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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Mile Hi Cable Partners, L.P.; Mountain States Video, Inc., d/b/a TCI of Colorado, Inc.; United Cable Television of Colorado, Inc., d/b/a TCI of Colorado, Inc.; TCI Cablevision of Colorado, Inc.; Heritage Cablevision of Tennessee, Inc.; and TCI Cablevision of Florida, Inc., Complainants v. Public Service Company of Colorado, Respondent. ) ) ) ) ) ) ) ) ) ) ) ) ) ) File No.: PA 98-003 MEMORANDUM OPINION AND ORDER Adopted: February 17, 1999 Released: February 22, 1999 By the Commission: I. INTRODUCTION 1. The Commission has before it an Application for Review, filed pursuant to Section 1.115 of the Commission's Rules, by the Public Service Company of Colorado ("PSCo") seeking review of an action ("Order") in a pole attachment complaint proceeding taken under delegated authority by the Chief of the Cable Services Bureau ("Bureau"). On April 1, 1998, Mile Hi Cable Partners, L.P.; Mountain States Video, Inc., d/b/a TCI of Colorado, Inc.; United Cable Television of Colorado, Inc., d/b/a TCI of Colorado, Inc.; TCI Cablevision of Colorado, Inc.; Heritage Cablevision of Tennessee, Inc.; and TCI Cablevision of Florida, Inc., ("TCI") filed a complaint ("Complaint") alleging that certain terms and conditions of their pole attachment agreement with PSCo are unjust and unreasonable and that the practices of PSCo in implementing those terms and conditions are unreasonable. On May 1, 1998, PSCo filed a motion to dismiss ("Motion") the Complaint for lack of jurisdiction. The Bureau dismissed PSCo's Motion in its Order and PSCo filed this Application for Review. We affirm the Order. 2. PSCo also seeks a stay of further action by the Bureau on the Complaint pending Commission action on the Application for Review. Because we are denying PSCo's Application for Review, we dismiss the Motion for Stay as moot. II. Background 3. On March 13, 1998, PSCo filed suit in the District Court for the City and County of Denver, Colorado, ("District Court") seeking damages for alleged unauthorized pole attachments. On April 1, 1998, TCI filed its Complaint with the Commission invoking the Commission's jurisdiction and alleging that the terms and practices that gave rise to the civil action in Colorado are unjust and unreasonable and, therefore, should be negated by the Commission pursuant to its statutory authority under Section 224 of the Communications Act of 1934, as amended ("Act"). PSCo stated in its Motion that the matter is strictly one of breach of contract over which the Commission does not have jurisdiction that should be resolved by the local district court. TCI filed an opposition to the Motion ("Opposition") on May 14, 1998, in which it reasserted that the Commission has jurisdiction to consider the Complaint and, consequently, urged denial of the Motion. PSCo also filed a reply to the Opposition on May 29, 1998. 4. In its Complaint, TCI asks the Commission to declare that both the previous $50 penalty and the newly imposed $250 penalty for unauthorized attachment are unreasonable. TCI also asks us to declare that imposition of an unauthorized attachment fee with regard to drop poles is unreasonable and that requiring the standard authorization process for drop poles is unreasonable. TCI further asks us to rule that the costs charged to TCI by PSCo for its pole count audit are unreasonable and order PSCo to disclose to TCI all materials necessary to verify the pole count audit and the resulting charges. Lastly, TCI asks that PSCo refund to TCI any amounts paid relating to matters addressed in the Complaint. In its Motion, PSCo asked the Commission to dismiss the Complaint for the following reasons: the contractual matters at issue are of a type that the Commission has determined are not within its jurisdiction; the Complaint does not implicate an interest cognizable by the Commission under Section 224 of the Act; and invoking Commission jurisdiction would allow those who attach their cables to poles without authorization to escape responsibility for those acts. 5. In its Order, released July 14, 1998, the Bureau determined that it had jurisdiction to address the issues raised in the Complaint, and consequently dismissed PSCo's Motion. At this time the Bureau has taken no further action on the Complaint. The District Court dismissed PSCo's suit on July 21, 1998. The court acknowledged the primary jurisdiction of the Commission stating: "It is a question involving the terms of a contract for the attachment of cable television lines to public utility poles. Therefore, the court finds that it is very much at the heart of what the federal statute was passed to address." This Application for Review was filed on August 13, 1998. An Opposition to the Application for Review ("Opposition") was filed by TCI on August 28, 1998, followed by a reply to the Opposition ("Reply") filed by PSCO on September 10, 1998. 6. PSCo, in conjunction with its Application for Review, filed a Motion to Stay further Bureau action. TCI filed its "Opposition to Motion to Stay" on August 24, 1998. PSCo moved to strike as untimely the "Opposition to Motion to Stay" on September 4, 1998. This was followed by an "Opposition to Motion to Strike" by TCI on September 8, 1998, and a "Reply to Opposition to Motion to Strike" by PSCo on September 18, 1998. III. Discussion 7. Section 224(b)(1) of the Act provides that "the Commission shall regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable" except where these matters are regulated by a State. Section 224(f) provides that a utility must provide nondiscriminatory access to its poles except "where there is insufficient capacity and for reasons of safety, reliability and generally applicable engineering purposes." We have concluded that "under the 'just and reasonable' standard, we have ample authority to consider terms and conditions in our ultimate decision on a complaint." Further, we have concluded that "where onerous terms or conditions are found to exist on the basis of evidence, a cable company may be entitled to a rate adjustment or the term or condition may be invalidated." We have also determined that we may take action when a utility has engaged in unjust or unreasonable practices. 8. Private negotiation is the preferred method for creating pole attachment arrangements and for dispute resolution. Should negotiations fail, the parties may seek resolution of disputes by the Commission by filing a complaint. Once the Commission acts on a complaint, such as reforming the terms and conditions of their agreement, the parties must look to the local court system to further order their affairs and to obtain remedies for breach of terms or conditions established by us. 9. Written pole attachment agreements are the industry norm, although such an agreement is not necessary. A common provision in pole attachment agreements is, such as here, a requirement that the cable operator make an application to the utility to attach to specific poles and receive permission, often called a license, before actually making the attachment. Some agreements contain a clause specifying a dollar amount as a penalty for each pole on which the cable operator installs a cable without prior authorization. Though we have indicated that such a penalty may be appropriate, we have not made a determination what would constitute a just and reasonable penalty. Such a clause and the practice in administering it are the basis of the Complaint. 10. PSCo states, "The single issue before the Commission is whether, under Section 224 of the Act, the Bureau properly may assert jurisdiction over contract provisions which remedy unauthorized pole attachment provisions." "Unauthorized Attachments" are defined in clause 2.11 of the pole attachment agreement signed June 25, 1995, by PSCo. An unauthorized attachment is one for which no application has been approved by PSCo. The clause also provides for a $250 charge which may be assessed by PSCo for the unauthorized attachment. 11. First, PSCo argues that the Order violates Commission policy by involving the Commission in a contract dispute that should be left to the state court. It charges that TCI "has not alleged that the contractual, rates, terms, and conditions for authorized pole attachments are unreasonable." It further charges that the only issues in the case are factual regarding the extent of TCI's unauthorized attachments and the relief for "a simple claim of breach of contract." The tenor of PSCo's argument is that the Commission does not have jurisdiction over what PSCo defines as unauthorized pole attachments. PSCo argues that the decision in Appalachian Power makes a distinction between remedies involving authorized attachments and those involving unauthorized attachments. In Appalachian Power, however, the unpaid fees were for authorized attachments. The cable system had simply ceased paying the fees during a dispute over a rate increase. The Commission held simply that once the rate was set the remedy for collection was an action in the state court for breach of contract or unjust enrichment. 12. The Order is consistent with Commission policy and precedent. The Complaint clearly alleges that terms and conditions in the pole attachment agreement between the parties and the practices in implementing those terms and conditions are not just and reasonable. We have jurisdiction over terms and conditions of pole attachments. This includes the conditions requiring authorization and any concomitant fees or penalties. Issues in the Complaint relate to PSCo's practices for surveying unauthorized attachments and billing TCI for the survey and whether the authorization requirement should apply to drop poles. The Bureau must rule on whether the unauthorized penalty clause is reasonable and whether the authorization provisions as applied by PSCo are reasonable. It must also rule on the reasonableness of the other actions which are challenged in the Complaint. Should TCI not pay its obligations as determined by the Bureau, PSCo will be free to go to the state court for a remedy based on the facts and in light of the Bureau's ruling. 13. Second, PSCo argues that the "Commission's assertion of jurisdiction, to the exclusion of the state court's jurisdiction, is inappropriate under Section 414 of the Act." It bases this upon the assertion that Section 224 of the Act gives the Commission no authority over unauthorized attachments. As discussed above, the Commission's jurisdiction extends to all terms and conditions of pole attachments, including requirements for authorization. Also, the Commission has not excluded state court jurisdiction. The District Court, under the doctrine of primary jurisdiction, has dismissed PSCo's suit so that it may appeal the ruling. As explained by the district court judge, the state suit could very well have been stayed pending the outcome of the Commission's deliberations. The doctrine of primary jurisdiction is part of the jurisprudence of the State of Colorado which emphasizes its discretionary nature. The Commission has not excluded state jurisdiction, it has exercised its own jurisdiction and determined that the Commission has primary jurisdiction. 14. Third, PSCo argues that unauthorized attachments are uncompensated attachments and regulation of penalties imposed for unauthorized attachments would render Section 224 of the Act unconstitutional. It further argues that the Commission would be depriving it "of the bargained-for remedy for theft, trespass and conversion." PSCo is entitled to compensation for attachments to its poles according to the provisions of Section 224 of the Act, whether those attachments are authorized or unauthorized. The Commission has held that collection of unpaid fees is a matter to be pursued in state court. The appropriate amount of compensation, however, is for the Commission to decide under Section 224 of the Act as is the reasonableness of the terms and conditions of the agreement. To the extent that the penalty, even if characterized as being for "theft, trespass and conversion," is "bargained for" and part of the agreement subject to Commission jurisdiction, it too is subject to Commission jurisdiction. The Bureau must determine the reasonableness of the penalty and whether it is not just a penalty, but excessive compensation for unpaid attachment fees. The Bureau must also determine whether the prior authorization requirement is reasonable in all instances raised in the Complaint. 15. Fourth, PSCo argues that the Bureau's Order violates the Tenth Amendment to the Constitution by depriving the courts of the State of Colorado over jurisdiction of a private contractual matter that has no impact on interstate commerce. We have addressed this issue above. The Commission has jurisdiction under Section 224 of the Act to address the Complaint. The District Court agrees and has exercised its discretion under the doctrine of primary jurisdiction to refer to the Commission those matters which should be addressed by it. 16. Fifth, PSCo urges us to overturn Williamsburg Cablevision and Alert Cable to the extent those cases assert that the Commission has jurisdiction over unauthorized attachment penalties. PSCo points out that those cases were relied upon by the Bureau in the Order. It further points out that those cases were staff decisions issued under delegated authority and that they were not appealed to the full Commission. PSCo again asserts that unauthorized attachment penalties are simply a contractual issue between parties and not subject to Section 224 of the Act. 17. Williamsburg Cablevision is an order concerning two pole attachment complaint proceedings, one involving Williamsburg Cablevision and the other, Alert Cable TV of North Carolina, Inc. ("Alert"). The primary issue in the complaints was the appropriate annual rate for pole attachments. Alert also alleged that a $15.00 fee charged by the utility for every attachment made without prior approval was unjust and unreasonable. The pole attachment agreement at issue required prior approval from the utility before attachments were made to its poles. It alleged this was necessary to prevent attachments that violated the terms of the agreement and often the safety code. The utility believed the penalty was necessary as a disincentive to unauthorized attachments. The order was issued by the Common Carrier Bureau ("CCB") under delegated authority. CCB recognized the legitimate interest of the utility in ensuring that all attachments are made in accordance with the contract and that pole attachments comply with safety codes. CCB also recognized that, as a penalty, the amount was not limited by the maximum attachment rate. CCB, however, made no finding that the penalty was reasonable. CCB dismissed the portion of the complaint regarding the unauthorized attachment penalty because Alert "presented no evidence" that the amount was unreasonable as a penalty or that the clause requiring prior approval was unreasonably administered. The reasonableness of the clause requiring prior approval was not at issue. 18. Alert Cable is the unpublished Memorandum Opinion and Order denying reconsideration of the Alert portion of Williamsburg Cable. Alert asked CCB to rule that penalties are unreasonable per se. The utility, on the other hand, argued that Commission jurisdiction did not extend to determining what a just and reasonable penalty would be. CCB found that it had jurisdiction to hear the complaint, but that a penalty was not unreasonable per se and that Alert had not sustained the burden of showing the penalty was unreasonable. PSCo argues that CCB "determined that unauthorized attachment penalties are not subject to measurement by the standards set forth in Section 224." CCB did no such thing. It found that the maximum rate criteria did not apply, but that the penalty was subject to the "just and reasonable" standard of Section 224. 19. Williamsburg Cablevision and Alert Cable are correct in the approach to penalties and unauthorized attachment provisions. Such terms and conditions and the practices in implementing them are within Commission jurisdiction to address in a complaint proceeding. We recognize the interests of the utility in receiving compensation for attachments to its poles and in ensuring that attachments to poles are safe and in accordance with agreed upon standards. We further recognize that penalty provisions may be a reasonable method to achieve its ends. We recognize, too, the statutory requirements for access to poles and our "rejection of the contention of some utilities that they are primary arbiters of [safety, reliability, or engineering] concerns, or that their determinations should be presumed reasonable." The terms and conditions and the practices employed authorizing pole attachments, including any penalties specified for failure to comply, must be just and reasonable. As CCB stated in Alert Cable: "The parties should be aware that we will act expeditiously to eliminate any abuse that may arise related to the penalty provision." 20. Sixth, PSCo asserts that it was denied due process before the Commission and the District Court. PSCO argues that the Complaint was not properly before the Bureau and the Bureau's improper intervention resulted in the loss of PSCo's claim in the district court. PSCo does not explain, however, how it was denied due process. The Complaint is pending before the Bureau. PSCo was granted an extension of time to respond and has responded. The Bureau will accord PSCo all due process under the Commission's Rules in considering the Complaint. The District Court opted not to retain jurisdiction, but dismissed the claim, to allow PSCo to appeal the District Court ruling. There are two possible outcomes the claim will be reinstated upon appeal or the District Court will entertain any action necessary to enforce any claim remaining upon the Bureau's resolution of the Complaint. Both the Bureau and the District Court have exercised discretion in procedural matters in favor of PSCo. PSCo has not demonstrated anything that will operate to prevent it from receiving proper resolution of this matter. 21. Lastly, PSCo suggests that the Complaint should have been dismissed for failure to include information required by Sections 1.1404(f)-(h) of the Commission's Rules. PSCo, however resolves the issue itself by acknowledging that the information alluded to applies to rate disputes and that a rate is not in dispute in this Complaint. Section 1.1406(b) of the Commission's Rules states that a complaint may be dismissed if it does not contain "substantially all the information required under 1.1404" or the complainant may be required to submit more information. It further states that the complaint shall not be dismissed if "the information is not available from the public records or from the respondent utility after reasonable request." The applicable provision is Section 1.1404(f) which states: "In any case, where it is claimed that a term or condition is unjust or unreasonable, the claim shall specify all information and argument relied upon to justify said claim." TCI has supplied this information and we will leave it to the discretion of the Bureau to determine whether additional information is necessary to dispose of the Complaint. IV. Conclusion 22. The Application for Review is without merit. The Bureau should proceed to process the Complaint according to the procedures established in the Rules and Commission precedent as clarified herein. 23. The Bureau has not acted on the complaint. This order affirms the Order of the Bureau recognizing its jurisdiction to hear the complaint. The Motion to Stay is, therefore, moot. V. Ordering Clauses 24. Accordingly, IT IS ORDERED, pursuant to Sections 4(i) and 4(j) of the Communications Act of 1934, as amended; 47 U.S.C. 154(i) & (j); and Sections 1.115 and 1.1415 of the Commission's Rules; 47 C.F.R. 1.115 & 1.1415; that the relief requested in the Application for Review IS DENIED. 25. IT IS FURTHER ORDERED that the Motion for Stay IS DISMISSED as moot. 26. IT IS FURTHER ORDERED that this order is EFFECTIVE upon release. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary