[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Rules and Regulations]
[Pages 5605-5618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01182]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[GN Docket No. 09-51, WC Docket No. 07-25; FCC 15-151]


Pole Attachment Rates

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission builds on its prior efforts 
to harmonize pole attachment rates that cable and telecom service 
providers pay utility pole owners. The Communications Act of 1934, as 
amended (Act), contains two formulas for calculating pole attachment 
rates, a formula adopted in 1978 applicable to cable television systems 
solely providing cable service, and a formula adopted in 1996 
applicable to telecommunications carriers providing telecommunications 
service.

DATES: Effective April 1, 2016.

ADDRESSES: You may submit comments, identified by WC Docket No. 07-245, 
GN Docket No. 09-51 and FCC 15-151, by any of the following methods:
     Federal Communications Commission's Web site: http://apps.fcc.gov/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Jonathan Reel, Wireline Competition 
Bureau, Competition Policy Division, (202) 418-0637, or send an email 
to [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration in GN Docket No. 09-51, WC Docket No. 07-245, and 
FCC 15-151, adopted November 17, 2015 and released November 24, 2015. 
The full text of this document is available for public inspection 
during regular business hours in the FCC Reference Information Center, 
Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. It 
is available on the Commission's Web site at http://www.fcc.gov.

I. Introduction

    1. In this Order on Reconsideration (Order), the Commission builds 
on its prior efforts to harmonize pole attachment rates that cable and 
telecom service providers pay utility pole owners. The Communications 
Act of 1934, as amended (Act), contains two formulas for calculating 
pole attachment rates, a formula adopted in 1978 applicable to cable 
television systems solely providing cable service, and a formula 
adopted in 1996 applicable to telecommunications carriers providing 
telecommunications service. Following the implementation of the 1996 
Act through 2011, rates calculated using the telecom rate formula have 
typically been higher than rates calculated using the cable formula in 
similar circumstances. In 2011, the Commission revised the formulas as 
described in greater detail below to improve efficiency, reduce 
potentially excessive costs of network deployment and accelerate 
broadband buildout, and eliminate the wide disparity between the 
telecom and cable rate formulas. The 2011 revisions sought to bring the 
telecom and cable rates into parity. In the intervening time, the 
Commission has seen that its revisions did not fully achieve that 
objective. Today, the Commission takes the next logical step in 
achieving the goals set forth in 2011.
    2. As detailed below, the Commission takes these actions in 
response to a Petition for Reconsideration or Clarification in this 
proceeding. The rule revisions that the Commission adopts amend the 
Commission's rules by defining ``cost,'' for the purpose of calculating 
the rates that telecommunications carriers pay for pole attachments, as 
a percentage of fully allocated costs that will depend on whether the 
average number of attaching entities in a service area is 2, 3, 4, or 
5. The rates that attachers pay to attach to poles are currently 
determined, among other things, by whether the attacher is a ``cable 
television system solely . . . provid[ing] cable service'' or a 
``telecommunications

[[Page 5606]]

carrier providing telecommunications services.'' The Commission, in its 
2011 Report and Order and Order on Reconsideration in this proceeding 
(2011 Pole Attachment Order) 80 FR 27626-01, May 14, 2015, sought to 
bring parity to pole attachment rates calculated using the telecom or 
cable rate formula so that all attachments rates would be at or near 
the cable rate formula level. The 2011 Pole Attachment Order adopted 
cost allocators in the telecom rate formula that closely approximate 
the treatment of cost in the cable rate formula. However, these 
allocators applied only in situations where poles have 5 attaching 
entities (0.66 percent of cost) or 3 attaching entities (0.44 percent 
of cost). On June 8, 2011, the National Cable and Telecommunications 
Association (NCTA), COMPTEL, and tw telecom inc. (Petitioners) filed a 
petition for reconsideration or clarification of the rules adopted in 
the 2011 Pole Attachment Order, asking the Commission either to clarify 
that 66 percent and 44 percent are ``illustrations'' of the new rule, 
or to revise the rules to ``provide corresponding cost adjustments to 
other entity counts.''
    3. In response to NCTA's petition, and to the record developed in 
this proceeding, Commission now introduces new cost allocators for 
poles with 2 attaching entities (0.31 percent of costs) and 4 attaching 
entities (0.56 percent of cost). When the average number of attaching 
entities is a fraction, the percentage cost allocator will be located 
between the whole numbers at the point where it most closely 
approximates the cost used in the cable rate formula. This flexible 
series of cost allocators should more fully realize the intent of the 
Commission in its 2011 Pole Attachment Order to bring parity to pole 
attachment rates at the cable rate formula level. The Commission also 
adopts this definition of cost to prevent pole owners from charging 
cable operators that also provide telecommunications service (including 
broadband Internet access service) pole attachment rental rates that 
can be approximately 70 percent higher than the cable rate under its 
existing rules.
    4. The Commission additionally acts to support incentives for 
deployment of broadband facilities, particularly in rural areas, and to 
harmonize regulatory treatment between states where the Commission 
regulates the rates, terms, and conditions for pole attachments and 
states where such matters are regulated by the state. Subjecting cable 
operators to higher pole attachment rates merely because they also 
provide telecommunications services, such as broadband Internet access, 
could deter investment in states subject to Commission pole regulation, 
which would undermine the Commission's broadband deployment policy. By 
keeping pole attachment rates unified and low, the Commission furthers 
its overarching goal to accelerate deployment of broadband by removing 
barriers to infrastructure investment and promoting competition.

II. Background

    5. On April 7, 2011, in its 2011 Pole Attachment Order, the 
Commission comprehensively revised its rules governing the attachment 
of cable and telecommunications facilities to utility poles. The 2011 
Pole Attachment Order contains a comprehensive background section 
outlining pole attachment policy developments through 2011. Commission 
does not repeat that material herein. Instead, Commission incorporates 
that history by reference here, and preserves a brief background 
section outlining and describing the provisions, orders, and cases 
germane to this Order on Reconsideration.
    6. In 1978, Congress added section 224 to the Act. As established 
in 1978, section 224 directed the Commission to ensure that the rates, 
terms, and conditions of attaching cable television systems' facilities 
to utility-owned poles were just and reasonable. Section 224 also 
identified the maximum rate for pole attachments as a percentage of 
fully-allocated costs. In 1987, the U.S. Supreme Court found that the 
cable rate formula adopted by the Commission provides pole owners with 
adequate compensation, and thus does not result in an unconstitutional 
taking.
    7. The 1996 Act expanded the definition of pole attachments to 
include attachments by providers of telecommunications service, and 
granted both cable operators and telecommunications carriers an 
affirmative right of access to utility poles. The 1996 Act also 
included a separate provision for calculating a cost-based rate paid by 
telecommunications carriers--the telecom rate formula--which 
incorporates ``the cost of providing space on a pole.'' As implemented 
by the Commission, the telecom rate formula generally resulted in 
significantly higher pole rental rates than rates derived from the 
cable rate formula. The Commission concluded that cable systems that 
provided Internet access in addition to video services should continue 
to pay the cable rate; that conclusion was reversed on appeal but later 
upheld by the Supreme Court.
    8. In the intervening years, the Commission considered a variety of 
possible reforms to its pole attachment regulations in light of their 
importance to the deployment of communications networks. The Commission 
issued a Notice of Proposed Rulemaking in 2007, to respond to petitions 
for rulemaking regarding pole access and incumbent LEC pole attachment 
issues, and to seek comment on pole rate issues. In 2010, in response 
to a directive in the American Recovery and Reinvestment Act of 2009, 
the Commission released the National Broadband Plan (NBP), identifying 
access to rights-of-way--including access to poles--as having a 
significant impact on the deployment of broadband networks. 
Accordingly, the NBP included several recommendations regarding pole 
attachment access, enforcement, and pricing policies to further advance 
broadband deployment. Following on the recommendations in the NBP, in 
its 2010 Further Notice the Commission sought comment on a variety of 
measures to speed access to poles and make pole rental rates as low and 
close to uniform as possible consistent with section 224 of the Act.
    9. In the 2011 Pole Attachment Order, the Commission sought, in 
pertinent part, to significantly reform its telecom rate regulations by 
reinterpreting the ambiguous term ``cost'' in the telecom rate formula 
in section 224(e) of the Act to yield telecom attachment rates 
``lowered to more effectively achieve Congress' goals under the 1996 
Act to promote competition and `advanced telecommunications capability' 
by both wired and wireless providers by `remov[ing] barriers to 
infrastructure investment.' '' In particular, the Commission sought to 
``balance the goals of promoting broadband [deployment] . . . with the 
historical role that pole rental rates have played in supporting the 
investment in pole infrastructure.''
    10. In order to promote broadband while ensuring that attaching 
entities continue to support the poles on which they depend, the 2011 
Pole Attachment Order adopted alternative methods for measuring cost, 
and provided that the method producing the higher rate is the one the 
parties use. Utilities thus receive the benefit of any difference 
between the methods. In this way, the Commission recognizes that 
telecommunications attachers have historically contributed to the 
capital costs of the pole network, and that the new telecom rate should 
not ``unduly burden [utility] ratepayers.'' Balancing the Commission 
decided under the first

[[Page 5607]]

of two acceptable methodologies to ``allow the pole owner to charge a 
monthly pole rental rate that reflects some contribution to capital 
costs'' while also reducing the telecom rate. The Commission settled on 
an approach that defines costs ``in terms of a percentage of the fully-
allocated costs'' of the pole--specifically, 66 percent of fully-
allocated costs in urban areas and 44 percent in non-urban areas. This 
measure of cost produces a rate that the Commission expected, based on 
the premise that the Commission's presumptive number of attachers would 
not be rebutted, ``[would], in general, approximate the cable rate'' 
and thereby promote network investment and broadband deployment.
    11. The Commission also established a second, alternative measure 
of cost that utilities may use. This alternative approach is based on 
the principle of ``cost causation,'' under which the ``customer--the 
cost causer--pays a rate that covers'' the costs for which it is 
``causally responsible.'' Under this approach, a pole owner may recover 
its administrative and maintenance costs through the telecom rate, but 
not capital costs other than those associated with make-ready expenses. 
The Commission also noted that capital costs caused by a 
telecommunications attacher have long been recovered through make-ready 
charges, which ``the utility itself sets'' without regard to ``any 
mandatory rate formula set by the Commission.'' Other capital costs 
(i.e., rate of return, taxes, and depreciation) are properly excluded 
under a cost-causation approach because the pole owner would have 
incurred those costs ``regardless of the demand for attachments.'' 
Although the ``percentage of fully-allocated costs'' measure of cost 
discussed above will produce a higher telecom rate ``in most cases,'' 
if the cost causation-based approach yields a higher rate, utilities 
are allowed to charge up to that rate.
    12. On February 26, 2013, the U.S. Court of Appeals for the D.C. 
Circuit (D.C. Circuit) rejected utilities' challenge to the 
Commission's action to bring the traditionally higher telecom rate more 
in line with the cable rate, concluding that ``[b]ecause the 
Commission's methodology is consistent with the unspecified cost terms 
contained in section 224(e), and the Commission's justifications are 
reasonable, the revision [to the telecom rate formula] warrants 
judicial deference.'' In particular, the court observed that section 
224(e) is ``less specific'' than section 224(d) in prescribing how the 
statutory rate formula should be implemented. The court agreed with the 
Commission that ``the term `cost' in section 224(e)(2) and (3) is 
necessarily ambiguous, and could thus `yield a range of rates from the 
existing fully-allocated cost approach at the high end to a rate closer 
to incremental cost at the low end.''' The D.C. Circuit thus affirmed 
the Commission's interpretation and implementation of section 224(e).
    13. On June 8, 2011, Petitioners filed the NCTA Petition, seeking 
reconsideration or clarification of the newly adopted cost allocation 
rule. The NCTA Petition points out that, when paired with the 
Commission's presumptive numbers of attachers (5 in urbanized and 3 in 
non-urbanized areas), the 66 percent and 44 percent cost allocators 
almost exactly reproduce the 7.4 percent of costs used as an input in 
the cable rate formula. The Petitioners report, however, that pole 
owners in fact often rebut the Commission's presumptions with much 
lower average numbers. For example, if the owner rebuts the urban 
presumption (5 attaching entities) with an actual count average of 2.6 
attaching entities, the telecom rate can be as much as 70 percent 
higher than the cable rate. To ``achieve the Commission's goal of 
providing pole attachment rates that are close to uniform as possible, 
and to ensure that all attachers contribute similar costs to pole 
owners,'' the Petitioners ask the Commission to address this gap 
between the intended effect of the cost allocators and their function 
as applied by ceasing to distinguish between urbanized and non-
urbanized areas.
    14. Specifically, the Petitioners ask the Commission either to 
clarify that 66 percent and 44 percent are mere illustrations of the 
new rule, or to revise the rule to ``provide corresponding cost 
adjustments to other entity counts.'' The NCTA Petition presents a 
model rule with additional cost allocators for 4 and 2 attachments, 
each of which aligns costs with the Commission's cable rate formula as 
effectively as the current rule does for the Commission's presumptive 
averages of 5 urbanized and 3 non-urbanized attachments. In service 
areas where the number of attaching entities is not a whole number, 
petitioners' proposed cost allocator would be interpolated from the 
allocators of the nearest whole numbers of attaching entities. On June 
20, 2011, the Commission sought comment on the NCTA Petition.
    15. On February 26, 2015, the Commission adopted the Open Internet 
Order, which, among other things, concluded that ``retail broadband 
Internet access service is best understood today as an offering of a 
`telecommunications service.' '' The Open Internet Order made clear 
that it did ``not itself require any party to increase the pole 
attachment rates it charges to attachers providing broadband Internet 
access service.'' A possible interpretation of the Order, however, 
could be that cable systems that also provide broadband Internet access 
service and previously were subject to the cable rate formula are now 
subject to the telecom rate formula. In the Open Internet Order, the 
Commission noted that Petitioners had already expressed concern that 
revisions to the telecom formula only fulfilled the Commission's 
expressed intent in the limited circumstances when there are either 5 
or 3 attaching entities on a pole. The Commission stated in the Open 
Internet Order that, ``[t]o the extent that there is a potential for an 
increase in pole attachment rates for cable operators that also provide 
broadband Internet access service, we are highly concerned about its 
effect on the positive investment incentives that arise from new 
providers' access to pole infrastructure.'' In short, the Commission 
made plain that it took seriously parties' concerns that 
reclassification could have unintended consequences for pole attachment 
rates, and that this Petition might present an effective vehicle for 
giving the issue a closer look. In light of this development, parties 
were asked to refresh the record with regard to the NCTA Petition.

III. Discussion

    16. The Commission adopts the Petitioners' proposal to broaden the 
use of cost allocators in the telecom rate formula. Specifically, the 
Commission adds cost allocators for poles with 2 and 4 attaching 
entities to augment the current cost allocators that target poles with 
3 and 5 attaching entities. The Commission also provides that, for 
fractional attaching-entity averages, cost allocators are to be 
interpolated from the whole-number cost allocators. The Commission 
takes this step to further its goal of promoting consistent, cross-
industry attachment rates that encourage deployment and adoption of 
broadband Internet access services by fulfilling the Commission's 
intent, expressed clearly in 2011 and upheld in court in 2013, to bring 
cable and telecom rates for pole attachments into parity at the cable-
rate level.

A. The Petitioner's Proposal Solves the Problem of Rate Disparity

    17. The Petitioners maintain, and the Commission agrees, that the 
cost allocators adopted in the 2011 Pole Attachment Order perform as 
intended,

[[Page 5608]]

but only if the actual average numbers of attaching entities coincide 
with the Commission's presumptive average numbers of attaching 
entities. As NCTA recognizes, the cost allocators in the 2011 Pole 
Attachment Order reflect and embody these presumptive averages. When 
0.66 percent and .044 percent of fully-allocated costs are applied in 
tandem with the Commission's presumptions of 5 and 3 attaching entities 
in urban and non-urban areas, respectively, the results approximate 
cable rate formula outcomes, as intended.
    18. There is widespread agreement that the real average number of 
attaching entities is regularly far lower than the Commission's 
presumptions, and that this disparity causes rates calculated with the 
telecom rate formula to be around 70 percent higher than rates 
calculated with the cable rate formula. NCTA also reports that, in 
reality, pole owners routinely rebut the Commission's presumptions with 
averages such as 2.6 attaching entities. No commenter disputes NCTA's 
claim or alleges that the number ``2.6'' is an outlier. Verizon reports 
several similarly frequent rebuttals to attacher numbers below three. 
Averages of 2.6 attaching entities rebut both the urban and non-
urbanized presumptions, which casts doubt not only on the credibility 
of the presumptions, but on the validity of the underlying urbanized/
non-urbanized distinction as well. Rebuttals that consistently show 
lower average numbers based on tracking actual attachments may reflect 
the fact that, under its rules, service territories count as ``urban'' 
if any part of them is urban. This approach dilutes the density of 
these nominally urban areas, and undercuts the Commission's original 
assumption that such areas would likely have a higher average of 
attaching entities.
    19. Recognizing that the rate reforms of 2011 have failed to align 
the results of the two pole attachment rate formulas as fully as 
intended, the Commission adopts the Petitioners' proposal as a template 
for corrective measures. By introducing new cost allocators of 0.31 
percent and 0.56 percent for poles with 2 and 4 attaching entities 
respectively, with interpolated allocators between the closest whole 
numbers for fractional averages, the Commission brings parity to pole 
attachment rates at the cable rate formula level. The Petitioners' 
proposed solution does not require us to revisit the presumptions 
themselves; these continue to perform as intended with the 66% and 44% 
cost allocators that the Commission adopted in 2011. The Commission 
therefore retains the presumptions for the same reasons the Commission 
adopted them in 2011: to ``expedite the process'' and to help utilities 
``avert the expense'' of applying demographic categories. Broadening 
the effect of the cost allocation system as the NCTA Petition proposes 
will greatly reduce the effect of, and the need for, the rebuttals. 
This approach to defining ``cost'' for purposes of the telecom rate 
formula achieves results that are consistently close to the cable rate. 
The new system also satisfies the fundamental purposes for using 
presumptions: To reduce reporting and recordkeeping requirements, to 
minimize administrative burdens, and to provide a level of 
predictability and efficiency in calculating the appropriate rate.

B. The Reasons To Revise the Cost Allocation System

    20. The Commission adopts this multiple cost-allocator approach for 
the same reasons that motivated the initial (but ultimately incomplete) 
reforms in 2011: To advance the deployment and adoption of broadband 
Internet access, which remains a fundamental policy goal that guides 
its implementation of the telecom rate formula. The Commission 
recognizes that pole rental rates are but one of many considerations 
underlying marketplace deployment decisions. That said, the Commission 
promotes broadband deployment on numerous fronts, and has sought public 
comment and advice on other measures to advance this overarching 
policy. When discussing pole attachments policy, the Commission refers 
consistently to incentives for investment. By the same token, it 
remains the Commission's policy to minimize disincentives to 
investment, including artificially high pole attachment rates. Lower 
pole rental rates serve to encourage broadband investment, and 
Commission continues to use its section 224 authority as one of the 
tools it brings to bear to on its broadband goals. The Commission also 
continues to support and subsidize deployment of broadband Internet 
access in high-cost areas. In contrast, increased pole attachment rates 
would ultimately be recovered from consumers, and could lead some 
consumers to cut back or even discontinue their service. Thus, the 
Commission views pole attachment rate reform as part of the 
Commission's fundamental mission to advance the availability and 
adoption of broadband in America.
    21. The Commission also intends this action to avoid the unintended 
consequence of higher pole attachment rates for cable providers that 
also offer broadband Internet access service, in those cases where the 
utility rebuts the Commission's attaching party presumptions. Comcast, 
for example, asserts that ``[a]bsent grant of the NCTA/COMPTEL 
Petition, a costly and time consuming process will ensue whereby 
utilities will seek to rebut the Commission's attaching entity 
presumptions, and cable operator attachers will then seek to refute the 
utilities' attachment studies.'' And NCTA observes that, because most 
cable operators may become subject to the telecom rate, and large 
numbers of associated attachments are implicated, utilities would have 
increased incentives to rebut the Commission's presumed number of 
attachers in areas where they had not done so previously. As a result, 
this could lead to pole rate increases for both cable operators and 
pre-existing telecommunications carriers in those areas. In the Open 
Internet Order, the Commission acknowledged that reclassification could 
lead to attempted increases in pole attachment rates, and stated its 
intention to avoid such an increase. Aligning rates produced by the two 
rate formulas forestalls this potential increase.
    22. The Commission also is concerned that unless it closes what one 
commenter refers to as the ``telecom formula loophole,'' the resulting 
rate disparity would, more broadly, frustrate the Commission's policy 
goals by artificially and incrementally deterring investment in states 
subject to Commission pole regulation in favor of investment in areas 
with more favorable state-regulated pole attachment regimes. As the 
Commission previously has observed, ``[c]ommenters report that many 
[states that have elected to exercise jurisdiction over pole 
attachments in lieu of the Commission] apply a uniform rate for all 
attachments used to provide cable and telecommunications services, and 
have done so by establishing a rate identical or similar to the 
Commission's cable rate formula.'' Thus, if the Commission's telecom 
rate frequently yielded rates materially above the cable rate, 
telecommunications service providers that operate in multiple states or 
are deciding where to enter the marketplace, would have an artificial 
disincentive to invest in states governed by the Commission's 2011 
telecom rate rule relative to states that established a uniform rate 
identical or similar to the Commission's cable rate formula. Although 
the Commission's action in this Order will not guarantee complete

[[Page 5609]]

state-to-state uniformity, seeking to address artificial marketplace 
distortions in the manner that it does here, rather than via a higher 
telecom rate, accords with the Commission's broadband mandate and its 
overall policy balancing in this context.
    23. Moreover, the record developed here demonstrates that pole 
owners routinely rebut the Commission presumptions with averages close 
to 2.6 attachers. This means that the Commission's standard examples of 
telecom rates, which presuppose fully-allocated costs and use the 
Commission's presumptions, have seriously underestimated the pre-reform 
disparity between cable- and telecom-rate outcomes. In this proceeding, 
the Commission has compared estimated telecom costs of 11.2 percent in 
urban areas and 16.9 percent in non-urban areas with fixed cable costs 
of 7.4 percent. Applying the 2.6 cost allocator that the record 
supports shows that the telecom rate formula cost estimate would have 
been 19.1 percent for both urban and rural areas. The discrepancy 
between the presumed numbers of attachers (5 in urban areas and 3 in 
rural areas) and actual numbers of attachers used in pole owner 
rebuttals and reported in the record (often at or close to 2.6) 
illustrates the substantial problem attachers face when applying the 
rate reform of the Commission's 2011 Pole Attachment Order.
    24. Along with the forgoing policy considerations, the Commission 
continues to seek to balance the ``legitimate concerns of pole owners 
and other parties'' by preserving incentives to invest in poles and 
avoiding the imposition of an undue burden on utility ratepayers. In 
2011, the Commission ultimately concluded that the level of recovery 
provided by the cable rate best balanced its broadband deployment 
mandates and the concerns of pole owners and utility ratepayers. 
Consistent with that analysis, the Commission explains above that the 
cable rate frequently is lower than the telecom rate as it previously 
had been implemented by the Commission, and reducing the telecom rate 
to cable rate level would further numerous policy goals. The Commission 
further observed that the cable rate had not produced a ``shortage of 
pole capacity,'' and, therefore, approximating that rate in the telecom 
formula likely would not diminish pole owners' ``incentives to invest 
in poles.'' The Commission also found ``persuasive the views of 
consumer advocates . . . recommend[ing] that the cable rate `should be 
used for all pole attachments.' ''
    25. The Commission thus remains persuaded that utility cost 
recovery at the level of the cable rate best balances the relevant 
policy considerations. Consequently, the Commission rejects arguments 
that the rule revision, which will more consistently and accurately 
ensure that the Commission's policy goals are achieved, will somehow 
upset the Commission's intended balance, unfairly burden utility 
ratepayers, or undermine the sharing of infrastructure costs. Likewise, 
while some commenters observe that other aspects of the 2011 Pole 
Attachment Order put downward pressure on the revenues electric 
utilities receive from incumbent LEC attachers, the Commission already 
accounted for that likelihood in its weighing of policies and 
conclusion that it was appropriate to permit capital cost recovery at 
the same level as under the cable rate.
    26. Utilities dismiss this policy balancing on several grounds, 
none of which persuade the Commission. The Utilities Telecom Council 
(UTC) argues that pole attachment rental is insignificant compared to 
other operating costs of large cable companies. Electric Utilities 
state that capital expenditure, and not pole attachment rental, drives 
deployment, and that pole attachment rental accounts for less than 2 
percent of the cost of deploying fiber optic cable. UTC argues that 
there has been only a slow rate of broadband deployment since the 
telecom rate was adjusted in 2011, which proves the futility of 
lowering pole attachment rates, and that any cost savings from lower 
pole attachment rates have not been passed on to consumers, but rather, 
as a result of industry consolidation, have been pocketed by providers 
instead.
    27. The Commission is skeptical that sums alleged to ``unfairly and 
negatively impact utilities and their ratepayers'' are 
``insignificant'' in the context of broadband deployment. While the 
record does not include quantifiable information regarding the exact 
effect on deployment of pole attachment rates, insofar as keeping 
attachment rates reasonable for cable companies prevents them from 
shelving even a small number of projects, the Commission would not 
consider that result ``insignificant.'' There remains room for 
improvement in the rate of broadband expansion, and the Commission 
cannot afford to dismiss the importance of even potentially small 
increments. Commenters state that cable companies continue to deploy 
facilities, and Commission intend to avert any destabilization of those 
plans that might arise from a large and sudden pole attachment rate 
increase. The Commission is particularly mindful of the potential for 
harm to rural areas, which are the least served areas in the nation, 
and where the most additional pole attachments are needed to reach 
additional customers.
    28. Utilities further argue that granting the NCTA Petition would 
unfairly reduce their revenue from pole attachments. They argue that 
the 2011 Pole Attachments Order has already reduced their recovery from 
the telecommunications rate, and expect that their revenue from 
broadband-only Internet service providers will also decline. The 
Commission finds these arguments unpersuasive. Telecommunications 
carriers account for only a little more that 10 percent of attaching 
entities. Leveling their rate down to the cable rate disrupts settled 
expectations far less than leveling up the rental rate for the much 
greater number of cable attachments. Although it is true that the new 
system will tend to lower rates negotiated under the telecom rate 
formula, they will settle at the level the Commission aimed for in 
2011, when its stated goal was to ``minimize the difference in rental 
rates paid for attachments that are used to provide voice, data, and 
video services.''
    29. Utilities argue that increasing demand for pole space should 
lead to increased prices, and that any downward rate adjustment runs 
counter to economic principles. The Commission attaches no significance 
to this assertion. The express reason for the statutory imposition of 
cost-based, regulated rates is to bypass the economic principle that `` 
`public utilities by virtue of their size and exclusive control over 
access to pole lines, are unquestionably in a position to extract 
monopoly rents . . . in the form of unreasonably high pole attachment 
rates.' '' By enacting cost-based rate formulas, Congress has already 
accounted for the economics of scarcity that so favor pole owners. 
Attachment rates agreed to by broadband-only providers before 
reclassification may indeed be called into question, but that is 
because these entities are now within the ambit of Section 224, and not 
because the Commission revises the method of cost allocation used in 
the telecom rate formula.
    30. Utilities claim that ``downward pressure'' on rates ``weakens 
the predictability and timeliness of the access process'' but this 
argument makes little sense. Attachers pay (and owners recover) the 
entire cost of access through make-ready fees paid before the 
attacher's facilities are mounted on

[[Page 5610]]

poles. Because access costs have already been recovered through make-
ready fees, pole attachment rental rates are concerned solely with the 
pole owner's recovery of operating costs; they should have nothing to 
do with the ``predictability and timeliness'' of access. In any case, a 
``downward pressure'' on rates to a parity with the cable rate formula 
level is precisely the outcome that the 2011 Pole Attachment Order 
sought to achieve and that the Commission intends this new cost 
allocation system to implement.

C. The Commission Has Authority To Adopt the Revised Telecom Rate Rule

    31. The modified telecom rate rule adopted in this Order is 
consistent with section 224(e) of the Act. The fundamental purpose of 
section 224(e) is to ``ensure that a utility charges just, reasonable, 
and nondiscriminatory rates for pole attachments'' by 
telecommunications carriers used to provide telecommunications 
services. As described above, in regulating cost-based telecom 
attachment rates under section 224(e), Congress granted the Commission 
substantial discretion to implement section 224(e) based on the 
agency's policy expertise by leaving the definition of the relevant 
costs ambiguous. Employing that policy expertise, the Commission builds 
upon the underpinnings of the statutory interpretation relied upon by 
the Commission in 2011 in the telecom rate rule adopted here.
    32. The 2011 Pole Attachment Order began by identifying a range of 
reasonable rates that could result from different definitions of 
``cost'' for purposes of section 224(e). Within that range of 
permissible outcomes, the telecom rate rule ultimately adopted in 2011 
involved the comparison of the rate yielded by two calculations, with 
utilities permitted to charge the higher of the two. Section 
1.1409(e)(2)(i) specifies the first calculation, which the Commission 
anticipated would approximate the cable rate. Section 1.1409(e)(2)(ii) 
specifies the second calculation, based on a cost-causation approach.
    33. As a threshold matter, this Order leaves unaltered the section 
1.1409(e)(2)(ii) `cost-causation'-based calculation. That calculation 
still will be performed whenever the Commission's telecom rate rule is 
used, and even utility commenters concede that it does ``not do away 
with apportioning the costs among all attaching entities'' in 
accordance with section 224(e). The definition of cost for purposes of 
that provision excludes capital costs and was designed to yield a rate 
that approached the incremental cost of attachment.
    34. The question of whether, and to what extent, to allow utilities 
to go beyond the recovery permitted by the section 1.1409(e)(2)(ii) 
telecom rate calculation and recover some capital costs ultimately 
depends on a further policy evaluation. As the Commission explained in 
2011, and as the Commission reiterates above, its implementation of 
section 224 is guided in significant part by its mandate to encourage 
the deployment of broadband. That policy, if overriding other 
considerations, might counsel in favor of relying solely on the rate 
yielded by the `cost-causation' calculation in section 
1.1409(e)(2)(ii), rather than permitting higher rates as just and 
reasonable under section 224(e). But the Commission also sought--and 
continues to seek--to balance the ``legitimate concerns of pole owners 
and other parties'' by preserving incentives to invest in poles and 
avoiding the imposition of an undue burden on utility ratepayers.
    35. As described above, in 2011 the Commission adopted rules that 
it anticipated would result in a telecom rate that generally 
approximated the cable rate. In practice, however, the rule the 
Commission adopted has only poorly reflected the balancing of policy 
interests that the Commission anticipated attaining in 2011 because the 
facts on the ground differed significantly from the Commission 
presumptions upon which the 2011 rule was predicated. As a result, 
telecom rates calculated based on the Commission's rules frequently 
were higher than the levels the Commission generally sought to achieve 
as just and reasonable under section 224(e)--i.e., materially in excess 
of the cable rate. The reclassification of broadband Internet access 
service as a telecommunications service brings this shortcoming into 
greater focus. Adopting the changes to section 1.1409(e)(2)(i) proposed 
by Petitioners will bring the balance that the Commission anticipated 
achieving in 2011, which the Commission is likewise persuaded is the 
appropriate outcome today.
    36. Thus, the Commission adopts the Petitioners' proposal and 
modifies section 1.1409(e)(2)(i) of the rules by redefining the 
ambiguous term ``cost'' as a percentage of fully allocated costs that 
depends on whether the average number of attaching entities in an area 
is 2, 3, 4, or 5. The specific percentage of fully allocated costs that 
Commission adopts in each of those instances will yield a rate under 
section 1.1409(e)(2)(i) that more closely and consistently approximates 
the cable rate.
    37. Although this definition of cost is based on an integer average 
number of attachers in an area, consistent with the Commission's 
efforts to ensure that it implements section 224(e) in a ``readily 
administrable'' manner, the proposal the Commission adopts incorporates 
a mechanism to allow parties, should they so choose, to continue to 
rely on non-integer average numbers of attachers in a service area by 
interpolating from the specified cost allocators in section 
1.1409(e)(2)(i) of the rules in a manner that does not undermine the 
definition of cost adopted above. In pertinent part, section 224(e)(2) 
is focused on allocating the ``cost''--however defined--of providing 
space on a pole other than useable space. Although a given pole only 
will have an integer number of attaching entities, for administrability 
the Commission has long permitted pole attachment rates to be 
calculated based on surveys or averages of the number of attaching 
entities in the relevant service area, which has the potential to yield 
an average number of attachers that is not an integer number. The use 
of a non-integer number of attaching entities in conjunction with the 
new definition of cost adopted for areas with 2, 3, 4, or 5 average 
attaching entities in revised section 1.1409(e)(2)(i) of the rules 
would result in similar, even if not always as extensive, deviations 
from the cable rate as the Commission found to result under the version 
of the rule adopted in 2011. The Commission concludes that such 
deviation is at odds with the balancing of policy interests it seeks to 
achieve through its revisions to section 1.1409(e)(2)(i) and also 
anticipates that it would increase the likelihood of disputes. The 
Commission thus adopts the interpolation mechanism in Petitioners' 
proposal, which will leave parties free to continue using non-integer 
average number of attachers should they choose to do so, without 
undermining its ability to ensure just and reasonable rates under 
section 224(e) in an administrable manner.
    38. Insofar as the reclassification of broadband Internet access 
service results in most Commission-regulated attachments becoming 
subject to the telecom rate, that counsels in favor of its redefinition 
of cost, contrary to the claims of some commenters. The Commission 
recognizes that the 2011 Pole Attachment Order cited the marketplace 
distortions resulting from disparate telecom and cable rates as part of 
the policy rationale for the telecom rate change adopted there. As 
identified there, these distortions led to

[[Page 5611]]

competitive disparities arising from telecommunications carriers paying 
higher pole attachment rates than their cable operator competitors. The 
distortions also created disincentives for cable operators to begin 
offering advanced services that could newly subject them to the telecom 
rate. Some commenters argue that reclassification of broadband Internet 
access service, insofar as it results in most cable operators now being 
subject to the telecom rate, resolves concerns about marketplace 
distortions and leaves the Commission with little or no policy basis 
for revisiting the definition of ``cost'' to better ensure that the 
telecom rate is as low and close to uniform with the cable rate as 
possible. The Commission rejects such claims for the reasons already 
explained above. In particular, the current telecom rate could lead to 
a windfall for utilities by increasing rates for many attachments 
without any offsetting benefits to cable attachers. This not only would 
harm cable operators and their customers, but more broadly would 
undermine the Commission's broadband policies by creating artificial 
marketplace distortions and disincentives for investment. Indeed, the 
Commission made this point clear in the Open Internet Order when it 
stated, ``[t]o the extent that there is a potential for an increase in 
pole attachment rates for cable operators that also provide broadband 
Internet access service, the Commission is highly concerned about its 
effect on the positive investment incentives that [otherwise] arise 
from new providers' access to pole infrastructure.''
    39. The Commission also disagrees with the suggestions of some 
commenters that only certain types of policy considerations can form 
the basis for its interpretation and implementation of the ambiguous 
term ``cost'' in section 224(e). As the D.C. Circuit recognized in AEP, 
the Commission reasonably can rely on policy rationales in giving 
meaning to the term ``cost.'' The Commission explains above the 
specific policy rationales for the approach the Commission adopts here, 
and finds no basis to conclude that those considerations cannot form a 
sufficient justification for the interpretation of the term cost in its 
implementation of section 224(e). For example, certain commenters 
assert that there is no ``economic reason'' for the adopted approach to 
defining cost, but do not explain what they mean by an ``economic 
reason,'' or why the policy considerations discussed above, including 
the economic effects of alternative approaches to defining cost, would 
not fall within that scope. Some commenters also criticize the 
Petitioners' proposal for failing to provide a more favorable outcome 
for attachers in rural areas, but fail to explain why that is a 
necessary basis for interpreting the term ``cost.'' To the extent that 
those comments are premised on certain policy arguments relied upon by 
the Commission in 2011 as part of its explanation of the specific 
definitions of cost adopted there, the Commission finds them 
unpersuasive. The Commission finds for the reasons explained above that 
the version of section 1.1409(e)(2)(i) adopted in 2011 only poorly 
advanced the Commission's more fundamental policy objectives, and to 
better advance those fundamental policy objectives, and for the other 
policy reasons relied on in this Order, the Commission departs from its 
prior approach that relied on historical rules tied to urban/rural 
distinctions. Moreover, the Commission is not revisiting how cost is 
defined under section 1.1409(e)(2)(i) to more consistently and 
accurately yield a rate the same or very similar to the cable rate as 
an end unto itself, but because that reflects the Commission's intended 
policy balancing, and the Commission rejects suggestions that that is 
not a valid justification. More broadly, because the Commissions 
explain in detail the legal and policy basis for its adoption of 
Petitioners' proposed revision to section 1.1409(e)(2)(i) of the rules, 
it rejects general claims that adopting that proposal would be 
arbitrary and capricious.
    40. Nor does modification of the telecom rate rule render section 
224(e)(2) of the Act a nullity, as some allege. For one, the 
Commission's telecom rate rule requires a comparison of the output of 
two calculations, and as explained above, even utilities appear to 
concede that the cost-causation-based calculation in section 
1.1409(e)(2)(ii) gives meaning to section 224(e)(2). Moreover, under 
revised section 1.1409(e)(2)(i) the apportionment specified in section 
224(e)(2) is given meaning because it is only by applying that 
apportionment to the definition of ``cost'' adopted above that the 
resulting rate will closely approximate the cable rate, and thus be 
just and reasonable under the analysis above.
    41. The Commission also rejects claims that its approach to 
interpreting ``cost'' otherwise is at odds with Congressional intent 
and the text and structure of section 224. The 2011 Pole Attachment 
Order explained why the statute does not require the telecom rate 
necessarily to be higher than, or otherwise different from, the cable 
rate and the Commission finds nothing in the record here to undercut 
that analysis. The Commission acknowledges some commenters' arguments 
that section 224(e)(2) could be read to suggest that Congress 
envisioned the telecom rate varying with the number of attachers, in 
contrast to its revised approach to defining cost in section 
1.1409(e)(2)(i) of the rules, under which the resulting rate will be 
the same or very similar regardless of the number of attaching 
entities. At the same time, although section 224(e)(2) provides for 
costs to be apportioned in a manner that depends on the number of 
attachers, it left undefined what costs should be so apportioned. This 
is in contrast to section 224(d)(1), which specifies both a cost-based 
rate methodology and the defined scope of costs to be used for purposes 
of the cable rate. In particular, although, as some commenters observe, 
Congress did not simply mandate the cable rate for all attachments, 
neither did it specify a definition of cost that would require an 
outcome under section 224(e)(2) that would, in practice, always vary 
with the number of attaching entities. Congress thus permitted the 
Commission to implement section 224(e) in a manner that yielded rates 
that vary with the number of attachers--an outcome that would depart 
from the cable rate, notwithstanding the requirement in section 
224(e)(1) that the rate be not only just and reasonable but also 
``nondiscriminatory.'' But while permitting such an outcome, the 
Commission also concludes that Congress did not require such an outcome 
as mandatory given its use of the ambiguous term ``cost.''
    42. In implementing section 224(e), the Commission considers the 
broader purposes of section 224, as also informed by other statutory 
goals and mandates. As in the 2011 Pole Attachment Order, the 
Commission finds that its interpretation and implementation of section 
224(e) here advances those objectives. The Commission has concluded 
that ``[t]he purpose of Section 224 of the Communications Act is to 
ensure that the deployment of communications networks and the 
development of competition are not impeded by private ownership and 
control of the scarce infrastructure and rights-of-way that many 
communications providers must use in order to reach customers.'' This 
also is borne out by the text of section 224, which emphasizes that the 
Commission's fundamental role is to

[[Page 5612]]

ensure just and reasonable rates, terms, and conditions of access. 
Other statutory provisions likewise counsel in favor of such an 
understanding of section 224, as discussed in greater detail in the 
2011 Pole Attachment Order and above. For the reasons explained in the 
preceding discussion, the Commission concludes that the revised telecom 
rate rule it adopts is necessary to ensure just and reasonable rates 
for pole access as a backstop for when private negotiations fail. 
Because the Commission can achieve that outcome by how it defines 
``cost'' under section 224(e), while still formally giving meaning to 
all the language of that provision, the Commission concludes that its 
adopted approach reasonably implements that provision as understood in 
the context of section 224 as a whole.
    43. The Commission also is not persuaded by arguments that section 
224(e)(2) limits the costs to be borne by pole owners. As described 
above, the Commission's fundamental responsibility under section 224(e) 
is to ensure that regulated rates ``for pole attachments used by 
telecommunications carriers to provide telecommunications services'' 
are just, reasonable, and nondiscriminatory. Read in that context, the 
Commission interprets section 224(e)(2) only to govern the 
apportionment of the ``cost''--however defined--of unusable space in 
the rates pole owners charge to telecom attachers. It is true that the 
methodology used to calculate the apportionment of ``cost'' to a 
telecom attacher under section 224(e)(2) involves a calculation of what 
``all attaching entities'' would bear assuming hypothetically that they 
all bore an equal apportionment of such cost. But it does not actually 
govern the cost to be borne by entities other than telecom attachers--
whether the pole owner or other attachers.

D. The Revisions to the Telecom Rate Rule Are Procedurally Proper

    44. Adopting this change to section 1.1409(e)(2)(i) of the rules is 
procedurally proper. Following the Commission's 2010 Further Notice 
seeking comment on ``establish[ing] rental rates for pole attachments 
that are as low and close to uniform as possible, consistent with 
section 224 of the Act,'' the 2011 Pole Attachment Order revised the 
telecom rate rule in a manner that the Commission anticipated would 
reflect its balancing of policy concerns. The timely filed Petition for 
Reconsideration identified flaws in the Commission's factual 
assumptions underlying section 1.1409(e)(2)(i) of the rules as adopted 
in the 2011 Pole Attachment Order that would cause that rule, in 
practice, to only poorly reflect the Commission's intended balancing of 
policy objectives. The Petitioners thus proposed that the Commission, 
on reconsideration, revise that rule in a manner that ``increases the 
certainty that pole rates will be as close as possible to the cable 
rate, meets the Commission's intended purposes, and makes the 
calculation more readily administrable by eliminating the need to 
distinguish urbanized and non-urbanized areas.'' Given that clear nexus 
to the 2011 Pole Attachment Order, the Commission finds the request in 
the Petition for Reconsideration to be squarely within the scope of the 
order from which reconsideration is sought, and the Commission rejects 
arguments to the contrary. Furthermore, for the reasons discussed in 
the preceding section, the Commission finds merit in the Petitioners' 
arguments, and thus concludes that it is in the public interest not 
only to consider their Petition but also to grant their requested 
reconsideration.
    45. The Commission also rejects claims that additional notice and 
comment is needed before it can proceed under the theory that the 
action in this Order effectively would modify sections 1.1417(c) and 
(d) of the rules. Section 1.1417(c) specifies the Commission's 
rebuttable presumptions of 5 attaching entities in urbanized areas and 
3 attaching entities in non-urbanized areas. Section 1.1417(d) 
describes how a utility can instead establish its own presumptive 
average number of attaching entities, subject to rebuttal. As a 
threshold matter, the Commission is not persuaded by commenters' claims 
that the Petitioners' proposed revision to section 1.1409(e)(2)(i) 
would render those rules ``moot.'' Under the utilities' own theory, the 
Commission-specified presumptions in section 1.1417(c) would have 
increased, rather than diminished, significance when performing the 
section 1.1409(e)(2)(i) calculation because it would obviate the need 
for utilities to expend the effort to develop their own presumptive 
average numbers of attachers if they believe that variation in the 
number of attachers would not matter. Further, although the result of 
the calculation in section 1.1409(e)(2)(i) frequently will be higher 
than that yielded by the cost-causation-based calculation in section 
1.1409(e)(2)(ii), its rules provide for both to be performed, with the 
possibility that there will be cases where the section 1.1409(e)(2)(ii) 
calculation is controlling. The outcome under section 1.1409(e)(2)(ii) 
unquestionably does vary with the number of attaching entities, and 
thus the utilities' ability to develop their own presumptive number of 
attaching entities under section 1.1417(d) remains important where the 
cost-causation-based calculation would be, or could be, controlling.
    46. Although the Commission is not persuaded that any implications 
of its change to section 1.1409(e)(2)(i) of the rules for sections 
1.1417(c) and (d) constitute substantive rule changes, even assuming 
arguendo that they were viewed in that manner, the Commission finds 
there was adequate notice and opportunity to comment. As noted above, 
the Commission's 2010 Further Notice sought comment on ``establish[ing] 
rental rates for pole attachments that are as low and close to uniform 
as possible, consistent with section 224 of the Act,'' seeking comment 
on particular alternative approaches and variations that might be 
adopted consistent with the Commission's statutory responsibilities. 
For example, the Further Notice included requests for comment on a 
proposal to revise the telecom rate rule so that it was the higher of a 
rate equal to the cable rate or a cost-causation-based rate, including 
regarding the administrability of such an approach and how it would 
relate to other Commission policies. Flowing from that Further Notice, 
the 2011 Pole Attachment Order adopted revisions to the telecom rate 
rule, and the Petition for Reconsideration requested reconsideration of 
the resulting rule in various respects, all within the scope of the 
underlying Order. The Commission sought comment on the Petition for 
Reconsideration at the time it was filed, and provided a further 
opportunity to comment on the requested rule changes subsequent to the 
Open Internet Order. The Commission concludes that any implications for 
the continuing significance of section 1.1417(c) and (d) resulting from 
its adoption of the Petitioners' proposal should have been understood 
to be within the scope of issues subject to comment--indeed, commenters 
themselves appear to suggest that the implications for section 
1.1417(c) and (d) are a necessary and unavoidable consequence of the 
adoption of that proposal. As a result, the Commission concluded that 
even assuming arguendo that notice and comment were required regarding 
the effects of a change in section 1.1409(e)(2)(i) on the presumption 
rules in section 1.1417(c) and (d), that was satisfied here.

[[Page 5613]]

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    47. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. In addition, therefore, it does not contain 
any new or modified information collection burden for small business 
concerns with fewer than 25 employees, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).

B. Regulatory Flexibility Analysis

    48. As required by the Regulatory Flexibility Act of 1980 (RFA), 
the Commission includes in Appendix B a Supplemental Final Regulatory 
Flexibility Analysis (FRFA) relating to this Order on Reconsideration.

C. Congressional Review Act

    49. The Commission will send a copy of the Order on 
Reconsideration, including the FRFA, in a report to be sent to Congress 
and the Government Accountability Office pursuant to the Congressional 
Review Act, 5 U.S.C. 801(a)(1).

D. Final Regulatory Flexibility Analysis

    50. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA).
    51. An Initial Regulatory Flexibility Analysis (IRFA) was included 
in the Order and Further Notice in WC Docket No. 07-245 and GN Docket 
No. 09-51. The Commission sought written public comment on the 
proposals in these dockets, including comment on the IRFA. This Final 
Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

E. Need for, and Objectives of, the Proposed Rules

    52. In this Order on Reconsideration, the Commission further 
implements its policy of bringing parity to pole attachment rates at or 
near the 47 CFR 1.1409(e)(1) cable rate formula level, including rates 
that are calculated using the 47 CFR 1.1409(d)(2) telecom rate formula. 
The 2011 Pole Attachment Order adopted cost allocators in the telecom 
rate formula that were intended to closely approximate the treatment of 
cost in the cable rate formula. However, these allocators perform 
successfully only where poles have 5 attaching entities (0.66 percent 
of cost) or 3 attaching entities (0.44 percent of cost). To build on 
that limited success, the Commission now adds cost allocators for poles 
with 2 attaching entities (0.31 percent of costs) and 4 attaching 
entities (0.56 percent of cost). When the average number of attaching 
entities is a fraction, the applicable cost allocator will be 
interpolated from the two closest whole numbers. In this way, this 
Order on Reconsideration spares cable operators that also provide a 
telecommunications service (e.g., broadband Internet access service) 
from having to pay attachment rates that would be approximately 70 
percent higher than the rate they pay under the existing rules. Pole 
attachment rate parity at the cable rate level also harmonizes 
regulatory treatment between Commission-regulated states and states 
that set their own pole attachment rates, which prevents any deterrence 
to investment in Commission-regulated states. By keeping pole 
attachment rates unified and low, the Commission furthers its 
overarching goal to accelerate deployment of broadband by removing 
barriers to infrastructure investment.

F. Summary of the Significant Issues Raised by the Public Comments in 
Response to the IRFA and Summary of the Assessment of the Agency of 
Such Issues

    53. No comments relating to any of the IRFAs have been filed since 
the 2011 Pole Attachment Order. In making the determinations reflected 
in the Order on Reconsideration, the Commission has considered the 
impact of its actions on small entities.

G. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules May Apply

    54. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``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 which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    55. Small Businesses. As of 2011, there are a total of 
approximately 28.2 million small businesses, according to the SBA.
    56. Small Organizations. As of 2007, there are approximately 1.6 
million small organizations. A ``small organization'' is generally 
``any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field.''
    57. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, towns, 
townships, villages, school districts, or special districts, with a 
population of less than fifty thousand.'' Census Bureau data for 2011 
indicate that there were 90,056 local governmental jurisdictions in the 
United States. The Commission estimates that, of this total, 89,327 
entities were ``small governmental jurisdictions.'' Thus, the 
Commission estimates that most governmental jurisdictions are small.
    58. The Commission has included small incumbent local exchange 
carriers in this present RFA analysis. As noted above, a ``small 
business'' under the RFA is one that, inter alia, meets the pertinent 
small business size standard (e.g., a telephone communications business 
having 1,500 or fewer employees), and ``is not dominant in its field of 
operation.'' The SBA's Office of Advocacy contends that, for RFA 
purposes, small incumbent local exchange carriers are not dominant in 
their field of operation because any such dominance is not ``national'' 
in scope. The Commission has therefore included small incumbent local 
exchange carriers in this RFA analysis, although it emphasize that this 
RFA action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
    59. Incumbent Local Exchange Carriers (``ILECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,311 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,311 
carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by its proposed action.
    60. Competitive Local Exchange Carriers (``CLECs''), Competitive 
Access Providers (``CAPs''), ``Shared-Tenant Service Providers,'' and 
``Other Local Service Providers.'' Neither the Commission nor the SBA 
has developed a small business size standard

[[Page 5614]]

specifically for these service providers. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 1005 carriers have 
reported that they are engaged in the provision of either competitive 
access provider services or competitive local exchange carrier 
services. Of these 1005 carriers, an estimated 918 have 1,500 or fewer 
employees and 87 have more than 1,500 employees. In addition, 16 
carriers have reported that they are ``Shared-Tenant Service 
Providers,'' and all 16 are estimated to have 1,500 or fewer employees. 
In addition, 89 carriers have reported that they are ``Other Local 
Service Providers.'' Of the 89, all have 1,500 or fewer employees. 
Consequently, the Commission estimates that most providers of 
competitive local exchange service, competitive access providers, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities that may be affected by its proposed 
action.
    61. Interexchange Carriers (``IXCs''). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 300 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 268 have 1,500 or fewer employees and 
32 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by its proposed action.
    62. Wireless Telecommunications Carriers (except satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular phone services, 
paging services, wireless Internet access, and wireless video services. 
The appropriate size standard under SBA rules is for the category 
Wireless Telecommunications Carriers (except satellite). For that 
category, a business is small if it has 1,500 or fewer employees. For 
this category, census data for 2007 show that there were 1,383 firms 
that operated for the entire year. Of this total, 1368 firms had 
employment of fewer than 1000 employees. The Census data about firms 
employing more than 1000 employees does not identify the number of 
firms that employed 1500 employees or less. Thus under this category 
and the associated small business size standard, the Commission 
estimates that the majority of wireless telecommunications carriers 
(except satellite) are small entities that may be affected by rules 
proposed in the Notice.
    63. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. Because Census Bureau data are not yet 
available for the new category, the Commission will estimate small 
business prevalence using the prior categories and associated data. For 
the category of Paging, data for 2002 show that there were 807 firms 
that operated for the entire year. Of this total, 804 firms had 
employment of 999 or fewer employees, and three firms had employment of 
1,000 employees or more. For the category of Cellular and Other 
Wireless Telecommunications, data for 2002 show that there were 1,397 
firms that operated for the entire year. Of this total, 1,378 firms had 
employment of 999 or fewer employees, and 19 firms had employment of 
1,000 employees or more. Thus, the Commission estimates that the 
majority of wireless firms are small.
    64. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Trends in 
telephone Service data, 413 carriers reported that they were engaged in 
wireless telephony. Of these, an estimated 261 have 1,500 or fewer 
employees and 152 have more than 1,500 employees. Therefore, more than 
half of these entities can be considered small.
    65. Broadband Personal Communications Service. The broadband 
personal communications services (``PCS'') spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission has created a small business 
size standard 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 small business size standard for ``very 
small business'' was added and is defined as an entity that, together 
with its affiliates, has average gross revenues of not more than $15 
million for the preceding three calendar years. These small business 
size standards, in the context of broadband PCS auctions, have been 
approved by the SBA. No small businesses within the SBA-approved small 
business size standards bid successfully for licenses in Blocks A and 
B. There were 90 winning bidders that qualified as small entities in 
the Block C auctions. A total of 93 ``small'' and ``very small'' 
business bidders won approximately 40 percent of the 1,479 licenses for 
Blocks D, E, and F. In 1999, the Commission reauctioned 155 C, D, E, 
and F Block licenses; there were 113 small business winning bidders.
    66. In 2001, the Commission completed the auction of 422 C and F 
Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this 
auction, 29 qualified as ``small'' or ``very small'' businesses. 
Subsequent events, concerning Auction 35, including judicial and agency 
determinations, resulted in a total of 163 C and F Block licenses being 
available for grant. In 2005, the Commission completed an auction of 
188 C block licenses and 21 F block licenses in Auction 58. There were 
24 winning bidders for 217 licenses. Of the 24 winning bidders, 16 
claimed small business status and won 156 licenses. In 2007, the 
Commission completed an auction of 33 licenses in the A, C, and F 
Blocks in Auction 71. Of the 14 winning bidders, six were designated 
entities. In 2008, the Commission completed an auction of 20 Broadband 
PCS licenses in the C, D, E and F block licenses in Auction 78.
    67. Advanced Wireless Services. In 2008, the Commission conducted 
the auction of Advanced Wireless Services (``AWS'') licenses. This 
auction, which as designated as Auction 78, offered 35 licenses in the 
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1 
licenses were licenses for which there were no winning bids in Auction 
66. That same year, the Commission completed Auction 78. A bidder with 
attributed average annual gross revenues that exceeded $15 million and 
did not exceed $40 million for the preceding three years (``small 
business'') received a 15 percent discount on its winning bid. A bidder

[[Page 5615]]

with attributed average annual gross revenues that did not exceed $15 
million for the preceding three years (``very small business'') 
received a 25 percent discount on its winning bid. A bidder that had 
combined total assets of less than $500 million and combined gross 
revenues of less than $125 million in each of the last two years 
qualified for entrepreneur status. Four winning bidders that identified 
themselves as very small businesses won 17 licenses. Three of the 
winning bidders that identified themselves as a small business won five 
licenses. Additionally, one other winning bidder that qualified for 
entrepreneur status won 2 licenses.
    68. Narrowband Personal Communications Services. In 1994, the 
Commission conducted an auction for Narrowband PCS licenses. A second 
auction was also conducted later in 1994. For purposes of the first two 
Narrowband PCS auctions, ``small businesses'' were entities with 
average gross revenues for the prior three calendar years of $40 
million or less. Through these auctions, the Commission awarded a total 
of 41 licenses, 11 of which were obtained by four small businesses. To 
ensure meaningful participation by small business entities in future 
auctions, the Commission adopted a two-tiered small business size 
standard in the Narrowband PCS Second Report and Order. A ``small 
business'' is an entity that, together with affiliates and controlling 
interests, has average gross revenues for the three preceding years of 
not more than $40 million. A ``very small business'' is an entity that, 
together with affiliates and controlling interests, has average gross 
revenues for the three preceding years of not more than $15 million. 
The SBA has approved these small business size standards. A third 
auction was conducted in 2001. Here, five bidders won 317 (Metropolitan 
Trading Areas and nationwide) licenses. Three of these claimed status 
as a small or very small entity and won 311 licenses.
    69. Cellular Radiotelephone Service. Auction 77 was held to resolve 
one group of mutually exclusive applications for Cellular 
Radiotelephone Service licenses for unserved areas in New Mexico. 
Bidding credits for designated entities were not available in Auction 
77. In 2008, the Commission completed the closed auction of one 
unserved service area in the Cellular Radiotelephone Service, 
designated as Auction 77. Auction 77 concluded with one provisionally 
winning bid for the unserved area totaling $25,002.
    70. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed, and broadcast auxiliary 
radio services. At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA small business size standard 
for the category Wireless Telecommunications Carriers (except 
Satellite), which is 1,500 or fewer employees. The Commission does not 
have data specifying the number of these licensees that have no more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of fixed microwave service licensees that 
would qualify as small business concerns under the SBA's small business 
size standard. Consequently, the Commission estimates that there are 
22,015 or fewer common carrier fixed licensees and 61,670 or fewer 
private operational-fixed licensees and broadcast auxiliary radio 
licensees in the microwave services that may be small and may be 
affected by the rules and policies proposed herein. The Commission 
notes, however, that the common carrier microwave fixed licensee 
category includes some large entities.
    71. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (``LMDS'') is a fixed broadband point-to-
multipoint microwave service that provides for two-way video 
telecommunications. The auction of the 986 LMDS licenses began and 
closed in 1998. The Commission established a small business size 
standard for LMDS licenses as an entity that has average gross revenues 
of less than $40 million in the three previous calendar years. An 
additional small business size standard for ``very small business'' was 
added as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. The SBA has approved these small business size 
standards in the context of LMDS auctions. There were 93 winning 
bidders that qualified as small entities in the LMDS auctions. A total 
of 93 small and very small business bidders won approximately 277 A 
Block licenses and 387 B Block licenses. In 1999, the Commission re-
auctioned 161 licenses; there were 32 small and very small businesses 
winning that won 119 licenses.
    72. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (``BETRS''). In the present 
context, the Commission will use the SBA's small business size standard 
applicable to Wireless Telecommunications Carriers (except Satellite), 
i.e., an entity employing no more than 1,500 persons. There are 
approximately 1,000 licensees in the Rural Radiotelephone Service, and 
the Commission estimates that there are 1,000 or fewer small entity 
licensees in the Rural Radiotelephone Service that may be affected by 
the rules and policies proposed herein.
    73. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (``MDS'') and Multichannel Multipoint Distribution 
Service (``MMDS'') systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (``BRS'') and Educational Broadband Service (``EBS'') 
(previously referred to as the Instructional Television Fixed Service 
(``ITFS'')). In connection with the 1996 BRS auction, the Commission 
established a small business size standard as an entity that had annual 
average gross revenues of no more than $40 million in the previous 
three calendar years. The BRS auctions resulted in 67 successful 
bidders obtaining licensing opportunities for 493 Basic Trading Areas 
(``BTAs''). Of the 67 auction winners, 61 met the definition of a small 
business. BRS also includes licensees of stations authorized prior to 
the auction. At this time, the Commission estimates that of the 61 
small business BRS auction winners, 48 remain small business licensees. 
In addition to the 48 small businesses that hold BTA authorizations, 
there are approximately 392 incumbent BRS licensees that are considered 
small entities. After adding the number of small business auction 
licensees to the number of incumbent licensees not already counted, the 
Commission finds that there are currently approximately 440 BRS 
licensees that are defined as small businesses under either the SBA or 
the Commission's rules. In 2009, the Commission conducted Auction 86, 
the sale of 78 licenses in the BRS areas. The Commission offered three 
levels of bidding credits: (i) A bidder with

[[Page 5616]]

attributed average annual gross revenues that exceed $15 million and do 
not exceed $40 million for the preceding three years (small business) 
will receive a 15 percent discount on its winning bid; (ii) a bidder 
with attributed average annual gross revenues that exceed $3 million 
and do not exceed $15 million for the preceding three years (very small 
business) will receive a 25 percent discount on its winning bid; and 
(iii) a bidder with attributed average annual gross revenues that do 
not exceed $3 million for the preceding three years (entrepreneur) will 
receive a 35 percent discount on its winning bid. Auction 86 concluded 
in 2009 with the sale of 61 licenses. Of the ten winning bidders, two 
bidders that claimed small business status won 4 licenses; one bidder 
that claimed very small business status won three licenses; and two 
bidders that claimed entrepreneur status won six licenses.
    74. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, the Commission estimates that at 
least 1,932 licensees are small businesses. Since 2007, Cable 
Television Distribution Services have been defined within the broad 
economic census category of Wired Telecommunications Carriers; that 
category is defined as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies.'' The SBA has 
developed a small business size standard for this category, which is: 
All such firms having 1,500 or fewer employees. To gauge small business 
prevalence for these cable services the Commission must, however, use 
current census data that are based on the previous category of Cable 
and Other Program Distribution and its associated size standard; that 
size standard was: all such firms having $13.5 million or less in 
annual receipts. According to Census Bureau data for 2002, there were a 
total of 1,191 firms in this previous category that operated for the 
entire year. Of this total, 1,087 firms had annual receipts of under 
$10 million, and 43 firms had receipts of $10 million or more but less 
than $25 million. Thus, the majority of these firms can be considered 
small.
    75. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: all such firms having 1,500 or fewer 
employees. To gauge small business prevalence for these cable services 
the Commission must, however, use current census data that are based on 
the previous category of Cable and Other Program Distribution and its 
associated size standard; that size standard was: all such firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this previous 
category that operated for the entire year. Of this total, 1,087 firms 
had annual receipts of under $10 million, and 43 firms had receipts of 
$10 million or more but less than $25 million. Thus, the majority of 
these firms can be considered small.
    76. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 6,635 systems nationwide, 
5,802 systems have fewer than 10,000 subscribers, and an additional 302 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small.
    77. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that, of 1,076 cable operators nationwide, all but ten 
are small under this size standard. The Commission notes that it 
neither requests nor collects information on whether cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250 million, and therefore the Commission is unable to estimate 
more accurately the number of cable system operators that would qualify 
as small under this size standard.
    78. Open Video Systems. The open video system (OVS) framework was 
established in 1996, and is one of four statutorily recognized options 
for the provision of video programming services by local exchange 
carriers. The OVS framework provides opportunities for the distribution 
of video programming other than through cable systems. Because OVS 
operators provide subscription services, OVS falls within the SBA small 
business size standard covering cable services, which is ``Wired 
Telecommunications Carriers.'' The SBA has developed a small business 
size standard for this category, which is: all such firms having 1,500 
or fewer employees. To gauge small business prevalence for such 
services the Commission must, however, use current census data that are 
based on the previous category of Cable and Other Program Distribution 
and its associated size standard; that size standard was: all such 
firms having $13.5 million or less in annual receipts. According to 
Census Bureau data for 2002, there were a total of 1,191 firms in this 
previous category that operated for the entire year. Of this total, 
1,087 firms had annual receipts of under $10 million, and 43 firms had 
receipts of $10 million or more but less than $25 million. Thus, the 
majority of cable firms can be considered small. In addition, the 
Commission notes that the Commission has certified some OVS operators, 
with some now providing service. Broadband service providers (``BSPs'') 
are currently the only significant holders of OVS certifications or 
local OVS franchises. The Commission does not have financial or 
employment information regarding the entities authorized to provide 
OVS, some of which may not yet be operational. Thus, again, at least 
some

[[Page 5617]]

of the OVS operators may qualify as small entities.
    79. Cable Television Relay Service. This service includes 
transmitters generally used to relay cable programming within cable 
television system distribution systems. This cable service is defined 
within the broad economic census category of Wired Telecommunications 
Carriers; that category is defined as follows: ``This industry 
comprises establishments primarily engaged in operating and/or 
providing access to transmission facilities and infrastructure that 
they own and/or lease for the transmission of voice, data, text, sound, 
and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: all such firms having 1,500 or fewer 
employees. To gauge small business prevalence for cable services the 
Commission must, however, use current census data that are based on the 
previous category of Cable and Other Program Distribution and its 
associated size standard; that size standard was: all such firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this previous 
category that operated for the entire year. Of this total, 1,087 firms 
had annual receipts of under $10 million, and 43 firms had receipts of 
$10 million or more but less than $25 million. Thus, the majority of 
these firms can be considered small.
    80. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. The Commission adopted criteria for defining three groups of 
small businesses for purposes of determining their eligibility for 
special provisions such as bidding credits. It defined a very small 
business as an entity with average annual gross revenues not exceeding 
$3 million for the preceding three years; a small business as an entity 
with average annual gross revenues not exceeding $15 million for the 
preceding three years; and an entrepreneur as an entity with average 
annual gross revenues not exceeding $40 million for the preceding three 
years. These definitions were approved by the SBA. On January 27, 2004, 
the Commission completed an auction of 214 MVDDS licenses (Auction No. 
53). In this auction, ten winning bidders won a total of 192 MVDDS 
licenses. Eight of the ten winning bidders claimed small business 
status and won 144 of the licenses. The Commission also held an auction 
of MVDDS licenses on December 7, 2005 (Auction 63). Of the three 
winning bidders who won 22 licenses, two winning bidders, winning 21 of 
the licenses, claimed small business status.
    81. Internet Service Providers. The 2007 Economic Census places 
these firms, whose services might include voice over Internet protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications connections 
(e.g. cable and DSL, ISPs), or over client-supplied telecommunications 
connections (e.g. dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The 2002 data show that 
there were 2,529 such firms that operated for the entire year. Of 
those, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, the Commission estimates that the majority 
of ISP firms are small entities.
    82. Electric Power Generation, Transmission and Distribution. The 
Census Bureau defines this category as follows: ``This industry group 
comprises establishments primarily engaged in generating, transmitting, 
and/or distributing electric power. Establishments in this industry 
group may perform one or more of the following activities: (1) operate 
generation facilities that produce electric energy; (2) operate 
transmission systems that convey the electricity from the generation 
facility to the distribution system; and (3) operate distribution 
systems that convey electric power received from the generation 
facility or the transmission system to the final consumer.'' This 
category includes Electric Power Distribution, Hydroelectric Power 
Generation, Fossil Fuel Power Generation, Nuclear Electric Power 
Generation, and Other Electric Power Generation. The SBA has developed 
a small business size standard for firms in this category: ``A firm is 
small if, including its affiliates, it is primarily engaged in the 
generation, transmission, and/or distribution of electric energy for 
sale and its total electric output for the preceding fiscal year did 
not exceed 4 million megawatt hours.'' According to Census Bureau data 
for 2002, there were 1,644 firms in this category that operated for the 
entire year. Census data do not track electric output and the 
Commission has not determined how many of these firms fit the SBA size 
standard for small, with no more than 4 million megawatt hours of 
electric output. Consequently, the Commission estimates that 1,644 or 
fewer firms may be considered small under the SBA small business size 
standard.
    83. Natural Gas Distribution. This economic census category 
comprises: ``(1) establishments primarily engaged in operating gas 
distribution systems (e.g., mains, meters); (2) establishments known as 
gas marketers that buy gas from the well and sell it to a distribution 
system; (3) establishments known as gas brokers or agents that arrange 
the sale of gas over gas distribution systems operated by others; and 
(4) establishments primarily engaged in transmitting and distributing 
gas to final consumers.'' The SBA has developed a small business size 
standard for this industry, which is: all such firms having 500 or 
fewer employees. According to Census Bureau data for 2002, there were 
468 firms in this category that operated for the entire year. Of this 
total, 424 firms had employment of fewer than 500 employees, and 18 
firms had employment of 500 to 999 employees. Thus, the majority of 
firms in this category can be considered small.
    84. Water Supply and Irrigation Systems. This economic census 
category ``comprises establishments primarily engaged in operating 
water treatment plants and/or operating water supply systems.'' The SBA 
has developed a small business size standard for this industry, which 
is: all such firms having $6.5 million or less in Annual receipts. 
According to Census Bureau data for 2002, there were 3,830 firms in 
this category that operated for the entire year. Of this total, 3,757 
firms had annual sales of less than $5 million, and 37 firms had sales 
of $5 million or more but less than $10 million. Thus, the majority of 
firms in this category can be considered small.

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

    85. The new rule concerns a cost allocation method that parties use 
in a formula when negotiating just and reasonable pole attachment 
rental rates. Application of the cost allocation rule is expanded but 
not altered from the cost

[[Page 5618]]

allocation rule that parties currently use. The Commission expects the 
cost of complying with the revised cost allocation rule to be minimal, 
and compliance costs do not significantly differ from requirements in 
place before the adoption of this Order on Reconsideration.

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

    86. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities. Cost allocation methodologies used in pole attachment rate 
formulas are by nature the same for all entities that use them, 
regardless of size. No party suggested that the Commission develop 
alternative approaches to cost allocation based on entity size.

J. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    87. None.

V. Ordering Clauses

    88. Accordingly, it is ordered that pursuant to sections 1, 4(i), 
4(j), 201(b), 224, 251(b)(4), and 303(r), of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 201(b), 224, 
251(b)(4), 303(r), this Order on Reconsideration IS ADOPTED.
    89. It is further ordered, pursuant to sections 1, 4(i), 4(j), 
201(b), 224, and 303(r), of the Communications Act, as amended, as 
amended, 47 U.S.C. 151, 154(i), 154(j), 201(b), 224, 303(r), that the 
Petition for Reconsideration or Clarification filed by the National 
Cable and Telecommunications Association, COMPTEL, and tw telecom inc., 
is GRANTED to the extent indicated herein, and otherwise is DISMISSED.
    90. It is further ordered that Part 1 of the Commission's rules IS 
AMENDED as set forth in Appendix A.
    91. it is further ordered that, pursuant to sections 1.4(b)(1) and 
1.103(a) of the Commission's rules, 47 CFR 1.4(b)(1), 1.103(a), this 
Order on Reconsideration shall be effective 30 days after publication 
of a summary in the Federal Register.
    92. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Order on Reconsideration, including the Supplemental Final 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary, Office of the Secretary.

Final Rule

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

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 79, et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 157, 160, 201, 225, 227, 303, 309, 332, 1403, 1404, 1451, 1452, 
and 1455.

Subpart J--Pole Attachment Complaint Procedures

0
2. Section 1.1409 is amended by revising paragraph (e)(2)(i) to read as 
follows:


Sec.  1.1409  Commission consideration of the complaint.

* * * * *
    (e) * * *
    (2) * * *
    (i) The following formula applies to the extent that it yields a 
rate higher than that yielded by the applicable formula in paragraph 
1.1409(e)(2)(ii) of this section:

Rate = Space Factor x Cost

Where Cost

in Service Areas where the number of Attaching Entities is 5 = 0.66 
x (Net Cost of a Bare Pole x Carrying Charge Rate)
in Service Areas where the number of Attaching Entities is 4 = 0.56 
x (Net Cost of a Bare Pole x Carrying Charge Rate)
in Service Areas where the number of Attaching Entities is 3 = 0.44 
x (Net Cost of a Bare Pole x Carrying Charge Rate)
in Service Areas where the number of Attaching Entities is 2 = 0.31 
x (Net Cost of a Bare Pole x Carrying Charge Rate)
in Service Areas where the number of Attaching Entities is not a 
whole number = N x (Net Cost of a Bare Pole x Carrying Charge Rate), 
where N is interpolated from the cost allocator associated with the 
nearest whole numbers above and below the number of Attaching 
Entities.
[GRAPHIC] [TIFF OMITTED] TR03FE16.000

* * * * *

[FR Doc. 2016-01182 Filed 2-2-16; 8:45 am]
BILLING CODE 6712-01-P