachments on the poles and submit to the utility what
it believes to be an appropriate average. Where the number of poles is
large, and complete inspection impractical, a statistically sound
survey should be submitted. The pole owner will be afforded an
opportunity to justify the presumption. Where a presumption is
successfully challenged, the resulting figure will be deemed to be the
number of attaching entities.
v. Allocating the Cost of Usable Space
27. Section 224(e)(3) provides that a utility shall apportion the
cost of providing usable space among all entities according to the
percentage of usable space required for each entity. The Commission has
defined usable space as the space on the utility pole above the minimum
grade level that is usable for the attachment of wires, cable, and
related equipment. In the Second Report and Order, 72 FCC 2d 59, the
Commission considered comment regarding the amount of usable space for
various size poles in different service areas. The Commission
subsequently adopted a rebuttable presumption that a pole contains 13.5
feet of usable space. The usable space presumption has been contested
in complaint proceedings before the Commission. In 1986, the Commission
revisited the usable space issue and upheld the presumption. In 1997,
the Commission sought comment on the presumptive amount of usable space
in the Pole Attachment Fee Notice. In the Notice, we sought comment on
the usable space presumption to establish a full record for attachments
made by telecommunications carriers under the 1996 Act. The Commission
also proposed to modify the current
[[Page 12018]]
methodology to reflect only the cost associated with usable space to
arrive at a factor for apportioning the costs of usable space for
telecommunications carriers under Section 224(e)(3). For allocating the
costs of usable space to telecommunications carriers, the following
basic formula was proposed:
[GRAPHIC] [TIFF OMITTED] TR12MR98.013
(1) Applying the 13.5 Foot Presumption and the One Foot Presumption
to Telecommunications Carriers. 28. We believe that the information we
received in this proceeding regarding calculation of usable space is
more appropriately addressed in the Pole Attachment Fee Notice
proceeding and we will thus reserve our decision on the total amount of
usable space issue until the resolution of that proceeding. For the
present time, the presumption that a pole contains 13.5 feet of usable
space will remain applicable. We adopt our proposed methodology to
apportion the cost of the usable space. We believe this formula most
accurately determines the apportionment of the cost of usable space. As
mandated by Congress, it incorporates the principle of apportioning the
cost of such space according to the percentage of space required for
each entity.
29. The Commission's one foot presumption has been in place since
1979. Neither the 1996 Act's amendments to Section 224 nor the record
in this proceeding suggest that a different presumption should be
applicable to telecommunications carriers. Circumstances that are
unique or that clearly warrant a departure from the formula may be used
to rebut the presumption.
(2) Overlashing and Dark Fiber. 30. Consistent with our above
discussion regarding overlashing, we find that the one foot presumption
shall continue to apply where an attaching entity has overlashed its
own pole attachments. We also determine that facilities overlashed by
third parties onto existing pole attachments are presumed to share the
presumptive one foot of usable space of the host attachment. To the
extent that the overlashing creates an additional burden on the pole,
any concerns should be satisfied by compliance with generally accepted
engineering practices. We again note that we have deferred decision to
the Pole Attachment Fee Notice proceeding on the issue of the effect
any increased burden may have on the rate the utility pole owner may
charge the host attacher. As stated above, we believe that that
proceeding is a more appropriate forum for resolution of this issue. As
also stated above, we affirm our current presumptions for the time
being.
B. Application of Pole Attachment Formula to Telecommunications
Carriers
31. We agree with cable operators and telecommunications carriers
that the continued use of a clear formula for the Commission's rate
determination is an essential element when parties negotiate for pole
attachment rates, terms and conditions. We think that a formula
encompassing these statutory directives of how pole owners should be
compensated adds certainty and clarity to negotiations as well as
assists the Commission when it addresses complaints. We conclude that
the addition of the unusable and usable space factors, developed to
implement Sections 224(e)(2) and (e)(3), is consistent with a just,
reasonable, and nondiscriminatory pole attachment rate for
telecommunications carriers. We affirm the following formula, to be
used to determine the maximum just and reasonable pole attachment rate
for telecommunications carriers, including cable operators providing
telecommunications services, effective February 8, 2001, encompassing
the elements enumerated in the law:
[GRAPHIC] [TIFF OMITTED] TR12MR98.014
C. Application of Pole Attachment Formula to Conduits
32. Section 224(e)(2) requires that two-thirds of the cost of the
unusable space be apportioned equally among all attaching entities. In
the Notice, the Commission proposed a methodology to apportion the
costs of unusable space among attaching entities. The following formula
was proposed as the methodology to determine costs of unusable space in
a conduit:
[GRAPHIC] [TIFF OMITTED] TR12MR98.015
In the Notice, the Commission also sought comment on what portions of
duct or conduit are ``unusable'' within the terms of the 1996 Act. The
Commission proposed that a presumptive ratio of usable ducts to
maintenance ducts be adopted to establish the amount of unusable space.
33. Section 224(e)(3) states that the cost of providing usable
space shall be apportioned according to the percentage of usable space
required for the entity using the conduit. Usable space is based on the
number of ducts and the diameter of the ducts contained in a conduit.
In the Pole Attachment Fee Notice, the Commission sought comment on a
proposed conduit methodology for use in determining a pole attachment
rate for conduit under Section 224(d)(3). In the Notice, the Commission
sought comment on a proposed half-duct methodology for use in a
proposed formula to determine a conduit usable space factor. The
proposed usable space formula under Section 224(e)(3) for pole
attachments in conduits is as follows:
[[Page 12019]]
[GRAPHIC] [TIFF OMITTED] TR12MR98.016
In the Notice, the Commission sought comment on the half-duct
presumption's applicability to determine usable space and to allocate
costs of providing usable space to the telecommunications carrier. The
Commission also sought comment on how its proposed conduit methodology
impacts determining an appropriate ratio of usable to unusable space
within a duct or conduit.
a. Counting Attaching Entities for Purposes of Allocating Cost of
Other than Usable Space. 34. For the purpose of allocating the cost of
unusable space in a conduit system, we agree that each party that
actually installs one or more wires in a duct or duct bank should be
counted as a single attaching entity, regardless of the number of
cables installed or the amount of duct space occupied. The statutory
preference for clarity is preeminent and we perceive no generally
applicable method that does not involve complexity and confusion other
than counting each entity within the conduit system as a separate
attaching entity.
b. Unusable Space in a Conduit System. 35. We disagree that no
unusable space exists in a conduit system. There appear to be two
aspects to the unusable space within conduit systems. First, there is
that space involved in the construction of the system, without which
there would be no usable space. Second, there is that space within the
system which may be unusable after the system is constructed. We
believe that the costs for the construction of the system, which allow
the creation of the usable space, should be part of the unusable space
allocated among attaching entities. We also believe that maintenance
ducts reserved for the benefit and use of all attaching entities should
be considered unusable space.
36. With regard to space in a conduit that is deteriorated, the
record is less clear. We are reluctant to require that the costs of
space that cannot be used by, and provide no benefit to, an existing
attaching entity should be allocated beyond the utility conduit owner.
In contrast, unusable space on a pole is largely attributed to safety
and engineering concerns, adherence to which benefits the pole owner
and attaching entities. Space in a conduit that has deteriorated serves
no benefit to the existing rate-paying attaching entities. Deteriorated
duct creates space that has been rendered unused by the utility. If
such space could, with reasonable effort and expense, be made
available, the space is usable and not unusable.
c. Half-Duct Presumption for Determining Usable Conduit Space. 37.
We adopt our proposed rebuttable presumption that a cable or
telecommunications attacher occupies a half-duct of space in order to
determine a reasonable conduit attachment rate. We note that the
National Electric Safety Code rule relied on by the electric utilities
does not prohibit the sharing of space between electric and
communications. Rather, the rule conditions the sharing of such space
on the maintenance and operation being performed by the utility. We
continue to believe that the half-duct methodology is the simplest and
most reasonable approximation of the actual space occupied by an
attacher. This method, patterned after the one used by the
Massachusetts Department of Public Utilities (``MDPU''), allows for
determining the cost per foot of one duct and then dividing by two
instead of actually measuring the duct space occupied. The MDPU finds,
and we agree, that this method is reasonable because an attacher's use
of a duct does not preclude the use of the other half of the duct so
the attacher should not have to pay for the entire duct. In situations
where the formula is inappropriate because it has been demonstrated
that there are more than two users in the conduit or that one
particular attachment occupies the entire duct, so as to preclude
another from using the duct, our half-duct presumption can be rebutted.
If a new entity is installing an attachment in a previously unoccupied
duct, we believe that such entity should be encouraged to place inner-
duct prior to placing its wires in the duct.
d. Conduit Pole Attachment Formula. 38. We believe that a formula
encompassing statutory directives of how utilities should be
compensated for the use of conduit adds certainty and clarity to
negotiations as well as assists the Commission when it addresses
complaints. We conclude that the addition of the conduit unusable and
conduit usable space factors, developed to implement Section 224(e)(2)
and Section 224(e)(3), is consistent with a just, reasonable, and
nondiscriminatory pole attachment rate for telecommunications carriers
in conduit. We adopt the following formula to be used to determine the
maximum just and reasonable pole attachment rate for telecommunications
carriers in a conduit system, effective February 8, 2001, encompasses
the elements enumerated in the law:
[GRAPHIC] [TIFF OMITTED] TR12MR98.017
D. Rights-of-Way
39. The information submitted in this proceeding is not sufficient
to enable us to adopt detailed standards that would govern all right-
of-way situations. We thus believe it prudent for the Commission to
gain experience through case-by-case adjudication to determine whether
additional ``guiding principles'' or presumptions are necessary or
appropriate. Therefore, we will address complaints about just,
reasonable, and nondiscriminatory pole attachments to a utility's
right-of-way on a case-by-case basis.
V. Cost Elements of the Formula for Poles and Conduit
40. In regulating pole attachment rates, the Commission has
implemented a cost methodology premised on historical or embedded
costs. These are costs that a firm has incurred in the past for
providing a good or service and are recorded for accounting purposes as
past operating expenses and depreciation. Many parties in this
proceeding, as well as in the Pole Attachment Fee Notice proceeding,
advocate extension of historical costs, while a number of parties
advocate that the Commission adopt a forward-looking economic cost-
pricing (``FLEC'') methodology for pole attachments. Forward-looking
cost methodologies seek to consider the costs that an entity would
incur if it were to construct facilities now to provide the good or
service at issue.
41. We did not raise the issue of forward looking costs in the
Notice in this proceeding. While we do not prejudge the arguments
raised by the commenters, we decline to address at this time proposals
to shift to a forward
[[Page 12020]]
looking cost methodology. Accordingly, we will continue the use of
historical costs in our pole attachment rate methodology, specifically
as it is applied to telecommunications carriers and cable operators
providing telecommunications services.
VI. Implementation and Effective Date of Rules
42. We conclude that the statutory language is explicit in
requiring that any increase in the rates for pole attachments shall be
phased-in over five years in equal annual increments beginning on the
effective date of such regulations. We clarify that the statutory
language ``beginning on the effective date of such regulations'' refers
to February 8, 2001, or five years after the enactment of the 1996 Act.
We affirm that the five-year phase-in is to apply to rate increases
only and that the amount of the increase or the difference between the
Section 224(d) rate and the 224(e) rate shall be applied annually until
the full amount of the increase is absorbed within five years of
February 8, 2001. Rate reductions are not subject to the phase-in and
are to be implemented immediately.
Final Regulatory Flexibility Analysis
43. As required by the Regulatory Flexibility Act (``RFA''), an
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in
the Notice. The Commission sought written public comment on the
proposals in the Notice including comment on the IRFA. The comments
received are discussed below. This present Final Regulatory Flexibility
Analysis (``FRFA'') conforms to the RFA.
A. Need for, and Objectives of, the Order
44. Section 703 of the 1996 Act requires the Commission to
prescribe regulations to govern the charges for pole attachments used
by telecommunications carriers to provide telecommunications services.
The objectives of the rules adopted herein are, consistent with the
1996 Act, to promote competition and the expansion of
telecommunications services and to reduce barriers to entry into the
telecommunications market by ensuring that charges for pole attachments
are just, reasonable and nondiscriminatory.
B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA
45. No comments submitted in response to the Notice were
specifically identified by the commenters as being in response to the
IRFA contained in the Notice. Small Cable Business Association
(``SCBA'') filed comments in response to the IRFA contained in the Pole
Attachment Fee Notice, and, to the extent they are relevant to the
issues in this proceeding, we incorporate them herein by reference.
SCBA claims in its IRFA comments that, because of the statutory
exclusion of cooperatives from the definition of utility, Section 224
does not minimize market entry barriers for small cable operators.
According to SCBA, the IRFA in the Pole Attachment Fee Notice fails to
consider this issue.
C. Description and Estimate of the Number of Small Entities to Which
Rules Will Apply
46. The RFA generally defines a ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small governmental jurisdiction.'' In addition, the term ``small
business'' has the same meaning as the term small business concern
under the Small Business Act. A ``small business concern'' is one that:
(1) is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (``SBA''). For many of
the entities described below, the SBA has defined small business
categories through Standard Industrial Classification (``SIC'') codes.
a. Utilities
47. Many of the decisions and rules adopted herein may have a
significant effect on a substantial number of utility companies.
Section 224 defines a ``utility'' as ``any person who is a local
exchange carrier or an electric, gas, water, steam, or other public
utility, and who owns or controls poles, ducts, conduits, or rights-of-
way used, in whole or in part, for any wire communications. Such term
does not include any railroad, any person who is cooperatively
organized, or any person owned by the Federal Government or any
State.'' The SBA has provided the Commission with a list of utility
firms which may be affected by this rulemaking. Based upon the SBA's
list, the Commission concludes that all of the following types of
utility firms may be affected by the Commission's implementation of
Section 224.
(1) Electric Utilities (SIC 4911, 4931 & 4939). 48. Electric
Services (SIC 4911). The SBA has developed a definition for small
electric utility firms. The Census Bureau reports that a total of 1379
electric utilities were in operation for at least one year at the end
of 1992. According to SBA, a small electric utility is an entity whose
gross revenues did not exceed five million dollars in 1992. The Census
Bureau reports that 447 of the 1379 firms listed had total revenues
below five million dollars.
49. Electric and Other Services Combined (SIC 4931). The SBA has
classified this entity as a utility whose business is less than 95%
electric in combination with some other type of service. The Census
Bureau reports that a total of 135 such firms were in operation for at
least one year at the end of 1992. The SBA's definition of a small
electric and other services combined utility is a firm whose gross
revenues did not exceed five million dollars in 1992. The Census Bureau
reported that 45 of the 135 firms listed had total revenues below five
million dollars.
50. Combination Utilities, Not Elsewhere Classified (SIC 4939). The
SBA defines this utility as providing a combination of electric, gas,
and other services which are not otherwise classified. The Census
Bureau reports that a total of 79 such utilities were in operation for
at least one year at the end of 1992. According to SBA's definition, a
small combination utility is a firm whose gross revenues did not exceed
five million dollars in 1992. The Census Bureau reported that 63 of the
79 firms listed had total revenues below five million dollars.
(2) Gas Production and Distribution (SIC 4922, 4923, 4924, 4925 &
4932). 51. Natural Gas Transmission (SIC 4922). The SBA's definition of
a natural gas transmitter is an entity that is engaged in the
transmission and storage of natural gas. The Census Bureau reports that
a total of 144 such firms were in operation for at least one year at
the end of 1992. According to SBA's definition, a small natural gas
transmitter is an entity whose gross revenues did not exceed five
million dollars in 1992. The Census Bureau reported that 70 of the 144
firms listed had total revenues below five million dollars.
52. Natural Gas Transmission and Distribution (SIC 4923). The SBA
has classified this entity as a utility that transmits and distributes
natural gas for sale. The Census Bureau reports that a total of 126
such entities were in operation for at least one year at the end of
1992. The SBA's definition of a small natural gas transmitter and
distributor is a firm whose gross revenues did not exceed five million
dollars. The Census Bureau reported that 43 of the 126 firms listed had
total revenues below five million dollars.
53. Natural Gas Distribution (SIC 4924). The SBA defines a natural
gas distributor as an entity that distributes natural gas for sale. The
Census Bureau
[[Page 12021]]
reports that a total of 478 such firms were in operation for at least
one year at the end of 1992. According to the SBA, a small natural gas
distributor is an entity whose gross revenues did not exceed five
million dollars in 1992. The Census Bureau reported that 267 of the 478
firms listed had total revenues below five million dollars.
54. Mixed, Manufactured, or Liquefied Petroleum Gas Production and/
or Distribution (SIC 4925). The SBA has classified this entity as a
utility that engages in the manufacturing and/or distribution of the
sale of gas. These mixtures may include natural gas. The Census Bureau
reports that a total of 43 such firms were in operation for at least
one year at the end of 1992. The SBA's definition of a small mixed,
manufactured or liquefied petroleum gas producer or distributor is a
firm whose gross revenues did not exceed five million dollars in 1992.
The Census Bureau reported that 31 of the 43 firms listed had total
revenues below five million dollars.
55. Gas and Other Services Combined (SIC 4932). The SBA has
classified this entity as a gas company whose business is less than 95%
gas, in combination with other services. The Census Bureau reports that
a total of 43 such firms were in operation for at least one year at the
end of 1992. According to the SBA, a small gas and other services
combined utility is a firm whose gross revenues did not exceed five
million dollars in 1992. The Census Bureau reported that 24 of the 43
firms listed had total revenues below five million dollars.
(3) Water Supply (SIC 4941). 56. The SBA defines a water utility as
a firm who distributes and sells water for domestic, commercial and
industrial use. The Census Bureau reports that a total of 3,169 water
utilities were in operation for at least one year at the end of 1992.
According to SBA's definition, a small water utility is a firm whose
gross revenues did not exceed five million dollars in 1992. The Census
Bureau reported that 3065 of the 3169 firms listed had total revenues
below five million dollars.
(4) Sanitary Systems (SIC 4952, 4953 & 4959). 57. Sewerage Systems
(SIC 4952). The SBA defines a sewage firm as a utility whose business
is the collection and disposal of waste using sewage systems. The
Census Bureau reports that a total of 410 such firms were in operation
for at least one year at the end of 1992. According to SBA's
definition, a small sewerage system is a firm whose gross revenues did
not exceed five million dollars. The Census Bureau reported that 369 of
the 410 firms listed had total revenues below five million dollars.
58. Refuse Systems (SIC 4953). The SBA defines a firm in the
business of refuse as an establishment whose business is the collection
and disposal of refuse ``by processing or destruction or in the
operation of incinerators, waste treatment plants, landfills, or other
sites for disposal of such materials.'' The Census Bureau reports that
a total of 2287 such firms were in operation for at least one year at
the end of 1992. According to SBA's definition, a small refuse system
is a firm whose gross revenues did not exceed six million dollars. The
Census Bureau reported that 1908 of the 2287 firms listed had total
revenues below six million dollars.
59. Sanitary Services, Not Elsewhere Classified (SIC 4959). The SBA
defines these firms as engaged in sanitary services. The Census Bureau
reports that a total of 1214 such firms were in operation for at least
one year at the end of 1992. According to SBA's definition, a small
sanitary service firms gross revenues did not exceed five million
dollars. The Census Bureau reported that 1173 of the 1214 firms listed
had total revenues below five million dollars.
(5) Steam and Air Conditioning Supply (SIC 4961). 60. The SBA
defines a steam and air conditioning supply utility as a firm who
produces and/or sells steam and heated or cooled air. The Census Bureau
reports that a total of 55 such firms were in operation for at least
one year at the end of 1992. According to SBA's definition, a steam and
air conditioning supply utility is a firm whose gross revenues did not
exceed nine million dollars. The Census Bureau reported that 30 of the
55 firms listed had total revenues below nine million dollars.
(6) Irrigation Systems (SIC 4971). 61. The SBA defines irrigation
systems as firms who operate water supply systems for the purpose of
irrigation. The Census Bureau reports that a total of 297 firms were in
operation for at least one year at the end of 1992. According to SBA's
definition, a small irrigation service is a firm whose gross revenues
did not exceed five million dollars. The Census Bureau reported that
286 of the 297 firms listed had total revenues below five million
dollars.
b. Telephone Companies (SIC 4813). 62. Many of the decisions and
rules adopted herein may have a significant effect on a substantial
number of small telephone companies. The SBA has defined a small
business for SIC code 4813 (Telephone Communications, except
Radiotelephone) to be a small entity when it has no more than 1500
employees. The Census Bureau reports that, at the end of 1992, there
were 3497 firms engaged in providing telephone services, as defined
therein, for at least one year. This number contains a variety of
different categories of carriers, including local exchange carriers
(``LECs''), interexchange carriers (``IXCs''), competitive access
providers (``CAPs''), cellular carriers, mobile service carriers,
operator service providers, pay telephone operators, personal
communications service (``PCS'') providers, covered SMR providers and
resellers. Some of those 3497 telephone service firms may not qualify
as small entities or small incumbent LECs because they are not
``independently owned and operated.'' We therefore conclude that fewer
than 3497 telephone service firms are small entity telephone service
firms or small incumbent LECs that may be affected by this Order.
Below, we estimate the potential number of small entity telephone
service firms or small incumbent LEC's that may be affected by the
rules adopted herein in this service category.
(1) Wireline Carriers and Service Providers. 63. The SBA has
developed a definition of small entities for telephone communications
companies other than radiotelephone (wireless) companies. The Census
Bureau reports that, there were 2321 such telephone companies in
operation for at least one year at the end of 1992. According to SBA's
definition, a small business telephone company other than a
radiotelephone company is one employing no more than 1500 persons. Of
the 2321 non-radiotelephone companies listed by the Census Bureau, 2295
were reported to have fewer than 1000 employees. Thus, at least 2295
non-radiotelephone companies that might qualify as small entities or
small incumbent LECs, or small entities based on these employment
statistics. Although some of these carriers are likely not
independently owned and operated, we are unable at this time to
estimate with greater precision the number of wireline carriers and
service providers that would qualify as small business concerns under
SBA's definition. Consequently, we estimate that there are fewer than
2295 small entity telephone communications companies other than
radiotelephone companies that may be affected by the decisions or rules
adopted in this Order.
(2) Local Exchange Carriers. 64. Neither the Commission nor SBA has
developed a definition of small providers of local exchange services.
The closest applicable definition under SBA rules is for telephone
[[Page 12022]]
communications companies other than radiotelephone (wireless) companies
(SIC 4813). The most reliable source of information regarding the
number of LECs nationwide appears to be the data that the Commission
publishes annually in its Telecommunications Industry Revenue report,
regarding the Telecommunications Relay Service (``TRS''). According to
``TRS Worksheet'' data released in November 1997, there are 1371
companies reporting that they categorize themselves as LECs. Although
some of these carriers are likely not independently owned and operated,
or have more than 1500 employees, we are unable at this time to
estimate with greater precision the number of LECs that would qualify
as small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 1371 small incumbent LECs that may
be affected by the rules adopted herein.
(3) Interexchange Carriers. 65. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services. The closest applicable definition
under SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies (SIC 4813). The most reliable
source of information regarding the number of IXCs nationwide of which
we are aware appears to be the data that we collect annually in
connection with TRS. According to our most recent data, 143 companies
reported that they were engaged in the provision of interexchange
services. Although some of these carriers are likely not independently
owned and operated, or have more than 1500 employees, we are unable at
this time to estimate with greater precision the number of IXCs that
would qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are fewer than 143 small entity
IXCs that may be affected by the decisions and rules adopted in this
Order.
(4) Competitive Access Providers. 66. Neither the Commission nor
SBA has developed a definition of small entities specifically
applicable to providers of competitive access services. The closest
applicable definition under SBA rules is for telephone communications
companies other than radiotelephone (wireless) companies (SIC 4813).
The most reliable source of information regarding the number of CAPs
nationwide of which we are aware appears to be the data that we collect
annually in connection with the TRS Worksheet. According to our most
recent data, 109 companies reported that they were engaged in the
provision of competitive access services. Although some of these
carriers are likely not independently owned and operated, or have more
than 1500 employees, we are unable at this time to estimate with
greater precision the number of CAPs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 109 small entity CAPs that may be affected by
the decisions and rules adopted herein.
(5) Cellular Service Carriers. 67. Neither the Commission nor SBA
has developed a definition of small entities specifically applicable to
providers of cellular services. The closest applicable definition under
SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies (SIC 4812). The most reliable
source of information regarding the number of cellular service carriers
nationwide of which we are aware appears to be the data that we collect
annually in connection with the TRS Worksheet. The TRS Worksheet places
cellular licensees and Personal Communications Service (``PCS'')
licensees in one group. According to the most recent data, there are
804 carriers reporting that they categorize themselves as either PCS or
cellular carriers. Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1500 employees, we are unable at this time to estimate with greater
precision the number of cellular service carriers that would qualify as
small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 804 small entity cellular service
carriers that may be affected by the decisions and rules adopted in
this Order.
(6) Mobile Service Carriers. 68. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
mobile service carriers, such as paging companies. The closest
applicable definition under SBA rules is for telephone communications
companies other than radiotelephone (wireless) companies (SIC 4813).
The most reliable source of information regarding the number of mobile
service carriers nationwide of which we are aware appears to be the
data that we collect annually in connection with the TRS Worksheet.
According to our most recent data, 172 companies reported that they
were engaged in the provision of mobile services. Although it seems
certain that some of these carriers are not independently owned and
operated, or have more than 1500 employees, we are unable at this time
to estimate with greater precision the number of mobile service
carriers that would qualify under SBA's definition. Consequently, we
estimate that there are fewer than 172 small entity mobile service
carriers that may be affected by the decisions and rules adopted in
this Order.
(7) Broadband Personal Communications Services (``PCS'') Licensees.
69. The broadband PCS spectrum is divided into six frequency blocks
designated A through F, and the Commission has held auctions for each
block. The Commission has defined ``small entity'' for Blocks C and F
as an entity that has average gross revenues of less than $40 million
in the three previous calendar years. For Block F, an additional
classification for ``very small business'' was added and is defined as
an entity that, together with their affiliates, has average gross
revenues of not more than $15 million for the preceding three calendar
years. These regulations defining ``small entity'' in the context of
broadband PCS auctions has been approved by the SBA. No small
businesses within the SBA-approved definition bid successfully for
licenses in Blocks A and B. There were 90 winning bidders that
qualified as small entities in the Block C auction. A total of 93 small
and very small business bidders won approximately 40% of the 1479
licenses for Blocks D, E, and F. However, licenses for blocks C through
F have not been awarded fully, therefore there are few, if any, small
businesses currently providing PCS services. Based on this information,
we conclude that the number of broadband PCS licensees will include the
90 winning C Block bidders and the 93 qualifying bidders in the D, E,
and F blocks, for a total of 183 small PCS providers as defined by the
SBA and the Commission's auction rules. We note that the TRS Worksheet
data track PCS licensees in the reporting category ``Cellular or
Personal Communications Service Carrier.'' As noted supra in the
paragraph regarding cellular carriers, according to the most recent
data, there are 804 carriers reporting that they place themselves in
this category.
(8) Specialized Mobile Radio (``SMR'') Licensees. 70. Pursuant to
47 CFR 90.814(b)(1) and 90.912(b)(1), the Commission has defined small
entity in auctions for geographic area 800 MHz and 900 MHz SMR licenses
as a firm that had average annual gross revenues of less than $15
million in the three previous calendar years. This definition of a
small entity in the context of 800 MHz and 900 MHz SMR has been
approved by the SBA. The rules adopted in this Order may apply to SMR
providers in the 800 MHz and 900 MHz bands that either hold geographic
area
[[Page 12023]]
licenses or have obtained extended implementation authorizations. We do
not know how many firms provide 800 MHz or 900 MHz geographic area SMR
service pursuant to extended implementation authorizations, nor how
many of these providers have annual revenues of less than $15 million.
We assume, for purposes of this FRFA, that all of the extended
implementation authorizations may be held by small entities which may
be affected by the decisions and rules adopted in this Order. We note
that the TRS Worksheet data track SMR licensees in the reporting
category ``Paging and Other Mobile Carriers.'' According to the most
recent data, there are 172 carriers, including SMR carriers, reporting
that they place themselves in this category.
71. The Commission recently held auctions for geographic area
licenses in the 900 MHz SMR band. There were 60 winning bidders that
qualified as small entities in the 900 MHz auction. Based on this
information, we conclude that the number of 900 MHz geographic area SMR
licensees affected by the rules adopted in this Order includes these 60
small entities. The Commission also recently held auctions for the 525
licenses for the upper 200 channels in the 800 MHz SMR band. There were
10 winning bidders that qualified as small entities in that auction.
Based on this information, we conclude that the number of geographic
area SMR licensees that may be affected by the rules adopted in this
Order also includes these 10 small entities. However, the Commission
has not yet determined how many licenses will be awarded for the lower
230 channels in the 800 MHz geographic area SMR auction. There is no
basis, moreover, on which to estimate how many small entities will win
these licenses. Given that nearly all radiotelephone companies have
fewer than 1000 employees and that no reliable estimate of the number
of prospective 800 MHz licensees for the lower 230 channels can be
made, we assume, for purposes of this FRFA, that all of the licenses
may be awarded to small entities that may be affected by the decisions
and rules adopted in this Order.
(9) Resellers. 72. Neither the Commission nor SBA has developed a
definition of small entities specifically applicable to resellers. The
closest applicable definition under SBA rules is for all telephone
communications companies (SIC 4812 and 4813). The most reliable source
of information regarding the number of resellers nationwide of which we
are aware appears to be the data that we collect annually in connection
with the TRS Worksheet. According to our most recent data, 339
companies reported that they were engaged in the resale of telephone
services. Although it seems certain that some of these carriers are not
independently owned and operated, or have more than 1500 employees, we
are unable at this time to estimate with greater precision the number
of resellers that would qualify as small business concerns under SBA's
definition. Consequently, we estimate that there are fewer than 339
small entity resellers that may be affected by the decisions and rules
adopted in this Order.
c. Wireless (Radiotelephone) Carriers (SIC 4812)
73. Although wireless carriers have not historically affixed their
equipment to utility poles, pursuant to the terms of the 1996 Act, such
entities are entitled to do so with rates consistent with the
Commission's rules discussed herein. SBA has developed a definition of
small entities for radiotelephone (wireless) companies. The Census
Bureau reports that there were 1176 such companies in operation for at
least one year at the end of 1992. According to SBA's definition, a
small business radiotelephone company is one employing no more than
1500 persons. The Census Bureau also reported that 1164 of those
radiotelephone companies had fewer than 1000 employees. Thus, even if
all of the remaining 12 companies had more than 1500 employees, there
would still be 1164 radiotelephone companies that might qualify as
small entities if they are independently owned and operated. Although
some of these carriers are likely not independently owned and operated,
we are unable at this time to estimate with greater precision the
number of radiotelephone carriers and service providers that would
qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are fewer than 1164 small entity
radiotelephone companies that may be affected by the rules adopted
herein.
d. Cable System Operators (SIC 4841)
74. The SBA has developed a definition of small entities for cable
and other pay television services, which includes all such companies
generating less than $11 million in revenue annually. This definition
includes cable systems operators, closed circuit television services,
direct broadcast satellite services, multipoint distribution systems,
satellite master antenna systems and subscription television services.
According to the Census Bureau, there were 1423 such cable and other
pay television services generating less than $11 million in revenue.
75. The Commission has developed its own definition of a small
cable system operator for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company,'' is one serving fewer
than 400,000 subscribers nationwide. Based on our most recent
information, we estimate that there were 1439 cable systems that
qualified as small cable system operators at the end of 1995. Since
then, some of those companies may have grown to serve over 400,000
subscribers, and others may have been involved in transactions that
caused them to be combined with other cable systems. Consequently, we
estimate that there are fewer than 1439 small entity cable system
operators that may be affected by the decisions and rules adopted in
this Order.
76. The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than one percent of
all subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that there are 61,700,000
subscribers in the United States. Therefore, we found that an operator
serving fewer than 617,000 subscribers shall be deemed a small
operator, if its annual revenues, when combined with the total annual
revenues of all of its affiliates, do not exceed $250 million in the
aggregate. Based on available data, we find that the number of cable
systems serving 617,000 subscribers or less totals 1450. Although it
seems certain that some of these cable system operators are affiliated
with entities whose gross annual revenues exceed $250,000,000, we are
unable at this time to estimate with greater precision the number of
cable system operators that would qualify as small cable systems under
the definition in the Communications Act.
e. Municipalities
77. The term ``small governmental jurisdiction'' is defined as
``governments of * * * districts, with a population of less than
50,000.'' There are 85,006 governmental entities in the United States.
This number includes such entities as states, counties, cities, utility
districts and school districts. We note that Section 224 specifically
excludes any utility which is cooperatively organized, or any person
owned by the Federal Government or any State. For this reason, we
believe that Section 224 will have minimal if any affect upon
[[Page 12024]]
small municipalities. Further, there are 18 states and the District of
Columbia that regulate pole attachments pursuant to Section 224(c)(1).
Of the 85,006 governmental entities, 38,978 are counties, cities and
towns. The remainder are primarily utility districts, school districts,
and states. Of the 38,978 counties, cities and towns, 37,566 or 96%,
have populations of fewer than 50,000.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
78. The rules adopted in this Order will require a change in
certain recordkeeping requirements. A utility pole owner will now have
to maintain specific records relating to the number of attachers for
purposes of determining and updating its presumptive average number of
attachers for computing the unusable space calculation for the
telecommunications carrier rate formula. The utility pole owner may
also require the services of an accountant to determine the new
telecommunications rate. In addition, our rules adopted herein will
require cable operators to notify the pole owner(s) if and when the
cable operator begins providing telecommunications services. We sought
comment in the Notice on whether small entities may be required to hire
additional staff and expend additional time and money to comply with
the proposals set forth in the Notice. In addition, we sought comment
as to whether there will be a disproportionate burden placed on small
entities in complying with the proposals set forth in this Order.
79. We did not receive any comments asserting that small entities
will be required to hire additional staff and expend additional time
and money to determine the appropriate rate for telecommunications
carriers under our new rules. SCBA was the only commenter to claim that
there will be a disproportionate burden placed on small entities. SCBA
claims that small cable systems will be particularly hurt by the
statutory exemption of cooperatives from the definition of utility
because small cable systems often operate in rural areas and therefore
necessarily attach their plant to rural telephone and electric
cooperatives. We note that SBCA does not appear to be claiming that our
rules will disproportionately burden small cable systems, but that
where our rules do not apply, small cable system operators will be
disproportionately harmed. Because the exemption for cooperatives was
set forth by Congress clearly in Section 224(a)(1), the Commission is
unable to address SBCA's concerns in this regard. We conclude that our
rules will not disproportionately burden small entities.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
80. The 1996 Act requires the Commission to adopt a
telecommunications carrier methodology within two years of the
enactment of the 1996 Act. We sought comment in the Notice on various
alternative ways of implementing the statutory requirements and any
other potential impact of these proposals on small business entities.
We sought comment on the implementation of a methodology to ensure
just, reasonable and nondiscriminatory pole attachment and conduit
rates for telecommunications carriers. We also sought comment on how to
develop a rights-of-way rate methodology for telecommunications
carriers.
81. In accordance with the RFA, the Commission has endeavored to
minimize significant impact on small entities. With regard to our pole
attachments complaint process, we rejected a proposal that we establish
an amount in controversy as a minimum threshold for filing a complaint
because, among other things, it might preclude small entities from
obtaining relief from unjust, unreasonable or discriminatory pole
attachment rates. We also rejected as too burdensome the suggestion
that cable operators be required to certify annually as to whether they
are providing telecommunications services. To minimize the burden on
utility pole owners, including those that qualify as small entities,
and to promote certainty and efficiency in determining the pole
attachment rate for telecommunications carriers, we have maintained our
formula presumptions, including our one-foot presumption of usable
space. We also determined that, as an alternative to requiring utility
pole owners to conduct potentially expensive pole-by-pole inventories
for the number of attachers on each pole, we would require pole owners
to develop, through information it possesses, a presumptive average
number of attachers, based on location (i.e., urban, rural and
urbanized).
82. Report to Congress: The Commission will send a copy of the
Order, including this FRFA, in a report to be sent to Congress pursuant
to the Small Business Regulatory Enforcement Fairness Act of 1996, see
5 U.S.C. Sec. 801(a)(1)(A).
IX. Ordering clauses
83. It is Ordered that, pursuant to Sections 1, 4(i) and 224 of the
Communications Act of 1934, as amended, 47 U.S.C. Secs. 151, 154(i) and
224, the Commission's rules are hereby amended.
84. It is further Ordered that Sec. 1.1402 of the Commission's
rules will become effective April 13, 1998, and that Secs. 1.1403,
1.1404, 1.1409, 1.1417 and 1.1418 of the Commission's rules will become
effective July 30, 1998, unless the Commission publishes a notice
before that date stating that the Office of Management and Budget
(``OMB'') has not approved the information collection requirements
contained in the rules.
85. It is further Ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Report and Order, including the Final Regulatory Flexibility Analyses,
to the Chief Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 1
Practice and procedure.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rules Changes
For the reasons stated in the preamble, the Federal Communications
Commission amends 47 CFR Part 1 as set forth below:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise
noted.
2. Section 1.1402 is amended by revising paragraph (c) and by
adding new paragraphs (i), (j), (k), (l) and (m) to read as follows:
Sec. 1.1402 Definitions.
* * * * *
(c) With respect to poles, the term usable space means the space on
a utility pole above the minimum grade level which can be used for the
attachment of wires, cables, and associated equipment. With respect to
conduit, the term usable space means space within a conduit system
which is available, or which could, with reasonable effort and expense,
be made available, for the purpose of installing wires, cable and
associated equipment for telecommunications services.
* * * * *
[[Page 12025]]
(i) The term conduit means a pipe placed in the ground in which
cables and/or wires may be installed.
(j) The term conduit system means structures that provide physical
protection for cable and/or wires that allow new cables to be added
along a route.
(k) The term duct means a single enclosed raceway for conductors,
cable and/or wire.
(l) With respect to poles, the term unusable space means the space
on a utility pole below the usable space, including the amount required
to set the depth of the pole. With respect to conduit, the term
unusable space means space involved in the construction of a conduit
system, without which there would be no usable space, and maintenance
ducts reserved for the benefit of all conduit users.
(m) The term attaching entity includes cable operators,
telecommunications carriers, incumbent local exchange carriers,
utilities and governmental entities providing cable or
telecommunications services.
3. Section 1.1403 is amended by revising the section heading and
adding new paragraph (e) to read as follows:
Sec. 1.1403 Duty to provide access; modifications; notice of removal,
increase or modification; petition for temporary stay; and cable
operator notice.
* * * * *
(e) Cable operators must notify pole owners upon offering
telecommunications services.
4. Section 1.1404 is by amended by redesignating paragraphs
(g)(12), (h), (i), (j) and (k) as (g)(13), (k), (l), (m) and (n), and
adding new paragraphs (g)(12), (h), (i) and (j) to read as follows:
Sec. 1.1404 Complaint.
* * * * *
(g) * * *
(12) The average amount of unusable space per pole for those poles
used for pole attachments (a 24 foot presumption may be used in lieu of
actual measurement, but the presumption may be rebutted); and
* * * * *
(h) With respect to attachments within a duct or conduit system,
where it is claimed that either a rate is unjust or unreasonable, or a
term or condition is unjust or unreasonable and examination of such
term or condition requires review of the associated rate, the complaint
shall provide data and information in support of said claim. The data
and information shall include, where applicable, equivalent information
as specified in paragraph (g) of this section.
(i) With respect to rights-of-way, where it is claimed that either
a rate is unjust or unreasonable, or a term or condition is unjust or
unreasonable and examination of such term or condition requires review
of the associated rate, the complaint shall provide data and
information in support of said claim. The data and information shall
include, where applicable, equivalent information as specified in
paragraph (g) of this section.
(j) If any of the information and data required in paragraphs (g),
(h) and (i) of this section is not provided to the cable television
operator or telecommunications carrier by the utility upon reasonable
request, the cable television operator or telecommunications carrier
shall include a statement indicating the steps taken to obtain the
information from the utility, including the dates of all requests. No
complaint filed by a cable television operator or telecommunications
carrier shall be dismissed where the utility has failed to provide the
information required under paragraphs (g), (h) or (i) of this section,
as applicable, after such reasonable request. A utility must supply a
cable television operator or telecommunications carrier the information
required in paragraph (g), (h) or (i) of this section, as applicable,
along with the supporting pages from its FERC Form 1, FCC Form M, or
other report to a regulatory body, within 30 days of the request by the
cable television operator or telecommunications carrier. The cable
television operator or telecommunications carrier, in turn, shall
submit these pages with its complaint. If the utility did not supply
these pages to the cable television operator or telecommunications
carrier in response to the information request, the utility shall
supply this information in its response to the complaint.
* * * * *
5. Section 1.1409 is amended by revising paragraph (e) and adding a
new paragraph (f) to read as follows:
Sec. 1.1409 Commission consideration of the complaint.
* * * * *
(e) When parties fail to resolve a dispute regarding charges for
pole attachments and the Commission's complaint procedures under
Section 1.1404 are invoked, the Commission will apply the following
formulas for determining a maximum just and reasonable rate:
(1) The following formula shall apply to attachments by cable
operators providing cable services. This formula shall also apply to
attachments by any telecommunications carrier (to the extent such
carrier is not a party to a pole attachment agreement) or cable
operator providing telecommunications services until February 8, 2001:
[GRAPHIC] [TIFF OMITTED] TR12MR98.018
(2) Subject to paragraph (f) the following formula shall apply to
pole attachments on a pole by any telecommunications carrier (to the
extent such carrier is not a party to a pole attachment agreement) or
cable operator providing telecommunications services beginning on
February 8, 2001:
Maximum Pole Rate = Unusable Space Factor + Usable Space Factor
For purposes of this formula, the unusable space factor, as defined
under Section 1.1417(b), and the usable space factor, as defined under
Section 1.1418(b), shall apply per pole.
(3) Subject to paragraph (f) the following formula shall apply to
pole attachments within a conduit system beginning on February 8, 2001:
Maximum Conduit Rate = Conduit Unusable Space Factor + Conduit Usable
Space Factor
For purposes of this formula, the conduit unusable space factor, as
defined under Section 1.1417(c), and the conduit usable space factor,
as defined under Section 1.1418(c), shall apply to each linear foot
occupied.
(f) Paragraphs (e)(2) and (e)(3) of this section shall become
effective February 8, 2001 (i.e., five years after the effective date
of the Telecommunications Act of 1996). Any increase in the rates for
pole attachments that result from the adoption of such regulations
shall be phased in over a period of five years beginning on the
effective date of such regulations in equal annual increments. The
five-year phase-in is to apply to rate increases only. Rate reductions
are to be
[[Page 12026]]
implemented immediately. The determination of any rate increase shall
be based on data currently available at the time of the calculation of
the rate increase.
6. Section 1.1417 is added to read as follows:
Sec. 1.1417 Allocation of Unusable Space Costs.
(a) A utility shall apportion the cost of providing unusable space
on a pole, duct, conduit, or right-of-way so that such apportionment
equals two-thirds of the costs of providing unusable space that would
be allocated to such entity under an equal apportionment of such costs
among all entities.
(b) With respect to poles, the following formula shall be used to
establish the allocation of unusable space costs on a pole for
telecommunications carriers and cable operators providing
telecommunications services:
[GRAPHIC] [TIFF OMITTED] TR12MR98.019
All attaching entities shall be counted as separate attaching entities
for purposes of apportioning the costs of unusable space.
(c) With respect to conduit, the following formula shall be used to
establish the allocation of unusable space costs for telecommunications
carriers and cable operators providing telecommunications services
within a conduit:
[GRAPHIC] [TIFF OMITTED] TR12MR98.020
All attaching entities with lines occupying any portion of a conduit
system shall be counted as separate attaching entities for purposes of
apportioning the costs of unusable space.
(d) Each utility shall establish a presumptive average number of
attachers for each of its rural, urban, and urbanized service areas (as
defined by the Bureau of Census of the Department of Commerce).
(1) Each utility shall, upon request, provide all attaching
entities and all entities seeking access the methodology and
information upon which the utilities presumptive average number of
attachers is based.
(2) Each utility is required to exercise good faith in establishing
and updating its presumptive average number of attachers.
(3) The presumptive average number of attachers may be challenged
by an attaching entity by submitting information demonstrating why the
utility's presumptive average is incorrect. The attaching entity should
also submit what it believes should be the presumptive average and the
methodology used. Where a complete inspection is impractical, a
statistically sound survey may be submitted.
(4) Upon successful challenge of the existing presumptive average
number of attachers, the resulting data determined shall be used by the
utility as the presumptive number of attachers within the rate formula.
7. Section 1.1418 is added to read as follows:
Sec. 1.1418 Allocation of Usable Space Costs.
(a) A utility shall apportion the amount of usable space among all
entities according to the percentage of usable space required by each
entity.
(b) With respect to poles, the following formula shall be used to
establish the allocation of usable space costs on a pole for
telecommunications carriers and cable operators providing
telecommunications services:
[GRAPHIC] [TIFF OMITTED] TR12MR98.021
The presumptive 13.5 feet of usable space may be used in lieu of the
actual measurement of the total amount of usable space. The presumptive
37.5 feet of pole height may be used in lieu of the actual measurement
of each pole. The presumptive one foot of space occupied by attachment
is applicable to both cable operators and telecommunications carriers.
(c) With respect to conduit, the following formula shall be used to
establish the allocation of usable space costs within a conduit system:
[GRAPHIC] [TIFF OMITTED] TR12MR98.022
[[Page 12027]]
With respect to conduit, an attacher is presumed to occupy one half-
duct of usable space.
[FR Doc. 98-5402 Filed 3-11-98; 8:45 am]
BILLING CODE 6712-01-P
