Pole Attachments

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 97-151; FCC 97-234]

Pole Attachments

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission has adopted a Notice of Proposed Rulemaking

seeking comment on its continued implementation of the pole attachment

provisions of the Telecommunications Act of 1996. We seek comment on a

methodology to ensure just, reasonable, and nondiscriminatory maximum

pole attachment and conduit rates for telecommunications carriers, and

on how to ensure that rates charged for use of rights of way are just,

reasonable and nondiscriminatory. The Commission explores this issue to

fulfill its obligation under the Telecommunications Act of 1996 to

adopt rules concerning pole attachments. The item will help the

Commission create a record on this issue, which will assist the

Commission in designing new or amending current regulations concerning

pole attachments.

DATES: Comments are due on or before September 26, 1997 and reply

comments on or before October 14, 1997.

FOR FURTHER INFORMATION CONTACT: Larry Walke, Cable Services Bureau,

(202) 418-7200. For additional information concerning the information

collections contained herein, contact Judy Boley at 202-418-0217, or

via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Notice of Proposed Rulemaking in CS Docket No. 97-151, FCC 97-234,

adopted July 1, 1997 and released August 12, 1997. 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, DC 20554, and may be

[[Page 43964]]

purchased from the Commission's copy contractor, International

Transcription Service, (202) 857-3800, 1919 M Street, NW, Washington,

DC 20554.

I. Introduction

1. In this Notice of Proposed Rulemaking (``NPRM''), the Commission

continues its implementation of section 703 of the Telecommunications

Act of 1996 (``1996 Act''), Pub. L. 104-104, 110 Stat. 61, 149-151

(February 8, 1996), by proposing amendments to the Commission's rules

relating to pole attachments. The 1996 Act expanded the scope of

section 224 of the Communications Act of 1934 (``Communications Act'')

to telecommunications carriers and created a distinction between pole

attachments used by cable systems solely to provide cable service and

pole attachments used by cable systems or by telecommunications

carriers to provide any telecommunications service. In this NPRM we

seek comment on the implementation of a methodology to ensure just,

reasonable, and nondiscriminatory maximum pole attachment and conduit

rates for telecommunications carriers. We also seek comment on how to

ensure that rates charged for use of rights of way are just, reasonable

and nondiscriminatory.

2. The Commission must prescribe the new methodology for

telecommunications carriers within two years of enactment of the 1996

Act, with these rules becoming effective five years from enactment.

Section 224(d)(3) of the Communications Act applies the Commission's

existing pole attachment methodology to both cable television systems

and telecommunications carriers until the effective date of the new

formula. We note that section 257 of the Communications Act provides

that the Commission promote policies that eliminate ``* * * market

entry barriers for entrepreneurs and other small businesses in the

provision and ownership of telecommunications services and information

services. * * *''

II. Background

A. Prior to the 1996 Act

3. It is common practice for telecommunications carriers to lease

space from utilities on poles or in ducts, conduits, or rights-of-way,

in order to provide telecommunications services. The federal government

did not regulate these arrangements until 1978, when Congress enacted

section 224 of the Communications Act in response to concerns raised by

cable television operators. Section 224 was enacted to stop utilities

from ``unfair pole attachment practices * * * and to minimize the

effect of unjust or unreasonable pole attachment practices on the wider

development of cable television service to the public.''

4. Section 224(b)(1) grants the Commission authority to regulate

the rates, terms, and conditions governing pole attachments to ensure

that they are just and reasonable. Generally, the Commission does not

have authority where a state regulates pole attachment rates, terms,

and conditions. Section 224(d)(1) defines a just and reasonable rate as

ranging from the statutory minimum (incremental costs) to the statutory

maximum (fully allocated costs). Incremental costs include pre-

construction survey, engineering, make-ready and change-out costs

incurred in preparing for cable attachments. Congress expected pole

attachment rates based on incremental costs to be low because utilities

generally recover the make-ready or change-out charges directly from

cable systems. Fully allocated costs refer to the portion of operating

expenses and capital costs that a utility incurs in owning and

maintaining poles that is equal to the portion of usable pole space

that is occupied by an attacher.

5. In 1978, the Commission implemented the original section 224 by

issuing rules governing pole attachment issues and establishing a basic

formula for pole attachment rates. Subsequent Commission orders have

reconsidered, amended and clarified the Commission's methodology for

determining rates, the amount of usable and unusable space on a pole

and the amount of space occupied by cable systems. In addition, the

Commission has adjusted complaint procedures, including the information

accompanying complaints.

B. The 1996 Act

6. The 1996 Act amended section 224 in important respects. Most

prominently, it created a right of access for telecommunications

carriers. New sections 224 (d)(3), (e), (f), (g), (h) and (i)

proscribed expanded access and established a new methodology for

determining just and reasonable rates for telecommunications carriers.

The 1996 Act also amended the definitions of ``utility'' and ``pole

attachment'' in sections 224 (a)(1) and (a)(4); recognized a State's

authority to regulate pole attachments involving telecommunications

carriers in sections 224 (c)(1) and (c)(2)(B); and added section

224(a)(5) to exempt incumbent local exchange carriers (``LECs'') from

the definition of telecommunications carriers.

7. Under section 224(d)(3) the Commission's existing rules are

applicable to both cable television systems and to telecommunications

carriers until such time as the new rules become effective. On March

14, 1997, the Commission released a Notice of Proposed Rulemaking,

Amendment of Rules and Policies Governing Pole Attachments, CS Docket

No. 97-98 (``Pole Attachment NPRM''), 62 FR 18074 (April 14, 1997),

relating to the existing formula for pole attachments. Parties need not

file duplicate comments to address issues raised in that proceeding. We

have determined that, to the extent such comments are relevant in the

instant proceeding, they will be incorporated by reference within this

proceeding. That proceeding specifically seeks comment on the

Commission's use of the current presumptions, on carrying charge and

rate of return elements of the formula, on the use of gross versus net

data, and on a new conduit methodology. Commenters to the Pole

Attachment NPRM are encouraged to distinguish their comments in that

proceeding if they vary from those filed in response to this NPRM, as

well as providing comment on the new and different issues raised in

this NPRM as a result of 1996 Act. We invite further comment in this

proceeding to establish a full record for attachments made by cable

systems offering telecommunications services. In Implementation of

Section 703 of the Telecommunications Act of 1996, CS Docket No. 96-166

(``Self-Effectuating Order''), 61 FR 43023 (August 20, 1996), the

Commission amended its rules to reflect the self-effectuating additions

and revisions to section 224. In Implementation of the Local

Competition Provisions in the Telecommunications Act of 1996 (``Local

Competition Provisions Order''), 61 FR 45476 (August 29, 1996), the

Commission implemented the access provisions of the 1996 Act, sections

224 (c)(1), (f) and (h).

8. Most significantly for purposes of this NPRM, the 1996 Act added

the following provisions of section 224(e):

(e)(1) The Commission shall, no later than 2 years after the

date of enactment of the Telecommunications Act of 1996, prescribe

regulations in accordance with this subsection to govern charges for

pole attachments used by telecommunication carriers to provide

telecommunications services, when the parties fail to resolve a

dispute over such charges. Such regulations shall ensure that a

utility charges just, reasonable, and nondiscriminatory rates for

such pole attachments.

(e)(2) A utility shall apportion the cost of providing space on

a pole, duct, conduit, or right-of-way other than usable space among

[[Page 43965]]

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.

(e)(3) A utility shall apportion the cost of providing usable

space among all entities according to the percentage of usable space

required for each entity.

(e)(4) The regulations required under paragraph (1) shall become

effective five years after enactment of the Telecommunications Act

of 1996. Any increase in the rates for pole attachments that result

from the adoption of the regulations required by this subsection

shall be phased in equal annual increments over a period of five

years beginning on the effective date of such regulations.

9. This NPRM considers the portion of the costs of a bare pole to

be included in the pole attachment rate. Currently, a portion of the

total annual cost of a pole is included in the pole attachment rate

based on the portion of the usable space occupied by the attaching

entity. This formula will continue to be applicable to cable systems

providing only cable service. However, for cable systems and

telecommunications carriers providing telecommunications services, the

portion of the total annual cost included in the pole attachment rate

will be determined under a more delineated method. This method

differentially allocates the costs of the portion of the total pole

cost associated with the usable portion of the pole and the portion of

the total pole cost associated with the unusable portion of the pole.

Generally, this is expected to result, at least initially, in the

inclusion of greater portions of the carrying charge components in the

rate. As the number of attaching entities increases, however, smaller

portions of the carrying charge will be included in each entity's rate.

As the carrying charge rate is spread amongst the attaching entities,

the overall rate may become lower over time because the total cost will

be spread over all attaching entities.

10. Section 224(e) requires two discrete steps. First, two-thirds

of the costs relating to the other than usable space on the pole, duct,

conduit or right-of-way will be apportioned equally among all attaching

telecommunications carriers. Second, telecommunications carriers will

also be apportioned the cost of usable space, according to the amount

of usable space the entity requires.

III. Preference for Negotiated Agreements

11. In proposing a methodology to implement section 224(e), we note

that the Commission's role is limited to circumstances ``when the

parties fail to resolve a dispute over such charges.'' Thus,

negotiations between a utility and an attacher should continue to be

the primary means by which pole attachment issues are resolved. We

believe that an attacher must attempt to negotiate and resolve its

dispute with a utility before filing a complaint with the Commission.

However, we also note that in the 1996 Act, Congress recognized the

importance of access in enhancing competition in telecommunications

markets and that parties in a pole attachment negotiation do not have

equal bargaining positions. Congress also recognized that the potential

for significant barriers to competition emanating from the lack of

access or unreasonable rates is significant. Accordingly, we propose to

use our current rule, which requires a complainant to include a brief

summary of all steps taken to resolve its dispute before filing a

complaint. 47 CFR 1.1404(i). ``The complaint shall include a brief

summary of all steps taken to resolve the problem prior to filing. If

no such steps were taken, the complaint shall state the reason(s) why

it believed such steps are fruitless.'' We seek comment on our

tentative conclusions and on the proposed use of our current rule.

IV. Attachment Space Use

12. Attachment space use must conform to the standards of section

224(f)(2) with respect to safety, reliability and generally applicable

engineering standards. When an attaching entity conforms to these

standards, the issue remaining is whether a utility may impose

additional limits on the use of the space. We note, for example, in the

context of a pole attachment by a cable television system which also

provides nonvideo communication, the Commission has determined that a

utility may not charge different pole attachment rates depending on the

type of service provided by the cable operator. See Heritage

Cablevision Assocs. of Dallas, L.P. v. Texas Utils. Elec. Co., 6 FCC

Rcd. 7099 (1991), aff'd sub nom. Texas Utils. Elec. Co. v. FCC, 997

F.2d 925 (D.C. Cir. 1993). The Commission found that ``Section 224

protects TCI's pole attachments within its franchise service area which

support equipment employed to provide nonvideo services in addition to

video and other traditional cable television services'' and that the

``imposition of a separate charge for TCI's cable system pole

attachments for nontraditional services violates section 224's

prohibition against unjust and unreasonable pole attachment rates,

terms and conditions.'' Id. at 7107. We seek comment on whether our

holding in Heritage should be extended to other circumstances where

utilities attempt to condition or limit the use of attachment space.

13. Given the pro-competitive intent of the 1996 Act, we

tentatively conclude that telecommunications carriers should be

permitted to overlash their existing lines with additional fiber when

building out their system. If a telecommunications carrier is allowed

to overlash its own lines, should it be permitted to allow third

parties to use the overlashed facility? Moreover, we seek comment

whether a cable system or telecommunications carrier may allow a third

party to use dark fiber in its original lines. Where an attaching

entity has overlashed with fiber, should it be permitted to allow third

parties to use dark fiber within its overlashed line? We inquire

whether a third party should be permitted to overlash to an existing

cable system or telecommunications carriers' attachment. We also seek

information whether there are inherent differences between the lines of

cable systems and those of telecommunications carriers that warrant a

difference in treatment between overlashing by cable systems and

telecommunications carriers. Similarly, we request that commenters

discuss whether, and to what extent, overlashing facilitates the

provision of services other than cable service by cable operators, such

as Internet access and local telephone service. We seek information on

how these situations should be treated for the purpose of counting

entities in the process of establishing a just and reasonable rate. We

seek comment on the contractual obligations that utilities should be

permitted to require of attaching entities who lease excess dark fiber

or allow overlashing. We inquire how best to promote the rapid

deployment of competitive telecommunications services in light of these

issues.

V. Charges for Attaching

A. Presumptions

14. In a previous order, the Commission found that ``the most

commonly used poles are 35 and 40 feet high, with usable spaces of 11

to 16 feet, respectively.'' The Commission recognized the NESC

guideline that 18 feet of the pole space must be reserved for ground

clearance and that six feet of pole space is for setting the depth of

the pole. To avoid a pole by pole rate calculation, the Commission

adopted rebuttable presumptions of an average pole height of 37.5 feet,

an average

[[Page 43966]]

amount of usable space of 13.5 feet, and an average amount of 24 feet

of unusable space on a pole.

15. A group of electrical utilities recently filed a Whitepaper

(``Whitepaper'') in anticipation of this NPRM. The Whitepaper suggests

that an increase in the current presumptive pole height is appropriate.

The Whitepaper asserts that over time, and with increased demand, the

average pole height has increased to an average of 40 feet. At the same

time, the Whitepaper contends that the usable space presumption should

also be changed from 13.5 feet to 11 feet. We seek comment in this

proceeding to establish a full record for attachments made by

telecommunications carriers under the 1996 Act. We also seek comment on

an issue raised by Duquesne Light Company (``Duquesne'') in its

reconsideration petition of the Commission's decision in the Local

Competition Provisions proceeding. Specifically, Duquesne advocates

that the number of physical attachments of an attaching entity is not

necessarily reflective of the burden, and therefore the costs, relating

to the attachment. Duquesne states that varying attachments place

different burdens on the pole and proposes that any presumption include

factors addressing weight and wind loads.

16. The presumptions were established because developing a data

base for each utility is impractical. We seek comment on the need for

presumptions and whether attachments by telecommunications carriers are

sufficiently different or unique to cause us to reevaluate our

presumptions. Specifically, we seek comment on the amount of usable

space occupied by telecommunications carriers and on whether the

presumptive one foot used for cable is applicable to telecommunications

carriers generally.

17. We also propose that the Commission's approach to the safety

space required to be maintained between power lines and communications

lines should also apply to telecommunications carriers. The Commission

has always recognized the NESC requirement that a 40 inch safety space

must exist between electric lines and communication lines. The NESC

requires a 40 inch safety space to minimize the possibility of physical

contact by employees working on cable television or telecommunications

attachments with the potentially lethal electric power lines. We

tentatively conclude that the safety space emanates from a utility's

requirement to comply with the NESC and should properly be assigned to

the utility as part of its usable space.

B. Allocating the Cost of Other Than Usable Space

18. Section 224(e)(2) states 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 usable space that

would be allocated to such entity under an equal apportionment of such

costs among all attaching entities.'' This requirement translates to

the following basic formula:

[GRAPHIC] [TIFF OMITTED] TP18AU97.000

19. Under section 224(e)(2), the number of entities with pole

attachments on each pole affects directly the rate charged. Defining

what an attacher is and establishing how to calculate the number of

attachers is critical to formulating a proper cost allocation method

pursuant to section 224(e)(2). The more attaching entities there are,

the more widely the costs relating to the unusable space are spread. We

propose, consistent with the statutory language, requiring equal

apportionment of two-thirds of the costs of providing unusable space

among all attaching entities, that any telecommunications carrier, or

cable operator or LEC attaching to a pole be counted as a separate

entity for the purposes of the apportionment of two-thirds of the costs

of the unusable space. We also propose that such costs will be

apportioned equally to all such attaching entities. We seek comment on

these tentative conclusions. We also note that section 224(g) requires

that a utility providing telecommunications services impute to its

costs of providing service an amount equal to the rate for which such

company would be liable under this section. We tentatively conclude

that where a utility is providing telecommunications services, such

entity would also be counted as an attaching entity for the purposes of

allocating the costs of unusable space under section 224(e). We seek

comment on this tentative conclusion.

20. We also tentatively conclude that an incumbent LEC with

attachments on a pole should be counted for the purposes of

apportionment of the costs of unusable space. We note that the

definition of telecommunications carrier excludes incumbent LECs and a

pole attachment is defined as any attachment by a cable television

system or a provider of telecommunications service, and seek comment on

how these definitions impact our tentative conclusion. We also seek

comment on the general premise that counts any telecommunications

carrier as a separate attaching entity for each foot, or partial

increment of a foot, it occupies on the pole and on such a

methodology's consistency with the statutory requirement in section

224(e)(2) for equal apportionment among all attaching entities. We also

seek information on alternative methodologies to apportion costs, such

as on a proportion of space occupied basis.

21. Similarly, we propose that attachments made by a government

agency be included. A utility may be required under its franchise or

statutory authorization to provide certain attachments for public use.

These include traffic signals, festoon lighting, or specific pedestrian

lighting. Often, the agency does not directly pay for the attachment.

Since the government agency is using space on the pole, we propose that

its attachments be counted for purposes of allocating the cost of the

unusable space. This cost would be borne by the pole owner, since it

relates to a responsibility under its franchise or statutory

authorization. We seek comment on this tentative conclusion.

22. We seek comment on how entities that have either overlashed to

an existing attachment or are using dark fiber within the initial

attachment of another entity should be counted for the purpose of

allocation of costs of unusable space. Should they be considered as

separate attachers for purposes of counting the number of entities on a

pole?

23. We believe a pole-by-pole inventory of the number of entities

on each pole would be too costly. We propose that each utility develop,

through the information it possesses, a presumptive average number of

attachers on one of its poles. We also

[[Page 43967]]

propose that telecommunications carriers be provided the methodology

and information by which a utility's presumption was determined. We

seek comment on this proposal and whether any parameters should be

established for a utility to develop its presumptive average. We also

seek comment on whether a utility should develop averages for areas

that share similar characteristics relating to pole attachments and

whether different presumptions should exist for urban, suburban, and

rural areas. We seek comment on the criteria to develop and evaluate

any presumption. As an alternative to a pole by pole inventory by the

facility owner, we seek comment on whether the Commission should

determine the average number of attachments. We inquire whether the

Commission should initiate a survey to gain the necessary data to

develop a rebuttable presumption regarding the number of attachments.

We seek comment on the difficulties of administrating a survey, any

additional data required, and parameters of accuracy and reliability

required for fair rate determination.

24. Where a presumptive number of attachers is developed by the

Commission and used to determine attachment rates, we believe that a

utility, telecommunications carrier or cable operator may challenge the

presumption. The challenging party must initially establish that the

presumption is not proper under the circumstances by identifying and

calculating the number of attachments on the poles and submitting 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. Where a presumption is challenged, the

challenged party will be afforded an opportunity to justify the

presumption. Where a presumption is overcome either by submission of

actual data or by survey, the resulting figures would be used as the

factor (number of attachers) within the formula to calculate the rate.

We seek comment on these issues.

C. Allocating the Cost of Usable Space

25. The Commission has adopted the following generally applicable

formula for calculating the maximum rate:

[GRAPHIC] [TIFF OMITTED] TP18AU97.001

26. The first component of the formula, space occupied by

attachment divided by the total usable space on a pole, is used to

calculate the percentage of usable space that the attachment occupies

on an average pole. The Commission's rules define usable space as the

space on a utility pole above the minimum grade level that can be used

for the attachment of wires, cables and associated equipment. As

discussed, for cable television system attachments, the Commission's

Petition to Adopt Rules Concerning Usable Space on Utility Poles

assigned one foot of usable space per pole to cable systems.

27. The second component of the overall formula is the net cost of

a bare pole. The component is derived from the gross investment in

poles less accumulated depreciation and accumulated deferred income

taxes. An adjustment is made to a utility's net pole investment to

eliminate the investment in crossarms and other non-pole related items.

To accomplish this, the Commission decided to reduce net pole

investment by 15% for electric utilities and 5% for telephone

companies. The two factors reflect the differences between telephone

companies' and electric utilities' investment in crossarms and other

non-pole investment that is recorded in the pole accounts. Electric

utilities typically have more investment in crossarms than telephone

companies. The 0.85 factor for electric utilities recognizes this

difference. To arrive at the net cost of a bare pole, a factor, 0.85

for electric utilities or 0.95 for telephone companies, is multiplied

by the net investment per pole, as shown in the following formula:

[GRAPHIC] [TIFF OMITTED] TP18AU97.002

This formula rearranges the Pole Attachment Order's net cost of a

bare pole formula for presentation purposes. Net pole investment is

defined as the gross investment in poles less accumulated depreciation

and accumulated deferred income taxes with respect to pole investment.

We seek comment on the use of these factors for arriving at the net

cost of bare pole.

28. The final component of the overall pole attachment formula is

the carrying charge rate. Carrying charges are the costs incurred by

the utility in owning and maintaining poles regardless of the presence

of pole attachments. The carrying charges include the utility's

administrative, maintenance, and depreciation expenses, a return on

investment, and taxes. To help calculate the carrying charge rate, we

developed a formula that relates each of these components to the

utility's net investment.

29. Section 224(e)(3) states 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.'' This is the

allocation methodology developed by the Commission as applicable to

cable systems--except that under the Commission's method the allocation

rate is applied to the full cost of the pole. As noted, in the Pole

Attachment NPRM, we are seeking comment on various aspects of the

current formula including the current space presumptions. We propose to

continue using our current rate methodology, modified to reflect only

the cost associated with the usable space, because we believe this

methodology to be as applicable to telecommunications carriers as to

cable systems. Thus, we would apply the following formula:

[[Page 43968]]

[GRAPHIC] [TIFF OMITTED] TP18AU97.003

30. Alternatively, as we did in the Pole Attachment NPRM, we seek

additional comment in the context of this proceeding on calculating a

telecommunications carrier pole attachment rate using gross book costs

instead of net book costs. Under this approach the cost of a bare pole

and most carrying charges are computed using gross book costs. The rate

of return and the income tax carrying charges must continue to be

computed using net book costs because utility prices are generally set

to allow them to earn an authorized rate of return on their net book

costs. We currently compute the carrying charge elements for

maintenance, depreciation and administrative expenses, as well as for

return on investment and taxes, using net book costs. Under the

proposed alternative, the carrying charge elements for maintenance,

depreciation and administrative expenses would be calculated using

gross book costs for both total plant investment and pole investment.

For example, the administrative expense element is currently calculated

by dividing total administrative and general expenses by net book cost.

This yields a percentage that is applied to the net book cost of a bare

pole. In contrast, a gross book cost approach to allocation would

divide total administrative and general expenses by gross book costs.

The resulting percentage would then be applied to the gross book cost

of the bare pole. Prior to the Pole Attachment Order, the Commission

had decided certain cases using gross book costs to calculate maximum

reasonable pole attachment rates. In addition, the Commission has

stated that if both parties to a pole attachment complaint agree, the

pole attachment rates may be computed using gross book costs. The use

of gross book costs appears consistent with the legislative history

supporting section 224, which indicates that the Commission has

significant discretion in selecting a methodology for determining just

and reasonable pole attachment rates. We seek comment on this

alternative to ensure a complete record in order to create a reasonable

telecommunications carrier pole attachment rate methodology. We note,

however, that because of the way administrative costs are allocated,

the application of gross book costs may produce a slightly higher rate.

We seek comment on whether this assumption is true and if so what the

impact of this change would be.

31. We also seek comment on the applicability of the above formula

when an entity either has overlashed to an existing attachment or is

using dark fiber within the initial attachment of another entity.

Should we still continue to apply the presumptive one foot of space

occupied by the attacher when allocating the cost of the usable space

or should the entity overlashing or using dark fiber be considered a

separate attacher, with each using one foot of usable space? As noted

previously, if the presumptive one foot is not appropriate, we inquire

as to what presumption should be used?

VI. Conduit Attachment Issues

A. Application of the Pole Attachment Formula to Conduits

32. Conduit systems are structures that provide physical protection

for cables and also allow new cables to be added inexpensively along a

route, over a long period of time, without having to dig up the streets

each time a new cable is placed. Conduit systems are usually multiple-

duct structures with standardized duct diameters. The duct diameter is

the principle factor for determining the maximum number of cables that

can be placed in a duct. We seek additional comment on the differences

between conduit owned and/or used by cable operators and

telecommunications carriers and conduit owned and or used by electric

or other utilities. We understand that there are inherent differences

in the safety aspects of the latter conduits and ducts, and we seek

comment on physical limitations that would affect the rate for such

facilities. Where such conduit is shared, we seek information on the

mechanism for establishing a just and reasonable rate. We seek comment

on the distribution of usable and unusable space within the conduit or

duct and how the determination for such space is made. In this NPRM we

are not addressing the access or safety provisions, as those issues are

more appropriately addressed in the context of the Local Competition

Provisions Order. Rather, we are interested in the application of our

formula for the purpose of setting just and reasonable rates. Our

present formula does not appear to take such differences into

consideration, and our experience in resolving disputes relating to

electric or other utility conduit has been limited.

33. Usable space is based on the number of ducts and the diameter

of the ducts. 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. In the Pole Attachment

NPRM, the Commission has sought comment on a proposed conduit

methodology. Moreover, we propose a half-duct methodology as the amount

of space used by a cable system or telecommunications carrier that is,

the space occupied by a cable system was generally a half-duct.

34. The proposed usable space formula for users of conduits would

thus be represented as follows:

[GRAPHIC] [TIFF OMITTED] TP18AU97.004

We seek comment on this presumption's applicability in determining

usable space and allocating cost to the telecommunications carrier.

35. As discussed above, section 224(e)(2) requires that two-thirds

of the cost of the unusable space be apportioned equally among all

attaching entities. The unusable space formula would then be

represented as follows:

[[Page 43969]]

[GRAPHIC] [TIFF OMITTED] TP18AU97.005

We seek comment on what portions of duct or conduit are

``unusable'' within the terms of the 1996 Act. We propose that a

presumptive ratio of usable ducts to maintenance ducts be adopted to

establish the amount of unusable space. We seek comment on how this

proposal impacts determining an appropriate ratio of usable to unusable

space within a duct or conduit.

36. As with poles, defining what an attaching entity is and

establishing how to calculate the number of attaching entities is

critical. We also seek comment on the use an attaching entity may make

of its assigned space, including allowing others to use its dark fiber.

Consistent with the half-duct convention proposed in the Pole

Attachment NPRM, we believe that each entity using one half-duct be

counted as a separate attaching entity. We seek comment on this method

of counting attaching entities for the purpose of allocating the cost

of the unusable space consistent with section 224(e).

VII. Rights-of-Way Issues

37. The access and reasonable rate provisions of section 224 are

applicable where a cable operator or telecommunications carrier seeks

to install facilities in a right-of-way but does not make a physical

attachment to any pole, duct or conduit. The Commission's proceedings

and cases generally have addressed issues involving physical

attachments to poles, ducts, or conduits. Our experience relating to

solely rights-of-way circumstances is limited. We seek information

regarding the degree rights-of-way access issues will arise and the

range of circumstances that will be involved. We ask whether the

Commission should adopt rules reflecting a methodology and/or formula

to determine a just and reasonable rate, or whether rights-of-way

complaints should be addressed on a case-by-case basis. We seek comment

on whether rights-of-way cases will be of such number that a

methodology is necessary, and whether the range of circumstances

involving rights-of-way can be discerned into a generic methodology. If

a methodology is appropriate, we seek comment on the elements,

including any presumptions, that will calculate the costs relating to

usable and unusable space. We also seek information regarding whether

information necessary for any formula is available through a utility's

accounting structure, as costs relating to rights-of-way may be

different than poles, ducts and conduit.

VIII. Implementation

38. Section 224(e)(4) requires the Commission to implement the

telecommunications carrier rate methodology on February 8, 2001.

Section 224(e)(4) states that ``The regulations required under

paragraph one shall become effective five years after enactment of the

Telecommunications Act of 1996. Any increase in the rates for pole

attachments that result from the adoption of the regulations required

by this subsection shall be phased in equal annual increments over a

period of five years beginning on the effective date of such

regulations.'' The statutory language of section 224(e)(4) requires

that any rate increase be phased in over five years in equal annual

increments beginning on that date. We propose that the amount of

increase should be phased in at the beginning of the five years and

one-fifth of that amount should be added to the rate in each of the

subsequent five years. We seek comment on this proposed five year phase

in of the telecommunications carrier rate. We also seek comment on any

other proposals that would equitably phase in the telecommunication

carrier rate within the five years allotted by section 224(e)(4).

IX. Initial Regulatory Flexibility Act Analyses

39. As required by the Regulatory Flexibility Act (RFA), the

Commission has prepared an Initial Regulatory Flexibility Analysis

(IRFA) of the expected significant economic impact on small entities by

the policies and rules proposed in this Notice of Proposed Rulemaking

(NPRM). Written public comments are requested on the IRFA. Comments

must be identified as responses to the IRFA and must be filed by the

deadlines established in paragraph 76 of this NPRM. The Secretary shall

send a copy of this NPRM, including the IRFA, to the Chief Counsel for

Advocacy of the Small Business Administration (SBA) in accordance with

the RFA.

40. Need for Action and Objectives of the Proposed Rule. In 1987,

the Commission adopted its current pole attachment formula for

calculating the maximum just and reasonable rates utilities may charge

cable systems for pole attachments. In this NPRM, we seek comment as to

whether the current pole attachment formula should be modified or

adjusted to eliminate certain anomalies and rate instabilities

particular parties assert have occurred. We have also tentatively

proposed such possible modifications to the formula, should altering

the formula become necessary, that would improve the accuracy of the

formula. In addition, we propose changes to the formula to reflect the

present part 32 accounting system that replaced the former part 31

rules in 1988. Finally, we propose a new conduit methodology that will

determine the maximum just and reasonable rates utilities may charge

cable systems and telecommunications carriers for their attachments to

conduit systems.

41. Legal Basis. The authority for the action proposed for this

rulemaking is contained in sections 1, 4(i), 4(j), 224, 303 and 403 of

the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i),

154(j), 224, 303 and 403.

42. Description and Estimate of the Number of Small Entities

Impacted. The RFA generally defines a ``small entity'' as having the

same meaning as the terms ``small business,'' ``small organization,''

``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.

43. Total Number of Utilities Affected. Many of the decisions and

rules proposed herein may have a significant effect on a substantial

number of utility companies. Section 224 of the Statue 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

[[Page 43970]]

Commission with a list of utility firms which may be affected by this

rulemaking. Based upon the SBA's list, the Commission seeks comment as

to whether all of the following utility firms are relevant to section

224.

44. Electric Services (SIC 4911). The SBA has developed a

definition for small electric utility firms. The Census Bureau reported

that 447 of the 1,379 firms listed had total revenues below five

million dollars. The Census Bureau reports that a total of 1,379

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. 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.

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.

45. 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. 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 distributer 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. Natural Gas Distribution (SIC 4924). The

SBA defines a natural gas distributor as an entity that distributes

natural gas for sale. The Census Bureau 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. 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. 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.

46. Water Supply (SIC 4941). 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 3,065 of the 3,169 firms listed had total revenues

below five million dollars.

47. Sewage 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. 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 2,287 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 1,908 of the 2,287 firms

listed had total revenues below six million dollars. 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

1,214 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 1,173 of the 1,214 firms listed had total revenues below

five million dollars.

48. Steam and Air Conditioning Supply (SIC 4961). 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.

49. Irrigation Systems (SIC 4971). 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, an 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.

50. Total Number of Telephone Companies Affected (SIC 4813). Many

of the decisions and rules proposed herein

[[Page 43971]]

may have a significant effect on a substantial number of small

telephone companies. The SBA has defined a small business for Standard

Industrial Classification (SIC) category 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 3,497 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, competitive access

providers, cellular carriers, mobile service carriers, operator service

providers, pay telephone operators, PCS providers, covered SMR

providers, and resellers. It seems certain that some of those 3,497

telephone service firms may not qualify as small entities or small

incumbent LECs because they are not ``independently owned and

operated.'' It seems reasonable to conclude, therefore, that fewer than

3,497 telephone service firms are small entity telephone service firms

or small incumbent LECs that may be affected by this NPRM. Below, we

estimate the potential number of small entity telephone service firms

or small incumbent LEC's that may be affected by this service category.

51. Wireline Carriers and Service Providers. 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 2,321 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 1,500 persons. Of

the 2,321 non-radiotelephone companies listed by the Census Bureau

2,295 were reported to have fewer than 1,000 employees. Thus, at least

2,295 non-radiotelephone companies that might qualify as small entities

or small incumbent LECs, or small entities based on these employment

statistics. Although it seems certain that some of these carriers are

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

2,295 small entity telephone communications companies other than

radiotelephone companies that may be affected by the decisions or rules

that come about from this NPRM.

52. Local Exchange Carriers. Neither the Commission nor SBA has

developed a definition of small providers of local exchange services

(LECs). The closest applicable definition under SBA rules is for

telephone communications companies other than radiotelephone (wireless)

companies. The most reliable source of information regarding the number

of LECs nationwide of which we are aware appears to be the data that we

collect annually in connection with the Telecommunications Relay

Service (TRS Worksheet). According to our most recent data, 1,347

companies reported that they were engaged in the provision of local

exchange services. Although it seems certain that some of these

carriers are not independently owned and operated, or have more than

1,500 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 1,347 small incumbent LECs that may be affected by this

NPRM.

53. Interexchange Carriers. Neither the Commission nor SBA has

developed a definition of small entities specifically applicable to

providers of interexchange services (IXCs). 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, 130

companies reported that they were engaged in the provision of

interexchange services. Although it seems certain that some of these

carriers are not independently owned and operated, or have more than

1,500 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 130 small entity IXCs that may be affected by the

decisions and rules proposed in this NPRM.

54. Competitive Access Providers. Neither the Commission nor SBA

has developed a definition of small entities specifically applicable to

providers of competitive access services (CAPs). 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, 57 companies reported that they were engaged in the provision of

competitive access services. Although it seems certain that some of

these carriers are not independently owned and operated, or have more

than 1,500 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 57 small entity CAPs that may be affected by

the decisions and rules proposed in this NPRM.

55. Wireless (Radiotelephone) Carriers. 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 1,176

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 1,500 persons. The Census Bureau also

reported that 1,164 of those radiotelephone companies had fewer than

1,000 employees. Thus, even if all of the remaining 12 companies had

more than 1,500 employees, there would still be 1,164 radiotelephone

companies that might qualify as small entities if they are

independently owned and operated. Although it seems certain that some

of these carriers are 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 1,164 small entity radiotelephone

companies that may be affected by this NPRM.

56. Cellular Service Carriers. 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

[[Page 43972]]

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, 792 companies reported that they were engaged in the

provision of cellular services. Although it seems certain that some of

these carriers are not independently owned and operated, or have more

than 1,500 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 792 small entity

cellular service carriers that may be affected by the decisions and

rules proposed in this NPRM.

57. Mobile Service Carriers. 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. 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, 117 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 1,500 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 117 small entity mobile service carriers that may be

affected by the decisions and rules proposed in this NPRM.

58. Broadband Personal Communications Services (PCS) Licensees. 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 1,479 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.

59. Specialized Mobile Radio (SMR) Licensees. Pursuant to 47 CFR

90.814(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 NPRM may apply to SMR providers in the 800 MHz

and 900 MHz bands that either hold geographic area 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 NPRM.

60. The Commission recently held auctions for geographic area

licenses in the 900 MHz SMR band. There were 60 winning bidders who

qualified as small entities in the 900 MHz auction. Based on this

information, we conclude that the number of geographic area SMR

licensees affected by the rule adopted in this Order includes these 60

small entities. No auctions have been held for 800 MHz geographic area

SMR licenses. Therefore, no small entities currently hold these

licenses. A total of 525 licenses will be awarded for the upper 200

channels in the 800 MHz geographic area SMR auction. 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 1,000 employees and that no reliable estimate

of the number of prospective 800 MHz licensees can be made, we assume,

for purposes of this IRFA, that all of the licenses may be awarded to

small entities who, thus, may be affected by the decisions proposed in

this NPRM.

61. Resellers. 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, 260

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 1,500 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 260

small entity resellers that may be affected by the decisions and rules

adopted in this NPRM.

62. Cable Systems (SIC 4841). 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 1,423 such cable and other pay television services generating less

than $11 million in revenue.

63. 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 1,439 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

[[Page 43973]]

other cable systems. Consequently, we estimate that there are fewer

than 1,439 small entity cable system operators that may be affected by

the decisions and rules proposed in this NPRM.

64. 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 1 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 1,450. 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.

65. Municipalities: The term ``small governmental jurisdiction'' is

defined as ``governments of . . . districts, with a population of less

than fifty thousand.'' 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 of the Act 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 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.

66. Reporting, Recordkeeping, and other Compliance Requirements:

The rules proposed in this NPRM will require a change in certain record

keeping requirements. A pole owner will now have to maintain specific

records relating to the number of attachers for purposes of computing

the usable and unusable space calculation for the telecommunications

carrier rate formula. We seek comment 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 this NPRM. In addition, we

seek comment as to whether there will be a disproportionate burden

placed on small entities in complying with the proposals set forth in

this NPRM.

67. Significant Alternatives Which Minimize the Impact on Small

Entities and Which Are Consistent With State Objectives: The 1996 Act

requires the Commission to propose a telecommunications carrier

methodology within two years of the enactment of the 1996 Act. We seek

comment on various alternative ways of implementing the statutory

requirements and any other potential impact of these proposals on small

business entities. We seek comment on the implementation of a

methodology to ensure just, reasonable and nondiscriminatory pole

attachment and conduit rates for telecommunications carriers. We also

seek comment on how to develop a rights-of-way rate methodology for

telecommunications carriers.

68. Federal Rules which Overlap, Duplicate, or Conflict with the

Commission's Proposal: None.

X. Initial Paperwork Reduction Act of 1995 Analysis

69. This NPRM contains either proposed or modified information

collections. The Commission, as part of its continuing effort to reduce

paperwork burdens and to obtain regular Office of Management and Budget

(``OMB'') approval of the information collections, invites the general

public and OMB to comment on the information collections contained in

this rulemaking, as required by the Paperwork Reduction Act of 1995.

Public and agency comments are due at the same time as other comments

relating to this NPRM; OMB notification of action is due 60 days from

date of publication of this NPRM in the Federal Register. Comments

should address: (a) Whether the proposed 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.

XI. Procedural Provisions

70. Ex parte Rules--Non-Restricted Proceeding. This is a non-

restricted notice and comment rulemaking proceeding. Ex parte

presentations are permitted, except during the Sunshine Agenda period,

provided that they are disclosed as provided in Commission's rules. See

generally 47 CFR 1.1202, 1.1203, and 1.1206(a).

71. Pursuant to applicable procedures set forth in Secs. 1.415 and

1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested

parties may file comments on or before September 26, 1997 and reply

comments on or before October 14, 1997. To file formally in this

proceeding, you must file an original and six copies of all comments,

reply comments, and supporting comments. Parties are also asked to

submit, if possible, draft rules that reflect their positions. If you

want each Commissioner to receive a personal copy of your comments, you

must file an original and eleven copies. Comments and reply comments

should be sent to Office of the Secretary, Federal Communications

Commission, 1919 M Street, NW., Room 222, Washington, DC 20554, with a

copy to Larry Walke of the Cable Services Bureau, 2033 M Street, NW.,

Room 408A, Washington, DC 20554. Parties should also file one copy of

any documents filed in this docket with the Commission's copy

contractor, International Transcription Services, Inc., 2100 M Street,

NW., Suite 140, Washington, DC 20037. Comments and reply comments will

be available for public inspection during regular business hours in the

FCC Reference Center, 1919 M Street, NW., Room 239, Washington, DC

20554.

72. Parties are also asked to submit comments and reply comments on

diskette, where possible. Such diskette submissions would be in

addition to and not a substitute for the formal filing requirements

addressed above. Parties submitting diskettes should submit them to

Larry Walke of the Cable Services Bureau, 2033 M Street, NW., Room

408A, Washington, DC 20554. Such a submission must be on a 3.5 inch

diskette formatted in an IBM compatible form using MS DOS 5.0 and

WordPerfect 5.1 software. The diskette should be submitted in ``read

only'' mode. The diskette should be clearly labelled with the party's

name, proceeding, type of pleading (comment or reply comments) and date

of

[[Page 43974]]

submission. The diskette should be accompanied by a cover letter.

73. Written comments by the public must be submitted at the same

time as those of the Office of Management and Budget (OMB) on the

proposed and/or modified information collections on or before 60 days

after publication of the NPRM in the Federal Register. In addition to

filing comments with the Secretary, a copy of any comments on the

information collections contained herein should be submitted to Judy

Boley, Federal Communications Commission, Room 234, 1919 M Street, NW.,

Washington, DC 20554, or via the Internet to [email protected], and to

Timothy Fain, OMB Desk Officer, 10236 NEOB, 725-17th Street, NW.,

Washington, DC 20503 or via the Internet to [email protected].

XII. Ordering Clauses

74. It is ordered that pursuant to sections 1, 4(i), 4(j), 224, 303

and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151,

154(i), 154(j), 224, 303 and 403, notice is hereby given of the

proposals described in this Notice of Proposed Rulemaking.

75. It is further ordered that the Secretary shall send a copy of

this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the

Small Business Administration in accordance with the Regulatory

Flexibility Act, 5 U.S.C. 603 (2).

76. For additional information regarding this proceeding, contact

Larry Walke, Policy and Rules Division, Cable Services Bureau (202)

418-7200.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Note: This attachment will not be published in the Code of

Federal Regulations.

Attachment--Pole Attachment Formulas (Modified as Proposed)

Telecommunications Companies:

Maximum Rate = (Space Occupied by Attachment x Carrying Charge Rate

x Net Pole Investment x .95) Total # of Poles

Total Carrying Charge Rate = Administrative + Maintenance +

Depreciation + Taxes + Return

Administrative Carrying Charge Rate = (Total Administrative and General

(Accounts 6710+6720 + 6110+6120 + 6534+6535)) (Gross Plant

Investment - Accum. Depreciation, Account 3100 - Accum. Deferred Taxes,

Plant)

Maintenance Carrying Charge Rate = (Account 6411 - Rental Expense,

Poles) Net Pole Investment

Depreciation Carrying Charge Rate = Depreciation Rate, Poles

Tax Carrying Charge Rate = Operating Taxes, Account 7200

(Gross Plant Investment - Accum. Depreciation, Account 3100 - Accum.

Deferred Taxes, Plant)

Return Carrying Charge Rate = Applicable Rate of Return

Space Occupied by Attachment = 1 foot

Total Usable Space = 13.5 feet (Subject to Rebuttal)

Gross Plan Investment = Account 2001

Gross Pole Investment = Account 2411

Net Pole Investment = Account 2411 - Accum. Depreciation, Poles -

Accum. Deferred Income Taxes, Poles

[FR Doc. 97-21818 Filed 8-15-97; 8:45 am]

BILLING CODE 6712-01-P