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>(#,%!h>*f9 xr G;hXa$G,',G\  P6G;Pa$I,',FI4  pG;`%O,(,|O PE37PD`%Q,(,Q_ pi7a$E,&,EE\  PAPx/c81,|Mc PE37PDy.f81,f_ pi70NI,^?L@ PI37P }*h88,+hxP7P$ }*i88,Mqips7)|C?,NsX|L@ PI37XPjS,*,SL@ PI37Py.V80,UV\  PAP   2U X- X    X-w  Federal Communications Commission`u(#FCC 9794 ă  yxdddy +f Before the w Federal Communications Commission  X-9Washington, D.C. 20554 ă  X-In the Matter of hhCq)pp  ) ` `  hhCq)  X_-Amendment of Rules and hhCq)CS Docket No. 9798  XH-Policies Governing Pole  hhCq)  X1-Attachments ` `  hhCq)pp  )  X -l  NOTICE OF PROPOSED RULE MAKING \  X -X` hp x (#%'0*,.8135@8:"(# 2 X\II. BACKGROUND p>"(# 3 X\III. POLE ATTACHMENT ISSUES p"(#5  XN- ` ` A. Development of the Formulax` p>"(# 5 X\B. Southwestern Bell Petition p>"(# 8 XC. Notice of Proposed Rulemaking p"(# 10  X -` ` 1.  ` ` 1. Potential Adjustments to the Pole Attachment Formula(# pT!(# 10 XX` ` X ` ` 2. Other Proposed Formula Adjustments p"(# 15 ` `  a. Administrative Componentp"(# 16 X` `  b. Maintenance Component p"(# 17 XX` `  c. Taxes Component ` p"(# 17 X` `  ` ` 3. Rate of Return p"(# 18 X\IV. CONDUIT ATTACHMENT ISSUES p"(# 18 X\A. Application of the Pole Attachment Formula to Conduits(#p"(# 18 XX` ` B. Proposed Conduit Methodology ` p"(# 20 X  X\V. OTHER MATTERS p"(# 22 "(,))ZZ'"ԌXX.\VI. REGULATORY FLEXIBILITYp"(# 22 VII. PAPERWORK REDUCTION ACT OF 1995 ANALYSISp"(# 33 VIII. PROCEDURAL PROVISIONSp"(# 33   IX. ORDERING CLAUSESp"(# 34 X\APPENDIX A CURRENT FORMULA (NOTING PROPOSED CHANGES) p`"(#36 APPENDIX B MAPPING PROPOSED FROM PART 31 TO PART 32p`"(#37 X\APPENDIX C PROPOSED CONDUIT ATTACHMENT FORMULA p!(# 38  X - I. INTRODUCTION Đ  Xy- 1.` ` This Notice of Proposed Rulemaking seeks comment on proposed modifications  d(#to the Commission's rules relating to the maximum just and reasonable rates utilities may charge  d(#for attachments made to a pole, duct, conduit or rightofway. These attachments are referred  X4- d(#jto as "pole attachments."Q4 {O-ԍ See 47 U.S.C.  224(a)(4). Q We believe that a reevaluation of this formula may be necessary to  d(#improve accuracy in the continued application of these rules to cable television systems and to  X- d(#telecommunications carriers pursuant to the Telecommunications Act of 1996 ("1996 Act").Z yO- d(#ԍ Telecommunications Act of 1996, Pub. L. No. 104104, 104 Stat. 56, 149151, signed February 8, 1996 (to be codified at 47 U.S.C.  224). We  d(#also propose amending the formula so that it reflects our current accounting rules that apply to  X- d(# telephone companies. Finally, in this Notice, we propose a conduit yO;- d(#ԍ According to the FCC ARMIS Operating Data Report, FCC Report 4308 (January 1992), a conduit is a pipe placed in the ground through which cables are pulled. methodology that will  d(#Ndetermine the maximum just and reasonable rates utilities may charge   cable systems and  d(#itelecommunications carriers for their use of conduit systems. The proposed formula would apply  d(#to all telecommunications carriers pending the effectiveness of the new formula required by the  X|-1996 Act."|  {O7"- d(#iԍ 47 U.S.C.  224(e)(1) as added by the 1996 Act,  7. In a separate proceeding, within the twoyear period  d(#specified in Section 224(e), we will adopt a separate conduit formula for telecommunication carriers. Thereafter,  d(#the conduit formula we propose in this Notice will only be applicable to cable systems who solely provide cable services. ` `  1. 1. 1. a.(1)(a) i) a) 1. a. i.(1)(a)(i) 1) a) "e ,-(-(ZZ"Ԍ X- II. BACKGROUND   X- 2.` ` It has become common practice for cable systems and telecommunications carriers  d(#yto lease space from utilities on poles or in ducts, conduits, or rightsofway, in order to provide  d(#cable service or telecommunications services. The federal government did not regulate these  d(#arrangements until 1978, when Congress, in response to concerns raised by cable television  Xv- d(#ioperators, enacted Section 224.=v yO-ԍ 47 U.S.C.  224.= In Section 224(d)(1), Congress established the parameters of just and reasonable cable pole attachment rates that  Xassures a utility the recovery of not less than the additional costs of providing pole  attachments, nor more than an amount determined by multiplying the percentage  of the total usable space, or the percentage of the total duct or conduit capacity,  which is occupied by the pole attachment by the sum of the operating expenses  and actual capital costs of the utility attributable to the entire pole, duct, conduit  X -or rightofway.C X yO-ԍ 47 U.S.C.  224(d)(1).C   d(#The zone of reasonableness is bounded on the lower end by the utility's incremental costs, and  d(#jon the upper end by the cable system or telecommunications carrier's share of the utility's fully  d(#allocated costs of owning and maintaining the poles to which an attachment has been made.  d(#Incremental costs are those costs that the utility would not have incurred "but for" these  X4- d(#xattachments.x4 {O-ԍ S. Rep. No. 95580, 95th Cong., 1st Sess. 19 (1977)(1977 Senate Report).x Congress expected that pole attachment rates based on incremental costs would be  d(#low, because utilities generally recover the makeready or changeout charges directly from cable  X- d(#systems.3z {O1-ԍ Id.3 Fully allocated costs refer to the portion of operating expenses and capital costs that  d(#a utility incurs in owning and maintaining poles that are associated with the space occupied by  X- d(#Lpole attachments.=   {O-ԍ Id. at 1920.= Congress acknowledged that there might be some difficulty in determining certain components of a utility's operating expenses and actual capital costs.  X- 3.` ` Section 224(b)(1) grants the Commission authority to regulate the rates, terms, and  d(#xconditions governing pole attachments and requires that such rates, terms and conditions are just  Xe- d(#and reasonable.  Xe yO$- d(#iԍ The Commission's authority under Section 224(c)(1) does not extend to pole attachment rates, terms, and  d(#conditions that a state regulates. 47 U.S.C.  224(c)(1). Jurisdiction for pole attachments reverts to the Commission  d(#Jgenerally if the state has not issued and made effective rules implementing the state's regulatory authority over pole  d(#wattachments. Reversion to the Commission, with respect to individual matters, also occurs if the state does not take" ' ,-(-(9'"  d(#final action on a complaint within 180 days after its filing with the state, or within the applicable period prescribed  d(#for such final action in the state's rules, as long as that prescribed period does not extend more than 360 days beyond the complaint's filing. 47 U.S.C.  224(c)(3). The Commission is also authorized to adopt procedures necessary to hear and"e ,-(-(ZZ"  X-to resolve complaints concerning such rates, terms, and conditions.C  yO-ԍ 47 U.S.C.  224(b)(1).C  X- C4.` ` When Congress enacted Section 224 in 1978, it directed the Commission to  d(#institute an expeditious program for determining just and reasonable pole attachment rates. The  d(#intent was that the program would necessitate a minimum of staff, paperwork and procedures  X- d(#consistent with fair and efficient regulation.L x {O -ԍ 1977 Senate Report at 21. L Congress did not believe, however, that special  d(# accounting measures or studies would be necessary because most cost and expense items  d(#kattributable to utility pole plant were already established and reported to various regulatory  XH- d(#ybodies. Congress also did not expect the Commission to reexamine the reasonableness of the  d(#cost methodologies that various regulatory agencies had sanctioned. It recognized that the  d(#Commission would have to "make its best estimate" of some of the less readily identifiable  X -costs.:   {O-ԍ Id. at 20.:  X - p5.` ` Section 703(6) of the 1996 Act amended Section 224(d)(3). This amendment  d(#expanded the scope of Section 224 by applying the pole attachment rate formula to  X - d(#telecommunications carriers in addition to cable systems.l  {O-ԍ 47 U.S.C.  224(a)(4), as amended by 1996 Act  703. l As amended, the statute defines "pole  d(#attachment" as "any attachment by a cable television system or provider of telecommunications  Xy- d(#yservice to a pole, duct, conduit, or rightofway owned or controlled by a utility."jy.  {OX-ԍ 47 U.S.C.  224(a)(4), as amended by 1996 Act  703.j The statute  d(#\also defines "utility" as any person that is a local exchange carrier or an electric, gas, water,  d(#steam, or other public utility, and that owns or controls poles, ducts, conduits, or rightsofways  X4- d(#used, in whole or in part, for any wire communications.4  {O- d(#Yԍ 47 U.S.C.  224(a)(1), as amended by 1996 Act 703. But note that for the purposes of this section, Section 224(a)(5) excludes incumbent local exchange carriers as defined in Section 251(h). The term "utility" does not include any  X- d(#railroad, any cooperatives or any federally or stateowned entity.3 {O"-ԍ Id.3 The formula proposed in this  d(#Notice will apply to attachments on poles, within ducts, conduit or rightsofway by both cable  d(#systems and telecommunications carriers until a separate methodology is proposed for",-(-(ZZ "  X- d(#Ktelecommunications carriers. {Oy- d(#.ԍ See 47 U.S.C.  224(d)(3), but only to the extent that such carrier is not a party to a pole attachment agreement.  Congress directed the Commission to issue a new pole attachment  d(#formula relating to telecommunications carriers within two years of the effective date of the 1996  X- d(#Act, to become effective five years after enactment.h" {O-ԍ 47 U.S.C.  224(e)(1), as added by 1996 Act  703.h We will propose these new rules and seek comment in a subsequent Notice.  X- III. POLE ATTACHMENT ISSUES  Xa- A. ` ` Development of the Pole Attachment Formula  X3- 26. ` ` In 1978, the Commission adopted procedural rules governing pole attachments.3 yO- d(#Yԍ Adoption of Rules for the Regulation of Cable Television Pole Attachments, CC Docket No. 78144, 68 FCC  {O`- d(#2d 1585 (1978) (First Report and Order). See also Second Report and Order, 72 FCC 2d 59 (1979); Third Report  {O*- d(#wand Order, 77 FCC 2d 187 (1980) (Third Report and Order), aff'd Monongahela Power Co. v. FCC, 655 F. 2d 1254  {O- d(#(D.C. Cir. 1985) (per curiam); Amendment of Rules and Policies Governing the Attachment of Cable Television  {O- d(#Hardware to Utility Poles, Report and Order, 2 FCC Rcd 4387 (1987)(Pole Attachment Order), recon., 4 FCC Rcd 468 (1989).  d(#. Subsequent Commission orders have refined the Commission's methodology for determining  X - d(#the amount of usable space on a pole and the space occupied by cable systems. 4  {O- d(#ԍ Second Report and Order, 72 FCC 2d at 5979; Petition to Adopt Rules Concerning Usable Space on Utility  {O- d(#Poles, Memorandum Opinion and Order, RM 4556, FCC 84325, slip op. at para. 10 (released July 25, 1984)(Usable  {O~- d(#xSpace Order). See also Alabama Power Co. v. FCC, 773 F.2d 362 (D.C. Cir. 1985). Alabama Power challenged  d(#the Commission's methodology for net pole investment and for carrying charges. The court upheld the challenge,  d(#xvacated the Commission's rules and remanded to the Commission. As a result the Commission revised its rules as  yO-in the Pole Attachment Order.  These orders  d(#.have also required additional information to be included with pole attachment complaints, and  X -improved complaint procedures.4  {O:-ԍ Id. 4  X - 7. ` ` In Adoption of Rules for the Regulation of Cable Television Pole Attachments, CC  X- d(#KDocket No. 78144,^D {O!-ԍ First Report and Order, 68 FCC 2d 1585 (1978).^ the Commission sought comment regarding the amount of usable space for  X- d(#various size poles in different service areas.Y {O$-ԍ Second Report and Order, 72 FCC 2d at 68.Y The total usable space is the space on the utility  d(#pole above the minimum grade level that is usable for the attachment of wires, cables, and related"hh,-(-(ZZ"  X- d(#equipment.C yOy-ԍ 47 C.F.R.  1.1402(c).C The Commission's determinations were based upon the outcome of survey results,  d(#iconsideration for the National Electric Safety Code ("NESC"), and practical engineering standards  d(#used in the construction of utility poles. The Commission found that "the most commonly used  X- d(#poles are 35 and 40 feet high, with usable spaces of 11 to 16 feet, respectively."9X {O-ԍ Id. at 699 The  d(#LCommission recognized the NESC guideline that 18 feet of the pole space must be reserved for  X- d(#ground clearance^ {O( -ԍ Second Report and Order, 72 FCC 2d at 68 n.21.^ and that six feet of pole space is for setting the depth of the pole.3| {O -ԍ Id.3 To avoid  d(#a pole by pole rate calculation, the Commission adopted rebuttable presumptions of an average  d(#pole height of 37.5 feet, an average amount of usable space of 13.5 feet, and an average amount  d(#]of 24 feet of unusable space on a pole. In addition, the Commission created a rebuttable  X1-presumption of one foot as the amount of space a cable television attachment occupies.\1 {O-ԍ Second Report and Order, 72 FCC 2d at 6970.\  X - 8. ` ` The Commission initially adopted a formula to determine the maximum allowable  d(#Lpole attachment rate under Section 224 on the basis of a utility's fully allocated cost of owning  X - d(#a pole.b  {O&-ԍ Second Report and Order, 72 FCC 2d at 5979.b This formula has been further refined through orders in complaint casesd\ 2  {O- d(#iԍ See, e.g., Teleprompter of Fairmont, Inc. v. Chesapeake and Potomac Telephone Co. of West Virginia, PA  {O- d(#790029, 79 FCC 2d 232 (1980); Continental Cablevision of New Hampshire, Inc. v. Concord Electric Co., Mimeo No. 5536 (Com. Car. Bur., July 3, 1985).d which have  X -resulted in the following generally applicable formula for calculating the maximum rate:@ V  yO-ԍ 47 C.F.R.  1.1404.@   X- Maximum Rate = Space Occupied by Attachment  X Net Cost of a X Carrying  Xy- ` ` Total Usable Space Bare Pole Charge Rate   XK- _9. ` ` The first component of the formula, space occupied by attachment divided by the  d(#ltotal usable space on a pole, is used to calculate the percentage of usable space that the  d(#attachment occupies on an average pole. The Commission's rules define usable space as the  d(#space on a utility pole above the minimum grade level that can be used for the attachment of  X- d(#wires, cables and associated equipment.H! {O%-ԍ See 47 C.F.R. 1.1402(c).H For purposes of cable television system attachments,  X- d(#the Commission's Petition to Adopt Rules Concerning Usable Space on Utility Poles permanently"x!,-(-(ZZ"  X- d(#assigned one foot of usable space per pole to cable systems.Z" {Oy-ԍ Usable Space Order, slip op. at para. 10. Z The denominator of the first  X-component is set using a rebuttable presumption that the total usable space per pole is 13.5 feet.#Z {O- d(#Kԍ 47 C.F.R  1.1404(g)(11); Second Report and Order, 72 FCC 2d at 69. See also Third Report and Order,  yO-77 FCC 2d at 192. Therefore, one cable attachment presumptively occupies 7.4% of an average pole.  X-   X-   10. ` ` The second component of the overall formula is the net cost of a bare pole. The  d(#component is derived from the gross investment in poles less accumulated depreciation and  d(#accumulated deferred income taxes. An adjustment is made to a utility's net pole investment  d(#[to eliminate the investment in crossarms and other nonpole related items. To accomplish this,  d(#the Commission determined to reduce net pole investment by 15% for electric utilities and 5%  d(#for telephone companies. Thus, to arrive at the net cost of a bare pole, a factor, 0.85 for electric  X - d(#utilities or 0.95 for telephone companies,$"  yO- d(#ԍ The two factors reflect the differences between telephone companies' and electric utilities' investment in  d(#crossarms and other nonpole investment that is recorded in the pole accounts. Electric utilities typically have more  d(#Jinvestment in crossarms than telephone companies. The 0.85 factor for electric utilities recognizes this difference.  {O-See Pole Attachment Order, 2 FCC Rcd at 4390.  is multiplied by the net investment per pole, as shown in the following formula:  X -  Net Cost of a = Factor X Net Pole Investment  X -$  Bare Pole%$ Gx {O - d(#ԍ See Pole Attachment Order, 2 FCC Rcd at 4402, Appendix A. This formula rearranges the Pole Attachment  {O- d(#Order's net cost of a bare pole formula for presentation purposes. Net pole investment is defined as the gross  d(#investment in poles less accumulated depreciation and accumulated deferred income taxes with respect to pole investment.  Number of Poles  \We believe these are the appropriate factors for arriving at the net cost of bare pole.  Xb- P11. ` ` The final component of the overall pole attachment formula is the carrying charge  d(#krate. Carrying charges are the costs incurred by the utility in owning and maintaining poles  d(#regardless of the presence of pole attachments. The carrying charges include the utility's  d(#[administrative, maintenance, and depreciation expenses, a return on investment, and taxes. To  d(#0help calculate the carrying charge rate, we developed a formula that relate each of these  X- d(#components to the utility's net investment.& Gx {O*#- d(#Zԍ Pole Attachment Order, 2 FCC Rcd at 440203, Appendix A. We discuss the carrying charge rate formula below. The entire formula is attached to this Notice as Appendix A. "&,-(-(ZZ"Ԍ X- B. Southwestern Bell Petition  X- 12. ` ` On August 26, 1994, Southwestern Bell Telephone Company ("SWB") filed a  X- d(#LPetition for Clarification, or in the Alternative, a Waiver of our formula for computing maximum  X- d(#reasonable pole attachment rates.S'\Gx yO- d(#Yԍ Southwestern Bell Telephone Company, Computation of Rates for Attachment of Cable Television Hardware  {O- d(#;to Utility Poles, Petition for Clarification or in the Alternative, a Waiver, AAD 94125 (filed Aug. 26, 1994)(SWB  {O-Petition).S SWB argues that in Oklahoma, the Commission's pole  d(# attachment formula produces a negative net cost of a bare pole and other negative figures,  Xv- d(#resulting in negative rates.9(vGx {O -ԍ Id. at 1.9 SWB asserts that these abnormal results arise as the original costs  d(#of the poles are depreciated over time, particularly since the cost of removing the pole at the end  d(#jof its useful life is included in the original cost of the pole. Because the cost of removal can be  X1- d(#high, SWB argues it has resulted in negative net pole investment for its poles in Oklahoma.;)1~Gx {O`-ԍ Id. at 2. ;  d(#SWB proposes to remedy the rate problem by extracting the cost of removing poles from the  X - d(#formula for calculating the accumulated depreciation used to determine pole attachment rates.9* Gx {O-ԍ Id. at 3.9  d(#This would increase the net pole investment SWB would use in applying the formula, thereby making SWB's pole attachment rates positive under that formula. ` `   X - 13. ` ` Supporting SWB's petition, U S West Communications, Inc. ("U S West") states  d(#that under the current pole attachment formula, the potential for negative net pole investment  Xy- d(#jexists.C+yGx yO-ԍ US West Comments at 2. C U S West agrees that this can occur because of the high cost of pole removal and the  Xb- d(#high accumulated depreciation balances for pole investment.3,b2 Gx {OE-ԍ Id.3 U S West supports SWB's  d(#proposal that we adjust the pole attachment formula by extracting the cost of removing poles  X4-from accumulated depreciation.9-4 Gx {O-ԍ Id. at 4.9  X- }14. ` ` The Texas Cable TV Association, the Arkansas Cable Television Association, the  d(#Kansas Cable Television Association, the Missouri Cable Telecommunications Association, and  d(#.the Cable Systems of Oklahoma, Inc. (collectively, "Cable Associations") filed joint comments  X- d(#opposing SWB's petition..XZV Gx yO%- d(#Zԍ On December 16, 1994, the Cable Associations filed a complaint against SWB that raised the negative net  d(#salvage value issue. The Cable Associations present data that indicate that the maximum just and reasonable pole  d(#attachment rates that SWB could charge the cable systems in Oklahoma and Kansas under our formula were negative. "X'-,-(-({'"  d(#,The parties have settled this complaint without prejudice to any action we may take in response to SWB's petition.  {OX- d(#See Texas Cable TV Association et al. v. Southwestern Bell Telephone Company, Order, 10 FCC Rcd 8184 (Com. Car. Bur., July 28, 1995).  The Cable Associations claim that SWB's proposal does not comport".,-(-(ZZ"  d(#with the Commission's pole attachment formula and would result in unlawful pole attachment  X- d(#rates.M/Gx yO-ԍ Cable Associations Comments at 2. M The Cable Associations also argue that, because SWB's accumulated depreciation exceeds  d(#yits investment in poles, it has, in effect, created a regulatory asset on which it has been earning  X- d(#a return.30zGx {O -ԍ Id.3 The Cable Associations maintain that we should not allow carriers to extract the cost  X-of removing poles from accumulated depreciation.1Z Gx {Oa - d(#Yԍ Id. Under Part 32 Uniform System of Accounts, accumulated depreciation accounts for telephone companies  d(#Jincludes the total depreciation taken on plant in service. Since the depreciation rates factor in the salvage values of plant less the cost of removal, the account effectively includes an accrual for the cost of removal.   Xv- 15. ` ` Discussion. Negative net pole investment may result from the way we have  d(#historically calculated depreciation rates. We generally prescribe depreciation rates at levels  d(#sufficient to give each carrier an opportunity to recover its plant investment on a straightline  d(#basis over the life of the associated plant. The rate also includes a provision that allows each  d(#?carrier to accrue over the life of the asset, the expenses associated with the removal and  d(#disposition of the plant investment, including the cost of removal. Depreciation rates have been calculated by using the following formula:  X -Depreciation Rate = 100% Accumulated Depreciation % Net Salvage %  X - ` `  hhCAverage Remaining Life  d(#/The depreciation rate determined by this formula is applied to the gross plant value. In the  d(#[formula, accumulated depreciation is the portion of the plant that has been charged to expense  d(#in previous periods and is often referred to as the depreciation reserve. Net salvage is the  d(#yestimated difference between the amount the carrier would receive as salvage for sale of retired  d(#plant and the plant's estimated cost of removal. Average remaining life is the estimated future life expectancy of investment in a particular plant account.  X- 16. ` ` As accumulated depreciation increases for plant with high removal costs, the  X- d(#<application of the depreciation rate formula may lead to net pole investment becoming negative.2. Gx yO"-ԍ In those instances where net salvage is negative, i.e. when cost of removal exceeds salvage value.  X- d(#.This would mean that accumulated depreciation could exceed the asset's original cost.3X  Gx yO%-ԍTo illustrate this, we assume the following:  yO%-Accumulated DepreciationhhCqpp0%  yO&-Estimated Salvage ProceedshhCqpp10%"&2,-(-(&"Ԍ yO-Estimated Cost of RemovalhhCqpp50%  yOX-Average Remaining LifehhCq10 years These assumptions would result in a depreciation rate of 14 percent per year:  yOx-Depreciation Rate  = 100% Accumulated Depreciation % Future Net Salvage %  yO@- ` `  hhCAverage Remaining Life  yO-Depreciation Rate  = 100% 0 (10% 50%) = 14% ` `   10  d(#Using a depreciation rate of 14 percent for 10 years would yield a recovery of 140 percent of the cost of the asset  d(#over its expected life. As a result, the asset would have a negative asset value by the eighth year, i.e., accumulated depreciation would exceed the asset's cost. SWB" 3,-(-(ZZR"  d(#asserts that its poles in Oklahoma are an example of plant where this has occurred. SWB  d(#contends that the cost of removal for its pole investment exceeds the salvage value for poles  d(#<resulting in a negative net salvage value. In these cases, the total depreciation taken over the life  d(#Lof the pole may exceed the pole investment and the net pole investment may therefore become  d(#.negative over time. Because our pole attachment formula applies percentages for the carrying  d(#charge factors to the poles' net investment, a negative net salvage value could result in negative  Xv-or unusually low pole attachment rates. 4v Gx yO- d(#xԍ The carrying charge factors are administrative, maintenance, and depreciation expenses, taxes, and rate of  d(#return. The carrying charge formula computes percentages for each factor which are added and then multiplied  d(#against the net asset value of poles also referred to as net pole investment. For example, if the carrying charge  d(#formula yields 10% for each factor, the carrying charge rate would be 50%. This rate would then be multiplied by  d(#net pole investment (expressed on a per pole basis as net cost of a bare pole) and the percentage of usable pole space occupied by a cable operator's equipment to determine the maximum just and reasonable rate per pole.   XH- C. ` ` Notice of Proposed Rulemaking  X1-  X -` ` 1. Potential Adjustment to the Pole Attachment Formula   X -  P17. ` ` As detailed below, we seek comment on the issues raised by SWB's petition. We  d(#?also seek comment on aspects of the current formula which some parties believe require  d(#modification. A group of electrical utilities recently filed a Whitepaper ("Whitepaper") in  X -anticipation of this Notice.S5 Gx {OP!- d(#ԍ See Whitepaper filed by the law firm of McDermott, Will and Emery on August 28, 1996. The Whitepaper  d(#was filed on behalf of the American Electric Power Service Corporation, Commonwealth Edison Company, Duke  d(#;Power Company, Entergy Services, Inc., Florida Power and Light Company, Northern States Power Company, The  d(#Southern Company and Washington Water Power Company. The Whitepaper is available in the Commission's public reference room under the docket in this proceeding.S  Xy- P18. ` ` The Whitepaper suggests that an increase in the current presumptive pole height  d(#is appropriate. The Whitepaper asserts that over time, and with increased demand, the average"b 5,-(-(ZZ"  d(#ypole height has increased to an average of 40 feet. At the same time, the Whitepaper contends  X- d(#that the usable space presumption should also be changed from 13.5 feet to 11 feet.:6Gx {Ob-ԍ Id. at 11.: Thus, we  d(#seek comment as to whether our current pole height and usable space presumptions are still  d(#applicable or whether these presumptions should be modified. The Whitepaper also makes certain  d(#recommendations with respect to accounts which should be included in the net cost of a bare  d(#ipole. These accounts include costs for lightning arresters and grounding installations. We agree  d(#Lthat such equipment installed to protect poles are included in the calculation of the net cost of  d(#a bare pole. We believe however, that current calculations already include all such lightning  XH-protectors and ground installations.7HZGx yOS - d(#ԍ Id. The electric utility companies contend that portions of Account 365 (Overhead conductors and devices)  d(#and Account 368 (Line transformers) should be included in the calculation of the net cost of a bare pole. We believe  d(#such costs are already part of the current formula. First, pole investment is included in Account 364 (Poles, towers  d(#;and fixtures), Account 365 (Overhead conductors and devices) and Account 369 (Services). Application of the .85  d(#xfactor eliminates the nonpole investment in these accounts, leaving in the valuation all polerelated investment  d(#;including lightning protectors and grounding installations. Second, we do not believe the equipment in Account 368  d(#(Line transformers) is polerelated. Rather, it is installed to protect equipment used to transform electricity to the  d(#voltage usable by customers. Thus, lightning protectors and grounding installations recorded in this account should not be included in the calculation of the net cost of a bare pole.   X - 19. ` ` The Commission has always recognized the NESC requirement that a 40 inch  X - d(#ysafety space must exist between electric lines and communication lines.8 * Gx {O- d(#ԍ See Second Report and Order, 72 FCC 2d at 6970; Third Report and Order, 77 FCC 2d at 190; Usable  {O-Space Order, slip op. at para. 7. The NESC requires a  d(#40 inch safety space to minimize the possibility of physical contact by employees working on  d(#cable television or telecommunications attachments with the potentially lethal electric power  X - d(#?lines.\9 Gx {O-ԍ Second Report and Order, 72 FCC 2d at 6970.\ We seek comment on the premise that the safety space emanates from a utility's  d(#.requirement to comply with the NESC and should properly be assigned to the utility as part of its usable space.  Xb-  $20. ` ` Poles of 30 feet or less are currently included in the calculation of cost of bare  d(#=pole. The Whitepaper contends that poles of 30 feet or less lack a sufficient amount of usable  X4- d(#kspace to accommodate multiple attachments.Q:4Gx {O!-ԍ See supra Whitepaper at note 53. Q In most cases these smaller poles have only  d(#electrical and/or telephone attachments affixed to them. We seek comment on whether including  d(#these smaller poles in the numerator and denominator of the cost of bare pole calculation results  d(#in a distorted determination of the actual costs of a bare pole. We also seek comment on this  d(#]proposal and whether poles of 30 feet or less lack a sufficient amount of usable space to accommodate multiple attachments. " :,-(-(ZZ"Ԍ X- Qԙ21. ` ` With regard to SWB's petition, we seek comment on the scope of the problem.  d(#jFor instance, we seek comment on the number of jurisdictions where accumulated depreciation  d(#ybalances currently exceed the gross pole investment. We also seek comment on the number of  d(#Kjurisdictions in which accumulated depreciation balances will exceed gross pole investment in the  d(#.near future. We seek comment on the rates being charged in such jurisdictions and how such rates comport with the statutory maximum rate.  X_- % 1. a. i.(1)(a)(i) 1) a) A 1 i.(1)(a)(i) 1) a)ٲ22. ` ` If commenters believe that a modification of the pole attachment formula is  d(#necessary, we seek comment on appropriate adjustments and the circumstances in which the  d(#adjustment should be made. In the alternative, if commenters believe that the frequency with  d(#Lwhich this problem occurs does not warrant any adjustment to the formulas, we seek comment  X -on whether a casebycase approach should be used. pp  X - 23. ` ` We recognize that many of the expenses associated with the ownership of poles  d(#Mcontinue after full recovery of investment in poles takes place. The inclusion of the cost of  d(#[removal in the calculation of depreciation for poles, however, tends to relieve attaching parties  X- d(#of this burden as full recovery of the poles investment takes place over time.[;xGx yO - d(#ԍ When net salvage is factored into depreciation rates as a negative amount, the net asset value to which the  d(#cost factors are applied in the formula may become inordinately low. This may result in some degree of under  d(#recovery. Such occurrences however, tend to be balanced by over recovery in the early phase of the pole's life.  d(#hWhen the net pole investment eventually becomes negative, certain cost factors of the Carrying Charge Rate of the  d(#fee formula become negative while others remain positive. As a result they offset one another. The resulting  d(#Carrying Charge Rate is applied to a negative balance that represents some portion of the cost of removal and not the remaining investment in poles.[ One possible  d(#modification that would eliminate this effect would be to adjust the current net investment  d(#approach. The adjustment would eliminate the net salvage amount from the accumulated  XK- d(#depreciation balance when the net value of poles becomes negative.<KGx {O-ԍ SWB Petition at 3. See also para. 15 supra (explaining net salvage amount). Removal of the net salvage  d(#>amount would, for the purpose of pole attachment rate calculation, restate the accumulated  d(#xdepreciation account to reflect only the depreciation of the pole investment, restoring the net pole  d(#investment to a positive balance. Calculating the appropriate amounts to recognize the continuing  d(#ycost of pole ownership could be done as currently provided in the formula. We seek comment  d(#on whether the application of the appropriate factors to the net pole amount, adjusted as proposed,  d(#would provide a fair rate for sharing in the recovery of continuing expenses associated with pole ownership.  X|- B24. ` ` Pending comment, we anticipate the need for this proposed adjustment will be  d(#limited to circumstances such as those suggested by SWB. We believe that the adjustment may  d(#properly be applied only after the net asset balance for poles has become negative. Each time  d(#a new rate is to be developed, the poles account would be examined before the accumulated"7 <,-(-(ZZ{"  d(#-depreciation balance is adjusted. If there is a positive balance, no adjustment to the accumulated  X-depreciation account would be made.=zGx yOb- d(#ԍ We believe that the proposed adjustment to accumulated depreciation for poles should be limited, since there  d(#is no record that rates generally need adjustment and general applicability of the proposed adjustment may tend to  d(#increase such pole attachment rates. This would allow for the continued recovery of those expenses that continue  d(#even after full recovery of investment occurs. As proposed, the exception would be triggered only when the net pole  d(#investment becomes negative due to the inclusion of the cost of removal in the depreciation account. As stated, in  {OJ- d(#Znote 59 supra, we believe that there is a certain desired balancing of over and under recovery that takes place by allowing the adjustment to be made only after the net pole investment becomes negative.   X- 25. ` ` We recognize that this proposed method of making an adjustment only after the  d(#<account balance becomes negative will result in a gradually declining rate that will eventually rise  d(#Lto a more consistent level over time after the proposed adjustment is made. Thus, even before  d(#-the pole account becomes negative, the inclusion of the disposal cost in depreciation could have  d(#the tendency to render pole attachment rates inordinately low. We believe however, that this is  d(#balanced by over recovery in the early phase of the pole's life. A new pole, for instance, should  d(#have very little maintenance requirements. Yet, in the early phase of its life, the full,  d(#undepreciated cost is included in the formula. Consequently, an excess provision for  d(#maintenance is included in the rate for the new pole. Normally, within the full complement of  d(#>poles, there should be a natural balancing of old and new poles. This results in an average  d(#condition that affects inclusion of the appropriate maintenance component in the formula. It  d(#yappears that such balancing may not occur when the cost of disposal works to reduce account  d(#balance for poles in the manner under consideration. Nevertheless, we believe it to be  d(#appropriate to require that the account be left unadjusted until full recovery has occurred. This  d(#iis necessary to balance over the life of every pole the excessive amounts included when the poles  d(#were new. We invite comment on this method and on whether it appropriately provides for such  d(#{balancing and then allows the rate to be stabilized at a level more reflective of the normal condition that prevails for the majority of operators not faced with such unusual disposal costs.  X-  26. ` ` The administrative expense, maintenance expense, depreciation expense, and at  d(#least some of the tax expenses associated with pole ownership are all expected to continue after  d(#!full recovery of the pole investment has occurred. Consequently, the calculation of the  d(#zappropriate factors for these components of the rate formula should be made using the pole  d(#Linvestment balance after adjustment has been made to the accumulated depreciation for poles.  d(#[We do not, however, propose to make any adjustments in the calculation of the return element  d(#zof the pole attachment rate formula. Since the full cost of poles will have been recovered at  d(#such time that the net balance for poles becomes negative, we do not believe that it would be  d(#Lappropriate to continue to provide pole owners with a return on their investment in poles. We  d(#propose, therefore, that the calculation of the return element should be made separately in the  d(#.manner currently prescribed. Thus, the return element would be computed on the basis of the  d(#unadjusted net pole balance and the result added (as a negative amount) to the carrying charges  d(#=for administrative, maintenance, depreciation, and tax expenses. We believe that the inclusion  d(#of this negative return element is reasonable and appropriate because the utility has, in effect," =,-(-(ZZ"  d(#already recovered more than the original cost of its pole plant through depreciation charges.  d(#While this "overrecovery" is necessary to defray the costs of disposing of the poles when they  d(#are retired from service, the utility has the use of any overrecovered amounts until the disposal  d(#-of the poles actually takes place. Our tentative conclusion is that a utility's pole attachment rates  d(#should reflect overrecovery in the form of a negative return carrying charge. We seek comment on this tentative conclusion.  X_- P27. ` ` Moreover, we tentatively conclude that the tax element of the rate formula should  d(#also be adjusted in those instances where the proposed adjustment to the accumulated depreciation  d(#account is made. The current formula includes a rate element for taxes in the Carrying Charge  d(#Rate. This includes federal and state income taxes as well as other operating taxes. A provision  d(#for income taxes is included in association with the provision for the cost of capital because the  d(#cost of capital is usually calculated as a return on investment, which includes an equity portion.  d(#The equity portion is considered profit, and as such, is taxable as income. Consequently, there  d(#usually arises an additional expense associated with the pole ownership, income tax expense,  d(#which is appropriately included in the calculation of the pole attachment charge. Our proposed  d(#adjustment to the formula, however, does not include the usual provision for the cost of capital,  d(#but rather an adjustment for the "overrecovery" pending disposal of the poles. Thus, under the  d(#proposed adjustment, there would be no return on equity included in the formula, and  d(#consequently there would be no associated income tax expense. Therefore, we tentatively  d(#conclude that the inclusion of federal and state income taxes in the formula should be  d(#kdiscontinued when the proposed adjustment is made to the depreciation account. We seek  d(#comment on this proposal to include only operating taxes, other than income taxes, in the rate formula.  X- 28. ` ` In proposing the use of this adjustment methodology, we are concerned that  d(#because telephone and electric utilities install poles over time at various original costs and  d(#because net salvage estimates vary over time, the extraction of the net salvage effect from  d(#accumulated depreciation could prove to be difficult. In addition, current FCC and Federal  d(#LEnergy Regulatory Commission accounting reports do not provide information with respect to  d(#the net salvage effect. We seek comment on the feasibility of this methodology as proposed.  d(#Additionally, we seek comment on the effectiveness of the methodology for the development of  d(#[fair pole attachment rates and on proposed modifications necessary to make this methodology  d(#effective in attaining this objective. Finally, commenters are requested to provide detailed assessments of the effects of this methodology on attachment rates.  X - 229. ` ` Alternatively, we seek comment on calculating pole attachment rates using gross  X!- d(#.book costs instead of net book costs.>!Gx yO&$- d(#ԍ Gross book cost is the original cost of the poles. Net book cost is the original cost of the poles less accumulated depreciation. Under this approach the cost of a bare pole and most"! >,-(-(ZZ "  X- d(#carrying charges are computed using gross book costs. ?Gx yOy- d(#ԍ The rate of return and the income tax carrying charges must continue to be computed using net book costs  d(#ibecause utility prices are generally set to allow them to earn an authorized rate of return on their net book costs.  d(#We currently compute the carrying charge elements for maintenance, depreciation and administrative expenses, as  d(#well as for return on investment and taxes, using net book costs. Under the proposed alternative, the carrying charge  d(#elements for maintenance, depreciation and administrative expenses would be calculated using gross book costs for  d(#Kboth total plant investment and pole investment. For example, the administrative expense element is currently  d(#calculated by dividing total administrative and general expenses by net book cost. This yields a percentage that is  d(#;applied to the net book cost of a bare pole. In contrast, a gross book cost approach to allocation would divide total  d(#administrative and general expenses by gross book costs. The resulting percentage would then be applied to the gross book cost of the bare pole. Prior to the Pole Attachment Order,  d(#lthe Commission had decided certain cases using gross book costs to calculate maximum  X- d(#<reasonable pole attachment rates.}@\` Gx {O - d(#Zԍ See, e.g., Capital Cities Cable, Inc. v. Southwestern Public Service Co., Mimeo No. 5431 (June 28, 1985);  {O - d(#Booth American Co. v. Duke Power Co., Mimeo 3064 (Com. Car. Bur., Mar. 22, 1984); Teleprompter of Greenwood, Inc. v. Duke Power Co., Mimeo 001866 (Com. Car. Bur., July 6, 1981).} The Commission also has stated that if both parties to a pole  X- d(#attachment complaint agree, the pole attachment rates may be computed using gross book costs.A Gx {O- d(#,ԍ TeleCable of Piedmont, Inc. et al. v. Duke Power Company, Hearing Designation Order, DA 951362, (Com. Car. Bur., June 15, 1995).  d(#The use of gross book costs appears consistent with the legislative history supporting Section 224,  d(#which indicates that the Commission has significant discretion in selecting a methodology for  Xx- d(#jdetermining just and reasonable pole attachment rates.IBxGx {O-ԍ 1977 Senate Report at 9. I We seek comment on this alternative  d(#to ensure a complete record on possible changes to the current formula. We note that because  d(#jof the way administrative costs are allocated, the application of gross book costs may produce  d(#La slightly higher rate. We seek comment on whether this assumption is true and if so what the impact of this change would be. ` `  X -` ` 2. Other Proposed Formula Adjustments  X - p30. ` ` When we adopted the revised pole attachment formula in 1987, the Uniform  X - d(#-System of Accounts for telephone companies was prescribed by our then existing Part 31 rules.FC pGx yO-ԍ 47 C.F.R. Part 31 (1987). F  d(#The formula specifies particular Part 31 accounts used to calculate the pole attachment rates  X{- d(#telephone companies may charge cable systems or telecommunications carriers.hD{Gx {O,#-ԍ Pole Attachment Order, 2 FCC Rcd at 4402, Appendix A. h In 1988, Part  Xd- d(#K31 was replaced by Part 32, which changed how telephone companies account for certain costs.<EdGx yO%-ԍ 47 C.F.R. Part 32.<  d(#We propose to revise our pole attachment formula for telephone companies so that it accurately"M"E,-(-(ZZ"  X- d(#>reflects our existing Part 32 Uniform System of Accounts.F Gx yOy- d(#ԍ We note that the Common Carrier Bureau has in the past provided guidance to telephone companies and cable  d(#systems on applying the formula using Part 32 accounts. Letter from Kenneth P. Moran, Chief, Accounting and  d(#Audits Division, Common Carrier Bureau, to Paul Glist, Esq., Cole, Raywid & Braverman, 5 FCC Rcd 3898 (Com. Car. Bur., June 22, 1990). We also propose to amend the  d(#formula to improve its accuracy. For example, certain expenses previously included in the  d(#formula as administrative expenses are not usually considered to be administrative in nature.  d(#Consequently it appears that the Part 31 mapping to the formula included nonadministrative  d(#expenses in the administrative component of the Carrying Charge Rate. Considering this, our  d(#proposed Part 32 mapping to the formula will not include such nonadministrative expense in the  d(#administrative component of the Carrying Charge Rate. Appendix B outlines our proposed Part  d(#L32 mapping to the formula and indicates the changes we propose to improve its accuracy. We seek comment on these proposals.  ` `  a. Administrative Component  X - A31. ` ` We propose to include amounts recorded in the following Part 32 accounts in the  d(# administrative component formula because they are all nonproject specific expenses of an  d(#administrative and general nature: Account 6720, General and administrative; Account 6710,  d(#iExecutive and planning; Account 6110, Network support expense; Account 6120, General support  d(#expenses; Account 6534, Plant operations administration expense; and Account 6535, Engineering  d(#expense. Appendix B maps the transition from Part 31 to Part 32, subject to several proposed changes discussed herein.  X4- 32. ` ` To further improve the accuracy of the administrative component of the formula,  d(#we propose to exclude earth station expenses recorded in Account 6231, Radio systems expense,  d(#Kfrom administrative expense calculations. We believe that because earth station expenses are not  d(#properly categorized as administrative and general expenses, they should not be included in the  d(#Zadministrative component formula. Under Part 31, the administrative component calculations also  d(#jincluded all amounts recorded in Accounts 671, Operating rents; 672, Relief and pensions; and  d(#.677, Expenses charged during construction. Some of these amounts are now recorded in non d(#administrative accounts. We propose to exclude those amounts recorded in nonadministrative accounts from our administrative component calculations.  XN- P33. ` ` Under Part 31, telephone company expenses for rental of poles from other entities  d(#was included in Account 671, Operating rents. As discussed in the previous paragraph, we are  d(#proposing to exclude the nonadministrative amounts previously included in Account 671 from  d(#Zthe administrative component of the pole attachment Carrying Charge Rate in the pole attachment  d(#formula. Under Part 32 however, the expense for rental of poles by telephone companies is now  d(#kincluded in Account 6411, Poles expense. Accordingly, it is now subject to inclusion in the  d(#.Carrying Charge Rate as part of the maintenance component. The rents in question, however,  d(#!are generally paid by telephone companies to utilities in order to secure rights to attach"!F,-(-(ZZ "  d(#telecommunications lines to the utility's poles. We do not believe, therefore, that the expense  d(#incurred by telephone companies for the rental of poles from other entities is related to the poles,  d(#or to the maintenance of poles, which attaching entities rent from other telephone companies.  d(#Furthermore, to include these rents in pole attachment rate computations could result in double  d(#payments by attaching entities once when the attaching entity attaches to a utility's poles and  d(#.again when the attaching entity pays an attachment fee to a telephone company renting poles  d(#yfrom the same utility. Thus for the purpose of computing pole attachment rates, we propose to  d(#Linclude an adjustment to the amount in Account 6411 to eliminate the expense associated with the rental of poles from other entities. We seek comment regarding this tentative proposal.  ` `  b. Maintenance Component  X - 34. ` ` The Commission has traditionally included Account 602:1, Repairs of pole lines,  d(#in the maintenance component formula. That account consisted primarily of laborrelated  d(#expenses; it did not, however, include the benefits associated with those salaries and wages.  d(#.Under Part 32, Account 6411, Poles expense, includes both salaries and wages and associated  d(#benefits. Because these benefits relate to pole maintenance activities, we propose to incorporate  d(#them in the maintenance component formula. Previously these expenses were included in the  d(#yadministrative expense component formula. We seek comment to our tentative proposal not to  d(#kinclude pole rents recorded in Account 6411 in the maintenance component formula, for the  X4-above stated reasons.IG4Gx {O-ԍ See supra. para 33.I  X- X` hp x (#%'0*,.8135@8: yOa-ԍ 11 FCC Rcd 15499, par. 11191248.L Rather, we are interested in the application of our  d(#iformula for the purpose of setting just and reasonable rates. Our present formula does not appear  d(#to take such differences into consideration, and our experience in resolving disputes relating to electric or other utility conduit has been limited.  X- 44. ` ` Section 224 provides that total conduit space and conduit space occupied by cable  X- d(#Ksystems is based on duct or conduit capacity.Sw yOi - d(#Yԍ A conduit is a tube that contains many ducts each of which may hold more than one single electric, telephone or cable wire. In addition, Section 224 states that "a rate is just  d(#and reasonable if it assures a utility the recovery of not less than the additional costs of providing  d(#-pole attachments, nor more than an amount determined by multiplying the percentage of the total  d(#[usable space, or the percentage of the total duct or conduit capacity, which is occupied by the  d(#Mpole attachment by the sum of the operating expenses and actual capital costs of the utility  X=- d(#attributable to the entire pole, duct, conduit, or rightorway."DT=` w yON'-ԍ 47 U.S.C.  224(d)(1). D The usable space can be"= T,-(-(ZZ"  d(#Lestimated based on the number of ducts or portion of a duct that an attachment occupies. We  d(#tentatively conclude that measuring the actual portion of duct space occupied by an attachment  d(#could be difficult and lead to further disputes between the parties. We seek comment on this  d(#tentative conclusion. Instead of attempting to measure the actual duct space occupied, we propose  d(#to adopt a new conduit methodology patterned after the halfduct methodology used by the  X- d(#Massachusetts Department of Public Utilities.Uw yO- d(#ԍ The Commonwealth of Massachusetts has the authority to regulate the rates, terms, and conditions for pole  {O- d(#attachments under Section 224 of the Communications Act of 1934, as amended. See 47 U.S.C.  224(c)(1). We  {O- d(# note that the Massachusetts pole attachment regulations are similar to Section 224. See also Multimedia Cablevision,  {Ob - d(#KInc. v. Southwestern Bell Telephone, CS Docket No. 96181, FCC 96362 (September 3, 1996); see also Greater  {O, -Media, Inc. v. New England Telephone and Telegraph, Massachusetts D.P.U. 91218 (1992).  In order to apply the halfduct formula, a  d(#determination of the cost per foot of one duct must be made, and then divided by onehalf to  X_- d(#produce a "halfduct convention." In the Greater Media decision, the Massachusetts Department  d(#of Public Utilities ("MDPU") found that a halfduct methodology was a reasonable approach to  d(#establish a conduit attachment rate for the complainant cable operator. The MDPU held that  d(#since the space occupied by the cable operator required the use of only one halfduct, and that  d(#[its use did not preclude the use of the other half of the duct, the cable operator should only be  d(#Mcharged for a halfduct. Moreover, the MDPU found that unless a cable operator's conduit  X -precludes use by other conduit attachers, the cable operator should pay only for a halfduct.  X - D45. ` ` This methodology determines the maximum just and reasonable rate per  X-attachment, per duct foot that can be charged. The proposed formula is represented as follows:hVw yO-ԍ The proposed formula is attached to this Notice as Appendix C.h     Xd- Maximum =  1 Duct  X 1 X Net Linear X Carrying  Rate Avg. # of Ducts 2 Cost of Conduit Charges ` `  Adjustments ` `  for reserved ` `  ducts  d(#We refer to the first fraction in the above formula as the "occupied space component" of the  d(#conduit attachment formula. #Xj\  P6G;9XP#If a utility reserves one duct for maintenance, and if the attacher  d(#has the right to utilize that reserved space in the event of a cable break or benefits in any way  d(#from the reservation of that space, that reserved duct would be considered unusable space. In that  d(#event, it is necessary to include an "adjustment for reserved ducts" element in the formula to  d(#reduce the average number of ducts in the denominator of the occupied space component of the  d(#formula. The adjustment for reserved ducts element would be the number of reserved ducts that  d(#all attachers have the right to use in the event of a cable break or that they otherwise receive  d(#benefit from in any other way. If the attacher has no right to use that space or receives no benefit from that duct, we propose that the denominator should not be reduced. "V,-(-(ZZ"Ԍ X- 46. ` ` We seek comment on our proposed rebuttable presumption that a cable attacher  d(#occupies a halfduct of space in order to factor a reasonable conduit attachment rate. We  d(#tentatively conclude that the halfduct methodology is the simplest and most reasonable  d(#.approximation of the actual space occupied by an attacher. In addition, we tentatively believe  d(#that the halfduct methodology is the most straight forward approach to calculating a conduit  d(#attachment fee because it does not require the parties to prove the actual amount of the duct the  d(#attachment occupies. We solicit comment on these tentative conclusions. We also seek comment  d(#Lon any additional proposals that would provide a simple and administratively efficient conduit methodology.   X - V.Other Matters  X -  47. ` ` We recognize that the issues raised in this Notice are broad in scope, and there  X - d(#may be additional issues we have not specifically addressed in the Notice. Commenters may  d(#submit proposals regarding the implementation of these pole attachment reforms. We welcome  d(#kthese comments and also seek proposals to ease the burdens of regulation for all interested parties.  Xf- o48. ` ` Section 257 of the Act provides for the elimination of "market entry barriers for  d(#entrepreneurs and other small businesses in the provision and ownership of telecommunications  X8- d(#services and information services."@W8w yO-ԍ 47 U.S.C.  257(a).@ We believe that market entry barriers are minimized for  d(#.small cable operators and telecommunications carriers by the application of Section 224 which requires just, reasonable and nondiscriminatory rates.  X- VI.INITIAL REGULATORY FLEXIBILITY ACT ANALYSES  X-  X- 49. ` ` As required by Section 603 of the Regulatory Flexibility Act (RFA),<XXw yO-ԍ 5 U.S.C.  603.< the  d(#Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected  d(#[significant economic impact on small entities by the policies and rules proposed in this Notice.  d(#0Written public comments are requested on the IRFA. These comments must be filed in  d(#accordance with the same filing deadlines as comments on the rest of the Notice, but they must  d(#have a separate and distinct heading designating them as responses to the regulatory flexibility analysis.  X- 50. ` ` Need for Action and Objectives of the Proposed Rule. In 1987, the Commission  d(#Zadopted its current pole attachment formula for calculating the maximum just and reasonable rates  X - d(#yutilities may charge cable systems for pole attachments. In this Notice, we seek comment as to  d(#whether the current pole attachment formula should be modified or adjusted to eliminate certain  d(#anomalies and rate instabilities particular parties assert have occurred. We have also tentatively""X,-(-(ZZ!"  d(#proposed such possible modifications to the formula, should altering the formula become  d(#necessary, that would improve the accuracy of the formula. In addition, we propose changes to  d(#the formula to reflect the present Part 32 accounting system that replaced the former Part 31 rules  d(#in 1988. Finally, we propose a new conduit methodology that will determine the maximum just  d(#and reasonable rates utilities may charge   cable systems and telecommunications carriers for their attachments to conduit systems.  X_- 51. ` ` Legal Basis. The authority for the action as proposed for this rulemaking is  d(#contained in Sections 1, 4(i), 4(j), 224, 303 and 403 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 224, 303 and 403.  X - 52. ` ` Description and Estimate of the Number of Small Entities Impacted. For the  d(#purposes of this Notice, the RFA defines a "small business" to be the same as a small business  d(#.concern under the Small Business Act, 15 U.S.C.  632, unless the Commission has developed  X - d(#[one or more definitions that are appropriate to its activities.Y w yO;-ԍ 5 U.S.C.  601(3)(incorporating by reference the definitions of "small business concern" in 5 U.S.C.  632). Under the Small Business Act, a  d(#"small business concern" is one that: (1) is independently owned and operated; (2) is not  d(#dominant in its field of operation; and (3) satisfies any additional criteria established by the Small  X}- d(#Business Administration (SBA).Z}Xw {O- d(#ԍ 15 U.S.C.  632. See e.g., Brown Transport Truckload Line v. Southern Wipers Inc., 176 B.R. 82 (N.D. Ga. 1994). The SBA has defined a small business for Standard Industrial  d(#Classification (SIC) category 4813 (Telephone Communications, except Radiotelephone) to be  XO-a small entity when it has fewer than 1500 employees.A[Ow yO-ԍ 13 C.F.R.  121.201.A  X!- A.` ` Utilities  X- 53. ` ` Total Number of Utilities Affected. The decisions and rules adopted herein may  d(#have a significant effect on a substantial number of utility companies. Section 224 of the Statue  d(#defines a "utility" as "any person who is a local exchange carrier or an electric, gas, water, steam,  d(#jor other public utility, and who owns or controls poles, ducts, conduits, or rightsofway used,  d(#[in whole or in part, for any wire communications. Such term does not include any railroad, any  d(#person who is cooperatively organized, or any person owned by the Federal Government or any  d(#State." The SBA has provided the Commission with a list of utility firms which may be effected  d(#by this rulemaking. Based upon the SBA's list, the Commission seeks comment as to whether all of the following utility firms are relevant to Section 224. ` ` 1. Electric Utilities (SIC 4911, 4931 & 4939) " X- `"54. ` ` Electric Services. The SBA has developed a definition for small electric utility  d(#firms. The Census Bureau reports that a total of 1,379 electric utilities were in operation for at" B[,-(-(ZZ"  d(#least one year at the end of 1992. According to SBA, a small electric utility is an entity whose  d(#gross revenues did not exceed five million dollars in 1992. The Census Bureau reported that 447  X- d(#{of the 1,379 firms listed had total revenues below five million dollars. Electric and Other  X- d(#jServices Combined. The SBA has classified this entity as a utility whose business is primarily  d(#electric, less than 95%, in combination with some other type of service. The Census Bureau  d(#reports that a total of 135 such firms were in operation for at least one year at the end of 1992.  d(#The SBA's definition of a small electric and other services combined utility is a firm whose gross  d(#revenues did not exceed five million dollars in 1992. The Census Bureau reported that 45 of the  XL- d(#135 firms listed had total revenues below five million dollars. Combination Utilities, Not  X7- d(#Elsewhere Classified. The SBA defines this utility has providing a combination of electric, gas,  d(#and other services which are not otherwise classified. The Census Bureau reports that a total of  d(#=79 such utilities were in operation for at least one year at the end of 1992. According to SBA's  d(#definition, a small combination utility is a firm whose gross revenues did not exceed five million  d(#dollars in 1992. The Census Bureau reported that 63 of the 79 firms listed had total revenues  X -below five million dollars.  ` ` 2. Gas Production and Distribution (SIC 4922, 4923, 4924, 4925 & 4932)  Xj- 55. ` ` Natural Gas Transmission. The SBA's definition of a small natural gas transmitter  d(#is an entity who is engaged in the transmission and storage of natural gas. The Census Bureau  d(#reports that a total of 144 such firms were in operation for at least one year at the end of 1992.  d(#According to SBA's definition, a small natural gas transmitter is an entity whose gross revenues  d(#jdid not exceed five million dollars in 1992. The Census Bureau reported that 70 of the 144 firms  X- d(#listed had total revenues below five million dollars. Natural Gas Transmission and Distribution.  X- d(#The SBA has classified this entity as a utility who transmits and distributes natural gas for sale.  d(#-The Census Bureau reports that a total of 126 such entities were in operation for at least one year  d(#at the end of 1992. The SBA's definition of a small natural gas transmitter and distributer is a  d(#firm whose gross revenues did not exceed five million dollars. The Census Bureau reported that  X- d(#43 of the 126 firms listed had total revenues below five million dollars. Natural Gas  Xs- d(#Distribution. The SBA defines a natural gas distributor as an entity that distributes natural gas  d(#[for sale. The Census Bureau reports that a total of 478 such firms were in operation for at least  d(#one year at the end of 1992. According to the SBA, a small natural gas distributor is an entity  d(#jwhose gross revenues did not exceed five million dollars in 1992. The Census Bureau reported  X- d(#that 267 of the 478 firms listed had total revenues below five million dollars. Mixed,  X- d(#Manufactured, or Liquefied Petroleum Gas Production and/or Distribution. The SBA has  d(#classified this entity as a utility who engages in the manufacturing and/or distribution of the sale  d(#of gas. These mixtures may include natural gas. The Census Bureau reports that a total of 43  d(#such firms were in operation for at least one year at the end of 1992. The SBA's definition of  d(#a small mixed, manufactured or liquefied petroleum gas producer or distributor is a firm whose  d(#ygross revenues did not exceed five million dollars in 1992. The Census Bureau reported that 31  X|$- d(# of the 43 firms listed had total revenues below five million dollars. Gas and Other Services  Xg%- d(#Combined. The SBA has classified this entity as a gas company whose business is less than 95%  d(#gas, in combination with other services. The Census Bureau reports that a total of 43 such firms  d(#were in operation for at least one year at the end of 1992. According to the SBA, a small gas";'[,-(-(ZZ%"  d(#and other services combined utility is a firm whose gross revenues did not exceed five million  d(#dollars in 1992. The Census Bureau reported that 24 of the 43 firms listed had total revenues below five million dollars.  X-` ` 3. Water Supply (SIC 4941)  Xv-  A56. ` ` Water Supply. The SBA defines a water utility as a firm who distributes and sells  d(#water for domestic, commercial and industrial use. The Census Bureau reports that a total of  d(#/3,169 water utilities were in operation for at least one year at the end of 1992. According to  d(#ySBA's definition, a small water utility is a firm whose gross revenues did not exceed five million  d(#]dollars in 1992. The Census Bureau reported that 3,065 of the 3,169 firms listed had total revenues below five million dollars. ` ` 4. Sanitary Systems (SIC 4952, 4953 & 4959)   X -  P57. ` ` Sewerage Systems. The SBA defines a sewage firm as a utility whose business is  d(#jthe collection and disposal of waste using sewage systems. The Census Bureau reports that a  d(#total of 410 such firms were in operation for at least one year at the end of 1992. According to  d(#SBA's definition, a small sewerage system is a firm whose gross revenues did not exceed five  d(#=million dollars. The Census Bureau reported that 369 of the 410 firms listed had total revenues  X8- d(#below five million dollars. Refuse Systems. The SBA defines a firm in the business of refuse  d(#[as an establishment whose business is the collection and disposal of refuse "by processing or  d(#destruction or in the operation of incinerators, waste treatment plants, landfills, or other sites for  d(#jdisposal of such materials." The Census Bureau reports that a total of 2,287 such firms were in  d(#operation for at least one year at the end of 1992. According to SBA's definition, a small refuse  d(#system is a firm whose gross revenues did not exceed six million dollars. The Census Bureau  d(#reported that 1,908 of the 2,287 firms listed had total revenues below six million dollars.  X- d(#Sanitary Services, Not Elsewhere Classified. The SBA defines these firms as engaged in sanitary  d(#services. The Census Bureau reports that a total of 1,214 such firms were in operation for at  d(#=least one year at the end of 1992. According to SBA's definition, a small sanitary service firms  d(#gross revenues did not exceed five million dollars. The Census Bureau reported that 1,173 of the 1,214 firms listed had total revenues below five million dollars. ` ` 5. Steam and Air Conditioning Supply (SIC 4961)  X- 58.  ` ` Steam and Air Conditioning Supply. The SBA defines a steam and air  d(#[conditioning supply utility as a firm who produces and/or sells steam and heated or cooled air.  d(#The Census Bureau reports that a total of 55 such firms were in operation for at least one year  d(#at the end of 1992. According to SBA's definition, a steam and air conditioning supply utility  d(#is a firm whose gross revenues did not exceed nine million dollars. The Census Bureau reported  Xr$-that 30 of the 55 firms listed had total revenues below nine million dollars.  "[%[,-(-(ZZ $"Ԍ` ` 6. Irrigation Systems (SIC 4971)  X- 59.  ` ` Irrigation Systems. The SBA defines irrigation systems as firms who operate water  d(#supply systems for the purpose of irrigation. The Census Bureau reports that a total of 297 firms  d(#zwere in operation for at least one year at the end of 1992. According to SBA's definition, an  d(#irrigation service is a firm whose gross revenues did not exceed five million dollars. The Census  d(#Bureau reported that 286 of the 297 firms listed had total revenues below five million dollars.  XJ-   X3- B.` ` Telephone Companies (SIC 4813)  X - 60. ` ` Total Number of Telephone Companies Affected. Many of the decisions and rules  d(#Nadopted herein may have a significant effect on a substantial number of small telephone  d(#companies. The Census Bureau reports that, at the end of 1992, there were 3,497 firms engaged  X - d(#-in providing telephone services, as defined therein, for at least one year.\ w {O;- d(#{ԍ United States Department of Commerce, Bureau of the Census, 1992 Census of Transportation,  {O-Communications, and Utilities: Establishment and Firm Size, at Firm Size 1123 (1995)(1992 Census).  This number contains  d(#a variety of different categories of carriers, including local exchange carriers (LECs),  d(#interexchange carriers, competitive access providers, cellular carriers, mobile service carriers,  d(#Koperator service providers, pay telephone operators, PCS providers, covered SMR providers, and  d(#resellers. It seems certain that some of those 3,497 telephone service firms may not qualify as  d(#?small entities or small incumbent LECs because they are not "independently owned and  X8- d(#operated."C]8$w yO -ԍ 15 U.S.C.  632(a)(1).C It seems reasonable to conclude, therefore, that fewer than 3,497 telephone service  d(#firms are small entity telephone service firms or small incumbent LECs that may be affected by  d(#=this Notice. Below, we estimate the potential number of small entity telephone service firms or small incumbent LEC's that may be affected by this service category.  X- 61. ` ` Wireline Carriers and Service Providers. SBA has developed a definition of small  d(#entities for telephone communications companies other than radiotelephone (wireless) companies.  d(#The Census Bureau reports that, there were 2,321 such telephone companies in operation for at  d(#least one year at the end of 1992. According to SBA's definition, a small business telephone  Xk- d(#-company other than a radiotelephone company is one employing fewer than 1,500 persons.u^kw yO -ԍ 13 C.F.R.  121.201, Standard Industrial Classification (SIC) Code 4812.u All  d(#but 26 of the 2,321 nonradiotelephone companies listed by the Census Bureau were reported to  d(#Lhave fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1,500  d(#employees, there would still be 2,295 nonradiotelephone companies that might qualify as small  d(#jentities or small incumbent LECs. Although it seems certain that some of these carriers are not  d(#independently owned and operated, we are unable at this time to estimate with greater precision  d(#the number of wireline carriers and service providers that would qualify as small business  d(#concerns under SBA's definition. Consequently, we estimate that there are fewer than 2,295" D^,-(-(ZZ"  d(#Ksmall entity telephone communications companies other than radiotelephone companies that may be affected by the decisions or rules that come about from this Notice.  X-  X- $62. ` ` Local Exchange Carriers. Neither the Commission nor SBA has developed a  d(#definition of small providers of local exchange services (LECs). The closest applicable definition  d(#iunder SBA rules is for telephone communications companies other than radiotelephone (wireless)  d(#companies (SIC 4813). The most reliable source of information regarding the number of LECs  d(#nationwide of which we are aware appears to be the data that we collect annually in connection  d(#with the Telecommunications Relay Service (TRS). According to our most recent data, 1,347  X3- d(#companies reported that they were engaged in the provision of local exchange services.f_^3w {O - d(#[ԍ Federal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  {Ov - d(#Revenue: TRS Fund Worksheet Data, Tbl. 21 (Average Total Telecommunications Revenue Reported by Class of  {O@ -Carrier) (Feb.1996) (TRS Worksheet). f  d(#-Although it seems certain that some of these carriers are not independently owned and operated,  d(#or have more than 1,500 employees, we are unable at this time to estimate with greater precision  d(# the number of LECs that would qualify as small business concerns under SBA's definition.  d(#Consequently, we estimate that there are fewer than 1,347 small incumbent LECs that may be affected by this Notice.  X- 63. ` ` Interexchange Carriers. Neither the Commission nor SBA has developed a  d(#definition of small entities specifically applicable to providers of interexchange services (IXCs).  d(#LThe closest applicable definition under SBA rules is for telephone communications companies  d(#other than radiotelephone (wireless) companies (SIC 4813). The most reliable source of  d(#=information regarding the number of IXCs nationwide of which we are aware appears to be the  d(#data that we collect annually in connection with TRS. According to our most recent data, 97  X - d(#companies reported that they were engaged in the provision of interexchange services.3` w {O-ԍ Id.3 Although  d(#yit seems certain that some of these carriers are not independently owned and operated, or have  d(#>more than 1,500 employees, we are unable at this time to estimate with greater precision the  d(#number of IXCs that would qualify as small business concerns under SBA's definition.  d(#Consequently, we estimate that there are fewer than 97 small entity IXCs that may be affected by the decisions and rules adopted in this Notice.   Xi- 64. ` ` Competitive Access Providers. Neither the Commission nor SBA has developed  d(#=a definition of small entities specifically applicable to providers of competitive access services  d(#(CAPs). The closest applicable definition under SBA rules is for telephone communications  d(#companies other than radiotelephone (wireless) companies (SIC 4813). The most reliable source  d(#of information regarding the number of CAPs nationwide of which we are aware appears to be  d(#-the data that we collect annually in connection with the TRS. According to our most recent data,  X- d(#30 companies reported that they were engaged in the provision of competitive access services.3aw {O'-ԍ Id.3 "a,-(-(ZZ"  d(#-Although it seems certain that some of these carriers are not independently owned and operated,  d(#or have more than 1,500 employees, we are unable at this time to estimate with greater precision  d(#Mthe number of CAPs that would qualify as small business concerns under SBA's definition.  d(#=Consequently, we estimate that there are fewer than 30 small entity CAPs that may be affected by the decisions and rules adopted in this Notice.  Xv-  65. ` ` Wireless (Radiotelephone) Carriers. Although wireless carriers have not  d(#=historically affixed their equipment to utility poles, pursuant to the terms of the 1996 Act, such  d(#entities are entitled to do so with rates consistent with the Commission's rules discussed herein.  d(#LSBA has developed a definition of small entities for radiotelephone (wireless) companies. The  d(#.Census Bureau reports that there were 1,176 such companies in operation for at least one year  X - d(#jat the end of 1992.Rb w {O~ -ԍ See 1992 Census supra at note 92. R According to SBA's definition, a small business radiotelephone company  X - d(#is one employing fewer than 1,500 persons.Cc Zw {O-ԍ See supra note 95. C The Census Bureau also reported that 1,164 of  d(#those radiotelephone companies had fewer than 1,000 employees. Thus, even if all of the  d(#_remaining 12 companies had more than 1,500 employees, there would still be 1,164  d(#radiotelephone companies that might qualify as small entities if they are independently owned and  d(#Zoperated. Although it seems certain that some of these carriers are not independently owned and  d(#operated, we are unable at this time to estimate with greater precision the number of  d(#radiotelephone carriers and service providers that would qualify as small business concerns under  d(#?SBA's definition. Consequently, we estimate that there are fewer than 1,164 small entity radiotelephone companies that may be affected by this Notice.  X- 366. ` ` Cellular Service Carriers. Neither the Commission nor SBA has developed a  d(#.definition of small entities specifically applicable to providers of cellular services. The closest  d(#applicable definition under SBA rules is for telephone communications companies other than  d(#lradiotelephone (wireless) companies (SIC 4813). The most reliable source of information  d(#regarding the number of cellular service carriers nationwide of which we are aware appears to  d(#jbe the data that we collect annually in connection with the TRS. According to our most recent  X- d(#data, 789 companies reported that they were engaged in the provision of cellular services.3dw {O-ԍ Id.3  d(#-Although it seems certain that some of these carriers are not independently owned and operated,  d(#or have more than 1,500 employees, we are unable at this time to estimate with greater precision  d(#<the number of cellular service carriers that would qualify as small business concerns under SBA's  d(#jdefinition. Consequently, we estimate that there are fewer than 789 small entity cellular service carriers that may be affected by the decisions and rules adopted in this Notice.  X- 67. ` ` Mobile Service Carriers. Neither the Commission nor SBA has developed a  d(#definition of small entities specifically applicable to mobile service carriers, such as paging  d(#companies. The closest applicable definition under SBA rules is for telephone communications"!~d,-(-(ZZ "  d(#?companies other than radiotelephone (wireless) companies. The most reliable source of  d(#information regarding the number of mobile service carriers nationwide of which we are aware  d(#appears to be the data that we collect annually in connection with the TRS. According to our  d(#most recent data, 117 companies reported that they were engaged in the provision of mobile  X- d(#yservices.3ew {O-ԍ Id.3 Although it seems certain that some of these carriers are not independently owned  d(#and operated, or have more than 1,500 employees, we are unable at this time to estimate with  d(#greater precision the number of mobile service carriers that would qualify under SBA's definition.  d(#Consequently, we estimate that there are fewer than 117 small entity mobile service carriers that may be affected by the decisions and rules adopted in this Notice.  X - 68. ` ` Broadband PCS Licensees. The broadband PCS spectrum is divided into six  d(#frequency blocks designated A through F. As set forth in 47 C.F.R.  24.720(b), the Commission  d(#has defined "small entity" in the auctions for Blocks C and F as a firm that had average gross  d(#revenues of less than $40 million in the three previous calendar years. Our definition of a "small  X - d(#entity" in the context of broadband PCS auctions has been approved by SBA.f Zw {O- d(#ԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No.93253, Fifth Report and Order, 9 FCC Rcd 5532, 558184 (1994). The  d(#zCommission has auctioned broadband PCS licenses in Blocks A, B, and C. We do not have  d(#jsufficient data to determine how many small businesses bid successfully for licenses in Blocks  d(#=A and B. There were 90 winning bidders that qualified as small entities in the Block C auction.  d(#Based on this information, we conclude that the number of broadband PCS licensees affected by  d(#Mthe decisions in this Notice includes, at a minimum, the 90 winning bidders that qualified as small entities in the Block C broadband PCS auction.  X-  69. ` ` At present, no licenses have been awarded for Blocks D, E, and F of broadband  d(#kPCS spectrum. Therefore, there are no small businesses currently providing these services.  d(#However, a total of 1,479 licenses will be awarded in the D, E, and F Block broadband PCS  d(#auctions, which are scheduled to begin on August 26, 1996. Of the 153 qualified bidders for the  X- d(#/D,E, and F Block PCS auctions, 105 were small businesses.gw {O- d(#ԍ See Auction of Broadband Personal Communications Services (D, E and F blocks), Public Notice, DA 961400 (rel. August 20, 1996). Eligibility for the 493 F Block  X- d(#licenses is limited to entrepreneurs with average gross revenues of less than $125 million.h^w {OT!- d(#ԍ  Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and the  {O"- d(#.Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 9659, Amendment of the Commission's  {O"-Cellular/PCS CrossOwnership Rule, Report and Order, GN Docket No. 90314, FCC 96278 (rel. June 24, 1996). We  d(#cannot estimate, however, the number of these licenses that will be won by small entities under  d(#\our definition, nor how many small entities will win D or E Block licenses. Given that nearly  XP- d(#all radiotelephone companies have fewer than 1,000 employeestiP4 w {O5'-ԍ  1992 Census, Table 5, Employment Size of Firms: 1992, SIC Code 4812.t and that no reliable estimate"P i,-(-(ZZ"  d(#of the number of prospective D, E, and F Block licensees can be made, we assume for purposes  d(#of this FRFA, that all of the licenses in the D, E, and F Block Broadband PCS auctions may be  d(#Mawarded to small entities under our rules, which may be affected by the decisions and rules adopted in this Notice.   X- _70. ` ` SMR Licensees. Pursuant to 47 C.F.R.  90.814(b)(1), the Commission has defined  d(#"small entity" in auctions for geographic area 800 MHz and 900 MHz SMR licenses as a firm  d(#.that had average annual gross revenues of less than $15 million in the three previous calendar  d(#>years. This definition of a "small entity" in the context of 800 MHz and 900 MHz SMR has  X3- d(#jbeen approved by the SBA.!j3w {O - d(#Yԍ  See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside  d(#xthe Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized Mobile  {O> - d(#Radio Pool, PR Docket No. 89583, Second Order on Reconsideration and Seventh Report and Order, 11 FCC Rcd  {O - d(#2639, 2693702 (1995); Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR  {O - d(#wSystems in the 800 MHz Frequency Band, PR Docket No. 93144, First Report and Order, Eighth Report and Order, and Second Further Notice of Proposed Rulemaking, 11 FCC Rcd 1463 (1995).! The rules adopted in this Order may apply to SMR providers in  d(#the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained  d(#extended implementation authorizations. We do not know how many firms provide 800 MHz  d(#jor 900 MHz geographic area SMR service pursuant to extended implementation authorizations,  d(#nor how many of these providers have annual revenues of less than $15 million. We assume, for  d(#purposes of this FRFA, that all of the extended implementation authorizations may be held by small entities, which may be affected by the decisions and rules adopted in this Notice.   X{- `71. ` ` The Commission recently held auctions for geographic area licenses in the 900  d(#yMHz SMR band. There were 60 winning bidders who qualified as small entities in the 900 MHz  d(#auction. Based on this information, we conclude that the number of geographic area SMR  d(#licensees affected by the rule adopted in this Order includes these 60 small entities. No auctions  d(#{have been held for 800 MHz geographic area SMR licenses. Therefore, no small entities  d(#currently hold these licenses. A total of 525 licenses will be awarded for the upper 200 channels  d(#in the 800 MHz geographic area SMR auction. However, the Commission has not yet determined  d(#=how many licenses will be awarded for the lower 230 channels in the 800 MHz geographic area  d(#SMR auction. There is no basis, moreover, on which to estimate how many small entities will  d(#win these licenses. Given that nearly all radiotelephone companies have fewer than 1,000  d(#employees and that no reliable estimate of the number of prospective 800 MHz licensees can be  d(#made, we assume, for purposes of this FRFA, that all of the licenses may be awarded to small entities who, thus, may be affected by the decisions in this Notice.  X9- 72. ` ` Resellers. Neither the Commission nor SBA has developed a definition of small  d(#entities specifically applicable to resellers. The closest applicable definition under SBA rules is  d(#for all telephone communications companies (SIC 4812 and 4813). The most reliable source of  d(#information regarding the number of resellers nationwide of which we are aware appears to be  d(#-the data that we collect annually in connection with the TRS. According to our most recent data,"Hj,-(-(ZZ"  X- d(#206 companies reported that they were engaged in the resale of telephone services.3kw {Oy-ԍ Id.3 Although  d(#yit seems certain that some of these carriers are not independently owned and operated, or have  d(#>more than 1,500 employees, we are unable at this time to estimate with greater precision the  d(#number of resellers that would qualify as small business concerns under SBA's definition.  d(#Consequently, we estimate that there are fewer than 206 small entity resellers that may be affected by the decisions and rules adopted in this Notice.  X_- C.` ` Cable System Operators (SIC 4841)  X1- B73. ` ` Cable Systems: SBA has developed a definition of small entities for cable and  d(#other pay television services, which includes all such companies generating less than $11 million  d(#in revenue annually. This definition includes cable systems operators, closed circuit television  d(#\services, direct broadcast satellite services, multipoint distribution systems, satellite master  d(#antenna systems and subscription television services. According to the Census Bureau, there were  d(#i1,323 such cable and other pay television services generating less than $11 million in revenue that  X -were in operation for at least one year at the end of 1992.Rl Zw {O-ԍ See 1992 Census supra at note 92. R  X{- 74. ` ` The Commission has developed its own definition of a small cable system operator  d(#[for the purposes of rate regulation. Under the Commission's rules, a "small cable company," is  XM- d(#<one serving fewer than 400,000 subscribers nationwide.m$Mw yO- d(#Kԍ 47 CFR.  76.901(e). The Commission developed this definition based on its determinations that a small  {O- d(#cable system operator is one with annual revenues of $100 million or less. Implementation of Sections of the 1992  {O|- d(#iCable Act: Rate Regulation, Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393.  Based on our most recent information,  d(#we estimate that there were 1,439 cable systems that qualified as small cable system operators  X!- d(#at the end of 1995.n!w {O-ԍ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996 (based on figures for Dec. 30, 1995). Since then, some of those companies may have grown to serve over  d(#400,000 subscribers, and others may have been involved in transactions that caused them to be  d(#[combined with other cable systems. Consequently, we estimate that there are fewer than 1,439  d(#small entity cable system operators that may be affected by the decisions and rules proposed in this Notice.  X- R75. ` ` The Communications Act also contains a definition of a small cable system  d(#operator, which is "a cable operator that, directly or through an affiliate, serves in the aggregate  d(#.fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity  XR- d(#or entities whose gross annual revenues in the aggregate exceed $250,000,000."CoRj w yOm&-ԍ 47 U.S.C. 543(m)(2).C The  d(#<Commission has determined that there are 61,700,000 subscribers in the United States. Therefore,"; o,-(-(ZZ"  d(#we found that an operator serving fewer than 617,000 subscribers shall be deemed a small  d(#operator, if its annual revenues, when combined with the total annual revenues of all of its  X- d(#affiliates, do not exceed $250 million in the aggregate.Apw yOK-ԍ 47 CFR  76.1403(b).A Based on available data, we find that  X- d(#Zthe number of cable systems serving 617,000 subscribers or less totals 1,450.CqXw {O-ԍ See supra note 109.C Although it seems  d(#certain that some of these cable system operators are affiliated with entities whose gross annual  d(#revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the  d(#number of cable system operators that would qualify as small cable systems under the definition in the Communications Act.  X1- 76. ` ` Municipalities: The term "small governmental jurisdiction" is defined as  X - d(#"governments of . . . districts, with a population of less than fifty thousand."?r w yO-ԍ 5 U.S.C.  601(5).? There are 85,006  X - d(#/governmental entities in the United States.s zw {O0-ԍ United States Dept. of Commerce, Bureau of the Census, 1992 Census of Governments. This number includes such entities as states,  d(#counties, cities, utility districts and school districts. We note that Section 224 of the Act  d(#Lspecifically excludes any utility which is cooperatively organized, or any person owned by the  d(#Federal Government or any State. For this reason, we believe that Section 224 will have minimal  d(#yif any affect upon small municipalities. Further, there are 18 States and the District of Columbia  d(#Kthat regulate pole attachments pursuant to Section 224(c)(1). Of the 85,006 governmental entities,  d(#{38,978 are counties, cities and towns. The remainder are primarily utility districts, school  d(#jdistricts, and states. Of the 38,978 counties, cities and towns, 37,566 or 96%, have populations of fewer than 50,000.  X-  77. ` ` Reporting, Recordkeeping, and other Compliance Requirements: The rules  d(#proposed in this Notice may require a change in certain record keeping requirements to reflect  d(#modification of Part 31 to Part 32 accounting, as well as maintaining specific records if  d(#adjustments proposed are used by the pole owner for the development of attachment rates. We  d(#seek comment on this tentative conclusion. In addition, as proposed in this Notice, a pole owner may have to adjust his pole and conduit attachment rates.  X- }78. ` ` Significant Alternatives Which Minimize the Impact on Small Entities and which  Xk- d(#xare Consistent with State Objectives: The first possible option is to keep the rules in their current  XV- d(#=form, for which we have sought comment.CtV w {O$-ԍ See supra para. 22.C The alternative would be to adjudicate anomalies  d(#resulting from the current pole attachment formula on a casebycase bases, thereby minimizing  d(#>impact on all interested parties. In addition, with respect to conduit methodology, we have  d(#Zproposed a methodology that relies on a rebuttable presumption that an attachment occupies one" t,-(-(ZZ"  d(#jhalf of a duct space. This rebuttable presumption can be used by small entities to minimize the  d(# detail required to establish certain rates for use of conduit. If such methodology was more  d(#burdensome to a small entity, such entity could use its actual records for establishing the  d(#Lappropriate rate. We seek comment on these methodologies and any other potential impact of  X- d(#these proposals on small business entities. Finally, the Notice seeks to further minimize burdens  X-on small entities in conformance with the 1996 Act.Cuw {O-ԍ See supra para. 39.C  X_- 79. ` ` Federal Rules which Overlap, Duplicate, or Conflict with the Commission's  XJ-Proposal: None.  X5-  X - VII.XINITIAL PAPERWORK REDUCTION ACT OF 1995 ANALYSIS (#  v 80. This Notice contains either proposed or modified information collections. The  d(#yCommission, as part of its continuing effort to reduce paperwork burdens and to obtain regular  d(#Office of Management and Budget ("OMB") approval of the information collections, invites the  d(#general public and OMB to comment on the information collections contained in this rulemaking,  d(#as required by the Paperwork Reduction Act of 1995. Public and agency comments are due at  d(#the same time as other comments relating to this Notice; OMB notification of action is due 60  d(#days from date of publication of this Notice in the Federal Register. Comments should address:  d(#-(a) whether the proposed collection of information is necessary for the proper performance of the  d(#Lfunctions of the Commission, including whether the information shall have practical utility; (b)  d(#the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and  d(#\clarity of the information collected; and (d) ways to minimize the burden of the collection of  d(#[information on the respondents, including the use of automated collection techniques or other forms of information technology.  X- VIII.PROCEDURAL PROVISIONS  X- 81. ` ` Ex parte Rules NonRestricted Proceeding. This is a nonrestricted notice and  d(#{comment rulemaking proceeding. Ex parte presentations are permitted, except during the  d(#.Sunshine Agenda period, provided that they are disclosed as provided in Commission's rules.  X=-See generally 47 C.F.R.  1.1202, 1.1203, and 1.1206(a).  X- 82. ` ` Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the  d(#jCommission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on or before  d(#"May 12, 1997 and reply comments on or before June 12, 1997. To file formally in this  d(#proceeding, you must file an original and six copies of all comments, reply comments, and  d(#Lsupporting comments. Parties are also asked to submit, if possible, draft rules that reflect their  d(#positions. If you want each Commissioner to receive a personal copy of your comments, you  d(#must file an original and eleven copies. Comments and reply comments should be sent to Office  d(#!of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222,"p$!Zu,-(-(ZZF#"  d(#[Washington, D.C. 20554, with a copy to Michael T. McMenamin of the Cable Services Bureau,  d(#[2033 M Street, N.W., 801(B), Washington, D.C. 20554. Parties should also file one copy of any  d(#idocuments filed in this docket with the Commission's copy contractor, International Transcription  d(#Services, Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. Comments and reply  d(#comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 20554.  X_- n83. ` ` Parties are also asked to submit comments and reply comments on diskette, where  d(#possible. Such diskette submissions would be in addition to and not a substitute for the formal  d(#Kfiling requirements addressed above. Parties submitting diskettes should submit them to Michael  d(#T. McMenamin of the Cable Services Bureau, 2033 M Street, N.W., Room 801B, Washington,  d(#D.C. 20554. Such a submission must be on a 3.5 inch diskette formatted in an IBM compatible  d(#zform using MS DOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in  d(#"read only" mode. The diskette should be clearly labelled with the party's name, proceeding,  d(#type of pleading (comment or reply comments) and date of submission. The diskette should be accompanied by a cover letter.  Xy-  84. ` ` Written comments by the public must be submitted at the same time as those of  d(#zthe Office of Management and Budget (OMB) on the proposed and/or modified information  d(#collections on or before 60 days after publication of the Notice in the Federal Register. In  d(#/addition to filing comments with the Secretary, a copy of any comments on the information  d(#collections contained herein should be submitted to Dorothy Conway, Federal Communications  d(#Commission, Room 234, 1919 M Street, N.W., Washington, D.C. 20054, or via the Internet to  d(#dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 72517th Street, N.W., Washington, D.C. 20503 or via the Internet to fain_t@al.eop.gov.  X- IX.ORDERING CLAUSES  X-  X|-  85. ` ` IT IS ORDERED that pursuant to Sections 1, 4(i), 4(j), 224, 303 and 403 of the  d(#>Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 224, 303 and 403, NOTICE IS HEREBY GIVEN of the proposals described in this Notice of Proposed Rulemaking.  X - q86. ` ` IT IS FURTHER ORDERED pursuant to Sections 4(i), 4(j), and 224 of the  d(#Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), & 224, that the Petition  d(#for Clarification, or in the Alternative, a Waiver of Southwestern Bell Telephone Company IS DISMISSED.  X!- `87. ` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of this Notice,  d(#including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration in  d(#=accordance with paragraph 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96354, 94 Stat.  Xh$-1164, 5 U.S.C.  601, et seq. (1981). "S%"u,-(-(ZZ $"Ԍ X-  88. ` ` For additional information regarding this proceeding, contact Michael T.  d(#McMenamin, Financial Analysis and Compliance Division, Cable Services Bureau (202) 4187200. ` ` hhCFEDERAL COMMUNICATIONS COMMISSION  ` ` hhCWilliam F. Caton ` `  hhCActingSecretary" #u,-(-(ZZ"  aE $$ #G\  P6G;P#  aE  APPENDIX A POLE ATTACHMENT FORMULAS HO(Modified as Proposed)  aE  aE> #O PE37P##G\  P6G;P#Telecommunications Companies :  aE0#6\  P6QP#Maximum ` ` =  (Space Occupied by Attachment X Carrying X Net Pole X .95 )  Total # of Poles  aERate` `  Total Usable Spaceq Charge Ratepp Investment  aETotal Carrying` ` =  Administrative + Maintenance + Depreciation + Taxes + Return Charge Rate  aE` Administrative ` ` =  Total Administrative and General (Accounts 6710+6720+6110+6120+6534+6535)   aE Carrying Charge ` `  Gross Plant Investment Accum. Depreciation, Account 3100 Accum. Deferred Taxes, Plant Rate  aE Maintenance` ` = Account 6411 Rental Expense, Poles   aEDCarrying Charge  Net Pole Investment Rate  aEDepreciation` ` = Depreciation Rate, Poles Carrying Charge Rate  aETax` ` =  Operating Taxes, Account 7200  aECarrying Charge  Gross Plant Investment Accum. Depreciation, Account 3100 Accum. Deferred Taxes, Plant Rate  aEXReturn` ` =  Applicable Rate of Return   aECarrying Charge  hhC Rate  aESpace Occupied ` ` =  1 foot by Attachment  aE.Total Usable ` ` =  13.5 feet (Subject to Rebuttal) Space  aEGross Plant` ` =  Account 2001 Investment  aE^"Gross Pole ` ` =  Account 2411 Investment  aE$Net Pole` ` =  Account 2411 Accum. Depreciation, Poles Accum. Deferred Income Taxes, Poles Investment  yOB&-#G\  P6G;P# #c PE37MP#"B&$u,-(-(ZZC&"  Q<T 3'3'Standard'3'3StandardCodes for Update ModuleڰX%  %%  X H#TW^?W#Appendix B#dP+P##xTWNsXW#  Q < #TW^?W#Conversion from Former to Proposed Formulas (Noting Proposed Changes)#xTWNsXW#  aE#G\  P6G;P#  XX .X4 <DL!T$&)\+- 0d24X` hJp x (#%'0*,.8135@8: