FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,309
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communications services, such as broadband Internet access, by promoting competition and removing
barriers to infrastructure investment.476
158. At the same time, our new interpretation of section 224(e), described above, recognizes
the limitations of the statutory framework Congress created when it delegated the authority to the
Commission to interpret and apply the telecom rate formula. We agree with commenters that the
Commission has discretion to reinterpret the undefined term "cost" and the ambiguous phrase "cost of
providing space" in section 224(e) in the manner proposed.477 As the Supreme Court has recognized in
other contexts, "without any better indication of meaning than the unadorned term, the word 'cost' ... is
'a chameleon' ... a 'virtually meaningless' term .... As Justice Breyer put it in Iowa Utilities Bd.,
words like 'cost' 'give ratesetting commissions broad methodological leeway; they say little about the
'method employed' to determine a particular rate.",478 Courts have granted agencies like the Commission
substantial leeway in defining the term "cost" in other contexts, as well.479 As a result, we reconsider the
"fully allocated cost" methodology previously used to implement the telecom attachment rate formula in
section 224(e). Instead, we conclude that we have flexibility to adopt a new pricing approach that
complies with the statute's requirements, yet also produces efficient pricing signals for infrastructure
investment and new service deployment by providers. Our decision to adopt a new methodology
recognizes the bounds Congress set in section 224(e), but also the Commission's duty to continually
review its rules and policies in light of changing circumstances, and make reasonable changes that in our
experience will better serve the pro-competitive goals Congress established in the Act.
159. It is readily apparent from other provisions of section 224 that when Congress wanted to
limit the Commission's discretion, it explicitly did so. For example, Congress specifically included
"operating expenses and actual capital costs" in the carrying charges for the cable rate formula (thus
incorporating a fully allocated cost methodology) in the upper limit of just and reasonable rates for
section 224(d).480 The statute also sets forth how the costs of usable and unusable space (however
defined) should be allocated among pole owners and attachers in the section 224(e) telecom formula.48'
Congress, however, did not establish in section 224(e) any other parameters for the Commission to follow
in defining "cost" or determining the "cost of providing space" on a pole. In the face of statutory
ambiguity, the Commission, therefore, has the authority - and responsibility - to fill in any "gaps" with
476 See id.
477 See, e.g., NCTA Reply at 23 (asserting that "[i]t is well-established that the term 'cost' is a 'chameleon' that
gives agencies 'broad methodological leeway' in determining a particular rate" and citing Verizon v. FCC, 535 U.S.
at 500-01, quoting Strickland v. Comm 'r, Maine Dep 't of Human Servs., 96 F.3d 542, 546 (1st Cir. 1996) and AT&T
v. Iowa Utils. Bd., 525 U.S. 366, 423 (1999) (Breyer, J., concurring in part and dissenting in part)); TWTC White
Paper at 18 (citing Chevron v. Natural Res. Def Council, 467 U.S. 837, 843-44 (1984) (Chevron); EEI/UTC
Comments at 93-94 (advocating a proposal to modify implementation of the telecom rate formula and citing Gulf
Power and Chevron).
478 Verizon Communications, Inc. v. FCC, 535 U.S. 467, 500-01 (2002) (citations omitted).
479 See, e.g., Permian Basin Area Rate Cases, 390 U.S. 747, 767 (1968) ("[CJourts are without authority to set aside
any rate selected by the [Federal Power] Commission which is within a 'zone of reasonableness.'" (citing FPC v.
Natural Gas Pipeline Co., 315 U.S. 575, 585 (1942) ("No other rule would be consonant with the broad
responsibility given to the Commission by Congress; it must be free, within the limitations imposed by pertinent
constitutional and statutory commands, to devise methods of regulation capable of equitably reconciling diverse and
4s80 47 U.S.C. 224(d). Likewise, as the lower bound of just and reasonable pole rental rates under section 224(d),
the Act defines cost as the "additional costs of providing pole attachments." Id.
48L 47 U.S.C. 224(e).
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/m1/481/: accessed July 24, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.