[Federal Register Volume 65, Number 96 (Wednesday, May 17, 2000)]
[Rules and Regulations]
[Pages 31270-31283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11911]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[CS Docket No. 97-98; FCC 00-116]


Rules and Policies Governing Pole Attachments

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document addresses issues raised in the Notice of 
Proposed Rulemaking relating to the formula used to calculate maximum 
just and reasonable rates utilities may charge for pole attachments 
made to a pole, duct, conduit or right-of-way pursuant. This document 
amends the formula so that it reflects the Commission's current 
accounting rules that apply to local exchange carriers; clarifies the 
treatment of accumulated depreciation attributable to removal costs to 
eliminate negative results; and adopts a conduit methodology for 
determining the maximum just and reasonable rates utilities may charge 
cable systems and telecommunications carriers for their use of conduit 
systems.

DATES: Effective June 16, 2000, except for Secs. 1.1404 and 1.1409, 
which contain information collection requirements that have not been 
approved by the Office of Management and Budget. The Commission will 
publish a document in the Federal Register announcing the effective 
date of these sections. Written comments by the public on any new and/
or modified information collection requirements should be submitted on 
or before July 17, 2000.

ADDRESSES: A copy of any comments on the information collection 
requirements contained herein should be submitted to Judy Boley, 
Federal Communications Commission, Room 1-C804, 445 12th Street, SW, 
Washington, DC 20554 or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Kathleen Costello at (202) 418-7200 or 
via the Internet at [email protected], or Cheryl King at (202) 418-2284 
or via the Internet at [email protected]. For additional information 
concerning the information collection requirements contained herein, 
contact Judy Boley at (202) 418-0214, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order, CS Dkt. No. 97-98, FCC 00-116, adopted March 29, 2000; 
released April 3, 2000. The full text of the Commission's Report and 
Order 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/.

[[Page 31271]]

Paperwork Reduction Act

    The requirements adopted in the Report and Order have been analyzed 
with respect to the Paperwork Reduction Act of 1995 (``1995 Act'') and 
found to impose no new but some modified information collection 
requirements on utilities. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public to 
comment on the information collection requirements contained in the 
Report and Order, as required by the 1995 Act. Public comments are due 
July 17, 2000. Comments should address: (a) whether the collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Approval Number: 3060-0392.
    Title: 47 CFR 1 Subpart J--Pole Attachment Complaint Procedures.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit; State, Local or Tribal 
Government.
    Number of Respondents: 1,381.
    Estimated Time Per Response: .5-35 hours.
    Frequency of Response: On occasion.
    Total Annual Burden to Respondents: 3,047 hours.

Synopsis of the Report and Order

I. Introduction

    1. The Report and Order (``Report and Order'') addresses issues 
raised in Amendment of Rules and Policies Governing Pole Attachments, 
Notice of Proposed Rulemaking, CS Docket No. 97-98, 62 FR 18074 
(``NPRM'') relating to the maximum just and reasonable rates utilities 
may charge for ``pole attachments'' made to a pole, duct, conduit or 
right-of-way. Generally, the commenters represent the interests of one 
of the following three categories: (1) Electric utilities; (2) cable 
operators; and (3) telecommunications carriers. In the Report and 
Order, we adopt amended rules.

II. Background

    2. Section 224 of the Communications Act (``Pole Attachment Act'') 
grants the Commission authority to regulate the rates, terms, and 
conditions governing pole attachments and requires that such rates, 
terms and conditions be just and reasonable. The Commission is also 
authorized to adopt procedures necessary to hear and to resolve 
complaints concerning such rates, terms, and conditions. Beginning in 
1978, the Commission developed a methodology to determine the maximum 
allowable pole attachment rate under section 224(d)(1), (the ``Cable 
Formula''), in Adoption of Rules for the Regulation of Cable Television 
Pole Attachments, First Report and Order, CC Docket No. 78-144 (``First 
Report and Order''); Second Report and Order (``Second Report and 
Order''); and Memorandum and Order (``Third Order''), implementing a 
cost methodology premised on historical or embedded costs. In 1987, the 
Commission amended and clarified the methodology for determining rates 
in Amendment of Rules and Policies Governing the Attachment of Cable 
Television Hardware to Utility Poles, CC Docket No. 86-212, 52 FR 
31769, August 24, 1987 (``Pole Attachment Order'').
    3. Revisions to the Cable Formula and the formula for pole 
attachment rates in conduit systems adopted in the Report and Order 
will apply to attachments made by cable systems and telecommunications 
carriers, until the new rules for attachments by telecommunications 
carriers providing telecommunications services established under the 
Telecommunications Report and Order, CS Docket No. 97-151, FCC 98-20, 
63 FR 12013, March 12, 1998, become effective in 2001. After February 
8, 2001, the Cable Formula for poles and the formula adopted for use of 
conduit systems adopted in the Report and Order, will continue to apply 
to pole attachments used by a cable television system, as long as the 
pole attachment is not also used to provide telecommunications 
services.

III. Pricing Methodologies

1. Modification of the Cable Formula

    4. The Commission has employed historical costs in Cable Formula 
calculations since the passage of the Pole Attachment Act in 1978. 
Further, the United States Supreme Court has upheld the application of 
an historical cost methodology for determining pole attachment rates. 
The continued use of a clear rate formula by the Commission is 
essential to encourage parties to negotiate for pole attachment rates, 
terms and conditions. The continued use of historical costs 
accomplishes key objectives of assuring, to both the utility and the 
attaching parties, just and reasonable rates; establishes 
accountability for prior cost recoveries; and accords with generally 
accepted accounting principles.

2. Gross Versus Net Book Costs

    5. The Cable Formula incorporates net figures for the calculation 
of maximum pole attachment rates. We compute the carrying charge 
elements for maintenance, depreciation and administrative expenses, as 
well as for return on investment and taxes, using net book costs. For 
example, the net cost of a bare pole component is derived from the 
gross investment in poles less accumulated depreciation and accumulated 
deferred income taxes. The important goal is to ensure that like 
figures are used, whether net or gross and if both parties to a pole 
attachment complaint agree, the pole attachment rates may be computed 
using gross book costs. We will continue to use net figures in the 
Cable Formula. However, as in the past, when all parties to a complaint 
agree, we will allow the use of gross book costs.

IV. Armis Uniform System of Accounts

    6. Our Automated Reporting Management Information System 
(``ARMIS'') Report 43-02 Uniform System of Accounts (``USOA'') contains 
the financial operating results of a local exchange carrier's 
telecommunications operations for every Part 32 account. We affirm the 
use of Part 32 Uniform System of Accounts for local exchange carriers, 
as reported to ARMIS, in determining various components of the Cable 
Formula. These specific accounts are discussed in the Report and Order 
relating to various aspects of the Cable Formula.

V. Formula for Determining Attachment Rates for Poles

    7. The Commission uses the following Cable Formula in disputed 
cases to set rates to be charged by utilities for attachments on poles:
[GRAPHIC] [TIFF OMITTED] TR17MY00.000


[[Page 31272]]



A. Percentage of Total Usable Space Occupied

    8. The presumptions used in the Cable Formula have been repeatedly 
affirmed since the enactment of the Pole Attachment Act. We again 
decline to modify the well established presumptions leading to 7.4% as 
the percentage of usable space occupied by a pole attachment.
1. Safety Space
    9. Because the electric supply cable precludes other attachments 
from occupying the safety space, which would otherwise be usable space, 
the safety space is effectively usable space occupied by the supply 
cable. So long as their crews make the installation, the electric 
utilities are not limited by the National Electrical Safety Code in 
what equipment or cables they may attach in the safety space. 
Accordingly, we reject the electric utilities' arguments to reduce the 
presumptive usable space of 13.5 feet by 40 inches.
2. Minimum Ground Clearance
    10. The Commission established that a presumptive average 18 feet 
of the pole space is reserved for ground clearance. The 18 foot 
presumption is not dictated by the National Electric Safety Code, but 
is an average to be used in the estimation of total usable space. In 
the Usable Space Order, we determined that the selection of the 18 foot 
figure reflected various elements such as differing pole heights, as 
well as National Electrical Safety Code standards that vary depending 
on the physical environment of the pole. Factors used to determine the 
National Electrical Safety Code standard of minimum ground clearance, 
include whether the wires or cables cross over railroad tracks, roads, 
or driveways and the amount of voltage transferred through the cables. 
The rebuttable nature of the usable space presumption allows for the 
use of a different minimum ground clearance when necessary to improve 
the accuracy of the calculations. Presumptions were adopted to 
encourage expeditious response to complaint information requests. We 
have not been persuaded that a departure from our well established 
presumption of an average minimum ground clearance of 18 feet is 
warranted.
3. 30 Foot Poles
    11. The record 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 plant investment from the 
rate calculation. We conclude 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.
4. Weight and Wind Load Factors
    12. The current method for allotting space to a pole attachment 
accounts directly for the wind load factor. The weight load factor is 
considered when deciding whether a stronger pole is necessary as part 
of make-ready work. Many of these factors are included in accounts in 
the maintenance element of the carrying charge rate. For electric 
utility owned poles, which report data for regulatory purposes to the 
Federal Energy Regulatory Commission (``FERC''), FERC Account 593 
includes pole related expenses for overhead lines and allows for the 
recovery of the cost of labor, materials used and expenses incurred in 
the maintenance of overhead distribution facilities. The Commission's 
ARMIS rules for local exchange carrier accounting provide for the 
recovery of damages and pole related expenses caused by storms or other 
casualties. The complete costs of the physical attachments of an 
attaching entity are normally paid to the pole line owner as a 
condition of attachment, addressing such factors as weight, wind load 
and safety space. These make-ready costs have been fully recovered.

B. Cost of a Bare Pole

1. Local Exchange Carrier Pole Owner Formula Methodology
    13. We adopt the following formula to determine the net cost of a 
bare pole for local exchange carrier pole owners:
[GRAPHIC] [TIFF OMITTED] TR17MY00.001

    14. In this formula Accumulated Depreciation (Poles) and 
Accumulated Deferred Income Taxes (Poles) are derived from composite 
Part 32 accounts attributable to poles. Specifically, Accumulated 
Depreciation (Poles) represents the share of Part 32 Account 3100 
(Accumulated Depreciation) that corresponds to Account 2411, and 
Accumulated Deferred Income Taxes (Poles) represents the shares of Part 
32 Accounts 4100 (Net Current Deferred Operating Income Taxes) and 4340 
(Net Noncurrent Deferred Operating Income Taxes) that correspond to 
Account 2411.
2. Electric Utility Pole Owner Formula Methodology
    15. We affirm the following formula to determine the net cost of a 
bare pole for electric utilities:
[GRAPHIC] [TIFF OMITTED] TR17MY00.002

    16. Under this formula, Accumulated Depreciation (Poles) 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 364 (Poles, Towers, and Fixtures). Similarly, Accumulated 
Deferred Income Taxes represents the share of composite FERC Account 
190 (Accumulated deferred income taxes) that corresponds to Account 
364. An adjustment to a utilty's net pole investment (15% for electric 
utilities and 5% for local exchange carriers) is necessary to eliminate 
the investment in crossarms and other non-pole related items.

[[Page 31273]]

3. Total Number of Poles
    17. We have previously concluded that poles of 30 feet or less 
should be included in calculations of the Cable Formula in our 
discussion about pole height and the usable space presumption. Based on 
our review of the record in this proceeding, we also conclude that 
poles of 30 feet or less should therefore be included in the inventory 
of the total number of poles owned or used, jointly-owned or solely-
owned, by a utility. The exclusion of these poles would result in a 
distorted and inaccurate pole inventory resulting in an unjust and 
unreasonable pole attachment rate because they are being used by the 
utility for their business services and by cable operators and 
telecommunications carriers to provide their respective services.

C. Carrying Charge Rate (Poles)

    18. The carrying charge rate reflects those costs incurred by the 
utility in owning and maintaining poles regardless of the presence of 
pole attachments. The elements of the carrying charge rate are: 
administrative, maintenance, depreciation, taxes and cost of capital 
(rate of return). The carrying charge rate factor of the Cable Formula 
is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR17MY00.020

    To calculate the carrying charge rate, the Commission developed a 
formula that relates each of these elements to a pole owner's net pole 
investment. Full Cable Formulas, with all components, elements and 
accounts used to determine a maximum just and reasonable rate for pole 
attachments to electric and local exchange carrier utility poles and 
conduit, are included in the appendices to the Report and Order.
1. The Administrative Element
    19. The following formula is adopted to determine the 
administrative element of the carrying charge rate of the Cable Formula 
for local exchange carrier pole owners:
[GRAPHIC] [TIFF OMITTED] TR17MY00.003

2. The Maintenance Element
a. LEC ARMIS Part 32 Account 6411
    20. Account 6411 includes the rents paid by the local exchange 
carrier to electric utilities for the local exchange carrier's use of 
the electric utility's poles for the local exchange carrier's own core 
business. Inclusion of the local exchange carrier's rental fees paid to 
the electric utility in the Cable Formula would result in the electric 
utility being paid twice. These fees will be deducted from the total 
amount reported to Account 6411.
b. Electric Utility FERC Account 590
    21. We reject our tentative conclusion that some portion of FERC 
Account 590 should be included in the maintenance element for electric 
utilities. We believe that any increased accuracy that would be derived 
from including the minute percentage of pole related expenses that may 
be included in Account 590, is outweighed by the complexity of arriving 
at an appropriate and equitable percentage of the expenses.
3. The Depreciation Element
    22. We redefine Net Pole Investment for Local Exchange Carriers as:
    [GRAPHIC] [TIFF OMITTED] TR17MY00.004
    
where Accumulated Depreciation (Poles) includes only that portion of 
Account 3100 which arises from the depreciation of Account 2411. The 
portion of Accumulated Depreciation (Poles) attributable to removal 
costs shall be treated as an offset to gross removal costs when 
calculating future net salvage value. This allows a proper matching of 
depreciation and corresponding sources, and provides an accurate basis 
for calculating investment returns.
4. The Taxes Element
    23. The taxes element of the carrying charge rate for local 
exchange carrier pole owners is calculated under the following formula:
[GRAPHIC] [TIFF OMITTED] TR17MY00.005

    Although a one to one matching of tax elements from Part 31 to Part 
32 may not be achievable in all instances, we believe the proposed tax 
element formula will provide reasonable results in an expeditious 
manner.
5. The Rate of Return Element
    24. The rate of return element is currently taken from the rate of 
return authorized for the utilities' intrastate services, but many 
states are moving

[[Page 31274]]

away from this type of regulation. The Commission has adopted an annual 
rate of return for the interstate access services of local exchange 
carriers of 11.25%. We affirm the continued use of the rate of return 
authorized by the state for intrastate services of the utility, when 
available; however, we will use, as a default rate of return for 
utilities when a state authorized rate is not available, the rate of 
return set by the Commission for local exchange carriers as it is 
modified from time to time, covering the appropriate period in the rate 
dispute.

VI. Formula for Determining Conduit Attachment Rates

    25. Conduits are structures that provide physical protection for 
cables and allow new cables to be added inexpensively along a route, 
without having to dig up the landscape, streets and other structures in 
the community each time a new cable is installed. A collection of 
conduits, together with their supporting infrastructure, constitutes a 
conduit system. A conduit consists of one or more ducts, which are the 
enclosures that carry the cables. Often, when cable system or 
telecommunications carriers' cables are placed in a duct, three or more 
inner ducts are inserted into the duct allowing ``one duct to be 
treated more like conduit.'' Congress authorized the Commission to 
regulate rates, terms, and conditions for pole attachments in ducts and 
conduits under section 224 which states:

    * * * 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 duct or conduit capacity, which is 
occupied by the pole attachment, by the sum of the operating 
expenses and actual capital costs of the utility attributable to the 
entire * * * duct [or] conduit.

1. Conduit Formula Methodology

    26. We believe it is appropriate to use system-wide data for 
establishing the maximum rate for use of a conduit. Necessary data is 
available in underlying records filed by electric utilities to support 
claims in sworn FERC submissions, and only in rare instances would a 
utility lack detailed information because it has no records. Where such 
records do not exist, other sources of information may be used. 
Electric utilities have demonstrated their ability to calculate a rate 
by applying the formula. Although the conduits which comprise a conduit 
system may vary widely from urban to suburban or rural locales, we will 
use the system-wide historical cost of the conduit in the formula.

2. Factors of the Conduit Formula

    27. The first factor of the formula, Conduit Capacity, is 
determined using the following variables: The Number of Inner Ducts 
placed in the duct (if there are no inner ducts the value would be 
presumed to be two, reflecting the rebuttable presumption that not more 
than half of a duct is occupied); and the Number of Ducts in the 
conduit system (which does not include collapsed or otherwise damaged 
ducts that are not repairable). This is presumed to be the average 
number of ducts per conduit for the system.
    28. The second factor of the formula, Net Linear Cost of Conduit, 
is determined using the following additional variables: Net Conduit 
Investment (gross conduit investment less the accumulated depreciation 
and accumulated deferred taxes); and System Duct Length, the length of 
all ducts in the system, minus the length of collapsed ducts and the 
length of ducts that for other reasons are physically unable to contain 
cable. The System Duct Length may be arrived at in one of three ways: 
First, it may be obtained from available records. Second, the length of 
the conduit in the system may be multiplied by an estimated average 
number of ducts per conduit. Third, the length of all ducts in the 
system is the sum of the products of the length of each conduit times 
the number of ducts in that conduit.
    29. Calculation of the maximum rate may be simplified by using the 
presumptions and using the Net Linear Cost of a Conduit for the second 
term in the formula. The formula is:
[GRAPHIC] [TIFF OMITTED] TR17MY00.006

a. Percentage of Total Capacity Occupied
i. Total Duct or Conduit Capacity
    30. 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. 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. The record supports 
our finding that capacity in a duct or conduit that is usable for any 
of these purposes is part of the total duct or conduit capacity.
ii. Occupied Capacity, the Half-Duct Presumption
    31. Presumptions are used in the Cable Formula to expedite the 
calculations of a just and reasonable rate so that complicated surveys, 
accounting and calculations may be avoided. We retain the half-duct 
rebuttable presumption that an attachment occupies a maximum of one 
half of a duct. Communications cables may, and often do, share a duct. 
The National Electrical Safety Code requires that, where electric 
supply cables share a duct with communications cables, the cables be 
maintained by the utility. The capacity is available to other 
communications cables and is, therefore, not occupied.
    32. Some cable operators assert that even the application of the 
half duct methodology will result in rates that are unreasonably high 
in light of current iner duct technology. The term inner duct generally 
refers to small diameter (1" or 1\1/2\") pipe or tubing placed inside a 
conventional duct to allow the installation of multiple wires or 
cables, and use of inner duct is a common practice. The half duct 
presumption is rebuttable, and the presence of inner duct is adequate 
rebuttal, and we have made direct provision in the formula for that 
contingency. 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 divided by the number of inner ducts in the duct, using

[[Page 31275]]

the default presumption of capacity occupied of one-half duct, or the 
actual percentage of capacity occupied.

3. Net Linear Cost of Conduit

    33. 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 as 
discussed below.
a. Net Conduit Investment
    34. The conduit formula requires the determination of the utility's 
net linear cost of its conduit system (``Net Conduit Investment''), 
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR17MY00.007

    35. Where Gross Conduit Investment for the local exchange carrier 
consists of Part 32 Account 2441. For the electric utility, Gross 
Conduit Investment is reflected in FERC Part 101 Account 366. For local 
exchange carriers, Accumulated Depreciation (Conduit) represents the 
share of ARMIS Account 3100 that corresponds to Account 2441. For 
electric utilities, Accumulated Depreciation (Conduit) represents the 
share of FERC Account 108 that corresponds to Gross Conduit Investment 
valuations included in Account 366.
    36. The formula for calculation of the Accumulated Deferred Income 
Taxes (conduit) is:
[GRAPHIC] [TIFF OMITTED] TR17MY00.008

    Total Accumulated Deferred Income Taxes for electric utilities are 
based on FERC Account 190. Because the local exchange carrier conduit 
owner keeps conduit specific data for its accumulated deferred income 
taxes, we will allow a local exchange carrier to use that data in the 
rate calculation, as long as it is readily available.
b. System Duct Length
    37. The denominator for the Net Linear Cost of Conduit element 
within the formula is based on duct length. The net cost data is 
available from FERC reports and, although electric utilities are not 
required to report the linear footage of conduit deployed, they 
routinely produce linear footage data during state conduit rate 
proceedings. Electric utility corporate or engineering departments have 
records on installed plant. Moreover, when a utility is unable to 
obtain the requisite data, information from other sources may be used. 
A determination of the total length of duct and conduit in the system 
can be made with a precision comparable to that reached in determining 
the number of poles owned by the utility. The utility must, however, 
specify the method used for computing the duct length and must disclose 
this information to all attachers upon request.

4. Carrying Charge Rate (Conduit)

    38. The elements of the carrying charge rate are: Administrative, 
maintenance, depreciation, taxes and rate of return. The Cable Formula 
and all components, elements and accounts used to calculate a maximum 
rate for use of electric and local exchange carrier utility conduit 
systems are discussed in the Report and Order. To calculate the 
carrying charge rate, the Commission developed a formula that relates 
each of these elements to a utility's net plant investment appropriate 
to the location of the pole attachment (e.g., poles, conduit system, 
right-of-way). That formula is:
[GRAPHIC] [TIFF OMITTED] TR17MY00.009

    39. The administrative, taxes, and rate of return elements will be 
the same for use in a formula for pole attachments in conduits and 
rights-of-way as on poles. The maintenance and depreciation elements, 
with the accounts and methodologies specific to conduits, are 
delineated in the Report and Order.
a. Maintenance Element
    40. For purposes of the calculation of the maintenance element, the 
denominator is the net conduit investment which equals the sum of gross 
investment, minus accumulated depreciation related to conduit systems, 
minus accumulated deferred income taxes related to conduit systems.
i. Conduit Owned by a Local Exchange Carrier
    41. We use the following formula to determine the maintenance 
carrying charge rate element for underground conduit systems owned by a 
local exchange carrier.
[GRAPHIC] [TIFF OMITTED] TR17MY00.010


[[Page 31276]]


ii. Electric Utility Owned Conduit
    42. The formula and FERC accounts used for the maintenance element 
of the carrying charge rate for electric utility conduit owners is as 
follow:
[GRAPHIC] [TIFF OMITTED] TR17MY00.011

b. Depreciation Element
    43. We adopt our proposed formula, as modified, using LEC ARMIS 
Account 2441 and electric utility FERC Account 366 for the Gross 
Conduit Investment in calculating the depreciation element, as follows:
[GRAPHIC] [TIFF OMITTED] TR17MY00.012

VII. Final Regulatory Flexibility Act Analysis

    44. As required by the Regulatory Flexibility Act (``RFA''), an 
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in 
the Notice of Proposed Rulemaking, CS Docket No. 97-98, 62 FR 18074 
(``NPRM''). The Commission sought written public comment on the 
proposals in the NPRM including comment on the IRFA. The comments 
received are discussed below. This present Final Regulatory Flexibility 
Analysis (``FRFA'') conforms to the RFA.

1. Need for, and Objectives of, the Report and Order

    45. 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. Since then the 
Commission replaced its accounting system for telephone companies, 
creating Part 32. This created a need to advise telephone companies 
about how the new system should be used in the pole attachment formula. 
The Telecommunications Act of 1996 made pole attachment rules 
applicable to telecommunications providers. The existing pole 
attachment formula applies to them until February 8, 2001. This gave 
rise to a need to ensure that the pole attachments rules would 
appropriately accommodate these new attachers. The use of conduit by 
cable systems and had not yet been addressed in detail by the 
Commission. This needs to be done in light of the anticipated number of 
new attachers whose entry into the marketplace the Commission wishes to 
facilitate. We recognize that a significant number of new attachers 
might be small businesses.
    46. The objectives of the rules adopted herein are consistent with 
Congressional intent to provide a clear methodology to determine just 
and reasonable pole attachment rates in a manner that uses publicly 
available and verifiable data whenever possible. The objectives of the 
rules adopted herein change the formula methodology used to determine a 
just and reasonable pole attachment rate to reflect the present Part 32 
accounting system for telephone companies that replaced the former Part 
31 rules in 1988. Finally, the objectives of the rules adopted herein 
are to identify a conduit methodology that will determine the maximum 
just and reasonable rates utilities may charge cable operators and 
telecommunications carriers for pole attachments to conduit systems. 
Although our rules do not differentiate between large and small 
businesses, our use of presumptions and publicly available data in our 
methodology ensures that small businesses will not be discouraged from 
seeking recourse with the Commission against the imposition of 
unreasonable pole attachment rates.

2. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    47. Small Cable Business Association (``SCBA'') filed comments in 
response to the IRFA contained in the NPRM, and, to the extent they are 
relevant to the issues in this proceeding, we incorporate them herein 
by reference. SCBA claims in its IRFA comments that, because of the 
statutory exclusion of cooperatives from the definition of utility, 
section 224 does not minimize market entry barriers for small cable 
operators. According to SCBA, the IRFA in the NPRM fails to consider 
this issue. SCBA claims that small cable systems will be particularly 
hurt by the statutory exemption of cooperatives from the definition of 
utility because small cable systems often operate in rural areas and 
therefore necessarily attach their plant to rural telephone and 
electric cooperatives. In its Reply to the SCBA's comments, the 
National Telephone Cooperative Association responded that `` * * * the 
exemption [of cooperatives from section] 224 does not deprive SCBA 
members of available legal remedies in connection with pole attachment 
agreements negotiated with exempt electric or telephone cooperatives.'' 
We note that the SCBA does not appear to be claiming that our rules 
will disproportionately burden small cable systems, but that where our 
rules do not apply, small cable system operators will be 
disproportionately harmed. Because the exemption for cooperatives was 
set forth by Congress clearly in section 224(a)(1), the Commission is 
left no discretion to address SCBA's concerns in this regard. In 
general comments, the National Cable Television Association (``NCTA'') 
acknowledged that:

    The benefits [of the Commission's current pole attachment 
regulatory regime] are most vivid in the case of small cable 
operators. Small operators are peculiarly vulnerable to pole rent 
overcharges, because of the nature of their service areas. The 
Commission has recognized that small systems serve areas that are 
far less densely populated areas than the areas served by large 
operators. A small rural operator might serve half of the homes 
along a road with only 20 homes per mile, but might need 30 poles to 
reach those 10 subscribers. A pole rent increase creates an enormous 
push on [cable] rates, and frequently makes rural line extensions 
uneconomical. These same small operators are often the very parties 
without the budgets to litigate expensive document-intensive rate 
cases.


[[Page 31277]]


    The NCTA's comments recognize that the Commission's chosen 
methodology does not excessively burden small businesses.

3. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply

    48. 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''). For many of 
the entities described below, the SBA has defined small business 
categories through Standard Industrial Classification (``SIC'') codes.
a. Utilities
    49. Many of the decisions and rules adopted herein may have a 
significant effect on a substantial number of utility companies. 
Section 224 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 concludes that all of the following types of 
utility firms may be affected by the Commission's implementation of 
section 224.
(1) Electric Utilities (SIC 4911, 4931 & 4939)
    50. Electric Services (SIC 4911). The SBA has developed a 
definition for small electric utility firms. The Census Bureau reports 
that a total of 1379 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 reports that 447 of the 1379 firms listed 
had total revenues below five million dollars.
    51. Electric and Other Services Combined (SIC 4931). The SBA has 
classified this entity as a utility whose business is less than 95% 
electric 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.
    52. Combination Utilities, Not Elsewhere Classified (SIC 4939). The 
SBA defines this utility as 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)
    53. Natural Gas Transmission (SIC 4922). The SBA's definition of a 
natural gas transmitter is an entity that 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.
    54. Natural Gas Transmission and Distribution (SIC 4923). The SBA 
has classified this entity as a utility that 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 
distributor 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.
    55. Natural Gas Distribution (SIC 4924). 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.
    56. Mixed, Manufactured, or Liquefied Petroleum Gas Production and/
or Distribution (SIC 4925). The SBA has classified this entity as a 
utility that 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.
    57. Gas and Other Services Combined (SIC 4932). 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)
    58. 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 3065 of the 3169 firms listed had total revenues below five 
million dollars.
(4) Sanitary Systems (SIC 4952, 4953 & 4959)
    59. Sewerage Systems (SIC 4952). 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.
    60. Refuse Systems (SIC 4953). The SBA defines a firm in the 
business of refuse as an establishment whose

[[Page 31278]]

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 2287 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 1908 of 
the 2287 firms listed had total revenues below six million dollars.
    61. Sanitary Services, Not Elsewhere Classified (SIC 4959). The SBA 
defines these firms as engaged in sanitary services. The Census Bureau 
reports that a total of 1214 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 1173 of the 1214 firms listed 
had total revenues below five million dollars.
(5) Steam and Air Conditioning Supply (SIC 4961)
    62. 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)
    63. 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, a small 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)
    64. Many of the decisions and rules adopted herein may have a 
significant effect on a substantial number of small telephone 
companies. The SBA has defined a small business for SIC code 4813 
(Telephone Communications, except Radiotelephone) to be a small entity 
when it has no more than 1500 employees. The Census Bureau reports 
that, at the end of 1992, there were 3497 firms engaged in providing 
telephone services, as defined therein, for at least one year. This 
number contains a variety of different categories of carriers, 
including local exchange carriers (``LECs''), interexchange carriers 
(``IXCs''), competitive access providers (``CAPs''), cellular carriers, 
mobile service carriers, operator service providers, pay telephone 
operators, personal communications service (``PCS'') providers, covered 
SMR providers and resellers. Some of those 3497 telephone service firms 
may not qualify as small entities or small incumbent LECs because they 
are not ``independently owned and operated.'' We therefore conclude 
that fewer than 3497 telephone service firms are small entity telephone 
service firms or small incumbent LECs that may be affected by the 
Report and Order. Below, we estimate the potential number of small 
entity telephone service firms or small incumbent LEC's that may be 
affected by the rules adopted herein in this service category.
(1) Wireline Carriers and Service Providers
    65. The SBA has developed a definition of small entities for 
telephone communications companies other than radiotelephone (wireless) 
companies. The Census Bureau reports that, there were 2321 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 no more than 1500 
persons. Of the 2321 non-radiotelephone companies listed by the Census 
Bureau, 2295 were reported to have fewer than 1000 employees. Thus, at 
least 2295 non-radiotelephone companies that might qualify as small 
entities or small incumbent LECs, or small entities based on these 
employment statistics. Although some of these carriers are likely 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 
2295 small entity telephone communications companies other than 
radiotelephone companies that may be affected by the decisions or rules 
adopted in the Report and Order.
(2) Local Exchange Carriers
    66. Neither the Commission nor SBA has developed a definition of 
small providers of local exchange 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 LECs nationwide 
appears to be the data that the Commission publishes annually in its 
Telecommunications Industry Revenue report, regarding the 
Telecommunications Relay Service (``TRS''). According to ``TRS 
Worksheet'' data released in November 1997, there are 1371 companies 
reporting that they categorize themselves as LECs. Although some of 
these carriers are likely not independently owned and operated, or have 
more than 1500 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 1371 small incumbent LECs that may be 
affected by the rules adopted herein.
(3) Interexchange Carriers
    67. Neither the Commission nor SBA has developed a definition of 
small entities specifically applicable to providers of interexchange 
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 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, 143 companies reported that they were engaged in the 
provision of interexchange services. Although some of these carriers 
are likely not independently owned and operated, or have more than 1500 
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 143 small entity IXCs that may be affected by the 
decisions and rules adopted in the Report and Order.
(4) Competitive Access Providers
    68. Neither the Commission nor SBA has developed a definition of 
small entities specifically applicable to providers of competitive 
access 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

[[Page 31279]]

CAPs nationwide of which we are aware appears to be the data that we 
collect annually in connection with the TRS Worksheet. According to our 
most recent data, 109 companies reported that they were engaged in the 
provision of competitive access services. Although some of these 
carriers are likely not independently owned and operated, or have more 
than 1500 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 109 small entity CAPs that may be affected by 
the decisions and rules adopted herein.
(5) Cellular Service Carriers
    69. 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 4812). 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 Worksheet. The TRS Worksheet places cellular licensees and 
Personal Communications Service (``PCS'') licensees in one group. 
According to the most recent data, there are 804 carriers reporting 
that they categorize themselves as either PCS or cellular carriers. 
Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1500 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 804 small entity cellular service carriers that may be 
affected by the decisions and rules adopted in the Report and Order.
(6) Mobile Service Carriers
    70. 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 (SIC 4813). 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 Worksheet. According to our most recent 
data, 172 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 1500 
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 172 small entity mobile service carriers that may be affected by 
the decisions and rules adopted in the Report and Order.
(7) Broadband Personal Communications Services (``PCS'') Licensees
    71. The broadband PCS spectrum is divided into six frequency blocks 
designated A through F, and the Commission has held auctions for each 
block. The Commission has defined ``small entity'' for Blocks C and F 
as an entity that has average gross revenues of less than $40 million 
in the three previous calendar years. For Block F, an additional 
classification for ``very small business'' was added and is defined as 
an entity that, together with their affiliates, has average gross 
revenues of not more than $15 million for the preceding three calendar 
years. These regulations defining ``small entity'' in the context of 
broadband PCS auctions has been approved by the SBA. No small 
businesses within the SBA-approved definition bid successfully for 
licenses in Blocks A and B. There were 90 winning bidders that 
qualified as small entities in the Block C auction. A total of 93 small 
and very small business bidders won approximately 40% of the 1479 
licenses for Blocks D, E, and F. However, licenses for blocks C through 
F have not been awarded fully, therefore there are few, if any, small 
businesses currently providing PCS services. Based on this information, 
we conclude that the number of broadband PCS licensees will include the 
90 winning C Block bidders and the 93 qualifying bidders in the D, E, 
and F blocks, for a total of 183 small PCS providers as defined by the 
SBA and the Commission's auction rules. We note that the TRS Worksheet 
data track PCS licensees in the reporting category ``Cellular or 
Personal Communications Service Carrier.'' As noted supra in the 
paragraph regarding cellular carriers, according to the most recent 
data, there are 804 carriers reporting that they place themselves in 
this category.
(8) Specialized Mobile Radio (``SMR'') Licensees
    72. Pursuant to 47 CFR 90.814(b)(1) and 90.912(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. The rules adopted in the Report and 
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 entities which may be affected by the decisions and 
rules adopted in the Report and Order. We note that the TRS Worksheet 
data track SMR licensees in the reporting category ``Paging and Other 
Mobile Carriers.'' According to the most recent data, there are 172 
carriers, including SMR carriers, reporting that they place themselves 
in this category.
    73. In April 1997, the Commission held auctions for geographic area 
licenses in the 900 MHz SMR band. There were 60 winning bidders that 
qualified as small entities in the 900 MHz auction. Based on this 
information, we conclude that the number of 900 MHz geographic area SMR 
licensees affected by the rules adopted in the Report and Order 
includes these 60 small entities. In December 1997, the Commission also 
held auctions for the 525 licenses for the upper 200 channels in the 
800 MHz SMR band. There were 10 winning bidders that qualified as small 
entities in that auction. Based on this information, we conclude that 
the number of geographic area SMR licensees that may be affected by the 
rules adopted in the Report and Order also includes these 10 small 
entities. 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 1000 employees and 
that no reliable estimate

[[Page 31280]]

of the number of prospective 800 MHz licensees for the lower 230 
channels can be made, we conclude, for purposes of this FRFA, that some 
or all of the licenses could conceivably be awarded to small entities 
that may be affected by the decisions and rules adopted in the Report 
and Order.
(9) Resellers
    74. 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 Worksheet. According to our most recent data, 339 
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 1500 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 339 
small entity resellers that may be affected by the decisions and rules 
adopted in the Report and Order.
c. Wireless (Radiotelephone) Carriers (SIC 4812)
    75. Pursuant to the terms of the 1996 Act, wireless carriers are 
entitled to affix their equipment to utility poles with rates 
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 1176 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 no more than 1500 persons. The Census Bureau also 
reported that 1164 of those radiotelephone companies had fewer than 
1000 employees. Thus, even if all of the remaining 12 companies had 
more than 1500 employees, there would still be 1164 radiotelephone 
companies that might qualify as small entities if they are 
independently owned and operated. Although some of these carriers are 
likely 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 1164 small entity radiotelephone companies that may be 
affected by the rules adopted herein.
d. Cable System Operators (SIC 4841)
    76. The 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 1423 such cable and other 
pay television services generating less than $11 million in revenue.
    77. 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. Based on our most recent 
information, we estimate that there were 1439 cable systems that 
qualified as small cable system operators at the end of 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 1439 small entity cable system 
operators that may be affected by the decisions and rules adopted in 
the Report and Order.
    78. 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 one percent of 
all subscribers in the United States and is not affiliated with any 
entity or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission 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. Based on 
available data, we find that the number of cable systems serving 
617,000 subscribers or less totals 1450. 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.
e. Municipalities
    79. The term ``small governmental jurisdiction'' is defined as 
``governments of * * * districts, with a population of less than 
50,000.'' 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 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.

4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    80. The rules adopted in the Report and Order may require a change 
in certain recordkeeping requirements for conduit systems. A utility 
will now have to maintain specific records relating to the number of 
linear meters, or feet, of conduit for the purpose of determining the 
net cost of conduit and the amount of conduit linear measurement in 
which a pole attachment exists. Although this requirement affects both 
large and small businesses equally, we believe that through the use of 
presumptions, specific accounts and publicly available data in our 
methodology, we have avoided a more extensive regulatory scheme which 
might have burdened small entities. We conclude that our rules will not 
disproportionately burden small entities.

5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    81. Section 703 of the 1996 Act amended section 224 in several 
important ways to provide access to and rate regulation for pole 
attachments by cable operators and telecommunications carriers in order 
that they might compete in the market place to provide their respective 
services. The 1996 Act established a pole attachment rate methodology 
for telecommunications carriers that would not become effective

[[Page 31281]]

until February 8, 2001. Until that time, pole attachments by 
telecommunications carriers will be regulated in the same manner as 
pole attachment rates for cable operators under section 224(d). Prior 
to the 1996 Act, access to pole attachments was available only to cable 
operators and only under their franchise pursuant to section 621. With 
the legislative expansion of access and rate regulation, small entities 
have greater opportunity to develop the infrastructure necessary to 
compete in the cable and telecommunications marketplaces. We have been 
mindful to maintain simplicity whenever possible, and to provide 
methodologies consistent with availability to publicly verifiable data. 
In the NPRM, we sought comment to re-evaluate the formula methodologies 
used or proposed, to update our rules for accounting used in the 
formulas, and to provide a methodology for determining just and 
reasonable rates for pole attachments in conduit.
    82. In accordance with the RFA, the Commission has endeavored to 
minimize significant impact on small entities. To minimize the burden 
on utility pole owners, including those that qualify as small entities, 
and to promote certainty and efficiency in determining the pole 
attachment rate for cable operators and telecommunications carriers, we 
have maintained our formula presumptions, including our one-foot 
presumption of space occupied by a pole attachment, and the presumptive 
amount of usable space on a pole. We have adopted a conduit methodology 
based on publicly available data and a half-duct presumption of 
capacity occupied by a pole attachment in a conduit system, to simplify 
the process of determining a just and reasonable pole attachment rate 
and to provide certainty for small entities preparing to enter the 
competitive marketplace. We have formalized the use of part 32 
accounting for LECs. We have consolidated all formula elements, and 
accounts specified for use in the formulas, in this one document in 
order to provide ease of application by all parties.
    83. Report to Congress: The Commission will send a copy of the 
Report and Order, including this FRFA, in a report to be sent to 
Congress pursuant to the Small Business Regulatory Enforcement Fairness 
Act of 1996, see 5 U.S.C. 801(a)(1)(A). A copy of the Report and Order 
and this FRFA (or summary thereof) will also be published in the 
Federal Register, see 5 U.S.C. 604(b), and will be sent to the Chief 
Counsel for Advocacy of the Small Business Administration.

VIII. Paperwork Reduction Act of 1995 Analysis

    84. The requirements adopted in the Report and Order have been 
analyzed with respect to the Paperwork Reduction Act of 1995 (the 
``1995 Act'') and found to impose modified information collection 
requirements on the public. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public to take 
this opportunity to comment on the information collection requirements 
contained in the Report and Order, as required by the 1995 Act. Public 
comments are due July 17, 2000. Comments should address: (1) whether 
the proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information shall have practical utility; (2) the accuracy of the 
Commission's burden estimates; (3) ways to enhance the quality, 
utility, and clarity of the information collected; and (4) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.
    85. As stated above, written comments by the public on the modified 
information collection requirements are due July 17, 2000. Comments on 
the information collections contained herein should be submitted to 
Judy Boley, Federal Communications Commission, Room 1-C804, 12th 
Street, SW, Washington DC 20554, or via the Internet at [email protected]. 
For additional information on the information collection requirements, 
contact Judy Boley at 202-418-0214 or via the Internet at 
[email protected].

IX. Ordering Clauses

    86. 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.
    87. Section 1.1402 of the Commission's rules, as amended in the 
Rule Changes, will become effective June 16, 2000. Sections 1.1404 and 
1.1409, as amended in the Rule Changes, contain information collection 
requirements that have not been approved by the Office of Management 
and Budget. The Commission will publish a document in the Federal 
Register announcing the effective date of these sections.
    88. The Commission's Office of Media Relations, Reference 
Operations Division, SHALL SEND a copy of this Report and Order, 
including the Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 1

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

Federal Communications Commission.
Magalie Roman Salas,
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 is revised to read as follows:

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


    2. Amend Sec. 1.1402 to revise paragraphs (c), (i), (j) and (l) and 
add paragraph (n) to read as follows:


Sec. 1.1402  Definitions.

* * * * *
    (c) With respect to poles, the term usable space means the space on 
a utility pole above the minimum grade level which can be used for the 
attachment of wires, cables, and associated equipment, and which 
includes space occupied by the utility. With respect to conduit, the 
term usable space means capacity within a conduit system which is 
available, or which could, with reasonable effort and expense, be made 
available, for the purpose of installing wires, cable and associated 
equipment for telecommunications or cable services, and which includes 
capacity occupied by the utility.
* * * * *
    (i) The term conduit means a structure containing one or more 
ducts, usually placed in the ground, in which cables or wires may be 
installed.
    (j) The term conduit system means a collection of one or more 
conduits together with their supporting infrastructure.
* * * * *
    (l) With respect to poles, the term unusable space means the space 
on a utility pole below the usable space, including the amount required 
to set the depth of the pole.
* * * * *

[[Page 31282]]

    (n) The term inner-duct means a duct-like raceway smaller than a 
duct that is inserted into a duct so that the duct may carry multiple 
wires or cables.

    3. Amend Sec. 1.1404 to remove paragraph (k), and redesignate 
paragraphs (l), (m), and (n) as (k), (l), and (m), respectively; and 
revise paragraphs (g), (h), and the third sentence of paragraph (j) to 
read as follows:


Sec. 1.1404  Complaint.

* * * * *
    (g) For attachments to poles, where it is claimed that either a 
rate is unjust or unreasonable, or a term or condition is unjust or 
unreasonable and examination of such term or condition requires review 
of the associated rate, the complaint shall provide data and 
information in support of said claim.
    (1) The data and information shall include, where applicable:
    (i) The gross investment by the utility for pole lines;
    (ii) The investment in crossarms and other items which do not 
reflect the cost of owning and maintaining poles, if available;
    (iii) The depreciation reserve from the gross pole line investment;
    (iv) The depreciation reserve from the investment in crossarms and 
other items which do not reflect the cost of owning and maintaining 
poles, if available;
    (v) The total number of poles:
    (A) Owned; and
    (B) Controlled or used by the utility. If any of these poles are 
jointly owned, the complaint shall specify the number of such jointly 
owned poles and the percentage of each joint pole or the number of 
equivalent poles owned by the subject utility;
    (vi) The total number of poles which are the subject of the 
complaint;
    (vii) The number of poles included in paragraph (g)(i)(vi) of this 
section that are controlled or used by the utility through lease 
between the utility and other owner(s), and the annual amounts paid by 
the utility for such rental;
    (viii) The number of poles included in paragraph (g)(i)(vi) of this 
section that are owned by the utility and that are leased to other 
users by the utility, and the annual amounts paid to the utility for 
such rental;
    (ix) The annual carrying charges attributable to the cost of owning 
a pole. These charges may be expressed as a percentage of the net pole 
investment. With its pleading, the utility shall file a copy of the 
latest decision of the state regulatory body or state court which 
determines the treatment of accumulated deferred taxes if it is at 
issue in the proceeding and shall note the section which specifically 
determines the treatment and amount of accumulated deferred taxes.
    (x) The rate of return authorized for the utility for intrastate 
service. With its pleading, the utility shall file a copy of the latest 
decision of the state regulatory body or state court which establishes 
this authorized rate of return if the rate of return is at issue in the 
proceeding and shall note the section which specifically establishes 
this authorized rate and whether the decision is subject to further 
proceedings before the state regulatory body or a court. In the absence 
of a state authorized rate of return, the rate of return set by the 
Commission for local exchange carriers shall be used as a default rate 
of return;
    (xi) The average amount of usable space per pole for those poles 
used for pole attachments (13.5 feet may be in lieu of actual 
measurement, but may be rebutted);
    (xii) The average amount of unusable space per pole for those poles 
used for pole attachments (a 24 foot presumption may be used in lieu of 
actual measurement, but the presumption may be rebutted); and
    (xiii) Reimbursements received from CATV operators and 
telecommunications carriers for non-recurring costs.
    (2) Data and information should be based upon historical or 
original cost methodology, insofar as possible. Data should be derived 
from ARMIS, FERC 1, or other reports filed with state or federal 
regulatory agencies (identify source). Calculations made in connection 
with these figures should be provided to the complainant. The 
complainant shall also specify any other information and argument 
relied upon to attempt to establish that a rate, term, or condition is 
not just and reasonable.
    (h) With respect to attachments within a duct or conduit system, 
where it is claimed that either a rate is unjust or unreasonable, or a 
term or condition is unjust or unreasonable and examination of such 
term or condition requires review of the associated rate, the complaint 
shall provide data and information in support of said claim.
    (1) The data and information shall include, where applicable:
    (i) The gross investment by the utility for conduit;
    (ii) The accumulated depreciation from the gross conduit 
investment;
    (iii) The system duct length or system conduit length and the 
method used to determine it;
    (iv) The length of the conduit subject to the complaint;
    (v) The number of ducts in the conduit subject to the complaint;
    (vi) The number of inner-ducts in the duct occupied, if any. If 
there are no inner-ducts, the attachment is presumed to occupy one-half 
duct.
    (vii) The annual carrying charges attributable to the cost of 
owning conduit. These charges may be expressed as a percentage of the 
net linear cost of a conduit. With its pleading, the utility shall file 
a copy of the latest decision of the state regulatory body or state 
court which determines the treatment of accumulated deferred taxes if 
it is at issue in the proceeding and shall note the section which 
specifically determines the treatment and amount of accumulated 
deferred taxes.
    (viii) The rate of return authorized for the utility for intrastate 
service. With its pleading, the utility shall file a copy of the latest 
decision of the state regulatory body or state court which establishes 
this authorized rate of return if the rate of return is at issue in the 
proceeding and shall note the section which specifically establishes 
this authorized rate and whether the decision is subject to further 
proceedings before the state regulatory body or a court. In the absence 
of a state authorized rate of return, the rate of return set by the 
Commission for local exchange carriers shall be used as a default rate 
of return; and
    (ix) Reimbursements received by utilities from CATV operators and 
telecommunications carriers for non-recurring costs.
    (2) Data and information should be based upon historical or 
original cost methodology, insofar as possible. Data should be derived 
from ARMIS, FERC 1, or other reports filed with state or federal 
regulatory agencies (identify source). Calculations made in connection 
with these figures should be provided to the complainant. The 
complainant shall also specify any other information and argument 
relied upon to attempt to establish that a rate, term, or condition is 
not just and reasonable.
* * * * *
    (j) * * * A utility must supply a cable television operator or 
telecommunications carrier the information required in paragraph (g), 
(h) or (i) of this section, as applicable, along with the supporting 
pages from its ARMIS, FERC Form 1, or other report to a regulatory 
body, within 30 days of the request by the cable television operator or 
telecommunications carrier. * * *
* * * * *

    4. Amend Sec. 1.1409 by redesignating paragraph (e)(3) as paragraph 
(e)(4); and revise paragraphs (e)(1) and (f), and add new paragraph 
(e)(3) to read as follows:

[[Page 31283]]

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] TR17MY00.013

* * * * *
    (3) The following formula shall apply to attachments to conduit by 
cable operators providing cable services. This formula shall also apply 
to attachments to conduit 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] TR17MY00.014


If no inner-duct is installed the fraction, ``1 Duct divided by the No. 
of Inner-Ducts'' is presumed to be \1/2\.
* * * * *
    (f) Paragraphs (e)(2) and (e)(4) of this section shall become 
effective February 8, 2001 (i.e., five years after the effective date 
of the Telecommunications Act of 1996). Any increase in the rates for 
pole attachments that results from the adoption of such regulations 
shall be phased in over a period of five years beginning on the 
effective date of such regulations in equal annual increments. The 
five-year phase-in is to apply to rate increases only. Rate reductions 
are to be implemented immediately. The determination of any rate 
increase shall be based on data currently available at the time of the 
calculation of the rate increase.
* * * * *
[FR Doc. 00-11911 Filed 5-16-00; 8:45 am]
BILLING CODE 6712-01-P