II. Background and Positions of Parties

SBC filed this request for dispute resolution pursuant to Decision (D.) 98-10-058, which established an expedited dispute resolution procedure for disputes involving "initial access to utility rights of way and support structures." Both parties agreed that it was appropriate to proceed under the D.98-10-058 dispute resolution rules,² but sought extensions of the extremely tight timeframe for such dispute resolution, and also stipulated to extend the Administrative Law Judge's (ALJ or arbitrator) time to issue a decision in this proceeding.

The parties asked the arbitrator to resolve three disputes, set forth below.

A. Whether to Include Costs of GSF in Pole
and Conduit Rates

The first dispute concerns which overhead costs SureWest may include in its pole and conduit rates.

1. SureWest's Position

SureWest proposes to include GSF costs in its rates, resulting in higher rates for SBC. SureWest claims that if its rates do not include these costs, it will be under-compensated for use of its poles and conduits. The GSF costs at issue include items such as motor vehicles, work equipment, buildings, furniture, office equipment, general purpose computers, materials and supplies inventories, and telephone plant under construction. SureWest asserts that the functions generating these costs are necessary for SureWest to install and maintain the poles and conduit.

2. SBC's Position

According to SBC, SureWest's witnesses conceded that many of the GSF costs SureWest proposes be included in rates are not related to SureWest's pole and conduit operations. In addition, SBC contends that both the FCC and this Commission have established methodologies for setting pole and conduit rates that expressly reject the inclusion of the types of costs SureWest includes.

B. Percentage of Pole Allocated to Each Attacher,
and Number of Attachers

The second dispute relates to how to allocate pole costs to each attacher. This issue has two subparts: first, what percentage of total pole costs each attacher should bear; and second, how many attachers one should presume for purpose of calculating pole rates.

1. SureWest's Positions

With regard to the percentage of pole costs allocated to each attacher, SureWest states that "if there are two attachers to the pole benefiting from such facilities, each should pay equally for use of the pole." It views as arbitrary a methodology that would assign 92.6% of the pole costs to the pole owner and 7.4% to an attacher, the allocation the Commission has adopted in other contexts.

With regard to the number of attachers, SureWest proposes not to include SBC, but only the parties attached to the pole before SBC attaches. Thus, SureWest simply divides the total number of attachers it currently has on its poles by its total number of poles, which yields an average of 1.8 attachers per pole. SureWest then rounds that figures to two attachers per pole to reflect that, at a minimum, any SureWest pole with an attachment in addition to SureWest's would result in two attachments. It claims that the relevant FCC decision³ supports its approach, since that decision refers to "attaching entities" as including "any other entity with a physical attachment to the pole." Because SBC does not have existing physical attachments on SureWest's poles - but instead seeks to make attachment in the future - SureWest contends that SBC's attachments should not be included in the analysis.

2. SBC's Positions

On the issue of the percentage of pole costs to allocate to each attacher, SBC claims that the California methodology applicable to cable companies and set forth in Cal. Pub. Util. Code § 767.5(c)(2)(B) should apply here, even though SureWest is not a cable company. That statute provides that pole attachment rates should constitute "a percentage of the annual costs of ownership for the support structure, computed by dividing the volume or capacity rendered unusable by the [leasing carrier's] equipment by the total usable volume or capacity." SBC claims that if it attaches to a SureWest pole, the attachment does not render 50% (assuming two attachers) of the pole unusable, but rather some smaller percentage. Indeed, under the statute, SBC claims it should be required to pay only "two dollars and fifty cents ($2.50) or 7.4 percent of the public utility's annual cost of ownership for the pole and supporting anchor, whichever is greater."⁴

Under the FCC methodology, according to SBC, the attacher should pay for one foot plus two-thirds times the unusable space of a pole (24 feet) divided by the total number of attachers on a pole. Assuming that I adopt SBC's view of the number of attachers on each pole (see below), SBC would bear approximately 14% of the net cost of each pole.

As for the assumed number of attachers, SBC states that its own attachment should be included in determining the average, and that one attacher should be added to the number of attachers SureWest assumes. It interprets the FCC rule as counting the party seeking to establish a pole rate as an attacher. The FCC states that,

We do not believe that Congress intended for a single attacher, protected by the Pole Attachment Act, that uses one foot of space on a pole, to pay a higher (double) portion of the unusable space cost than the pole owner that controls, and use a good portion of, the rest of the usable space. Therefore, we include the utility pole owner in the count, resulting in a minimum of two attaching entities being counted.⁵

If each pole owner has a minimum of two attachers, according to SBC, the FCC must be counting the pole owner and one attacher. The latter entity, therefore, must be the party seeking to attach - in this case, SBC.

C. Interoffice Facility

Finally, the parties disagree whether SBC's CLEC, doing business in SureWest's territory, should be allowed to use an interoffice fiber optic facility that the SBC ILEC installed between SBC's Fair Oaks and Rocklin central offices. SureWest claims it would be anticompetitive to allow SBC's CLEC to use this facility, and SBC claims it would be inefficient to require SBC to construct a duplicate facility.

Event Day Number

Request for Arbitration filed 0
Responses filed 15
Revised Arbitration Statement filed 18
Arbitration hearings conducted 27
Draft Arbitrator's Report issued 42
Comments on Report filed 52
Final Arbitrator's Report issued 67
Commission Decision placed on agenda 104