Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+-----+-----------------------------+
| **In the Matter of**             | **  | **EB Docket No. 04-381**    |
|                                  | )** |                             |
| **Florida Cable                  |     |                             |
| Telecommunications Association,  | **  |                             |
| Inc.; Comcast Cablevision of     | )** |                             |
| Panama City, Inc.; Mediacom      |     |                             |
| Southeast, L.L.C.; and** **Cox   | **  |                             |
| Communications Gulf, L.L.C.,**   | )** |                             |
|                                  |     |                             |
| **Complainants,**                | **  |                             |
|                                  | )** |                             |
| **v.**                           |     |                             |
|                                  | **  |                             |
| **Gulf Power Company,**          | )** |                             |
|                                  |     |                             |
| **Respondent.**                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
|                                  |     |                             |
|                                  | **  |                             |
|                                  | )** |                             |
+----------------------------------+-----+-----------------------------+

**Appearances**

# *John D. Seiver, Esquire and Geoffrey C. Cook, Esquire*, on behalf of Florida Cable Telecommunications Association, Inc., et al.; *Eric B. Langley, Esquire, J. Russ Campbell, Esquire, Ralph Peterson, Esquire and Allen M. Estes, Esquire* on behalf of Gulf Power Company; *Lisa Griffin, Esquire, Rhonda Lien, Esquire and James W. Shook*, *Esquire,* on behalf of the Enforcement Bureau

**INITIAL DECISION**

**OF**

CHIEF ADMINISTRATIVE LAW JUDGE RICHARD L. SIPPEL

**Issued:** January 30, 2007 **Released:** January 31, 2007

Preliminary Statement

1.  By delegation, the Chief, Enforcement Bureau initiated this formal
    hearing[^1] to determine whether the respondent Gulf Power Company
    ("Gulf Power") is entitled to receive compensation above marginal
    costs for attachments to its utility poles of cable companies
    Comcast Cablevision of Panama City, Inc., Medicom Southeast, L.L.C.,
    and Cox Communications Gulf Coast, L.L.C., the cable companies
    represented by Florida Cable Telecommunications Association, Inc.,
    (Complainants"). *Hearing Designation* Or*der*, EB Docket No. 04-381
    (DA 04-3048), released September 27, 2004, 19 FCC Rcd 18718 (2004)
    *("HDO").* Gulf Power was assigned the burden of proof on the
    designated issue:

> Whether Gulf Power is entitled to receive compensation above marginal
> costs for any attachments to its poles belonging to the Cable
> Operators and, if so, the amount of any such compensation.

*HDO* at Para. 11.

**Background**

2.  Complainants filed a complaint against Gulf Power on July 10, 2000,
    alleging that Gulf Power violated Section 224 of the Communications
    Act ("Act") \[47 U.S.C. § 224\] and the Commission's pole
    attachments rules (47 C.F.R. §§ 1.1401-1.1418) by terminating
    existing agreements with the Complainants, forcing them to execute
    new pole attachment agreements with higher pole attachment rates,
    and refusing to renegotiate new rates in good faith in accordance
    with the FCC Cable Formula. (47 C.F.R. §1.1409(e)(i).) [^2] Gulf
    Power unilaterally decided that an attachment rate based on the
    Cable Formula does not provide just compensation, and that an
    alternative methodology should be employed to arrive at an
    appropriate *albeit* much high rate.[^3]

3\. On May 13, 2003, the Enforcement Bureau ("Bureau") granted the
complaint. *Florida Cable Telecommunications Association, Inc.; Comcast
Cablevision of Panama City, Inc.; Mediacom Southeast, L.L.C.; and Cox
Communications Gulf Coast, L.L.C. v. Gulf Power Company, Memorandum
Opinion and Order,* 18 FCC Rcd 9599 (Enf. Bur. 2003) ("*Gulf Power
Order"*). The Bureau determined that the Cable Formula provided just
compensation, relying on Commission holdings that Cable Formula rent
plus payment of make-ready expenses exceed just compensation. [^4] *Gulf
Power Order* at 9602-03. The *Gulf Power Order* also relied

on the case of *Alabama Power Co. v. FCC*, 311 F.3d 1357 (11^th^ Cir.
2002), *cert. denied,* 540 U.S. 937 (2003)*("Alabama Power").* *Alabama
Power* holds that a utility pole owner is constitutionally entitled only
to marginal costs under the Cable Formula, unless it is shown by a
preponderance of the evidence for each pole that:

> *(1) the pole is at full capacity and (2) either (a) another buyer of
> the*
>
> *space is waiting in the wings or (b) the power company is able to
> put*
>
> *the space to a higher-valued use with its own operations.*

*Gulf Power Order* at 9607, citing *Alabama Power*, 311 F.2d at 1370-71.
(Emphasis added.)

4\. Complainants challenged Gulf Power's charging an annual per pole
rate of \$38.06, an amount exceeding the Cable Formula rate by over
500%, and an amount which the Bureau found to be "unjust and
unreasonable."[^5] *Gulf Power Order* at 9600, 9608. The *Gulf Power
Order* also held that Gulf Power "had submitted no evidence . . . that
would satisfy the test set by the Eleventh Circuit." *Id.* at 9607.
*See* Para. 3 above. However, because its complaint was filed prior to
the Eleventh Circuit's decision, Gulf Power requested and was granted an
opportunity to present evidence under the *Alabama Power* regimen.
Accordingly, the Bureau has ordered a hearing before an Administrative
Law Judge to determine "\[w\]hether Gulf Power is entitled to receive
compensation above marginal costs for any attachments to its poles
belonging to the Cable Operators." *HDO* at Para. 11.

5\. After five days of hearings, Proposed Findings of Fact and
Conclusions of Law and Reply Proposed Findings of Fact and Conclusions
of Law were filed by Complainants and by Gulf Power.[^6]

**Arguments**

**Gulf Power**

6\. Gulf Power contends that it only need show that poles to which
Complainants' cables are attached are crowded, and that there is no need
to prove that its poles are at full capacity, which is the standard of
proof required by the *Alabama Power* court. *Alabama Power*, 311 F.3d
at 1370-71 (proof required that "pole is at full capacity"). Gulf Power
would lower the standard of proof to showing merely crowded poles
requiring make ready to accommodate another attachment. Gulf Power
argues that crowded poles can be rivalrous when a rearrangement of
existing equipment and attachments is required in order to accommodate
another attacher. It is recognized that a rivalrous condition may occur
when possession by one corresponds to the loss of another.

**Complainants**

7\. Complainants contend that a showing of full capacity requires proof
that Gulf Power could not accommodate another attacher on specific
poles. Complainants argue that Gulf Power offered no evidence of a
particular pole for which it had to turn away some entity because Gulf
Power could not accommodate another attachment due to a pole's full
capacity. Therefore, Gulf Power has not proven a lost opportunity as to
any entity which is waiting in the wings for space on a pole, and has
not shown proof that an opportunity for higher valued use was lost to
space occupied by a cable attachment. Michael Dunn, a former key
employee of Gulf Power, testified at hearing that Gulf Power needed to
show full capacity and a buyer waiting in the wings. (Dunn, Tr. 748-49.)
Gulf Power's economic expert testified to the two-pronged test: proof of
poles at full capacity and a showing of either a buyer in the wings or a
higher valued use by Gulf Power. (Spain, Tr. 1155-56.) Another key
employee, Ben Bowen, admitted as to fifty selected poles, that he did
not determine whether there was another party waiting in the wings
seeking to attach to any particular pole. (Bowen, Tr. 1028.) Therefore,
for failure of proof, Gulf Power is not entitled to pole rent that
exceeds the Cable Formula. (Compls. Exh. A *passim*.)

**Fact Findings**

**Pole Attachments**

8\. Gulf Power owns approximately 225,000 wooden distribution poles, and
150,000 of these are joint use poles. (GP Exh. B at 6.) A joint use pole
is one to which one or more entities other than Gulf Power are attached.
(*Id* at 1.) For the usual main line attachment, the wire is secured to
the pole with a three-bolt clamp. *Id*. An attachment which is a service
drop is a line leading into a customer\'s house or place of business.
*Id.* If a main line attachment is on a pole, that attachment occupies
at least one foot of space. *Id*. If a cable company has a service drop
as well, the actual usable space occupied could be significantly more
than one foot. *Id.* Complainants also attach other fixtures and
appliances to Gulf Power's poles, and sometimes bond to Gulf Power's
grounding*. Id.* Complainants attach coaxial, fiber, and service drops
to approximately 100,000 of Gulf Power's poles. (GP Exh. B at 13.)

**Contracting**

9\. Complainants entered into standard written agreements with Gulf
Power. (GP Exh. A at 8; GP Exh. B at 9-10.) These agreements expired in
2000 and Gulf Power announced its intention to cease voluntary
attachment relationships. (GP Exh. A at 8; GP Exh. B at. 9.) Since that
time, attachments have remained on Gulf Power's poles pursuant to
the1996 Telecommunication Act's mandatory access, but the parties have
not agreed on new rental terms governing the attachments. (GP Exh. B at
9-10.) Pending final determination, Complainants' attachments remain in
place at rates set under former agreements. *Gulf Power Order* at 9609.

10\. The contracting process is controlled by Gulf Power, and attaching
parties are referred to as licensees. To illustrate the process, Mr.
Dunn negotiated an agreement with a cable company that was executed on
January 1, 1997. (GP Exh. A at 8; GP Exh. 7.) Gulf Power rearranged
other attachers in order to accommodate the cable licensee. (GP Exh. 7
at 10.) The contract term ran to December 31, 2001. Before attaching a
cable, the licensee needed to submit a permit with construction drawings
for Gulf Power's approval and the licensee had to pay all make ready
costs. The licensee paid an annual per pole rent of \$6.20 from 1997
through 2000, and the rental rate was to be recalculated for 2001 under
the Cable Formula.

11\. The agreement also provided that when two or more entities desire
to attach to the same pole location, the first entity applying gets
preference if space is available. If a licensee wishes a higher position
on the pole, it pays the make-ready costs associated with any
reattachment. (GP Exh. 7 at 9.) If a pole is too short or otherwise
inadequate and a rearrangement would involve moving other attachers,
then the licensee would be required to pay all expenses, including
reimbursing the owners of changed facilities on the pole. (GP Exh. 7 at
10.) Installation would be at licensee's expense, and when required by
Gulf Power, the licensee must remove, relocate, replace or renew its
facilities, transfer to a substituted pole, or perform other work
required by Gulf Power. If Gulf Power performs any of the work, the
licensee pays for the cost of work plus 15%. (GP Exh. 7 at 13.) These
expenses paid by attachers are over and above the Cable Formula, showing
that Gulf Power is not operating at a financial loss in complying with
the Cable Formula.

**Structural Character of Poles**

12\. Poles have both usable space and unusable space. (GP Exh. B at
13-14, 41; GP Exh. 70 at 121-23.) Unusable space includes: (1) the
portion of the pole which is underground; and (2) the portion of the
pole above ground required to support minimum mid-span clearances. (GP
Exh. B at 13-14, 41.) A forty-inch workers safety zone also is required
between the lowest electrical wire and the highest communications wire.
(GP Exh. 38.) (Compls. Exh.12, *National Electrical Safety Code* (NESC)
§238E.) But this safety space does not prevent additional attachments or
alternative uses.

13\. The typical pole is approximately forty feet tall, having one set
of power lines, one cable attachment, and one telephone attachment.
(Dunn, Tr. 739, 814-15.) In order to simultaneously accommodate power,
cable and telephone attachers consistent with Gulf Power's needs,
utility lines must be reduced from 8.5 feet to 7.5 feet on a standard 40
foot pole. (GP Exh. A at 25-26.) Eighteen feet of clearance above ground
is needed, and forty inches of separation is required between the
highest communication wire and the lowest electric wire. (Bowen, Tr.
1050; GP Exh. 40; GP Exh. B at 29.) An attachment is placed higher than
eighteen feet in order to achieve clearance at mid-span. (GP Exh. 40; GP
Exh. B at 21.) After the buried portion and required clearances, there
is generally 28.5 feet of space that is unusable. (Dunn, Tr.832-33; GP
Exh. A at 25-26; GP Exhs. 35-37.) This results in 11.5 feet of usable
space for attachers. (GP Exh. A at 25-26; GP Exh. B at 25.) (*See* GP
Exh. 35, forty foot pole diagram.) Mr. Dunn considers poles having
power, cable and telephone attachments to be typical of the poles in
issue. (GP Exh. A at 25-26.)

14\. There is no evidence that rearrangements of equipment and
attachments on these typical poles cause full capacity or such a degree
of crowding that an added cable could not be arranged, or that there
were lost opportunities. Rather, the record establishes that routine
changes are made when there are physical obstructions, or to observe
safety standards which are conditions requiring correction having
nothing to do with capacity. (Dunn, Tr. 754-56.) Those changes are in
the public interest, and such modifications do not detract from the
mandate under the Telecommunications Act to make space available for
cable attachers on utility poles.

**Make Ready**

15\. Make-ready in connection with joint use poles is any rearrangement
of equipment and attachments "in order to make room on either an
existing pole or a new, different pole for a new attacher." (GP Exh. A
at 15.) Gulf Power prepares a work order to determine cost of any make
ready. Once cost is determined the work can be completed. (GP Exh. A at
16.) Spacing on the pole must be in conformity with NESC requirements.
(GP Exh. A at 17.) (GP Exh. 38 at 2; NESC § 238E.) But compliance with
safety has never rendered a pole at full capacity, and Mr. Dunn knew of
no instance of denying access to a pole simply "because another cable
operator was there." (Compls. Exh. 86 at 129.)

**Osmose Survey**

16\. Gulf Power presented evidence of a survey of poles known as the
"Osmose Study." (GP Exh. 40 at 4, Osmose Statement of Work, was to audit
Gulf Power's joint use poles to determine number of "crowded" or "full
capacity" poles in the context of this proceeding.) Allegedly to insure
objectivity, Osmose was not given information about "what constitutes a
pole at full capacity." (GP Reply Finding at 7.) (GP Exh. 43.) In Gulf
Power's First Report on Pole Survey dated October 31, 2005, Osmose
reported surveying 9,663 poles, of which 7,120 were characterized as
"crowded" for a percentage of 73.68 %.

17\. Mr. Bowen testified that Gulf Power's definition of crowded that
was provided to Osmose meant "an NESC violation, Gulf Power violation,
or any other applicable code or one that would not accept another
attacher." \-\-\-- " \[T\]hat's the way the Osmose Statement of Work was
set out \-\-\-- ." (Bowen, Tr. 1015.) Osmose considered a crowded pole
as one having vertical clearance violations under the NESC safety code,
or clearance over roads that would cause violations if corrected, or a
pole that cannot accept an additional attachment due to inadequate
clearance space between transformers. (GP Exh. 40 at 4.) Thus, Osmose
was not taking into consideration make-ready adjustments or
reconfigurations in order to accommodate another attachment. In
responding to Osmose's conclusions of crowded, Complainant's engineering
expert opined without contradiction, that a utility pole is never at
full capacity if make-ready work can accommodate an additional
attachment. (Compls. Exh. 1; Harrelson, Tr. 1568.)

**Analysis**

18\. The *Alabama Power* decision held.

> \[I\]f the government commits a taking, it is under an obligation to
>
> put the aggrieved party in the position it was in before the taking
>
> occurred (and no better). In unique cases such as this one, marginal
>
> cost meets this test -- unless, if course, the aggrieved party proves
> *lost*
>
> *opportunity by showing (1) full capacity and (2) an higher valued*
>
> *use \-\-- .* (Emphasis added.)

311 F*.*3d at 1371. Thus, to be entitled to charge rent in excess of
marginal cost, Gulf Power must prove: (1) a pole's condition of full
capacity, and (2) actual loss of a higher valued use as a result of full
capacity.

19\. Gulf Power hopes to finesse the full capacity requirement by
reference to the court's observation that "if crowded, the pole space
becomes rivalrous," because in a genuine full capacity situation, "the
zero-sum nature of pole space, like land, is the key."[^7] 311 F.3d
1369-70. But the court also pointed out that a showing of lost
opportunity remains critical, and crowding is not tantamount to lost
opportunity. 311 F.3d 1370. So merely pointing to the need for
rearrangement of existing attachments and/or compliance with safety
codes in order to accommodate new attachments do not meet Gulf Power's
burden.[^8] Such changes and rearrangements on poles are normal to
accommodate new attachments. (Compls. Exh. A at 32; Kravtin, Tr.1516.)
And Gulf Power is never out of pocket because when a cable operator
needs make-ready work to accommodate an attachment, the attacher pays
the costs. (Dunn, Tr. 807-809.) The *Alabama Power* court neither found
nor concluded that crowded was equivalent to full capacity. Rather, the
court held to the contrary, that where no lost opportunity is shown and
marginal costs incident to attaching are paid, "pole space is, for
practical purposes, nonrivalrous." 311 F.3d 1369.

20\. Gulf Power does not deny that it can accommodate change-outs, but
argues that with a change-out the pole space is *ipso facto* crowded and
rivalrous. In another rent regulation case, Amtrak was required to pay
only incremental costs while forcing its trains on another carrier's
line. *Metropolitan Trans. Auth. v. ICC*, 792 F.2d 287 (2d Cir. 1986).
The *Alabama Power* court examines that case and compares the rare
occurrence of a crowded train track with crowding on a utility pole:

> The possibility of crowding is perhaps more likely in the context of
> pole space, however, and if crowded, the pole space becomes rivalrous.
> Indeed, Congress contemplated a scenario in which poles would reach
> full capacity when it created a statutory exception to the
> forced-attachment regime.[^9]

*Alabama Power* at 1370. But Gulf Power's argument suffers from a
failure of proof that potential users will pay higher rent, or proof of
higher valued uses of the space by Gulf Power which were foreclosed by
Complainants' cable attachments. Also, Gulf Power always has the ability
to adjust poles at the expense of new attachers thus showing that Gulf
Power's poles lack full capacity and are nonrivalrous. Most importantly,
under the Cable Formula, Gulf Power has not lost any opportunity and
therefore, as characterized by the *Alabama Power* court, Gulf Power's
utility poles are "for practical purposes nonrivalrous." 311 F.3d at
1369.

21\. Gulf Power finally argues that its poles are not essential because
there are other options, including underground construction, and that
because other options exist, "monopoly rates", "duress" or "essential
facilities" are unsubstantiated. This argument amounts to a long-
discredited attack on the basis for the Pole Attachment Act which the
Commission is not at liberty to ignore, and has nothing to do with the
*HDO*. The sole issue as framed by the *HDO* is whether rents are
recoverable by Gulf Power that exceed the Cable Formula based on proof
of identifiable lost opportunities caused by proven full capacity. Gulf
Power has failed to meet this standard of proof and has not met its
burden of proof.[^10]

**Conclusions of Law**

22\. Neither evidence nor reason support Gulf Power's argument that
performing any make-ready work on a pole means that it is at full
capacity, and that Gulf Power can therefore charge higher unregulated
rates. Gulf Power admitted that "a rearrangeable pole would not be at
full capacity." (Dunn, Tr. 736-37.) It is only when a "government taking
forecloses an opportunity to sell space to another bidding firm that a
pole owner may charge rents above the Cable Formula." 311 F.3d at 1370.
Through the industry's established remedy of make-ready that is paid for
by the attacher, a taking by government mandated cable attachments does
not foreclose the opportunity to sell space to another attacher.[^11]
311 F.3d at 1370-71. Since Gulf Power failed to show any lost
opportunity, it does not meet the criteria for charging rents above the
Cable Formula. (Compls. Exh. A at 50.)

23\. Gulf Power contends in proposed findings that determining whether
or not a pole is at full capacity involves an analysis of inches, and
where there is an analysis of inches, rivalry cannot realistically be
disputed. (GPFCL at Para. 10) Determining such rivalry by such a
deduction would be speculative, while the "too close to call" argument
is exceedingly narrow and erroneous. Significantly, when an attacher
pays the cost of getting on a pole, Gulf Power stands to earn more. Gulf
Power has failed to identify any instance of inability to accommodate a
new attacher. (Compl. Exh. A at 42.) Moreover, Gulf Power has offered no
evidence of an instance when it was prevented from accommodating an
attachment because of cable attachments. To the contrary, Mr. Dunn
admitted: "unless there was some engineering or safety reason for not
allowing attachment to that pole -- if it is within our means to do so,
we did so." (Compl. Exh. 86 at 58-59.) Similarly, Mr. Bowen testified
that Gulf Power will change-out or rearrange a pole if necessary.
(Bowen, Tr. 1078.) Gulf Power has not proven that its joint use poles
are at full capacity.

24\. Gulf Power relies on an inapposite court decision, *Southern Co. v.
FCC,* 293 F.3d 1338, 1346-47 (11^th^ Cir. 2002). *Southern Co.* narrowly
holds that "when it is agreed \[by pole owner and attacher\] that
capacity is insufficient," a utility may not be required to provide an
attacher with access to a pole. *Id.* *See also Section 224 (f)(2) of
the Act*. The decision also holds that the term "insufficient capacity"
was not defined by statute, was ambiguous, and that utilities do not
"enjoy the unfettered discretion to determine when capacity is
insufficient*." Id.* at 1348. A finding of whether a pole's
"insufficient capacity caused a missed opportunity must consider Gulf
Power's "historical willingness to accommodate attachers by performing
make-ready*." See interlocutory* *Order* FCC 05M-50, released October
12, 2005 at 2 (Gulf Power admits to its "historical willingness to
accommodate attachers by performing make ready"). Mr. Dunn admitted that
he had no knowledge of any instance in which Gulf Power denied any party
access to a pole "because another cable operator was there." (Compls.
Exh. 86 at 129.) In any event, since there was never an agreement
between Complainants and Gulf Power regarding pole capacity, the
*Southern Co.* decision is not relevant to any *HDO* issue, and has no
decisional application in this case.

**Ultimate Conclusions**

25\. When capacity is available through rearrangement or expansion of a
pole's height, its capacity cannot be full since there is no exclusion
of another and no missed, foreclosed, or lost opportunity. Gulf Power
erroneously argues that a need to use make-ready to accommodate an
attachment constitutes proof of full capacity. To the contrary,
make-ready is the means of providing space for attachments on poles
already having the capacity to expand, which is the case for practically
all of Gulf Power's poles.[^12]

26\. Had Gulf Power made the requisite showing under the two-part test
with respect to a specific pole, it would be entitled to compensation
above marginal costs for that pole, whether or not other poles in its
network were or were not at full capacity. But Gulf Power has failed to
show that any pole is at full capacity and that (1) the Cable Formula
has cost it an opportunity to rent space to someone else at a higher
rate or that (2) it is prevented from putting the space to a higher
valued use within its own operations. Instead, it rails against the
fairness of the *Alabama Power* test, overlooking or ignoring that the
Enforcement Bureau designated this hearing for the sole purpose of
affording Gulf Power an opportunity to present evidence to an
Administrative Law Judge under that test. *HDO* at Para. 4-5.

27\. The burden of proof is on Gulf Power to prove by a preponderance of
the evidence that but for the FCC's mandatory pole attachment
regulation, it would be able to rent Complainant's space to someone else
at a higher unregulated rate, or use the space for its own higher valued
purposes. On the other hand, if space is available for all those who
request space, then the cable operator occupies space that would
otherwise be vacant. In that case, the regulated rate provides a fair
return on investment, and Gulf Power is not entitled to more than
marginal or incremental costs as provided by the Cable Formula. The
result is that the FCC's regulated rate, which provides for recapturing
allocated costs, is found to be entirely just and equitable.

28\. Finally, since Gulf Power failed to prove that any pole's utilized
capacity makes impossible the attachment of any potential user waiting
in the wings, or that Complainant's cable attachments deny Gulf Power an
alternative opportunity of higher value, the inquiry under the *HDO* is
at an end. Therefore, it is no longer necessary to decide whether the
Complainant cable companies are entitled to substitute a longer pole at
their own expense since Gulf Power has failed to show that any existing
pole to which any Complainant's cable is attached is at full capacity.
Nor for that same reason is it necessary to reach the question of what
rate other than the Cable Formula would be fair and equitable.

**Order**

IT IS ORDERED that having found that none of Gulf Power Company's poles
are proven to be at full capacity, the FCC Cable Formula providing for
Gulf Power recovering marginal or incremental (fully allocated) costs is
triggered by default.

IT IS FURTHER ORDERED that Gulf Power Company is not entitled to receive
any compensation above marginal or incremental (fully allocated) costs
for any of Complainants' cable attachments to Gulf Power Company's
poles.

FEDERAL COMMNICATIONS COMMISSION[^13]

Richard L. Sippel

Chief Administrative Law Judge

[^1]: *See* 47 C.F.R §0.111(a)(12) (Enforcement Bureau may resolve
    complaints regarding pole attachments); and §0.111(a)(14)
    (Enforcement Bureau may issue \-\-- designation orders).

[^2]: The Cable Formula is the Commission's methodology to calculate
    maximum pole attachment rates. 47 C.F.R. §11409(e)(i). *See
    Amendment of Rules and Policies Governing Pole Attachments*, *Report
    and Order,* 15 FCC Rcd 6453, 6457, ¶ 5 (2000), *review denied sub
    nom.,* *Southern Co. Serv., Inc. v. FCC*, 313 F.3d 574 (D.C. Cir.
    2002); *Amendment of Commission's Rules and Policies Governing Pole
    Attachments*, *Consolidated Partial Order on Reconsideration*, 16
    FCC Rcd 12103, 12110, ¶ 10 (2001).

[^3]: Gulf Power Company's Response to Complaint, File No. PA 00-004
    (filed Aug. 9, 2000) at 9-13, 38-52.

[^4]: *Gulf Power Order*, 18 FCC Rcd at 9609, ¶ 15 (citing *Alabama
    Cable Telecommunications Ass'n v. Alabama Power Co.,*16 FCC Rcd
    12209, 12223-36, ¶¶ 32-61 (2001) ("*Alabama Power Order*")). Alabama
    Power believed that the Cable Formula did not provide just
    compensation but the Bureau disagreed. FCC Rcd 17346 (Cable Serv.
    Bur. 2000). The Commission upheld the Bureau. *Alabama Power Order*,
    16 FCC Rcd at 12212, 12241 (Cable Formula not arbitrary or
    capricious). On appeal, the Eleventh Circuit upheld the Commission's
    conclusion that "marginal cost was tantamount to just compensation."
    *Alabama Power Co. v. FCC*, 311 F. 3d 1357 (11^th^ Cir. 2002),
    *cert. denied*, 124 S. Ct. 50 (2003).

[^5]: In 1999 -- 2000, Complainants were paying annual rates under the
    Cable Formula of \$6.20 per pole, when Gulf Power announced the rate
    would increase to \$38.06. *Gulf Power Order* at 9600*. Cf.*
    *Alabama Power,* 311. F 3d at 1366 (including labor costs and pro
    rata share of unusable portion of pole, the rate sought was \$38.81
    compared with \$7.47 paid under the Cable Formula).

[^6]: Each Gulf Power exhibit cited will be referred to as (GP Exh.
    \_\_\_\_). Each cited exhibit of Complainants will be referred to as
    (Compls. Exh. \_\_\_\_). Hearing transcripts will be cited by
    witness name and transcript page (Dunn, Tr. \_\_\_\_\_).

[^7]: An economist explains that "zero sum" may occur in situations
    where when one entity gains, another entity loses the quantity
    gained. (Compls. Exh. A at 25.)

[^8]: The height of poles identified by Gulf Power was barely over forty
    feet. (GP Exh. 42 (summary of Osmose data) and GP Exh. 43 (Gulf
    Power's fifty poles). The height of the poles selected by
    Complainants was over forty three feet, obviously selected because
    the three additional feet make it more difficult to show poles that
    cannot be changed-out because of full capacity. (Compls. Exh. 6.)
    These height differences are irrelevant since Gulf Power failed to
    show that a cable company was unable to attach whether the pole is
    forty feet or forty three feet tall, or that Gulf Power was
    foreclosed from an opportunity.

[^9]: *See* 47 U.S.C. § 224(f)(2). \[A\] utility providing electric
    service may deny a cable television system or any telecommunications
    carrier access to its poles \-\-- on a non-discriminatory basis when
    there is insufficient capacity, and for reasons of safety,
    reliability and generally applicable engineering purposes. It is
    noted that such conditions can usually be fixed and occur so
    infrequently as to become *de minimis* to a network. It is always in
    Gulf Power's interest to locate and correct such problems as soon as
    possible.

[^10]: The evidence also fails to prove that Cable Formula rents are
    insufficient to put Gulf Power in as good a position as it was
    before any taking of its pole space If it were needed to be shown,
    replacement cost would be the amount which Gulf Power would charge
    over and above the Cable Formula rate. (Replacement cost rents range
    from \$38.06 to \$64.98 per pole, while rents under the Cable
    Formula range from \$4.61 to \$6.30.) (GP Exh. E at 6.) The
    Commission has already concluded that Cable Formula rates plus
    payment of make-ready expenses, provides compensation that exceeds
    just compensation. *Alabama Power Order,* 12 FCC Red 12208,
    12223-36. Also, the Commission has twice rejected replacement cost
    methodology. *In the Matter of Commission's Rules and Policies
    Governing Pole Attachments, Partial Order on Reconsideration*, 16
    FCC Red. 12, 103 at Paras. 15, 17 (2001) (rejected pole attachment
    rates based on replacement cost), affirming *Fee Order*, 15 FCC Red,
    6453, at Para. 10 (2000) (replacement cost methodology rejected).
    Therefore, if it were necessary to assess damages, replacement cost
    methodology would not be used.

[^11]: Complainants' expert concluded that through normal and customary
    make-ready rearrangements, including correcting code violations and
    pole change-outs, "Gulf Power has historically been able to
    accommodate an additional attacher." She also concluded that no
    exclusion on a pole can be said to exist "if the additional attacher
    is or can be accommodated on the pole." (Compls. Exh. A at 32.) Gulf
    Power's evidence did not contradict or rebut her opinion. (GP Exh. F
    *passim*.)

[^12]: Cf. *Interlocutory* *Order* FCC 05M-50, *supra*.

[^13]: This *Initial Decision* shall become effective and this
    proceeding shall be terminated 50 days after its release if
    exceptions are not filed within 30 days thereafter, unless the
    Commission elects to review the case on its own motion. 47 C.F.R.
    §1.276(b)/