WPCkL 2 VB Z zNxxx U^x  @X@Courier 10 Pitch P7gP2?ZO-=#|xW0505 - HPIIIdHPLASIII.PRS P7,\,^!dPCG Times (Scalable)CG Times Bold (Scalable)  X` hp x (#%'0*,.8135@8: 6S&YaYa~F0̝vPF2YaYa KK2( KKYat )B3[?@ 7S&Ya Ya~F0̝vPF2YaYa KK2( KKYat )B4fAB 2-5;+6},7,8 -8S&Ya!Ya~F0̝vPF2YaYa KK2( KKYat )B5qCD Technical[1]a~F0̝vPF2YaYay KK2( KKYat )B6$gh Technical[2]a~F0̝vPF2YaYa KK2( KKYat )B7/ij Technical[3]a~F0̝vPF2YaYa KK2( KKYat )B8:kl 209-:m.;/</Technical[4]a~F0̝vPF2YaYa KK2( KKYat )B9Emn Technical[5]a~F0̝vPF2YaYa KK2( KKYat )B:Pop Technical[6]a~F0̝vPF2YaYa KK2( KKYat )B;[qr Technical[7]a~F0̝vPF2YaYa KK2( KKYat )B}1?2@2Technical[8]a~F0̝vPF2YaYa KK2( KKYat )B=quv 9S&Ya4Ya~F0̝vPF2YaYa KK2( KKYat )B>$wx 10S&Ya5Ya~F0̝vPF2YaYa KK2( KKYat )B?/yz 11S&Ya6Ya~F0̝vPF2YaYa KK2( KKYat )B@:{| 2 6AO3B3C4DJ512S&Ya7Ya~F0̝vPF2YaYa KK2( KKYat )BAE}~ 13S&Ya8Ya~F0̝vPF2YaYa! KK2( KKYat )BBP 14S&Ya9Ya~F0̝vPF2YaYa/ KK2( KKYat )BC[ 15S&Ya:Ya~F0̝vPF2YaYa= KK2( KKYat )BDf 28GE;6X7]8 \=16S&Ya;Ya~F0̝vPF2YaYaK KK2( KKYat )BEq =H@,$ P7P<H@,y;_ p^7]%M+',M P7P+ה,ǝmuO?  ~~"m+O6^@HdllHHHlHHHHllllllllllHHlTh͜xٜHHHllHlx`x`Llx  ^ ԍ S.652, Sec. 5(1).> Similarly, the House of Representatives styled its legislation as a bill "[t]o promote competition  ^ and reduce regulation."B  ^@ ԍ See, H.R. 1515.B Thus, even where Congress recognized that some regulation might be warranted during a transition period from a regulated to a deregulated market place, it put in place procedures to reduce or eliminate that  ^ regulation where possible.1 L ^ ԍ See, e.g., 47 U.S.C. 252(a)(1) (providing that an incumbent local exchange carrier and a party requesting interconnection may enter into a binding agreement without regard to the interconnection standards set forth in Sections 251(b) and (c)).1  Finally, the Commission's own implementation of the 1996 Act confirms the important role of voluntarily negotiated agreements. For example, although the  ^ Commission determined in its Interconnection decision  ^ ԍ In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 9698, First Report and Order (released August 8, 1996)("the Interconnection Order").  7 that nondiscriminatory access to poles, ducts, conduits and rightsofway is required, the Commission declined to establish a "comprehensive regime of specific rules, but instead establish[ed] a few rules supplemented by certain guidelines and presumptions that ... will facilitate the negotiation and mutual performance of fair, procompetitive access  ^ agreements."@  ^& ԍ Order at 1143.@  In short, negotiations should be the prevailing means of determining a rate for access by telecommunications carriers to the infrastructure owned by utilities. "Good faith" negotiations aimed at reaching a procompetitive agreement over the rates, terms and conditions upon which pole attachments can be made, rather than a demand for an artificial, regulated rate, is consistent with Congress' intent and the statutory scheme. Congress recognized the important role of an open and competitive market in Section 224(e) and thus provided that a governmentimposed rate should come into play only as a fallback. Any rate regulations the Commission may issue must honor the Congressional intent the important role of negotiations embodied in the statutory scheme.  Finally, a voluntarily negotiated pole attachment agreement must be binding on the parties, just as a voluntarily negotiated interconnection agreement under Section 252(a)(2) is binding on the parties. The rates, terms and conditions of contractsR z ,** voluntarily entered into must be deemed binding and enforceable, even if those terms and conditions depart from prior FCC precedent. If not, the ability to contract at all, and Congress' emphasis on a deregulated, not a regulated marketplace, is meaningless.  ]   B.` ` The Regulated Pole Attachment Rate Methodology (#`  The FCC's current pole attachment rate methodology involves a series of calculations addressing the net cost of a bare pole, carrying charges components (including administrative, maintenance, depreciation, taxes and cost of capital) and a use ratio. Certain basics and assumptions were formulated some eighteen years ago. The formula has been revised in some respects over the intervening years.  Below, the Infrastructure Owners provide comment on the major aspects of the FCC's rate methodology for distribution poles. First, the Infrastructure Owners review the assumptions used by the Commission over the years and suggest changes to update those assumptions in accordance with prevailing practices in the industry. Second, the Infrastructure Owners propose a method for calculating rates that assume an average number of parties per pole, as a substitute for a polebypole assessment and rate calculation. Third, changes in the calculation of the typical pole height and the average amount of usable and other than usable pole space are discussed, again in light of current practices. Fourth, the Infrastructure Owners suggest changes in the method of calculating the net cost of a bare pole, in an attempt to produce a figure that more accurately reflects actual costs. Finally, the Infrastructure Owners address the carrying charges component of the rate formula and, again, suggest changes that will result in a more precise calculation of actual costs.  X X` ` 1.X The Rate Formula Must Continue to Be Based on Reasonable, Rebuttable Presumptions   Section 224(e)(1) of the Pole Attachments Act requires the FCC to promulgate regulations to govern the charges for pole attachments used by telecommunications carriers to provide telecommunications services, in the event parties are unable to  ^: reach a voluntarily negotiated rate for such pole attachments.F:  ^" ԍ 47 U.S.C. 224(e)(1).F Specifically, the Pole Attachments Act requires a utility to:  (1)` ` Apportion the cost of the other than usable space among entities so that the apportionment equals twothirds of the costs of the other than usable space that would be allocated to such entity under an equal apportionment of such costs among all attaching entities; and,(#` ' ,**Ԍ (2)` ` Apportion the costs of providing usable space among all entities according to the percentage of usable space required for each entity.(#`  At a minimum, the implementation of the twopart statutory scheme on a polebypole basis requires knowledge of the number of parties on each and every utility pole, the pole height, the amount of space occupied by each attaching entity, the amount of other than usable space and the amount of usable space. Polebypole information of this type is not maintained by the Infrastructure Owners, because it does not have a value to the Infrastructure Owners' core electric business or to their core constituents the consumers of electric power. To the best of the Infrastructure Owners' knowledge, a polebypole accounting of this nature is not a prevailing practice in the industry.  The creation of a database to collect and maintain polebypole information will be a timeconsuming and costly venture. The implementation and maintenance of such a database would require, at a minimum, the following: X X` ` The purchase and maintenance of computer hardware;(#` X X` ` The development, purchase and maintenance of computer software;(#` X X` ` The collection of information by surveying (i.e., the physical counting of infrastructure);(#` X X` ` The hiring of data entry personnel and the performance of data entry;(#` X X` ` The maintenance of the database through an ongoing program to update information (including periodic surveying);(#` X X` ` The training of employees in gathering the necessary data, maintaining the database, calculating the applicable pole attachment rates, and in billing and collection matters; and(#` X X` ` The design and implementation of new billing and collection procedures. (#`  In the Infrastructure Owners' view, the development of a pole database to establish the number of attaching entities on each pole, the pole height, the amount of space occupied by each attaching entity, the amount of other than usable space and the amount of usable space is impractical. The costs to implement and maintain the database would be significant. Although the Infrastructure Owners have not undertaken a formal study of those costs, they estimate that the upfront costs would run into millions of dollars. The maintenance of the database would, of course, mean ( ,** ongoing, significant maintenance costs. Implementation of the database would take years.  Because the sole beneficiaries of a polebypole database are parties seeking to attach to utilities' poles, the costs of the database would have to be borne by attaching entities ĩ telecommunications carriers and cable operators. Neither the utilities nor their ratepayers can be expected to absorb these costs. To pay for the initial development of the database, telecommunications carriers and cable operators would have to be assessed an upfront fee. Thereafter, database maintenance costs would have to be assessed on a periodic basis.  Apart from the cost issue, the Infrastructure Owners question whether a polebypole database results in any benefit to telecommunications providers or cable operators. Certainly, there is no apparent benefit to the consumers of telecommunications or cable television services. Thus, in lieu of requiring the development of a costly database that yields no benefits to the consumers of electric power or the subscribers of telecommunications and cable television services, the Infrastructure Owners encourage the Commission to continue to permit averages and assumptions to be used.  The use of averages and assumptions has been sanctioned by the Commission  ^ throughout its regulation of pole attachments. ^  ԍ See, e.g., In the Matter of Adoption of Rules for the Regulation of Cable Television Pole Attachments, 68 F.C.C. 2d 1585 (1978). For example, in its initial 1978 order, the Commission provided for the averaging of the amount of usable space on a  ^v pole.Av ^ ԍX Id. at 1604.A The Commission's rationale in permitting averaging, in this context and elsewhere in its decisions, is that averaging avoids unnecessary disputes between parties over actual figures that may be difficult to ascertain and "will better serve Congress' intent that the Commission develop 'a flexible program . . . [that is] simple  ^^ and expeditious.'"^F ^f! ԍ In the Matter of Adoption of Rules for the Regulation of Cable Television Pole Attachments, 72 F.C.C. 2d 59, 69 (1979) ("Second Report and Order") (quoting S. Rep. No. 95580, 95th Cong., 1st Sess. 2122 (1977)).  The Infrastructure Owners urge the Commission to continue the practice of allowing an average or assumption to be used. By so doing, the Commission will continue to promote an expeditious and costeffective method of calculating pole attachment rates that benefits all interested parties and the consumers of their respective services.: ,**Ԍ ] ԙ  2.` ` The Calculation of the Average Number of Parties Per Pole(#`  The calculation of each attaching entity's share of the costs of the other than usable space requires that the utility have knowledge of the number of parties with pole attachments on each pole. As noted above, in lieu of a polebypole calculation, the Infrastructure Owners recommend the use of currently available, accurate information to calculate the average number of parties with pole attachments per pole.  The Infrastructure Owners recommend that the following calculation be performed to yield the average number of parties per pole over a utility's distribution system:  X The average number of attaching entities per pole (assuming that multiple attachments on a pole by a single entity as part of the same system are considered as one attachment) = (# l  The Total Number of Attachments of Telecommunications ,   Carriers, Cable Operators and Incumbent LECs ă  ^   The Total Number of Poles Poles of 30' and Less ^ ԍ As discussed below, the Infrastructure Owners recommend that poles 30 feet and less in height should be excluded from the pole count because they are not sufficiently tall to be used for attachments by multiple parties.lŃ  The Infrastructure Owners' proposed calculation of the average number of attaching entities per pole utilizes information that is presently collected and maintained by utilities. Most utilities collect and maintain information through the pole permitting process and through the billing and collection process on the total number of pole attachments on their poles and the identity or status of the attaching entity (e.g., telecommunications carrier, cable operator, incumbent LEC). Thus, they have readily available information that will yield the total number of pole attachments that are subject to the Pole Attachments Act. Attachments by parties that are not subject to the Pole Attachments Act for example, attachments made by governmental agencies as a public service accommodation by the utility and at no cost to the agency involved should not be included in the calculation of the average number of attachments per pole because it would unfairly reduce the percentage of costs recovered by the utility for the other than usable space. Congress intended in  ^." the new rate formula for utilities to recoup the costs of the nonusable space..."~ ^n( ԍ See, e.g., H.R. Conf. Rep. No. 458, 104th Cong., 2d Sess. 207 (1996) ("Newh),** subsection 224(e) establishes a new rate formula charged to telecommunications carriers for the nonuseable [sic] space of each pole.")..." ~,**Ԍ Incumbent LECs are included in the calculation of the average number of parties per pole. Although not entitled to make pole attachments to utilities' poles at the statutory rate, the exclusion of incumbent LECs from the rate calculation would have the inequitable effect of increasing the percentage of the costs of other than usable space borne by telecommunications carriers and cable operators. Clearly, incumbent LECs do occupy utility poles in many instances and, unlike the parties the Infrastructure Owners propose to exclude from the calculation (governmental agencies who do not pay a fee for the use of the space), the incumbent LECs do pay a fee for the use of utilities' poles. For this reason, the Infrastructure Owners suggest that they should be included in the calculation of the average number of parties per pole.  Finally, utilities maintain accounting records of the total number of poles in service over their distribution system. The Infrastructure Owners propose that the total number of poles reflect only distribution poles of 35 feet or taller. Quite simply, distribution poles of 30 feet and less cannot be used by multiple parties because they are not sufficiently tall; typically will only accommodate the facilities of the electric utility and are not representative of a typical distribution pole. Moreover, many poles of 30 feet or less are used strictly for street lights and, therefore, are not applicable for joint use.  The Infrastructure Owners' proposed averaging of the number of parties per pole, to be calculated on a utilitybyutility basis, using actual figures to calculate an average. The averaging of the number of parties with pole attachments on a pole will not have a material impact on attaching entities.  ]j  X 3.X` ` The Calculation of the Typical Pole Height and the `  ` ` Amount of Usable and Other Than Usable Pole Space   In the rulemaking proceedings to implement the pole attachment rate formula set forth in the original 1978 Pole Attachments Act, the Commission invited comments  ^L on the amount of usable space for various sizes of poles in different service areas.YL~ ^# ԍ Second Report and Order, 72 F.C.C. 2d at 68.Y Based on the comments submitted to it, the Commission found that "the most commonly used poles are 35 and 40 feet high, with usable spaces of 11 and 16 feet,  ^: respectively."=: @ ^<( ԍ Id. at 69.= To simplify the process and avoid a polebypole rate calculation, the Commission permitted utilities the option of using the arithmetic average of the4!,** usable spaces of 11 and 16 feet, that is, 13.5 feet, as the amount of usable space per  ^ pole for those poles used for cable attachments.6 ^ ԍ Id.6 The use of 13.5 as the average amount of usable space resulted in a hypothetical pole height of 37.5 feet. The Infrastructure Owners support the use of an average pole height and average amounts of usable and other than usable space. They believe, however, that the averages have changed over time and, therefore, support the Commission's review and revision of those averages.  The Infrastructure Owners believe that an average pole height of between 35 feet and 40 feet is no longer accurate. Over time, in light of the growing demand for access to poles by cable operators and others, 35 foot poles have been replaced with 40 foot and taller poles, to accommodate the demand for space. Although 45 foot or taller poles are in service, the Infrastructure Owners believe that, on average, the pole height of poles used for cable operators and other attachees is 40 feet. The Infrastructure Owners urge the adoption of a 40 foot pole as the average pole  ^ height. ^ ԍ Poles are available only in 5 foot increments. Thus, the use of a 40 foot average pole height also dispenses with the hypothetical pole of 37.5 feet.  Assuming a typical pole height of 40 feet, the Infrastructure Owners calculate the amount of usable space and other than usable space as follows:  ^  (1)` `  The average amount of usable space, and the average amount of space required for each type of entity, is as follows:(#` X X` ` ©X 11 feet of usable space with electric occupying 7.5 feet, cable  ^p occupying 1 foot, and the LEC occupying 2.5 feet. (# X (2)X` ` The average amount of other than usable space is 29 feet with the following allocation:(#`  ^R X X` `  ĩ 6 feet below ground;(#` X X` ` ©X 19' 8" of minimum ground clearance;(# X X` ` ©X 40 inches of clearance between the electric and communications space.(#  The calculation of the average amount of usable space is derived from the calculation of the average amount of other than or nonusable space. Turning to"$F,** that calculation, the Infrastructure Owners believe that the amount of space below ground is not an issue. The Commission has recognized that 6 feet of pole space  ^ underground (for a 35 foot pole) is standard.^ ^~ ԍ Second Report and Order, 72 F.C.C. 2d at 68 n.21.^  The Commission also has previously recognized that 18 feet of pole space on any pole must be reserved for ground clearance pursuant to the National Electrical  ^ Safety Code ("NESC"). ^( ԍ Id. Ground clearance of 18 feet also is required by local standards in many areas. What the Commission has not previously recognized, however, is that 18 feet of ground clearance at midspan requires that the lowest attachment on a pole be at least 19.8 feet from the ground to accommodate for cable sag. Stated alternatively, to achieve a minimum ground clearance of 18 feet, a pole attachment cannot be made lower than 19.8 feet from ground. The Infrastructure Owners urge the Commission to recognize the actual specifications required for compliance with safety standards and to adopt a minimum ground clearance of 19.8 feet at the pole.   With respect to the 40 inch clearance or safety space that is required under the NESC to be maintained between power lines and communications cables, the Commission has previously found that under the 1978 rate formula, the 40 inches cannot be included in the calculation of the usable space, a percentage of which must be shared by cable television operators based on the amount of space occupied by  ^ them.^F ^ ԍX Second Report and Order, 72 F.C.C. 2d at 7071.^ The Infrastructure Owners concur. However, the 1996 Act's amendments to the Pole Attachments Act now require all attaching entities to share in the costs of the nonusable space.  The 40 inch clearance is designed to protect the employees of communications companies from coming into physical contact with the potentially fatal voltage carried by the electric lines. As such, the Commission has previously held that the risk for  ^^ maintaining this safety space effectively falls on the cable operator.=^ ^(# ԍ Id. at 71.= While the clearance is intended to benefit primarily communications company workers, the Infrastructure Owners recognize that all parties benefit from the 40 inch clearance space. For this reason, consistent with the Congressional intent, the Infrastructure Owners support the assignment of the 40 inch clearance space as other than usable space, the costs of which will be shared by all parties with pole attachments. : ,**Ԍ The calculation of the amount of other than usable space results in a calculation of 11 feet of usable space on a 40 foot pole. This figure is consistent with the current  ^ allocation of usable space on the pole.  ^~ ԍ The Commission has assumed that cable operators occupy one foot of usable space on the pole. See, Second Report and Order, 72 F.C.C. 2d at 70. On average electric facilities occupy between 78 feet of usable space and LEC facilities occupy between 23 feet of usable space. The Infrastructure Owners have averaged the amount to space occupied by each to arrive at an assignment of 7.5 feet of usable space for electric and 2.5 feet of usable space for LEC facilities.   The Infrastructure Owners encourage the Commission to continue the practice of permitting pole rate calculations based on averages. In accordance with that practice, the Infrastructure Owners submit that the average pole height is 40 feet, the average amount of usable space is 11 feet on a 40 foot pole, and the average amount of other than usable space is 29 feet on that same pole. While continuing to promote a streamlined and expeditious calculation of pole attachment rates, the Commission's adoption of these revised averages will reflect the more accurate, actual usages of the pole space by the respective parties that have evolved over time. During the 18odd years since the enactment of the 1978 statute, assumptions, prevailing practices in the industry, and usages have changed. Accordingly, a more equitable sharing of the costs of providing and maintaining the infrastructure is needed and should result from the proposals set forth by the Infrastructure Owners.  ]   4.` ` The Calculation of the Net Cost of a Bare Pole  Under the Commission's current rate formula, the calculation of the net cost of a bare pole is as follows:  A/C 364 (Gross Pole Investment) Depreciation Reserve (Poles)  ^j w Accumulated Deferred Income Taxes (Poles)}jl ^! ԍ In this calculation of the net cost of a bare pole, the Infrastructure Owners treat deferred taxes as some state commissions do as a rate base deduction. If the state utility commission includes the reserve for deferred income taxes in the utility's capital structure at zero cost, this adjustment to A/C 364 would not be necessary.}  ^d    .15 of Net Pole Investmentd  ^B' ԍ See Footnote 30 regarding the deduction of accumulated deferred income taxes. ă  Number of Poles X ,**Ԍ Overall, the Infrastructure Owners agree with the methodology used by the  ^ Commission to calculate the net cost of a bare pole.  ^ ԍ As a preliminary matter, the Infrastructure Owners submit that, in general, the costs used to calculate the applicable pole attachment rate should be replacement or market value costs, not embedded costs. The use of marketvalue or replacement costs, in lieu of historical costs, should be a key aspect of the FCC's upcoming rate rulemaking. Nonetheless, because the Commission has historically used embedded costs in its calculations, the comments here continue to use the FERC Form 1 Accounts (which are based on embedded costs). An updated reference to those accounts is attached hereto as Appendix II. They do, however, recommend two changes that will result in a more accurate calculation.  First, as noted above, the Infrastructure Owners propose that poles of 30 feet in height and less should be eliminated from the investment in Account 364 and from the total number of poles to arrive at a more accurate accounting of the actual net costs of a bare pole and a more precise count of the actual number of poles suitable for joint use, where the information necessary to do so is readily available to the utility. Poles of 30 foot or less simply do not have sufficient usable space to accommodate  ^ attachments by any party other than the electric utility.t! `  ^ ԍ Poles of 30' and less can be used for service drops. However, the assumptions concerning usable and other than usable space and the percentages assigned to parties would not follow the current rate methodology. Thus, the Infrastructure Owners submit that, at a minimum, a separate rate methodology would need to be developed.t For this reason, their inclusion in both the numerator and denominator of the calculation results in an inexact determination of the actual net costs of a bare joint use pole.  The deduction of poles of 30 feet or less from Account 364 and from the total number of poles does not involve the collection of new or difficulttogather information. On the contrary, in most cases, the information is readily available and is easily identifiable by electric utilities. In light of the ease with which the information can be identified and the value of a more accurate calculation, the  ^ Infrastructure Owners urge the Commission to adopt this approach." ^`" ԍ The Infrastructure Owners urge the deduction of poles of 30 feet and less from the calculation of the net costs of a bare pole, but they do not seek a similar deduction in the carrying charges component of the rate calculation, discussed below. The quantity of and investment in poles of 30 feet or less can be readily identified in Account 364. Thus, in offsetting Account 364 in the numerator of the calculation, a correlating offset is made in the denominator. Thus, there is no double counting and the underlying data is not skewed. Similar offsets cannot be easily performed with6)!,** respect to the carrying charges calculations. Thus, inequities would result in reducing the investment in Account 364 by the deduction of poles of 30 feet and less without reducing the associated maintenance, administrative, tax and depreciation expenses. x",**Ԍ Second, portions of Accounts 365 and 368 should be included in the numerator component of the calculation of the net cost of a bare pole. Account 365 includes the installed cost of grounding installations and lightning arresters used for distribution  ^ purposes.Q#x ^( ԍ See 18 C.F.R. Part 101 (1996).Q The cost installed of lightning arresters attached to line transformers is  ^ included in Account 368.6$: ^ ԍ Id.6  Section 9 and 21 of the NESC states that all messenger wires and guys (including those used for CATV and telecommunications) are required to be grounded at poles. Grounds for attachment at poles and lightning arresters to protect pole attachments are provided by the electric utility as a pole owner. They are accounted for in Accounts 365 and 368. Cable operators and telecommunications companies use these pole bonds for protection of their equipment and for compliance with Section 9 (92C1, 2, and 3) and Section 21 (215C1) of the NESC. Any joint user with metallic cables benefits from the utility's ground wires because it must bond from its sheath to the ground to minimize potential differences in circulating currents. Joint users also benefit from the utility's lightning arresters since they provide protection from voltage surges for both facilities. Tree trimming is another clear benefit. These costs are currently borne solely by the electric utility; they are not presently included the FCC's pole attachment rate formula.  In sum, the facilities included in Accounts 365 and 368 are essential grounding facilities that are used by and useful to cable television operators and telecommunications carriers. Grounding installations, lightning arresters, initial tree trimming and clearing, and power supplies are an important element of the gross investment in poles and are directly related to protection of attaching entities' equipment. For this reason, to more accurately reflect the true costs, the Infrastructure Owners support the inclusion of an appropriate percentage (i.e., in the range of 1012% and 46% respectively) of Accounts 365 and 368, respectively, in  ^X the calculation of the net cost of a bare pole.%X ^& ԍ Depreciation reserve and accumulated deferred income taxes would, of course, be deducted from Accounts 365 and 368, as they currently are deducted from Account 364. R %,**Ԍ ]   5.` ` The Calculation of Carrying Charges  The Commission's calculation of the carrying charges component of the current pole attachment rate formula involves several elements: (1) administrative expenses; (2) maintenance expenses; (3) depreciation expenses; (4) normalized taxes; and, (5) the cost of capital. The Commission has issued decisions establishing the specific  ^ manner in which the carrying charges elements should be calculated.t& ^f ԍ In the Matter of Amendment of Rules and Policies Government the Attachment of Cable Television Hardware to Utility Poles, 2 FCC Rcd 4387 (1987); see also In the Matter of Amendment of Rules and Policies Government the Attachment of Cable Television Hardware to Utility Poles, 4 FCC Rcd 468 (1989).t  In this position paper, the Infrastructure Owners do not address the Commission's methodology regarding the administrative, depreciation, and costs of capital elements of the carrying charges component. They suggest one change in the manner in which the maintenance expense element is calculated, the addition of a new element to reflect operations expenses, and a possible revised formula for the taxes expense element.  Maintenance expenses are currently calculated as follows: n A/C 593 (Maintenance of Overhead Lines)ă A/Cs 364 (Poles, Towers and Fixtures), p 365 (Overhead Conductors) and 369 (Services) Depreciation Reserve for A/Cs 364, 365, 369 #  Accumulated Deferred Income Taxes for A/Cs 364, 365, 369 X X` ` X (#  The Infrastructure Owners suggest that the maintenance expense does not reflect the actual costs of maintaining poles, towers and fixtures because it omits the supervision and engineering aspects of the maintenance function. For this reason, the maintenance element should be revised as follows: Maintenance Expense =` A/Cs 590 (Maintenance supervision(# X X` ` X Xand engineering) + 593 (# X X` ` X XA/Cs 364, 365, 369 Depreciation Reserve for A/Cs 364,(# X X` ` X X365, 369 Accumulated Deferred Income Taxes for A/Cs(# X X` ` X X364, 365, 369(#  Account 590 includes the cost of labor and expenses incurred in the general  ^." supervision and direction of maintenance of the distribution system.@'."x ^h) ԍ 18 C.F.R. Part 101.@ The expenses.":',** are not currently included in the maintenance calculation and are not recovered elsewhere in the pole attachment rate calculation. Because the Account 590 maintenance expenses are directly attributable to the function of maintaining the pole distribution network that, in turn, directly benefits parties with pole attachments, those expenses should properly be included in the rate calculation.  The Infrastructure Owners also recommend the adoption of a new element of the carrying charges component to capture the operations costs of the distribution network and its pole attachments. The following operations expense formula is proposed: Z Operations Expense = ` A/Cs 580 (Operation supervision and engineering) + 583 (Overhead line expenses) + 588 (Miscellaneous distribution expenses) (#  ^ X X` ` X XA/Cs 364, 365, 368(  ^6 ԍ The Infrastructure Owners submit that Account 368 is properly associated with Accounts 580, 583 and 588 and should be included in the denominator with Accounts 364, 365, and 369., 369 Depreciation Reserve for A/Cs 364, 365, 368, 369 Accumulated Deferred Income Taxes for A/Cs 364, 365, 368, 369Z (#  The supervision and engineering expenses of Account 580, like the companion Account 590, include the costs of labor and expenses incurred in the general  ^ supervision and direction of the operation of the distribution system.6)~ ^ ԍ Id.6 Account 583  ^ includes major overhead line expenses.6*@ ^ ԍ Id.6 Finally, Account 588 includes the costs of labor, materials used and expenses incurred in distribution system operations not  ^v provided for elsewhere.6+v ^: ԍ Id.6 Those items include, but are not limited to, joint pole maps and records and operating records covering poles, transformers, manholes,  ^j cables and other distribution facilities (excluding meter records, etc.).6,j  ^# ԍ Id.6  Like the Account 590 expenses, these items are directly related to the operation of the distribution system and its pole attachments. They have a direct benefit to parties with pole attachments on utility poles, but they are not currently recovered through the pole attachment rate formula. The Infrastructure Owners suggest that theyL ,,** properly should be and urge the Commission to revise that formula to include an operations element of the carrying charges component.  Finally, the Infrastructure Owners suggest that a revised tax expense element of the carrying charge should be considered by the Commission in its rate rulemaking. In the Infrastructure Owners' view, the current tax expense calculation should be examined to determine whether it unfairly penalizes those companies with low or no  ^ earnings in any given year.  III.X OTHER JUST, REASONABLE AND NONDISCRIMINATORY  ] TERMS AND CONDITIONS OF POLE ATTACHMENTS    ]   A.` ` Attachment Permitting and Preapproval Is Mandated by  ] Safety and Reliability Concerns  x`  The attachment of telecommunications and cable television facilities to the poles of electric utilities necessarily raises safety and reliability concerns. Care must be taken to ensure that the required clearances are maintained, that personnel are properly trained in maneuvering around and avoiding contact with electrical wires, and that the pole attachment will not compromise the structural integrity of the pole. Engineering studies must be performed to account for wind loading, ice loading (where appropriate), and guying and anchoring, among other matters. In short, the process is not automatic; it requires a careful consideration of many factors.  To ensure that pole attachments comport with safety, reliability and engineering concerns, the prevailing practice in the industry is to require parties seeking to attach to a utility's poles to apply for a notification permit to attach and to obtain the utility's preapproval before the attachment of facilities actually occurs. Pole attachment agreements generally provide for permitting and preapproval of applications for attachment to specific utility poles. In theory, the contractual obligation should prevent unauthorized attachments. In practice, it does not.  Utility surveys of distribution pole systems routinely reveal significant numbers of unauthorized attachments. For example, the Infrastructure Owners report that during any given pole inspection, roughly 1015% of the poles contained attachments by telecommunications companies that were unauthorized. The approximate number of unauthorized attachments by cable operators is generally higher, in the range of 2022%. The unauthorized attachments typically represent an attempt by the attaching entity to avoid the pole attachment rate charges or to avoid addressing a safety code violation. Either motive is problematic, but the safety concerns are of greatest significance.  (,,**Ԍ Unauthorized attachments will become increasingly problematic over time, with increases in demands for access to utilities' poles. Unauthorized attachments on poles do not give pole owners the opportunity to make reasonable determinations as to the proper loading and stress on the pole. The inability to perform accurate safety and reliability calculations threatens reliable electric service and, accordingly, the public safety (since police, fire, and other emergency and public safety services rely on electric service in the performance of their public safety responsibilities). Unauthorized attachments also may cause personal and property damages and the loss of telecommunications and cable television services. Finally, the "free ride" enjoyed by parties who make unauthorized attachments to utilities' poles results in higher pole attachment rates for all other attaching entities.  The Infrastructure Owners urge the Commission to adopt, in the course of its rate rulemaking proceeding, a regulation requiring parties seeking access to utilities' poles to obtain an upfront permit and the utilities' preapproval to attach. That regulation should find that a contractual provision requiring a party seeking to attach to a utility's poles to obtain a permit to do so, and preapproval from the utility prior to making any attachment, is a just, reasonable and nondiscriminatory term or condition of a pole attachment agreement. Only by doing so will the Commission ensure that the very real safety and reliability concerns of utilities are met, that the pole on which telecommunications or cable television facilities are to be mounted can withstand that added attachment and that all attaching entities share in the costs of maintaining the structures on which their respective equipment is attached.l##E(##  With the enactment of the 1996 Act, the Pole Attachments Act now makes a distinction between the pole attachments of "pure" cable operators and the pole  ^d attachments of other telecommunications carriers.P-d ^ ԍ 47 U.S.C.  224(d) and (e).P Section 224(d) establishes the X81Í/Í/X81Í/Í/current FCC rate as the pole attachment rate applicable to "any pole attachment used  ^X by a cable television system solely to provide cable service."F.X ^ ԍ 47 U.S.C. 224(d)(3).F Section 224(e), on the other hand, establishes the rate applicable to pole attachments by  ^L telecommunications carriers to provide telecommunications services.F/LL ^Z# ԍ 47 U.S.C. 224(e)(1).F The new rate for telecommunications carriers and cable operators providing both cable and telecommunications services takes effect five years after the date of enactment of the 1996 Act (i.e., February 8, 2001).  Because cable operators providing "pure" cable services over their entire system will be indefinitely grandfathered at the current, low FCC rate, a potential for(#/,**  ^ abuse exists.0 ^ ԍ The Commission found in its Interconnection Order that a utility that uses any single part of its infrastructure to provide wire communications triggers access to all of the utility's infrastructure under the Pole Attachments Act, even that infrastructure not currently used for wire communications. Interconnection Order at 1173. Similarly, the Commission must find that the provision of any telecommunications services anywhere over a cable operator's system taints the entire system. Accordingly, in that situation, the cable operator is no longer entitled to pole attachments at the current, artificially low rate. Unless the Commission requires "pure" cable operators to make a certification, upon penalty of perjury, that their respective system is used solely to provide traditional oneway video programming services to subscribers over their entire system, cable operators providing twoway and other telecommunications services will gain an unfair competitive advantage over other noncable providers of telecommunications services. Further, the "free rider" situation will again be present, where a cable operator does not pay its fair share of the costs of the pole and, therefore, receives a subsidy from other attaching entities. As noted above, Congress intended a level playing field.  To prevent the "free rider" situation, the Infrastructure Owners support the adoption of certification procedures by those parties claiming to provide "pure" cable services. As part of the permitting and preapproval process, such operators should be required to make a certification (under penalty of perjury) to the utility that its system provides only "pure" cable television services. Unless the required certification is made, the utility must be entitled to presume that the attachments provide both oneway and twoway telecommunications services and to assess the pole attachment rate  ^ applicable to telecommunications carriers.M1`  ^ ԍ See 47 U.S.C. 224(e).M Moreover, a cable operator must be required to inform a utility with whom it has pole attachments if the nature of its services changes that is, from "pure" cable television services to "mixed" services or vice versa within 60 days of the change.  Finally, all attaching entities have an equal interest in ensuring that all other parties with pole attachments pay their fair share of the pole costs, according to the statutory scheme enacted by Congress. For this reason, enforcement of the permitting/preapproval and cable operator certification requirements should lie with the FCC through a complaint proceeding.  ]X  X B.X` ` The Identification of Facilities Is Essential (#`  In addition to requiring parties to obtain a permit and the authorization or preapproval of the utility to make a pole attachment, the Infrastructure Owners alsoF" 1,** urge the Commission to require attaching parties to clearly identify their attachments through a standardized, nationwide identification process. An identification requirement, like the permit and preapproval requirement, is necessitated by public safety concerns.  Many utility poles currently contain multiple attachments. Oftentimes, those attachments cannot be identified by visual inspection. Moreover, although there may only be two pole attachments on any given pole by the LEC, a cable television operator, or a competitive access provider a utility's system of distribution poles may be used by many parties in different localities. For example, Duke Power Company reported that approximately 70 different cable television operators or telecommunications carriers, some with multiple contracts, have pole attachments on its infrastructure in its twostate service territory (North and South Carolina). American Electric Power Service Corp. deals with 256 CATV and telecommunications providers in its 7 state territory. Duke Power's and American Electric Power Service Corp.'s situations are not atypical. In light of these kinds of numbers and because many utilities do not maintain a database of polebypole information, it is virtually impossible to identify a particular party's facilities.  In emergency situations, utility pole owners must be able to identify the owners of facilities that are attached to their infrastructure. Without that information, they cannot contact the owner of the facilities to inform it that a pole, and thus its cables and other facilities that might be owned by the telecommunication service provider, are down. Contact about routine operations and maintenance is difficult as well and often results in additional field work to trace a cable to an identified source.  The most efficient and reliable way of resolving this problem is to require a party seeking access to a utility's poles to identify its facilities when it makes its attachment and to update that information as necessary. A nationwide, standardized system should be developed so that facilities can be easily identified and to account for overlapping distribution territories. The name of the company, its location, and 24hour telephone number (an 800 or other toll free number), and any other telephone number to be used in the event of an emergency, should be sufficient information to address utilities' safety concerns. Without that information the Commission should find that utilities are relieved of their obligation to provide the telecommunications carrier or cable operator with written notice of scheduled modifications to the facilities pursuant to Section 224(h) or to otherwise assume any liability for the facilities of those providers.  The Infrastructure Owners recommend that the Commission seek comments and reply comments in its upcoming pole attachment rate rulemaking on the most efficient, and least costly but reliable, method of properly identifying pole attachments and related facilities. Alternatively, the Commission might consider a negotiated)1,** rulemaking involving all interested parties where a mutuallyacceptable standardized method of identifying telecommunications and cable equipment could be developed through consensus. Parties should begin the process of identifying their facilities (both existing attachments and all future attachments) now so that all facilities will be in compliance upon the effectiveness of the FCC's rate regulations.    ]  X C.X` ` The Overlashing of Cable (As an Alternative to Setting Taller  ] Poles) Should Be Encouraged Under Certain Conditions  `  In addressing the pole access and denial of access issues raised in the Interconnection Rulemaking, the Commission's Interconnection Order noted that one way of "maximizing useable capacity on a pole is to permit 'overlashing,' by which a new cable is wrapped around an existing wire, rather than being strung  ^ separately."P2  ^< ԍ Interconnection Order at 1161.P The Infrastructure Owners concur that, under certain conditions, overlashing may be an acceptable solution to a lack of sufficient capacity to permit another attachment.  Overlashing is not appropriate in all circumstances, however. Moreover, it raises many questions involving safety and reliability issues. It also prompts numerous questions about the fairness from a cost perspective of the overlashing. For example, what pole attachment rate should be paid by the overlashing party? Should the full rate apply or some percentage of that rate? How does the overlashing affect the rates paid by other parties with pole attachments on that pole? Should the overlashing party share in the costs of the other than usable space? In the Infrastructure Owners' view, many of these issues must be addressed by the Commission in its upcoming pole attachment rate rulemaking.  In the interim, the Infrastructure Owners suggest, at a minimum, that the following rules be established as a condition of overlashing:  ` ` Parties seeking to overlash must obtain the pole owner's approval before any overlashing is performed.(#` X X` ` Parties seeking to overlash must have a pole attachment agreement with the utility pole owner before overlashing occurs.(#` X X` ` Like all other attaching entities, parties seeking to overlash cable must calculate the effect of their attachment on the pole integrity and must comply with all applicable safety, reliability and engineering standards and specifications (i.e., wind loading, ice loading, etc.). (#` '2,**ԌX X` ` Parties seeking to overlash must separately identify their facilities, in accordance with identification procedures to be established by the Commission.(#`  The Infrastructure Owners urge the adoption of the above (or similar rules) to protect the structural integrity of the pole and the infrastructure owner from additional liability exposure from an attacher without an agreement. These rules also will avoid adverse consequences to the public safety. The Commission also should set appropriate penalties, including monetary penalties, for failure to comply with its overlashing rules. Issues of the applicable rate for overlashing, and the development of fair rate standards, also should be addressed.  ]  IV.X JUST, REASONABLE AND NONDISCRIMINATORY RATES FOR ACCESS TO DUCTS, CONDUITS, RIGHTSOFWAY AND  ] TRANSMISSION FACILITIES (#  The Pole Attachments Act gives the Commission jurisdiction to regulate the rates, terms and conditions of access to poles, ducts, conduits and rightsofway owned or controlled by utilities, except where States have certified that they regulate  ^ such matters.C3 ^ ԍ 47 U.S.C. 224(b).C Historically, however, the statute has applied primarily to the rates, terms and conditions for pole attachments to utilities' distribution poles. The statutory rate scheme established in the 1978 Pole Attachments Act did not lend itself to adaptation to the conduit, duct, rightofway or even transmission facility context; nor does the amended rate scheme enacted as part of the 1996 Act.  Over the years since the enactment of the 1978 statute, utilities have received few demands for access to their ducts, conduits, rightsofway or transmission facilities (other than rightsofway over which pole distribution lines pass). Moreover, as a general matter, many have denied access to those facilities when access has been sought. The justification for the denial of access has been grounded in serious safety concerns. Utilities have long maintained and the Commission recently recognized that access to ducts, conduits and transmission facilities presents heightened safety  ^@ concerns, far beyond the safety concerns raised by access to distribution poles.r4@ ^# ԍ See, e.g., Interconnection Order at 1163, 1184. r  Because the demand for access to ducts, conduits and transmission facilities has been very limited, the Commission has not yet undertaken the task of establishing a rate scheme for ducts, conduits, rightsofway, or transmission facilities. The Infrastructure Owners urge the Commission to carefully study the issues involved in these contexts before embarking down that road.%L4,**Ԍ Ducts, conduits, rightsofway and transmission facilities are unique and pose uniquely different concerns. The concepts of usable and nonusable space, the number of parties present, or the space occupied by each have no meaning in the conduit or duct environment. For example, although a duct may have a certain amount of space, when multiple parties seek access to the duct, it may only be possible to accommodate access if inner duct is installed. Duct may only be divided a finite number of times. Conduit access poses the same issues. Further, duct and conduit issues vary greatly among various geographical regions and between urban and rural areas. Like the rightsofway issues that the Commission recently recognized are a matter of state  ^ lawP5 ^T ԍ Interconnection Order at 1179.P, duct and conduit matters also are largely governed by state and local laws and ordinances.  Given the complexity of the issues, the Infrastructure Owners suggest that the Commission address the duct, conduit, rightsofway and transmission issues much like it addressed the access and denial of access matters raised in the Interconnection Order. There, the Commission concluded that: X The reasonableness of particular conditions of access imposed by a utility should be resolved on a casespecific basis. . . . The record makes clear that there are simply too many variables to permit any other approach with respect to access to the millions of utility poles and untold miles of conduit in the  ^ nation.?6 ^ ԍ Id. at 1143.?(# Thus, the Commission adopted only five general rules of applicability and several guidelines to assist the parties in reaching mutually agreeable access agreements. The  ^j Commission declined to set a comprehensive regime of specific rules.P7jL ^x ԍ Interconnection Order at 1143.P  The Infrastructure Owners urge the Commission to follow this approach with respect to ducts, conduits, rightsofway and transmission facilities. As a starting point, the Commission should allow parties to negotiate access to ducts, conduits, rightsofway and transmission facilities where appropriate. The heightened concerns surrounding these types of facilities must continue to be recognized and access should be afforded only on terms and conditions that are consistent with capacity, safety, reliability and generally applicable engineering purposes.  In short, an overall deregulatory approach should be applied to the issue of ducts, conduits, rightsofway and transmission facilities. The Infrastructure Owners(#7,** submit that such an approach comports with what Congress envisioned in the 1996 Act, including its amendments to the Pole Attachments Act. Moreover, it comports with the unique, inherent nature of ducts, conduits, rightsofway and transmission facilities.  ] V. CONCLUSION   The 1996 Act effected the most sweeping change in this Nation's telecommunications laws in 60 years. The change is premised on the notion that a deregulated, competitive market results in efficiency and innovation and produces the greatest benefits for the American public. The Infrastructure Owners urge the Commission to adopt such a deregulated, competitive approach with respect to pole attachment rates and related issues. Where regulation is needed, that regulation should be minimal and designed to achieve a specific goal.  The Infrastructure Owners suggest that the recommendations presented in this position statement are consistent with the overall deregulation and procompetition themes. They urge the Commission to adopt a regulatory scheme, and specific regulations where necessary, consistent with their proposals.