Pole Attachments

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 [email protected].

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 [email protected].

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