[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Proposed Rules]
[Pages 18074-18081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9515]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[CS Docket No. 97-98; FCC 97-94]


Amendment of Rules and Policies Governing Pole Attachments

AGENCY: Federal Communications Commission

ACTION: Proposed rule.

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SUMMARY: In 1987, the Commission adopted its current pole attachment 
formula for calculating the maximum just and reasonable rates utilities 
may charge cable operators for pole attachments. In this Notice of 
Proposed Rulemaking, we seek comment as to whether the current pole 
attachment formula should be modified or adjusted to eliminate certain 
anomalies and rate instabilities particular parties assert have 
occurred. Should altering the formula become necessary, we have 
tentatively proposed a modification that would improve the formula's 
accuracy. In addition, we propose changes to the formula to reflect the 
present accounting system that replaced the former rules in 1988. 
Finally, we propose a new conduit methodology that will determine the 
maximum just and reasonable rates utilities may charge cable operators 
and telecommunications service providers for their use of conduit 
systems.

DATES: Comments are due on or before May 12, 1997 and Reply Comments 
are due on or before June 12, 1997.

ADDRESSES: Office of the Secretary, Federal Communications Commission,

[[Page 18075]]

1919 M Street, N.W., Room 222, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Michael T. McMenamin, Cable Services 
Bureau, (202) 418-7200, TTY (202) 418-7172.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking, CS Docket No. 97-98, adopted March 14, 
1997 and released March 14, 1997. The full text of this decision is 
available for inspection and copying during normal business hours in 
the FCC Reference Center (Room 239), 1919 M Street, NW, Washington, 
D.C. 20554, and may be purchased from the Commission's copy contractor, 
International Transcription Service, (202) 857-3800, 1919 M Street, NW, 
Washington, D.C. 20554. For copies in alternative formats, such as 
braille, audio cassette, or large print, please contact Sheila Ray at 
International Transcription Service.

Synopsis of the Notice of Proposed Rulemaking

    1. This Notice of Proposed Rulemaking seeks comment on proposed 
modifications to the Commission's rules relating to the maximum just 
and reasonable rates utilities may charge for attachments made to a 
pole, duct, conduit or right-of-way. These attachments are referred to 
as ``pole attachments.'' We believe that a re-evaluation of this 
formula may be necessary to improve accuracy in the continued 
application of these rules to cable television systems and to 
telecommunications carriers pursuant to the Telecommunications Act of 
1996, Public Law 104-104, 110 Stat. 56 (1996). We also propose amending 
the formula so that it reflects our current accounting rules that apply 
to telephone companies. Finally, in this Notice, we propose a conduit 
methodology that will determine the maximum just and reasonable rates 
utilities may charge cable systems and telecommunications carriers for 
their use of conduit systems. The proposed formula would apply to all 
telecommunications carriers pending the effectiveness of the new 
formula required by the 1996 Act.
    2. On August 26, 1994, Southwestern Bell Telephone Company 
(``SWB'') filed a Petition for Clarification, or in the Alternative, a 
Waiver of our formula for computing maximum reasonable pole attachment 
rates. SWB argues that in Oklahoma, the Commission's pole attachment 
formula produces a negative net cost of a bare pole and other negative 
figures, resulting in negative rates. SWB asserts that these abnormal 
results arise as the original costs of the poles are depreciated over 
time, particularly since the cost of removing the pole at the end of 
its useful life is included in the original cost of the pole. Because 
the cost of removal can be high, SWB argues it has resulted in negative 
net pole investment for its poles in Oklahoma. SWB proposes to remedy 
the rate problem by extracting the cost of removing poles from the 
formula for calculating the accumulated depreciation used to determine 
pole attachment rates. This would increase the net pole investment SWB 
would use in applying the formula, thereby making SWB's pole attachment 
rates positive under that formula.
    3. Potential Adjustments to the Pole Attachment Formula: As 
detailed below, we seek comment on the issues raised by SWB's petition. 
We also seek comment on aspects of the current formula that may require 
modification.
    4. The Commission seeks comment as to whether over time, and with 
increased demand, the average pole height has increased to an average 
of 40 feet and whether the usable space presumption should also be 
changed from 13.5 feet to 11 feet. The Commission recognizes the 
National Electric Safety Code requirement that a 40 inch safety space 
must exist between electric lines and communication lines. We seek 
comment on the premise that the safety space emanates from a utility's 
requirement to comply with the NESC and should properly be assigned to 
the utility as part of its usable space. We also seek comment on the 
premise that the 40 inch safety space emanates from a utility's 
requirement to comply with the NESC and should properly be assigned to 
the utility as part of its usable space.
    5. Poles of 30 feet or less are currently included in the 
calculation of cost of bare pole. We seek comment on whether including 
these smaller poles in the numerator and denominator of the cost of 
bare pole calculation results in a distorted determination of the 
actual costs of a bare pole. We also seek comment on this proposal and 
whether poles of 30 feet or less lack a sufficient amount of usable 
space to accommodate multiple attachments.
    6. We seek comment as to the scope of the problem raised in SWB's 
petition. For instance, we seek comment on the number of jurisdictions 
where accumulated depreciation balances exceed the gross pole 
investment. We also seek comment on the rates being charged in such 
jurisdictions. When our formula defining the maximum just and 
reasonable rate for pole attachments is applied to poles with negative 
net asset values, the result is either extremely low pole attachment 
rates or negative rates. In this Notice, we suggest that if the 
frequency with which this problem occurs does not warrant the proposed 
adjustment to the pole attachment formula, then a case-by-case approach 
could be used. If commenters agree that the scope of the problem 
warrants an adjustment, we propose to do so.
    7. This Notice proposes eliminating the anomalous effect by 
adjusting the current net investment approach to allow for the 
elimination of the net salvage amount (which is typically a negative 
amount) from the accumulated depreciation balance for poles at such 
time that the net asset value of poles becomes negative. Removal of the 
net salvage amount would, for the purpose of pole attachment rate 
calculation, restate the accumulated depreciation account to reflect 
only the depreciation of the pole investment, and would restore the net 
pole investment to a positive balance. The calculation of the 
appropriate amounts to recognize the continuing cost of pole ownership 
could then be made as currently provided in the formula. Each time a 
new rate is to be developed, the pole account should be examined before 
the accumulated depreciation balance is adjusted. If there is a 
positive balance, no adjustment to the accumulated depreciation account 
should be made. Alternatively, if the accumulated depreciation balance 
is negative our proposed adjustment should be made. We seek comment on 
whether the application of the appropriate factors to the net pole 
amount, adjusted as proposed, would provide a fair rate for sharing in 
the recovery of continuing expenses associated with pole ownership.
    8. Further, in these instances we do not believe that it would be 
appropriate to continue to calculate a return on investment that has 
been fully recovered. Thus, we propose that the calculation of the 
return element should be made separately without removal of net salvage 
amounts. The return element would be computed on the basis of the 
unadjusted net pole balance and the result added (as a negative amount) 
to the carrying charges for administrative, maintenance, and tax 
expenses. We believe that the inclusion of this negative return element 
is reasonable and appropriate because the utility has, in effect, 
already recovered more than the original cost of its pole plant through 
depreciation charges. While this ``over-recovery'' is necessary to 
defray the costs of disposing of the poles when they are retired from 
service, the utility has the use of any over-recovered amounts until 
the disposal of the poles actually takes place. We seek comment

[[Page 18076]]

on our tentative conclusion that a utility's pole attachment rates 
should reflect this over-recovery, in the form of a negative return 
carrying charge. Moreover, we seek comment on our proposal to include 
only operating taxes, other than income taxes, in the rate formula.
    9. In proposing the use of this adjustment methodology, we are 
concerned that because telephone and electric utilities install poles 
over time at various original costs and because net salvage estimates 
vary over time, the extraction of the net salvage effect from 
accumulated depreciation could prove to be difficult. In addition, 
current FCC and Federal Energy Regulatory Commission accounting reports 
do not provide information with respect to the net salvage effect. We 
seek comment on the feasibility of this methodology as proposed. 
Additionally, we seek comment on the effectiveness of the methodology 
for the development of fair pole attachment rates and on proposed 
modifications necessary to make this methodology effective in attaining 
this objective. Finally, commenters are requested to provide detailed 
assessments of the effects of this methodology on attachment rates. 
Based on our initial assessment of this proposed adjustment, we do not 
believe that the application of the adjustment where appropriate will 
have any significant impact on current pole attachment rates.
    10. Alternatively, we seek comment on calculating pole attachment 
rates using gross book costs instead of net book costs. Under this 
approach the cost of a bare pole and most carrying charges are computed 
using gross book costs. Prior to the Amendment of Rules and Policies 
Governing the Attachment of Cable Television Hardware to Utility Poles, 
Report and Order, 2 FCC Rcd 4387 (1987), recon., 4 FCC Rcd 468 (1989), 
the Commission had decided certain cases using gross book costs to 
calculate maximum reasonable pole attachment rates. The Commission also 
has stated that if both parties to a pole attachment complaint agree, 
the pole attachment rates may be computed using gross book costs. The 
use of gross book costs appears consistent with the legislative history 
supporting Section 224, which indicates that the Commission has 
significant discretion in selecting a methodology for determining just 
and reasonable pole attachment rates. We seek comment on this 
alternative to ensure a complete record on possible changes to the 
current formula. We note that because of the way administrative costs 
are allocated, the application of gross book costs may produce a 
slightly higher rate. We seek comment on whether this assumption is 
true and if so what the impact of this change would be.
    11. Proposed Conduit Methodology. Section 224 provides that total 
conduit space and conduit space occupied by a cable operator or 
telecommunication provider is based on duct or conduit capacity. In 
addition, Section 224 states that: ``a rate is just and reasonable if 
it assures a utility the recovery of not less than the additional costs 
of providing pole attachments, nor more than an amount determined by 
multiplying the percentage of the total usable space, or the percentage 
of the total duct or conduit capacity * * *'' The usable space can be 
estimated based on the number of ducts or portion of a duct that a 
cable occupies. However, we have tentatively concluded that measuring 
the actual portion of duct space occupied by a cable would be difficult 
and would most likely lead to further disputes between the parties. 
Instead of attempting to measure the actual duct space occupied, we 
propose to adopt a new half-duct conduit methodology as was recently 
done by the Commission in the Memorandum Opinion and Hearing 
Designation Order of Multimedia Cablevision, Inc. v. Southwestern Bell 
Telephone, 11 FCC Rcd 11202 (September 3, 1996) (``Southwestern 
Bell''). In order to apply the half-duct formula, a determination of 
the cost per foot of one duct must be made, and then divided by one-
half to produce a ``half-duct convention.'' This determines the maximum 
just and reasonable rate per duct foot that can be charged for cable 
attachments.
    12. We seek comment on the proposed half-duct methodology. The 
Commission, in the Southwestern Bell, concluded that the half-duct 
methodology is the simplest and most reasonable approximation of the 
actual space occupied by an attacher. In addition, the Commission found 
that the half-duct methodology is the most straight forward approach to 
calculating a conduit attachment fee because it does not require the 
parties to prove the actual amount of the duct the cable operator 
occupies. We solicit comment on this approach which the Commission 
adopted in the Southwestern Bell. We also seek comment on any 
additional proposals that would provide a simple and administratively 
efficient conduit methodology.

Initial Regulatory Flexibility Analysis

    12. As required by Section 603 of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. Sec. 603, as amended, the Commission has prepared an 
Initial Regulatory Flexibility Analysis (IRFA) of the expected 
significant economic impact on small entities by the policies and rules 
proposed in this Notice. Written public comments are requested on the 
IRFA. These comments must be filed in accordance with the same filing 
deadlines as comments on the rest of the Notice, but they must have a 
separate and distinct heading designating them as responses to the 
regulatory flexibility analysis. The Secretary shall cause a copy of 
this Notice to be sent to the Chief Counsel for Advocacy of the Small 
Business Administration (``SBA'') in accordance with Section 603(a) of 
the RFA, 5 U.S.C. Sec. 603(a).
    13. Need for Action and Objectives of the Proposed Rule. In 1987, 
the Commission adopted its current pole attachment formula for 
calculating the maximum just and reasonable rates utilities may charge 
cable systems for pole attachments. In this Notice, we seek comment as 
to whether the current pole attachment formula should be modified or 
adjusted to eliminate certain anomalies and rate instabilities 
particular parties assert have occurred. We have also tentatively 
proposed such possible modifications to the formula, should altering 
the formula become necessary, that would improve the accuracy of the 
formula. In addition, we propose changes to the formula to reflect the 
present Part 32 accounting system that replaced the former Part 31 
rules in 1988. Finally, we propose a new conduit methodology that will 
determine the maximum just and reasonable rates utilities may charge 
cable systems and telecommunications carriers for their attachments to 
conduit systems.
    14. Legal Basis. The authority for the action as proposed for this 
rulemaking is contained in Sections 1, 4(i), 4(j), 224, 303 and 403 of 
the Communications Act of 1934, as amended, 47 U.S.C. Secs. 151, 
154(i), 154(j), 224, 303 and 403.
    15. Description and Estimate of the Number of Small Entities 
Impacted. For the purposes of this Notice, the RFA defines a ``small 
business'' to be the same as a small business concern under the Small 
Business Act, 15 U.S.C. Sec. 632, unless the Commission has developed 
one or more definitions that are appropriate to its activities. Under 
the Small Business Act, a ``small business concern'' is one that: (1) 
Is independently owned and operated; (2) is not dominant in its field 
of operation; and (3) satisfies any additional criteria established by 
the Small Business Administration (SBA). The SBA has defined a small 
business for Standard Industrial Classification (SIC) category 4813 
(Telephone Communications,

[[Page 18077]]

except Radiotelephone) to be a small entity when it has fewer than 1500 
employees, See 13 CFR Sec. 121.201.

A. Utilities

    16. Total Number of Utilities Affected. The decisions and rules 
adopted herein may have a significant effect on a substantial number of 
utility companies. Section 224 of the Statue defines a ``utility'' as 
``any person who is a local exchange carrier or an electric, gas, 
water, steam, or other public utility, and who owns or controls poles, 
ducts, conduits, or rights-of-way used, in whole or in part, for any 
wire communications. Such term does not include any railroad, any 
person who is cooperatively organized, or any person owned by the 
Federal Government or any State.'' The SBA has provided the Commission 
with a list of utility firms which may be effected by this rulemaking. 
Based upon the SBA's list, the Commission seeks comment as to whether 
all of the following utility firms are relevant to Section 224.
1. Electric Utilities (SIC 4911, 4931 & 4939)
    17. Electric Services. The SBA has developed a definition for small 
electric utility firms. The Census Bureau reports that a total of 1,379 
electric utilities were in operation for at least one year at the end 
of 1992. According to SBA, a small electric utility is an entity whose 
gross revenues did not exceed five million dollars in 1992. The Census 
Bureau reported that 447 of the 1,379 firms listed had total revenues 
below five million dollars. Electric and Other Services Combined. The 
SBA has classified this entity as a utility whose business is primarily 
electric, less than 95%, in combination with some other type of 
service. The Census Bureau reports that a total of 135 such firms were 
in operation for at least one year at the end of 1992. The SBA's 
definition of a small electric and other services combined utility is a 
firm whose gross revenues did not exceed five million dollars in 1992. 
The Census Bureau reported that 45 of the 135 firms listed had total 
revenues below five million dollars. Combination Utilities, Not 
Elsewhere Classified. The SBA defines this utility has providing a 
combination of electric, gas, and other services which are not 
otherwise classified. The Census Bureau reports that a total of 79 such 
utilities were in operation for at least one year at the end of 1992. 
According to SBA's definition, a small combination utility is a firm 
whose gross revenues did not exceed five million dollars in 1992. The 
Census Bureau reported that 63 of the 79 firms listed had total 
revenues below five million dollars.
2. Gas Production and Distribution (SIC 4922, 4923, 4924, 4925 & 4932)
    18. Natural Gas Transmission. The SBA's definition of a small 
natural gas transmitter is an entity who is engaged in the transmission 
and storage of natural gas. The Census Bureau reports that a total of 
144 such firms were in operation for at least one year at the end of 
1992. According to SBA's definition, a small natural gas transmitter is 
an entity whose gross revenues did not exceed five million dollars in 
1992. The Census Bureau reported that 70 of the 144 firms listed had 
total revenues below five million dollars. Natural Gas Transmission and 
Distribution. The SBA has classified this entity as a utility who 
transmits and distributes natural gas for sale. The Census Bureau 
reports that a total of 126 such entities were in operation for at 
least one year at the end of 1992. The SBA's definition of a small 
natural gas transmitter and distributer is a firm whose gross revenues 
did not exceed five million dollars. The Census Bureau reported that 43 
of the 126 firms listed had total revenues below five million dollars. 
Natural Gas Distribution. The SBA defines a natural gas distributor as 
an entity that distributes natural gas for sale. The Census Bureau 
reports that a total of 478 such firms were in operation for at least 
one year at the end of 1992. According to the SBA, a small natural gas 
distributor is an entity whose gross revenues did not exceed five 
million dollars in 1992. The Census Bureau reported that 267 of the 478 
firms listed had total revenues below five million dollars. Mixed, 
Manufactured, or Liquefied Petroleum Gas Production and/or 
Distribution. The SBA has classified this entity as a utility who 
engages in the manufacturing and/or distribution of the sale of gas. 
These mixtures may include natural gas. The Census Bureau reports that 
a total of 43 such firms were in operation for at least one year at the 
end of 1992. The SBA's definition of a small mixed, manufactured or 
liquefied petroleum gas producer or distributor is a firm whose gross 
revenues did not exceed five million dollars in 1992. The Census Bureau 
reported that 31 of the 43 firms listed had total revenues below five 
million dollars. Gas and Other Services Combined. The SBA has 
classified this entity as a gas company whose business is less than 95% 
gas, in combination with other services. The Census Bureau reports that 
a total of 43 such firms were in operation for at least one year at the 
end of 1992. According to the SBA, a small gas and other services 
combined utility is a firm whose gross revenues did not exceed five 
million dollars in 1992. The Census Bureau reported that 24 of the 43 
firms listed had total revenues below five million dollars.
3. Water Supply (SIC 4941)
    19. Water Supply. The SBA defines a water utility as a firm who 
distributes and sells water for domestic, commercial and industrial 
use. The Census Bureau reports that a total of 3,169 water utilities 
were in operation for at least one year at the end of 1992. According 
to SBA's definition, a small water utility is a firm whose gross 
revenues did not exceed five million dollars in 1992. The Census Bureau 
reported that 3,065 of the 3,169 firms listed had total revenues below 
five million dollars.
4. Sanitary Systems (SIC 4952, 4953 & 4959)
    20. Sewerage Systems. The SBA defines a sewage firm as a utility 
whose business is the collection and disposal of waste using sewage 
systems. The Census Bureau reports that a total of 410 such firms were 
in operation for at least one year at the end of 1992. According to 
SBA's definition, a small sewerage system is a firm whose gross 
revenues did not exceed five million dollars. The Census Bureau 
reported that 369 of the 410 firms listed had total revenues below five 
million dollars. Refuse Systems. The SBA defines a firm in the business 
of refuse as an establishment whose business is the collection and 
disposal of refuse ``by processing or destruction or in the operation 
of incinerators, waste treatment plants, landfills, or other sites for 
disposal of such materials.'' The Census Bureau reports that a total of 
2,287 such firms were in operation for at least one year at the end of 
1992. According to SBA's definition, a small refuse system is a firm 
whose gross revenues did not exceed six million dollars. The Census 
Bureau reported that 1,908 of the 2,287 firms listed had total revenues 
below six million dollars. Sanitary Services, Not Elsewhere Classified. 
The SBA defines these firms as engaged in sanitary services. The Census 
Bureau reports that a total of 1,214 such firms were in operation for 
at least one year at the end of 1992. According to SBA's definition, a 
small sanitary service firms gross revenues did not exceed five million 
dollars. The Census Bureau reported that 1,173 of the 1,214 firms 
listed had total revenues below five million dollars.

[[Page 18078]]

5. Steam and Air Conditioning Supply (SIC 4961)
    21. Steam and Air Conditioning Supply. The SBA defines a steam and 
air conditioning supply utility as a firm who produces and/or sells 
steam and heated or cooled air. The Census Bureau reports that a total 
of 55 such firms were in operation for at least one year at the end of 
1992. According to SBA's definition, a steam and air conditioning 
supply utility is a firm whose gross revenues did not exceed nine 
million dollars. The Census Bureau reported that 30 of the 55 firms 
listed had total revenues below nine million dollars.
6. Irrigation Systems (SIC 4971)
    22. Irrigation Systems. The SBA defines irrigation systems as firms 
who operate water supply systems for the purpose of irrigation. The 
Census Bureau reports that a total of 297 firms were in operation for 
at least one year at the end of 1992. According to SBA's definition, an 
irrigation service is a firm whose gross revenues did not exceed five 
million dollars. The Census Bureau reported that 286 of the 297 firms 
listed had total revenues below five million dollars.

B. Telephone Companies (SIC 4813)

    23. Total Number of Telephone Companies Affected. Many of the 
decisions and rules adopted herein may have a significant effect on a 
substantial number of small telephone companies. The Census Bureau 
reports that, at the end of 1992, there were 3,497 firms engaged in 
providing telephone services, as defined therein, for at least one 
year, See United States Department of Commerce, Bureau of the Census, 
1992 Census of Transportation, Communications, and Utilities: 
Establishment and Firm Size, at Firm Size 1-123 (1995) (1992 Census). 
This number contains a variety of different categories of carriers, 
including local exchange carriers (LECs), interexchange carriers, 
competitive access providers, cellular carriers, mobile service 
carriers, operator service providers, pay telephone operators, PCS 
providers, covered SMR providers, and resellers. It seems certain that 
some of those 3,497 telephone service firms may not qualify as small 
entities or small incumbent LECs because they are not ``independently 
owned and operated'', See 15 U.S.C. Sec. 632(a)(1). It seems reasonable 
to conclude, therefore, that fewer than 3,497 telephone service firms 
are small entity telephone service firms or small incumbent LECs that 
may be affected by this Notice. Below, we estimate the potential number 
of small entity telephone service firms or small incumbent LEC's that 
may be affected by this service category.
    24. Wireline Carriers and Service Providers. SBA has developed a 
definition of small entities for telephone communications companies 
other than radiotelephone (wireless) companies. The Census Bureau 
reports that, there were 2,321 such telephone companies in operation 
for at least one year at the end of 1992. According to SBA's 
definition, a small business telephone company other than a 
radiotelephone company is one employing fewer than 1,500 persons. All 
but 26 of the 2,321 non-radiotelephone companies listed by the Census 
Bureau were reported to have fewer than 1,000 employees. Thus, even if 
all 26 of those companies had more than 1,500 employees, there would 
still be 2,295 non-radiotelephone companies that might qualify as small 
entities or small incumbent LECs. Although it seems certain that some 
of these carriers are not independently owned and operated, we are 
unable at this time to estimate with greater precision the number of 
wireline carriers and service providers that would qualify as small 
business concerns under SBA's definition. Consequently, we estimate 
that there are fewer than 2,295 small entity telephone communications 
companies other than radiotelephone companies that may be affected by 
the decisions or rules that come about from this Notice.
    25. Local Exchange Carriers. Neither the Commission nor SBA has 
developed a definition of small providers of local exchange services 
(LECs). The closest applicable definition under SBA rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies (SIC 4813). The most reliable source of information regarding 
the number of LECs nationwide of which we are aware appears to be the 
data that we collect annually in connection with the Telecommunications 
Relay Service (TRS). According to our most recent data, 1,347 companies 
reported that they were engaged in the provision of local exchange 
services, See Federal Communications Commission, CCB, Industry Analysis 
Division, Telecommunications Industry Revenue: TRS Fund Worksheet Data, 
Tbl. 21 (Average Total Telecommunications Revenue Reported by Class of 
Carrier) (Feb. 1996) (TRS Worksheet). Although it seems certain that 
some of these carriers are not independently owned and operated, or 
have more than 1,500 employees, we are unable at this time to estimate 
with greater precision the number of LECs that would qualify as small 
business concerns under SBA's definition. Consequently, we estimate 
that there are fewer than 1,347 small incumbent LECs that may be 
affected by this Notice.
    26. Interexchange Carriers. Neither the Commission nor SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services (IXCs). The closest applicable 
definition under SBA rules is for telephone communications companies 
other than radiotelephone (wireless) companies (SIC 4813). The most 
reliable source of information regarding the number of IXCs nationwide 
of which we are aware appears to be the data that we collect annually 
in connection with TRS. According to our most recent data, 97 companies 
reported that they were engaged in the provision of interexchange 
services. Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1,500 employees, we 
are unable at this time to estimate with greater precision the number 
of IXCs that would qualify as small business concerns under SBA's 
definition. Consequently, we estimate that there are fewer than 97 
small entity IXCs that may be affected by the decisions and rules 
adopted in this Notice.
    27. Competitive Access Providers. Neither the Commission nor SBA 
has developed a definition of small entities specifically applicable to 
providers of competitive access services (CAPs). The closest applicable 
definition under SBA rules is for telephone communications companies 
other than radiotelephone (wireless) companies (SIC 4813). The most 
reliable source of information regarding the number of CAPs nationwide 
of which we are aware appears to be the data that we collect annually 
in connection with the TRS. According to our most recent data, 30 
companies reported that they were engaged in the provision of 
competitive access services. Although it seems certain that some of 
these carriers are not independently owned and operated, or have more 
than 1,500 employees, we are unable at this time to estimate with 
greater precision the number of CAPs that would qualify as small 
business concerns under SBA's definition. Consequently, we estimate 
that there are fewer than 30 small entity CAPs that may be affected by 
the decisions and rules adopted in this Notice.
    28. Wireless (Radiotelephone) Carriers. Although wireless carriers 
have not historically affixed their equipment to utility poles, 
pursuant to the terms of the 1996 Act, such entities are entitled to do 
so with rates

[[Page 18079]]

consistent with the Commission's rules discussed herein. SBA has 
developed a definition of small entities for radiotelephone (wireless) 
companies. The Census Bureau reports that there were 1,176 such 
companies in operation for at least one year at the end of 1992. 
According to SBA's definition, a small business radiotelephone company 
is one employing fewer than 1,500 persons. The Census Bureau also 
reported that 1,164 of those radiotelephone companies had fewer than 
1,000 employees. Thus, even if all of the remaining 12 companies had 
more than 1,500 employees, there would still be 1,164 radiotelephone 
companies that might qualify as small entities if they are 
independently owned and operated. Although it seems certain that some 
of these carriers are not independently owned and operated, we are 
unable at this time to estimate with greater precision the number of 
radiotelephone carriers and service providers that would qualify as 
small business concerns under SBA's definition. Consequently, we 
estimate that there are fewer than 1,164 small entity radiotelephone 
companies that may be affected by this Notice.
    29. Cellular Service Carriers. Neither the Commission nor SBA has 
developed a definition of small entities specifically applicable to 
providers of cellular services. The closest applicable definition under 
SBA rules is for telephone communications companies other than 
radiotelephone (wireless) companies (SIC 4813). The most reliable 
source of information regarding the number of cellular service carriers 
nationwide of which we are aware appears to be the data that we collect 
annually in connection with the TRS. According to our most recent data, 
789 companies reported that they were engaged in the provision of 
cellular services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of cellular service carriers that would qualify as 
small business concerns under SBA's definition. Consequently, we 
estimate that there are fewer than 789 small entity cellular service 
carriers that may be affected by the decisions and rules adopted in 
this Notice.
    30. Mobile Service Carriers. Neither the Commission nor SBA has 
developed a definition of small entities specifically applicable to 
mobile service carriers, such as paging companies. The closest 
applicable definition under SBA rules is for telephone communications 
companies other than radiotelephone (wireless) companies. The most 
reliable source of information regarding the number of mobile service 
carriers nationwide of which we are aware appears to be the data that 
we collect annually in connection with the TRS. According to our most 
recent data, 117 companies reported that they were engaged in the 
provision of mobile services. Although it seems certain that some of 
these carriers are not independently owned and operated, or have more 
than 1,500 employees, we are unable at this time to estimate with 
greater precision the number of mobile service carriers that would 
qualify under SBA's definition. Consequently, we estimate that there 
are fewer than 117 small entity mobile service carriers that may be 
affected by the decisions and rules adopted in this Notice.
    31. Broadband PCS Licensees. The broadband PCS spectrum is divided 
into six frequency blocks designated A through F. As set forth in 47 
CFR Sec. 24.720(b), the Commission has defined ``small entity'' in the 
auctions for Blocks C and F as a firm that had average gross revenues 
of less than $40 million in the three previous calendar years. Our 
definition of a ``small entity'' in the context of broadband PCS 
auctions has been approved by SBA, See Implementation of Section 309(j) 
of the Communications Act--Competitive Bidding, PP Docket No. 93-253, 
Fifth Report and Order, 9 FCC Rcd 5532, 5581-84 (1994).
    The Commission has auctioned broadband PCS licenses in Blocks A, B, 
and C. We do not have sufficient data to determine how many small 
businesses bid successfully for licenses in Blocks A and B. There were 
90 winning bidders that qualified as small entities in the Block C 
auction. Based on this information, we conclude that the number of 
broadband PCS licensees affected by the decisions in this Notice 
includes, at a minimum, the 90 winning bidders that qualified as small 
entities in the Block C broadband PCS auction.
    32. At present, no licenses have been awarded for Blocks D, E, and 
F of broadband PCS spectrum. Therefore, there are no small businesses 
currently providing these services. However, a total of 1,479 licenses 
will be awarded in the D, E, and F Block broadband PCS auctions, which 
are scheduled to begin on August 26, 1996. Of the 153 qualified bidders 
for the D,E, and F Block PCS auctions, 105 were small businesses, See 
Auction of Broadband Personal Communications Services (D, E and F 
blocks), Public Notice, DA 96-1400 (rel. August 20, 1996). Eligibility 
for the 493 F Block licenses is limited to entrepreneurs with average 
gross revenues of less than $125 million, See Amendment of Parts 20 and 
24 of the Commission's Rules--Broadband PCS Competitive Bidding and the 
Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59, 
Amendment of the Commission's Cellular/PCS Cross-Ownership Rule, Report 
and Order, GN Docket No. 90-314, FCC 96-278 ( June 24, 1996). We cannot 
estimate, however, the number of these licenses that will be won by 
small entities under our definition, nor how many small entities will 
win D or E Block licenses. Given that nearly all radiotelephone 
companies have fewer than 1,000 employees and that no reliable estimate 
of the number of prospective D, E, and F Block licensees can be made, 
we assume for purposes of this FRFA, that all of the licenses in the D, 
E, and F Block Broadband PCS auctions may be awarded to small entities 
under our rules, which may be affected by the decisions and rules 
adopted in this Notice.
    33. SMR Licensees. Pursuant to 47 CFR Sec. 90.814(b)(1), the 
Commission has defined ``small entity'' in auctions for geographic area 
800 MHz and 900 MHz SMR licenses as a firm that had average annual 
gross revenues of less than $15 million in the three previous calendar 
years. This definition of a ``small entity'' in the context of 800 MHz 
and 900 MHz SMR has been approved by the SBA, See Amendment of Parts 2 
and 90 of the Commission's Rules to Provide for the Use of 200 Channels 
Outside the Designated Filing Areas in the 896-901 MHz and the 935-940 
MHz Bands Allotted to the Specialized Mobile Radio Pool, PR Docket No. 
89-583, Second Order on Reconsideration and Seventh Report and Order, 
11 FCC Rcd 2639, 2693-702 (1995); Amendment of Part 90 of the 
Commission's Rules to Facilitate Future Development of SMR Systems in 
the 800 MHz Frequency Band, PR Docket No. 93-144, First Report and 
Order, Eighth Report and Order, and Second Further Notice of Proposed 
Rulemaking, 11 FCC Rcd 1463 (1995). The rules adopted in this Order may 
apply to SMR providers in the 800 MHz and 900 MHz bands that either 
hold geographic area licenses or have obtained extended implementation 
authorizations. We do not know how many firms provide 800 MHz or 900 
MHz geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
less than $15 million. We assume, for purposes of this FRFA, that all 
of the extended implementation authorizations may be held by small

[[Page 18080]]

entities, which may be affected by the decisions and rules adopted in 
this Notice.
    34. The Commission recently held auctions for geographic area 
licenses in the 900 MHz SMR band. There were 60 winning bidders who 
qualified as small entities in the 900 MHz auction. Based on this 
information, we conclude that the number of geographic area SMR 
licensees affected by the rule adopted in this Order includes these 60 
small entities. No auctions have been held for 800 MHz geographic area 
SMR licenses. Therefore, no small entities currently hold these 
licenses. A total of 525 licenses will be awarded for the upper 200 
channels in the 800 MHz geographic area SMR auction. However, the 
Commission has not yet determined how many licenses will be awarded for 
the lower 230 channels in the 800 MHz geographic area SMR auction. 
There is no basis, moreover, on which to estimate how many small 
entities will win these licenses. Given that nearly all radiotelephone 
companies have fewer than 1,000 employees and that no reliable estimate 
of the number of prospective 800 MHz licensees can be made, we assume, 
for purposes of this FRFA, that all of the licenses may be awarded to 
small entities who, thus, may be affected by the decisions in this 
Notice.
    35. Resellers. Neither the Commission nor SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable definition under SBA rules is for all telephone 
communications companies (SIC 4812 and 4813). The most reliable source 
of information regarding the number of resellers nationwide of which we 
are aware appears to be the data that we collect annually in connection 
with the TRS. According to our most recent data, 206 companies reported 
that they were engaged in the resale of telephone services. Although it 
seems certain that some of these carriers are not independently owned 
and operated, or have more than 1,500 employees, we are unable at this 
time to estimate with greater precision the number of resellers that 
would qualify as small business concerns under SBA's definition. 
Consequently, we estimate that there are fewer than 206 small entity 
resellers that may be affected by the decisions and rules adopted in 
this Notice.

C. Cable System Operators (SIC 4841)

    36. Cable Systems: SBA has developed a definition of small entities 
for cable and other pay television services, which includes all such 
companies generating less than $11 million in revenue annually. This 
definition includes cable systems operators, closed circuit television 
services, direct broadcast satellite services, multipoint distribution 
systems, satellite master antenna systems and subscription television 
services. According to the Census Bureau, there were 1,323 such cable 
and other pay television services generating less than $11 million in 
revenue that were in operation for at least one year at the end of 
1992.
    37. The Commission has developed its own definition of a small 
cable system operator for the purposes of rate regulation. Under the 
Commission's rules, a ``small cable company,'' is one serving fewer 
than 400,000 subscribers nationwide, See 47 CFR. Sec. 76.901(e). Based 
on our most recent information, we estimate that there were 1,439 cable 
systems that qualified as small cable system operators at the end of 
1995, See Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996 
(based on figures for Dec. 30, 1995). Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and others 
may have been involved in transactions that caused them to be combined 
with other cable systems. Consequently, we estimate that there are 
fewer than 1,439 small entity cable system operators that may be 
affected by the decisions and rules proposed in this Notice.
    38. The Communications Act also contains a definition of a small 
cable system operator, which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than 1 percent of 
all subscribers in the United States and is not affiliated with any 
entity or entities whose gross annual revenues in the aggregate exceed 
$250,000,000'', See 47 U.S.C. Sec. 543(m)(2). The Commission has 
determined that there are 61,700,000 subscribers in the United States. 
Therefore, we found that an operator serving fewer than 617,000 
subscribers shall be deemed a small operator, if its annual revenues, 
when combined with the total annual revenues of all of its affiliates, 
do not exceed $250 million in the aggregate, See 47 CFR 
Sec. 76.1403(b). Based on available data, we find that the number of 
cable systems serving 617,000 subscribers or less totals 1,450. 
Although it seems certain that some of these cable system operators are 
affiliated with entities whose gross annual revenues exceed 
$250,000,000, we are unable at this time to estimate with greater 
precision the number of cable system operators that would qualify as 
small cable systems under the definition in the Communications Act.
    39. Municipalities: The term ``small governmental jurisdiction'' is 
defined as ``governments of * * * districts, with a population of less 
than fifty thousand'', See 5 U.S.C. Sec. 601(5). There are 85,006 
governmental entities in the United States. This number includes such 
entities as states, counties, cities, utility districts and school 
districts. We note that Section 224 of the Act specifically excludes 
any utility which is cooperatively organized, or any person owned by 
the Federal Government or any State. For this reason, we believe that 
Section 224 will have minimal if any affect upon small municipalities. 
Further, there are 18 States and the District of Columbia that regulate 
pole attachments pursuant to Section 224(c)(1). Of the 85,006 
governmental entities, 38,978 are counties, cities and towns. The 
remainder are primarily utility districts, school districts, and 
states. Of the 38,978 counties, cities and towns, 37,566 or 96%, have 
populations of fewer than 50,000.
    40. Reporting, Recordkeeping, and other Compliance Requirements: 
The rules proposed in this Notice may require a change in certain 
record keeping requirements to reflect modification of Part 31 to Part 
32 accounting, as well as maintaining specific records if adjustments 
proposed are used by the pole owner for the development of attachment 
rates. We seek comment on this tentative conclusion. In addition, as 
proposed in this Notice, a pole owner may have to adjust his pole and 
conduit attachment rates.
    41. Significant Alternatives Which Minimize the Impact on Small 
Entities and which are Consistent with State Objectives: The first 
possible option is to keep the rules in their current form, for which 
we have sought comment. The alternative would be to adjudicate 
anomalies resulting from the current pole attachment formula on a case-
by-case basis, thereby minimizing impact on all interested parties. In 
addition, with respect to conduit methodology, we have proposed a 
methodology that relies on a rebuttable presumption that an attachment 
occupies one half of a duct space. This rebuttable presumption can be 
used by small entities to minimize the detail required to establish 
certain rates for use of conduit. If such methodology was more 
burdensome to a small entity, such entity could use its actual records 
for establishing the appropriate rate. We seek comment on these 
methodologies and any other potential impact of these proposals on 
small business entities. Finally, the Notice seeks to further minimize

[[Page 18081]]

burdens on small entities in conformance with the 1996 Act.
    42. Federal Rules which Overlap, Duplicate, or Conflict with the 
Commission's Proposal: None.

Ordering Clauses

    43. It is ordered that pursuant to Sections 1, 4(i), 4(j), 224, 303 
and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 
Secs. 151, 154(i), 154(j), 224, 303 and 403, Notice is hereby given of 
the proposals described in this Notice of Proposed Rulemaking.
    44. It is further ordered pursuant to Sections 4(i), 4(j), and 224 
of the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 
154(j), and 224, that the Petition for Clarification, or in the 
Alternative, a Waiver of Southwestern Bell Telephone Company is 
dismissed.
    45. It is further ordered that the Secretary shall send a copy of 
this Notice, including the IRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration in accordance with paragraph 603(a) 
of the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 
U.S.C. 601, et seq. (1981).

List of Subjects in 47 CFR Part 1

    Administrative practice and procedures, Communications common 
carriers, Investigations, Lawyers, Penalties, Reporting and 
recordkeeping requirements, Telecommunications.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-9515 Filed 4-11-97; 8:45 am]
BILLING CODE 6712-01-P