[Federal Register Volume 66, Number 126 (Friday, June 29, 2001)]
[Rules and Regulations]
[Pages 34569-34581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16038]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[CS Docket Nos. 97-98 and 97-151; FCC 01-170]


Rules and Policies Governing Pole Attachments; Implementation of 
Section 703(e) of the Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Final rule; petitions for reconsideration.

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SUMMARY: This document responds to petitions for reconsideration of the 
Report and Order in CS Docket No. 97-151, and the Report and Order in 
CS Docket No. 97-98. This document consolidates two reconsideration 
proceedings raising similar and interrelated issues concerning the 
rates, terms and conditions of access for attachments by cable 
operators and telecommunications carriers to utility poles, ducts, 
conduits and rights-of-way pursuant to section 224 of the 
Communications Act of 1934, as amended. This document reconsiders 
affirms and clarifies the pole attachment rate formula for cable 
attachers as well as the formula for telecommunications attachers.

DATES: Effective July 30, 2001.

FOR FURTHER INFORMATION CONTACT: Kathleen Costello at (202) 418-7200 or 
via the Internet at <a href="/cdn-cgi/l/email-protection#a6cdc5c9d5d2c3cacae6c0c5c588c1c9d0"><span class="__cf_email__" data-cfemail="93f8f0fce0e7f6ffffd3f5f0f0bdf4fce5">[email protected]</span></a>, or Cheryl King at (202) 418-2284 
or via the Internet at <a href="/cdn-cgi/l/email-protection#3a595153545d7a5c5959145d554c"><span class="__cf_email__" data-cfemail="24474f4d4a43644247470a434b52">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration, CS Dkt. Nos. 97-98 and 97-151, FCC 01-170, adopted 
May 22, 2001; release May 25, 2001. The full text of the Commission's 
Order on Reconsideration is available for inspection and copying during 
normal business hours in the FCC Reference Center (Room CY-A257) at its 
headquarters, 445 12th Street, SW., Washington, DC 20554, or may be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 1231 20th Street, NW., 
Washington, DC 20036, or may be reviewed via Internet at http://www.fcc.gov/csb/.

Paperwork Reduction Act

    The requirements adopted in the Order on Reconsideration have been 
analyzed with respect to the Paperwork Reduction Act of 1995 (``1995 
Act'') and found to impose no new or modified information collection 
requirements on the public.

Synopsis of the Order on Reconsideration

I. Introduction

    1. This Order on Reconsideration grants in part and denies in part 
petitions for reconsideration and/or clarification of Report and Order, 
Implementation of Section 703(e) of the Telecommunications Act of 1996, 
Amendment to the Commission's Rules and Policies Governing Pole 
Attachments, CS Docket No. 97-151, FCC 98-20, 63 FR 12013, published 
March 12, 1998, 13 FCC Rcd 6777 (1998) (``Telecom Order'') and Report 
and Order, Amendment of Rules and Policies Governing Pole Attachments, 
CS Docket No. 97-98, FCC 00-116, 65 FR 31270, published May 17, 2000, 
corrected 65 FR 34820, May 31, 2000, 15 FCC Rcd 6453 (2000) (``Fee 
Order''), concerning the rates, terms and conditions of access for 
attachments by cable operators and telecommunications carriers to 
utility poles, ducts, conduits and rights-of-way pursuant to Section 
224 of the Communications Act of 1934, as amended (``Pole Attachment 
Act''), 47 U.S.C. 224 and Subpart J of the Commission's Rules, 47 CFR 
1.1401-1.1418.
    2. This Order on Reconsideration affirms our decision not to impose 
additional regulation on the negotiation process or on the rules for 
resolution of pole attachment complaints; affirms the continued use, in 
the pole attachment rate calculation formulas, of specific regulatory 
accounts maintained by utilities and identify the actual costs incurred 
by the utilities for the poles, ducts, conduits and rights-of-way that 
are the subject of the attachment; reconsiders and clarifies the way in 
which entities are counted for the purpose of allocating and 
apportioning costs of unusable space for telecommunications attachers 
after February 8, 2001; reconsiders and clarifies the geographic areas 
used to determined average numbers of attaching entities for use in 
calculations of the formulas of telecommunications pole attachment 
rates, and establish two presumptive averages that may be used in our 
formulas after February 8, 2001; affirms and clarifies decisions 
regarding third party overlashing; affirms the presumption that a pole 
attachment occupies one foot of usable space and that this presumption 
is rebuttable by either party; affirms that the formula adopted in the 
Fee Order, for calculating the rate for use of capacity in a conduit, 
is applicable to telecommunications systems; affirms the use in the 
formula of the actual percentage of the conduit capacity occupied, with 
a rebuttable presumption that an attacher occupies one-half duct; 
affirms that there is no unusable capacity in a conduit; affirms our 
decision that a utility may not exclude reserved capacity within a 
conduit system when calculating total capacity upon which the pole 
attachment rate in a conduit is based; affirms that complaints 
regarding nondiscriminatory access, rates, terms and conditions for 
non-traditional pole attachments, such as attachments to

[[Page 34570]]

rights-of-way, wireless attachments and transmission facilities 
attachments, will be considered under our rules on a case-by-case 
basis; reconsiders and clarifies the methodology for calculating 
maximum pole maximum pole attachment rates when the net pole investment 
becomes zero or negative; declines or reconsider at this time and 
reserves for later review; our decision that Internet service has a 
neutral affect on an attacher's classification as a cable system or 
telecommunications system; declines to reconsider at this time and 
reserves for later review; our decision that providers of wireless 
telecommunications services are entitled to the benefits and protection 
of the Pole Attachment Act; and adopts amended rules. Generally, the 
petitioners and commenters represent the interests of one of the 
following three categories: (1) Electric utilities; (2) cable 
operators; and (3) telecommunications carriers.

II. Background

    3. In 1978, Congress enacted section 224 of the Communications Act, 
47 U.S.C. 224, granting the Commission authority to regulate the rates, 
terms, and conditions governing pole attachments, requiring that such 
rates, terms and conditions be just and reasonable. The Commission is 
authorized to adopt procedures necessary to hear and to resolve 
complaints concerning such rates, terms, and conditions. Congress 
sought to constrain the ability of utilities to extract monopoly 
profits from cable television system operators in need of pole, duct, 
conduit or right-of-way space for pole attachments.
    4. Section 224(d)(1) of the Pole Attachment Act defines a just and 
reasonable rate as ranging from the statutory minimum based on the 
additional costs of providing pole attachments, to the statutory 
maximum based on fully allocated costs. The additional, or incremental, 
costs are the costs that would not be incurred by the utility but for 
the pole attachments. The maximum rate, identified as a percentage of 
fully allocated costs, refers to the portion of operating expenses and 
capital costs that a utility incurs in owning and maintaining pole 
attachment infrastructure that is equal to the portion of space on a 
pole, or capacity of a duct, conduit, or right-of-way, that is occupied 
by an attacher. The Commission developed a methodology to determine the 
maximum allowable pole attachment rate under section 224(d)(1) of the 
Pole Attachment Act, which is referred to as the Cable Formula.
    5. Subsequently, Congress enacted the 1996 Act ``to accelerate 
rapidly private sector deployment of advanced telecommunication and 
information technologies and services.'' Section 703(6) of the 1996 Act 
added a new section 224(d)(3), which expanded the scope of section 224 
by applying the Cable Formula to rates for pole attachments made by 
telecommunications carriers, in addition to cable systems, until a 
separate methodology became effective for telecommunications carriers 
in 2001. Section 703(7) of the 1996 Act added new sections 224(e)(1-4), 
which set forth a separate methodology to govern charges for pole 
attachments used to provide telecommunications services beginning 
February 8, 2001 (``Telecom Formula''). Further, the 1996 Act gave 
cable operators and telecommunications carriers a right of 
nondiscriminatory access to utility poles, ducts, conduit and rights-
of-way.

III. Order on Reconsideration

A. Complaint Procedures and Negotiated Agreements

    6. Upon consideration of the record, we affirm our decision not to 
impose additional regulation on either the negotiation process or the 
rules for resolution of complaints arising out of failed negotiations. 
Our experience has taught us, and the record gained through these 
proceedings demonstrates, that without our rules and the use of 
presumptions in a formula methodology, attaching entities would not be 
able to challenge any rate offered by a utility. There would be no 
reasonable negotiation without a benchmark rate against which to 
compare the utility's proposed rate. We continue to reject arguments by 
utilities that attaching parties should be required to take exception 
to terms or conditions when the pole attachment agreement is negotiated 
or be estopped from filing a complaint about those issues. However, we 
do require that differences in rates, terms and conditions for pole 
attachments among attaching entities, be based on legitimate exchanges 
of consideration and not on discriminatory factors such as favoring an 
affiliated services provider over an unaffiliated entity. We will 
carefully scrutinize any differences in rates, terms and conditions in 
any complaint action, and the burden will be on the utility to 
demonstrate that any differences are nondiscriminatory.

B. Basic Concepts Used in the Formula

1. Use of Actual Costs
    7. Electric utilities continue to urge that we abandon our use of 
regulatory accounts based on historical costs. Petitioners assert that 
pricing methodologies for use in pole attachment formulas should 
reflect replacement costs or the rates calculated are not 
constitutional because they cannot provide just compensation. We affirm 
our decision that the Cable Formula, which includes regulatory accounts 
maintained using historical costs, encompasses the statutory directive 
to provide just and reasonable rates for pole attachments, adding 
certainty and clarity to negotiations. We have been presented with no 
persuasive evidence that utility owners do not recover a just and 
reasonable compensation for pole attachments from use of the Cable 
Formula. Congressional intent to rely on existing regulatory accounts 
and avoid a prolonged rate making process is realized in the 
Commission's regulations.
    8. We have recognized that the continued use of the historical cost 
based pole attachment formula brings certainty to the regulatory 
process. For more than two decades, the pole attachment formula has 
provided a stable and certain regulatory framework, which may be 
applied ``simply and expeditiously'' requiring ``a minimum of staff, 
paperwork and procedures consistent with fair and efficient 
regulation.'' We have found that switching to a methodology based on 
forward-looking economic costs would significantly change and burden 
the Commission's processes, requiring the Commission to develop a new 
formula, which would necessitate a protracted rulemaking proceeding 
involving complicated pricing investigation. We have acknowledged that, 
in certain contexts, setting prices on the basis of forward-looking 
economic costs has advantages, such as giving the appropriate signal 
for new entrants to invest in network facilities; but these advantages 
are less pronounced in the pole attachment context because pole 
attachers are less likely to build, or may be prohibited from building, 
their own poles and conduit. We have concluded and continue to find 
that, in the context of pole attachments, the continued use of 
historical costs accomplishes the key objectives of assuring just and 
reasonable rates to both the utility and the attaching parties, 
establishing accountability for prior cost recoveries, and encouraging 
negotiation among the parties by providing regulatory certainty. We 
will continue to calculate

[[Page 34571]]

maximum pole attachment rates under the Pole Attachment Act using 
regulatory accounts based on historical costs.
2. When Net Pole Investment Is Zero or Negative
    9. Under Section 224(d)(1), fully allocated costs refer to the 
portion of operating expenses and capital costs that a utility incurs 
in owning and maintaining poles that are associated with the space 
occupied by pole attachments. Carrying charges are the costs incurred 
by the utility in owning and maintaining poles regardless of the 
presence of pole attachments. The carrying charges include the 
utility's administrative, maintenance, and depreciation expenses, a 
return on investment, and associated income taxes. To help calculate 
the carrying charge rate, we developed formulas that relate each of 
these components to the utility's net pole investment.
    10. The pole attachment formulas rely on the investment and expense 
data utilities maintain in, or derive from, their accounting records. 
The investment data take two forms: ``gross'' data, which provide the 
original cost of the plant being considered; and ``net'' data, which 
adjust the gross data to reflect accumulated depreciation and deferred 
income taxes associated with that plant. The pole attachment formulas 
generally allocate the costs of owning and maintaining poles on the 
basis of net pole or net plant investment. In the Fee Order, we 
affirmed our long practice of calculating pole attachment rates using 
net book costs, continuing to allow the use of gross book costs if all 
parties agreed to that usage. We concluded that the important goal is 
to ensure that like figures are used, whether not or gross. We affirm 
our continued use of net figures in the formulas unless the parties 
agree otherwise, with the following limited exception.
    11. In certain cases, negative net asset values for poles may occur 
as a result of the way the Commission calculates depreciation rates. As 
accumulated depreciation rises, for plant with high removal costs such 
as poles, the application of the depreciation rate formula can lead to 
a net asset value becoming negative. This is because, in computing the 
net pole investment, the formula subtracts from gross pole investment 
an accumulated depreciation that includes both a recovery of original 
investment and a recovery of costs of removal (less salvage). Because 
gross pole investment only includes the original cost of the poles, 
subtracting both components from the gross pole investment may lead to 
a zero or negative net pole investment. The carrying charge formulas 
compute percentages for each element (administrative, maintenance, and 
depreciation expenses, taxes, and rate of return) which are added and 
then multiplied against the net pole investment. For example, if the 
carrying charge formulas yield 10% for each element, the carrying 
charge rate would be 50%. This rate would then be multiplied by net 
pole investment (expressed on a per pole basis as net cost of a bare 
pole) and the percentage of usable pole space occupied by the 
attachment, to determine the maximum just and reasonable rate per pole. 
When the net pole investment is zero or negative, the formula cannot be 
calculated properly. In those instances, our pole attachment formula, 
using net figures, cannot be used to calculate a maximum rate based on 
fully allocated costs.
    12. On reconsideration of this matter, we modify and clarify our 
guidance to utilities and attaching entities on how to apply the 
formula in those cases where the net pole investment is zero or 
negative. We have determined that the most reasonable and efficient 
method is to apply the formula using gross figures rather than net 
figures, with the exception of the rate of return element of the 
carrying charges which is always a net calculation. For example, we 
currently allocate administrative expenses by dividing total 
administrative and general expenses by net plant investment. This 
yields a percentage that is applied against the net cost of a bare 
pole. In contrast, a gross approach to allocation would, for example, 
divide total administrative and general expenses by gross plant 
investment.
    13. With the exception of the maintenance component, the expense 
accounts upon which the pole attachment rates rely are not kept by type 
of plant. Because utilities cannot directly measure the amount of 
administrative expenses or taxes that are incurred because of poles, we 
must allocate administrative expenses and taxes to poles on some 
rational basis. We have previously determined that allocation of 
expenses based on net pole investment is reasonable. We continue to 
agree that the appropriate figures to use in the normal situation are 
the net figures. However, in the unusual situations where net pole 
investment is zero or negative, we find application of the formula 
using gross figures, with the noted net adjustment to the return 
element, to be appropriate.
    14. In proposing this methodology, we acknowledge that only the 
administrative and tax elements of the carrying charges are affected by 
the change. The maintenance, depreciation and return elements yield the 
same maximum rate whether net or gross figures are used. The 
administrative and tax elements may be higher or lower due to the 
different ratios of accumulated depreciation and accumulated deferred 
taxes to gross total plant as opposed to gross pole plant. The rate of 
return element will be negative and is subtracted from the positive 
elements of the carrying charge. We believe this result is reasonable 
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 throughout the poles' useful lives. 
Our conclusion that the utility's pole attachment rates should reflect 
the over-recovery in the form of a negative rate of return carrying 
charge properly recognizes this fact.
    15. The formula using the gross approach yields the following 
calculation:

(A). Gross Plant (Poles)
(B). Net Plant (Poles)
(C). Depreciation Rate (Poles)
(D). Maintenance Expense (Poles)
(E). Quantity of Poles
(F). Authorized Rate of Return
(G). Administrative Expenses (Total)
(H). Taxes (Total)
(I). Gross Plant (Total)
(J). Net Plant (Total)
(K). Usable Space Factor (.074)
(L). Bare Pole Factor (.85 or .95)
Maintenance = Maintenance Expense (Poles) <divide> Gross Plant (Poles)
Element = (D) <divide> (A)
Depreciation = Depreciation Rate (Poles)
Element = (C)
Return Element = Rate of Return  x  Net Plant (Poles) <divide> Gross 
Plant (Poles) = [(F)  x  (B)] <divide> (A)
Administrative = Administrative Expenses (Total) <divide> Gross Plant 
(Total)
Element = (G) <divide> (I)
Tax Element = Taxes (Total) <divide> Gross Plant (Total) = (H) <divide> 
(I)
Total Carrying Charge = Sum of Maint., Depr., Ret. (-), Admin. and Tax 
Elements
Max Rate = Space Factor  x  Bare Pole Factor  x  Gross Plant (Poles) 
x  Total Carrying Charges <divide> Quantity of Poles = [(K)  x  (L)  x  
(A)  x  Total Carrying Charges] <divide> (E)

    We reiterate that in all other cases, where the net pole investment 
is

[[Page 34572]]

positive, the appropriate figures to use in the formula continue to be 
the net figures, unless the parties agree otherwise.
3. Case by Case Applications
    16. In the Telecom Order, we stated that the record was not 
sufficient to enable us to adopt detailed standards that would govern 
all of these situations. We believe our basic rate methodology is 
adaptable to attachments that fit these categories. A complaint 
involving a dispute about these attachments would be treated as any 
other pole attachment complaint. We recognize guiding principles based 
on the Pole Attachment Act to be used in determining rates for pole 
attachments, including attachments to rights-of-way, wireless 
attachments and transmission facilities attachments. Guiding principles 
include the congressionally mandated methodology, preference for 
publicly available records when available, and an acceptable range of 
just and reasonable rates. We continue to believe it prudent to gain 
experience through case by case adjudication to determine whether 
additional guiding principles or presumptions are necessary or 
appropriate, and this will be accomplished through our existing 
complaint procedures. We will continue to address complaints about just 
and reasonable rates, terms and conditions, and nondiscriminatory 
access for non-traditional attachments on a case-by-case basis.

C. The Space Factor

    17. The basic Cable Formula can be stated as follows:
    [GRAPHIC] [TIFF OMITTED] TR29JN01.000
    
    18. We define total usable space as the space on the utility pole 
above the minimum grade level that is usable for the attachment of 
wires, cables, and related equipment. In the Fee Order, we affirmed the 
use of various presumptions that lead to 13.5 feet as the presumptive 
average usable space on a pole. The Cable Formula uses a 37.5 foot 
presumptive pole height, an 18 foot average minimum ground clearance, 
allocation of the 40-inch safety space to usable space, and the 
inclusion of poles of 30 feet or less when calculating the costs of a 
bare pole. No persuasive evidence or arguments have been presented 
which challenge our long-standing presumptions resulting in 13.5 feet 
as the presumptive usable space. Application of these presumptions 
results in 7.4% as the percentage of usable space occupied by a pole 
attachment.
1. Average Pole Height
    19. The record in this proceeding confirms the prevalent use of 30-
foot poles and reflects that exclusion of such poles from the Cable 
Formula calculations could distort the resulting rate by excluding a 
significant portion of local exchange carrier (``LEC'') utility plant 
investment from the rate calculation. We affirm our position that a 
distorted inventory of poles would be reflected if utilities were 
allowed to ``opt out'' or exclude their poles of 30 feet or less when 
calculating their pole attachment rates.
2. Safety Space
    20. No new arguments or evidence was presented in the filings and 
based on our previous reasoning, the 40-inch safety space that exists 
to minimize the likelihood of physical contact between employees 
working on cable television or telephone lines and the potentially 
lethal voltage carried by the electric lines, as well as to prevent 
electrical contact between such cables, is usable and used by the 
electric utility, and we reject arguments to reduce the presumptive 
usable space of 13.5 feet by 40 inches.
3. Minimum Ground Clearance
    21. Ground clearance requirements in the National Electric Safety 
Code (``NESC'') include an average amount of sag for cable lines. No 
new evidence or arguments were provided that would persuade us to 
abandon our long-standing reliance on the presumptive average minimum 
ground clearance based on NESC standards.
4. Telecom Formula Space Factor
    a. Counting Attaching Entities
    22. Under the Cable Formula, the costs of unusable space are 
allocated based on the portion of usable space an attachment occupies, 
the space factor. Our formula is stated as follows:
[GRAPHIC] [TIFF OMITTED] TR29JN01.001

    23. Using the presumptions in the Cable Formula, this results in a 
space factor of 1/13.5 or .074, multiplied by the net cost of a bare 
pole and the carrying charge rate:
[GRAPHIC] [TIFF OMITTED] TR29JN01.002

    24. Under the Telecom Formula, pursuant to the specific 
requirements of the Pole Attachment Act, the costs of unusable space 
are separated from the costs of usable space are allocated based on the 
number of attaching entities. The costs of usable space are still 
calculated based on the portion of usable space occupied. In the 
Telecom Order, we adopted separate formulas for determining the 
unusable space factor maximum rate and the usable space factor maximum 
rate which, when added together, calculate a maximum rate under section 
224(e) of the Pole Attachment Act. We now simplify the two formulas 
into one combined formula as follows:

[[Page 34573]]

[GRAPHIC] [TIFF OMITTED] TR29JN01.003

    25. Using our presumptions in the Telecom Formula, this calculation 
can be stated as:
[GRAPHIC] [TIFF OMITTED] TR29JN01.004

which results in a combined (usable and unusable) space factor of 
between .24 and 2 attachers and .098 for 6 attachers for 
telecommunications attachers, as opposed to .074 for cable attachers. 
The difference between the two rate calculations is then phased in over 
five years, pursuant to the provisions of the Pole Attachment Act.
    26. In the Telecom Order, we recognized that the number of 
attaching entities is a significant factor in determining he maximum 
rate. We concluded that certain entities should be counted as attaching 
entities pursuant to the Pole Attachment Act. We now reconsider and 
clarify our methodology for counting the number of attaching entities 
used in the Telecom Formula. We clarify our position that all utilities 
should be counted as attaching entities. In addition, we further 
reconsider and clarify that any entity with a physical attachment to 
the pole should be counted as an attaching entity. We will continue to 
exclude a government's temporary or seasonal attachments from this 
category. We also reconsider our inclusion of third party overlashers 
as separate entities and conclude that they are not to be counted as 
separate attaching entities. This is consistent with our conclusion 
that an overlashing entity does not occupy additional space on a pole. 
An overlashed cable is still only attached to the pole by the original 
single attachment.
    27. The term ``attaching entities'' includes, without limitation, 
and consistent with the Pole Attachment Act, any telecommunications 
carrier, incumbent or other local exchange carrier, cable operator, 
government agency, and any electric or other utility, whether or not 
the utility provides a telecommunications service to the public, as 
well as any other entity with a physical attachment to the pole. This 
is consistent with the language of the statute and with Congress' 
intent to count all attaching entities when allocating the costs of 
unusable space. Therefore, we include the utility pole owner in the 
count, resulting in a minimum of two attaching entities being counted.
    28. Upon reconsideration, we find that third party overlashers 
should not be counted as separate entities because they are not 
occupying separately segregated pole space. This conclusion is 
consistent with our finding that overlashing does not constitute a 
separate attachment and our conclusion that all entities with a 
physical attachment should be counted. Our review of the Pole 
Attachment Act leads us to reconsider our previous decision and 
conclude that the term ``attaching entity'' as it is used in the Pole 
Attachment Act is not limited to entities with attachments that met the 
definition of pole attachment as it is used in the Pole Attachment Act. 
Rather, we conclude that any entity with a physical attachment to the 
pole should be counted. Our rule for counting attaching entities will 
allow parties to pole attachment agreements to calculate an average 
number of attaching entities for use in the Telecom Formula.
    b. Average Number of Attaching Entities: 29. In the Telecom Order, 
we determined that the most efficient and expeditious manner to 
identify an average number of attaching entities, was for each utility 
to develop its own average number of attaching entities.
    i. Geographic Areas. 30. Upon presentation of additional 
information and consideration of the record in this proceeding, we 
modify the geographic areas on which a utility will base its average 
numbers of attaching entities. Some utilities assert it will not be 
feasible to determine averages in any cost-efficient manner, so we will 
provide default averages for urbanized and non-urbanized areas, for use 
in the absence of utility developed averages.
    31. The purpose of having averages based on geographic areas was to 
have pole attachment rates reflect an appropriate average number of 
pole attachments in a particular geographic area as of February 2001, 
when utilities begin calculating rates for telecommunications carriers. 
A population of 50,000 or greater (urbanized area) is a reasonable 
density in which to expect greater penetration of service providers and 
attachments. The record shows that using urbanized and non-urbanized 
areas allows a reasonably effective classification of poles based upon 
the actual characteristics of pole inventory of different utilities.
    32. We will require utility pole owners to calculate an average 
number of attaching entities by service area. Where a utility territory 
or service area in which an attaching entity seeks to install pole 
attachments can be identified as either urbanized or non-urbanized, the 
default averages, or the actual averages if developed by the utility, 
for that area should be used. However, where a utility territory or 
service area in which an attaching entity seeks to install pole 
attachments cannot be identified as either urbanized or non-urbanized 
because it crosses into both an urbanized and non-urbanized area, and 
the utility is unable to identify a separate service area as non-
urbanized, the default averages, or the actual averages if developed by 
the utility, for an urbanized area should be used. If any part of a 
specific service area, as identified by the utility, is urbanized, then 
all that service area would be considered urbanized for pole attachment 
purposes. This will facilitate an equitable calculation of pole 
attachment rates for telecommunications carriers. Utilities that have 
multiple service areas in a state would classify each service area, as 
either urbanized or non-urbanized depending on whether any part of the 
service area is within an area designated by the Bureau of Census as 
urbanized. Utilities advise this would be equitable because in a 
service area in which any part is considered urbanized, the

[[Page 34574]]

development potential for the entire area to become urbanized is great.
    33. We emphasize our preference that each utility use the data it 
has available in its corporate and regulatory records, and not go to 
extraordinary lengths to be precise when reasonable estimates will 
generally provide an equitable process. The utility shall make 
available its data, information and methodology upon which the averages 
were developed, unless the default averages are used. We clarify that 
when a distinct area defined by the Bureau of Census as urban falls 
within an urbanized area, a separate average number of attaching 
entities for that urban area is not required. The record demonstrates 
that in some states, and for some utilities, there may be no 
significant difference in the number of attaching entities for rural 
areas and for urban areas that are outside urbanized areas. Therefore, 
we provide utilities the option of using our presumptive averages 
presented below, or developing averages for two areas: (1) Urbanized 
(50,000 or higher population), and (2) non-urbanized (less than 50,000 
population).
    34. When a utility exercises good faith in determining average 
numbers of attaching entities upon which to base the costs of providing 
unusable space, the burden of proof will be on an attaching entity to 
demonstrate the costs are being unjustly apportioned. In demonstrating 
its good faith, the utility must make its methodology and data publicly 
available to the attaching entity, upon request for information 
sufficient for an attaching entity to project its costs of attaching to 
that utility's infrastructure. The costs of conducting an exercise to 
determine average numbers of attaching entities shall not be directly 
passed on to the attaching entities as make-ready costs. Expenses 
relating to the exercise necessary to develop these averages will be 
shared ultimately by all attachers and the utility when, as a 
reasonable business expense incurred as part of doing business, the 
expense is reported to the utility's appropriate regulatory accounts 
and factored into the carrying charge rate of the Cable Formula. We do 
not believe that such expenses would be within the methodology 
prescribed by Congress for individual payment by each attaching entity 
for a pole attachment.
    ii. Presumptive Averages. 35. In order to expedite the process of 
developing average numbers of attaching entities, and allow utilities 
to avert the expense of developing location specific averages, we 
provide two rebuttable presumptive averages for use in our Telecom 
Formula. This gives both small and large utilities the option of not 
conducting a potentially costly and burdensome exercise necessary to 
develop averages based on their company specific records. The adoption 
of presumptive averages should reduce cost and effort by all parties.
    36. In the Telecom Order, we did not establish presumptions, but 
said we believed the most efficient and expeditious manner to calculate 
a presumptive number of attaching entities would be for each utility to 
develop its own presumptive average number of attaching entities. We 
now reconsider that decision and set rebuttable presumptive average 
numbers of attaching entities for our two categories, urbanized and 
non-urbanized. We are now persuaded that utilities and attaching 
entities would benefit from our providing presumptive averages for 
their use. Our establishment of presumptive averages will expedite the 
process and allow utilities to avert the expense of developing location 
specific averages. As with all our presumptions, either party may rebut 
this presumption with a statistically valid survey or actual data.
    37. Based on the expanded record, we establish presumptive average 
numbers of attaching entities in a non-urbanized (less than 50,000 
population) area to be three (3) attaching entities, based on 
information presented in the record and the expectation that on a pole 
or in a conduit, for instance, there would be electric, telephone and 
cable attachers. It is estimated that cable systems now provide access 
to cable television services to over 97% of all households with a 
television. Electric power and telephone service is even more 
universal. The record supports a presumptive average of three attaching 
entities in non-urbanized areas.
    38. In an urbanized area that is more densely populated (50,000 or 
higher population), more developed commercially than a non-urbanized 
area, and in which we expect both residential and business commercial 
competition to flourish, we set a presumptive average number of 
attaching entities at five (5) to reflect the inclusion of, but not 
limited to, the following possible attaching entities: electric, 
telephone, cable, competitive telecommunications service providers and 
governmental agencies. Advanced telecommunications capability is being 
deployed throughout the country. As noted above, competitive services 
are increasing. The record supports a presumptive average number of 
five attachers in urbanized areas.

D. Overlashing

1. Space Occupied by Third Party Overlashing
    39. Cable companies have, through overlashing been able to decades 
to replace deteriorated cables or expand the capacity of existing 
communications facilities, by typing communication conductors to 
existing, supportive strands of cable on poles. The 1996 Act was 
designed to accelerate rapid deployment of telecommunications and other 
services, and to increase competition among providers of these 
services. Overlashing existing cable reduces construction disruption 
and associated expense. Accordingly, in the Telecom Order, we declared 
our continued approval of, and support for, third party overlashing, 
subject to the same safety, reliability, and engineering constraints 
that apply to overlashing one's own pole attachment.
    40. We determined that facilities overlashed by third parties are 
presumed to share the presumptive one foot of usable space occupied by 
the host attachment. We did not dictate how the utility, host attaching 
and third party attaching entities would relate to each other for 
compensation purposes. We did not require the host attaching entity or 
the third party overlasher to obtain the consent of the utility beyond 
the consent already acquired for the host attachment although the 
utility is entitled to notice of the overlashing. We stated that third 
party overlashing did not disadvantage the utility's ability to ensure 
the integrity of its poles.
    41. We decline to impose additional regulation and clarify several 
aspects of our position regarding third party overlashing. Allowing 
third party overlashing reduces construction disruption and associated 
expenses which would otherwise be incurred by third parties installing 
new poles and separate attachments. We clarify that third party 
overlashing is subject to the same safety, reliability, and engineering 
constraints that apply to overlashing the host pole attachment. We 
affirm our policy that neither the host attaching entity nor the third 
party overlasher must obtain additional approval from or consent of the 
utility for overlashing other than the approval obtained for the host 
attachment.
2. What the Third Party Overlasher Pays
    42. Some petitioners urge us to specify, or at least clarify, what 
the third party telecommunications carrier overlasher pays to the host 
attacher or the utility pole owner. We decline to attempt to regulate 
this relationship. However, if the third party overlashing

[[Page 34575]]

cable operator's pole attachment is a telecommunications carrier, then 
the pole attachment will be considered to be used to provide 
telecommunications services for purposes of calculating the pole 
attachment rate. The maximum rate for that overlashed pole attachment 
would then be calculated using the Telecom Formula after February 8, 
2001. In some instances, the host attaching entity will pay the utility 
for a telecommunications carrier pole attachment. We have stated that 
the third party overlasher is not separately liable to the utility for 
the usable space which the overlashing shares with the host attachment 
because there would be no additional usable space occupied. We expect 
and encourage the overlashing and host attaching entities to negotiate 
a just and reasonable rate of compensation between them for the 
overlashing, which will represent some sharing of the usable and 
unusable space costs. Until our intervention is necessary to facilitate 
pole attachments for these parties, we will rely on all parties to act 
in good faith to develop their own just and reasonable compensation.
3. Wind and Weight Load Factors
    43. We have reviewed Sections 24 and 26 of the NESC that address 
loading and structural requirements in detail. Based on our analysis 
and the record, we continue to believe that an attachment's ``burden on 
the pole'' relates to an assessment of need for make-ready changes to 
the pole structure, including pole change-out, to meet the strength 
requirements of the NESC. For example, if the addition of overlashed 
wires to an existing attachment causes an excessive weight to be added 
to the pole requiring additional support or causes the cable sag to 
increase to a point below safety standards, then the attacher must pay 
the make-ready charges to increase the height or strength of the pole. 
Make-ready costs are non-recurring costs. for which the utility is 
directly compensated and as such are excluded from expenses used in the 
rate calculation. The statutory language prescribes that we allocate 
costs based on space occupied, not load capacity.
    44. Fee Order petitioners present no new or persuasive evidence 
that the ``burden on the pole'' due to weight and wind load is an 
additional factor for consideration in the determination of the amount 
of space occupied through which some rate increase would be calculated. 
We affirm our position that the costs of the physical attachments of an 
attaching entity are normally paid to the pole owner as a condition of 
attachment, addressing such factors as weight, wind load and safety 
space. Overlashing does not increase the amount of space actually 
occupied by the attachment.
4. Shared One-Foot Usable Space
    45. In the Telecom Order, we found that the one foot presumption 
should continue to apply where an attaching entity has overlashed its 
own pole attachments. We also determined that facilities overlashed by 
third parties onto existing pole attachments are presumed to share the 
presumptive one foot of usable space of the host attachment. The one 
foot presumption is rebuttable by any party. We decline to abandon or 
redefine our presumption for usable space occupied by a pole 
attachment, even in instances of overlashing. The record on 
reconsideration affirms that the sharing and use of the one foot 
presumption, for usable space occupied by a pole attachment, does not 
lead to a distortion of the allocation of the costs of the pole in 
determining a just and reasonable compensation for the utility.
5. Cable Operator Not a Utility Obligated To Provide for Overlashing
    46. The Pole Attachment Act does not define utility to include 
attachers, Section 224(f) of the Pole Attachment Act obligates a 
utility to provide a cable television system or any telecommunications 
carrier with nondiscriminatory access for purposes of a pole 
attachment. Neither a cable system attacher nor a telecommunications 
attacher has an obligation to act as a host and share its pole 
attachment with a third party overlasher.
6. Notice to Utility Pole Owner
    47. We agree that the utility pole owner has a right to know the 
character of, and the parties responsible for, attachments on its 
poles, including third party overlashers. The pole owner is entitled to 
charge to Telecom Formula rate when a pole attachment previously used 
to provide only cable services is used to provide telecommunications 
services, as a result of a third party telecommunications carrier 
overlashing. When the cable operator's pole attachment provides 
transmission of telecommunications services, whether for itself or via 
third party overlashing, it will notify the pole owner. We clarify that 
it would be reasonable for a pole attachment agreement to require 
notice of third party overlashing.
    48. In the Telecom Order, we concluded that the third party 
overlashing entity should be classified as a separate attaching entity 
for purposes of counting entities using the Telecom Formula. We now 
reconsider that decision, and based on our review of the statute, the 
record herein and our decision that an overlasher shares space with the 
host attachment, we believe that the third party overlasher should not 
be counted as a separate attaching entity.
    49. We affirm the requirement that a cable operator notify the 
utility when the cable operator begins providing telecommunications 
services itself or via third party overlashing. Cable attachers stress 
that this notification should not provide utilities with an opportunity 
to acquire sensitive proprietary and business development, planning, or 
scheduling information that could result in a competitive disadvantage 
to the attaching entity. We agree. The record fails to demonstrate any 
legitimate purpose for a utility to require commercially-sensitive data 
or information to be provided as a part of this notification of a 
change of service status by a cable operator.
    50. Pole attachment agreements after February 8, 2001 could be 
expected to include a reasonable mechanism for notification by a cable 
operator of its change of status to a telecommunications carrier. Pole 
attachment agreements could also be expected to include a reasonable 
remedy for a cable operator's failure to so notify. Because we have not 
explored the issue of a penalty for failure to notify and have no 
record on the question, we will not make a determination on that issue 
at this time.
7. Dark Fiber
    51. We affirm our holding in the Telecom Order that if an 
attachment previously used for providing solely cable services would, 
as a result of the leasing of dark fiber, also be used for providing 
telecommunications services, the rate for the attachment would be 
determined using the Telecom Formula. However, attaching entities may 
lease their dark fiber to third parties without such leases being 
considered separate attachments and without making an additional 
payment beyond the host's existing attachment rate. The cable system 
operator may lease excess fiber capacity within its existing attachment 
to any party for a negotiated rate without the knowledge or consent of 
the pole owner because the physical attachment will not be altered. The 
dark fibers contained within the attaching host have already been taken 
into account in determining the rent for the attachment. The character 
and content of the services provided do not affect the amount of space 
occupied by the

[[Page 34576]]

attachment. The type of services provided over the attachment only 
affect the pole attachment rate if the services are telecommunications 
services. If the third party leasing the fiber is, or becomes, a 
telecommunications carrier, then the utility is compensation for the 
pole attachment based on the Telecom Formula and must be notified.

E. Conduit Issues

    52. Conduits are structures that provide physical protection for 
cables and allow new cables to be added inexpensively along a pathway 
or route. A conduit consists of one or more ducts, which are the 
enclosures that carry the cables. Often, when a cable operator's or 
telecommunications carrier's cables are placed in a duct, three or more 
inner duct are inserted into the duct allowing ``one duct to be treated 
more like conduit.'' A collection of conduits, together with their 
supporting infrastructure, constitutes a conduit system. A conduit 
system may vary widely among geographic areas, and between LEC and 
electric utilities.
    53. The total capacity of a duct or conduit is the entire volume of 
available capacity in the conduit system. All costs associated with the 
construction of the conduit system are considered in determining the 
cost of this total capacity. Essentially, the lack of any unusable 
capacity in a conduit makes the practical application of the Pole 
Attachment Act formulas the same for both cable attachers and 
telecommunications attachers both before and after February 8, 2001.
    54. Cable operators and telecommunications carriers alike will 
calculate a maximum just and reasonable rate for a pole attachment in a 
conduit by apportioning the cost of providing capacity among all 
entities according to the percentage of capacity used by each entity. 
Calculation of the maximum rate may be simplified by using the 
presumptions in the formula. The carrying charge rate is calculated for 
pole attachments in conduit, in the same manner as the carrying charge 
rate in our pole attachment formula. The conduit formula adopted in the 
Fee Order and affirmed here is the following:
[GRAPHIC] [TIFF OMITTED] TR29JN01.028

1. Space Factor in Conduit
    55. In the Fee Order, we concluded that all costs attributable to 
utilities' underground conduit systems are costs of providing capacity. 
The regulatory accounts to which LEC and electric utilities report 
their gross conduit investment include the costs of installed conduit, 
original permit, excavation, sewer connections and other costs. All 
costs associated with the construction of the conduit system are 
considered in determining the cost of this total capacity.
    a. Total Duct or Conduit Capacity. 56. In the Fee Order, we 
clarified that a utility may designate capacity in a duct for 
maintenance or emergency use, but that a duct so designated is usable 
in the event it is needed, and therefore is part of the conduit 
capacity. Where duct capacity is set aside for future municipal use (in 
the nature of consideration as a condition for a license, franchise, or 
permit), the utility is compensated for those costs as part of its net 
conduit investment and/or in the carrying charge rate. Collapsed or 
otherwise ducts are no longer available for pole attachments, and 
should not be included in the calculation of total capacity of a 
conduit or duct in the Cable Formula.
    57. We will not allow capacity designated for maintenance, future 
business plans, or municipal set-asides to be subtracted from the total 
duct or conduit capacity for rate determination purposes. The record 
supports our analysis that capacity in a duct or conduit that is usable 
for any of these purposes is part of the ``total duct or conduit 
capacity.'' For example, a utility may set-aside capacity for 
maintenance or emergencies so that unoccupied capacity is available 
into which a temporary cable may be placed and spliced into a damaged 
cable. Capacity so designated is usable in the event it is needed, and 
available for use by the utility at any time for any purpose, and is 
therefore part of the total available conduit capacity. Such 
reservation of capacity is not necessarily identified by a specific 
duct or location, can be created, used, withdrawn or discarded at the 
sole discretion of the utility, and must be considered part of the 
total capacity of the conduit. Municipal set-asides are also capacity 
that may be made available for the use of the local government as a 
condition in a franchise, license, right-of-way or other agreement.
    58. Capacity may be reserved, or kept unused to be available to an 
electric utility for expansion of its core business services, but that 
capacity is still part of the total capacity of the duct or conduit 
system and must be made available for pole attachments until such time 
as it is needed by the electric utility under a bona fide business 
plan. Under the policy articulated in the Local Competition Order, an 
electric utility is allowed to reserve capacity for future business 
purposes under a bona fide business plan, but must allow that capacity 
to be used for attachments until an actual business need arises. For 
whatever reason capacity may be reserved or designated for special 
uses, by or on behalf of the utility, and regardless of who may benefit 
directly or indirectly from those uses, the capacity is available for 
use and therefore remains part of the total capacity of the conduit for 
rate determination purposes.
    b. Occupied Capacity, the Half-Duct Presumption. 59. Presumptions 
are used in the Cable and Telecom Formulas to expedite the calculations 
of a just and reasonable rate so that complicated surveys, accounting 
and calculations may be avoided.
    60. We affirm our rebuttable presumption that a cable or 
telecommunications attacher occupies a maximum capacity of one half of 
a duct, when determining a reasonable conduit attachment rate. The 
presumption that a communications cable in a conduit system occupies 
one half of a duct is based on clear evidence that all types of cable--
including electric supply cables when controlled by the same party as 
the communications cable--may share a duct. We affirm our position 
that, because the NESC rule relied on by the electric utilities does 
not prohibit the sharing of a duct by electric and communications 
cables when controlled by the same party or two communications cables, 
it is reasonable to expect there to be more than one attacher in a 
duct.
    61. The one half duct presumption is rebuttable and the presence of 
inner duct is adequate rebuttal. Where inner duct is installed, either 
by the attacher or in a previous installation, the maximum rate will be 
reduced in proportion to the fraction of the duct occupied. That 
fraction will be one

[[Page 34577]]

divided by the actual number of inner ducts in the duct. We continue to 
believe that the use of the one half duct rebuttable presumption is a 
simple, expedient and reasonable approximation of the actual capacity 
occupied by a cable operator or telecommunications carrier attaching in 
a conduit system. When the actual percentage of capacity occupied is 
known, it can and should be used instead of the one half duct 
presumption.
2. Net Linear Cost of Conduit
    62. As stated in the Fee Order, in the conduit context, we use the 
net linear cost of the conduit, as compared to the net cost of a bare 
pole, as one factor within the formula for determining a maximum 
permissible rate for attachment within conduit. As the net cost of a 
bare pole reflects the total system investment for the above ground 
pole attachment infrastructure, to arrive at a system investment for 
use in the conduit formula we identify the net linear cost of the 
conduit system. To accomplish this, the utility must first establish 
the Net Conduit Investment.
    63. Our goal has always been to adopt a formula which allows the 
parties to calculate the maximum rate using public data when available, 
in a fair and expeditious manner. We also have a policy against 
requiring additional accounting procedures so long as the information 
is available from the utilities upon reasonable request.
    a. Net Conduit Investment (LEC-Owned Conduit). 64. Net Conduit 
Investment for LEC-owned conduit is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR29JN01.005

    65. Gross Conduit Investment for the LEC consists of Part 32 
Account 2441. For LECs, Accumulated Depreciation (Conduit) represents 
the share of ARMIS Account 3100 that corresponds to Account 2441. 
Accumulated Depreciation related to conduit is publicly available at 
the LECs ARMIS Report 43-02. In the Fee Notice we proposed the 
following formula for the calculation of accumulated deferred income 
taxes for conduit:
[GRAPHIC] [TIFF OMITTED] TR29JN01.006

    66. LEC conduit owners objected to this formula on the basis that 
the actual amount of accumulated deferred taxes for conduit is 
available directly from the LEC's books. BellSouth maintains that 
because it is required to keep separate and accurate records of 
accumulated deferred income taxes for poles and conduit, our formula 
will improperly introduce non-conduit related deferred taxes into rate 
calculations. NCTA argued that LECs should not use accumulated deferred 
income tax figures taken from the LEC's books because the information 
is not publicly available.
    67. In the Fee Order, we concluded that if the LEC conduit owner is 
required to keep this data precisely as required for the formula, we 
will allow them to use it in the rate calculation, as long as it was 
reported to and available through our public ARMIS. There is confusion 
among utilities and attaching entities whether this data is available. 
Pursuant to our Biennial Regulatory Review, Review of Accounting and 
Cost Allocation Requirements, FCC 99-106 and Biennial Regulatory 
Review, Review of ARMIS Reporting Requirements, FCC 99-107 we require 
the LEC conduit owner to keep this data as required for the formula 
because we require LECs to use it in the rate calculation. This data 
will be available at ARMIS Report 43-02 and we will use this data in 
our formulas. Until ARMIS reports for LECs include this required data 
after 2001, we will continue to use the proration method to calculate 
the conduit portion of accumulated deferred taxes for use in the 
formula to calculate the net linear cost of conduit.
    b. Net Conduit Investment (Electric Utility-Owned Conduit). 68. Net 
Conduit Investment for electric utility-owned conduit is calculated as 
follows:
[GRAPHIC] [TIFF OMITTED] TR29JN01.007

    69. For electric utilities, Gross Conduit Investment is reflected 
in FERC Part 101 Account 366. Accumulated Depreciation (Conduit) 
represents the share of FERC Account 108 (Accumulated provision for 
depreciation of electric utility plant (Major only)--a composite 
account that is required to be maintained on a subsidiary basis) that 
corresponds to Account 366. Accumulated Deferred Income Taxes for 
electric utilities represents the share of FERC Accounts 190, 281, 282, 
283 that correspond to Account 366.
    70. Upon review, we found no new information presented that would 
persuade us to abandon the use of system-wide data in the conduit 
context, as it is used in the pole context. No viable alternate 
suggestion has been offered and we continue to find that the use of 
system-wide data is the most efficient and reasonable methodology.

F. FERC and ARMIS Accounts Used in the Formulas

1. Electric Utility Accumulated Deferred Income Taxes Poles 
(Correction)
    71. In the Fee Order, we stated the following formula to determine 
the net cost of a bare pole for electric utilities:

[[Page 34578]]

[GRAPHIC] [TIFF OMITTED] TR29JN01.008

    We stated that the Accumulated Deferred Income Taxes represents the 
share of composite FERC Account 190 (Accumulated deferred income taxes) 
that corresponds to Account 364. In error, we neglected to include FERC 
Accounts 281, 282, and 283 along with Account 190. We now correct this 
typographical error so that Accumulated Deferred Income Taxes 
represents the share of composite FERC Accounts 190, 281, 282 and 283 
that corresponds to Account 364.
2. Carrying Charge Accounts (LECs)
    72. The carrying charge rate reflects those costs incurred by the 
utility in owning and maintaining pole attachment infrastructure 
regardless of the presence of attachments. The elements of the carrying 
charge rate are: administrative, maintenance, depreciation, taxes and 
cost of capital (rate of return). To calculate the carrying charge 
rate, we developed formulas that relate each element to a utility 
owner's net investment. The carrying charge rate factor of the Cable 
Formula is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR29JN01.009

    73. In May 1986, the Commission adopted a new uniform system of 
accounts for all FCC regulated telephone companies. The Commission's 
Annual Report Form M was revised on April 27, 1989 to reflect the new 
accounting system in Part 32 that replaced the accounting system in 
Part 31, effective January 1, 1988. The Pole Attachment Order provided 
formulas for determining a maximum just and reasonable pole attachment 
rate with regulatory accounts identified. The formula for LECs used 
Part 31 accounts until after adoption of the New USOA-Part 32 Adoption, 
when the Common Carrier Bureau responded to a request for clarification 
of what Part 32 accounts would be used in place of the Part 31 accounts 
specified in the Pole Attachment Order. That guidance was given the 
understanding that an exact tracking of expenses from Part 31 accounts 
to Part 32 accounts was not possible. In the Fee Order, we clarified 
the Part 32 accounts to be used in the Cable Formula for LECs 
utilities.
    74. In the Fee Order, we adopted the following formula to determine 
the administrative element of the carrying charge rate of the Cable 
Formula for LEC pole owners:
[GRAPHIC] [TIFF OMITTED] TR29JN01.010

    75. The Fee Order did not attempt to establish different accounts 
to be used in the administrative elements of the carrying charges. The 
Fee Order merely reconciled the accounts formerly listed in Part 31 to 
their counterpart accounts in Part 32. This resulted in the 
identification of Accounts 6710 and 6720 to be included in the 
administrative element of the carrying charges.
    76. We reviewed and considered the record before us regarding the 
accounts to be used for the administrative element expenses for LECs. 
We do not believe Congress intended us to discover and aggregate all de 
minimis expenses which might have some intangible nexus to pole 
attachments. On the contrary, we believe Congress gave us a clear 
mandate not to engage in full-scale ratemaking exercises every time we 
have a pole attachment compliant before us. We have chosen not to 
disaggregate the major accounts selected for inclusion in our 
calculations in order to eliminate expenses not directly attributable 
to administrative costs with a nexus to pole attachments, such as 
corporate strategic planning. On reconsideration, we decline to draw in 
more expenses to the administrative element because we already apply a 
comprehensive set of expenses in conformance with the statutory 
directive to allocate a percentage of operating expenses attributable 
to pole attachments.
3. Carrying Charge Accounts (Electric)
    77. Account 593 (maintenance of overhead lines (Major only)) 
includes all the cost of labor, materials used and expenses incurred in 
the maintenance of overhead distribution line facilities, the book cost 
of which is includible in Account 364 (poles, towers and fixtures), 
Account 365 (overhead conductors and devices), and Account 369 
(services). In our calculation we include the net investment for all 
three accounts to determine the portion of Account 593 attributable to 
Account 364. We have been provided no additional evidence to rebut the 
description of Account 590 or that ``direct field supervision of 
specific jobs shall be charged to the appropriate maintenance 
account,'' in this case Account 593. Fee Order petitioners do not 
persuade us that there is any significant expense related to poles 
included in Account 590.
    78. This same reasoning applies to Account 594 in the conduit 
context. Account 594 (maintenance of underground lines (Major only)) 
includes the cost of labor, materials used and expenses incurred in the 
maintenance of underground distribution line facilities, the book cost 
of which is includible in Account 366 (underground conduit), Account 
367 (underground conductors and devices), and Account 369 (Services). 
All expenses associated with Account 366, the account used to determine 
conduit investment, are reported in Account 594

[[Page 34579]]

and no additional accounts should be included as maintenance expenses.
    79. Accounts 580, 583, 584, and 588 are operational accounts to 
which electric utilities report expenses relating to the utility's core 
regulated business services, and not pole or conduit expenses. Account 
598 is the miscellaneous account related generally to maintenance of 
equipment on customer premises and is not associated with pole or 
conduit expenses. We will not include any portion of Accounts 580, 583, 
584, 588 or 598 in the calculation of the maintenance element of the 
carrying charge rate for pole or conduit because the costs or expenses 
reported to these accounts do not reflect a sufficient nexus to the 
operating expenses and actual capital costs of the utility attributable 
to the pole or conduit attachment. The pertinent maintenance expenses 
are reported in Accounts 593 (poles) and 594 (conduit) and we include 
those in the calculation.
4. Investment Accounts (Electric)
    80. We calculate net pole or conduit investment for two purposes in 
the formula. First, we calculate net investment to identify the portion 
of net investment that is allocable to the physical attachment. We then 
apply the rate of return against that portion so that the utility is 
fully compensated for the capital investment that is being used by the 
attacher. The only account pertinent to that calculation is the pole or 
conduit investment account.
    81. We measure the capital investment that is used by determining 
the percentage of physical space occupied by the attachment. For 
electric utility poles, we use Account 364 (poles, towers and 
fixtures). Those costs are fully captured in Account 364. The accounts 
suggested by petitioners include capital expenditures which support the 
utility's core business function and are not related to the pole cost. 
To the extent that an attacher wished to place a separate structure 
(pole, box, etc.) on utility property, we would examine any rate issue 
on a case by case basis.
    82. We do not believe that the Pole Attachment Act envisions a 
drawn out ratemaking process to determine whether a lightning arrester, 
whose only function is to protect a piece of equipment which supports 
the utility's core business function of power distribution, indirectly 
benefits other attachers on the pole. Neither do we propose a complex 
ratemaking process to remove every possible cost included in Account 
364 that does not benefit the pole attacher.
    83. Account 366 (underground conduit), which we include in the 
investment calculation, includes the cost installed of underground 
conduit and tunnels used for housing distribution cables or wires. All 
items associated with the construction of the conduit are included in 
this account.
    84. Based on our extensive review of the record and the description 
of the accounts, we affirm that only FERC accounts to be included in 
the investment calculation are Accounts 364 for pole investment and 
Account 366 for conduit investment. Petitioners failed to provide any 
new information and their reiteration of the same arguments fail to 
persuade us to include additional accounts in our calculation of the 
pole or conduit investment. As we have stated above, any unusual 
requests involving access to land or rights of way other than for a 
pole attachment or conduit attachment will be considered on a case by 
case basis. Our inclusion of unrelated expenses in certain accounts and 
our exclusion of possible minor expenses in other accounts provides a 
balanced overall allocation of costs while avoiding a prolonged and 
contentious ratemaking process.

IV. Final Regulatory Flexibility Certification

    85. As required by the Regulatory Flexibility Act (``REA''), an 
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in 
both the Fee Order Notice and Telecom Order Notice and a Final 
Regulatory Flexibility Analysis (``FRFA'') was incorporated in both the 
Fee Order and Telecom Order. The Commission sought written public 
comment on the proposals in the Fee Order Notice and Telecom Order 
Notice, including comment on the IRFAs. No comments were received in 
response to the IRFA in either the Fee Order Notice or Telecom Order 
Notice, nor did we receive any petitions for reconsideration of the Fee 
Order FRFA or Telecom Order FRFA. The RFA requires that an RFA analysis 
be prepared for notice and comment rulemaking proceedings, unless the 
agency certifies that ``the rule will not, if promulgated, have a 
significant economic impact on a substantial number of small 
entities.''
    86. The RFA generally defines a ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' In addition, the term ``small 
business'' has the same meaning as the term small business concern 
under the Small Business Act. A ``small business concern'' is one that: 
(1) Is independently owned and operated; (2) is not dominant in its 
field of operation; and (3) satisfies any additional criteria 
established by the Small Business Administration (``SBA''). As we 
described in the FRFA analyses in the Fee Order and Telecom Order, we 
estimate that there are small business entities that might be affected 
by those orders.
    87. In this Order on Reconsideration, we affirm most of our prior 
conclusions in the Fee Order and Telecom Order. We have, among other 
things, amended certain requirements of Secs. 1.1401-1.1418 of our 
rules. These amendments serve to simplify our formulas for calculating 
pole attachment rates. Specifically, we provide a simplified equation 
of our formula for telecommunications attachers; we simplify the 
geographic categories for determining average numbers of attaching 
entities; and we allow parties to a pole attachment proceeding to 
substitute presumptive numbers of attaching entities in the formula in 
order to avoid the expense of establishing numbers based on a survey or 
compilation of actual data. We also provide a simpler methodology for 
calculating rates when the net pole investment is negative or zero. 
These changes do not impose additional compliance burdens on small 
entities nor do they alter the number or type of small entities 
possibly affected by the rules published in the Fee Order and Telecom 
Order. The changes may, in fact, reduce the burden on small entities. 
Therefore, we certify, pursuant to Section 605(b) of the RFA, that the 
rules adopted herein will not have a significant economic impact on a 
substantial number of small entities.
    88. Report to Congress: The Commission will send a copy of this 
Order on Reconsideration, including this FRFA certification, in a 
report to be sent to Congress pursuant to the Congressional Review Act, 
5 U.S.C. 801(a)(1)(A). A copy of this Order on Reconsideration (or 
summary thereof) and this FRFA certification will be published in the 
Federal Register, see 5 U.S.C. 605, will be sent to the Chief Counsel 
for Advocacy of the Small Business Administration.

V. Paperwork Reduction Act of 1995 Analysis

    89. The requirements adopted in this Order on Reconsideration have 
been analyzed with respect to the Paperwork Reduction Act of 1995 (the 
``1995 Act'') and found to impose no new or modified information 
collection requirements on the public.

[[Page 34580]]

VI. Ordering Clauses

    90. Pursuant to section 405 of the Communications Act of 1934, as 
amended, 47 U.S.C. 405 and section 1.106 of the Commission's rules, 47 
CFR 1.106, the petitions for reconsideration and/or clarification are 
denied in part and granted in part.
    91. Pursuant to sections 1, 4(i), 224 and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 224 and 
303(r), the Commission's rules are hereby amended as set forth in the 
Rule Changes.
    92. The Commission's rules, as amended in the Rule Changes, will 
become effective July 30, 2001.
    93, The Commission's Consumer Information Bureau, Reference 
Information Center, SHALL SEND a copy of this Order on Reconsideration, 
including the Final Regulatory Flexibility Certification, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 1

    Administrative practice and procedures, Cable television, 
Communications common carriers, Conduit, Pole attachments, Poles, 
Reporting and recordkeeping requirements, Telecommunications.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR Part 1 as follows:

PART 1--PRACTICE AND PROCEDURE

    1. The authority citation for Part 1 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 
and 325(e).


    2. Sec. 1.1402 is amended by revising paragraph (m) to read as 
follows:


Sec. 1.1402  Definitions.

* * * * *
    (m) The term attaching entity includes cable system operators, 
telecommunications carriers, incumbent and other local exchange 
carriers, utilities, governmental entities and other entities with a 
physical attachment to the pole, duct, conduit or right of way. It does 
not include governmental entities with only seasonal attachments to the 
pole.
* * * * *

    3. Sec. 1.1409 is amended by removing paragraph (e)(4) and revising 
paragraphs (e)(1), (e)(2), (e)(3) and the first sentence of paragraph 
(f) to read as follows:


Sec. 1.1409  Commission consideration of the complaint.

* * * * *
    (e) * * *
    (1) The following formula shall apply to attachments to poles by 
cable operators providing cable services. This formula shall also apply 
to attachments to poles by any telecommunications carrier (to the 
extent such carrier is not a party to a pole attachment agreement) or 
cable operator providing telecommunications services until February 8, 
2001:
[GRAPHIC] [TIFF OMITTED] TR29JN01.011

[GRAPHIC] [TIFF OMITTED] TR29JN01.012

    (2) Subject to paragraph (f) of this section the following formula 
shall apply to attachments to poles by any telecommunications carrier 
(to the extent such carrier is not a party to a pole attachment 
agreement) or cable operator providing telecommunications services 
beginning February 8, 2001:
[GRAPHIC] [TIFF OMITTED] TR29JN01.013

    (3) The following formula shall apply to attachments to conduit by 
cable operators and telecommunications carriers:
[GRAPHIC] [TIFF OMITTED] TR29JN01.014

    simplified as:
    [GRAPHIC] [TIFF OMITTED] TR29JN01.015
    

[[Page 34581]]


    If no inner-duct is installed the fraction, ``1 Duct divided by the 
No. of Inner-Ducts'' is presumed to be \1/2\.
    (f) Paragraph (e)(2) of this section shall become effective 
February 8, 2001 (i.e., five years after the effective date of the 
Telecommunications Act of 1996).  * * *
* * * * *

    4. Sec. 1.1417 is amended by revising paragraphs (a), (b), (c), and 
the introductory text of paragraph (d) to read as follows:


Sec. 1.1417  Allocation of unusable space costs.

    (a) With respect to the formula referenced in Sec. 1.1409(e)(2), a 
utility shall apportion the cost of providing unusable space on a pole 
so that such apportionment equals two-thirds of the costs of providing 
unusable space that would be allocated to such entity under an equal 
apportionment of such costs among all attaching entities.
    (b) All attaching entities attached to the pole shall be counted 
for purposes of apportioning the cost of unusable space.
    (c) Utilities may use the following rebuttable presumptive averages 
when calculating the number of attaching entities with respect to the 
formula referenced in Sec. 1.1409(e)(2). For non-urbanized service 
areas (under 50,000 population), a presumptive average number of 
attaching entities of three (3). For urbanized service areas (50,000 or 
higher population), a presumptive average number of attaching entities 
of five (5). If any part of the utility's service area within the state 
has a designation of urbanized (50,000 or higher population) by the 
Bureau of Census, United States Department of Commerce, then all of 
that service area shall be designated as urbanized for purposes of 
determining the presumptive average number of attaching entities.
    (d) A utility may establish its own presumptive average number of 
attaching entities for its urbanized and non-urbanized service area as 
follows:  * * *
* * * * *

    5. Sec. 1.1418 is revised to read as follows:


Sec. 1.1418  Use of presumptions in calculating the space factor.

    With respect to the formulas referenced in Sec. 1.1409(e)(1) and 
Sec. 1.1409(e)(2), the space occupied by an attachment is presumed to 
be one (1) foot. The amount of usable space is presumed to be 13.5 
feet. The amount of unusable space is presumed to be 24 feet. The pole 
height is presumed to be 37.5 feet. These presumptions may be rebutted 
by either party.

[FR Doc. 01-16038 Filed 6-28-01; 8:45 am]
BILLING CODE 6712-01-M


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