[Federal Register Volume 75, Number 135 (Thursday, July 15, 2010)]
[Proposed Rules]
[Pages 41338-41363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17048]
[[Page 41337]]
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Part IV
Federal Communications Commission
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47 CFR Part 1
Implementation of Section 224 of the Act; A National Broadband Plan for
Our Future; Proposed Rule
Federal Register / Vol. 75, No. 135 / Thursday, July 15, 2010 /
Proposed Rules
[[Page 41338]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[WC Docket No. 07-245, GN Docket No. 09-51; FCC 10-84]
Implementation of Section 224 of the Act; A National Broadband
Plan for Our Future
AGENCY: Federal Communications Commission.
ACTION: Proposed rules.
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SUMMARY: In this Further Notice of Proposed Rulemaking (FNPRM), the
Commission proposes rules to expedite access by telecommunications
carriers and cable operators to utility poles. Proposed measures
include adoption of a specific timeline for poles survey and make-ready
work, use of outside contractors, and improving the availability of
data. The FNPRM also proposes to improve the pole attachments
enforcement process, and proposes ways to make attachment rates as low
and uniform as possible consistent with section 224 of the
Communications Act. These steps should lower both the cost of gaining
access to utility poles and pole attachment rates. These actions are
intended to remove impediments to the deployment of facilities and to
increase delivery of broadband services.
DATES: Comments are due on or before August 16, 2010 and reply comments
are due on or before September 13, 2010. Written comments on the
Paperwork Reduction Act proposed information collection requirements
must be submitted by the public, Office of Management and Budget (OMB),
and other interested parties on or before September 13, 2010.
ADDRESSES: You may submit comments, identified by WC Docket No. 07-245;
GN Docket No. 09-51, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
In addition to filing comments with the Secretary, a copy of any
comments on the Paperwork Reduction Act information collection
requirements contained herein should be submitted to the Federal
Communications Commission via e-mail to [email protected] and to Nicholas A.
Fraser, Office of Management and Budget, via e-mail to [email protected] or via fax at 202-395-5167.
FOR FURTHER INFORMATION CONTACT: Jonathan Reel, Wireline Competition
Bureau, Competition Policy Division, 202-418-1580. For additional
information concerning the Paperwork Reduction Act information
collection requirements contained in this document, send an e-mail to
[email protected] or contact [email protected].
SUPPLEMENTARY INFORMATION: Pursuant to sections 1.415 and 1.419 of the
Commission's rules, 47 CFR 1.415, 1.419, interested parties may file
comments on or before August 16, 2010 and reply comments on or before
September 13, 2010. Comments may be filed using: (1) The Commission's
Electronic Comment Filing System (ECFS), (2) the Federal Government's
eRulemaking Portal, or (3) by filing paper copies. See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
All hand-delivered or messenger-delivered paper filings
for the Commission's Secretary must be delivered to FCC Headquarters at
445 12th St., SW., Room TW-A325, Washington, DC 20554. All hand
deliveries must be held together with rubber bands or fasteners. Any
envelopes must be disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street, SW., Washington DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an e-mail to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
Filings and comments are also available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. They may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street,
SW., Room CY-B402, Washington, DC 20554, telephone: (202) 488-5300,
fax: (202) 488-5563, or via e-mail http://www.bcpiweb.com.
This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due September 13, 2010.
Comments should address: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology. In
addition, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment
on how we might further reduce the information collection burden for
small business concerns with fewer than 25 employees.
OMB Control Number: 3060-XXXX.
Title: Pole attachment Access Requirements.
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Form Number: N/A.
Type of Review: New collection.
Respondents: Business or other for-profit.
Number of Respondents and Responses: 2,961 respondents; 20,427
responses.
Estimated Time per Response: 6-300 hours.
Frequency of Response: On occasion and annual reporting and
recordkeeping requirements and third party disclosure requirement.
Obligation to Respond: Mandatory.
Total Annual Burden: 965,202 hours.
Total Annual Cost: No cost.
Privacy Act Impact Assessment: No impacts.
Nature and Extent of Confidentiality: No need for confidentiality.
Needs and Uses: Delivery of telecommunications, information, and
video services depends on the ability of wireline and wireless
providers of these services to attach their facilities (e.g., cable and
fiber) to existing utility infrastructure. The Commission proposes a
comprehensive regulatory scheme to ensure that the terms and conditions
of attachment are just and reasonable under section 224 of the
Communications Act. These proposals largely formalize existing
practices, such as contract negotiations, applications to attach,
surveys and engineering analyses, coordinated repositioning of existing
attachments. But the proposals also impose some new paperwork
requirements, including web postings of information, and letters of
notification among the affected parties. Both existing practices and
new proposals are incorporated in the paperwork burden estimates. Most
of these responsibilities fall on the pole-owning utility, but some
paperwork is required of prospective attaching entities. Normal course-
of-business practices, including preparation, review, and payment of
invoices, are not included.
Below is a synopsis of the Commission's Further Notice of Proposed
Rulemaking in WC Docket No. 07-245, GN Docket No. 09-51, adopted May
20, 2010, and released May 20, 2010.
Synopsis of Further Notice of Proposed Rulemaking
1. In this FNPRM, the Commission seeks comment on how to improve
access to essential infrastructure, and expedite the build-out of
affordable broadband services as well as telecommunications and cable
services. The Commission proposes a specific timeline for all wired
pole attachment requests (including fiber or other wired attachments by
wireless carriers), and seeks comment on the timeline and exceptions or
refinements, as well as the development of a timeline for the
attachment of wireless facilities. The Commission also proposes rules
allowing the use of contract workers in certain circumstances, and
proposes reforming its access dispute-resolution process consistent
with the aims of the National Broadband Plan. The Commission seeks to
establish rental rates for pole attachments that are as low and close
to uniform as possible, consistent with section 224 of the Act, and the
Commission seeks comment on proposals to accomplish this goal.
A. Expediting Access to Utility Poles
2. A Comprehensive Timeline for Section 224 Access. The Commission
proposes a comprehensive timeline for the make-ready process, as
recommended in the National Broadband Plan. The Commission begins the
process of establishing a Federal timeline that covers each step of the
pole attachment process, from application to issuance of the final
permit. The Commission believes that the Federal timeline should be
comprehensive and applicable to all forms of communications
attachments. The Commission proposes that it should adopt a timeline
covering the process of certifying wireless equipment for attachment.
The record before the Commission includes many examples of delay in
make-ready work in states without make-ready timelines, in contrast to
evidence of more expedited deployment in those states that have adopted
timelines. Section 224 imposes a responsibility on utilities to provide
just and reasonable access to any pole, duct, conduit, or right-of-way
owned or controlled by it, in addition to preserving their ability to
deliver their traditional services. The Commission is skeptical of the
`zero-sum' view that some commenters seem to take with respect to the
resources devoted to pole attachments and regular maintenance. To the
extent utilities or other commenters assert that they are unable to
satisfy these requirements, commenters are asked to provide further
detail. Are utilities unable to hire enough workers to perform timely
surveys and make-ready, and to ramp up their operations to meet demand?
Inasmuch as they are unable to perform pole attachments as needed
without impeding their provision of electric service, why is this so?
Are these issues really a claim of insufficient cost recovery, rather
than inability to provide make-ready work in a timely fashion?
3. A Proposed Five-Stage Timeline for Wired Pole Attachment. The
Commission proposes adopting a specific five-stage timeline to govern
the pole attachment process for wired attachments consisting of the
following five stages: (1) Survey; (2) estimate; (3) attacher
acceptance; (4) performance; and, if needed, (5) multiparty
coordination. Depending how long the applicant reviews the estimate,
and whether the existing attachers complete their work in a timely
manner, make-ready should be complete within a 105 to 149 day window
after the utility receives a complete application for access. The
Commission does not propose at this time to apply this timeline to
make-ready for wireless equipment or pole replacement.
4. Stage 1--Survey: 45 Days. As current rules dictate, a request
for access continues to trigger a 45 day period for the utility to
respond. The Commission proposes that, as the first stage of the
timeline, the Commission should retain existing Commission rule Sec.
1.1403(b). A ``request for access'' is a complete application that
provides the utility with the information necessary to begin to survey
the poles. The current rule gives utilities 45 days to provide a
written explanation of evidence and information for denying the request
for reasons of lack of capacity, safety, reliability or engineering
standards. The rule is functionally identical to a requirement for a
survey and engineering analysis when applied to wired facilities, and
is generally understood by utilities as such. The rule remains
applicable to wireless facilities, but could apply in a somewhat
different manner. A 45-day survey limit accords with the time allowed
for surveys in New York, Connecticut, and the Coalition Proposal, as
well as the current rule.
5. The Commission proposes that all requests for attachment be
included in the timeframe for the survey stage, even where the request
ultimately indicates a lack of capacity. Any right the owner has to
refuse to install a new pole, and other questions about timing,
however, do not affect the applicant's right to know whether the owner
considers pole replacement necessary. The Commission seeks comment on
whether to clarify what constitutes a sufficient request to trigger the
timeline. Utilities state that application errors cause them to miss
deadlines, and New York has adopted specific rules governing the
application process. The Commission asks whether it should adopt
similar regulations, or leave the details of the application process in
the hands of individual parties. The Commission also
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seeks comment on whether timing should be adjusted when an application
that appears complete includes errors that delay the survey. Should
significant errors justify stopping the clock? Should it matter whether
the errors reflect lack of due care by the applicant, or lack of
information that the utility could have provided?
6. Stage 2--Estimate: 14 Days. The Commission proposes that, as the
second stage in the pole access timeline, a utility must tender an
estimate of its charges to perform any make-ready work within 14 days
after completing the survey. Both the New York timeline and the
Coalition Proposal include a similar deadline, and the Commission
proposes that such a timeframe is reasonable. Although utilities
commonly provide an estimate with the survey and engineering analysis,
an estimate of charges is not clearly required under the current 45-day
response rule. The Commission proposes a deadline for estimates that is
separate from the survey in order to permit a utility to separate the
engineering analysis from its estimation of charges, and to permit the
attacher time to examine and consider the engineering assessment before
it reviews an invoice.
7. Stage 3--Acceptance: 14 Days. The Commission proposes that, as
the third stage in the timeline, the applicant should have 14 days to
accept the tendered estimate, consistent with New York's practice. The
Commission considers it unreasonable to require a utility to commit
indefinitely to its make-ready proposal and estimate of charges, and
believes that imposing this time limit on prospective attachers will
provide additional certainty. Limiting review also meets the intention
that the timeline should be comprehensive, and address each phase of
the process. The applicant may accept the estimate sooner, and need not
wait 14 days before accepting or rejecting it.
8. Stage 4--Performance: 45 Days. The Commission proposes that, as
the fourth stage in the timeline, payment by the applicant should
trigger a 45-day period for the completion of make-ready work,
consistent with the approach in New York and Connecticut. Given the
experience in New York and Connecticut, the Commission finds 45 days to
be a reasonable time period for the actual performance of make-ready
work. To implement this approach, the Commission proposes that, when it
receives payment, a utility must notify immediately all entities whose
existing attachments may be affected by the project. The Commission
further proposes that notification must include a reminder that those
attachers have 45 days to move, rearrange, or remove any facilities as
needed to perform the make-ready work and that, if they fail to do so,
the utility or its agents, or the new attacher, using authorized
contractors, may move or remove any facilities that impede performance.
Moreover, the Commission proposes that the obligation to complete make-
ready work in this timeframe extend not only to the utility, but also
to existing attachers. Utilities contend that existing attachers cause
delays and have little incentive to cooperate, especially if the
applicant will be a competitor, and this constrains their ability to
provide timely pole access to new attachers. The Commission seeks
comment with regard to this assertion, as well as the incentive and
ability of other attachers on a pole to discriminate against a new
attacher. The Commission invites comment on alternative or additional
policies that could ensure the cooperation needed as part of the make-
ready process. By contrast, the Commission notes that the Coalition
Proposal would not adopt a specific number of days for completion of
relevant make-ready work, instead proposing to perform such work ``in a
manner that does not discriminate in favor of the utility's own needs
or customer work.'' The Commission seeks comment on what metrics and
data would be needed to evaluate compliance with such an approach, and
how it would be reported or otherwise made available. The Commission
also seeks comment on the balance reflected in the Coalition Proposal
in this regard between attachers' interests in timely, predictable pole
access and pole owners' interests in ensuring safety, reliability, and
sound engineering.
9. Stage 5--Multiparty Coordination: 30 Days. The Commission
proposes that the fifth stage of the timeline--if needed--will provide
time for any coordination and make-ready work required in the event
that some existing attachers fail to move their facilities as directed
by the utility. The Commission notes that incumbent LECs typically
occupy more space on a pole than other communications attachers and,
due to their location on a pole, often must be the first to move their
communications attachments as part of the make-ready process. And while
current Commission rules provide that attachments by a cable operator
or non-incumbent LEC telecommunications carrier may not be moved by the
utility until 60 days have passed, that rule does not govern
attachments by incumbent LECs. Thus, after 45 days, the utility or its
agent may move incumbent LEC attachments as needed and, after 60 days,
may act independently of other existing attachers to finish the
project.
10. Consequently, it is reasonable to allow extra time for the
utility or its agent to complete the make-ready with a free hand. Given
that the utility will have surveyed the poles and coordinated
rearrangement, and, after 60 days, may act independently of other
existing attachers, the Commission considers 30 days after the 45th day
a reasonable extension of time to undertake any coordination or
planning required to finish the project. The Commission seeks comment
on this proposal. In addition to defining a default timeline, the
Commission recognizes the need to define certain exceptions or
limitations in appropriate circumstances.
11. Adjustments to the Timeline for the Number of Pole Attachment
Requests. In addition, the Commission recognizes the potential need to
address utilities' concerns about possible operational or logistical
challenges or the need to respond to factors outside their control.
Thus, the Commission seeks comment on any necessary adjustments or
exclusions from the timeline proposed above.
12. Size of Request. The Commission seeks comment on whether
requests for access to a particularly large number of poles should be
excepted from the timeline, or subject to an alternative timeline.
Requests for access vary widely, and the Commission seeks comment on
how best to incorporate the size or complexity of requests into the
rules. Utah and Vermont adjust the duration of the survey and
performance deadlines for both the size of the job and size of the
utility. Utah divides requests for attachment into four categories: (1)
Up to 20 poles; (2) 21 to 300 poles, or up to .5 percent of the owner's
poles in Utah; (3) 300 to 3,000 poles, or 5 percent of the owner's
poles in Utah, up to 3,000 poles; and (4) requests that exceed 3,000
poles or 5 percent of the owner's poles in Utah, which are negotiated
individually. At each step, the lower outcome of the absolute number or
percentage test applies. Vermont staggers the timeline solely according
to the percentage of the owner's poles where attachment is requested,
which it divides at .5 percent, 3 percent, and 5 percent; any request
that exceeds 5% of the owner's poles must be negotiated individually.
Similarly, New York requires applicants to give advance notice of
``significant'' attachment requests.
13. Comment is sought on the merits and effectiveness of the
states' timeline adjustments or notice requirements as
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modifications to the proposed Federal timeline described above. Utah
and Vermont's approach has the virtue of calibrating the timeline to
fit both the size of the request and the size of the utility, but
implementation depends upon access to data that may not currently be
readily available for utilities nationally. Should utilities below a
certain size have the option of sorting attachment requests into
categories determined by a percentage of the utility's in-State poles,
and adjusting the timeline accordingly? If so, how should the
Commission define a large, medium, and small request, and what
timeframe would be appropriate for each level? Should small utilities
negotiate all timelines individually? Alternatively, should the
timeline apply to small utilities for requests up to a certain size,
with any larger requests subject to individual negotiation?
14. Providing access on a rolling basis, or capping the number of
attachments in a given time period, might provide an alternative
approach to modifying the proposed timeline to accommodate larger jobs.
The Coalition Proposal would limit any individual request to 250 poles,
with pole access requests limited to 600 attachments in any one month.
Utah considers a request to attach to more than 300 poles a large
request, and counts all requests from any particular prospective
attacher within a calendar month as one application. Regarding surveys,
UTC reports that, on average, approximately 19 percent of all requests
take longer than 45 days to process and, of that number, the reason for
30 percent of missed deadlines was the size of the project. Comment is
sought regarding whether, and if so, how, the reasonable size of a
request would fit the timeline that the Commission proposes. The
Commission also asks whether that size should be adjusted for small
utilities, and, if so, what thresholds are appropriate.
15. Just as some requests might prove too large for the timeline to
accommodate, some attachers might seek faster action on smaller
requests. Connecticut accelerates the deadline when an applicant
requests access to four or fewer attachments. Utah distinguishes access
requests for 20 poles or less. Should the Commission adopt an
alternative timeline for small requests, and, if so, how many poles
should count as a small request and what deadlines should apply?
Commenters should consider whether some deadlines may be easier to
scale back than others, and address the concern that a utility that can
act quickly alone may not be able to induce other attachers to act
quickly in concert. Section 224 requires that the utility give existing
attachers a ``reasonable opportunity'' to modify their attachments.
What notice would be appropriate in the context of particular small
jobs?
16. Stopping the Clock. The Commission acknowledges that
circumstances beyond a utility's control may require prioritization, or
otherwise warrant interrupting the timeline. In New York,
``circumstances beyond the owner's control, other than resource
problems, will excuse meeting the timetable. Non-payment of charges
will also stop the clock for meeting timetables.'' In Vermont, the
clock stops for extraordinary circumstances or reasons beyond the pole
owner's control. Comment is sought with regard to stopping and
restarting the clock. Are guidelines necessary or helpful? What type of
communication or notice between parties is expected? If so, what
potential disputes would guidelines resolve, and should guidelines be
specific or general? The Commission would expect the utility to return
to the timeline as soon as circumstances permit, which will generally
be the same point that the utility resumes normal operation, and to
keep all interested parties reasonably informed.
17. Wireless Attachment Timeline Issues. The Commission also
solicits comment on developing timelines for section 224 access other
than wired pole attachments. First, the Commission seeks comment on
whether the wired pole attachment timeline is appropriate for wireless
equipment. Utilities assert that wireless attachment presents different
safety, reliability, and engineering concerns because wireless
equipment varies widely; is often placed in or near the electric lines;
and requires a power source. The current rule requiring a response to
pole access requests within 45 days applies in full to utilities that
receive requests by wireless carriers, however. Where a utility has no
master agreement with a carrier for wireless attachments requested,
such as pole top attachments, the utility may satisfy the requirement
to respond with a written explanation of its concerns with regard to
capacity, safety, reliability, or engineering standards. The Commission
seeks comment on whether it should require that the response be
sufficiently detailed to serve as a basis for negotiating a master
agreement, which would dictate a timely process for future attachments.
18. The Commission seeks comment on considerations that would
affect a timeline tailored to suit requests for attachment of wireless
equipment after a utility and the carrier have reached a master
agreement. Attachment of wireless equipment may complicate engineering
analyses, but may also avoid the multiparty notice and coordination
issues that characterize rearrangement of wired facilities. Also,
wireless carriers using a distributed antenna system (DAS) attach to
relatively few poles compared to cable operators and wireline carriers
that attach to every pole that their network passes. Should a timeline
for requests for wireless equipment reflect these circumstances, and if
so how? The Commission particularly asks utilities that have permitted
wireless equipment to be installed on their poles to report their
experience, and to describe their typical timeframes for meeting
wireless attachment requests. The goal is to bring regularity and
predictability to attachment of wireless facilities while acknowledging
that the attachment of wireless telecommunications equipment in or near
the electric space may raise different safety, reliability, and
engineering concerns.
19. Other Section 224 Timeline Issues. Section 224 provides that,
when an owner intends to modify a pole, the owner shall provide both
written notification to ``any entity that has obtained an attachment''
and a ``reasonable opportunity to add to or modify its existing
attachment.'' The record suggests that modification may be required
during make-ready when, for example, a pole that has been grandfathered
to a prior standard must be brought into compliance with current
standards when a new attachment is added. Similarly, a utility may have
been unaware of a safety violation until make-ready is performed. Does
the proposed timeline provide adequate time for utilities to implement
this obligation? The definition of ``pole attachment'' in section
224(a)(4) includes attachments to a pole, duct, conduit, or right-of-
way. The record compiled in this proceeding almost exclusively
addresses issues of attachments to poles. Beyond timeline issues for
access to poles, comment is sought on whether to implement this
timeline for access to section 224 ducts, conduits, and rights-of-way
owned or controlled by a utility. Has delayed access to infrastructure
other than poles impeded the deployment of broadband or other services?
If so, should the proposed pole attachment timeline set forth above be
applied to requests for access to other infrastructure, or are
modifications or other considerations needed?
20. Use of Outside Contractors. Attachers frequently seek the
ability to
[[Page 41342]]
use independent contractors to deploy their facilities when the utility
fails to perform survey and make-ready work in a timely manner. The
National Broadband Plan recommends rules that allow attachers to use
independent, utility-approved and certified contractors to perform
engineering assessments and communications make-ready work, as well as
independent surveys. In defining how and when attachers may employ
contractors in response to that recommendation, the Commission first
delineates between: (a) Survey and make-ready work; and (b) the actual
attachment of facilities. As a general matter, the Commission believes
it is appropriate to allow greater utility control over the former by
permitting utilities to require the use of pre-approved contractors for
this work, but continuing a less restrictive approach, originally
established in 1996, for the latter. The Commission also distinguishes
between electric utilities and incumbent LECs regarding the level of
control that each may exercise over an attacher's use of independent
contractors.
21. Basic Right to Use Contractors. The Local Competition Order
established a general principle that attachers may rely upon
independent contractors; that order did not differentiate between two
different types of work: (a) Surveys and make-ready; and (b) post-make-
ready attachment of lines. As a result, there have been ongoing
disagreements regarding the ability of attachers to use contractors to
perform survey and make-ready work under existing law. As discussed
below, addressing these issues in greater detail here the Commission
proposes to clarify and revise this approach in several respects in the
context of surveys and make-ready to reflect utilities' concerns
regarding safety, reliability, and sound engineering. The Commission
also finds differing approaches warranted for incumbent LEC pole owners
as compared to other pole owners.
22. In particular, with respect to surveys and communications make-
ready work, the Commission proposes that: Attachers may use contractors
to perform surveys and make-ready work if a utility has failed to
perform its obligations within the timeline, or as otherwise agreed to
by the utility. As discussed above, the Commission proposes a pole
access timeline based in significant part on the approach taken in New
York. Within that regulatory framework, the New York Commission gives
utilities the option of using their own workers to do the requested
work, or to hire outside contractors themselves, or to allow attachers
to hire approved outside contractors. Under the proposed approach,
utilities likewise would be entitled to rely on their own personnel
unless they are unable to complete work within the timeline. If the
utility decides to deploy its workforce on other projects or otherwise
is unable to meet a deadline, the prospective attacher would be free to
use contractors that are approved and certified by the utility. Comment
is sought on this general approach, including the relative benefits of
preserving greater control for utilities as compared to potential time-
or cost-savings that attachers might obtain if they have appropriate
contractors available and ready to do make-ready work.
23. With respect to actual attachment of facilities to poles, the
Commission proposes to retain the existing rules. The make-ready
process is designed to address the utilities' safety, reliability and
engineering concerns prior to a new attachment. So when that process is
complete and facilities are ready to be attached, the utility's
concerns are less pressing, and an attacher's interest in rolling out
properly permitted facilities is proportionately larger. Therefore, for
the post-make-ready attachment of facilities, the Commission retains
the existing standard of ``same qualifications, in terms of training,
as the utilities' own workers,'' and continues to deny utilities the
right to predesignate or co-direct an attacher's chosen contractor. The
Commission seeks comment on this proposal, as well as other
alternatives.
24. Approval and certification of contract workers. With respect to
electric utilities and other non-incumbent LEC pole owners, the
Commission proposes that: To perform surveys or make-ready work
attachers may use contractors that a utility has approved and certified
for purposes of performing such work. This is consistent with the
approach of the New York Commission--cited approvingly by some
attachers--which entitles applicants for attachment to hire contractors
from a utility-approved list if the utility cannot or will not meet
survey and make-ready deadlines. A number of utilities express concern
that the safety and reliability of their poles may be jeopardized by
independent contractors. Crucial judgments about safety, capacity, and
engineering are made during surveys and make-ready, and the Commission
finds the utilities' concerns reasonable. Permitting such utilities to
decide which contractors it will approve and certify for surveys and
make-ready addresses the need that utilities maintain control over
safety and engineering standards, although the Commission seeks comment
on alternative approaches, as well.
25. Although the Commission proposes to allow electric utilities
and other non-incumbent LEC pole owners to pre-approve the contractors
they will permit to perform surveys and make-ready, their discretion
should not be unbounded, and the Commission proposes the following
requirements. First, the Commission proposes to require such utilities
to post or otherwise share with attachers a list of approved- and
certified contractors, including any contractors that the utility
itself uses. Second, the Commission proposes to require each such
utility to post or otherwise share with attachers the standards it uses
to evaluate contractors for approval and certification and require the
nondiscriminatory application of those standards. Under the proposal,
these utilities may design their requirements as they see fit, by, for
example, setting training standards, approving training manuals, or
otherwise clarifying their requirements.
26. These requirements are minimally burdensome and are sufficient
to prevent a utility from artificially limiting the list of approved
contractors. The Commission is unpersuaded by contentions from certain
utilities that the decisions on outside contractors will lead to
resource diversion of non-employee ``resources,'' undercutting their
ability to deliver traditional services. Nothing in this proposal
affects a utility's control of its employees. The Commission is aware
of the need to balance the work of infrastructure personnel, but also
mindful that section 224 imposes obligations on utilities that may
require accommodations and adjustments. The Commission seeks further
comment on the staffing issues, especially regarding the utilities'
rights to the time and attention of contractors. The Commission invites
comment concerning whether the proposed requirements are necessary,
appropriate, and sufficient for their purpose.
27. The Commission seeks comment on this proposal, including
whether it strikes the right balance of rights and burdens of attachers
and utilities, and any implementation issues the Commission should
address. For example, if no list is provided, or if one is not
available when the application is filed, should the existing ``same
qualifications'' standard apply by default? The Commission also seeks
comment on whether any additional criteria are warranted. For example,
should this list contain a minimum number of contractors to ensure
ready
[[Page 41343]]
availability of contractors if make-ready work is needed? Should the
list automatically include any contractors previously used by the
utility for its own purposes? Should there be a presumption that
contractors that are approved and certified by a utility (or multiple
utilities) other than the pole owner be acceptable for make-ready work?
28. With respect to incumbent LECs, the Commission proposes that:
to perform surveys or make-ready work attachers may use any contractor
that has the ``same qualifications, in terms of training, as the
utilities own workers.'' As discussed above, in the Local Competition
Order, the Commission reasoned that ``[a]llowing a utility to dictate
that only specific employees or contractors be used would impede the
access that Congress sought to bestow on telecommunications providers
and cable operators * * *.'' These risks are heightened in the context
of incumbent LEC utility poles, where the new attacher typically will
be a competitor of the incumbent LEC. Thus, the balancing of safety
concerns and protection for attachers differs from the context of
electric utility-owned poles, and leads us to propose an approach that
grants greater flexibility to attachers.
29. Direction and Supervision of Outside Contractors. The
Commission proposes that, for surveys and make-ready work, utilities
and prospective attachers may jointly direct and supervise contractors.
As with approval and certification of contract workers, the Commission
proposes a differing approach for incumbent LEC pole owners and other
pole owners. And in the context of actual attachment of facilities to
poles, the Commission does not propose any affirmative right for
utilities to jointly direct and supervise contractors.
30. For electric utilities and other non-incumbent LEC pole owners,
the Commission proposes that: attachers performing surveys and make-
ready work using contractors shall invite representatives of the
utility to accompany the contract workers, and should mutually agree
regarding the amount of notice to the utility. The Commission further
proposes that, whenever possible, both parties' engineers should seek
to find mutually satisfactory solutions to conflicting opinions, but
when differences are irreconcilable, the pole owners' representative
may exercise final authority to make all judgments that relate directly
to insufficient capacity or safety, reliability, and sound engineering,
subject to any otherwise-applicable dispute resolution process. The
Commission sees no conflict between the use of contractors as outlined
above and the electric utilities' safety and engineering concerns. Nor
does the Commission see a conflict with the attachers' desire to use
independent contractors. Use of contractors is an appropriate tool to
facilitate timely deployment of facilities only when it does not
circumvent or diminish the electric utilities' vital role in
maintaining the safety, reliability, and sound engineering of the pole
infrastructure.
31. In the case of incumbent LEC-owned poles: attachers performing
surveys and make-ready work using contractors shall invite a
representative of the incumbent LEC to accompany and observe the
contractor, but the incumbent LEC shall not have final decision-making
power. In the majority of cases, electric power companies and other
non-incumbent LECs are typically disinterested parties with only the
best interest of the infrastructure at heart; incumbent LECs may make
no such claim. In contrast to the vast majority of electric utilities
or similar pole owners, as discussed above, incumbent LECs are usually
in direct competition with at least one of the new attacher's services,
and the incumbent LEC may have strong incentives to frustrate and delay
attachment. To allow an incumbent LEC a veto over contractors would
provide them with an undue ability to act on that incentive. The
Commission seeks comment on whether incumbent LECs have other legal
responsibilities or obligations under joint use agreements that could
counsel in favor of a different approach.
32. Working Among the Electrical Lines. The Commission further
proposes that all utilities may deny access by contractors to work
among the electric lines, except where the contractor has special
communications-equipment related training or skills that the utility
cannot duplicate. In so doing, the Commission clarifies that
``proximity of electric lines'' extends into the safety space between
the communications and electrical wires but, not among the lines
themselves. The Commission concluded in the Local Competition Order
that ``[a] utility may require that individuals who will work in the
proximity of electric lines have the same qualifications, in terms of
training, as the utility's own workers, but the party seeking access
will be able to use any individual workers who meet these criteria.''
Safety, reliability, and engineering concerns are strongest regarding
work among energized power lines, and the National Broadband Plan calls
for the use of independent contractors to perform ``engineering
assessments and communications make-ready work.'' In any event, the
word ``proximity'' is ambiguous, and could mean either ``up to the
electric lines'' or ``among the electric lines.'' The former is the
more reasonable choice and the Commission believes it is appropriate to
remove this ambiguity from the rules. Thus, the Commission proposes
that, generally, attachers and their contractors may be limited to the
communications space and safety space below the electric space on a
pole. However, utilities must permit contract personnel with
specialized communications-equipment training or skills that the
utility cannot duplicate to work among the power lines, such as work
with wireless antennae equipment. Because of the heightened safety
considerations, any such work shall be performed in concert with the
utility's workforce and when the utility deems it safe.
Other Options To Expedite Pole Access
33. Payment for Make-ready Work. In addition to adopting a formal
pole access timeline, the Commission seeks to correctly align the
incentives to perform make-ready work on schedule. Accordingly, the
Commission proposes to adopt the Utah rule that applicants pay for
make-ready work in stages, and may withhold a portion of the payment
until the work is complete. In Utah, applicants trigger initiation of
performance by paying one half the estimated cost; pay one quarter of
the estimated cost midway through performance; and pay the remainder
upon completion. What schedule of payment is normal in comparable
circumstances in other commercial contexts? Alternatively, should the
Commission adopt a general rule permitting payment for make-ready work
in stages, and leave the details of the specific payment schedule to
negotiation?
34. Schedule of Charges. The Commission proposes that utilities
shall make available to attaching entities a schedule of common make-
ready charges. The National Broadband Plan recommended that the
Commission ``[e]stablish a schedule of charges for the most common
categories of work (such as engineering assessments and pole
construction)'' as an additional way to lower the cost and increase the
speed of the pole attachment process. Such a schedule could provide
transparency to attachers seeking to deploy their networks and could
fortify the ``just and reasonable'' access standard for pole
attachments. The Commission seeks comment generally on the benefits and
any limitations associated with
[[Page 41344]]
requiring utilities to prepare such a schedule. Further, the Commission
asks whether and how schedules of common make-ready charges are used
and implemented by utilities today. The Commission also seeks comment
on any comparable State requirements. For example, the Commission notes
that the New York Commission's rules require that make-ready charges be
in each pole owner's operating agreement, be posted on its Web site,
with supporting documentation available to attachers on request, and
can only be changed annually with notice. The Commission also asks if
there are other mechanisms currently in use, such as standardized
contract terms, that provide the necessary information and transparency
to the make-ready process, without additional government mandate.
Finally, the Commission seeks comment on whether particular make-ready
jobs and charges are the most common, and thus would most easily be
applied to a generalized schedule of charges.
35. Administering Pole Attachments. The Commission seeks comment on
ways to simplify the relationship between prospective attachers and
utilities when there is joint ownership. The record suggests that, when
a pole is jointly owned, a prospective attacher may sometimes be
required to obtain permission to attach from both owners. Consolidating
administrative authority in one managing utility would simplify a
prospective attacher's request for access, and clarify which utility
will interact with the requesting entity and existing attachers during
the make-ready process. The Commission therefore proposes that, when
more than one utility owns a pole, the owners must determine which of
them is the managing utility for any jointly-owned pole. Also,
requesting entities need only deal with the managing utility, and not
both utilities. The Commission also proposes that both utilities should
make publicly available the identity of the managing utility for any
given pole, and the Commission seeks comments on these proposals. The
Commission invites comment on whether the proposed regulations are
sufficient to clarify joint owners' rights and responsibilities with
regard to the right of access. In addition, the Commission seeks
comment on joint use agreements, and whether they may inhibit the
managing owner from administering the entire pole. If the joint user is
an incumbent LEC, how should the Commission address concerns that it
might not be inclined to devote its resources to providing access for a
competitor? Do joint use agreements sometimes give that user a degree
of ``control'' over access to the pole to the point that the user may
have a specific duty to provide access under section 224?
36. The Commission also seeks comment regarding the managing
utility's responsibility to administer the pole during the make-ready
process. In particular, under section 224, an existing attacher may not
be required to bear any of the costs of rearranging its attachment to
make room for a new attacher. As a practical matter, only the utility
has privity with both the requesting entity and the existing attachers,
and it appears reasonable for the utility to manage the transfer of
funds. The Commission is reluctant, however, to entrust this
responsibility to the managing utility without standards or guidance.
Therefore, it proposes to require the utility to collect from existing
attachers statements of any costs that are attributable to
rearrangement; to bill the new attacher for these costs, plus any
expenses the utility incurs in its role as clearinghouse, and to
disburse compensatory payment to the existing attachers. The Commission
seeks comment on this proposal, and any alternatives for managing this
process. The Commission also asks whether utilities require any further
clarification of their role in managing the pole during the make-ready
process. For example, should the managing utility schedule the sequence
for attaching entities to move their facilities during make-ready?
37. Attachment Techniques. In the Order, the Commission clarified
that the Act requires a utility to allow cable operators and
telecommunications carriers to use the same pole attachment techniques
that the utility itself uses or allows. Some commenters state, however,
that even if a utility has employed such practices in the past, it
should be able to prohibit boxing and bracketing for both itself and
other attachers going forward. If a utility changes its practices over
time to exclude attachment techniques such as boxing, to what extent
would the nondiscrimination standard in the statute automatically
address this, or are rules necessary? The Commission also seeks comment
on how standards should apply when a pole is jointly used or owned, and
on whether utilities' decisions regarding the use of boxing and
bracketing should be made publicly available.
38. Improving the Availability of Data. The Commission seeks
comment on how to improve the collection and availability of
information regarding the location and availability of poles, ducts,
conduits, and rights-of-way. As the National Broadband Plan points out,
there are hundreds of entities that own and use this infrastructure,
and accurate information about it is important for the efficient and
timely deployment of advanced and competitive communications networks.
Initially, the Commission asks what data would be beneficial to
maintain, such as the ownership of, location of, and attachments on a
pole. Should the Commission collect these data itself, or might
industry, including third-party entities, be better suited for the
task? If the latter, what is the appropriate role for the Commission
regarding the establishment of common standards and oversight? Could or
should this information, if collected and maintained by separate
entities, be aggregated into a national database?
39. To gain perspective on the scope of this task, the Commission
seeks comment on the number of poles for which data would need to be
gathered, how long it would take to inventory them, and the cost of
such an inventory. The Commission also asks what existing methods
utilities currently use, such as the National Joint Utilities
Notification System (NJUNS) or Alden Systems' Joint Use services. How
can the Commission ensure participation by all relevant parties,
including timely updates of information? For example, is it reasonable
for a utility to require all attachers to actively use or populate a
system it uses, such as NJUNS, to inventory pole attachments, perhaps
as a term of the master agreement? How can the Commission ensure that
the costs are shared equitably by pole owners and other users of the
data? The Commission also seeks comment on the challenges to creating
and maintaining such a database, including security issues, access for
prospective attachers, and the potential burden to small utilities, as
well as on any additional benefits such data would have for maintaining
safe and reliable infrastructure.
40. The Commission also expects that the timeline and related rules
proposed above will help expedite pole access, and proposes that it
monitor whether those rules, if adopted, achieve the intended results.
The Commission seeks comment on the most appropriate method for it to
use in this regard. Would the other possible improvements to the
collection and availability discussed above provide a source of such
information? If not, should the Commission otherwise collect such
information, either formally, or through a periodic Public Notice or
Notice of Inquiry? Similarly, is there other
[[Page 41345]]
information that the Commission should collect to monitor the
effectiveness of any other pole access, enforcement, or pricing rules
it might adopt?
B. Improving the Enforcement Process
41. Revising Pole Attachment Dispute Resolution Procedures. In
response to the Pole Attachment Notice, the Commission received several
comments suggesting that the Commission modify its procedures for
resolving pole attachment complaints. In addition, the National
Broadband Plan included recommendations that the Commission implement
institutional changes, such as the creation of specialized forums and
processes for attachment disputes, and adopt process changes to
expedite dispute resolution.
42. The Commission asks whether it should modify its existing
procedural rules governing pole attachment complaints. Should the
Commission adopt additional rules or procedures to address specific
issues that arise with wireline or wireless attachments? Do any of the
Commission's other procedural rules, such as the rules governing formal
complaints under section 208 of the Act, or the rules governing
complaints related to cable service, provide a suitable model in
developing new procedural rules for pole attachment complaints? What
other issues concerning dispute resolution processes should the
Commission consider?
43. If the Commission were to establish specialized forums to
handle pole attachment disputes, what form and structure should these
forums take? Under what legal authority could the Commission authorize
the formation of such forums? How would the forums be formed, managed,
and funded? How should forum participants be selected? What specific
expertise should staff of these forums have? What role should the
Commission or Commission staff play with regard to the forums? What
specific role should such forums play in the resolution of pole
attachment disputes? Should the forums engage in mediation or other
alternative dispute resolution mechanisms? Should the use of the forums
for dispute resolution be mandatory or voluntary? Should these
specialized forums issue decisions in specific cases? How could the
decisions of the forums be challenged, and pursuant to what standard?
Should such decisions be appealable to the Commission? What kinds of
rules or procedures should govern the work of the specialized forums?
How would the forum participants avoid conflicts of interest when
engaging in dispute resolution processes with industry participants? Do
the Transition Administrator procedures established in the 800 MHz
Report and Order provide a suitable model in developing these forums?
The Commission invites comment.
44. Efficient Informal Dispute Resolution Process. In the Pole
Attachment Notice, the Commission noted that the Commission has
encouraged parties to participate in staff-supervised, informal dispute
resolution processes and that these processes have been successful in
resolving pole attachment matters. If parties are able informally to
agree to a resolution of their problems, they can avoid the time and
expense attendant to formal litigation. Some attachment disputes may be
more quickly or cost-effectively resolved by the companies involved
themselves or through other local dispute resolution processes outside
the Commission's auspices. The Commission seeks comment on whether the
Commission should attempt to encourage this type of local dispute
resolution with a set of ``best practices,'' or in other ways. If the
Commission were to develop a set of best practices, what would the
likely impact be on the process compared with how disputes are resolved
today? Should the best practices or local processes apply to all
attachment disputes, safety and engineering issues only, or have some
other scope? The New York Commission, for instance, requires some
resolution at the company level before a formal complaint can be filed.
Should the Commission encourage similar efforts, suggest that parties
seek mediation or arbitration before filing a complaint, or are there
other processes that parties have found helpful and can recommend? Are
there other ways that the Commission should encourage this type of
dispute resolution?
45. The Pole Attachment Notice questioned whether Sec. 1.1404(m)
has had the unintended consequence of discouraging informal resolution
of disputes. For that reason, the Commission sought comment on whether
the rule should be amended or eliminated. The Commission received no
substantive comment concerning Sec. 1.1404(m), which provides that
potential attachers who are denied access to a pole, duct, or conduit
must file a complaint ``within 30 days of such denial.'' The experience
of handling pole attachment complaints, however, leads us to believe
that the rule hinders informal resolution of disputes. Specifically,
the existence of the rule deters attachers from pursuing pre-complaint
mediation and has prompted the premature filing of complaints. Indeed,
several complainants have indicated to Commission staff that, although
they would be interested in mediation, they felt they had no choice but
to file a complaint first, because of Sec. 1.1404(m). Thus, the
Commission believes the rule unnecessarily pushes some parties into
formal litigation at a stage when informal resolution still is
possible. Accordingly, the Commission proposes that the 30-day
requirement in Sec. 1.1404(m) be eliminated.
46. Remedies. Under section 224 of the Act, the Commission is
charged with a duty to ``regulate the rates, terms, and conditions for
pole attachments'' and to ``adopt procedures necessary and appropriate
to hear and resolve complaints concerning such rates, terms, and
conditions.'' The Commission has broad authority to ``enforc[e] any
determinations resulting from complaint procedures'' and to ``take such
action as it deems appropriate and necessary, including issuing cease
and desist orders * * *.'' In furtherance of these statutory duties,
the Commission has adopted procedural rules governing complaints
alleging both unreasonable rates, terms, and conditions for pole
attachment, and the unlawful denial of pole access.
47. Section 1.1410 of the pole attachment rules lists the remedies
available in a complaint proceeding where the Commission determines
that a challenged rate, term, or condition is not just and reasonable.
In such cases, the Commission may terminate the unjust and unreasonable
rate, term, or condition, or substitute a just and reasonable rate,
term, or condition established by the Commission. Moreover, Sec.
1.1410(c) also permits a monetary award in the form of a ``refund, or
payment,'' which will ``normally be the difference between the amount
paid under the unjust and/or unreasonable rate, term, or condition and
the amount that would have been paid under the rate, term, or condition
established by the Commission from the date that the complaint, as
acceptable, was filed, plus interest.'' Although the Commission
occasionally has departed from the notion that the filing of a pole
attachment complaint marks the beginning of a refund period, it usually
has used the complaint filing date as the starting point for
determining refunds.
48. The Commission's rules do not expressly set forth the remedies
available where the Commission determines that a utility has wrongfully
denied or delayed access to poles in violation of section 224(f) of the
Act. In addition, the rules do not provide for an award of compensatory
damages in cases where either an unlawful denial or
[[Page 41346]]
delay of access is established, or a rate, term, or condition is found
to be unjust or unreasonable. The Commission proposes that Sec. 1.1410
of the Commission's pole attachment complaint rules be amended to
enumerate the remedies available to an attacher that proves a utility
has unlawfully delayed or denied access to its poles. The Commission
proposes that the rule specify that one remedy available for an
unlawful denial or delay of access is a Commission order directing that
access be granted within a specified time frame, and/or under specific
rates, terms, and conditions. Because the Commission already has
authority to issue such orders, and has done so in the past, this rule
change would simply codify existing precedent.
49. The Commission further proposes amending Sec. 1.1410 to
specify that compensatory damages may be awarded where an unlawful
denial or delay of access is established, or a rate, term, or condition
is found to be unjust or unreasonable. Because the current rule
provides no monetary remedy for a delay or denial of access, utilities
have little disincentive to refrain from conduct that obstructs or
delays access. Under the current rule, the only consequence a utility
engaging in such conduct is likely to face in a complaint proceeding is
a Commission order requiring the utility to provide the access it was
obligated to grant in the first place. Currently, a utility that
competes with the attacher may calculate that the cost of defending an
access complaint before the Commission, even if it receives an adverse
ruling, may be justified by the advantage the pole owner has gained by
delaying a rival's build-out plans. Allowing an award of compensatory
damages for unlawful delays or denials of access would provide an
important disincentive to pole owners to obstruct access. It would also
give the Commission the ability to ensure that the attacher is ``made
whole'' for the delay it has suffered.
50. Should Sec. 1.1410 be amended to provide for an award of
compensatory damages where a rate, term, or condition is found to be
unjust or unreasonable? Under the current rule, the only monetary
remedy specified in such cases is a refund. Although the refund remedy
may adequately compensate an attacher who has been charged excessive
rental rates or make-ready fees, it does not compensate the attacher
for unreasonable terms and conditions of attachment that do not involve
payments to the pole owner. For example, a pole owner that unlawfully
bars an attacher from using the boxing technique on poles may increase
the charges an attacher must pay third parties to attach its facilities
to poles. Just compensation in such a case would not involve a refund
by the pole owner, but might require it to reimburse the attacher for
costs the attacher would not have incurred but for the owner's
unreasonable ban on boxing.
51. Finally, as noted above, Sec. 1.1410(c) also permits a
monetary award in the form of a ``refund, or payment,'' measured ``from
the date that the complaint, as acceptable, was filed, plus interest.''
The Commission adopted Sec. 1.1410(c) in 1978 to ``avoid abuse and
encourage early filing when rates are considered objectionable by the
CATV operator.'' But the experience in handling pole attachment
complaints leads us to believe that Sec. 1.1410(c) fails to make
injured attachers whole. Generally speaking, a plaintiff is entitled to
recompense going back as far as the applicable statute of limitations
allows. There does not appear to be a justification for treating pole
attachment disputes differently. Moreover, the Commission finds that
Sec. 1.1410(c) discourages private negotiations between parties about
the reasonableness of terms and conditions of attachment and instead
encourages an attacher first to file a complaint and then to negotiate
with the utility. For these reasons, the Commission proposes that Sec.
1.1410(c) be modified by deleting the phrase ``from the date that the
complaint, as acceptable, was filed.'' Additionally, the Commission
proposes that the phrase ``consistent with the applicable statute of
limitations'' be added to emphasize that any relief sought is governed
by the relevant limitations period.
52. Unauthorized Attachments. In the Pole Attachment Notice, the
Commission sought comment on the prevalence of attachments installed on
poles without a lawful agreement with the pole owner (so-called
``unauthorized attachments''). In response, several utilities claim
that a significant number of pole attachments on their poles are
unauthorized and violate relevant safety codes. For example, Florida
Power and Light reports finding 33,350 unauthorized attachments in an
audit conducted in 2006. EEI and UTC maintain that, for some utilities,
unauthorized attachments meet or exceed 30 percent of attachments. AEP
submits the results of surveys conducted by five utilities indicating
that unauthorized attachment rates in the double-digits are common. In
contrast, other utilities report percentages that are significantly
lower. For instance, Progress Energy, Xcel Energy, and Wheeling Power
report unauthorized attachment rates of 6.18 percent, 4.79 percent, and
2 percent, respectively.
53. Attachers maintain that utilities' allegations of unauthorized
attachments are ``overblown.'' Time Warner Cable, for instance,
contends that such assertions often are based on poor recordkeeping
(including incorrect system maps), changes in pole ownership (e.g., a
utility considers a once-authorized attachment on a pole to be
unauthorized after ownership is transferred to the utility), use of
novel and inappropriate definitions of attachment that deviate from the
parties' past practices and industry standards, and utilities' offering
of financial incentives to their contractors to find unauthorized
attachments. Other attachers are of a similar mind.
54. Based on the current record, the Commission is unable to gauge
with certainty the extent of the problem of unauthorized attachments.
Indeed, the data suggest that the number of unauthorized attachments
can vary dramatically from one pole system to another. Nevertheless,
the Commission believes the dangers presented by unauthorized
attachments transcend the theoretical. True unauthorized attachments
can compromise safety because they bypass even the most routine
safeguards, such as verifying that the new attachment will not
interfere with existing facilities, that adequate clearances are
maintained, that the pole can safely bear the additional load, and that
the attachment meets the appropriate safety requirements of the utility
and the NESC. The question becomes, then, how best to address the
problem of unauthorized attachments.
55. The Commission sought comment in the Pole Attachment Notice on
whether existing enforcement mechanisms adequately address alleged
unlawful practices by attachers and ensure the safety and reliability
of critical electric infrastructure. Under current precedent,
unauthorized attachment fees imposed by utilities are not ``per se
unreasonable,'' and the ``penalty may exceed the annual pole attachment
rate.'' A ``reasonable penalty,'' however, cannot ``exceed an amount
approximately equal to the annual pole attachment fee for the number of
years since the most recent inventory or five years, whichever is less,
plus interest * * *.''
56. Pole owners complain that this precedent results in penalties
that are not steep enough to deter attachers from mounting facilities
for which they have no permit or that fail to comply with relevant
safety and engineering
[[Page 41347]]
standards. In one utility's words, the unauthorized attachment penalty
approved by the Commission is ``not a penalty at all in most cases,''
because the attacher ends up having to pay only what it would have owed
had it followed appropriate permitting procedures in the first place.
In contrast, some attachers insist that the current regime is
sufficient, while others assert that allowing the imposition of
penalties would contravene principles of contract law.
57. Although the Commission makes no specific findings today as to
whether the Commission should allow stricter penalties for unauthorized
attachments, it appears that penalties amounting to little more than
back rent may not discourage non-compliance with authorization
processes. In other words, competitive pressure to bring services to
market may overwhelm the deterrent effect of modest penalties. And so
the Commission seeks additional comment on practical and lawful means
of increasing compliance through the use of more substantial penalties.
58. One potential alternative to the Commission's present penalty
regime is a system akin to the one adopted by the Oregon Public
Utilities Commission (Oregon Commission). The Oregon Commission
specifies penalties of $500 per pole, per year, for attachment of
facilities without an agreement, and, for attachments without a permit,
$100 per pole plus five times the current annual rental fee per pole.
The Oregon system further includes, among other things, a provision for
attacher notification, opportunity for an attacher to correct
violations or submit a plan for correction, and a mechanism for
resolution of factual disputes. The Oregon penalties have been tested
and refined with assistance from the Oregon Joint Use Association.
59. The Commission seeks comment on whether the system of penalties
instituted by the Oregon Commission has been effective in reducing the
incidence of unauthorized attachments in that State. What are the
benefits and shortcomings of the Oregon system? Should the Commission
adopt the Oregon standards as presumptively reasonable penalties for
unauthorized attachments? Would the Commission need to modify the
Oregon standards before adopting them as national standards? If so, in
what ways? Should there be a threshold number of unauthorized
attachments necessary before penalties apply? Should exceptions be made
for violations caused or contributed to by the pole owner (e.g., a
utility that assumes ownership of a pole formerly owned by another
entity, creates a hazard by adding facilities, changes its safety
standards, renegotiates an attachment agreement, or otherwise causes a
formerly permitted and safe attachment to lose that status)?
60. How could the Oregon standards be enforced--through provisions
in pole attachment agreements, through the complaint resolution
mechanism in section 224 of the Act, or through both? Would changes to
the Commission's pole attachment rules (47 CFR 1.1401-1.1418) be
necessary to enable utilities to bring unauthorized attachment
complaints?
61. If the Oregon system is not adopted, what are alternative
penalty systems that would deter unauthorized attachments? Are there
other models the Commission should consider? What are the contours of
such alternatives, including notice to attachers, safe harbors,
opportunities for correction, exceptions for safety violations caused/
contributed to by pole owners, and means of dispute resolution?
62. The ``Sign and Sue'' Rule. Under current Commission rules and
precedent, an attacher may execute a pole attachment agreement with a
utility, and then later file a complaint challenging the lawfulness of
a provision of that agreement. This process, sometimes called ``the
sign and sue rule,'' allows an attacher to seek relief where it claims
that a utility has coerced it to accept unreasonable or discriminatory
contract terms to gain access to utility poles. In the Pole Attachment
Notice, the Commission sought comment on the ``sign and sue'' rule, and
asked whether the Commission should adopt some contours to the rule,
such as time-frames for raising written concerns about a provision of a
pole attachment agreement. As discussed below, the Commission proposes
that the sign and sue ``rule'' should be retained, but also proposes
that it be modified through an amendment to the Commission's rules that
would require an attacher to provide a pole owner with notice, during
contract negotiations, of the terms it considers unreasonable or
discriminatory.
63. In response to the Pole Attachment Notice, a number of
attachers filed comments supporting retention of the sign and sue rule
in its present form. The attachers assert that, because utilities have
inherently superior bargaining power in negotiating pole attachment
agreements, attachers may be forced to accept unreasonable rates,
terms, and conditions in order to gain the prompt access to poles that
is vital to their business plans. One commenter observes that ``cable
operators or telecom providers may need to sign an unreasonable pole
attachment agreement while they are undergoing time-sensitive build-
outs or plant upgrades and cannot afford to be delayed by protracted
negotiations or litigation before the Commission.'' The Commission's
willingness to review the reasonableness of contract provisions, in the
view of some attachers, has served to check the utilities' abuse of
their superior bargaining and encourage them to negotiate in good
faith, thus reducing the incidence of disputes.
64. Attachers oppose amending the Commission's rules to impose time
limits on the right to challenge the provisions in a pole attachment
agreement. They argue that such time limits are inappropriate because a
given term in a pole attachment agreement may not be unreasonable on
its face, but may only become so through a utility's later
interpretation or application. They predict that imposing time limits
on challenges to the reasonableness of terms would lead to unnecessary
pole attachment litigation because attachers would be forced
immediately to challenge terms that may, hypothetically, be
unreasonably applied or interpreted in the future.
65. Several utilities filed comments opposing the sign and sue rule
and suggesting that it be modified or eliminated. They contend that the
rule has engendered distrust between pole-owning utilities and
attaching entities. According to these utilities, attachers are willing
to sign virtually any pole attachment agreement as a matter of
expediency, knowing they can use the Commission's complaint process
``to forestall or upset the utility's ability to enforce the
agreement.'' The Commission's willingness to entertain pole attachment
complaints at any time, they argue, undermines a pole owner's
confidence ``that it will realize the bargain it has struck with an
attaching entity.'' As one commenter put it, the sign and sue rule
``allows attachers to `cherry pick' contractual provisions that they
would like to disavow, while not extending the same privilege to
utilities.''
66. Utilities have proposed a number of fixes to these perceived
problems with the sign and sue rule. One commenter urged the Commission
to adopt a presumption that an executed pole attachment agreement is
just and reasonable. Similarly, another commenter asked the Commission
to make explicit that both parties to a pole attachment agreement are
subject to a duty to negotiate in good faith, and bar
[[Page 41348]]
complaints as to the reasonableness of executed pole attachment
agreements, absent extrinsic evidence of coercion or undue influence as
would be sufficient to make the agreement void or voidable under the
common law. Another utility asked the Commission to require that any
challenges to pole attachment agreements be brought in State court
under well-defined State law standards of unconscionability.
67. The Commission adopted the sign and sue rule in recognition
that utilities have monopoly power over pole access. The Commission was
concerned that a utility could nullify the statutory rights of a cable
system or a telecommunications carrier by making ``take it or leave it
demand[s]'' that it relinquish valuable rights under section 224
``without any quid pro quo other than the ability to attach its wires
on unreasonable or discriminatory terms.'' The record does not
demonstrate that the potential for utilities to exert such coercive
pressure in pole attachment agreement negotiations is less significant
today than when the Commission first adopted the sign and sue rule.
Because there remains a real possibility that utilities may abuse their
monopoly power during the negotiating process, the Commission proposes
that the sign and sue rule should be retained in some form. For similar
reasons, the Commission proposes that the record does not support
adoption of a presumption that executed pole attachment agreements are
just and reasonable.
68. To be sure, utilities have raised valid concerns about the need
to ensure that both parties to a pole attachment agreement negotiate in
good faith. Their suggestion, however, that the Commission's review of
pole attachment agreements be limited to determining whether the
agreement would be deemed unconscionable or voidable under State
contract law appears inconsistent with the Commission's statutory
mandate under section 224. Section 224 grants cable systems and
telecommunications carriers rights to pole access, and to reasonable
rates, terms, and conditions for pole attachment, that are independent
and distinct from rights granted under contract law. The Commission has
a duty under section 224 to ``adopt procedures necessary and
appropriate to hear and resolve complaints concerning * * * rates,
terms, and conditions'' of pole attachment pursuant to the requirements
of section 224. The Commission would not be fulfilling that duty if it
were to substitute the requirements of contract law for the dictates of
section 224.
69. It is important to note, however, that section 224 does not
grant attachers an unfettered right to ``cherry pick'' contractual
terms they wish to disavow, while retaining the benefits of more
favorable terms. An attacher is entitled to relief under the sign and
sue rule only if it can show that a rate, term, or condition is
unlawful under section 224, not merely unfavorable to the attacher.
Further, the Commission has recognized that in some circumstances, a
utility ``may give a valuable concession in exchange for the provision
the attacher subsequently challenges as unreasonable.'' Where such a
quid pro quo is established, the Commission will not disturb the
bargained-for package of provisions.
70. As the Commission has previously stated, the Commission
encourages, supports and fully expects that mutually beneficial
exchanges will take place between the utility and the attaching entity.
The Commission wants to promote efforts by attachers and utilities to
negotiate innovative and mutually beneficial solutions to contested
contract issues. In furtherance of that goal, the Commission proposes
that the Commission amend Sec. 1.1404(d) of the rules to add a
requirement that an attacher provide a utility with written notice of
objections to a provision in a proposed pole attachment agreement,
during contract negotiations, as a prerequisite for later bringing a
complaint challenging that provision.
71. Should the amended rule include an exception addressing
attachers' concerns that a given contract provision may not be
unreasonable on its face, but only become so through a utility's later
interpretation or application? The Commission thus proposes to include
language in amended Sec. 1.1404(d) allowing the attacher to challenge
the lawfulness of a rate, term, or condition in an executed agreement,
without prior notice to the utility during contract negotiations, where
the attacher establishes that the rate, term, or condition was not
unjust and unreasonable on its face, but only as later applied by the
utility, and the attacher could not reasonably have anticipated that
the utility would apply the challenged rate, term, or condition in such
an unjust and unreasonable manner. The Commission believes that this
amendment to Sec. 1.1404(d) will prevent utilities from being blind-
sided by an attacher's post-execution challenge to the lawfulness of
contract provisions, and will encourage the parties to reach mutually
acceptable compromises on disputed terms, before the agreement is
executed.
72. Finally, the Commission asks for comment on when an attacher's
cause of action challenging a rate, term, or condition in a pole
attachment agreement accrues for purposes of applying the appropriate
statute of limitations. The Commission proposes that the cause of
action be deemed to accrue at the time the challenged contract
provision is first applied against the attacher in an unlawful manner--
regardless of whether the provision is facially invalid--because that
is the point in time when the attacher suffers an injury. By contrast,
if the cause of action were instead deemed to accrue at the time the
agreement was executed, attachers might feel compelled to bring a
complaint challenging a contract provision that may never be applied
against them, merely to avoid having their claims extinguished by the
statute of limitations. The Commission seeks comment on this proposed
rule of accrual. Further, with respect to other claims involving pole
attachments, the Commission seeks comment on whether the Commission
should continue to follow common law principles in determining the time
of accrual, or adopt other, alternative approaches.
C. Pole Rental Rates
73. Telecommunications carriers and cable operators generally pay
for access to utility poles in two separate ways. First, as noted
above, attachers pay nonrecurring charges to cover the costs of ``make-
ready'' work--that is, rearranging existing pole attachments or
installing new poles as needed to enable the provider to attach to the
pole. Second, attachers generally also pay an annual pole rental fee,
which currently is designed to recover a portion of the utility's
operating and capital costs attributable to the pole. Both of these
costs can impact communications service providers' investment
decisions. In a prior section, this FNPRM seeks comment on ways to
reduce make-ready costs. Below, the Commission seeks comment on ways to
minimize the distortionary effects arising from the differences in
current pole rental rates, consistent with the objectives of the
National Broadband Plan and the existing statutory framework.
74. By virtue of the 1996 Act revisions, section 224 of the Act now
sets forth two separate formulas to determine the maximum rates for
pole attachments--one applies to pole attachments used by providers of
telecommunications services (the telecom rate formula), and the other
to pole attachments used ``solely to provide cable service'' (the cable
rate formula).
[[Page 41349]]
As the Commission has implemented these statutory formulas, the telecom
rate formula generally results in higher pole rental rates than the
cable rate formula. The difference between the two formulas under
current Commission rules is the manner in which they allocate the costs
associated with the unusable portion of the pole--that is, the space on
the pole that cannot be used for attachments. The cable rate formula
and the telecom rate formula both allocate the costs of usable space on
a pole based on the fraction of the usable space that an attachment
occupies. Under the cable rate formula, the costs of unusable space on
a pole are allocated in the same way, i.e., based on the portion of
usable space an attachment occupies. Under the telecom rate formula,
however, two-thirds of the costs of the unusable space is allocated
equally among the number of attachers, including the owner, and the
remaining one third of these costs is allocated solely to the pole
owner.
75. At the same time that the Commission adopted a rule
implementing the telecom rate formula, it addressed the issues of cable
attachments used to offer commingled cable and Internet access
services. In particular, the Commission held that cable television
systems that offer commingled cable and Internet access service should
continue to pay the cable rate. In 2000, the Supreme Court upheld this
decision, finding that section 224(b) gives the Commission authority to
adopt just and reasonable rates for attachments within the general
scope of section 224 of the Act, but outside the ``self-described
scope'' of the telecom rate formula or cable rate formula as specified
under sections 224(d) and (e).
76. Effects of Current Pole Rental Rates. The National Broadband
Plan recommends that the Commission ``establish rental rates for pole
attachments that are as low and close to uniform as possible,
consistent with [s]ection 224 of the [Act], to promote broadband
deployment.'' In particular, the Plan observes that ``[a]pplying
different rates based on whether the attacher is classified as a
`cable' or a `telecommunications' company distorts attachers'
deployment decisions.'' There have been many disputes about the
applicability of ``cable'' or ``telecommunications'' rates to
broadband, voice over Internet protocol and wireless services, among
others. The Plan found that ``[t]his uncertainty may be deterring
broadband providers that pay lower pole rates from extending their
networks or adding capabilities (such as high-capacity links to
wireless towers),'' based on the risk that, by doing so, a higher pole
rental rate might be applied for their entire network.
77. The record here likewise bears out these concerns. A number of
cable operators confirm that they have been deterred from offering new,
advanced services, such as to anchor institutions or wireless towers,
based on the possible financial impact if, as a result, they were
required to pay the current telecom rate for all their poles. The
National Broadband Plan estimated an average annual difference between
the telecom rate and cable rate of approximately $3 today. Although
that difference in rates might not seem significant in isolation, it
could amount to approximately $90 million to $120 million annually,
given the estimated 30-40 million poles subject to Commission-regulated
rates used by the cable industry. Cable commenters estimate an even
greater difference between the two rates of $208 million to $672
million for the cable industry as a whole. Moreover, the Commission
anticipated that rate differences could deter cable operators from
offering new services when it applied the cable rate to cable
operators' attachments used for both video and Internet services,
concluding that: In specifying [the cable] rate, the Commission intends
to encourage cable operators to make Internet services available to
their customers. The Commission believes that specifying a higher rate
might deter an operator from providing non-traditional services. Such a
result would not serve the public interest. Rather, the Commission
believes that specifying the [cable rate] will encourage greater
competition in the provision of Internet service and greater benefits
to consumers.
78. Previously, the Pole Attachment Notice sought comment on, among
other things, the difference in pole attachment rates paid by cable
systems, incumbent LECs, and competing telecommunications carriers that
provide the same or similar services. The Commission likewise
recognized ``the importance of promoting broadband deployment and the
importance of technological neutrality,'' and thus ``tentatively
conclude[d] that all categories of providers should pay the same pole
attachment rate for all attachments used for broadband Internet access
service.'' The Pole Attachment Notice went on to tentatively conclude,
however, that ``the [uniform] rate should be higher than the current
cable rate, yet no greater than the telecommunications rate.''
79. The Commission declines to pursue the approach proposed by the
Pole Attachment Notice for several reasons. The Commission believes
that pursuing uniformity by increasing cable operators' pole rental
rates--potentially up to the level yielded by the current telecom
formula--would come at the cost of increased broadband prices and
reduced incentives for deployment. Instead, by seeking to limit the
distortions present in the current pole rental rates by reinterpreting
the telecom rate to a lower level consistent with the Act, the
Commission expects to increase the availability of, and competition
for, advanced services to anchor institutions and as middle-mile inputs
to wireless services and other broadband services.
80. USTelecom and AT&T/Verizon Broadband Rate Proposals. As an
initial matter, the Commission seeks comment on two alternatives, filed
after the comment cycle closed in the Pole Attachment Notice, to
establish a uniform rate for all pole attachments used to provide
broadband Internet access services, including those by
telecommunications carriers. As described below, both the USTelecom and
AT&T/Verizon proposals would allocate costs among attachers differently
than they are allocated today based on different assumptions about
numbers of attachers and the space each occupies on a pole. Presently,
under the cable rate formula, attachers (other than a pole owner) pay
an average of 7.4 percent of the annual costs of a pole. Under the
current telecom rate formula, each attacher (other than a pole owner),
pays an average of 11.2 percent of the annual costs of a pole in urban
areas and 16.89 percent in non-urban areas. Under USTelecom's rate
proposal, by contrast, any attacher (other than a pole owner) would pay
11 percent of the annual cost of a pole, regardless of the number of
attachers or amount of space each attacher uses. Under the AT&T/Verizon
proposal, it appears that each attacher (other than the pole owner)
would pay 18.67 percent of the annual costs of the pole.
81. Both rate proposals consist of formulas that are different from
those prescribed in section 224 of the Act. USTelecom and AT&T/Verizon
argue that the Commission ``is not limited to the particular rate
formulas incorporating factors such as usable space set forth in
[s]ection 224(d) and (e) for pole attachments of non-incumbent
telecommunications carriers and cable television systems.'' Thus,
USTelecom asserts that the Commission ``has broad authority, within the
bounds of reasonableness, `to derive its own view of just and
reasonable rates' * * * regardless of conventional considerations such
as usable space.''
[[Page 41350]]
The Commission seeks comment on this view of the Commission's
authority. Although the Supreme Court has confirmed that the Commission
can rely on its general section 224(b) authority to ensure ``just and
reasonable rates'' to regulate pole rental rates, under that holding
the Commission would appear to be bound by the statutory rate formulas
within their ``self-described scope.'' To the extent that Congress
intended a particular rate formula to apply only when a provider was
exclusively providing a particular type of service, it clearly knew how
to do so. Thus, the statute provides that the section 224(d) cable rate
formula applies to ``any pole attachment used by a cable television
system solely to provide cable service.'' The section 224(e) telecom
rate formula is not limited in this manner, and thus the ``self-
described scope'' of that formula would seem to encompass any
attachments by telecommunications carriers so long as they are being
used to provide telecommunications services--whether exclusively or in
combination with other services. However, the Commission seeks comment
on whether alternative interpretations of the statute would be
reasonable. Alternatively, is there a way in which the USTelecom or
AT&T/Verizon proposals could be reconciled with the pole rental rate
formulas specified in sections 224(d) and (e) of the Act?
82. The Commission also seeks comment on whether the USTelecom or
AT&T/Verizon proposals are in the public interest. In particular, the
Commission notes that, under the USTelecom proposal, the rates paid by
telecom attachers generally would be lower than those rates are today,
but the rates paid by cable attachers would be higher. With respect to
the AT&T/Verizon proposal, the Commission notes that it appears that
both telecommunications carriers and cable operators generally would
pay higher pole rental rates than yielded by the current telecom rate
formula. While those outcomes would provide uniformity of rates, would
they undermine investment incentives or otherwise increase the cost of
or reduce competition for communications services?
83. Reinterpreting the Telecom Rate. Rather than deviating from the
statutory telecom rate formula, the Commission seeks comment on ways to
reinterpret the section 224(e) telecom rate formula so as to yield pole
rental rates that reduce disputes and investment disincentives which
can arise from the disparate rates yielded by the Commission's current
rules. As the National Broadband Plan recognizes, this disparity
largely results from the existing statutory framework, as implemented
by the Commission. Although the National Broadband Plan recommended
that Congress ``consider amending [s]ection 224 of the Act to establish
a harmonized access policy for all poles, ducts, conduits and rights-
of-way,'' it also recommended that the Commission take what actions it
can to address these rate disparities within the existing statutory
framework. The Commission seeks comment below on alternatives for
reinterpreting the telecom rate formula, the proposal based in part on
one of those alternatives, as well as other alternative approaches to
reinterpreting the telecom rate formula within the existing statutory
framework.
84. TWTC Proposal. TWTC submitted a proposal to revise the
interpretation of the telecom rate formula to ``eliminate or
dramatically reduce the differential in pole attachment rates.'' The
Commission sought comment on this proposal in the Pole Attachment
Notice in the context of the somewhat different focus and proposals
considered there. The Commission revisits this proposal in light of the
pole rate recommendation of the National Broadband Plan. In addition to
the specific comment sought below, the Commission asks commenters to
refresh the record regarding the questions raised about the TWTC
proposal in the Pole Attachment Notice in the context of the issues
under consideration here.
85. Specifically, TWTC asserts that, despite the textual
differences between section 224(d) and section 224(e) regarding the
costs to be included in the cable rate formula and the telecom rate
formula, ``the FCC currently includes the same cost categories in its
implementing regulations'' reflected in the two formulas. In
particular, TWTC contends that the telecom rate includes costs not
mentioned in section 224(e), citing: (1) Rate of return; (2)
depreciation; and (3) taxes. TWTC alleges that such costs ``bear no
relation'' to the cost of providing space for an attachment and are not
necessitated by the language of section 224(e). In particular, TWTC
contends that ``none of these `costs' has anything to do with actually
providing `space' on a pole for pole attachments because a utility
would incur these costs `regardless of the presence of pole
attachments.''' Thus, TWTC proposes that those costs should be
eliminated from the telecom rate.
86. TWTC suggests instead that utilities should determine ``how
much extra a utility must incur to provide non-usable and usable space
on poles for pole attachments (in both construction and maintenance
costs) and then fully allocate those costs based on the cost-
apportionment formulas under Section 224(e)(2) and (3).'' The
underlying economic or analytical theory for TWTC's proposal is not
entirely clear, however.
87. To the extent that TWTC is arguing for ``costs'' to be defined
as marginal or incremental costs for purposes of section 224(e), the
Commission is skeptical of that theory. Marginal cost can be defined
either as the rate of change in total cost when output changes by an
infinitesimal unit or as the change in total cost when output changes
by a single unit. The term incremental cost refers to a discrete change
in total cost when output changes by any non-infinitesimal amount,
which might range from a single unit to a large increment representing
a firm's entire output. The Eleventh Circuit, in addressing a takings
challenge, has held that a pole attachment rate above marginal cost can
provide just compensation, and marginal or incremental cost pricing can
be an appropriate approach to setting regulated rates. Indeed, section
224(d) establishes such an approach as the low end of permissible rates
under the cable rate formula. However, the section 224(e) formulas
allocate the relevant costs in such a way that simply defining ``cost''
as equal to incremental cost would result in pole rental rates below
incremental cost. In particular, section 224(e) allocates portions of
the relevant ``cost'' to both the pole owner and the attachers. Thus,
if the Commission precisely calculated the relevant incremental costs,
and then applied the section 224(e) cost allocation formulas, the
resulting pole rental rate would recover less than the utility's
incremental cost, effectively resulting in a subsidy to the attacher.
In other words, the pole owner would bear more costs than if there were
no third party attachments on the pole at all. The Commission thus
believes that defining the ``cost of providing space'' as incremental
cost in the manner TWTC seems to suggest would be inconsistent with the
section 224(e) framework, given the manner in which the statutory
provision allocates the relevant ``costs.'' Nevertheless, the
Commission seeks comment on whether any party believes that, to the
contrary, such an interpretation is permissible.
88. The Commission also seeks comment on whether there are other
rationales that, consistent with the existing statutory framework,
could support TWTC's proposed approach, possibly in a modified form.
For example, what standard could the
[[Page 41351]]
Commission use to determine whether particular costs `bear any
relation' to the cost of providing space on a pole within the meaning
of TWTC's proposal? To what extent would such an approach be consistent
with the section 224 framework? As a practical matter, how would the
particular costs be calculated, and what sources of data could be used
to implement TWTC's proposal? In this regard, the Commission believes
that the proposal below draws on some of the underlying elements of
TWTC's proposal, but is more consistent with the statutory framework
and readily administrable. However, the Commission also seeks comment
on other possible approaches as well, to the extent that they have
advantages over that proposal.
89. Commission Rate Proposal. The Commission proposes an
alternative approach which would recognize that the Commission has
substantial--but not unlimited--discretion under the statutory
framework to interpret the term ``cost'' for purposes of section
224(e). This proposal would view the range of possible interpretations
of ``cost'' under section 224(e) as yielding a range of permissible
rates, from the current application of the telecom rate formula at the
higher end of the range, to an alternative application of the telecom
rate formula based on cost causation principles at the lower end. Under
this approach, the Commission would select a particular rate from
within that range as the appropriate telecom rate.
90. Interpretation of the Statutory Framework. The existing
statutory framework consists of several key provisions, and any revised
telecom rate formula must be consistent with those provisions. For one,
section 224(b) imposes an over-arching duty that the Commission ensure
that rates are ``just and reasonable.'' As the Commission has
recognized, ``[r]ather than insisting upon a single regulatory method
for determining whether rates are just and reasonable, courts and other
Federal agencies with rate authority similar to the own evaluate
whether an established regulatory scheme produces rates that fall
within a ``zone of reasonableness.'' For rates to fall within the zone
of reasonableness, the agency rate order must undertake a `reasonable
balancing' of the `investor interest in maintaining financial integrity
and access to capital markets and the consumer interest in being
charged non-exploitative rates.' '' With respect to each of the
alternatives for interpreting the telecom rate formula discussed below,
as well as any others raised by commenters, the Commission seeks
comment on how well the proposal ensures ``just and reasonable'' rates.
In particular, the Commission seeks comment from pole owners, in
addition to attachers and other interested persons. The Commission
notes that pole owners' perspective regarding the costs and other
characteristics of their infrastructure might give them unique insight
into ways the Commission could reinterpret the section 224(e) telecom
rate formula to yield pole rental rates ``that are as low and close to
uniform as possible, consistent with [s]ection 224 of the [Act], to
promote broadband deployment.''
91. In addition, sections 224(d) and (e) specify cable and telecom
rate formulas. As discussed above, the Commission's rate rules already
take account of one difference between those frameworks--namely, the
treatment of unusable space. Other differences in those statutory
provisions are not currently reflected in the Commission's rules,
however. Although section 224(e) specifies how the pole space costs are
to be allocated between the owner and attacher, it does not specify a
cost methodology. In particular, section 224(e) describes how ``[a]
utility shall apportion the cost of providing space'' on a pole--
whether usable or unusable--but does not define ``the cost of providing
space.'' This is in contrast with the upper bound for the cable rate
under section 224(d), which does identify particular costs to be
included. The Commission initially implemented section 224(e) by
interpreting ``cost'' to include the same cost categories that it was
using in the cable rate formula, relying on a fully-distributed cost
approach. This initial approach was not inherently unreasonable, as
noted above, but it has resulted in rate disparities and disputes over
which formula applies and impacted communications service providers'
investment decisions.
92. This statutory framework bounds the ways in which the
Commission can interpret and apply the telecom rate formula in section
224(e). The Commission agrees with commenters that the Commission has
discretion to reinterpret the ambiguous term ``cost'' in section 224(e)
and modify the cost methodology underlying the telecom rate formula to
yield a different rate. Depending upon the relative magnitude of costs
included, the telecom rate formula will yield relatively higher or
lower rates. Identifying the upper- and lower-bound interpretations of
``cost'' that are consistent with the statute thus provides an upper
and lower limit on the possible telecom rates that would be consistent
with section 224(e). Any of the resulting rates within that range
potentially could be adopted by the Commission as the ``just and
reasonable'' rate for purposes of section 224(e).
93. Upper Bound Rate. To begin identifying the range of reasonable
rates that could result from the telecom rate formula, the Commission
first identifies the present telecom rate as a reasonable upper bound.
The Commission's current telecom rate formula is based on a fully
distributed cost methodology, which recovers costs that the pole owner
incurs regardless of the presence of attachments. It includes a full
range of costs, some of which, as TWTC argues, do not directly relate
to or vary with the presence of pole attachments. For this reason, this
interpretation of the statutory telecom rate formula could be
considered at the higher end of the range of reasonable rates. In light
of the National Broadband Plan's recommendation that the Commission
seeks to achieve pole rental rates ``that are as low and close to
uniform as possible, consistent with [s]ection 224 of the [Act],''
under this alternative the Commission ultimately would select a rate
closer to the lower end of the range. Thus, within the context of this
alternative, the Commission does not believe it is necessary to define
the high end of the range more precisely, although the Commission seeks
comment on that conclusion. The Commission also seeks comment on
whether there is a cost methodology, other than a fully-distributed
cost methodology, that could be considered as part of an upper-bound
formula in addition, or instead.
94. Lower Bound Rate. In identifying the lower bound of reasonable
rates under section 224(e), the Commission proposes that a rate that
covers the pole owners' incremental cost associated with attachment
would, in principle, provide a reasonable lower limit. For the reasons
described above in the context of TWTC's proposal, however, to remain
consistent with the statutory framework, this outcome cannot be
achieved simply by defining costs as a precise calculation of
incremental cost. Thus, the statutory framework makes it more difficult
to identify a lower-bound rate that recovers a utility's marginal
costs. Instead, some definition of ``costs'' somewhat above incremental
cost would need to be used so that when those costs are allocated
pursuant to the 224(e) formula, the resulting pole rental rate would
allow the utility to recover the incremental cost associated with
attachment.
95. For purposes of identifying such a lower-bound rate, the
Commission continues to rely on the basic principles
[[Page 41352]]
of cost causation that would underlie a marginal cost rate. Under cost
causation principles, if a customer is causally responsible for the
incurrence of a cost, then that customer, the cost causer, pays a rate
that covers this cost. This is consistent with the Commission's
existing approach in the make-ready context where, for example, a pole
owner recovers the entire capital cost of a new pole through make-ready
charges from the new attacher when a new pole is needed to enable the
attachment. Under this proposed approach, cost causation principles
could be applied separately to each category of a pole owner's costs--
broadly consisting of capital and operating costs--for purposes of the
pole rental rate, as well.
96. The Commission recognizes that, under traditional ratemaking
principles, rates may recover both operating expenses and capital
costs, including a rate of return. Under the proposal, however, capital
costs would be excluded for purposes of identifying a lower bound for
the telecom pole rental rate. As an initial matter, the Commission
notes that if capital costs arise from the make-ready process, the
existing rules are designed to require attachers to bear the entire
amount of those costs. With respect to other capital costs, the
Commission believes it is likely that the attacher is the ``cost
causer'' for, at most, a de minimis portion of these costs. It is
likely that most, if not all, of the past investment in an existing
pole would have been incurred regardless of the demand for attachments
other than the owner's attachments. As a result, under a cost causation
theory, where there is space available on a pole, an attacher would be
required to pay for none, or at most a de minimis portion, of the
capital costs of that pole. Given Congress' intention that the
Commission not ``embark upon a large-scale ratemaking proceeding in
each case brought before it, or by general order'' to establish pole
rental rates, this alternative would simply exclude capital costs from
the pole rental rate rather than perform a detailed cost analysis to
identify the likely de minimis, if any, capital costs to include in the
lower bound telecom rate. This is consistent with TWTC's argument,
discussed above, that section 224(e) does not require the inclusion of
these costs.
97. The Commission seeks comment on whether the exclusion of
capital costs from the lower bound telecom rate under this approach is
consistent both with principles of cost causation and the existing
section 224 framework. To the extent that pole owners contend that they
do, in fact, incur significant capital costs outside the make-ready
context solely to accommodate third party attachers, the Commission
seeks comment on the nature and extent of those costs. For example, the
Coalition of Concerned Utilities argues that: (a) Communications
attachers are responsible for incremental capital costs for the extra
space on taller poles; and (b) those costs exceed the attachers' share
of the capital costs for an entire pole that the attachers bear under
the fully distributed cost methodology reflected in the Commission's
existing rate formulas. In particular, the Coalition argues that
utilities install taller poles routinely throughout their networks to
satisfy their own needs and anticipated third-party attachment demand,
and that they do not receive sufficient compensation for this option.
For the reasons discussed above, the Commission questions how
frequently such situations would arise. The Commission nevertheless
invites parties to submit studies that isolate and quantify the effect
of third-party attachment demand on pole height and therefore pole
investment.
98. In addition, under the proposal, taxes would be treated as part
of the capital costs that are excluded from the lower-bound telecom
rate, based on cost-causation principles. The Commission seeks comment
on the proposal to treat taxes as capital costs. The Commission also
seeks comment more generally regarding the availability of space on
poles today and in the future.
99. By contrast, this approach would continue to include certain
operating expenses--namely maintenance and administrative expenses--in
the definition of ``cost'' for purposes of the lower bound telecom rate
formula. This is generally consistent with cost causation principles
because it is likely that an attacher is causally responsible for some
of the ongoing maintenance and administrative expenses relating to use
of the pole. Although the attacher might not be the cost causer with
respect to all the operating costs that would be included in the lower
bound telecom rate under this approach, as noted above, Congress'
intention was that the Commission not ``embark upon a large-scale
ratemaking proceeding in each case brought before it, or by general
order'' to establish pole rental rates, which the Commission believes
counsels in favor of including the costs in the context of maintenance
and administrative expenses. The Commission seeks comment on the
reasonableness of including these operating costs, as well as the
mechanics of such an approach. Is it appropriate to develop average per
pole maintenance and administrative expenses from ARMIS or FERC 1 data
and to allocate these per pole expenses between the owner and the
attacher using the factors in section 224(e)? Would such an approach
over- or under-allocate these expenses relative to the amount actually
caused by the attacher? The Commission notes that the Coalition of
Concerned Utilities argues that the incremental operating costs for
attachments, which utilities contend are caused by communications
attachers, exceed the attachers' share of the operating costs for a
pole that the attachers bear under the fully distributed cost
methodology reflected in the Commission's existing rate formulas. The
Commission is skeptical of this claim because the Commission would
expect that a significant portion of the pole-related maintenance and
administrative expenses would be incurred for routine activities
unrelated to the number of attachments. The Commission nevertheless
invites parties to submit studies that isolate and quantify the effect
of third-party attachment demand on operating expenses.
100. The Commission seeks comment on alternative proposals for
determining a lower bound telecom rate. For example, should the
Commission instead require a more precise identification of the costs
to be included under such an approach? If so, would this be consistent
with Congress' goal that the Commission's rate formulas be
administrable? Commenters advocating such an approach should provide
data calculating these costs consistent with their proposals, and
identify how such data could be obtained for purposes of implementing
their recommended alternative.
101. Specific Rate Proposal. Having proposed upper- and lower-bound
telecom rates, the Commission considers the particular rate within that
range that utilities may charge as the ``just and reasonable'' telecom
rate. The Commission notes that it appears likely that, in most cases,
the rates yielded by the current cable rate formula would fall within
that range. The Commission seeks comment on whether these findings hold
for pole attachments more generally. How likely is it that the cable
rate will be higher than the telecom rate calculated using only
maintenance and administrative expenses?
102. In particular, under this proposal, utilities would calculate
the low-end telecom rate and the rate yielded by the current cable
formula, and charge whichever is higher. Significantly, the cable rate
formula has
[[Page 41353]]
been upheld by the courts as just, reasonable, and fully compensatory,
and would result in greater rate parity between telecommunications and
cable attachers. This approach would seem to further goals of the Act--
to promote communications competition and the deployment of ``advanced
telecommunications capability.'' Moreover, as commenters point out, to
the extent that attachers are, to the greatest extent possible, paying
the same rates, this should minimize disputes that have resulted from
the Commission's current rate formulas. This proposed alternative also
appears to be readily administrable, consistent with Congress'
instruction to develop a regulatory framework that may be applied in a
``simple and expeditious'' manner with ``a minimum of staff, paperwork
and procedures consistent with fair and efficient regulation.'' The
Commission seeks comment on whether this proposal is consistent with
other Commission policies, as well as whether it is consistent with the
statutory mandate of section 224 to ensure ``just and reasonable'' pole
rental rates, consistent with the statutory formulas.
103. Other Alternatives and Overarching Considerations. In addition
to the specific alternatives for reinterpreting the telecom rate
formula discussed above, the Commission seeks comment on any other
possible approaches, including any approaches used by states that
regulate pole attachments that commenters would recommend. For the
approaches to reinterpreting the telecom rate formula discussed above,
or other approaches identified by commenters, the Commission seeks
comment on whether the proposal would be consistent with the
Commission's obligations under the Act and whether it would further the
public interest. How administrable is the proposed approach? To what
extent would the proposed telecom rate be compensatory, and, when
considered in conjunction with other revenues earned by the utility,
would it both lead to adequate cost recovery and protect against
double-recovery? Is the proposed approach consistent with the
Commission's current rules governing make-ready charges--the other way
in which attachers compensate pole owners for access to poles today? If
not, how would the Commission's approach to make-ready payments need to
be modified? Would it be possible for the Commission to forbear from
applying the section 224(e) telecom rate, and adopt a different rate--
such as the cable rate--pursuant to section 224(b), as some commenters
have suggested?
104. Incumbent LEC Rate Issues. As part of their proposals
discussed above, AT&T/Verizon and USTelecom assert that incumbent LECs
should be subject to the just and reasonable rates provision in section
224(b) in the same manner as it applies to other providers. The issues
related to incumbent LEC attachment rates, however, raise complex
questions, and although the National Broadband Plan noted the possible
effects of these rate disparities, the Plan did not include a
recommendation specifically addressing this matter. As with the TWTC
proposal discussed above, the Commission sought comment on the
possibility of regulating the rates incumbent LECs pay for attachments
in the Pole Attachment Notice in the context of the issues under
consideration there. In contrast to the rate regulation proposals
discussed above, the Commission does not propose specific rules in this
FNPRM that would alter the Commission's current approach to the
regulation of pole attachments by incumbent LECs. Rather, given the
statutory and policy complexities, the Commission revisits the issue of
regulation of rates paid by incumbent LEC attachers both in light of
the specific telecom rate proposals, as well as the factual findings of
the National Broadband Plan. In addition to the questions below,
commenters should refresh the record regarding the questions raised
regarding regulation of rates paid by incumbent LECs in the Pole
Attachment Notice in the context of the issues under consideration
here.
105. As an initial matter, the Commission seeks comment on the
relationship between incumbent LEC pole attachments rates and
deployment of broadband networks and affordability of broadband
services. USTelecom asserts that pole attachment rates ``can
disproportionately affect the cost of delivering broadband in [rural]
areas because the typically longer loops in rural areas often require
more pole attachments per end user.'' Windstream, for example, argues
that ``[g]iven the importance of pole attachments in deploying advanced
networks to rural consumers, any Commission action that reduces
excessive pole attachment rates would promote, rather than stifle, a
competitive marketplace for advanced communications networks,''
including broadband. Windstream thus urges the Commission to extend a
lower uniform attachment rate that it may adopt to incumbent LECs
because it relies heavily on pole attachments to deploy broadband
service to rural consumers. Do commenters agree that uniform rates
between incumbent LECs and other providers are necessary or helpful to
promote broadband deployment in unserved or underserved areas of the
country?
106. The Commission also seeks comment on the relationship between
the pole rental rates paid by incumbent LECs and any other rights and
responsibilities they have by virtue of their pole access agreements
with utilities. For instance, incumbent LECs generally asserted in
response to the Pole Attachment Notice that they presently are forced
to pay rates for pole attachments that are unreasonably higher than
those available to other attachers and that they need the protection of
just and reasonable rates under section 224 to preclude being placed at
a competitive disadvantage. Unlike other attachers, however, incumbent
LECs generally attach to poles pursuant to joint use or joint ownership
agreements. These arrangements between incumbent LECs and electric
companies historically provide more favorable terms and conditions to
attaching incumbent LECs than competitive LECs and cable operators
receive from electric companies under license agreements. Electric
utilities, cable operators, and competitive LECs thus argue that
incumbent LECs have negotiated terms and conditions that give them
advantages over cable operators and competitive LECs and, therefore,
reducing attachment rates for incumbent LECs or allowing them to pay
the same rate would provide them with an unfair competitive advantage.
The Commission seeks further comment on how to reconcile these
assessments and how the Commission should best pursue competitively
neutral policies in these circumstances.
107. To the extent that section 224(b)'s ``just and reasonable''
rate regulation could apply to attachments by incumbent LECs, how would
those rates be regulated to ensure that they are ``just and
reasonable,'' and how might they affect joint use or joint ownership
agreements? Should the rate be the same as other attachers pay,
notwithstanding the possible differences in pole access and
utilization, as discussed above? And how should any approach be
implemented? For instance, AT&T argues that, if incumbent LECs are
entitled to attachments at regulated ``just and reasonable'' rates
under section 224, any rate assessed by an electric company in excess
of the statutory maximum rate should be unenforceable ``because it
would, by definition, be unjust and unreasonable'' even if contained in
an existing joint use agreement.
[[Page 41354]]
108. NCTA proposes an alternative plan whereby any attaching
entity, including incumbent LECs, would be permitted to ``opt in'' to
existing pole agreements. Under this proposal, each pole owner would
make each pole attachment, joint ownership, or joint use agreement
publicly available, and attachers could opt in to those agreements,
accepting all the terms and conditions of the agreement. NCTA presumes
``that pole owners will not be harmed by allowing third parties to
attach to their poles at rates, terms, and conditions that the pole
owner already has made available to at least one other attaching party
in its service area.'' NCTA anticipates that ``many ILECs may be
reluctant to give up the favorable attachment rights that they
typically possess under most joint use agreements,'' but provides them
an alternative in cases where they believe a pole owner's rates are
unreasonable. The Commission seeks input on the viability of these
approaches, or other possible approaches. Could a remedy providing the
ability for incumbent LECs unilaterally to opt out of joint use or
joint ownership agreements in certain circumstances affect more than
rate issues, such as safety and emergency response obligations, or
negate other benefits that other utilities realize through joint use
agreements? To what extent would any approach be readily administrable?
109. In addition to requesting the right to pay a uniform rate for
pole attachments, incumbent LECs also generally assert that they should
have ``the same right as competitive LECs, wireless providers, and
cable television systems to file complaints before the Commission to
enforce their right to reasonable pole attachment rates, terms, and
conditions for poles in which they lack an ownership interest.'' Some
incumbent LECs assert they are left without any or sufficient recourse
if electric utilities impose unreasonable rates, terms, and conditions
and that this conflicts with the Commission's goals of promoting
competition and broadband deployment. Electric utilities argue that
incumbent LECs may seek recourse at the State level if they believe
rates are unreasonable. The Commission seeks comment on what remedies
incumbent LECs presently have to challenge any rates, terms, and
conditions for pole attachments. Are those remedies sufficient? How, if
at all, would the ability to file complaints with the Commission affect
any State or local laws governing dispute resolution?
Procedural Matters
A. Paperwork Reduction Act Analysis
110. This document contains new information collection requirements
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the Office of Management and Budget (OMB)
for review under section 3507(d) of the PRA. OMB, the general public,
and other Federal agencies are invited to comment on the new or
modified information collection requirements adopted in this Order.
B. Regulatory Flexibility Analysis
111. As required by the Regulatory Flexibility Act of 1980, as
amended, the Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) for this further notice of proposed rulemaking, of the
possible significant economic impact on a substantial number of small
entities by the policies and rules proposed in this further notice of
proposed rulemaking. The IRFA is in Appendix C. Written public comments
are requested on this IRFA. Comments must be identified as responses to
the IRFA and must be filed by the deadlines for comments on the further
notice of proposed rulemaking. The Commission will send a copy of the
notice of proposed rulemaking, including this IRFA, to the Chief
Counsel for Advocacy of the SBA. In addition, the notice of proposed
rulemaking and IRFA (or summaries thereof) will be published in the
Federal Register.
C. Ex Parte Presentations
112. This proceeding shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance
of the presentations and not merely a listing of the subjects
discussed. More than a one or two sentence description of the views and
arguments presented is generally required. Other requirements
pertaining to oral and written presentations are set forth in Sec.
1.1206(b) of the Commission's rules.
D. Initial Regulatory Flexibility Analysis
113. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this present Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities by the
policies and rules proposed in this Further Notice of Proposed
Rulemaking (FNPRM). Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments on the FNPRM provided on the first page
of the FNPRM. The Commission will send a copy of the FNPRM, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). In addition, the FNPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
114. The FNPRM seeks comment on a variety of issues relating to
implementation of section 224 pole attachment rules in light of
increasing intermodal competition since the Commission began to
implement the 1996 Act. Specifically, the FNPRM seeks comment on the
adoption of a specific timeline regarding the pole attachment request,
survey, and make-ready time period in order to provide greater
certainty for the timely deployment of telecommunications, cable, and
broadband services. Additionally, the FNPRM seeks comment on the
adoption of several proposals regarding the ability of new attachers to
use contractors to perform pole attachment make-ready work. The FNPRM
also proposes improvements to the existing enforcement process.
Finally, the FNPRM seeks comment on existing rules governing pole
attachment rates for telecommunications carriers and incumbent local
exchange carriers (LECs) in pursuit of a low, compensatory rate that
will improve incentives for network deployment.
2. Legal Basis
115. The legal basis for any action that may be taken pursuant to
the FNPRM is contained in sections 1, 4(i), 4(j), 224, 251(b)(4), and
303 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i)-(j), 224, 251(b)(4), 303.
3. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules May Apply
116. The RFA directs agencies to provide a description of, and
where feasible, an estimate of the number of small entities that may be
affected by the proposed rules and policies, if adopted. The RFA
generally defines the term ``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
[[Page 41355]]
concern'' under the Small Business Act. A ``small business concern'' is
one which: (1) Is independently owned and operated; (2) is not dominant
in its field of operation; and (3) satisfies any additional criteria
established by the SBA.
117. Small Businesses. Nationwide, there are a total of
approximately 29.6 million small businesses, according to the SBA.
118. Small Organizations. Nationwide, as of 2002, there are
approximately 1.6 million small organizations. A ``small organization''
is generally ``any not-for-profit enterprise which is independently
owned and operated and is not dominant in its field.''
119. Small Governmental Jurisdictions. The term ``small
governmental jurisdiction'' is defined generally as ``governments of
cities, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' Census
Bureau data for 2002 indicate that there were 87,525 local governmental
jurisdictions in the United States. The Commission estimates that, of
this total, 84,377 entities were ``small governmental jurisdictions.''
Thus, the Commission estimates that most governmental jurisdictions are
small.
120. The Commission has included small incumbent local exchange
carriers in this present RFA analysis. As noted above, a ``small
business'' under the RFA is one that, inter alia, meets the pertinent
small business size standard (e.g., a telephone communications business
having 1,500 or fewer employees), and ``is not dominant in its field of
operation.'' The SBA's Office of Advocacy contends that, for RFA
purposes, small incumbent local exchange carriers are not dominant in
their field of operation because any such dominance is not ``national''
in scope. The Commission has therefore included small incumbent local
exchange carriers in this RFA analysis, although the Commission
emphasizes that this RFA action has no effect on Commission analyses
and determinations in other, non-RFA contexts.
121. Incumbent Local Exchange Carriers (``ILECs''). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The appropriate
size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business
is small if it has 1,500 or fewer employees. According to Commission
data, 1,311 carriers have reported that they are engaged in the
provision of incumbent local exchange services. Of these 1,311
carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have
more than 1,500 employees. Consequently, the Commission estimates that
most providers of incumbent local exchange service are small businesses
that may be affected by the proposed action.
122. Competitive Local Exchange Carriers (``CLECs''), Competitive
Access Providers (``CAPs''), ``Shared-Tenant Service Providers,'' and
``Other Local Service Providers.'' Neither the Commission nor the SBA
has developed a small business size standard specifically for these
service providers. The appropriate size standard under SBA rules is for
the category Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 1005 carriers have reported that they are
engaged in the provision of either competitive access provider services
or competitive local exchange carrier services. Of these 1005 carriers,
an estimated 918 have 1,500 or fewer employees and 87 have more than
1,500 employees. In addition, 16 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 16 are estimated to have
1,500 or fewer employees. In addition, 89 carriers have reported that
they are ``Other Local Service Providers.'' Of the 89, all have 1,500
or fewer employees. Consequently, the Commission estimates that most
providers of competitive local exchange service, competitive access
providers, ``Shared-Tenant Service Providers,'' and ``Other Local
Service Providers'' are small entities that may be affected by the
proposed action.
123. Interexchange Carriers (``IXCs''). Neither the Commission nor
the SBA has developed a small business size standard specifically for
providers of interexchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 300 carriers have
reported that they are engaged in the provision of interexchange
service. Of these, an estimated 268 have 1,500 or fewer employees and
32 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by the proposed action.
124. Satellite Telecommunications and All Other Telecommunications.
These two economic census categories address the satellite industry.
The first category has a small business size standard of $15 million or
less in average annual receipts, under SBA rules. The second has a size
standard of $25 million or less in annual receipts. The most current
Census Bureau data in this context, however, are from the (last)
economic census of 2002, and the Commission will use those figures to
gauge the prevalence of small businesses in these categories.
125. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing telecommunications
services to other establishments in the telecommunications and
broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite
telecommunications.'' For this category, Census Bureau data for 2002
show that there were a total of 371 firms that operated for the entire
year. Of this total, 307 firms had annual receipts of under $10
million, and 26 firms had receipts of $10 million to $24,999,999.
Consequently, the Commission estimates that the majority of Satellite
Telecommunications firms are small entities that might be affected by
the action.
126. The second category of All Other Telecommunications comprises,
inter alia, ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems.'' For this
category, Census Bureau data for 2002 show that there were a total of
332 firms that operated for the entire year. Of this total, 303 firms
had annual receipts of under $10 million and 15 firms had annual
receipts of $10 million to $24,999,999. Consequently, the Commission
estimates that the majority of All Other Telecommunications firms are
small entities that might be affected by the action.
127. Wireless Telecommunications Carriers (except Satellite). Since
2007, the Census Bureau has placed wireless firms within this new,
broad, economic census category. Prior to that time, such firms were
within the now-superseded categories of ``Paging'' and ``Cellular and
Other Wireless Telecommunications.'' Under the present and prior
categories, the SBA has deemed a wireless business
[[Page 41356]]
to be small if it has 1,500 or fewer employees. Because Census Bureau
data are not yet available for the new category, the Commission will
estimate small business prevalence using the prior categories and
associated data. For the category of Paging, data for 2002 show that
there were 807 firms that operated for the entire year. Of this total,
804 firms had employment of 999 or fewer employees, and three firms had
employment of 1,000 employees or more. For the category of Cellular and
Other Wireless Telecommunications, data for 2002 show that there were
1,397 firms that operated for the entire year. Of this total, 1,378
firms had employment of 999 or fewer employees, and 19 firms had
employment of 1,000 employees or more. Thus, the Commission estimates
that the majority of wireless firms are small.
128. Common Carrier Paging. As noted, since 2007 the Census Bureau
has placed paging providers within the broad economic census category
of Wireless Telecommunications Carriers (except Satellite). Prior to
that time, such firms were within the now-superseded category of
``Paging.'' Under the present and prior categories, the SBA has deemed
a wireless business to be small if it has 1,500 or fewer employees.
Because Census Bureau data are not yet available for the new category,
the Commission will estimate small business prevalence using the prior
category and associated data. The data for 2002 show that there were
807 firms that operated for the entire year. Of this total, 804 firms
had employment of 999 or fewer employees, and three firms had
employment of 1,000 employees or more. Thus, the Commission estimates
that the majority of paging firms are small.
129. In addition, in the Paging Second Report and Order, the
Commission adopted a size standard for ``small businesses'' for
purposes of determining their eligibility for special provisions such
as bidding credits and installment payments. A small business is an
entity that, together with its affiliates and controlling principals,
has average gross revenues not exceeding $15 million for the preceding
three years. The SBA has approved this definition. An initial auction
of Metropolitan Economic Area (``MEA'') licenses was conducted in the
year 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven
companies claiming small business status won 440 licenses. A subsequent
auction of MEA and Economic Area (``EA'') licenses was held in the year
2001. Of the 15,514 licenses auctioned, 5,323 were sold. One hundred
thirty-two companies claiming small business status purchased 3,724
licenses. A third auction, consisting of 8,874 licenses in each of 175
EAs and 1,328 licenses in all but three of the 51 MEAs, was held in
2003. Seventy-seven bidders claiming small or very small business
status won 2,093 licenses.
130. Currently, there are approximately 74,000 Common Carrier
Paging licenses. According to the most recent Trends in Telephone
Service, 281 carriers reported that they were engaged in the provision
of ``paging and messaging'' services. Of these, an estimated 279 have
1,500 or fewer employees and two have more than 1,500 employees. The
Commission estimates that the majority of common carrier paging
providers would qualify as small entities under the SBA definition.
131. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Trends in
Telephone Service data, 434 carriers reported that they were engaged in
wireless telephony. Of these, an estimated 222 have 1,500 or fewer
employees and 212 have more than 1,500 employees. The Commission has
estimated that 222 of these are small under the SBA small business size
standard.
132. Broadband Personal Communications Service. The broadband
personal communications services (``PCS'') spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission has created a small business
size standard 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 small business size standard for ``very
small business'' was added and is defined as an entity that, together
with its affiliates, has average gross revenues of not more than $15
million for the preceding three calendar years. These small business
size standards, in the context of broadband PCS auctions, have been
approved by the SBA. No small businesses within the SBA-approved small
business size standards bid successfully for licenses in Blocks A and
B. There were 90 winning bidders that qualified as small entities in
the Block C auctions. A total of 93 ``small'' and ``very small''
business bidders won approximately 40 percent of the 1,479 licenses for
Blocks D, E, and F. In 1999, the Commission reauctioned 155 C, D, E,
and F Block licenses; there were 113 small business winning bidders.
133. In 2001, the Commission completed the auction of 422 C and F
Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this
auction, 29 qualified as ``small'' or ``very small'' businesses.
Subsequent events, concerning Auction 35, including judicial and agency
determinations, resulted in a total of 163 C and F Block licenses being
available for grant. In 2005, the Commission completed an auction of
188 C block licenses and 21 F block licenses in Auction 58. There were
24 winning bidders for 217 licenses. Of the 24 winning bidders, 16
claimed small business status and won 156 licenses. In 2007, the
Commission completed an auction of 33 licenses in the A, C, and F
Blocks in Auction 71. Of the 14 winning bidders, six were designated
entities. In 2008, the Commission completed an auction of 20 Broadband
PCS licenses in the C, D, E and F block licenses in Auction 78.
134. Advanced Wireless Services. In 2008, the Commission conducted
the auction of Advanced Wireless Services (``AWS'') licenses. This
auction, which as designated as Auction 78, offered 35 licenses in the
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1
licenses were licenses for which there were no winning bids in Auction
66. That same year, the Commission completed Auction 78. A bidder with
attributed average annual gross revenues that exceeded $15 million and
did not exceed $40 million for the preceding three years (``small
business'') received a 15 percent discount on its winning bid. A bidder
with attributed average annual gross revenues that did not exceed $15
million for the preceding three years (``very small business'')
received a 25 percent discount on its winning bid. A bidder that had
combined total assets of less than $500 million and combined gross
revenues of less than $125 million in each of the last two years
qualified for entrepreneur status. Four winning bidders that identified
themselves as very small businesses won 17 licenses. Three of the
winning bidders that identified themselves as a small business won five
licenses. Additionally, one other winning bidder that qualified for
entrepreneur status won 2 licenses.
135. Narrowband Personal Communications Services. In 1994, the
Commission conducted an auction for Narrowband PCS licenses. A second
[[Page 41357]]
auction was also conducted later in 1994. For purposes of the first two
Narrowband PCS auctions, ``small businesses'' were entities with
average gross revenues for the prior three calendar years of $40
million or less. Through these auctions, the Commission awarded a total
of 41 licenses, 11 of which were obtained by four small businesses. To
ensure meaningful participation by small business entities in future
auctions, the Commission adopted a two-tiered small business size
standard in the Narrowband PCS Second Report and Order. A ``small
business'' is an entity that, together with affiliates and controlling
interests, has average gross revenues for the three preceding years of
not more than $40 million. A ``very small business'' is an entity that,
together with affiliates and controlling interests, has average gross
revenues for the three preceding years of not more than $15 million.
The SBA has approved these small business size standards. A third
auction was conducted in 2001. Here, five bidders won 317 (Metropolitan
Trading Areas and nationwide) licenses. Three of these claimed status
as a small or very small entity and won 311 licenses.
136. Cellular Radiotelephone Service. Auction 77 was held to
resolve one group of mutually exclusive applications for Cellular
Radiotelephone Service licenses for unserved areas in New Mexico.
Bidding credits for designated entities were not available in Auction
77. In 2008, the Commission completed the closed auction of one
unserved service area in the Cellular Radiotelephone Service,
designated as Auction 77. Auction 77 concluded with one provisionally
winning bid for the unserved area totaling $25,002.
137. Private Land Mobile Radio (``PLMR''). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories, and are often used in
support of the licensee's primary (non-telecommunications) business
operations. For the purpose of determining whether a licensee of a PLMR
system is a small business as defined by the SBA, the Commission uses
the broad census category, Wireless Telecommunications Carriers (except
Satellite). This definition provides that a small entity is any such
entity employing no more than 1,500 persons. The Commission does not
require PLMR licensees to disclose information about number of
employees, so the Commission does not have information that could be
used to determine how many PLMR licensees constitute small entities
under this definition. The Commission notes that PLMR licensees
generally use the licensed facilities in support of other business
activities, and therefore, it would also be helpful to assess PLMR
licensees under the standards applied to the particular industry
subsector to which the licensee belongs.
138. As of March 2010, there were 424,162 PLMR licensees operating
921,909 transmitters in the PLMR bands below 512 MHz. The Commission
notes that any entity engaged in a commercial activity is eligible to
hold a PLMR license, and that any revised rules in this context could
therefore potentially impact small entities covering a great variety of
industries.
139. Fixed Microwave Services. Fixed microwave services include
common carrier, private operational-fixed, and broadcast auxiliary
radio services. At present, there are approximately 22,015 common
carrier fixed licensees and 61,670 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services. The
Commission has not created a size standard for a small business
specifically with respect to fixed microwave services. For purposes of
this analysis, the Commission uses the SBA small business size standard
for the category Wireless Telecommunications Carriers (except
Satellite), which is 1,500 or fewer employees. The Commission does not
have data specifying the number of these licensees that have no more
than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of fixed microwave service licensees that
would qualify as small business concerns under the SBA's small business
size standard. Consequently, the Commission estimates that there are
22,015 or fewer common carrier fixed licensees and 61,670 or fewer
private operational-fixed licensees and broadcast auxiliary radio
licensees in the microwave services that may be small and may be
affected by the rules and policies proposed herein. The Commission
notes, however, that the common carrier microwave fixed licensee
category includes some large entities.
140. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (``LMDS'') is a fixed broadband point-to-
multipoint microwave service that provides for two-way video
telecommunications. The auction of the 986 LMDS licenses began and
closed in 1998. The Commission established a small business size
standard for LMDS licenses as an entity that has average gross revenues
of less than $40 million in the three previous calendar years. An
additional small business size standard for ``very small business'' was
added as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. The SBA has approved these small business size
standards in the context of LMDS auctions. There were 93 winning
bidders that qualified as small entities in the LMDS auctions. A total
of 93 small and very small business bidders won approximately 277 A
Block licenses and 387 B Block licenses. In 1999, the Commission re-
auctioned 161 licenses; there were 32 small and very small businesses
winning that won 119 licenses.
141. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio System (``BETRS''). In the present
context, the Commission will use the SBA's small business size standard
applicable to Wireless Telecommunications Carriers (except Satellite),
i.e., an entity employing no more than 1,500 persons. There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
the Commission estimates that there are 1,000 or fewer small entity
licensees in the Rural Radiotelephone Service that may be affected by
the rules and policies proposed herein.
142. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (``MDS'') and Multichannel Multipoint Distribution
Service (``MMDS'') systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (``BRS'') and Educational Broadband Service (``EBS'')
(previously referred to as the Instructional Television Fixed Service
(``ITFS'')). In connection with the 1996 BRS auction, the Commission
established a small business size standard as an entity that had annual
average gross revenues of no more than $40 million in the previous
three calendar years. The BRS auctions resulted in 67 successful
bidders obtaining licensing opportunities for 493 Basic Trading Areas
(``BTAs''). Of the 67 auction winners, 61 met the definition of a small
business. BRS also includes licensees of stations authorized prior to
the auction. At this time, the Commission estimates that of the 61
[[Page 41358]]
small business BRS auction winners, 48 remain small business licensees.
In addition to the 48 small businesses that hold BTA authorizations,
there are approximately 392 incumbent BRS licensees that are considered
small entities. After adding the number of small business auction
licensees to the number of incumbent licensees not already counted, the
Commission finds that there are currently approximately 440 BRS
licensees that are defined as small businesses under either the SBA or
the Commission's rules. In 2009, the Commission conducted Auction 86,
the sale of 78 licenses in the BRS areas. The Commission offered three
levels of bidding credits: (i) A bidder with attributed average annual
gross revenues that exceed $15 million and do not exceed $40 million
for the preceding three years (small business) will receive a 15
percent discount on its winning bid; (ii) a bidder with attributed
average annual gross revenues that exceed $3 million and do not exceed
$15 million for the preceding three years (very small business) will
receive a 25 percent discount on its winning bid; and (iii) a bidder
with attributed average annual gross revenues that do not exceed $3
million for the preceding three years (entrepreneur) will receive a 35
percent discount on its winning bid. Auction 86 concluded in 2009 with
the sale of 61 licenses. Of the ten winning bidders, two bidders that
claimed small business status won 4 licenses; one bidder that claimed
very small business status won three licenses; and two bidders that
claimed entrepreneur status won six licenses.
143. In addition, the SBA's Cable Television Distribution Services
small business size standard is applicable to EBS. There are presently
2,032 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this
analysis as small entities. Thus, the Commission estimates that at
least 1,932 licensees are small businesses. Since 2007, Cable
Television Distribution Services have been defined within the broad
economic census category of Wired Telecommunications Carriers; that
category is defined as follows: ``This industry comprises
establishments primarily engaged in operating and/or providing access
to transmission facilities and infrastructure that they own and/or
lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based
on a single technology or a combination of technologies.'' The SBA has
developed a small business size standard for this category, which is:
All such firms having 1,500 or fewer employees. To gauge small business
prevalence for these cable services the Commission must, however, use
current census data that are based on the previous category of Cable
and Other Program Distribution and its associated size standard; that
size standard was: All such firms having $13.5 million or less in
annual receipts. According to Census Bureau data for 2002, there were a
total of 1,191 firms in this previous category that operated for the
entire year. Of this total, 1,087 firms had annual receipts of under
$10 million, and 43 firms had receipts of $10 million or more but less
than $25 million. Thus, the majority of these firms can be considered
small.
144. Cable Television Distribution Services. Since 2007, these
services have been defined within the broad economic census category of
Wired Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. To gauge small business prevalence for these cable services
the Commission must, however, use current census data that are based on
the previous category of Cable and Other Program Distribution and its
associated size standard; that size standard was: all such firms having
$13.5 million or less in annual receipts. According to Census Bureau
data for 2002, there were a total of 1,191 firms in this previous
category that operated for the entire year. Of this total, 1,087 firms
had annual receipts of under $10 million, and 43 firms had receipts of
$10 million or more but less than $25 million. Thus, the majority of
these firms can be considered small.
145. Cable Companies and Systems. The Commission has also developed
its own small business size standards, for the purpose of cable rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving 400,000 or fewer subscribers, nationwide. Industry data
indicate that, of 1,076 cable operators nationwide, all but eleven are
small under this size standard. In addition, under the Commission's
rules, a ``small system'' is a cable system serving 15,000 or fewer
subscribers. Industry data indicate that, of 6,635 systems nationwide,
5,802 systems have under 10,000 subscribers, and an additional 302
systems have 10,000-19,999 subscribers. Thus, under this second size
standard, most cable systems are small.
146. Cable System Operators. The Communications Act of 1934, as
amended, also contains a size standard for small cable system
operators, which is ``a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that an operator serving
fewer than 677,000 subscribers shall be deemed a small operator, if its
annual revenues, when combined with the total annual revenues of all
its affiliates, do not exceed $250 million in the aggregate. Industry
data indicate that, of 1,076 cable operators nationwide, all but ten
are small under this size standard. The Commission notes that the
Commission neither requests nor collects information on whether cable
system operators are affiliated with entities whose gross annual
revenues exceed $250 million, and therefore the Commission is unable to
estimate more accurately the number of cable system operators that
would qualify as small under this size standard.
147. Open Video Systems. The open video system (``OVS'') framework
was established in 1996, and is one of four statutorily recognized
options for the provision of video programming services by local
exchange carriers. The OVS framework provides opportunities for the
distribution of video programming other than through cable systems.
Because OVS operators provide subscription services, OVS falls within
the SBA small business size standard covering cable services, which is
``Wired Telecommunications Carriers.'' The SBA has developed a small
business size standard for this category, which is: all such firms
having 1,500 or fewer employees. To gauge small business prevalence for
such services the Commission must, however, use current census data
that are based on the previous category of Cable and Other Program
Distribution and its associated size standard; that size standard was:
all such firms having $13.5 million or less in annual receipts.
According to Census Bureau data for 2002, there were a total of 1,191
firms in this previous category that operated for the entire year. Of
this total, 1,087 firms had annual receipts of under $10 million, and
43 firms had receipts of $10 million or more but less
[[Page 41359]]
than $25 million. Thus, the majority of cable firms can be considered
small. In addition, the Commission notes that the Commission has
certified some OVS operators, with some now providing service.
Broadband service providers (``BSPs'') are currently the only
significant holders of OVS certifications or local OVS franchises. The
Commission does not have financial or employment information regarding
the entities authorized to provide OVS, some of which may not yet be
operational. Thus, again, at least some of the OVS operators may
qualify as small entities.
148. Cable Television Relay Service. This service includes
transmitters generally used to relay cable programming within cable
television system distribution systems. This cable service is defined
within the broad economic census category of Wired Telecommunications
Carriers; that category is defined as follows: ``This industry
comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that
they own and/or lease for the transmission of voice, data, text, sound,
and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: all such firms having 1,500 or fewer
employees. To gauge small business prevalence for cable services the
Commission must, however, use current census data that are based on the
previous category of Cable and Other Program Distribution and its
associated size standard; that size standard was: all such firms having
$13.5 million or less in annual receipts. According to Census Bureau
data for 2002, there were a total of 1,191 firms in this previous
category that operated for the entire year. Of this total, 1,087 firms
had annual receipts of under $10 million, and 43 firms had receipts of
$10 million or more but less than $25 million. Thus, the majority of
these firms can be considered small.
149. Multichannel Video Distribution and Data Service. MVDDS is a
terrestrial fixed microwave service operating in the 12.2-12.7 GHz
band. The Commission adopted criteria for defining three groups of
small businesses for purposes of determining their eligibility for
special provisions such as bidding credits. It defined a very small
business as an entity with average annual gross revenues not exceeding
$3 million for the preceding three years; a small business as an entity
with average annual gross revenues not exceeding $15 million for the
preceding three years; and an entrepreneur as an entity with average
annual gross revenues not exceeding $40 million for the preceding three
years. These definitions were approved by the SBA. On January 27, 2004,
the Commission completed an auction of 214 MVDDS licenses (Auction No.
53). In this auction, ten winning bidders won a total of 192 MVDDS
licenses. Eight of the ten winning bidders claimed small business
status and won 144 of the licenses. The Commission also held an auction
of MVDDS licenses on December 7, 2005 (Auction 63). Of the three
winning bidders who won 22 licenses, two winning bidders, winning 21 of
the licenses, claimed small business status.
150. Internet Service Providers. The 2007 Economic Census places
these firms, whose services might include voice over Internet protocol
(VoIP), in either of two categories, depending on whether the service
is provided over the provider's own telecommunications connections
(e.g. cable and DSL, ISPs), or over client-supplied telecommunications
connections (e.g. dial-up ISPs). The former are within the category of
Wired Telecommunications Carriers, which has an SBA small business size
standard of 1,500 or fewer employees. The latter are within the
category of All Other Telecommunications, which has a size standard of
annual receipts of $25 million or less. The most current Census Bureau
data for all such firms, however, are the 2002 data for the previous
census category called Internet Service Providers. That category had a
small business size standard of $21 million or less in annual receipts,
which was revised in late 2005 to $23 million. The 2002 data show that
there were 2,529 such firms that operated for the entire year. Of
those, 2,437 firms had annual receipts of under $10 million, and an
additional 47 firms had receipts of between $10 million and
$24,999,999. Consequently, the Commission estimates that the majority
of ISP firms are small entities.
151. Electric Power Generation, Transmission and Distribution. The
Census Bureau defines this category as follows: ``This industry group
comprises establishments primarily engaged in generating, transmitting,
and/or distributing electric power. Establishments in this industry
group may perform one or more of the following activities: (1) Operate
generation facilities that produce electric energy; (2) operate
transmission systems that convey the electricity from the generation
facility to the distribution system; and (3) operate distribution
systems that convey electric power received from the generation
facility or the transmission system to the final consumer.'' This
category includes Electric Power Distribution, Hydroelectric Power
Generation, Fossil Fuel Power Generation, Nuclear Electric Power
Generation, and Other Electric Power Generation. The SBA has developed
a small business size standard for firms in this category: ``A firm is
small if, including its affiliates, it is primarily engaged in the
generation, transmission, and/or distribution of electric energy for
sale and its total electric output for the preceding fiscal year did
not exceed 4 million megawatt hours.'' According to Census Bureau data
for 2002, there were 1,644 firms in this category that operated for the
entire year. Census data do not track electric output and the
Commission has not determined how many of these firms fit the SBA size
standard for small, with no more than 4 million megawatt hours of
electric output. Consequently, the Commission estimates that 1,644 or
fewer firms may be considered small under the SBA small business size
standard.
152. Natural Gas Distribution. This economic census category
comprises: ``(1) establishments primarily engaged in operating gas
distribution systems (e.g., mains, meters); (2) establishments known as
gas marketers that buy gas from the well and sell it to a distribution
system; (3) establishments known as gas brokers or agents that arrange
the sale of gas over gas distribution systems operated by others; and
(4) establishments primarily engaged in transmitting and distributing
gas to final consumers.'' The SBA has developed a small business size
standard for this industry, which is: all such firms having 500 or
fewer employees. According to Census Bureau data for 2002, there were
468 firms in this category that operated for the entire year. Of this
total, 424 firms had employment of fewer than 500 employees, and 18
firms had employment of 500 to 999 employees. Thus, the majority of
firms in this category can be considered small.
153. Water Supply and Irrigation Systems. This economic census
category ``comprises establishments primarily engaged in operating
water treatment plants and/or operating water supply systems.'' The SBA
has developed a small business size standard for this industry, which
is: All such firms having $6.5 million or less in annual receipts.
According to Census Bureau data for 2002, there were 3,830 firms in
this category that operated for the entire year. Of this total, 3,757
firms had annual sales of less than $5 million, and
[[Page 41360]]
37 firms had sales of $5 million or more but less than $10 million.
Thus, the majority of firms in this category can be considered small.
4. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
154. Should the Commission adopt the proposed regulations
concerning access to poles, ducts, conduits, and rights-of-way, such
action could result in increased, reduced, or otherwise altered
reporting, recordkeeping or other compliance requirements for pole
owners and attaching entities. In particular, if the Commission adopts
rules governing the timing of pole attachment preparation (i.e., survey
and make-ready), as opposed to resolution on a case-specific complaint
basis, reporting, recordkeeping or other compliance requirements could
change. Examples of specific topics where recordkeeping, reporting, or
compliance requirements could change by virtue of Commission action
include: (1) Searches and surveys of both poles and conduits, including
information management; (2) performance of make-ready work, including
timeliness, safety, capacity, and the use of boxing and extension arms;
and (3) the use of qualified third-party contract workers.
155. Should the Commission alter the enforcement process, such
action could result in increased, reduced, or otherwise altered
reporting, recordkeeping, or other compliance requirements for pole
owners and attaching entities. In particular, if the Commission
eliminates the 30-day requirement in rule 1.404(m), a cable television
operator or telecommunications carrier would no longer be required to
file a complaint that it was denied access to a pole, duct, conduit or
right-of-way despite a request made pursuant to section 47 U.S.C.
224(f) within 30 days of the denial. If the Commission adopts a penalty
regime for unauthorized attachments similar to Oregon's, pole owners
might be required to notify occupiers of alleged violations, and to
allow the occupiers an opportunity to correct violations or submit a
plan for correction, before pursuing relief under the Commission's
rules. If the Commission modifies the ``sign and sue'' rule, such
action might require attachers to provide notice during contact
negotiations of terms they consider unreasonable or discriminatory.
156. Should the Commission alter the pole attachment rate
structure, such action could result in increased, reduced, or otherwise
altered reporting, recordkeeping or other compliance requirements for
pole owners and attaching entities. For example, if the Commission were
to adopt a uniform rate for all pole attachments used for broadband
Internet access service, providers of such services might be required
to record and report where such service is offered. Changes to
reporting, recordkeeping or other compliance requirements could either
be new (e.g., if telecommunications carriers begins to record or report
where they offer broadband Internet access service) or could
reconfigure existing requirements (e.g., if cable television systems
begin to record and report where they or their lessees offer broadband
Internet access service, but cease to record and report where they or
their lessees offer telecommunications services). If the Commission
initiates regulation of the rates, terms, and conditions of pole
attachment by incumbent LECs, such regulation could increase reporting,
recordkeeping or other compliance requirements for pole owners and
incumbent LECs where incumbent LECs attach to poles owned by other
utilities.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
157. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include (among others) the following four alternatives: (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
158. The Commission proposes to adopt a specific timeline and
several additional rules that provide a predictable, timely process for
parties to seek and obtain pole attachments, while maintaining a
utility's interest in preserving safety, reliability, and sound
engineering. In the consideration of these proposals, the Commission
seeks comment on whether adjustments based on the size of the utility
to which the timeline applies are warranted. For instance, the
Commission asks whether small utilities should negotiate all timelines
individually or have the option of adjusting the timeline based on the
size of the attachment request, and whether steps taken to improve the
availability of pole data could potentially burden small pole owners.
Further, the Commission does not have authority to regulate (and the
proposed rules, thus, do not apply to) small utilities that are
municipally or cooperatively owned.
159. The Commission also proposes to modify its rules to ensure
that its enforcement process is suited to resolving access-related
complaints and is fair to all parties. In particular, the Commission
proposes to remove the 30-day requirement to file a complaint from
Sec. 1.404(m), amend Sec. 1.1410 to enumerate the remedies available
to an attacher and provide for compensatory damages, and amend Sec.
1.404(d) to require an attacher to object in writing, during contract
negotiations, to provisions it considers unreasonable or
discriminatory. These modifications aim to streamline the complaint
process and remove barriers to informal dispute resolution, and they
should have minimal, if any, economic impact on small entities.
160. Finally, the Commission proposes to promote broadband
deployment and competition by reinterpreting the section 224(e) telecom
rate in a way that yields pole rental rates that are as low and close
to uniform as possible. The Commission considered requiring all
categories of providers to pay a uniform rate that would have been
higher than the cable rate but lower than the telecom rate, but found
that pursuing uniformity by increasing cable operators' pole rental
rates would come at the cost of increased broadband prices and reduced
incentives for deployment. The Commission also seeks comment on
alternative proposals that would establish a uniform rate for all pole
attachments used to provide broadband, and on whether the rates paid by
incumbent LEC attachers should also be subject to the ``just and
reasonable'' rates provision in section 224(b).
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
161. None.
Ordering Clauses
162. Accordingly, It is ordered that pursuant to sections 1, 4(i),
4(j), 224, 251(b)(4), and 303 of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i)-(j), 224, 251(b)(4), 303, this Order and
Further Notice of Proposed Rulemaking in WC Docket No. 07-245 is
adopted.
163. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of
[[Page 41361]]
this further notice, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 1
Administrative practice and procedure, Cable television,
Communications common carriers, Communications equipment,
Telecommunications, Telephone, Television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 1 as follows:
PART 1--PRACTICE AND PROCEDURE
Subpart J--Pole Attachment Procedures
1. The heading of Part 1, subpart J is amended to read as set forth
above.
2. The authority citation for part 1, subpart J is added to read as
follows:
Authority: 47 U.S.C. 224, 154(i).
3. Section 1.1402 is amended by adding paragraph (o) to read as
follows:
Sec. 1.1402 Definitions.
* * * * *
(o) The term authorized contractor means an independent contractor
that is approved by a utility and is certified by the utility to
perform field surveys, engineering analyses, or make-ready work, and
includes any contractor that the utility itself employs to perform such
work.
4. Section 1.1403 is amended by revising paragraph (b) 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.
* * * * *
(b) Requests for access to a utility's poles, ducts, conduits, or
rights-of-way by a telecommunications carrier or cable operator must be
in writing. If access is not granted within 45 days of the request for
access, the utility must explain the denial or grant of access
conditioned on performance of make-ready in writing by the 45th day.
The utility's explanation shall be specific, shall include all relevant
evidence and information supporting its decision and shall explain how
such evidence and information relate to a denial or conditional grant
of access for reasons of lack of capacity, safety, reliability or
engineering standards.
* * * * *
5. Section 1.1404 is amended by revising paragraphs (d) and (m) to
read as follows:
Sec. 1.1404 Complaint.
* * * * *
(d) The complaint shall be accompanied by a copy of the pole
attachment agreement, if any, between the cable system operator or
telecommunications carrier and the utility. If the complainant contends
that a rate, term, or condition in an executed pole attachment
agreement is unjust and unreasonable, it shall attach to its complaint
evidence documenting that the complainant provided written notice to
the respondent, during negotiation of the agreement, that the
complainant considered the rate, term, or condition unjust and
unreasonable, and the basis for that conclusion. Proof of such notice
to the respondent shall be a prerequisite to filing a complaint
challenging a rate, term, or condition in an executed agreement, except
where the complainant establishes that the rate, term, or condition was
not unjust and unreasonable on its face, but only as applied by the
respondent, and it could not reasonably have anticipated that the
challenged rate, term, or condition would be applied or interpreted in
such an unjust and unreasonable manner. If there is no present pole
attachment agreement, the complaint shall contain:
(1) A statement that the utility uses or controls poles, ducts, or
conduits used or designated, in whole or in part, for wire
communication; and
(2) A statement that the cable television system operator or
telecommunications carrier currently has attachments on the poles,
ducts, conduits, or rights-of-way.
* * * * *
(m) In a case where a cable television system operator or
telecommunications carrier claims that it has been denied access to a
pole, duct, conduit or right-of-way despite a request made pursuant to
section 47 U.S.C. 224(f), the complaint, in addition to meeting the
other requirements of this section, shall include the data and
information necessary to support the claim, including:
(1) The reasons given for the denial of access to the utility's
poles, ducts, conduits and rights-of-way;
(2) The basis for the complainant's claim that the denial of access
is improper;
(3) The remedy sought by the complainant;
(4) A copy of the written request to the utility for access to its
poles, ducts, conduits or rights-of-way; and
(5) A copy of the utility's response to the written request
including all information given by the utility to support its denial of
access. A complaint alleging improper denial of access will not be
dismissed if the complainant is unable to obtain a utility's written
response, or if the utility denies the complainant any other
information needed to establish a prima facie case.
6. Section 1.1409 is amended by revising paragraph (e)(2) to read
as follows:
Sec. 1.1409 Commission consideration of the complaint.
* * * * *
(e) * * *
(2) With respect to attachments to poles by any telecommunications
carrier or cable operator providing telecommunications services, the
maximum just and reasonable rate shall be the higher of:
(i) The rate yielded by Sec. 1.1409(e)(1), or
(ii) The rate yielded by the following formula:
Maximum Rate = Space Factor x Net Cost of a Bare Pole x [Carrying
Charge Rate]
Where
Space Factor = [(Space Occupied) + [(\2/3\) x (Unusable Space/No. of
Attaching Entities)]]/Pole Height
* * * * *
7. Section 1.1410 is revised to read as follows:
Sec. 1.1410 Remedies.
(a) If the Commission determines that the rate, term, or condition
complained of is not just and reasonable, it may prescribe a just and
reasonable rate, term, or condition and may:
(1) Terminate the unjust and unreasonable rate, term, or condition;
(2) Substitute in the pole attachment agreement the just and
reasonable rate, term, or condition established by the Commission;
(3) Order a refund, or payment, if appropriate. The refund or
payment will normally be the difference between the amount paid under
the unjust and/or unreasonable rate, term, or condition and the amount
that would have been paid under the rate, term, or condition
established by the Commission, plus interest, consistent with the
applicable statute of limitations; and
(4) Order an award of compensatory damages, consistent with the
applicable statute of limitations.
[[Page 41362]]
(b) If the Commission determines that access to a pole, duct,
conduit, or right-of-way has been unlawfully denied or unreasonably
delayed, it may:
(1) Order that access be permitted within a specified time frame
and in accordance with specified rates, terms and conditions; and
(2) Order an award of compensatory damages, consistent with the
applicable statute of limitations.
8. Add Sec. 1.1420 to subpart J to read as follows:
Sec. 1.1420 Timeline for access to poles, ducts, conduits, and
rights-of-way.
(a) All time limits in this section are to be calculated according
to Sec. 1.4.
(b) A request for access triggers a requirement to perform the
obligations in Sec. 1.1403(b) within 45 days, including a survey and
engineering analysis used to support a utility's decision. If the
utility fails to complete and deliver the survey to the requesting
entity within 45 days after the request, the requesting entity may use
a contractor to complete the survey and engineering analysis. The
utility shall cooperate with the requesting entity in directing and
supervising the authorized contractor.
(1) For poles, ducts, conduits, and rights-of-way owned by an
incumbent LEC utility, the requesting entity shall use a contractor
that has at least the same qualifications and training as the incumbent
LEC's own workers that perform the same tasks.
(2) For poles, ducts, conduits, and rights-of-way owned by a non-
incumbent LEC utility, the requesting entity shall use an authorized
contractor.
(c) Within 14 days of providing a survey as required by Sec.
1.1420(b), a utility shall tender an offer to perform all necessary
make-ready work, including an estimate of its charges.
(1) The requesting entity may accept a valid offer and make an
initial payment upon receipt, or until the offer is withdrawn.
(2) The utility may withdraw an outstanding offer to perform make-
ready work after 14 days.
(d) Upon receipt of payment, a utility shall notify immediately all
attaching entities that may be affected by the project, and shall
specify the date after which the utility or its agents become entitled
to move the facilities of the attaching entity.
(1) The utility shall set a date for completion of make-ready no
later than 45 days after the notice.
(2) The utility shall direct and coordinate the sequence and timing
of rearrangement of facilities to afford each attaching entity a
reasonable opportunity to use its own personnel to move its facilities.
(3) Completion of all make-ready work and final payment by the
requesting entity shall complete the grant of requested access and all
necessary authorization.
(e) If make-ready work is not completed by any other attaching
entities as required by paragraph (d) of this section, the utility or
its agent shall complete all necessary make-ready work.
(1) An incumbent local exchange carrier's facilities may be
rearranged or replaced by the utility or its agents 45 days after the
notice required in paragraph (d) of this section.
(2) A cable system operator's or telecommunications carrier's
remaining facilities may be rearranged or replaced by the utility or
its agents 60 days after the notice required by paragraph (d) of this
section.
(f) If make-ready work is not completed in the time specified in
paragraph (e)(2) of this section, the requesting entity may use a
contractor to complete all necessary make-ready work. For poles owned
by an incumbent LEC utility, the requesting entity shall use a
contractor that has at least the same qualifications and training as
the incumbent LEC's own workers that perform the same tasks. For poles
owned by a non-incumbent LEC utility, the requesting entity shall use
an authorized contractor.
(1) The utility shall cooperate with the requesting entity in
directing and supervising the contractor.
(2) Upon completion of make-ready, the requesting entity shall pay
the utility for any outstanding expenses charged by the utility for
expenses incurred to complete the make-ready.
(3) Upon receipt of payment or establishment that no further
payment is due, the utility shall confirm that the request for access
is granted.
(4) Once all make-ready work is performed and the request for
access is granted, the requesting entity may use any contractor to
install its facilities that has the same qualifications, in terms of
training, as the utility's own workers, whether or not the contractor
is authorized by the utility.
9. Add Sec. 1.1422 to subpart J to read as follows:
Sec. 1.1422 Contractors.
(a) Utilities shall make available:
(1) A list of authorized contractors; and
(2) Criteria and procedures for becoming an authorized contractor.
(b) If a contractor has been hired according to conditions
specified in Sec. 1.1420, a utility may direct and supervise an
authorized contractor in cooperation with the requesting entity.
(1) The attaching entity shall invite a utility representative to
accompany the contractor and the utility representative may consult
with the authorized contractor and the entity requesting access.
(2) The representative of a non-incumbent LEC utility may make
final determinations on a nondiscriminatory basis that relate directly
to insufficient capacity or the safety, reliability, and sound
engineering of the infrastructure.
10. Add Sec. 1.1424 to subpart J to read as follows:
Sec. 1.1424 Exclusion from work among the electric lines.
(a) Utilities may exclude non-utility personnel from working among
the electric lines on a utility pole, except workers with specialized
communications-equipment skills or training that the utility cannot
duplicate which are necessary to add or maintain a pole attachment.
(b) Utilities shall permit workers with specialized skills or
training concerning communications equipment to work among the electric
lines:
(1) In concert with the utility's workforce; and
(2) When the utility deems it safe.
11. Add Sec. 1.1426 to subpart J to read as follows:
Sec. 1.1426 Charges for access and make-ready.
(a) Utilities shall make available to attaching entities a schedule
of common make-ready charges.
(b) Payment for make-ready charges is due in the following
increments:
(1) Payment of 50 percent of estimated charges requires the
recipient utility to begin make-ready performance.
(2) Payment of 25 percent of estimated charges is due 22 days after
the first payment.
(3) Payment of remaining make-ready charges is due when access is
granted.
12. Add Sec. 1.1428 to subpart J to read as follows:
Sec. 1.1428 Administration of pole attachment requests.
(a) Where a pole is jointly owned by more than one utility:
(1) The owners shall designate a single owner to manage requests
for pole attachment; and
(2) Each owner shall make publicly available the identity of the
managing utility for its poles.
(b) Requesting entities shall not be required to interact with an
owner other than the single managing pole owner.
(c) The managing pole owner shall:
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(1) Collect from each existing attacher a statement of any costs
attributable to rearrangement of the existing attacher's facilities to
accommodate a new attacher.
(2) Bill the new attacher for these costs, plus any expenses the
managing pole owner incurs in its role as clearinghouse; and
(3) Disburse compensatory payment to the existing attachers.
[FR Doc. 2010-17048 Filed 7-14-10; 8:45 am]
BILLING CODE 6712-01-P