FCC Record, Volume 26, No. 7, Pages 4843 to 5761, March 28 - April 08, 2011 Page: 5,326
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195. In conclusion, we find that the lower-bound telecom rate and the make-ready fees together
do not subsidize third-party pole attachers because these rates recover more than the costs caused by
attachers. Specifically, these rates recover all the capital costs caused by attachers, and an amount of
maintenance and administrative costs that exceeds the amount caused by attachers. Moreover, the pole
owner benefits from the extra capacity it obtains for free in the make-ready process, in addition to
recovering an amount greater than the costs caused by the attachers.
196. Taxes. In the Further Notice, the Commission stated that, under its proposal, taxes would
be treated as part of the capital costs that are excluded from the lower-bound telecom rate.95 Parties
identified and commented on two types of relevant taxes: income taxes596 and property taxes.597 As
discussed below, we find it appropriate to exclude both types of taxes from the lower-bound rate.
197. Consistent with the cost-causation principles underlying our lower-bound telecom rate, we
exclude income taxes because third-party attachers do not cause utilities to incur these expenses.598 As
we stated in the Further Notice, income taxes are capital costs because they apply to the return
stockholders receive for providing funds used to pay for the pole.59 Under our approach, if a new
attachment would give rise to capital costs, the attacher bears those costs through make-ready fees.6"
Where no capital costs arise from a new attachment, the new attacher has "caused" none of the capital
outlay on which stockholders earn a return and therefore none of the corporate income taxes on that
return. Accordingly, income taxes are excluded from the lower-bound rate.
198. We likewise find that property taxes should be excluded from the lower-bound telecom
rate because there is no evidence in the record that third-party attachers cause pole owners to incur these
expenses. In theory, if a pole owner places a new pole to accommodate a third-party attachment, the
value of that owner's pole stock could increase. That increase, in turn, could increase the pole owner's
property taxes, if property taxes are assessed based on an estimate of property values. We are persuaded
by the record, however, that such a theoretical property tax increase, if any, would be insignificant. For
one, the record indicates that new poles seldom are installed to accommodate third-party attachment
demand.6" Moreover, the magnitude of any increase in value of the owner's stock of poles arising from a
new pole would be expected to reflect only the extra capacity provided by the new pole. Commenters did
not provide data demonstrating the increase in value - if any - likely to result under these circumstances;
95 Further Notice, 25 FCC Rcd at 11922 n.372. Income taxes are capital costs because they apply to the return
equity holders receive for providing funds used to pay for the pole. ROGER A. MORIN, REGULATORY FINANCE:
UTILITIES' COST OF CAPITAL 409-1 1 (1994).
596 Kravtin refers to "revenue-related" taxes without distinguishing these from income taxes. See NCTA Comments
Attach. A, Patricia D. Kravtin Report at 36 (NCTA Kravtin Report).
597 Pecaro notes possessory interest taxes, which are similar to the property taxes the owner of private property pays.
See Comcast Pecaro Decl. at 13. A possessory interest tax is paid by an entity that uses government property and
typically is based on the assessed value of that property.
598 See Comcast Pecaro Decl. at 12-13; NCTA Kravtin Report at 36; Mahanger Reply at 17-18.
599 A stockholder is a legal owner of one or more shares of the capital stock of a corporation. See Eric L. Kohler, A
Dictionary for Accountants at 457 (5th Ed.) (1975). Capital stock, in turn, refers to the ownership shares of a
corporation authorized by its articles of incorporation. Id. at 84.
600 See supra paras. 144, 161.
6'l For example, data provided by Oncor indicates that only 0.9% and 0.5% of the poles for which attachers
requested access were replaced at the attachers' expense through make-ready fees in 2008 and 2009, respectively.
See EE/UTC Chakrabarti Report at 9-10. See also Ex Parte Letter from Joseph A. Lawhorn, Counsel to Georgia
Power Co. and Southern Communications Services, to Marlene H. Dortch, Secretary, FCC, Attach. B, slide 4 (filed
Nov. 17, 2009). This letter describes an actual project in which only 4 of 294 poles, or 1.4%, had to be changed out
to accommodate new attachments by a cable company.
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/m1/498/: accessed February 21, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.