20020920Cable One's Response.pdf

September 20, 2002

Weldon Stutzman, Esq.
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720

Re: Case No. GNR-E-02-02

Dear Mr. Stutzman:

This response is submitted on behalf of Cable One, Inc. ("Cable One") to the September 6, 2002,
letter you sent to all interested parties in the captioned proceeding. In that letter you asked the parties to
submit comments on a pole attachment rate formula developed by the staff of the IPUC. The formula
enclosed with your letter modifies a formula first presented by the IPUC staff at a workshop held on August
27, 2002. Cable One appreciates this opportunity to comment on the staff's position.
Cable One concurs with the staff's methodology for calculating the net pole investment and carrying
charge components of the rate formula. If the matters raised below are the only points of dispute, Cable
One believes that they involve policy issues which can be addressed through the mechanism of briefing and
oral argument. Cable One offers the following observations, explained in more detail below, for the staff's
consideration: • Staff's methodology unfairly increases the burden on cable subscribers and negatively
impacts cable operator decisions in sparsely populated areas;
• The IPUC's decision in Benewah to divide the safety space between usable and unusable
space should be re-evaluated; and
• Even if the Benewah safety space division is maintained, Cable One does not understand the
rationale for allocating a portion of the usable safety space to a communications attacher.

Weldon Stutzman, Esq.
September 20, 2002
Page 2 of 8

Impact on cable subscribers and cable companies
As an initial matter, Cable One would again like to observe that Section 61-538 of the Idaho Code
directs the IPUC to consider the effect of its pole attachment policies on the customers of both the attaching
cable company and the public utility which owns the poles.
…In determining and fixing the rates, terms and conditions, the commission shall consider
the interest of the customers of the attaching cable television company, the public utility
upon which the attachment is made as well as the customers of the public utility….1

A rate formula which increases pole attachment rates will have an adverse effect on cable customers which
is disproportionate to the benefit derived by utility customers. This is because pole rental represents a larger
proportion of a cable company's expenses than it does of a utility's revenues and, because there are fewer
cable subscribers than there are utility customers in any given service area, the dollar-for-dollar burden of
any increase in pole rental will be greater on a cable subscriber than the benefit will be to a utility customer.
Of perhaps greater importance, a significant increase in pole rental rates will have an adverse impact
on certain cable company decisions in more sparsely populated areas. The impact per subscriber, or
prospective subscriber, will be greater in these areas because there are fewer potential subscribers per mile
of pole plant, i.e., less population density. The prospect of a much larger recurring cash expense for pole
attachments thus plays a greater role in investment decisions. This could have a negative influence on cable
companies' decisions to rebuild their systems so as to be able to offer broadband services and/or to extend
service to such areas.
Safety space
The National Electrical Safety Code requires a "communications worker safety zone" to be
maintained on a pole between the facilities located in the power company's supply space and the facilities

1 Idaho Code, Title 61, Ch. 5, Section 61-538.

Weldon Stutzman, Esq.
September 20, 2002
Page 3 of 8

located in the communications space.2 This space is ordinarily 40 vertical inches, although it can be less in
certain circumstances.3 The staff proposes to assign approximately half of the safety space to usable space
and half to unusable space, as was done in the Benewah decision.4 Cable One contends that the entire safety
space must be assigned to usable space.
The staff's proposal is based on the IPUC's conclusion in Benewah that "[t]he evidence established
that electric utilities may use [the safety] space for attachments such as street lights or transformers.
Nevertheless, this space is not for their exclusive benefit. In the absence of this space, the communications
conductors could not attach at all." The first part of the IPUC's statement, that electric utilities may use this
space, is unexceptionable. Thus, the NESC permits an electric utility to allow placement of span wires or
brackets carrying luminaires, traffic signals, or trolley conductors in the safety space with vertical clearances
above communications facilities of as little as four inches.5 Thus, virtually all of this space is "usable".
Significantly, none of these potentially revenue-producing uses are available to a communications attacher
such as a cable company, but only to the utility which owns the pole.
The second part of the IPUC's rationale, that the safety space is mutually beneficial to the
communications and electric attachers, is also true, but that statement omits an important fact, namely, that
the cable company often must pay the entire cost of establishing this space. Virtually every pole attachment
agreement contains a provision which requires the cable company to pay the entire cost of a new pole,
including the cost of moving existing attachments, if the existing pole is inadequate to accommodate the
2 National Electrical Safety Code ("NESC"), Rules 235C and 238 (2002). 3 NESC, Table 235-5 and notes 1 and 5 thereto. 4 Washington Water Power Company v. Benewah Cable Company, et al., Case No. U-1008-206, Order No. 19229 (1994). 5 NESC, Rule 238C and Table 238-2. See also Rules 238D and 239 for other facilities which can be located in the safety space.

Weldon Stutzman, Esq.
September 20, 2002
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cable company's attachment.6 In other words, this space either already exists on a pole when a cable
company first seeks to place an attachment or the cable company must bear the cost of creating it.
These facts led the FCC to conclude in 1979 that the entire safety space must be deemed usable.7
When asked to revisit this issue after passage of the 1996 amendments to the pole attachment provision of
the Communications Act, the FCC stated as follows:
It is the presence of the potentially hazardous electric lines that makes the safety space
necessary and but for the presence of those lines, the space could be used by cable and
telecommunications attachers. The space is usable and is used by the electric utilities. A bare
pole, when erected has portions to which attachments cannot be made at any time -- the ground
clearance and the part of the pole below ground. The rest is available for attachments; it is
usable space. A communications attachment, even though it may be a fiber optic cable with a
diameter of only one inch, is presumed to occupy one foot of the attachable space because of
separation requirements. In a like manner, the electric supply cable on the pole, because of its
unique spacing requirements must be 40 inches away from communications attachments. No
one questions that the eleven inches of space not physically occupied by a fiber optic cable, but
attributed to it, is usable space. Because the electric supply cable precludes other attachments
from occupying the safety space, which would otherwise be usable space, the safety space is
effectively usable space occupied by the supply cable. So long as their crews make the
installation, the electric utilities are not limited by the NESC in what equipment or cables they
may attach in the safety space. Accordingly, we reject the electric utilities' arguments to reduce
the presumptive usable space of 13.5 feet by 40 inches. [emphasis added; footnote omitted.]8

Moreover, as noted in Cable One's July 29 submission, almost every state which has considered this issue
has agreed with the FCC and concluded that all of the safety space is usable.9 In this light and for the
reasons set forth, Cable One urges the staff to reconsider its position.
6 For example, Section 8.B of the agreement proferred to Cable One by Idaho Power Company states as follows:
Make Ready: In the event that any pole(s) of the Licensor to which Licensee desires to make attachments are inadequate
to support the additional facilities in accordance with the specifications prescribed in Exhibit B, as interpreted by Licensor,
Licensor will, if requested by Licensee, replace such inadequate poles with suitable poles at the expense of the Licensee. In
the event that accommodation of Licensee's facilities on such poles, are feasible, Licensor will perform said changes at the
expense of the Licensee. Any replacement of poles, installation of additional poles, or guying required to accommodate the
attachments of Licensee shall be provided at the expense of Licensee. Any payments made by the Licensee under the
foregoing provisions of this Agreement shall not in any way entitle Licensee to any ownership of such pole(s). 7 See Second Report and Order in FCC Docket No. 78-144, 72 FCC 2d 59 (1979), para. 24; Memorandum Opinion and Order in
FCC Docket No. 78-144, 77 FCC 2d 187 (1980), paras.8-11. 8 15 FCC Rcd 6453 (2000), para. 22. 9 See Exhibit A hereto for a state-by-state breakdown of how the safety space has been treated.

Weldon Stutzman, Esq.
September 20, 2002
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Allocation factor
The staff's revised allocation factor calculates a communications attacher's percentage responsibility
for the annual pole cost by starting with the presumptive one foot of attachment space and adding a portion
of the one and one-half feet of the safety space deemed usable. The portion of this space to be added is
based on the average number of attachers to a pole. The sum of these two figures is then divided by the
presumptive usable space of 12 feet in order to derive the percentage of the annual pole cost to be borne by
the communications attacher. In other words, the staff proposes adding a portion of the usable safety space
to the one foot of space normally assigned to a communications attacher. Cable One submits that the logic
behind this formulation is flawed.
Consistent with the universal practice, the staff proposes to assign a presumptive one foot of space to
a communications attacher. This is space which is actually occupied, although it can be argued that a cable
attachment physically occupies only about one inch of space and the rest represents the space needed to
comply with the NESC's requirement that there be 12 inches of space between communications wires.
However, there is no discernable justification for assigning any of the safety space to a communications
attacher. As explained above, the safety space is indeed usable, but the only party legally permitted to use it
is the electric utility. A communications attacher cannot use any portion of the safety space. How then can
such an attacher be assigned any percentage of that space, much less a significant percentage?
No matter how it is couched, the staff's position, like the formula proposed at the August 27
workshop, contains a crucial policy assumption, i.e., that a certain portion of the annual pole cost should be
shared equally by all attachers to the pole. This can be done directly, as was the case in the staff's original
position, or it can be done indirectly, as is the case in the staff's modified position. This policy is contrary to

Weldon Stutzman, Esq.
September 20, 2002
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the IPUC's decision in Benewah; it is contrary to the FCC's cable formula;10 and it is contrary to almost
every state rate formula.11 Those formulations apportion the entire annual pole cost based on the percentage
of usable space each attacher occupies. Cable One's objection to the staff's position is perhaps best
illustrated by using the analogy of a shopping center. Each tenant pays rent for the square footage it
occupies. Thus, Albertsons pays a higher rent than Starbucks. The common costs, e.g., parking lot and
hallways, are factored into the square foot charge. If these two stores were the only tenants, you wouldn't
expect Starbucks to pay 50% of the common costs. Or even just 50% of the cost of the hallways. Instead,
Starbucks pays an aliquot portion of the common costs based on the percentage of the rentable square
footage of the shopping center it occupies. A pole can be conceptualized in the same fashion. There are
only so many feet of space which can be occupied. The rest is common space. If 10 feet of the pole can be
occupied, and a cable company occupies one foot, then the cable company's rental rate should be 10% of the
cost of the entire pole.
Staff's formula will give the utilities a significant increase in their pole rates. If the staff is
concerned that, since most pole rates have remained steady for several years, there must have been cost
increases that the utilities should be allowed to recoup, Cable One would ask staff to consider the following
points. First, even assuming that annual pole costs have risen over time, it is also possible that the
attachment rates being charged have been too high. Indeed, application of the Benewah decision to the year
2000 data for Idaho Power Company, for example, produces a rate below the rate which Idaho Power has
been charging for years.12 Second, the Benewah methodology will capture changes in the utilities'
underlying costs and produce rates accordingly. Thus, it appears that the increase in utility revenue

10 The FCC's second, or telecom, formula does incorporate the policy of a different apportionment of the usable and unusable
space. However, this formula only applies to cable attachments when the cable company begins to offer telecommunications
services. 47 USC Section 224. Cable One does not offer such services in Idaho. 11 See Exhibit A hereto for a state-by-state breakdown of how the allocation of costs has been done. 12 See Exhibit No.1 to Cable One's July 29 submission.

Weldon Stutzman, Esq.
September 20, 2002
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resulting from staff's proposal is driven not by a change in costs but by a change in philosophy regarding
allocation of those costs.
Finally, insofar as it may inform the staff's considerations, Cable One would like to put to rest any
vestige of currency which the utilities' subsidization argument may have. The electric utilities have
persistently argued that rates calculated using a formula like the FCC's or the one used in Benewah result in
a subsidy flowing from the utility ratepayer to the cable company. This argument is simply fallacious.
When a cable company requests permission to attach to an existing pole, the utility is already bearing the
annual pole cost. When a cable company seeks permission to attach to a pole there are upfront costs
involved in accommodating the cable company's attachment, such as processing the permit application,
engineering studies and any rearrangement of facilities, including installation of a larger pole, all of which
are paid by the cable company. Thus, all non-recurring costs are paid in full by the cable company. As for
recurring costs, these basically entail administrative activities such as bookkeeping and billing. A generous
estimate of these costs would place them at no more than $1.00 per year. Therefore, since all non-recurring
costs are paid by the cable company and recurring costs add no more than $1.00 per year to the annual pole
cost, any pole rental in excess of the recurring cost is a contribution to the utility's revenue requirements.
Thus, the cable company can not be said to be receiving a subsidy since it is defraying costs which the
utility would otherwise have to bear in the absence of the cable attachment.
In conclusion, Cable One again wants to express its appreciation for the opportunity to comment on
the staff's proposal. Cable One urges the staff to look to the IPUC's decision in Benewah, the FCC's various
decisions, and the decisions of other public utility commissions in making its recommendations as to how
the annual pole cost should be apportioned among the owners and users of pole space. In this regard Cable

Weldon Stutzman, Esq.
September 20, 2002
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One points the staff to the IPUC's responsibility under Section 61-538 of the Idaho Code to consider the
effect of a decision on the subscribers, and potential subscribers, to the state's cable television systems.
Sincerely,

MCDEVITT & MILLER LLP

_____________________________
Dean J. Miller

FLEISCHMAN AND WALSH, L.L.P.

_______________________________
Stuart F. Feldstein