Proposed Rule2022-09029
Accelerating Wireline and Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment
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Published
April 28, 2022
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission) seeks comment on measures that the Commission may adopt to better align the financial incentives of utilities and attachers with respect to pole replacements. Specifically, the Commission seeks comment on the circumstances in which attachers should not be required to pay the entire cost of pole replacements needed to accommodate their new attachments and the proper allocation of costs in those situations, whether and how the Commission should revise its rules to address pole replacement cost issues, whether there are changes the Commission could make to its rules that would help utilities and attachers avoid disputes and expedite the resolution of pole attachment complaints, and the appropriate scope of refunds ordered by the Commission when it determines that a pole attachment rate, term, or condition is unjust and unreasonable.
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[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Proposed Rules]
[Pages 25181-25196]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-09029]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[WC Docket No. 17-84; FCC 22-20; FRS 83033]
Accelerating Wireline and Wireless Broadband Deployment by
Removing Barriers to Infrastructure Investment
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks comment on measures that the Commission may adopt to
better align the financial incentives of utilities and attachers with
respect to pole replacements. Specifically, the Commission seeks
comment on the circumstances in which attachers should not be required
to pay the entire cost of pole replacements needed to accommodate their
new attachments and the proper allocation of costs in those situations,
whether and how the Commission should revise its rules to address pole
replacement cost issues, whether there are changes the Commission could
make to its rules that would help utilities and attachers avoid
disputes and expedite the resolution of pole attachment complaints, and
the appropriate scope of refunds ordered by the Commission when it
determines that a pole attachment rate, term, or condition is unjust
and unreasonable.
DATES: Comments are due on or before June 27, 2022, and reply comments
are due on or before July 27, 2022.
ADDRESSES: You may submit comments, identified by WC Docket No. 17-84,
by any of the following methods:
[ssquf] Federal Communications Commission's Website: <a href="https://apps.fcc.gov/ecfs/">https://apps.fcc.gov/ecfs/</a>. Follow the instructions for submitting comments.
[ssquf] Mail: Parties who choose to file by paper must file an
original and one copy of each filing. Filings can be sent by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission. Commercial
overnight mail (other than U.S. Postal Service Express Mail and
Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction,
MD 20701. U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 45 L Street NE, Washington, DC 20554. Effective
March 19, 2020, and until further notice, the Commission no longer
accepts any hand or messenger delivered filings. This is a temporary
measure taken to help protect the health and safety of individuals, and
to mitigate the transmission of COVID-19. See FCC Announces Closure of
FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public
Notice, DA 20-304 (March 19, 2020), <a href="https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy">https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy</a>.
[ssquf] People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#32747171070206725451511c555d44"><span class="__cf_email__" data-cfemail="a5e3e6e6909591e5c3c6c68bc2cad3">[email protected]</span></a> or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Michael Ray, Competition Policy
Division, Wireline Competition Bureau, at (202) 418-0357,
<a href="/cdn-cgi/l/email-protection#264b4f454e47434a0854475f6640454508414950"><span class="__cf_email__" data-cfemail="0b666268636a6e6725796a724b6d6868256c647d">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Further Notice of Proposed Rulemaking (Second Further Notice) in WC
Docket No. 17-84, adopted March 16, 2022, released March 18, 2022. The
full text of this document is available for public inspection on the
Commission's website at <a href="https://www.fcc.gov/document/fcc-seeks-comment-resolving-disputes-over-pole-replacement-costs">https://www.fcc.gov/document/fcc-seeks-comment-resolving-disputes-over-pole-replacement-costs</a>. To request materials in
accessible formats for people with disabilities (e.g., braille, large
print, electronic files, audio format, etc.) or to request reasonable
accommodations (e.g., accessible format documents, sign language
interpreters, CART, etc.), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="c9afaaaafcf9fd89afaaaae7aea6bf">[email protected]</a> or call the
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or
(202) 418-0432 (TTY).
Synopsis
I. Second Further Notice of Proposed Rulemaking
1. In this Second Further Notice, we seek comment on ways to
eliminate or expedite the resolution of pole replacement disputes by
establishing clear standards for when and how utilities and attachers
must share in the costs of a pole replacement that is precipitated by a
new attachment request. In the Pole Replacement Declaratory Ruling, the
Bureau found that it would be contrary to the Commission's rules and
policies to require a new attacher to pay the entire cost of a pole
replacement when a pole already requires replacement (e.g., because the
pole is out of compliance with current safety and utility construction
standards or it has been red-tagged) at the time a request for a new or
modified attachment is made. According to the Bureau, even if the new
attacher might benefit from that type of pole replacement, it is not
``necessitated solely as a result'' of the new attachment pursuant to
the language in Section 1.1408(b) of our rules and therefore the
utility may not impose all make-ready costs of that pole replacement on
the new attacher. The Bureau based its clarification on the cost
causation and cost sharing principles codified in Section 1.1408(b). We
affirm the Bureau's findings in the Pole Replacement Declaratory Ruling
as consistent with Section 224, the Commission's rules, and past
Commission precedent.
2. On July 16, 2020, NCTA--the internet & Television Association
filed a Petition asking the Commission to clarify its rules in the
context of pole replacements. The record developed in response to the
NCTA Petition indicates significant disagreement between utilities and
attachers about when a pole replacement is not ``necessitated solely''
by a new attachment when the circumstances do not involve a preexisting
violation or red-tagged pole. We seek comment on these more ambiguous
situations and the role the Commission should take in providing further
guidance regarding pole replacements. We also take this opportunity to
seek comment on additional scenarios in which financial responsibility
for pole replacements should be shared by attachers and utilities and
how those costs should be apportioned. Additionally, we seek comment on
the scope of utility liability for pole attachment rate refunds when
rates are found to be unjust and unreasonable.
A. Determining the Applicability of Cost Causation and Cost Sharing
3. In the Pole Replacement Declaratory Ruling, the Bureau
clarified, pursuant to the language in Section 1.1408(b) of our rules,
that when a new attachment request precipitates a pole replacement, but
the pole must also be replaced for other reasons, the pole replacement
is not ``necessitated solely'' by the new attachment and all of the
parties that benefit from the replacement must share proportionally in
the cost, including utilities. Under this standard, and consistent with
the 2018 Wireline Infrastructure Order, the Bureau made clear that this
standard applies when the pole must be replaced
[[Page 25182]]
due to a preexisting violation or because it has been red-tagged.
4. We seek comment on whether there are additional situations in
which a pole replacement is not ``necessitated solely'' by a new
attachment request. Is it possible for a future planned pole
replacement to serve as grounds for concluding that the pole must be
replaced for other reasons at the time of the new attachment request?
If so, in what circumstances? For example, if the utility has already
scheduled the requested pole for replacement one or two years after the
new attachment request is made, could we deem that known and scheduled
replacement as necessary at the time that the new attachment request is
made and therefore consider the replacement of the pole to not be
``necessitated solely'' by the new attachment? Should the Commission
codify a definition of ``necessitated solely'' for the purposes of
Section 1.1408(b) and, if so, what should that definition be? When
considering situations ``necessitated solely'' by a need to create
capacity for a new attachment, should the term ``capacity'' refer to
both additional space needed to accommodate the new attachment and/or
the need for a stronger pole to increase loading capacity? Should the
Commission codify a definition of ``red-tagging'' or other terminology
that distinguishes between priority replacements that need to be
performed immediately due to the status of a pole from non-priority
replacements that may be implemented at a later time? The Commission
has previously described a ``red-tagged'' pole as one found to be non-
compliant with safety standards and placed on a utility's replacement
schedule. Crown Castle argues that the Commission should employ a
broader definition that includes ``any pole where, based on an existing
condition, the utility contends the pole must be replaced before any
new attachment, or change to an existing attachment, may be made.''
5. Even if a pole replacement is necessitated for a reason other
than a new attachment request, Section 1.1408(b) requires existing
attachers (including the utility) to pay a proportional share of the
replacement costs only if they ``directly benefit'' from the
replacement. The Commission has previously determined that an
incidental benefit is not sufficient to hold these attachers
accountable for the pole replacement costs. When addressing additional
circumstances to which the clarification in the Pole Replacement
Declaratory Ruling should apply, if any, we ask that commenters specify
whether any benefits that accrue to existing attachers are direct
versus incidental and how they define those terms for the purposes of
their arguments. We ask that commenters be clear about the criteria
that distinguish a direct benefit from an incidental benefit and cite
all economic and legal authorities that support their positions.
6. We seek comments specifically addressing whether a utility
directly benefits from a pole replacement that is necessary to correct
a preexisting violation that the utility did not cause. As stated in
the 2018 Wireline Infrastructure Order, utilities may not hold new
attachers responsible for the costs of correcting a preexisting
violation. That does not necessarily mean, however, that the utility is
ultimately responsible for all of the costs in all cases. Rather, the
party that is responsible for the violation is responsible for the
costs of correcting the violation, and the utility is authorized to
seek recovery from the violating party. What are the circumstances
under which existing attachers, as opposed to utilities, may be
responsible for preexisting violations that require an entire pole to
be replaced? In such situations, are there ways that a utility directly
benefits from a pole replacement that corrects a preexisting violation
within the meaning of the first two sentences of Section 1.1408(b),
even if it did not cause the violation? For instance, in concluding
that a utility may not hold a new attacher responsible for costs
arising from the correction of safety violations caused by other
attachers, the former Cable Services Bureau determined that it was up
to the utility ``to require other attachers to reimburse [the utility]
or otherwise pay for corrections of safety violations.'' In the 2018
Wireline Infrastructure Order, the Commission found that a utility may
not hold a new attacher responsible for the costs of a preexisting
violation caused by another attacher or delay the completion of make-
ready to accommodate a new attachment while it ``attempts to identify
or collect from the party who should pay for correction of the
preexisting violation.'' In the context of pole replacements, should we
construe these precedents to mean that the utility is responsible for
the costs of correcting the violation vis-[agrave]-vis the new
attacher, and, therefore, directly benefits when the pole replacement
needed to accommodate the new attachment corrects the violation? If so,
does that financial responsibility and direct benefit require the
utility to share in the costs of the replacement under Section
1.1408(b)?
7. We also seek comment on how to identify and quantify the costs
of a pole replacement that are proportional to the direct benefit
obtained by a utility from a pole replacement that is not necessitated
solely by a new attachment request. We remain committed to the long-
standing principle that when ``capital costs would not have been
incurred `but for' the pole attachment demand . . . the attacher--the
cost causer--pays for these costs.'' In the context of make-ready
charges for a new attachment, that includes the ``direct incremental
costs of making space available to the [attacher],'' but excludes costs
that are not required to accommodate the new attachment. Make-ready is
``the modification or replacement of a utility pole, or of the lines or
equipment on the utility pole, to accommodate additional facilities on
the utility pole.'' Make-ready charges to prepare a pole for a new
attachment are ``non-recurring costs for which the utility is directly
compensated and as such are excluded from expenses used in the rate
calculation.''
8. How should we distinguish the incremental costs attributable to
the new attacher from the costs that should be attributable to
utilities when a pole replacement is necessary to make space for the
new attachment and for a reason that directly benefits the utility? In
the context of a pole that also needs to be replaced to correct a
preexisting violation or because it has been red-tagged, should the new
attacher be responsible for the difference in cost between a taller or
stronger pole needed to accommodate its attachment and what it would
cost to replace the existing pole with one of the same type and size or
strength? Is there a different way to apportion the cost of the new
pole between its owner and the new attacher? How should other costs
associated with pole replacements, such as the cost of transferring
existing attachments to the new pole, be apportioned between the
utility and new attacher? We ask that commenters submit data and
documents describing and substantiating the precise costs of pole
replacements in each scenario addressed above and specify the party
that causes them to be incurred.
9. Finally, we seek comment on whether we should revise our cost
allocation rules to modify or replace the direct benefit versus
incidental benefit standard set forth in Section 1.1408(b). Is there a
more equitable and efficient standard for determining when parties
should share in the costs of modifying a facility? What are the costs
and benefits of applying an alternate standard? We ask that commenters
[[Page 25183]]
proposing alternate standards detail how costs would be allocated under
the proposed standard's terms in real-world scenarios, specifically
addressing the economic and operational impacts on the parties,
including whether the standard would allow utilities to fully recover
the costs of establishing additional capacity on their poles. We also
ask that commenters explain whether any proposed alternate standard
would promote or deter broadband deployment or the ability of utilities
and attachers to successfully negotiate pole attachment agreements,
including whether it would lead to an increase or decrease in pole
attachment disputes.
B. Allocating Costs When Utilities Directly Benefit From Pole
Replacements
10. Attachers have represented to the Commission that utilities
often seek to hold them responsible for all costs of replacing a pole
that is needed to make space for a new attachment, even if all of those
costs are not needed to accommodate the new attachment (e.g., pole
upgrades, increasing capacity beyond the needs of the new attachment).
While some utilities indicate that this is not the case and that new
rules in this area are unnecessary, others have not denied it or have
attempted to justify it with a broad interpretation of the Commission's
cost causation policy, i.e., but for the new attachment request, the
pole replacement would not have occurred at all, so the attacher should
pay all costs of the replacement. Stated differently, some utilities
contend that while implementing a pole replacement is necessitated
solely by the new attachment, they should be able to enhance the pole
in some way that is not necessitated by the new attachment without
incurring financial responsibility for those enhancements. Attachers
have also argued that utilities receive a windfall when they hold new
attachers responsible for all the costs of a pole replacement because
it eliminates or reduces the costs they would have otherwise had to pay
to replace the pole in the future (i.e., financial responsibility for
the utility's deteriorating and aging infrastructure is shifted to the
attacher). In particular, the white paper submitted by Charter's
economist, Dr. Patricia Kravtin, states that ``since the future
replacement of the pole from the utility's perspective is `an
inevitable event' that it would eventually have to pay for itself, the
practice of transferring the full cost of that replacement onto new
attachers (who must either pay to obtain access or choose to abandon
their investment plans) results in burdens to the attaching entity far
exceeding the costs they actually cause the pole owner to incur over a
more meaningful time horizon.'' We seek comment on the conclusions
reached by Dr. Kravtin as they relate to the cost allocations and
causes of pole replacements. Utilities counter that the early
retirement of their poles precipitated by a new attachment comes at a
cost--the value they lose in a capital asset that has not yet reached
the end of its useful life--and that under the Commission's cost
causation policy, they are entitled to compensation for the unrealized
value of a pole that would otherwise remain in service.
11. While we acknowledge that the economic and legal arguments made
by utilities could have merit, we are concerned by the frequent
statements in the record that attachers are being required to absorb
costs that are not caused by their attachments and/or result in
attachers assuming financial responsibility for a utility's capital
assets. Our concern is rooted in the potential impact on the deployment
of broadband networks if the financial resources available for
deployments are depleted by these costs. That said, we are keenly aware
of the need to carefully examine the impact any changes to our cost
allocation rules may have on the ability of utilities to fully recover
the costs of expanding capacity to accommodate new attachments to avoid
the unintended consequence of increased attachment denials. Section 224
does not provide the Commission with authority to require utilities to
replace poles when additional capacity is needed to accommodate a new
attachment. Utility commenters argue that ``[i]f utilities are no
longer compensated for pole replacements and can no longer control the
pole replacement process, many utility pole owners will decide they can
no longer economically or safely replace poles on a voluntary basis for
new attachers. The `clarification' would deny new attachers access to
poles that require replacement to accommodate them.''
12. To evaluate and resolve these competing concerns, we seek
comment on whether the Commission should revise its pole attachment
rules to expressly recognize that utilities directly benefit from pole
replacements that are precipitated by a new attachment request and
establish clear standards for when and how utilities should be required
to pay a proportional share of the total pole replacement costs. We
limit our inquiries to situations where a pole replacement is needed to
accommodate a new attachment due to lack of capacity. We are aware of
allegations by attachers that some utilities erroneously or
disingenuously claim that an existing pole lacks capacity to
accommodate a new attachment and insist that the pole must be replaced
at the attacher's cost. The rules clearly prohibit such conduct by
utilities, and the Commission is fully capable of adjudicating such
disputes through its complaint process, and we believe that is the
appropriate avenue for attachers asserting such claims to seek relief.
Would clear standards on these points expedite cost dispute resolution
between the parties? Or, are any disputes likely to be fact-specific
and better addressed in adjudicatory proceedings? Are further cost
allocation rules for pole replacements unnecessary and/or could they
result in more attachment requests being denied as some utilities
claim?
1. Responsibility for Pole Upgrades and Modifications Unrelated to New
Attachments
13. Attachers have represented to the Commission that, when a pole
replacement is needed to expand capacity for a new attachment,
utilities use that pole replacement as an opportunity to upgrade a pole
(e.g., increase its class or grade) or expand their own use of the pole
in a manner that is unrelated to the new attachment (e.g., expand
capacity for future use by the utility itself or to rent to a different
attacher). When that occurs, attachers represent that they are held
accountable for the cost of upgrade/expanded use modifications made at
the same time as the make-ready for their new attachments. According to
NCTA, utilities insist that they are entitled to shift those costs to
the new attacher because, even if the upgrade/expanded use
modifications are not required to effectuate the new attachment, the
utility would not have made them if a pole replacement had not been
required to accommodate the new attachment. Attachers argue that, under
the Commission's rules and precedent, they may not be held accountable
for such costs because they are not necessitated by the new attachment.
Utilities who shift the costs of upgrade/expanded use modifications to
new attachers claim that, as described above, the pole replacement
required to accommodate the new attachment is the ``but for'' cause of
those modification costs. We note that some utilities have represented
to the Commission that they do not hold new attachers responsible for
pole upgrades that are not required by a new attachment and that new
rules are unnecessary in this area.
[[Page 25184]]
14. We seek comment on whether utilities directly benefit when they
use pole replacements precipitated by an attachment request to upgrade
or enhance their poles and whether utilities should pay a proportional
share of the total pole replacement costs. As an initial matter, we
seek comment on whether the Commission's existing cost allocation rules
and precedent require clarification on this point. Section 1.1408(b) of
the Commission's rules states, in pertinent part, that ``[t]he costs of
modifying a facility shall be borne . . . by all parties that directly
benefit from the modification,'' and that each party that directly
benefits from the modification shall share proportionally in its costs,
but it then qualifies that language by stating, ``[n]otwithstanding the
foregoing, a party with a preexisting attachment to a pole . . . shall
not be required to bear any of the costs of rearranging or replacing
its attachment if such rearrangement or replacement is necessitated
solely as a result of an additional attachment . . . sought by another
party.'' If a pole upgrade is necessitated at the time a pole is
replaced to create capacity for a new attachment, does the text of
Section 1.1408(b) allocate all costs of the pole replacement, including
those for unrelated upgrade/expansion modifications, to the new
attacher? Or does it merely shield other attachers, and not the
utility, from bearing any upgrade costs? We note that the text of
Section 1.1408(b) does not appear to include replacing a pole after
receiving a modification request as an instance of ``piggybacking.''
The third sentence of the rule states that ``[a] party with a
preexisting attachment to the modified facility shall be deemed to
directly benefit from a modification if, after receiving notification
of such modification . . . it adds to or modifies its attachment.''
While a ``facility'' may include a pole and a ``modification'' includes
replacing a pole, adding to or modifying an attachment is not the same
thing as installing a new, upgraded pole.
15. In the Local Competition Order, the Commission stated that an
attacher is responsible for the entire cost of a new pole needed to
create new capacity for its attachment ``unless [other parties with
attachments] expanded their own use of the facilities at the same
time.'' In the latter event, the other parties that expanded their own
use of the facilities would need to share in the cost of the new pole.
This language is broader than the text of Section 1.1408(b) of the
Commission's rules. Whereas the rule text speaks to pole replacements
that are ``necessitated solely as a result of'' the new attachment, the
language in the Local Competition Order addresses situations where the
pole replacement is an ``opportunity'' for the utility and other
attachers to ``expand their own use'' of the new pole.
16. We seek comment on how to reconcile these cost attribution
standards in the Commission's rules and precedent in the context of a
utility using a pole replacement that is ``necessitated solely'' by a
new attachment request as an opportunity to upgrade the requested pole
in a manner that is not required by the new attachment. Does Section
1.1408(b) of our rules limit the cost-sharing statements in our
precedent? Do the statements in our precedent establish a cost-sharing
standard for a set of facts that is not contemplated by the codified
rule?
17. Should the Commission address this issue by revising Section
1.1408(b) to expressly create a presumption that utilities directly
benefit when they use a pole replacement precipitated by a new
attachment request as an opportunity to upgrade the pole or expand it
for its own use and should, therefore, pay a proportional share of the
pole replacement costs? If so, what are the specific circumstances to
which such a presumption would apply? Specifically, we seek comment on
when an upgrade or expanded use of a pole by a utility confers an
incidental versus direct benefit to a utility. For instance, NCTA and
other commenters urge us to require utilities to share in the costs of
a pole replacement that results in the utility obtaining excess
capacity for its own use. The Commission has previously stated that,
while that excess capacity may confer benefits on utilities, utilities
are not under any obligation to share the future revenue they may
receive due to that excess capacity, even if they did not share in the
costs of the modification that created the excess capacity. Further,
the Commission found that excess pole capacity could be ``particularly
cumbersome'' if it remains unused for extended periods. Should these
statements be understood to mean that the Commission has considered
excess pole capacity to be an incidental benefit of a pole replacement
rather than a direct benefit? Are there grounds for the Commission to
conclude that excess capacity resulting from a pole replacement is a
direct benefit to utilities and they should, therefore, share in the
replacement costs? Are there other benefits that a utility obtains when
a pole is replaced to accommodate a new attachment that the Commission
should treat as incidental as opposed to direct? Or, as utilities
claim, is it unnecessary to modify our rules to address cost allocation
when utilities use a new attachment request that precipitates a pole
replacement as an opportunity to upgrade the pole or expand it for its
own use? In addressing these questions, we ask that commenters be
specific with respect to how they are defining incidental and direct
benefits, their economic bases for those definitions, and how they
apply or do not apply to each circumstance proposed as a benefit to
utilities.
18. If the Commission were to adopt the presumption described
above, what would be a proportional allocation of the costs of a pole
replacement that is precipitated by a new attacher and then used as an
opportunity for the utility to upgrade or expand its use of the pole?
What are the incremental costs of upgrading the class or grade of the
taller pole being installed to accommodate the new attachment? Should
the new attacher be responsible for the difference in cost between a
taller pole of a same type as the existing pole and the upgraded pole,
along with other typical make-ready costs of a new attachment (e.g.,
the cost of transferring existing attachments to the new pole)? If not,
what measure should be used? If the Commission revisits its position on
the installation of excess pole capacity, should those costs be
apportioned in a manner similar to when multiple attachers use an
attachment request to upgrade their existing facilities, requiring
expanded pole capacity, i.e., a ratio of the new space on the taller
pole occupied by the new attacher to the total amount of excess
capacity on the taller pole?
19. We also seek comment on whether adopting a presumption that
utilities directly benefit from pole replacements precipitated by a new
attachment when the utility uses the pole replacement as an opportunity
to upgrade or expand its use of the pole would have a positive or
negative effect on pole attachment negotiations and, relatedly, the
deployment of broadband facilities. Would it facilitate and expedite
successful negotiations by eliminating areas of dispute? Conversely,
would it increase the frequency of pole attachment denials and delay
the deployment of broadband networks due to utility concerns that they
will not be fully compensated for the costs caused by the attachments?
Are there potential adverse impacts for utility ratepayers? If so,
would any of these adverse impacts be lessened if the Commission were
to recognize specific circumstances under which the presumption could
be rebutted? What would those circumstances be? What evidentiary
[[Page 25185]]
showing would utilities need to make to substantiate that circumstances
exist to rebut the presumption? Do these considerations vary based on
whether the pole is located in an ``unserved area,'' and, if so, how
should that term be defined in this context?
20. Additionally, we seek comment on how the last sentence of
Section 1.1408(b) should be interpreted with respect to pole
replacements. That sentence states, ``If a party makes an attachment to
the facility after the completion of the modification, such party shall
share proportionately in the cost of the modification if such
modification rendered possible the added attachment.'' What time period
is reasonable ``after'' the pole replacement occurs for the subsequent
attacher to share in the costs of the pole replacement? Would any
subsequent attachment to a new pole be considered ``rendered possible''
by the pole replacement even if it occurred a significant time later?
2. Costs and Benefits of Early Pole Retirement
21. According to NCTA and other attachers, ``[p]oles, like other
utility infrastructure, have a finite life and require maintenance and
intermittent replacement. Replacing an older pole with a new one
necessarily allows the utility to defer the next scheduled replacement,
including transfer of its facilities to the new pole, and reduces
maintenance costs.'' In NCTA's view, ``where existing utility
infrastructure is . . . near the end of its useful life, it is unjust
and unreasonable [under Section 224(b) of the Act] for pole owners to
shift the entire cost of a pole replacement to a new attacher when the
pole owner itself derives the predominant financial gain, including in
the form of betterment, from replacing and upgrading the pole.''
Attachers argue that utilities should, therefore, be required to pay a
proportional share of pole replacement costs whenever a pole is
replaced to accommodate a new attachment, and irrespective of whether
they have otherwise improved the pole. NCTA also argues that shifting
the entire cost of a pole replacement to a new attacher is inconsistent
with Section 224(f) of the Act because it discriminates against new
attachers ``seeking to bring broadband to an unserved area by imposing
unjust and unreasonable conditions upon access.''
22. Utilities counter that the attachers' position is barred by
Section 1.1408(b) of the Commission's rules, which mandates that new
attachers bear the costs of pole replacements necessitated solely as a
result of their new attachments. They also assert that the attachers
misstate or misunderstand the process and economics of scheduling a
pole for replacement. The record indicates that utilities use internal
pole replacement programs to determine when a pole needs to be replaced
because it is unsafe, unreliable, or unfit. These programs involve
inspections scheduled at periodic intervals during which the condition
of a pole is evaluated. If the pole is deemed to be in poor condition
or reaching the end of its useful life--a status that utilities
emphasize is distinct from a pole's age--the utility will schedule it
for replacement. The timing of that replacement appears to vary based
on the provisions of a particular utility's replacement program, but a
pole that is deteriorating but still safe and serviceable may not be
scheduled for replacement for a period of years after the inspection.
For example, the POWER Coalition explains that its members conduct
their inspections at 8-10 year cycles and that if it is determined that
a pole is not likely to remain serviceable until the next cycle (i.e.,
for another 8-10 years), it will be replaced in one to two years.
Utilities argue that when those pole replacements are accelerated to
create capacity for new attachments, they lose the value of their
capital asset that is being retired before it has reached the end of
its useful life. For these reasons, utilities dispute that they obtain
a benefit when a pole is replaced before the end of its useful life.
Rather, they argue that requiring a new attacher to pay the costs of
the pole replacement ensures that utilities are compensated for, among
other things, the lost value of an asset that would otherwise remain in
service for years. Some utilities have also indicated that state-level
oversight of their capital budgets and spending cycles limits their
flexibility to assume increased capital expenditures in a given year to
accommodate communications deployments.
23. We seek additional information and documents that will better
substantiate the economic, legal, and practical implications of
potentially revising our rules governing cost sharing. We are
particularly interested in additional information and analyses that
expand the economic arguments made by utilities and attachers,
including those addressing their respective economic incentives and how
our rules do or do not effectively align them. We recognize that our
current cost sharing rules have been interpreted to shift the financial
responsibility of utilities for maintaining and replacing their capital
assets to attachers, and that this shift inflates attachers' pole
attachment costs. We also recognize that the ability of utilities to
deny access to their poles due to insufficient capacity, together with
the substantial cost to attachers having to deploy underground
infrastructure in lieu of an attachment, potentially confers
significant leverage to utilities that may disadvantage attachers in
negotiations to obtain what they believe is an equitable allocation of
pole replacement costs. Utilities counter that if they are prevented
from fully realizing the value of their infrastructure assets when a
new attachment request requires the early retirement of an otherwise
serviceable pole, there is little incentive for them to approve the
request.
24. We seek comment on whether revising our pole attachment rules
to require utilities to pay some portion of the costs of replacing a
pole that is necessitated solely to accommodate a new attachment would
better align the economic incentives of the parties, or whether it
would, as some utilities suggest, simply incent utilities to deny
access to the pole in this circumstance. If we were to revise our rules
on this point, what standards or formula should be used to apportion
the costs between the utility, the new attacher, and any other existing
attachers? Should we adopt NCTA's suggestion that new attachers be
responsible for the remaining net book value of the pole being
replaced, measured by the average depreciated bare pole investment
derived using the Commission's pole attachment rate formula? If we were
to adopt that standard, what, if any, additional costs would need to be
allocated to the new and/or existing attachers to ensure that utilities
are compensated for the costs of attachments to their poles? What, if
any, impact would the standard proposed by NCTA have on pole attachment
rates, costs borne by existing attachers other than the utilities, and
utility ratepayers? The Electric Utilities argue that shifting some of
the cost of pole replacements to utilities ``would actually
discriminate against existing attachers that have already paid the
actual cost of make-ready necessary to accommodate their attachments.''
According to Electric Utilities ``[i]f electric utilities are bearing
the vast majority of make-ready pole replacement costs, then those
costs will be booked to the appropriate capital and O&M accounts
(principally FERC Accounts 364 and 593), which will, in turn, lead to
an increase in pole attachment rates paid by all attaching
[[Page 25186]]
entities subject to the FCC's formulas.'' Is there a different standard
of cost allocation that would better balance the incentives of the
parties, be administratively simple to apply, and be more amenable to
utilities? Have states that regulate pole attachments adopted rules
specifying how to allocate the upfront cost to replace a pole between
utilities and attachers that the Commission should consider adopting or
modifying for its own use?
25. We also seek comment on the relationship between the upfront
costs incurred to replace a pole versus the recovery of pole
replacement costs through recurring pole attachment rates.
Specifically, would it be more efficient and effective to require all
costs incurred to replace a pole (except where a pole replacement is
solely necessitated by a new attachment) to be recovered over time
through the allowance for depreciation reflected in recurring rates
calculated pursuant to the Commission's pole attachment rate formulas,
rather than upfront through make-ready fees? Would the utility be made
whole for early replacement of a structurally sound pole through the
allowance for depreciation expense reflected in recurring pole rental
rates, given the use of accurate depreciation rates? Do utilities use
group depreciation for poles? Do utilities' pole depreciation rates
equally reflect the probability of late pole replacement, relative to
average expected useful life, and the probability of early replacement,
whether caused by the addition of an attachment or by some other
reason? Under this approach, would the allowance reflected in recurring
pole attachment rates through the application of the rate of return
component of the carrying charge rate to the net cost of a bare pole,
as in the Commission's rate formula, fully compensate the utility for
the cost of capital used to finance the remaining undepreciated cost of
a replacement pole? Pole replacement costs (other than for pole
replacements solely necessitated by a new attachment) under this
approach would be allocated in the same way that capital, maintenance,
and administrative costs are allocated under the Commission's recurring
pole attachment rate formulas. Would this approach reduce barriers to
entry and at the same time send efficient pricing signals for pole
investment and broadband deployment? Would this approach reduce cost
allocation and rate disputes related to pole replacement? Could such an
approach be used for recovery of all upfront pole replacement costs,
regardless of the reason for replacement? What are the advantages and
disadvantages of such an approach?
26. If we were to adopt a standard for allocating the costs of a
pole replacement precipitated by a new attachment between utility and
attachers, should utilities be able to contest that the allocation is
sufficiently compensatory during negotiations with attachers and, if
necessary, in complaint proceedings at the Commission, and what showing
would be required for them to do so?
27. To help us understand the scale of the pole replacement costs
at issue, we seek data from attachers for a broad sample of recent,
large broadband network buildouts showing the total number of poles to
which they attached and, of those poles, the number for which they paid
the full cost to replace an existing pole. For each project identified,
we ask that attachers specify the total non-recurring costs of the
project (i.e., costs for the physical material of the poles and any and
all other assets, such as fiber and electronic equipment, and labor
costs for design, engineering, and construction of the network) and the
total non-recurring cost specifically for replacement poles. We ask
that attachers and utilities provide information concerning the
condition of the poles that were replaced and their status within the
utility's pole inspection and replacement program, including any
available information concerning the term of the pole's useful life. We
also request that utilities provide data from their year-end 2021
accounts showing: (1) Gross pole investment; (2) accumulated pole
depreciation expense; (3) accumulated deferred income taxes
attributable to poles; (4) net pole investment (i.e., gross pole
investment minus accumulated depreciation expense minus accumulated
deferred income taxes, a result that is equivalent to the net cost of a
bare pole under the Commission's pole attachment formulas); and (5)
pole investment excluded from gross pole investment (to avoid double
recovery of the same pole costs through the collection of both non-
recurring make-ready and recurring rental fees).
28. We seek comment on whether revising our cost sharing rules to
recognize that utilities directly benefit from pole replacements needed
to create capacity for new attachments and should pay a proportional
share of those costs would have a positive or negative impact on the
negotiation of pole attachment agreements and broadband deployment. As
the Commission has previously recognized, Section 224 of the Act does
not authorize us to mandate that utilities replace poles to create
capacity for new attachments. We ask that commenters supporting or
recommending specific cost allocation methodologies address why their
favored solution will expedite pole attachment approvals without
increasing denials, benefit consumers by connecting more people to
broadband, and otherwise be in the public interest. We also seek
comment on whether there are constraints on a utility's ability to deny
attachment based on lack of capacity, such as the nondiscrimination
requirement in Section 224(f)(2) of the Act. For instance, if a utility
itself provides broadband, would it be discriminatory to deny
attachment to another broadband provider based on lack of capacity?
C. Avoiding and Resolving Disputes Between Utilities and Attachers
29. In addition to the questions above, we seek comment on
additional measures that the Commission could adopt that would enable
attachers and utilities to avoid pole replacement disputes and/or
quickly resolve them when they occur. For instance, ExteNet argues that
the Commission should require utilities to provide potential attachers
with information concerning the condition of, and replacement plans
for, their poles. Would disputes concerning the need for pole
replacements and associated costs be avoided if attachers had access to
such information when planning their deployments? What specific data
points would utilities need to provide potential attachers for such
disputes to be avoided? What mechanism could utilities use to provide
such information to attachers if required to do so (e.g., an internal
utility database) and what costs would be associated with establishing
the mechanism(s)? Does the Commission have jurisdiction to require
utilities to provide potential attachers with information concerning
the status of their poles? Are there any other revisions or additions
that the Commission can make to its rules that would enable parties to
avoid disputes concerning pole replacements or facilitate the private
resolution of those disputes? Beyond the topic of pole replacements,
are there other recurring issues with the pole attachment process that
hinder the ability of broadband providers to deploy new facilities? Are
there other infrastructure-related barriers that broadband providers
are facing in their efforts to quickly deploy broadband? What steps
should the Commission take to address these and other problems that may
arise, and to accelerate their resolution?
[[Page 25187]]
30. When pole replacement disputes cannot be avoided or resolved
privately by the parties, are there additional procedures the
Commission should adopt to expedite the resolution of pole attachment
complaints? In November 2017, the Commission established a 180-day shot
clock for the Enforcement Bureau to resolve pole access complaints.
NCTA argues that the Commission should take the additional step of
announcing policies favoring the placement of pole attachment
complaints arising in unserved areas on the Accelerated Docket, which
requires that proceedings on a complaint be concluded within 60 days.
We seek comment on whether such a step is necessary given the 180-day
shot clock for pole access complaints and the discretion already
afforded to Commission staff to place a complaint on the Accelerated
Docket if they deem it suitable. We seek comment on the specific
criteria the Commission would include in a policy that would guide
Commission staff on when pole attachment complaints should be placed on
the Accelerated Docket. For example, should the Commission's policy
take into account the number and complexity of the claims, need for
discovery, need for expert affidavits, and ability of the parties to
stipulate to facts? If the Commission were to adopt a policy that
favors including pole attachment complaints on the Accelerated Docket,
should it be limited to complaints that raise only discrete pole access
issues and do not require the Commission to consider whether a rate,
term, or condition of attachment is unjust or unreasonable? We also
seek comment on any other procedural mechanisms that would expedite the
resolution of complaints before the Commission concerning pole
replacements. We also seek comment on whether there is additional
clarity the Commission can provide on the scope of refunds available
under the Commission's existing rules governing pole attachment
complaints.
31. The Commission, as part of its continuing effort to advance
digital equity for all, including people of color, persons with
disabilities, persons who live in rural or Tribal areas, and others who
are or have been historically underserved, marginalized, or adversely
affected by persistent poverty or inequality, invites comment on any
equity-related considerations and benefits (if any) that may be
associated with the proposals and issues discussed herein.
Specifically, we seek comment on how our proposals may promote or
inhibit advances in diversity, equity, inclusion, and accessibility, as
well the scope of the Commission's relevant legal authority.
II. Initial Regulatory Flexibility Analysis
32. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities from the policies and rule
changes proposed in this Second Further Notice. The Commission requests
written public comment on this IRFA. Comments must be identified as
responses to the IRFA and must be filed by the deadlines for comments
on the Second Further Notice. The Commission will send a copy of the
Second Further Notice, including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA). In addition, the
Second Further Notice and IRFA (or summaries thereof) will be published
in the Federal Register.
A. Need for, and Objectives of, the Proposed Rule Changes
33. The Second Further Notice seeks comment on ways to eliminate or
expedite the resolution of pole replacement disputes by establishing
clear standards for when and how the cost causation and cost sharing
requirements in Section 1.1408(b) of the Commission's rules apply to
pole replacements. The Second Further Notice specifically seeks comment
on situations in which a pole replacement is not ``necessitated
solely'' by a new attachment request, whether and to what extent
utilities directly benefit from various types of pole replacements, and
if the Commission should establish standards for when utilities should
be required to pay a proportional share of pole replacement costs.
Additionally, the Second Further Notice seeks comment on whether the
Commission should adopt an express presumption with regard to whether
utilities directly benefit when they use pole replacements precipitated
by attachment requests to upgrade or enhance their poles, as well as
whether the Commission has previously embraced or rejected such a
presumption. Comments are also sought regarding the circumstances in
which such a presumption would apply, how relevant costs would be
allocated, and whether this presumption would positively or negatively
impact pole attachment negotiations and, relatedly, broadband
deployment.
34. The Second Further Notice also seeks comment on the costs and
benefits of early pole retirements. Specifically, when retiring a pole
early to accommodate a new attachment, the Second Further Notice seeks
comment on whether a revision of the Commission's pole attachment rules
to require utilities to pay a portion of the costs of the pole
replacement would help to align parties' economic incentives. The
Second Further Notice seeks comment on whether it would be more
efficient and effective to require all costs incurred to replace a
structurally sound pole for reasons other than insufficient capacity to
be recovered over time through the allowance for depreciation reflected
in recurring rates calculated pursuant to the Commission's pole
attachment rate formulas, rather than upfront through make-ready fees.
It also seeks comment on whether a revision of the Commission's cost
sharing rules to recognize that utilities directly benefit from pole
replacements that create capacity for new attachments and should thus
pay a proportional share of the costs would positively or negatively
affect negotiations of pole attachment agreements and broadband
deployment. The Second Further Notice seeks comment on whether the
Commission should explicitly define certain key terms related to pole
replacements and the rules governing them, including ``necessitated
solely'' and ``red-tagged.'' Finally, the Second Further Notice seeks
comment on measures the Commission could adopt to avoid disputes
concerning pole replacements and expedite the resolution of complaints
concerning pole replacements and provide more clarity with respect to
the scope of refunds and payments that may be ordered if the Commission
determines that a pole attachment rate, term, or condition is unjust
and unreasonable.
B. Legal Basis
35. The proposed action is authorized under Sections 1-4, 201, 202,
214, 224, 251, and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. 151-54, 201, 202, 214, 224, 251, and 303(r).
C. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
36. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the rules adopted herein. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small
[[Page 25188]]
organization,'' and ``small governmental jurisdiction.'' In addition,
the term ``small business'' has the same meaning as the term ``small-
business concern'' under the Small Business Act.'' A ``small-business
concern'' is one which: (1) Is independently owned and operated; (2) is
not dominant in its field of operation; and (3) satisfies any
additional criteria established by the SBA.
37. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe here, at
the outset, three broad groups of small entities that could be directly
affected herein. First, while there are industry specific size
standards for small businesses that are used in the regulatory
flexibility analysis, according to data from the Small Business
Administration's (SBA) Office of Advocacy, in general a small business
is an independent business having fewer than 500 employees. These types
of small businesses represent 99.9% of all businesses in the United
States, which translates to 32.5 million businesses.
38. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2020, there were
approximately 447,689 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
39. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicate that there
were 90,075 local governmental jurisdictions consisting of general
purpose governments and special purpose governments in the United
States. Of this number there were 36,931 general purpose governments
(county, municipal and town or township) with populations of less than
50,000 and 12,040 special purpose governments--independent school
districts with enrollment populations of less than 50,000. Accordingly,
based on the 2017 U.S. Census of Governments data, we estimate that at
least 48,971 entities fall into the category of ``small governmental
jurisdictions.''
40. Wired Broadband internet Access Service Providers. (Wired
ISPs). Providers of wired broadband internet access service include
various types of providers except dial-up internet access providers.
Wireline service that terminates at an end user location or mobile
device and enables the end user to receive information from and/or send
information to the internet at information transfer rates exceeding 200
kilobits per second (kbps) in at least one direction is classified as a
broadband connection under the Commission's rules. Wired broadband
internet services fall in the Wired Telecommunications Carriers
industry. The SBA small business size standard for this industry
classifies firms having 1,500 or fewer employees as small. U.S. Census
Bureau data for 2017 show that there were 3,054 firms that operated in
this industry for the entire year. Of this number, 2,964 firms operated
with fewer than 250 employees. Additionally, according to Commission
data on internet access services as of December 31, 2018, nationwide
there were approximately 2,700 providers of connections over 200 kbps
in at least one direction using various wireline technologies. The
Commission does not collect data on the number of employees for
providers of these services, therefore, at this time we are not able to
estimate the number of providers that would qualify as small under the
SBA's small business size standard. However, in light of the general
data on fixed technology service providers in the Commission's 2020
Communications Marketplace Report, we believe that the majority of
wireline internet access service providers can be considered small
entities.
41. Internet Service Providers (Non-Broadband). Internet access
service providers using client-supplied telecommunications connections
(e.g., dial-up ISPs) as well as VoIP service providers using client-
supplied telecommunications connections fall in the industry
classification of All Other Telecommunications. The SBA small business
size standard for this industry classifies firms with annual receipts
of $35 million or less as small. For this industry, U.S. Census Bureau
data for 2017 show that there were 1,079 firms in this industry that
operated for the entire year. Of those firms, 1,039 had revenue of less
than $25 million. Consequently, under the SBA size standard a majority
of firms in this industry can be considered small.
42. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired communications networks. Transmission
facilities may be based on a single technology or a combination of
technologies. Establishments in this industry use the wired
telecommunications network facilities that they operate to provide a
variety of services, such as wired telephony services, including VoIP
services, wired (cable) audio and video programming distribution, and
wired broadband internet services. By exception, establishments
providing satellite television distribution services using facilities
and infrastructure that they operate are included in this industry.
Wired Telecommunications Carriers are also referred to as wireline
carriers or fixed local service providers.
43. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms that operated in this industry for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on Commission data in the 2021 Universal Service
Monitoring Report, as of December 31, 2020, there were 5,183 providers
that reported they were engaged in the provision of fixed local
services. Of these providers, the Commission estimates that 4,737
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
44. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. Providers of these services
include both incumbent and competitive local exchange service
providers. Wired Telecommunications Carriers is the closest industry
with an SBA small business size standard. Wired Telecommunications
Carriers are also referred to as wireline carriers or fixed local
service providers. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms that operated in this industry for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on
[[Page 25189]]
Commission data in the 2021 Universal Service Monitoring Report, as of
December 31, 2020, there were 5,183 providers that reported they were
fixed local exchange service providers. Of these providers, the
Commission estimates that 4,737 providers have 1,500 or fewer
employees. Consequently, using the SBA's small business size standard,
most of these providers can be considered small entities.
45. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the
Commission nor the SBA have developed a small business size standard
specifically for incumbent local exchange carriers. Wired
Telecommunications Carriers is the closest industry with an SBA small
business size standard. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms in this industry that operated for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on Commission data in the 2021 Universal Service
Monitoring Report, as of December 31, 2020, there were 1,227 providers
that reported they were incumbent local exchange service providers. Of
these providers, the Commission estimates that 929 providers have 1,500
or fewer employees. Consequently, using the SBA's small business size
standard, the Commission estimates that the majority of incumbent local
exchange carriers can be considered small entities.
46. Competitive Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a size standard for small
businesses specifically applicable to local exchange services.
Providers of these services include several types of competitive local
exchange service providers. Wired Telecommunications Carriers is the
closest industry with an SBA small business size standard. The SBA
small business size standard for Wired Telecommunications Carriers
classifies firms having 1,500 or fewer employees as small. U.S. Census
Bureau data for 2017 show that there were 3,054 firms that operated in
this industry for the entire year. Of this number, 2,964 firms operated
with fewer than 250 employees. Additionally, based on Commission data
in the 2021 Universal Service Monitoring Report, as of December 31,
2020, there were 3,956 providers that reported they were competitive
local exchange service providers. Of these providers, the Commission
estimates that 3,808 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, most of
these providers can be considered small entities.
47. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a small business size standard specifically for
Interexchange Carriers. Wired Telecommunications Carriers is the
closest industry with an SBA small business size standard. The SBA
small business size standard for Wired Telecommunications Carriers
classifies firms having 1,500 or fewer employees as small. U.S. Census
Bureau data for 2017 show that there were 3,054 firms that operated in
this industry for the entire year. Of this number, 2,964 firms operated
with fewer than 250 employees. Additionally, based on Commission data
in the 2021 Universal Service Monitoring Report, as of December 31,
2020, there were 151 providers that reported they were engaged in the
provision of interexchange services. Of these providers, the Commission
estimates that 131 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, the
Commission estimates that the majority of providers in this industry
can be considered small entities.
48. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The closest applicable industry with an SBA
small business size standard is Wired Telecommunications Carriers. The
SBA small business size standard classifies a business as small if it
has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show
that there were 3,054 firms in this industry that operated for the
entire year. Of this number, 2,964 firms operated with fewer than 250
employees. Additionally, based on Commission data in the 2021 Universal
Service Monitoring Report, as of December 31, 2020, there were 32
providers that reported they were engaged in the provision of operator
services. Of these providers, the Commission estimates that all 32
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, all of these providers can be considered
small entities.
49. Other Toll Carriers. Neither the Commission nor the SBA has
developed a definition for small businesses specifically applicable to
Other Toll Carriers. This category includes toll carriers that do not
fall within the categories of interexchange carriers, operator service
providers, prepaid calling card providers, satellite service carriers,
or toll resellers. Wired Telecommunications Carriers is the closest
industry with an SBA small business size standard. The SBA small
business size standard for Wired Telecommunications Carriers classifies
firms having 1,500 or fewer employees as small. U.S. Census Bureau data
for 2017 show that there were 3,054 firms in this industry that
operated for the entire year. Of this number, 2,964 firms operated with
fewer than 250 employees. Additionally, based on Commission data in the
2021 Universal Service Monitoring Report, as of December 31, 2020,
there were 115 providers that reported they were engaged in the
provision of other toll services. Of these providers, the Commission
estimates that 113 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, most of
these providers can be considered small entities.
50. The broadband internet access service provider category covered
by these new rules may cover multiple wireless firms and categories of
regulated wireless services. Thus, to the extent the wireless services
listed below are used by wireless firms for broadband internet access
service, the actions may have an impact on those small businesses as
set forth above and further below. In addition, for those services
subject to auctions, we note that, as a general matter, the number of
winning bidders that claim to qualify as small businesses at the close
of an auction does not necessarily represent the number of small
businesses currently in service. Also, the Commission does not
generally track subsequent business size unless, in the context of
assignments and transfers or reportable eligibility events, unjust
enrichment issues are implicated.
51. Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. The
SBA size standard for this industry classifies a business as small if
it has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show
that there were 2,893 firms in this industry that operated for the
entire year. Of that number, 2,837 firms employed fewer
[[Page 25190]]
than 250 employees. Additionally, based on Commission data in the 2021
Universal Service Monitoring Report, as of December 31, 2020, there
were 797 providers that reported they were engaged in the provision of
wireless services. Of these providers, the Commission estimates that
715 providers have 1,500 or fewer employees. Consequently, using the
SBA's small business size standard, most of these providers can be
considered small entities.
52. Wireless Communications Services. Wireless Communications
Services (WCS) can be used for a variety of fixed, mobile,
radiolocation, and digital audio broadcasting satellite services.
Wireless spectrum is made available and licensed for the provision of
wireless communications services in several frequency bands subject to
Part 27 of the Commission's rules. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with an SBA small business
size standard applicable to these services. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
53. The Commission's small business size standards with respect to
WCS involve eligibility for bidding credits and installment payments in
the auction of licenses for the various frequency bands included in
WCS. When bidding credits are adopted for the auction of licenses in
WCS frequency bands, such credits may be available to several types of
small businesses based average gross revenues (small, very small and
entrepreneur) pursuant to the competitive bidding rules adopted in
conjunction with the requirements for the auction and/or as identified
in the designated entities section in Part 27 of the Commission's rules
for the specific WCS frequency bands.
54. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
55. 1670-1675 MHz Services. These wireless communications services
can be used for fixed and mobile uses, except aeronautical mobile.
Wireless Telecommunications Carriers (except Satellite) is the closest
industry with an SBA small business size standard applicable to these
services. The SBA size standard for this industry classifies a business
as small if it has 1,500 or fewer employees. U.S. Census Bureau data
for 2017 show that there were 2,893 firms that operated in this
industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission estimates that a majority of licensees in this industry can
be considered small.
56. According to Commission data as of November 2021, there were
three active licenses in this service. The Commission's small business
size standards with respect to 1670-1675 MHz Services involve
eligibility for bidding credits and installment payments in the auction
of licenses for these services. For licenses in the 1670-1675 MHz
service band, a ``small business'' is defined as an entity that,
together with its affiliates and controlling interests, has average
gross revenues not exceeding $40 million for the preceding three years,
and a ``very small business'' is defined as an entity that, together
with its affiliates and controlling interests, has had average annual
gross revenues not exceeding $15 million for the preceding three years.
The 1670-1675 MHz service band auction's winning bidder did not claim
small business status.
57. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
58. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. The closest applicable industry with an SBA small
business size standard is Wireless Telecommunications Carriers (except
Satellite). The size standard for this industry under SBA rules is that
a business is small if it has 1,500 or fewer employees. For this
industry, U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated for the entire year. Of this number, 2,837 firms
employed fewer than 250 employees. Additionally, based on Commission
data in the 2021 Universal Service Monitoring Report, as of December
31, 2020, there were 407 providers that reported they were engaged in
the provision of cellular, personal communications services, and
specialized mobile radio services. Of these providers, the Commission
estimates that 333 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, most of
these providers can be considered small entities.
59. Broadband Personal Communications Service. The broadband
personal communications services (PCS) spectrum encompasses services in
the 1850-1910 and 1930-1990 MHz bands. The closest industry with an SBA
small business size standard applicable to these services is Wireless
Telecommunications Carriers (except Satellite). The SBA small business
size standard for this industry classifies a business as small if it
has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show
that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
60. Based on Commission data as of November 2021, there were
approximately 5,060 active licenses in the Broadband PCS service. The
Commission's small business size standards with respect to Broadband
PCS involve eligibility for bidding credits and installment payments in
the auction of licenses for these services. In auctions for these
licenses, the Commission defined ``small business'' as an entity that,
together with its affiliates and controlling interests, has average
gross revenues not exceeding $40 million for the preceding three years,
and a ``very small business'' as an entity that, together with its
affiliates and controlling interests, has had
[[Page 25191]]
average annual gross revenues not exceeding $15 million for the
preceding three years. Winning bidders claiming small business credits
won Broadband PCS licenses in C, D, E, and F Blocks.
61. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these, at this time we are not able to estimate the
number of licensees with active licenses that would qualify as small
under the SBA's small business size standard.
62. Broadband Personal Communications Service. The broadband
personal communications services (PCS) spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission initially defined a ``small
business'' for C- and F-Block licenses as an entity that has average
gross revenues of $40 million or less in the three previous calendar
years. For F-Block licenses, an additional small business size standard
for ``very small business'' was added and is defined as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. These
standards, defining ``small entity'' in the context of broadband PCS
auctions, have been approved by the SBA. No small businesses within the
SBA-approved small business size standards bid successfully for
licenses in Blocks A and B. There were 90 winning bidders that claimed
small business status in the first two C-Block auctions. A total of 93
bidders that claimed small business status won approximately 40% of the
1,479 licenses in the first auction for the D, E, and F Blocks. On
April 15, 1999, the Commission completed the reauction of 347 C-, D-,
E-, and F-Block licenses in Auction No. 22. Of the 57 winning bidders
in that auction, 48 claimed small business status and won 277 licenses.
63. Specialized Mobile Radio Licenses. Special Mobile Radio (SMR)
licenses allow licensees to provide land mobile communications services
(other than radiolocation services) in the 800 MHz and 900 MHz spectrum
bands on a commercial basis including but not limited to services used
for voice and data communications, paging, and facsimile services, to
individuals, Federal Government entities, and other entities licensed
under Part 90 of the Commission's rules. Wireless Telecommunications
Carriers (except Satellite) is the closest industry with an SBA small
business size standard applicable to these services. The SBA size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. For this industry, U.S. Census Bureau data
for 2017 show that there were 2,893 firms in this industry that
operated for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Additionally, based on Commission data in the
2021 Universal Service Monitoring Report, as of December 31, 2020,
there were 119 providers that reported they were of SMR (dispatch)
providers. Of this number, the Commission estimates that all 119
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, these 119 SMR licensees can be considered
small entities.
64. Based on Commission data as of December 2021, there were 3,924
active SMR licenses. However, since the Commission does not collect
data on the number of employees for licensees providing SMR services,
at this time we are not able to estimate the number of licensees with
active licenses that would qualify as small under the SBA's small
business size standard. Nevertheless, for purposes of this analysis the
Commission estimates that the majority of SMR licensees can be
considered small entities using the SBA's small business size standard.
65. Lower 700 MHz Band Licenses. The lower 700 MHz band encompasses
spectrum in the 698-746 MHz frequency bands. Permissible operations in
these bands include flexible fixed, mobile, and broadcast uses,
including mobile and other digital new broadcast operation; fixed and
mobile wireless commercial services (including FDD- and TDD-based
services); as well as fixed and mobile wireless uses for private,
internal radio needs, two-way interactive, cellular, and mobile
television broadcasting services. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with an SBA small business
size standard applicable to licenses providing services in these bands.
The SBA small business size standard for this industry classifies a
business as small if it has 1,500 or fewer employees. U.S. Census
Bureau data for 2017 show that there were 2,893 firms that operated in
this industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission estimates that a majority of licensees in this industry can
be considered small.
66. According to Commission data as of December 2021, there were
approximately 2,824 active Lower 700 MHz Band licenses. The
Commission's small business size standards with respect to Lower 700
MHz Band licensees involve eligibility for bidding credits and
installment payments in the auction of licenses. For auctions of Lower
700 MHz Band licenses the Commission adopted criteria for three groups
of small businesses. A very small business was defined as an entity
that, together with its affiliates and controlling interests, has
average annual gross revenues not exceeding $15 million for the
preceding three years, a small business was defined as an entity that,
together with its affiliates and controlling interests, has average
gross revenues not exceeding $40 million for the preceding three years,
and an entrepreneur was defined as an entity that, together with its
affiliates and controlling interests, has average gross revenues not
exceeding $3 million for the preceding three years. In auctions for
Lower 700 MHz Band licenses seventy-two winning bidders claiming a
small business classification won 329 licenses, twenty-six winning
bidders claiming a small business classification won 214 licenses, and
three winning bidders claiming a small business classification won all
five auctioned licenses.
67. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
68. Upper 700 MHz Band Licenses. The upper 700 MHz band encompasses
spectrum in the 746-806 MHz bands. Upper 700 MHz D Block licenses are
nationwide licenses associated with the 758-763 MHz and 788-793 MHz
bands. Permissible operations in these bands
[[Page 25192]]
include flexible fixed, mobile, and broadcast uses, including mobile
and other digital new broadcast operation; fixed and mobile wireless
commercial services (including FDD- and TDD-based services); as well as
fixed and mobile wireless uses for private, internal radio needs, two-
way interactive, cellular, and mobile television broadcasting services.
Wireless Telecommunications Carriers (except Satellite) is the closest
industry with an SBA small business size standard applicable to
licenses providing services in these bands. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of that number, 2,837 firms employed fewer than 250 employees.
Thus, under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
69. According to Commission data as of December 2021, there were
approximately 152 active Upper 700 MHz Band licenses. The Commission's
small business size standards with respect to Upper 700 MHz Band
licensees involve eligibility for bidding credits and installment
payments in the auction of licenses. For the auction of these licenses,
the Commission defined a ``small business'' as an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years, and a
``very small business'' an entity that, together with its affiliates
and controlling principals, has average gross revenues that are not
more than $15 million for the preceding three years. Pursuant to these
definitions, three winning bidders claiming very small business status
won five of the twelve available licenses.
70. Air-Ground Radiotelephone Service. Air-Ground Radiotelephone
Service is a wireless service in which licensees are authorized to
offer and provide radio telecommunications service for hire to
subscribers in aircraft. A licensee may provide any type of air-ground
service (i.e., voice telephony, broadband internet, data, etc.) to
aircraft of any type, and serve any or all aviation markets
(commercial, government, and general). A licensee must provide service
to aircraft and may not provide ancillary land mobile or fixed services
in the 800 MHz air-ground spectrum.
71. The closest industry with an SBA small business size standard
applicable to these services is Wireless Telecommunications Carriers
(except Satellite). The SBA small business size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
72. Based on Commission data as of December 2021, there were
approximately four licensees with 110 active licenses in the Air-Ground
Radiotelephone Service. The Commission's small business size standards
with respect to Air-Ground Radiotelephone Service involve eligibility
for bidding credits and installment payments in the auction of
licenses. For purposes of auctions, the Commission defined ``small
business'' as an entity that, together with its affiliates and
controlling interests, has average gross revenues not exceeding $40
million for the preceding three years, and a ``very small business'' as
an entity that, together with its affiliates and controlling interests,
has had average annual gross revenues not exceeding $15 million for the
preceding three years. In the auction of Air-Ground Radiotelephone
Service licenses in the 800 MHz band, neither of the two winning
bidders claimed small business status.
73. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, the Commission
does not collect data on the number of employees for licensees
providing these services therefore, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
74. 3650-3700 MHz band. Wireless broadband service licensing in the
3650-3700 MHz band provides for nationwide, non-exclusive licensing of
terrestrial operations, utilizing contention-based technologies, in the
3650 MHz band (i.e., 3650-3700 MHz). Licensees are permitted to provide
services on a non-common carrier and/or on a common carrier basis.
Wireless broadband services in the 3650-3700 MHz band fall in the
Wireless Telecommunications Carriers (except Satellite) industry with
an SBA small business size standard that classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
75. The Commission has not developed a small business size standard
applicable to 3650-3700 MHz band licensees. Based on the licenses that
have been granted, however, we estimate that the majority of licensees
in this service are small internet Access Service Providers (ISPs). As
of November 2021, Commission data shows that there were 902 active
licenses in the 3650-3700 MHz band. However, since the Commission does
not collect data on the number of employees for licensees providing
these services, at this time we are not able to estimate the number of
licensees with active licenses that would qualify as small under the
SBA's small business size standard.
76. Fixed Microwave Services. Fixed microwave services include
common carrier, private-operational fixed, and broadcast auxiliary
radio services. They also include the Upper Microwave Flexible Use
Service (UMFUS), Millimeter Wave Service (70/80/90 GHz), Local
Multipoint Distribution Service (LMDS), the Digital Electronic Message
Service (DEMS), 24 GHz Service, Multiple Address Systems (MAS), and
Multichannel Video Distribution and Data Service (MVDDS), where in some
bands licensees can choose between common carrier and non-common
carrier status. Wireless Telecommunications Carriers (except Satellite)
is the closest industry with an SBA small business size standard
applicable to these services. The SBA small size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of fixed
microwave service licensees can be considered small.
77. The Commission's small business size standards with respect to
fixed microwave services involve eligibility for bidding credits and
installment payments in the auction of licenses for
[[Page 25193]]
the various frequency bands included in fixed microwave services. When
bidding credits are adopted for the auction of licenses in fixed
microwave services frequency bands, such credits may be available to
several types of small businesses based average gross revenues (small,
very small and entrepreneur) pursuant to the competitive bidding rules
adopted in conjunction with the requirements for the auction and/or as
identified in Part 101 of the Commission's rules for the specific fixed
microwave services frequency bands.
78. In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
79. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (MDS) and Multichannel Multipoint Distribution
Service (MMDS) systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (BRS) and Educational Broadband Service (EBS) (previously
referred to as the Instructional Television Fixed Service (ITFS)).
Wireless cable operators that use spectrum in the BRS often
supplemented with leased channels from the EBS, provide a competitive
alternative to wired cable and other multichannel video programming
distributors. Wireless cable programming to subscribers resembles cable
television, but instead of coaxial cable, wireless cable uses microwave
channels.
80. In light of the use of wireless frequencies by BRS and EBS
services, the closest industry with an SBA small business size standard
applicable to these services is Wireless Telecommunications Carriers
(except Satellite). The SBA small business size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
81. According to Commission data as December 2021, there were
approximately 5,869 active BRS and EBS licenses. The Commission's small
business size standards with respect to BRS involves eligibility for
bidding credits and installment payments in the auction of licenses for
these services. For the auction of BRS licenses, the Commission adopted
criteria for three groups of small businesses. A very small business is
an entity that, together with its affiliates and controlling interests,
has average annual gross revenues exceed $3 million and did not exceed
$15 million for the preceding three years, a small business is an
entity that, together with its affiliates and controlling interests,
has average gross revenues exceed $15 million and did not exceed $40
million for the preceding three years, and an entrepreneur is an entity
that, together with its affiliates and controlling interests, has
average gross revenues not exceeding $3 million for the preceding three
years. Of the ten winning bidders for BRS licenses, two bidders
claiming the small business status won 4 licenses, one bidder claiming
the very small business status won three licenses and two bidders
claiming entrepreneur status won six licenses. One of the winning
bidders claiming a small business status classification in the BRS
license auction has an active licenses as of December 2021.
82. The Commission's small business size standards for EBS define a
small business as an entity that, together with its affiliates, its
controlling interests and the affiliates of its controlling interests,
has average gross revenues that are not more than $55 million for the
preceding five (5) years, and a very small business is an entity that,
together with its affiliates, its controlling interests and the
affiliates of its controlling interests, has average gross revenues
that are not more than $20 million for the preceding five (5) years. In
frequency bands where licenses were subject to auction, the Commission
notes that as a general matter, the number of winning bidders that
qualify as small businesses at the close of an auction does not
necessarily represent the number of small businesses currently in
service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
83. Satellite Telecommunications. This industry comprises firms
``primarily engaged in providing telecommunications services to other
establishments in the telecommunications and broadcasting industries by
forwarding and receiving communications signals via a system of
satellites or reselling satellite telecommunications.'' Satellite
telecommunications service providers include satellite and earth
station operators. The SBA small business size standard for this
industry classifies a business with $35 million or less in annual
receipts as small. U.S. Census Bureau data for 2017 show that 275 firms
in this industry operated for the entire year. Of this number, 242
firms had revenue of less than $25 million. Additionally, based on
Commission data in the 2021 Universal Service Monitoring Report, as of
December 31, 2020, there were 71 providers that reported they were
engaged in the provision of satellite telecommunications services. Of
these providers, the Commission estimates that approximately 48
providers have 1,500 or fewer employees. Consequently using the SBA's
small business size standard, a little more than of these providers can
be considered small entities.
84. All Other Telecommunications. This industry is comprised of
establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems. Providers of
internet services (e.g. dial-up ISPs) or voice over internet protocol
(VoIP) services, via client-supplied telecommunications connections are
also included in this industry. The SBA small business size standard
for this industry classifies firms with annual receipts of $35 million
or less as small. U.S. Census Bureau data for 2017 show that there
[[Page 25194]]
were 1,079 firms in this industry that operated for the entire year. Of
those firms, 1,039 had revenue of less than $25 million. Based on this
data, the Commission estimates that the majority of ``All Other
Telecommunications'' firms can be considered small.
85. Because Section 706 of the Act requires us to monitor the
deployment of broadband using any technology, we anticipate that some
broadband service providers may not provide telephone service.
Accordingly, we describe below other types of firms that may provide
broadband services, including cable companies, MDS providers, and
utilities, among others.
86. Cable and Other Subscription Programming. The U.S. Census
Bureau defines this industry as establishments primarily engaged in
operating studios and facilities for the broadcasting of programs on a
subscription or fee basis. The broadcast programming is typically
narrowcast in nature (e.g., limited format, such as news, sports,
education, or youth-oriented). These establishments produce programming
in their own facilities or acquire programming from external sources.
The programming material is usually delivered to a third party, such as
cable systems or direct-to-home satellite systems, for transmission to
viewers. The SBA small business size standard for this industry
classifies firms with annual receipts less than $41.5 million as small.
Based on U.S. Census Bureau data for 2017, 378 firms operated in this
industry during that year. Of that number, 149 firms operated with
revenue of less than $25 million a year and 44 firms operated with
revenue of $25 million or more. Based on this data, the Commission
estimates that a majority of firms in this industry are small.
87. Cable Companies and Systems (Rate Regulation). The Commission
has developed its own small business size standard for the purpose of
cable rate regulation. Under the Commission's rules, a ``small cable
company'' is one serving 400,000 or fewer subscribers nationwide. Based
on available data, as of December 2020, there were approximately
45,308,192 basic cable video subscribers in the top Cable MSOs in the
United States. Only five cable operators serving cable video
subscribers in the top Cable MSOs had more than 400,000 subscribers.
Accordingly, the Commission estimates that the majority of cable
operators are small.
88. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, contains a size standard for
small cable system operators, which classifies ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than
one percent of all subscribers in the United States and is not
affiliated with any entity or entities whose gross annual revenues in
the aggregate exceed $250,000,000,'' as small. As of December 2020,
there were approximately 45,308,192 basic cable video subscribers in
the top Cable MSOs in the United States. Accordingly, an operator
serving fewer than 453,082 subscribers shall be deemed a small operator
if its annual revenues, when combined with the total annual revenues of
all its affiliates, do not exceed $250 million in the aggregate. Based
on available data, all but five of the cable operators in the Top Cable
MSOs have less than 453,082 subscribers and can be considered small
entities under this size standard. We note however, that the Commission
neither requests nor collects information on whether cable system
operators are affiliated with entities whose gross annual revenues
exceed $250 million. Therefore, we are unable at this time to estimate
with greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act.
89. Electric Power Generators, Transmitters, and Distributors. The
U.S. Census Bureau defines the utilities sector industry as comprised
of ``establishments, primarily engaged in generating, transmitting,
and/or distributing electric power. Establishments in this industry
group may perform one or more of the following activities: (1) Operate
generation facilities that produce electric energy; (2) operate
transmission systems that convey the electricity from the generation
facility to the distribution system; and (3) operate distribution
systems that convey electric power received from the generation
facility or the transmission system to the final consumer.'' This
industry group is categorized based on fuel source and includes
Hydroelectric Power Generation, Fossil Fuel Electric Power Generation,
Nuclear Electric Power Generation, Solar Electric Power Generation,
Wind Electric Power Generation, Geothermal Electric Power Generation,
Biomass Electric Power Generation, Other Electric Power Generation,
Electric Bulk Power Transmission and Control and Electric Power
Distribution.
90. The SBA has established a small business size standard for each
of these groups based on the number of employees which ranges from
having fewer than 250 employees to having fewer than 1,000 employees.
U.S. Census Bureau data for 2017 indicate that for the Electric Power
Generation, Transmission and Distribution industry there were 1,693
firms that operated in this industry for the entire year. Of this
number, 1,552 firms had less than 250 employees. Based on this data and
the associated SBA size standards, the majority of firms in this
industry can be considered small entities.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
91. The Second Further Notice seeks comment on ways to effectively
resolve pole replacement disputes through the establishment of
standards for when and how utilities and attachers must share in the
costs of a pole replacement necessitated by an attachment request. The
Second Further Notice does not definitively propose any changes to the
Commission's current pole attachment rules, but does request that
commenters address the legal implications of any rule revisions they
propose, which may include reporting, recordkeeping, and other
compliance requirements. For example, the Second Further Notice seeks
comment on whether the Commission has jurisdiction to require utilities
to share information concerning the status of utility poles with
attachers and, if so, the mechanism through which such information
would be provided.
92. The Second Further Notice seeks comment on what situations
exist in which a pole replacement is not ``necessitated solely'' by a
new attachment request and whether codifying a definition of this
phrase would be helpful for parties seeking to comply with Section
1.1408(b) of the Commission's rules. With respect to utility benefits,
the Second Further Notice seeks comment on how to identify and quantify
the costs associated with a pole replacement that are proportional to
the direct benefit obtained by a utility from a replacement not
necessitated solely by a new attachment request. The Second Further
Notice also seeks comment on whether the Commission should revise its
pole attachment rules to recognize that utilities directly benefit from
pole replacements caused by new attachment requests and establish clear
standards for when utilities should be required to pay a proportional
share of pole replacement costs. Further, the Second Further Notice
seeks comment on whether the Commission should adopt an express
presumption that utilities directly benefit when they use pole
[[Page 25195]]
replacements precipitated by an attachment request to upgrade or
enhance their poles. The Commission then asks how costs should be
allocated between utilities and attachers if such a presumption is
adopted and whether the Commission should revise its cost sharing rules
to require utilities to pay a portion of the costs of replacing a pole
to create capacity for new attachments. The Commission also seeks
comment on the scope of utility liability for pole attachment rate
refunds when rates are found to be unjust and unreasonable. Should
commenters provide compelling arguments, some or all of these proposals
could be adopted. The guidance and clarity offered by these proposals
would lessen the compliance impact on small utilities and attaching
entities with regard to pole replacements and pole attachment rate
refunds.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
93. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
94. The Second Further Notice does not propose specific changes to
the Commission's pole attachment rules, but seeks comment on whether
the Commission should revise its rules to eliminate and expedite the
resolution of pole replacement disputes between utilities and attachers
and provide clarity with respect to the pole attachment rate refund
liability for utilities. The Commission's objective in requesting this
information is to determine whether it can and should establish clear
standards for when and how attachers and utilities must share the costs
of a pole replacement precipitated by a new attachment request. In
considering the cost allocations, the Commission seeks comment on
alternatives that might help smaller utilities and attaching entities.
For example, it asks that when a pole needs to be replaced both to
accommodate a new attachment and to correct a preexisting violation,
whether the new attacher should be responsible for the difference in
cost between the taller pole needed for its attachment and what it
would cost to replace the existing pole with one of the same type and
size. The Second Further Notice also seeks comment on what other
methods of apportioning costs are available in this situation in an
attempt to properly balance this burden on different types of entities.
Additionally, the Second Further Notice seeks comment on the Commission
recognizing an express presumption regarding whether utilities directly
benefit when they use pole replacements precipitated by an attachment
request to upgrade or enhance their poles. The Commission seeks comment
on cost allocation alternatives related to the presumption, were it to
be adopted, that could be helpful to smaller attachers and utilities.
Specifically, the Second Further Notice asks whether the new attacher
should be responsible for the difference in cost between a taller pole
of the same type as the existing pole and the upgraded pole, along with
other typical make-ready costs of a new attachment, or if another
measure is more appropriate when specific parties are involved.
Notably, at the conclusion of the Second Further Notice, the Commission
also asks commenters recommending certain cost allocation methodologies
to address why their favored solution will expedite pole attachment
approvals, benefit consumers, and otherwise be in the public interest.
The Commission further seeks comment on the scope of refunds available
to attachers when pole attachment rates are found to be unjust and
unreasonable. Information submitted in response to these requests for
comment will enable the Commission to evaluate the impact that revising
its cost sharing and rate refund rules would impact smaller entities.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rule
95. None.
III. Procedural Matters
96. Ex Parte Rules. This proceeding shall be treated as a ``permit-
but-disclose'' proceeding in accordance with the Commission's ex parte
rules. Persons making ex parte presentations must file a copy of any
written presentation or a memorandum summarizing any oral presentation
within two business days after the presentation (unless a different
deadline applicable to the Sunshine period applies). Persons making
oral ex parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was
made, and (2) summarize all data presented and arguments made during
the presentation. If the presentation consisted in whole or in part of
the presentation of data or arguments already reflected in the
presenter's written comments, memoranda, or other filings in the
proceeding, then the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings
(specifying the relevant page and/or paragraph numbers where such data
or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with 47 CFR 1.1206(b). In proceedings governed by
47 CFR 1.49(f), or for which the Commission has made available a method
of electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
97. Initial Regulatory Flexibility Analysis. Pursuant to the
Regulatory Flexibility Act, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities of the policies and actions
considered in the Second Further Notice. The text of the IRFA is set
forth herein. Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments on the Second Further Notice. The
Commission's Consumer and Governmental Affairs Bureau, Reference
Information Center, will send a copy of the Second Further Notice,
including the IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration.
98. Contact Person. For further information about this proceeding,
contact Michael Ray, FCC, Wireline Competition Bureau, Competition
Policy Division, 45 L Street NE, Washington, DC 20554, (202) 418-0357,
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="4e03272d262f2b22601c2f370e282d2d60292138">[email protected]</a>.
99. Paperwork Reduction Act Analysis. This document contains
[[Page 25196]]
proposed information collection requirements. The Commission, as part
of its continuing effort to reduce paperwork burdens, invites the
general public and the Office of Management and Budget (OMB) to comment
on the information collection requirements contained in this document,
as required by the Paperwork Reduction Act of 1995, Public Law 104-13.
In addition, pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific
comment on how we might further reduce the information collection
burden for small business concerns with fewer than 25 employees.
IV. Ordering Clauses
100. Accordingly, it is ordered that, pursuant to Sections 1-4,
201, and 224 of the Communications Act of 1934, as amended, 47 U.S.C.
151-154, 201, and 224, this Second Notice of Proposed Rulemaking is
adopted.
101. It is further ordered that the Commission's Consumer &
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Second Further Notice of Proposed Rulemaking, including
the Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2022-09029 Filed 4-27-22; 8:45 am]
BILLING CODE 6712-01-P
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