FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,322
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184. No Evidence of Utility Subsidy. We find no evidence in the record that supports the
utilities' assertions that the lower-bound telecom formula results in rates so low that it forces electric
ratepayers to subsidize third-party attachment rates.570 Under economic and legal principles, a given
service is not subsidized by other services if the rate for the service produces revenues that cover all of the
costs caused by the service.571 In this case, neither the firm that provides the given service and other
services, nor the customers of those other services, are made worse off by the firm incurring costs to
supply the service. The given service (e.g., access to poles) does not subsidize other services (e.g.,
electric service) if its rate produces revenues that cover the incremental costs of providing the service.
185. Capital Costs. We next discuss the specific costs - capital, maintenance, and
administrative costs -- caused by third-party attachers, and why the amount of each particular cost
reflected in the lower-bound rate is not a subsidized amount. The capital costs of a pole are for the
physical material of the pole itself and for the labor and engineering needed to install it. The attacher
causes the pole owner to incur costs if measures such as rearrangement or bracketing are performed, or if
there is no space available on an existing pole to accommodate an attachment. The attacher causes the
pole owner to incur the costs for rearranging existing attachments, adding brackets, installing a new pole,
or for otherwise incurring costs to accommodate the attacher's demand. Pole owners have the
opportunity to recover through make-ready fees all of the capital costs caused by third-party attachers.
Importantly, the utility itself sets these fees as are appropriate - they are not subject to any mandatory rate
formula set by the Commission.572
186. As discussed below, the record demonstrates that attachers do not cause pole owners to
incur capital costs if there is space available on an existing pole to accommodate an attachment. For that
reason, none of the capital cost of a pole is included in the lower-bound telecom recurring pole rental rate
(and none is recovered through the make-ready fees). In accordance with the economic and legal
principles set forth above, the lower-bound rate is not a subsidized rate, even though it excludes capital
costs, because the attacher does not cause the utility to incur capital costs in this case. Excluding capital
costs from the lower-bound rate, while at the same time allowing recovery of all of the capital costs
caused by third-party attachers through the make-ready fees, prevents a subsidy that would result from
under-recovery of capital costs.
187. Moreover, as one party points out, in cases where an attacher pays make-ready fees to
upgrade or to add capacity to an existing pole, or for a new, taller pole to accommodate that attacher's
570 See, e.g., APPA Reply at 15-16; Coalition Comments at 112-13; EEI/UTC Comments at 71-73; 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, Report of Kaustuv Chakrabarti passim
(filed Dec. 14, 2010) (EEI/UTC Chakrabarti Report).
s57 Alabama Power Co. v. FCC, 311 F.3d at 1370. See also William J. Baumol and Dietrich Fischer, Super Fairness:
Applications and Theory, Ch. 6 (1986); Gerald R. Faulhaber, Cross-Subsidization: Pricing in Public Enterprises,
65 AM. EcoN. REV. 966, 966-77 (1975). The economic test developed by Faulhaber requires that the revenues a
firm derives from each service or group of services cover their own individual incremental costs. Faulhaber, id.
The complexity of the calculations and the voluminous information required to even roughly approximate the
incremental revenues and costs for each group of services precludes such an analysis here, especially given
Congress' instruction that the Commission institute a "simple and expeditious" pole attachment regulatory program
rather than requiring protracted proceedings and complicated pricing investigations. See 1977 Senate Report at 21.
572 We note that parties can seek Commission review of make-ready charges to the extent that they believe such
charges are unjust or unreasonable. See, e.g., Knology v. Georgia Power, 18 FCC Rcd 24615 (2003) ("Utilities are
entitled to recover their costs from attachers for reasonable make-ready work necessitated by requests for
attachment. Utilities are not entitled to collect money from attachers for unnecessary, duplicative, or defective
make-ready work."); Kansas City Cable Partners v. Kansas City Power & Light Co., Consolidated Order, 14 FCC
Rcd I 1599 (Cable Serv. Bur. 1999) (attacher responsible only for cost of work made necessary because of its
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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/m1/494/: accessed January 20, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.