20020813Verizon Response.pdf

HERSHNER
HUNTER
ANDREWS
NEILL
SMITH, LLP
LAW OFFICES
180 Ea" 11'Avenue
O. Box 1475
Eugene, Oregon 9744()
[phone]
Marlin C. Ard (Oregon State Bar No. 93145)
Hershner , Hunter , Andrews, Neill & Smith , LLP
180 East Eleventh Avenue
PO Box 1475
Eugene , Oregon 97440-1475
541 549 1787
541 5494537 (Fax)
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
BY THE IDAHO PUBLIC UTILITIES
COMMISSION TO DETERMINE A POLE
A TT ACHMENT RATE FORMULA
PURSUANT TO IDAHO CODE SEe. 61-538
) Case No. GNR-02-
RESPONSE OF
VERIZON NORTHWEST INC.
) TO STAFF'S INQUIRY OF
JULY 15 , 2002 REGARDING
POLE ATTACHMENTS
By a letter dated July 15 2002 , the Staff has asked for parties ' positions on pole attachment
formulas and related matters in the above numbered proceeding. Below is Verizon Northwest
Inc. 's (V erizon ' s) response.
Background and Summary
Verizon is a telecommunications provider in Idaho, offering local exchange and related
telecommunications services. As such, it attaches to poles of different utility providers , and in
some cases provides its own poles as well. Verizon has an interest in the outcome of this
proceeding because it is likely that the rates and formula adopted in this matter will ultimately if not
immediately affect the prices Verizon faces when attaching to poles.
Negotiations should be used to settle fee levels between pole users and providers, as
indicated in the Idaho statutes, and negotiation should always be the preferred method of setting an
attachment rate. 1 The negotiating parties will always be in the best position to know for themselves
In Idaho, two statutory provisions speak to pole attachments, Idaho Code Section 61.538 says cable television
providers can attach to utility poles , and sets forth a general formula. Idaho Code Section 61.514 directs that utilities
may attach to each others ' poles in order to provide their respective services. Both sections make clear that regulatory
oversight begins only if negotiating parties are unable to agree upon an attachment rate. Section 61.538 does provide a
Page 1--RESPONSE OF VERIZON
HERSHNER
HUNTER
ANDREWS
NElll.
SMITH, LLP
LAW OFFICES
180 East 11'Avenue
O. Box 1475
Eugene, Oregon 97440
[phone]
what costs and rates make the best business sense , and the Commission should make clear that
whatever oversight it imposes will only begin if negotiations fail. In addition, the Commission
should, to the extent practical , strongly encourage parties to negotiate rates.
However, if negotiations fail and Commission intervention is necessary, the Commission
should ensure that whatever formula is adopted is applied equally and even-handedly to everyone
attaching to a pole - cable TV providers , telecommunication companies and other utilities.
In terms of a specific formula, Verizon generally supports the process and formula last
adopted by the Commission , under which pole attachment rates are based on the cost of the
attachment derived from historical (accounting) costs. Essentially, the net investment in poles and
the annual carrying costs are determined on an embedded (historical) basis and a rate per
attachment is derived after determining the usable space on a pole and the space used by each
occupier. The FCC has also approved this general process , largely because it constitutes " a stable
and certain regulatory framework, that may be applied 'simply and expeditiously ' requiring '
minimum of staff, paperwork and procedures consistent with fair and efficient regulation. ' "4
observation remains true today, and Verizon recommends that the general process approved in
This
reasonable compensation" standard if no such agreement is reached, though it does state a specific formula for
determining reasonable compensation. No specific rate standard is provided in the case of Section 61.514.
See, footnote 1. In Verizon s view , nothing in the current statutory scheme for Idaho prevents this Commission
from adopting a uniform standard and formula for all providers who attach to poles.
See, In the Matter of the Washington Water Power Company, Petitioner, v. Benewah Cable Company, Case
No. U-1008-206; Order No. 19229, dated November, 1984, 1984 Ida. PUC LEXIS 100. There, the Commission said:
The parties' calculations of the rates followed a similar analysis: calculation of Water Power s total net investment in
poles for the State of Idaho, determination of the number of its poles in the State of Idaho to determine average net
investment per pole , calculation of its annual carrying charges per pole to determine annual costs of poles, calculation of
usable space ratios to determine the amount of pole that should be charged to the cable operators, and multiplication of
this ratio by the annual carrying cost per pole to determine the rate.
Note also that the FCC has expressed essentially the same formula: "Maximum Rate = Space Occupied /
Total Usable Space x Cost of a Bare Pole x Carrying Charge Rate.In the Matter of Amendment of Rules and Policies
Governing Pole Attachments CS Docket No. 97-, Report and Order, FCC Release No. 00-116, adopted March 29
2000, 15 FCC Rcd 6453, 2000 FCC LEXIS 1690, at 6464.
In the Matter of Amendment of Rules and Policies Governing Pole Attachments CS Docket No. 97-, Report
and Order , FCC Release No. 00-116, adopted March 29 2000, 15 FCC Rcd 6453 , 2000 FCC LEXIS 1690, at 6460.
Page 2--RESPONSE OF VERIZON
HERSHNER
HUNTER
ANDREWS
NEILL
SMITH, LLP
LAW OFFICES
180E",II Avenue
O. Box 1475
Eugene, Oregon 97440
[phone]
Washington Water Power Company, Petitioner, v. Benewah Cable, supra remain in place for
purposes of Idaho pole attachments.
Verizon responds below to Staff's specific questions.
Please provide, expressed as a formula , your proposed methodology for
calculating cable television pole attachment rates. Provide a narrative
discussion of the legal, policy or economic justifications for your proposed
formula.
Response
As an initial , important point Verizon urges that the formula adopted by the Commission
apply evenly to all providers who attach to poles , not just cable TV companies. Competitive
neutrality is a hallmark of the Telecommunications Act of 1996 , and it is a policy that will best
serve Idaho consumers and the Commission. Different rates for different providers should not be
the standard , particularly in an industry sector (telecommunications) where , at best, the lines are
blurred as to what type of service (voice , data, video , or Internet access , for example) any provider
is offering.
Attachment 1 hereto is the proposed formula offered by Verizon. As noted in the
Background and Summary, it essentially tracks the approach currently used in Idaho.
From a legal , policy and economic standpoint, the current approach represents the best
current solution for Idaho pole attachments. It is an approach that has been used for years, if not
decades, it is well understood, and many regulators have approved this approach. It also
represents an approach that can be implemented with the least amount of administrative burden
both for providers and regulatory staffs facing controversies or disputes when users and providers
cannot agree upon a fair and reasonable rate.
Additionally, this approach has allowed the development of new telecommunications and
cable TV services over the years , while not harming (insofar as Verizon can determine) the
fmancial health or well being of pole providers. Given these circumstances, there should be no
Page 3--RESPONSE OF VERIZON
HERSHNER
HUNTER
ANDREWS
NElll.
SMITH, LLP
LAW OFFICES
lBOEas,11 Avenue
O. Box 1475
Eugene, O'egon 9744!J
[phone]
need to change the general approach already in existence unless pole providers can establish a
material change in circumstances (i., that they are not receiving fair and reasonable compensation
under current procedures for determining rates.
For each of the following elements, please provide a worksheet showing your
proposed method for calculating and including the element in a pole
attachment formula. If you believe an element should not be included , indicate
that as your response. (Elements not listed).
Response
See Attachment 1 hereto. Also, note that essentially two versions of the same formula are
provided, one for electric companies with references to FERC accounting rules , and one for
telephone companies based on ARMIS accounting.
If your proposed formula requires a determination of how much space on a
pole should be assigned to cable television attachments, describe your proposed
methodology for determining space assigned to cable television attachments per
pole. Include references to data sources necessary to make the determination.
Response
V erizon ' s proposal does not at this point assign space to any particular provider or user
including cable TV companies. As a general matter, it should be assumed that all communication
users would occupy one foot of space for each mainline attachment within the usable space on the
pole. For annual rental purposes , an overlashed cable or a service drop within the mainline
attachment space would not encumber additional space on the pole , and therefore should not incur
any additional charge. This standard (one foot per attachment) is an industry standard that has
been employed for years.
If your proposed formula requires a determination of what space on a pole
should be considered Usable Space, describe your proposed methodology for
Page 4--RESPONSE OF VERIZON
HERSHNER
HUNTER
ANDREWS
NEILL
SMITH, LLP
LAW OFFICES
180 Eo.. 11 Avenue
O. Box 1475
Eugene, Oregon 9744()
[phone]
determining Usable Space. Include references to data sources necessary to
make the determination.
Response
V erizon I s proposal tracks the method used by the FCC in CS Docket 97-, FCC Release
No. 00-116.5 In that proceeding, the FCC referenced a set of accepted standards , or values
concerning pole attachments. Generally, the FCC noted:
In the Second Report and Order , consistent with Section 224(d)(2) and
Congressional intent, the Commission defined total usable space as the space on the
utility pole above the minimum grade level that is usable for the attachment of wires
cables, and related equipment. Based upon survey results , consideration of the
National Electric Safety Code ("NESC"), and practical engineering standards used
in constructing utility poles , the Commission found that li the most commonly used
poles are 35 and 40 feet high, with usable spaces of 11 to 16 feet, respectively. II In
the Third Order, the Commission relied on NESC guidelines and data received in its
rulemaking proceedings to affirm the presumption of an average 18 feet for
minimum ground clearance , referring to Congressional fmdings that II . . . the
typical utility pole (is) 35 feet in length (and) has 11 feet of usable space leaving a
total of 24 feet for both the portion buried underground (6 feet) and the necessary
ground clearance (18 feet)." To avoid a pole-by-pole rate calculation , the
Commission adopted rebuttable presumptions of (1) an average 37.5 foot pole
height; (2) 13.5 feet of usable space; and (3) one foot as the amount of space a cable
television attachment occupies. These presumptions serve as the premise for
calculating pole attachment rates under the current formula. In the Matter of
Amendment of Rules and Policies Governing Pole Attachments CS Docket No. 97-
, Report and Order , FCC Release No. 00-116 , adopted March 29 , 2000, 15 FCC
Red 6453 , 2000 FCC LEXIS 1690 , at 6465 (footnotes omitted).
Verizon recommends that the Commission also adopt rebuttable presumptions about the
length of pole, usable space , and other relevant factors for purposes of calculating rates. Absent
other compelling information, the FCC's recommendations noted above can be used.
Describe your proposed methodology for determining the total number of cable
television attachments located on the utility s poles.
Response
In the Matter of Amendment of Rules and Policies Governing Pole Attachments CS Docket No. 97-98, Report
and Order FCC Release No. 00-116, adopted March 29 , 2000, 15 FCC Rcd 6453 , 2000 FCC LEXIS 1690.
Page 5--RESPONSE OF VERIZON
HERSHNER
HUNTER
ANDREWS
NEILL
SMITH LLP
LAWOFFJCES
180Enstl1"Avenue
O. Box 1475
Eugene, Oregon 97440
(541) 686-851\
The number of attachments for annual rental purposes should be based on the number of
feet utilized within the usable space portion of the pole. Again, Verizon emphasizes that this
standard should apply to all pole users, not just cable television providers.
If your proposed formula requires a determination of average pole height,
describe your proposed methodology for determining average pole height.
Include references to data sources necessary to make the determination.
Response
See Verizon s answer to question 4 , above.
If you contend a pole attachment formula should include rate elements
additional to those identified above , please provide a worksheet setting forth
your proposed method for calculating Additional Rate Elements. Include
references to data sources necessary to make the calculations(s). Provide a
narrative discussion of the economic, policy, legal or other justification for any
additional rate elements.
Response
At this time, Verizon is not recommending any additional rate elements beyond what it has
described above.
Pursuant to IDAPA Rule 41 of the Commission s Rules of Procedure , Verizon designates
the following two representatives for this matter: its counsel , Marlin D. Ard, whose address and
telephone number are shown on the first page of this pleading, and Mr. Dean Randall, Verizon
Northwest Inc., PO Box 1100 , Beaverton, Oregon 97075-1100.
Dated August 12 , 2002.
By
~ ~
Marlin D. Ard, OSB o. 93145
Willard L. Forsyth, OSB No. 99262
Hershner, Hunter , Andrews , Neill & Smith, LLP
Of Attorneys for Verizon Northwest Inc.
Page 6--RESPONSE OF VERIZON
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A TT A CHMENT 1 - Page 2
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A TT A CHMENT 1 - Page 3
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ATTACHMENT 1 - Page 4