FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,303
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would be included in the lower bound telecom rate, Congress' intention was that the Commission not
"embark upon a large-scale ratemaking proceeding in each case brought before it, or by general order" to
establish pole rental rates.435 Thus, under our methodology to determine the lower-bound telecom rate,
we include maintenance and administrative expenses.436
146. Determining the New Just and Reasonable Telecom Rate. From within the range of
possible interpretations of the term "cost" for purposes of section 224(e), we adopt a particular definition
of cost, and therefore a particular rate as the appropriate just and reasonable telecom rate. The definition
of cost we select is based on a balancing of policy goals. As discussed in greater detail below, we seek to
ensure that the Commission's policies promote the availability of broadband services and efficient
competition for those services.437 We also recognize, however, that pole rental rates historically have
helped support the investment utilities make in their pole infrastructure, and acknowledge utilities' policy
concerns about shifting that burden to utility ratepayers.438
147. We agree with commenters who explain that today, the telecom rate is sufficiently high
that it hinders important statutory objectives. For example, commenters explain that reducing the telecom
rate would improve the business case for providing advanced services, because it will reduce the expected
incremental cash outflows of providing such services, thereby increasing the likelihood that the present
value of the expected incremental cash inflows will exceed the present value of the expected incremental
cash outflows.439 In addition to reducing barriers to the provision of new services, reducing the telecom
rate can expand opportunities for communications network investment, as discussed in greater detail
below.440 We thus conclude that lowering the telecom rates will better enable providers to compete on a
level playing field, will eliminate distortions in end-user choices between technologies, and lead to
provider behavior being driven more by underlying economic costs than arbitrary price differentials."'
We also find persuasive the views of consumer advocates in this respect. Notably, "NASUCA members
are interested in keeping the costs of pole attachments down, so as to keep the costs of the[se] services ...
435 See 1977 Senate Report at 22, reprinted in 1978 U.S.C.C.A.N. at 130. The pole attachment methodology does
not purport to be a precise ratemaking tool. Congress recognized there would be "difficulties ... in determining
some cost components associated with erecting and maintaining pole line plant, and allocating those costs," and
understood that the considerable flexibility it gave to the Commission in making its "best estimate" of some costs
for determining just and reasonable pole attachment rates also carries with it an element of imprecision. Adoption of
Rules for the Regulation of Cable Television Pole Attachments, CC Docket No. 78-144, Notice of Proposed
Rulemaking, 68 FCC2d 3, 9, 11, paras. 15, 20 (1978) (1978 Pole Attachment NPRM). In keeping with Congress's
directive, our policy has been that not every detail of pole attachment cost must be accounted for, nor every detail of
non-pole attachment cost eliminated from every account used. See, e.g., 2000 Fee Order, 15 FCC Rcd at 6463-64,
436 See 1977 Senate Report at 22, reprinted in 1978 U.S.C.C.A.N. at 130.
47 See infra Part V.B.3.
438 See, e.g., Coalition Reply at 22; Letter from Aryeh B. Fishman, Director, Regulatory Legal Affairs, and John
Caldwell, Director of Economics, EEI, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 07-245, GN Docket
No. 09-51, Supp. Decl. of Jonathan Orszag and Allan Shampine, at paras. 10-11 (filed Dec. 14, 2010) (EEI Orszag,
Shampine Supp. Decl.).
439 See infra paras. 174-177 (discussing commenters' evidence in this regard). Based on well-established economic
principles, investment in offering a product or service is likely to be undertaken if the present value of the expected
incremental cash inflows exceeds the present value of the expected incremental cash outflows, with present values
calculated using a discount rate equal to a cost of capital that reflects the risk of the venture. See, e.g., JAMES C.
VANHORNE, FINANCIAL MANAGEMENT AND POLICY 123-26, 131-39 (2d ed. 1971); THOMAS E. COPELAND AND J.
FRED WESTON, FINANCIAL THEORY AND CORPORATE POLICY 25-41 (3d ed. 1988).
440 See infra Part V.B.3.
4 See generally infra Part V.B.3.
Federal Communications Commission
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United States. Federal Communications Commission. FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011, book, April 2011; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc52169/m1/475/: accessed November 19, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.