**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+------------------------------+-------+------------------------------+
| In the Matter of             | )     | File No. PA 98-003           |
|                              |       |                              |
| Mile Hi Cable Partners, LP;  | )     |                              |
| Mountain States Video, Inc., |       |                              |
| d/b/a TCI of Colorado, Inc.; | )     |                              |
| United Cable Television of   |       |                              |
| Colorado, Inc., d/b/a TCI of | )     |                              |
| Colorado, Inc.; TCI          |       |                              |
| Cablevision of Colorado,     | )     |                              |
| Inc.; Heritage Cablevision   |       |                              |
| of Tennessee, Inc.; and TCI  | )     |                              |
| Cablevision of Florida,      |       |                              |
| Inc.,                        | )     |                              |
|                              |       |                              |
| Complainant                  | )     |                              |
|                              |       |                              |
| v\.                          | )     |                              |
|                              |       |                              |
| Public Service Company of    | )     |                              |
| Colorado,                    |       |                              |
|                              | )     |                              |
| Respondent/Applicant         |       |                              |
|                              | )     |                              |
| Application for Review       |       |                              |
|                              | )     |                              |
|                              |       |                              |
|                              | )     |                              |
|                              |       |                              |
|                              | )     |                              |
|                              |       |                              |
|                              | )     |                              |
|                              |       |                              |
|                              | )     |                              |
+------------------------------+-------+------------------------------+

**ORDER**

**Adopted: March 25, 2002 Released: March 28, 2002**

By the Commission:

**I. INTRODUCTION**

1.  Before the Commission is an application for review
    (\"Application\"), filed by Respondent on July 31, 2000, of an Order
    released by the Cable Services Bureau (\"Bureau\") under delegated
    authority. The Order, DA 00-1476 (\"Bureau Order\"),[^1] granted in
    part Complainant's pole attachment complaint (\"Complaint\") filed
    pursuant to Section 224 of the Communications Act of 1934, *as
    amended* (\"Pole Attachment Act\")[^2] and Subpart J of the
    Commission\'s Rules.[^3] Complainant filed an opposition to the
    Application (\"Opposition\") on August 15, 2000, and Respondent
    filed its reply to the Opposition (\"Reply\") on August 25, 2000.
    The Bureau Order found that penalty fees, charged by Respondent for
    Complainant's allegedly unauthorized pole attachments,[^4] were
    excessive. It also concluded that Respondent's retroactive
    imposition of an application process to drop poles[^5] was not just
    and reasonable. It required Respondent to recalculate the total
    unauthorized pole attachment penalties imposed on Complainant; to
    recalculate its costs for its pole attachment survey; and to allow
    Complainant access to the records necessary to verify the count and
    the cost. In this order we deny Respondent's Application and affirm
    the Bureau Order as modified herein.

**II. BACKGROUND**

2.  Pursuant to the Pole Attachment Act, the Commission has authority to
    regulate the rates, terms, and conditions for attachments by a cable
    television system or provider of telecommunications service to a
    pole, duct, conduit, or right-of-way owned or controlled by a
    utility. The Pole Attachment Act provides that such rates, terms and
    conditions must be just and reasonable.[^6] The Pole Attachment Act
    grants the Commission general authority to regulate such rates,
    terms and conditions, except where such matters are regulated by a
    State.[^7] The Commission is authorized to adopt procedures
    necessary to hear and to resolve complaints concerning such rates,
    terms, and conditions.[^8] A utility must charge a pole attachment
    rate that does not exceed the maximum amount permitted by the
    formula developed by the Commission. We have concluded that \"where
    onerous terms or conditions are found to exist on the basis of the
    evidence, a cable company may be entitled to a rate adjustment or
    the term or condition may be invalidated.\"[^9]

3.  In 1996 and 1997, Respondent conducted an inventory of its poles. At
    the conclusion of that inventory, Respondent claimed that
    Complainant had made numerous unauthorized pole attachments.
    Respondent's inventory count included attachments to both mainline
    poles and drop poles. The inventory also indicated that in some
    areas Complainant was attached to fewer poles than the number for
    which Complainant had been paying. When Complainant refused to pay
    Respondent's bills for the allegedly unauthorized attachments and
    the survey costs, Respondent sued in Colorado State court for breach
    of contract. In response, Complainant filed a complaint with the
    Commission, alleging that Respondent had violated the Pole
    Attachment Act. The State court invoked the doctrine of primary
    jurisdiction and stayed Respondent's suit pending clarification by
    the Commission of the parties' rights under the Pole Attachment
    Act.[^10]

**III. BUREAU ORDER**

4.  The Bureau Order concluded that the amount of any unauthorized
    attachment and the circumstances under which it is imposed must be
    just and reasonable. The Bureau Order found that Complainant met its
    burden to show that Respondent's \$250.00 per pole unauthorized
    attachment fee is not just and reasonable. It further concluded that
    a reasonable fee for unauthorized attachments in this case will
    equal five times the annual pole attachment fee per pole per
    unauthorized attachment plus interest.[^11] This amount comported
    with information submitted by Complainant concerning industry
    practice as well as with the Bureau's own experience with
    unauthorized attachment fees.

5\. The Bureau reasoned that Respondent's argument, that the cost
avoided by Complainant for unauthorized attachments is the present value
of fourteen years of annual fees plus some speculative amount related to
alleged increased safety risks and administrative costs, was not
supportable. The Bureau refused to infer, based on the evidence
presented, that the unauthorized attachments at issue could have existed
for fourteen years. The Bureau also reasoned that Complainant must
always comply with safety requirements; pay to correct any safety
violations; and pay for any damages resulting from its own safety
violations. Because Complainant is under the same obligation to make its
attachments safely and incurs the same liability for any safety
violations for unauthorized attachments as it does for authorized ones,
the Bureau concluded that there is no cost avoided by Complainant
related to safety issues and no cost incurred by Respondent related to
safety issues, as a result of unauthorized attachments. The Bureau also
concluded that the parties did not include drop poles in the
authorization process prior to December 29, 1997, when Respondent
informed Complainant that drop poles would be included in the
authorization process.

##### 

##### IV. APPLICATION FOR REVIEW

6\. In its Application, Respondent argues that the Bureau exceeded its
jurisdictional authority under the Pole Attachment Act when it concluded
that Respondent\'s charges to Complainant for unauthorized attachments
were not just and reasonable. Respondent also asserts that Complainant
should not be able to contest an unauthorized attachment fee provision
after entering into a contract. Respondent argues that the Order
constitutes arbitrary and capricious agency action because 1) the
unauthorized attachment fee authorized by the Bureau Order is not large
enough to deter unauthorized attachments; 2) the Complainant will avoid
responsibility and liability at Respondent's expense for damages that
might occur from its unauthorized attachments; and 3) the decision to
exclude unauthorized attachment fees for drop poles prior to 1998 was
not based on reasoned analysis. Respondent claims that the Bureau erred
by giving credibility to Complainant's evidence concerning the industry
standard for unauthorized attachment fees.

##### V. DISCUSSION

7\. Although certain remedies for breach of contract may be pursued in
forums other than the Commission, the Commission has primary
jurisdiction over issues about the reasonableness of rates, terms and
conditions concerning pole attachments.[^12] The issue in this matter is
not whether the Complainant failed to pay an invoice based on a just and
reasonable term or condition, but whether the term or condition itself
was reasonable. We previously concluded in this matter that we have
jurisdiction over the terms and conditions imposed on the pole
attachment authorization process and any associated fees or
penalties.[^13] The Bureau\'s decision is well within the Commission's
jurisdiction under the Pole Attachment Act to ensure that conditions of
pole attachment agreements are just and reasonable. We have also
repeatedly affirmed our conclusion that an attacher cannot be forced to
waive its right to federal, state, or local regulatory relief as a
condition of attachment.[^14] An attacher may file a complaint pursuant
to the Pole Attachment Act after a contract has been executed.[^15] We
have concluded that a pole attachment agreement that includes a clause
waiving statutory rights to file a complaint with the Commission is *per
se* unreasonable.[^16] Precluding Complainant from raising the
unauthorized attachment fee issue after entering into the contract would
be tantamount to requiring Complainant to waive its right to file a
complaint with the Commission.

8\. The Bureau reasonably concluded that a just and reasonable
unauthorized attachment fee will provide incentive for Complainant to
comply with a reasonable applications process, while encouraging
utilities not to delay audits of unauthorized attachments. In setting
reasonable terms and conditions in pole attachment cases, we consider
the prevailing industry practices.[^17] Complainant included the
affidavit of its cable pole attachment expert, Michael Kruger, as
evidence of industry standards.[^18] Mr. Kruger opined, and an attached
survey of unauthorized attachment fee provisions in pole attachment
agreements attached to complaints on file with the FCC showed, that the
industry standard was a one-time charge of \$15.00 to \$25.00 per pole,
or charges based on back rent for no more than three years, which
charges would be no more than \$30.00.[^19] Respondent offered no
countervailing evidence. The Bureau properly considered all pertinent
evidence presented regarding an appropriate charge for unauthorized
attachments.

9\. We find that the Bureau\'s determination \-- i.e., that a just and
reasonable unauthorized attachment fee is five times the annual rent
that Complainant would have paid if the attachment had been authorized
\-- is appropriate in these circumstances. Here, the Complainant
acquired the systems in question between 1991 and 1993 (except for one
that was acquired in 1988), on average about 5 years before Respondent
commenced its survey of Complainant\'s attachments to Respondent\'s
poles.[^20] We believe it would be unreasonable to subject Complainant
to unauthorized attachment fees for essentially the 10 years prior to it
even owning and controlling the attachments in question, particularly
where as here Respondent itself did not conduct systemic surveys of its
poles.[^21] In determining a just and reasonable fee, we must balance
the need to provide an effective remedy with the need to encourage
utilities not to delay audits of unauthorized attachments. We believe
that a fee equal to five times the annual rent strikes the necessary
balance under these circumstances.

10\. In addition, the Bureau\'s conclusion is consistent with general
contract principles that prohibit the enforcement of unreasonable
penalties for breach of contract.[^22] An attaching party need not
engage in the type of behavior that would support exemplary or punitive
damages in order to incur a reasonable unauthorized attachment fee.[^23]
In the instant case, there is no basis in the record to support a
conclusion that Respondent is entitled to exemplary or punitive damages
beyond compensatory damages, and indeed, Respondent has attempted to
justify its fee in terms of its actual losses.[^24] Respondent was
unable to support its claim for the present value of fourteen years of
annual fees plus some speculative amount related to alleged increased
safety risks and administrative costs. Just and reasonable
administrative costs associated with a pole attachment survey are fully
recoverable in addition to any unauthorized attachment fee and therefore
may not be included in the unauthorized attachment fee.[^25] Complainant
must also pay all just and reasonable costs associated with safety
compliance issues in addition to any unauthorized attachment fee.[^26]
Respondent was unable to provide support for actual losses in excess of
the unauthorized attachment fee approved by the Bureau.

11\. We affirm the Bureau\'s conclusion regarding a reasonable
unauthorized attachment fee in this case. We conclude, however, that it
was unnecessary for the Bureau to establish a standard of general
applicability regarding reasonable unauthorized attachment fees.[^27]
Therefore, we affirm the Bureau Order to the extent that, based on the
facts of this case, a reasonable unauthorized attachment fee is five
times the annual per pole attachment fee plus interest. As discussed
above, we believe the record in this matter supports this determination.

12\. Respondent also argues that the Pole Attachment Act and the
parties\' contracts do not distinguish between mainline and drop poles
and Respondent may apply all contract terms, including advance
authorization, rent, and unauthorized attachment fee requirements, to
drop poles. The Bureau Order found that Complainant presented sufficient
evidence to the contrary, and we agree. The evidence introduced by the
parties, and cited by the Bureau, supported the finding that it was the
specific practice of Respondent not to require that Complainant gain
advance authorization for drop poles (or, therefore, to pay fees for
them) until 1998. The Bureau reasonably concluded, based on the evidence
presented, that Respondent could charge an annual pole attachment fee
for drop poles beginning in 1998, after the date it provided Complainant
with notice that it would charge an annual fee for drop poles. We agree
that it would be unjust and unreasonable to allow Respondent to collect
unauthorized attachment fees for drop poles when Respondent has provided
no evidence to contradict Complainant\'s evidence that prior to 1998,
Complainant was not required to apply for, or pay for, attachments to
drop poles.

13\. Finally, Respondent argues that the Bureau Order amounts to an
unconstitutional confiscation of Respondent's property. Because the
Bureau Order requires Complainant to provide compensation plus interest
to Respondent in an amount that equals or exceeds Respondent\'s actual
losses of rental income and costs associated with safety violations,
there is no basis to Respondent\'s claim of unconstitutional
confiscation. We conclude that the Bureau Order allowed Respondent to
recover just and reasonable compensation for Complainant\'s use of
Respondent\'s poles.

**VI. CONCLUSION AND ORDERING CLAUSE**

14\. For the reasons discussed above, we conclude that Respondent\'s
application for review should be denied.

15\. Accordingly, IT IS ORDERED, pursuant to Section 1.115 of the
Commission\'s Rules, 47 C.F.R. § 1.115, that the Application for Review
of In the Matter of Mile Hi Cable Partners, LP, et al. v. Public Service
Company of Colorado, PA 98-003, DA 00-1476, 15 FCC Rcd 11450 (2000) IS
DENIED.

16\. IT IS FURTHER ORDERED, pursuant to Section 1.115 of the
Commission\'s Rules, 47 C.F.R. § 1.115, that In the Matter of Mile Hi
Cable Partners, LP, et al. v. Public Service Company of Colorado, PA
98-003, DA 00-1476, 15 FCC Rcd 11450 (2000) IS AFFIRMED AS MODIFIED
HEREIN.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton

Acting Secretary

[^1]: *Mile Hi Cable Partners, LP, et al. v. Public Service Company of
    Colorado*, 15 FCC Rcd 11450 (2000).

[^2]: 47 U.S.C. § 224.

[^3]: 47 C.F.R. §§ 1.1401--1.1418.

[^4]: Pole attachment contracts generally provide for an application
    process by which an attacher notifies a utility pole owner of the
    poles to which it wishes to attach. Unauthorized attachments are
    those attachments for which no application was filed.

[^5]: Mainline poles are typically poles along roads and other public
    rights of way. A drop pole is typically a pole that takes a cable
    from a mainline pole to a customer's premises that is unusually far
    from a mainline pole, such as across a road or far back from a road.

[^6]: 47 U.S.C. § 224 (b) (1).

[^7]: 47 U.S.C. § 224(b)(1) and (2). Colorado has not certified that it
    regulates rates, terms and conditions of pole attachments. *See*
    *Public Notice,* \"*States That Have Certified That They Regulate
    Pole Attachments,*\" 7 FCC Rcd 1498 (1992).

[^8]: 47 U.S.C. § 224(b)(1). The Commission has developed a formula
    methodology to determine the maximum allowable pole attachment rate.
    *See* *Adoption of Rules for the Regulation of Cable Television Pole
    Attachments, First Report and Order,* 68 F.C.C.2d 1585 (1978);
    *Second Report and Order*, 72 F.C.C.2d 59 (1979); *Memorandum and
    Order*, 77 F.C.C.2d 187 (1980), *aff\'d*, *Monongahela Power Co. v.
    FCC*, 655 F.2d 1254 (D.C. Cir. 1985) (*per curiam*); and *Amendment
    of Rules and Policies Governing the Attachment of Cable Television
    Hardware to Utility Poles*, 2 FCC Rcd 4387 (1987). *See also*,
    *Implementation of Section 703(e) of the Telecommunications Act of
    1996*, 13 FCC Rcd 6777 (1998) and *Amendment of Rules and Policies
    Governing Pole Attachments*, 15 FCC Rcd 6453 (2000).

[^9]: *Amendment of Rules and Policies Governing the Attachment of Cable
    Television Hardware to Utility Poles, Memorandum Order and Opinion
    on Reconsideration*, 4 FCC Rcd 468, 471 (1989).

[^10]: *See* *Public Service Company of Colorado v. Mile Hi Cable
    Partners, LP, et al*., 995 P.2d 310 (Co. 1999).

[^11]: An important aspect of the Bureau Order is the requirement that
    Respondent provide Complainant with the record documentation of its
    survey so that Complainant can verify the unauthorized attachment
    count. Respondent\'s charges to Complainant for unauthorized pole
    attachments were based on a survey that identified the allegedly
    unauthorized attachments but also revealed that Complainant had paid
    an annual pole attachment fee for non-existent attachments. For
    example, in several instances Respondent's survey revealed that
    Complainant was attached to fewer poles, including those alleged to
    be unauthorized, than the number for which Complainant had been
    paying the annual fee. Even though Complainant had over compensated
    Respondent for these poles, Respondent billed Complainant for the
    allegedly unauthorized attachments without granting Complainant an
    offset for the overpayment.

[^12]: *Alabama Cable Telecommunications Association, et al. v. Alabama
    Power Company*, 16 FCC Rcd 12209, 12217 (2001), *appeal pending sub
    nom. Alabama Power Company v. FCC*, Case No. 01-13058-B (11^th^
    Cir.).

[^13]: *Mile Hi Cable Partners, LP, et al. v. Public Service Company of
    Colorado*, 14 FCC Rcd 3244, 3248 (1999).

[^14]: *See* Implementation of Section 703(e) of the Telecommunications
    Act of 1996, 13 FCC Rcd 6777, 6790 and n.90 (1998), *rev\'d in part
    on other grounds*, 208 F.3d 1263 (11^th^ Cir. 2000), *cert.
    granted*, *FCC v. Gulf Power Co*., 531 U.S. 1125 (2001); *See also*,
    *Cavalier Telephone, LLC v. Virginia Electric and Power Company*, 15
    FCC Rcd 9563 (2000).

[^15]: *See* 47 C.F.R. § 1.1404 (d) (requiring that a complaint be
    accompanied by a copy of any existing pole attachment agreement).
    *See also* S. Rep. No. 95-580, at 16 (1977), 1978 U.S.C.C.A.N. 109,
    124 (anticipating Commission jurisdiction where the communications
    space is already occupied by the cable television system.)

[^16]: *Id.* *See also*, Letter from Meredith J. Jones, Chief, Cable
    Services Bureau to Danny E. Adams, Esq., Kelley Drye & Warren LLP,
    12 FCC Rcd 942 (1997).

[^17]: *See Alert Cable TV of North Carolina, Inc. v. Carolina Power &
    Light Co*., 1985 LEXIS 3679 ¶ 5 (C.C.B. 1985), citing *Adoption of
    Rules for the Regulation of Cable Television Attachments*, 68
    F.C.C.2d 1585, 1590 (1978). *See also*, S. Rep. No. 95-580, at 21
    (1977), 1978 U.S.C.C.A.N. 109, 129) (\"The committee believes that
    the open standard of \'just and reasonable\' is at the same time
    sufficiently precise and flexible to permit the commission to make
    determinations when presented with specific contractual provisions
    alleged to be excessively onerous or unfair. In any event, the
    fairness of any term or condition of a CATV pole-leasing agreement
    will have to be judged in relation to other contract provisions,
    prevailing practices in the industries involved, and the particular
    pole rate charges, matters which cannot be precisely translated into
    statutory language.\")

[^18]: Complaint ¶ 27, Exhibit 5 (Kruger Declaration ¶ 3).

[^19]: Complaint ¶ 28, Exhibit 5 (Kruger Declaration ¶ 3) and Exhibit 10
    (survey of damages for unauthorized attachments); Reply of
    Complainant, filed Aug. 17, 1998, at 9. It was also revealed that
    one contract signed by Complainant has a penalty of \$750.00 for
    unauthorized attachments. (Motion to Dismiss at 15; Answer at 15).
    According to Complainant, however, several cable-utility contracts
    have no penalty. Reply of Complainant, filed Aug. 17, 1998, at 6.
    These extremes are enlightening, but neither establishes an industry
    standard.

[^20]: *See* Bureau Order at ¶ 4.

[^21]: *See* Respondent\'s \"Answers of Public Service Company of
    Colorado to Questions of the Cable Services Bureau,\" at Questions 1
    and 2 (filed May 3, 1999).

[^22]: *See, e.g.*, *Space Master International, Inc. v. City of
    Worcester*, 940 F.2d 16, 17-18 (1^st^ Cir. 1991) citing *Priebe &
    Sons v. Unites States*, 332 U.S. 407, 411-414 (1947); *Restatement
    (Second) of Contracts* § 356 (1979 Main Vol.) (\"Damages for breach
    by either party may be liquidated in the agreement but only at an
    amount that is reasonable in the light of the anticipated or actual
    loss caused by the breach and the difficulties of proof of loss. A
    term fixing unreasonably large liquidated damages is unenforceable
    on grounds of public policy as a penalty.\"); *Perino v. Jarvis*,
    312 P.2d 108 (Colo. 1957).

[^23]: *Cf. Williamsburg Cablevision v. Carolina Power and Light Co*.,
    PA 82-007, and *Alert Cable TV of North Carolina, Inc. v. Carolina
    Power and Light*, PA 82-0012, 52 R.R. 2d. 1697, 1706, *aff\'d sub
    nom. Alert Cable TV of North Carolina, Inc. v Carolina Power and
    Light Company*, 1985 FCC LEXIS 3679 (1985).

[^24]: Our conclusion does not preclude a finding, under other
    circumstances, that action by an attacher might support a penalty
    reflecting exemplary or punitive damages.

[^25]: *See* Bureau Order at ¶¶ 8-9. *See also*, *Cable Texas, Inc. v.
    Entergy Services, Inc*., 14 FCC Rcd 6647, 6652 (1999); *Newport News
    Cablevision, Ltd. v. Virginia Power*, 7 FCC Rcd 2610, 2611 (1992).

[^26]: Complainant not only has a contractual obligation to comply with
    the application process, but also has a separate obligation to
    comply with state and local government safety codes. Complainant
    must follow the agreed to application process to ensure that the
    location of its attachments in relation to Respondent\'s attachments
    is in compliance with these safety codes.

[^27]: *See* Bureau Order at ¶ 14 (determining reasonable unauthorized
    attachment fees in those cases where a pole attachment survey was
    completed less than five years before the discovery of unauthorized
    attachments).