FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,308
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statutory requirements established in section 224(e) of the Act, including the specific cost apportionment
provisions applicable to attachers.
156. "Cost " Is Not Defined in Section 224(e). Our new telecom rate reflects a reasonable
interpretation of the ambiguous statutory language of section 224(e). Congress established a rate formula
for charges for pole attachments used by telecommunications carriers to provide telecommunications
services in section 224(e) based on the "cost of providing space on a pole.'"47 Although section 224(e)
specifies how the pole space costs are to be allocated between the owner and attacher, it does not specify
a cost methodology. Specifically, section 224(e)(1) states that the Commission shall prescribe regulations
"in accordance with this subsection to govern the charges for pole attachments used by
telecommunications carriers to provide telecommunications services," and that "[s]uch regulations shall
ensure that a utility charges just, reasonable, and nondiscriminatory rates."47' In particular, section
224(e)(2) and (3) describe how "[a] utility shall apportion the cost of providing space" on a pole -
whether usable or unusable - but does not define the term "cost." We therefore find the term "the cost of
providing space" to be ambiguous."472 By contrast, under section 224(d)(1) of the cable formula,
Congress established a specific range of rates. This zone of reasonableness for cable attachment rates
ranges from "the additional costs of providing pole attachments," known as the incremental cost, to a
percentage (based on usable space) of "the sum of the operating expenses and capital costs of the utility
attributable to the entire pole," known as fully allocated costs.4'3
157. The Commission initially implemented section 224(e) by interpreting "cost" to include the
same cost categories that it was using in the cable rate formula, relying on a fully-allocated cost approach.
This initial approach was reasonable since, when the 1996 Act was enacted, it was consistent with - and
allowed the Commission to continue - the traditional cost methodology that had been in effect at the time
for the cable rate formula.474 Experience has shown, however, that this approach has resulted in higher
rates than necessary, as well as rate disparities and disputes over whether the cable or telecom formula
applies, negatively impacting communications service providers' investment decisions to expand their
networks and services.47" As discussed below, that outcome has proved to be inconsistent with Congress'
policies underlying the 1996 Act to encourage the widest deployment possible of advanced
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aspects of the full panoply of Title II common carrier regulation need not apply, and the Commission is afforded
discretion to select regulatory tools.") (emphasis added).
470o 47 U.S.C. 224(e)(2).
47 47 U.S.C. 224(e)(2).
472 In particular, section 224(e)(2) provides: "A utility shall apportion the cost of providing space on a pole, duct,
conduit, or right-of-way other than the usable space among entities so that such apportionment equals two-thirds of
the costs of providing space other than the usable space that would be allocated to such entity under an equal
apportionment of such costs among all attaching entities." 47 U.S.C. 224(e)(2). Section 224(eX3) provides: "A
utility shall apportion the cost of providing usable space among all entities according to the percentage of usable
space required for each entity." 47 U.S.C. 224(e)(3). The term unusable space "means the space on a utility pole
below the usable space, including the amount required to set the depth of the pole." 47 C.F.R. 1.1402(1). Usable
space, in turn, "means the space on a utility pole above the minimum grade level which can be used for the
attachment of wires, cables, and associated equipment, and which includes space occupied by the utility." 47 C.F.R.
473 47 U.S.C. 224(dX1).
474 See 1998 Implemnentation Order, 13 FCC Red at 6800, para. 43 n.160; Implementation ofSection 703(e) of the
Telecommunications Act of 1996, Amendment of the Commission's Rules and Policies Governing Pole Attachments,
CS Docket No. 97-151, Notice of Proposed Rule Making, 12 FCC Rcd 11725, 11737, para. 33 (1997) (Telecom
475 See infra para. 174.
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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/m1/480/: accessed May 25, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.