FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,321
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in the provision of new advanced services or network upgrades.563 The new telecom rate also will
substantially reduce the incentives for costly disputes by substantially reducing the potential gains that a
party can claim by arguing for a favorable attachment definition.564 At the same time, in defining the new
telecom rate we have been mindful of the potential burden of reform on utility ratepayers and the
incentives of utilities to continue investing in pole infrastructure, and have accounted for that in setting
the new telecom rate.565
4. The Commission's Approach Permits Utilities to Recover Their Costs
182. We are not persuaded by claims of utilities that the new telecom rate will not enable them
to recover their costs. The new telecom rate is compensatory and is designed so that utilities will not be
cross-subsidizing attachers, as it ensures that utilities will recover more than the incremental cost of
making attachments. The record provides no evidence indicating that there is any category or type of
costs that are caused by the attacher that are not recovered through the new telecom rate.
183. New Telecom Rate Is Compensatory. Under our new approach, the lower-bound telecom
rate excludes capital costs - the depreciation, rate of return, and tax components of the carrying charges66
- consistent with economic, cost causation principles. Pole owners would continue to recover up-front,
through make-ready fees, the entire amount of the capital costs incurred to accommodate an attacher. As
Comcast points out, this approach is also consistent with Congress's understanding that pole attachments
generally do not impose any capital costs on utilities that are not recovered fully in make-ready charges:
"Thus, the only added cost to the utility resulting from the pole attachment would be administrative
costs."567 Significantly, the lower-bound telecommunications rate, the new telecom rate, and the cable
rate each are fully compensatory to utilities because these rates meet or exceed incremental cost, and
satisfy all constitutional compensation requirementss The cable rate formula has been upheld by the
courts as just, reasonable, and fully compensatory, and in virtually all cases the new telecom rate will
recover at least an equivalent amount of costs.569 Further, if the lower-bound telecom rate is applied, it
will be because it is higher than the (already compensatory) rate yielded by the cable rate formula.
563 Attachments to a particular utility pole by cable operators and telecommunications carriers are a near identical
input, so any price difference directly treats competitors differently.
5o Thus, under the new telecom rate, fewer resources can be profitably wasted in such disputes. See supra para. 174
(discussing how a low and more uniform rate will reduce disputes and litigation about the applicability of "cable" or
"telecommunications" rates). The efficiency gains due to reduced rent seeking are likely to be significant because
they are of a first-order magnitude (that is, they apply to every attachment sold), rather than applying to marginal
changes in attachments made.
565 See supra paras. 146-152.
s66 See supra note 419.
567 Comcast Comments at 13 (citing 123 Cong. Rec. 5080 (1977) (statement of Rep. Wirth) and 1977 Senate Report
at 19 ("[A utility's] avoidable costs...could be expected to be minimal since most of those costs are the outlays that
should be fully recovered in the make-ready charges.").
56s8 The new telecom rate would be equal to the higher of either the lower-end telecom rate or the cable rate;
generally this will result in the cable rate.
5 See, e.g., Alabama Power Co. v. FCC, 311 F.3d at 1370-71 ("[A]ny implementation of the [Commission's cable
pole attachment rate] (which provides for much more than marginal cost) necessarily provides just compensation.");
FCC v. Florida Power Corp., 480 U.S. at 253-54 (finding that it could not "seriously be argued, that a rate
providing for the recovery of fully allocated cost, including the actual cost of capital, is confiscatory"). See also
NATIONAL BROADBAND PLAN at 1 10 ("[The cable rate] has been in place for 31 years and is 'just and reasonable'
and fully compensatory to utilities."); Comcast NPRM Comments Exh. 2, Decl. of Harold W. Furchtgott-Roth at 1,
10-11 (Furchtgott-Roth Report); Comcast Kravtin Report at paras. 38-40, 67-72).
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/m1/493/: accessed July 23, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.