**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of: )

)

RCN TELECOM SERVICES OF )

NEW YORK, INC. )

)

Complainant, )

)

v\. )

)

CABLEVISION SYSTEMS CORPORATION, )

MADISON SQUARE GARDEN )

NETWORK, INC. and )

FOX SPORTS NET - NEW YORK )

)

Defendants; ) File Nos. CSR 99-5404-P and CSR 99-5415-P

)

MICROWAVE SATELLITE )

TECHNOLOGIES, INC. )

)

Complainant, )

)

v\. )

)

CABLEVISION SYSTEMS CORPORATION, )

RAINBOW MEDIA HOLDINGS, INC., )

MADISON SQUARE GARDEN )

NETWORK, INC. and )

FOX SPORTS NET - NEW YORK )

)

Defendants. )

**MEMORANDUM OPINION AND ORDER**

**Adopted: October 6, 1999 Released: October 7, 1999**

By the Deputy Chief, Cable Services Bureau:

**I. INTRODUCTION**

RCN Telecom Services of New York, Inc. (\"RCN\") and Microwave Satellite
Technologies, Inc. (\"MST\") (together referred to as \"Complainants\")
filed separate program access complaints (the \"Complaints\") against
Cablevision Systems Corporation (\"Cablevision\"), Madison Square Garden
Network, Inc. (\"MSG\"), Fox Sports Net - New York (\"Fox Sports/NY\"),
and Rainbow Media Holdings, Inc. (\"Rainbow\") (collectively referred to
as \"Defendants\").[^1] Complainants allege that Defendants have
violated Sections 628(b) and (c) of the Communications Act of 1934, as
amended (\"Communications Act\"),[^2] and Sections 76.1001, 76.1002(a),
76.1002(b), and 76.1002(c) of the Commission\'s rules,[^3] by engaging
in discrimination and unfair practices in conjunction with the
distribution of terrestrial and satellite cable programming. Because RCN
and MST\'s complaints are based upon identical facts and raise the same
legal issues, we have consolidated the above-captioned proceedings.

**II. BACKGROUND**

Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (\"1992 Cable Act\")[^4] to promote competition,
with the view that regulation would be transitional until the video
programming distribution market becomes competitive.[^5] In enacting the
program access provisions, codified in Section 628 of the Communications
Act (\"Section 628\"),[^6] Congress sought to minimize the incentive and
ability of vertically integrated programming suppliers to favor
affiliated cable operators over nonaffiliated cable operators or other
multichannel video programming distributors (\"MVPDs\") in the sale of
satellite cable and satellite broadcast programming.[^7]

Section 628(b) of the Communications Act states that:

\[i\]t shall be unlawful for a cable operator, a satellite cable
programming vendor in which a cable operator has an attributable
interest, or a satellite broadcast programming vendor to engage in
unfair methods of competition or unfair or deceptive acts or practices,
the purpose or effect of which is to hinder significantly or to prevent
any multichannel video programming distributor from providing satellite
cable programming or satellite broadcast programming to subscribers or
consumers.[^8]

In Section 628(c), Congress instructed the Commission to promulgate
regulations that:

\(A\) establish effective safeguards to prevent a cable operator which
has an attributable interest in a satellite cable programming vendor or
a satellite broadcast programming vendor from unduly or improperly
influencing the decision of such vendor to sell, or the prices, terms,
and conditions of sale of, satellite cable programming or satellite
broadcast programming to any unaffiliated multichannel video programming
distributor; \[and\][^9]

\(B\) prohibit discrimination by a satellite cable programming vendor in
which a cable operator has an attributable interest or by a satellite
broadcast programming vendor in the prices, terms, and conditions of
sale or delivery of satellite cable programming or satellite broadcast
programming among or between cable systems, cable operators, or other
MVPDs or their agents or buying groups. . . .[^10]

In *Implementation of Sections 12 and 19 of the Cable Television
Consumer Protection and Competition Act of 1992: Development of
Competition and Diversity in Video Programming Distribution and
Carriage*, MM Docket No. 92-265, First Report and Order (\"*Program
Access Report and Order*\"),[^11] the Commission concluded that
non-price discrimination is included within the prohibition against
discrimination set forth in Section 628(c)(2)(B). While the Commission
did not attempt to identify all types of non-price discrimination that
could occur, the Commission stated that \"one form of non-price
discrimination could occur through a vendor\'s \'unreasonable refusal to
sell\', or refusing to initiate discussions with a particular
distributor when the vendor has sold its programming to that
distributor\'s competitor.\" The Commission cautioned, however that
\"\'unreasonable\' refusals to sell\" should be distinguished from
\"certain legitimate reasons that could prevent a contract between a
vendor and a particular distributor.\"[^12] Such legitimate reasons
would include:

\(i\) the possibility of \[the\] parties reaching an impasse on
particular terms, (ii) the distributor\'s history of defaulting on other
programming contracts, or (iii) the vendor\'s preference not to sell a
program package in a particular area for reasons unrelated to an
existing exclusive arrangement or a specific distributor.[^13]

**III. THE FACTS**

RCN operates an open video system in New York City pursuant to a
certification issued by the Commission and pursuant to RCN\'s open video
system agreement with the city. RCN offers MVPD service over its system
to approximately 50,000 subscribers in Manhattan, Queens, and the
Bronx.[^14] MST is a private cable operator offering MVPD service to
subscribers throughout the New York metropolitan area.[^15]

Cablevision is a multiple system operator (\"MSO\") that owns and
operates cable systems in various parts of the country including New
York City. Cablevision currently provides MVPD service to approximately
2.7 million subscribers in the New York metropolitan area.[^16]
Cablevision owns a majority interest in Rainbow, a programming and
entertainment company, which in turn owns a controlling interest in the
entity which ultimately owns and controls MSG and Fox Sports/NY.[^17]
MSG and Fox Sports/NY are satellite-delivered programming services
operating in the New York metropolitan market which provide subscribers
with telecasts of numerous New York professional major league sport
contests as well as local collegiate and amateur sporting events.[^18]
MSG and Fox Sports/NY own the rights to televise games played by the
Knicks and the Nets (teams of the National Basketball Association), the
Rangers, Islanders and Devils (teams of the National Hockey League), and
the Yankees and the Mets (Major League Baseball teams).[^19] Because MSG
and Fox Sports/NY distribute their programming through satellite
technology, it is considered \"satellite cable programming\" subject to
the program access rules.[^20]

Since the late 1980\'s, MST has distributed the programming services now
known as MSG and Fox Sports/NY to its subscribers in the New York
metropolitan area.[^21] RCN and its predecessors have distributed these
programming services in the New York area since the early 1990\'s.[^22]
Due to the large number of professional sports teams in the New York
area, it is often the case that a number of the teams are playing
simultaneously. In the past when this occurred, Defendants often
provided \"overflow\" games to distributors of MSG and Fox Sports/NY,
including Complainants. MSG and Fox Sports/NY would each produce a
primary game for distribution as part of their regular service and
produce certain of the games on a secondary or overflow basis as
well.[^23] Distributors typically would clear channel capacity elsewhere
on their systems in order to telecast these overflow games.[^24] Under
their contracts with MSG and Fox Sports/NY, distributors usually were
required only to use \"reasonable\" or \"best\" efforts in order to make
capacity available for the overflow programming.[^25] Neither MSG nor
Fox Sports/NY ever established a body of sports programming specifically
designated as \"overflow programming.\"[^26] Rather, the foregoing
process operated in an *ad hoc* manner and depended upon when and what
conflicts occurred.[^27] According to Defendants, the *ad hoc* nature of
this process and inconsistent channel placement had a negative impact on
ratings for the games and on the advertising revenue generated by the
games.[^28]

On August 5, 1998, Rainbow launched a new programming service tailored
for the New York metropolitan market called the MetroChannels.[^29]
Rainbow distributes the MetroChannels terrestrially using Cablevision\'s
fiber optic transport network connecting various headends serving the
metropolitan area.[^30] The MetroChannels consist of three services:
MetroGuide, MetroLearning, and MetroTraffic and Weather. The
MetroChannels provide a variety of local programming content including
cultural events, educational services, and sports programming, much of
which is original and has not appeared before on any other programming
service.[^31] In January of 1999, MSG and Fox Sports/NY began to use
MetroGuide as an outlet for the overflow games previously distributed
through the independent distributors of MSG and Fox Sports/NY in the
manner described above.[^32] In addition, MSG and Fox Sports/NY moved a
portion of the overflow programming to local broadcast stations.[^33]

In meetings and through written correspondence, RCN and MTS attempted
without success to negotiate with Defendants for the right to carry the
overflow programming Defendants now distribute *via* the
MetroChannels.[^34] RCN and MTS did not seek carriage rights for the
MetroChannels service as a whole. In letters to Complainants, counsel
for the MetroChannels asserted that the MetroChannels are a
terrestrially-delivered service and that the programming contained on
the MetroChannels is not subject to the program access rules. Counsel
stated that Defendants will not extend carriage rights to Complainants
for any of the programming on the MetroChannels.[^35] After providing
Defendants with the requisite notice of their intent to file a program
access complaint, Complainants initiated these proceedings alleging that
the refusal to license Complainants to carry the sports programming
previously distributed *via* MSG and Fox Sports/NY as overflow
programming violates the program access provisions of the Communications
Act.[^36]

**IV. THE PLEADINGS**

Complainants allege that Defendants\' refusal to negotiate carriage of
the overflow programming constitutes an impermissible refusal to sell
prohibited by Section 628(c)(2)(B).[^37] RCN argues that if this
programming were transmitted by satellite, Defendants\' refusal to sell
would constitute an impermissible form of non-price discrimination. RCN
maintains that Defendants have shifted the programming to terrestrial
distribution *via* the MetroChannels in order to evade application of
the program access rules and that the Commission has authority under a
combination of Sections 4(i) and 303(r) of the Communications Act to
prohibit such evasions.[^38] Sections 4(i) and 303(r), RCN argues,
empower the Commission to adopt ancillary measures that extend beyond
narrow statutory mandates when necessary to implement the Act and
further its goals. RCN contends that the purpose of Section 628 is to
promote competition and diversity in the multichannel video programming
market. RCN asserts that while Section 628 addresses only satellite
programming, movement of satellite programming to terrestrial
distribution in order to evade the program access rules frustrates its
pro-competitive goals and that the Commission can act pursuant to
Sections 4(i) and 303(r) to restrict such activity.[^39] RCN argues that
nothing in the language of Section 628 or its legislative history
prohibits such an assertion of jurisdiction over satellite programming
recently shifted to terrestrial distribution with an evasive
intent.[^40]

Complainants reference two recent decisions of the Cable Services Bureau
(the \"Bureau\") denying program access complaints involving similar
facts and based upon similar arguments regarding extension of the
Commission\'s jurisdiction to prohibit possible evasions of the program
access rules through transition to terrestrial delivery.[^41] To the
extent the Bureau held in *DIRECTV v. Comcast* or *EchoStar v. Comcast*
that it does not have such jurisdiction pursuant to Sections 4(i) and
303(r), RCN asks the Bureau to overrule or distinguish its decisions in
those cases.[^42] Complainants also argue that the facts of *DIRECTV*
and *EchoStar* are distinguishable from those underlying their
respective complaints. In this regard, Complainants state that they
previously carried all of the overflow programming at issue, whereas the
complainant in *DIRECTV* carried only a portion of the disputed
programming and in *EchoStar* the complainant did not carry any of the
programming at issue.[^43] Complainants also contend that their cases
are distinguishable because in this case the ownership of the rights to
televise the sports contests involved has remained at all relevant times
with Defendants, whereas in *DIRECTV* and *EchoStar* the parties
undertook the shift to terrestrial distribution only after acquisition
of the distribution rights from an unaffiliated third party.[^44]

Complainants further argue that Defendants\' refusal to negotiate for
carriage of the overflow programming while offering it to other MVPDs as
part of the MetroChannels constitutes an unfair practice under Section
628(b). RCN maintains that the statutory prohibition contained in
Section 628(b) is broader than the specific prohibitions on
discrimination in Section 628(c), arguing that the only requirement for
triggering the prohibition in Section 628(b) is that the unfair conduct
in question prevents an MVPD \"from providing satellite cable
programming or satellite broadcast programming to subscribers or
consumers.\"[^45] RCN argues that the status of the contested
programming itself as \"satellite cable programming\" is irrelevant as
long as a party can show it has been harmed in its general ability to
provide satellite cable programming.[^46] RCN and MST assert that
Defendants\' refusal to license them to carry the disputed programming
hinders their provision of satellite programming and their ability to
compete in the New York market, thus resulting in a violation of Section
628(b).[^47]

Finally, Complainants maintain that Defendants\' movement of the
overflow programming and refusal to license Complainants to carry the
programming constitutes the imposition of an exclusivity agreement
against Complainants in the New York metropolitan area in violation of
Section 628(c)(2)(D) of the Communications Act and Sections
76.1002(c)(4) and (c)(5) of the Commission\'s rules.[^48] Complainants
assert that Defendants have not obtained a Commission determination that
this exclusive arrangement serves the public interest or obtained prior
approval from the Commission for the arrangement. Complainants argue
that Defendants\' failure to do so violates the foregoing provisions
which prohibit certain exclusive contracts for satellite cable
programming or satellite broadcast programming without Commission
approval.[^49]

In their Answers, Defendants argue that the Commission is granted only
limited authority to adjudicate disputes regarding access to satellite
cable programming, defined as \"video programming which is transmitted
*via* satellite.\"[^50] Defendants assert that their conduct does not
violate Sections 628(b) or 628(c) since the MetroChannels, and the
overflow programming now incorporated therein, are
terrestrially-delivered and do not constitute satellite cable
programming.[^51] Defendants cite Congress\' use of the phrase
\"satellite cable programming\" as evidence that Congress intended to
limit application of the program access rules to satellite programming.
Defendants argue that the legislative history reveals that Congress
considered and rejected the idea that the program access rules apply to
terrestrially-delivered programming.[^52] Defendants argue that the
Commission\'s ancillary authority set forth in Sections 4(i) and 303(r)
cannot serve as a basis for the Commission to apply the program access
provisions to terrestrially-delivered programming given that Congress
expressly limited these provisions to satellite-delivered
programming.[^53] Defendants reason that if the Commission were to
extend application of the statute to terrestrial programming, despite
the clear language of the statute, it would violate well established
principles of statutory construction.[^54]

Defendants argue that *DIRECTV* and *EchoStar* are controlling and that
Complainants have failed to distinguish these decisions.[^55] Defendants
assert that like Complainants here, the complainant in *DIRECTV* had
previously carried the programming at issue and that this fact was not a
basis for the Bureau\'s refusal to apply the program access rules in
that case.[^56] Defendants also reject Complainants\' other proffered
distinction of *DIRECTV* and *EchoStar* which was based upon the fact
that in this case Defendants held the distribution rights to the
programming at issue prior to the transition to terrestrial delivery.
Defendants argue that while the transfer of distribution rights in
conjunction with the move to terrestrial delivery may have been
considered as one factor in the *DIRECT TV* and *EchoStar* decisions, it
was not central to the analysis.[^57] Defendants maintain that the
MetroChannels are clearly a new service regardless of the continuity in
ownership of the distribution rights to certain of the programming
carried on this service.[^58]

Defendants reject Complainants\' argument that the Commission has
authority under Sections 4(i) or 303(r) or Section 628 itself to police
evasions of the program access rules and argue that no such evasion can
be found on these facts in any event. Defendants deny the allegation
that they incorporated the overflow programming into the
terrestrially-delivered MetroChannels in order to evade the program
access rules.[^59] According to Defendants, they have expended
significant resources in developing the MetroChannels as a
ground-breaking new \"hyper-local\" programming service with extensive
content in the areas of news, entertainment, and sports. Defendants
argue that the inclusion of such a small amount of content previously
transmitted *via* satellite cannot be considered credible evidence of
evasive conduct.[^60] Defendants explain that adoption of terrestrial
distribution for the MetroChannels was a rational and legitimate
business decision based on a determination that terrestrial distribution
would be significantly less expensive than satellite distribution and
better suited for the type of programming and interactive services that
will be included.[^61] Defendants assert that because they had access to
Cablevision\'s pre-existing terrestrial infrastructure, terrestrial
distribution was the most economical option.[^62] Defendants also state
that because the MetroChannels are a regional service, there is no
reason to incur the higher costs associated with satellite
distribution.[^63]

Defendants further assert that Complainants have failed to state a claim
under Section 628(b). As an initial matter, Defendants argue that the
terrestrial programming at issue is beyond the scope of Section 628(b),
which they argue applies only to programming delivered *via*
satellite.[^64] Defendants next assert that the decision to move this
programming to terrestrial delivery is permitted under the law and is
not an unfair practice.[^65] Defendants also maintain that their refusal
to sell the overflow programming is not an unfair practice since no
other MVPD can purchase this programming separately as Complainants
desire.[^66] Defendants further argue that Complainants fail to state a
Section 628(b) claim because they cannot demonstrate a purpose on the
part of Defendants to cause the requisite harm or make a showing of the
harm itself.[^67] As discussed above, Defendants contend that they made
the decision to transition the programming to terrestrial delivery for
legitimate business reasons and not for any prohibited purpose.
Defendants also assert that Complainants have presented no evidence
demonstrating that their inability to distribute the overflow
programming has hindered their competitive position in the New York
market.[^68]

Defendants maintain that Complainants\' request for only the overflow
programming now incorporated into the MetroChannels, rather than the
entire MetroChannels service, is not cognizable under Section 628.[^69]
Defendants argue that the relevant legislative history and the structure
of the program access rules indicate that they govern access to
integrated programming services and not to the specific programs that
make up such services.[^70] In response, RCN references other portions
of the legislative history and argues that the program access rules can
apply on a program-specific basis.[^71] RCN also states that not only
have Defendants refused to negotiate carriage of the overflow
programming by itself, they also have refused to negotiate carriage of
the complete MetroChannels programming package.[^72]

Lastly, Defendants argue that their conduct does not violate the
restrictions on exclusive contracts contained in Section 628(c)(2)(D).
Defendants argue that this provision by its terms applies only to
contracts for programming delivered *via* satellite and that the
terrestrial programming in dispute is not covered by Section
628(c)(2)(D).[^73]

**V. DISCUSSION**

The central legal issues underlying the Complaints are essentially the
same as those involved in *DIRECTV* and *EchoStar*. We therefore rely
substantially on the analysis set forth in those decisions in resolving
the Complaints. The primary issues disputed in this proceeding are as
follows:

\(1\) Does the Commission have the authority to take action against
evasions of the program access rules involving terrestrially-delivered
programming and, if so, is Defendants\' conduct actionable as an evasion
of Section 628(c)(2)(B)?

\(2\) Does Defendants\' conduct involve unfair or anti-competitive
action the purpose or effect of which is to hinder Complainants\'
distribution of \"satellite cable programming\" in violation of Section
628(b)?

\(3\) Does Defendants\' conduct violate the restrictions on exclusive
contracts contained in Section 628(c)(2)(D)?

Section 628 is generally understood to be a mechanism for ensuring that
MVPDs that are competing with traditional cable television systems are
not deprived, through exclusive contracts, discriminatory pricing, or
otherwise, of access to vertically integrated \"satellite cable
programming.\" Section 628(c)(2)(B) prohibits a \"satellite cable
programming vendor\" in which a cable operator has an attributable
interest from engaging in discrimination in the prices, terms or
conditions of the sale or delivery of satellite cable programming to
competing MVPDs.[^74]

Complainants do not argue that the overflow programming is in fact
\"satellite cable programming.\"[^75] Rather, they assert that
Defendants\' movement of this programming from satellite to terrestrial
delivery constitutes an attempt to evade Section 628(c)(2)(B), and that
the Commission can act to prevent such conduct pursuant to the ancillary
authority granted in Sections 4(i) and 303(r) or the general
jurisdiction of Section 628. Assuming for the sake of argument that the
Commission has the authority to act against evasions in some
circumstances (an issue the Commission has considered elsewhere),[^76]
we are not persuaded here that the totality of the circumstances
demonstrates an intent to evade our rules. Because we conclude that
evasive conduct is not present, we do not address Complainants\'
arguments under Sections 4(i), 303(r) and 628.

We find that Defendants have provided convincing evidence that their
decision to move the sports programming previously distributed on an
overflow basis *via* MSG and Fox Sports/NY to the MetroChannels, as well
as their decision to distribute the MetroChannels terrestrially, were
based upon legitimate business and marketing considerations. Defendants
have invested substantial resources in developing the MetroChannels as a
new \"hyper-local\" service tailored to the interests of specific
communities and offering a wide range of original news, entertainment,
and sports content. The sports programming at issue is only a small part
of the programming offered on the MetroChannels. Defendants articulate a
clear, marketing-based rationale for including the overflow sports
programming as part of the \"electronic newspaper\" design upon which
the MetroChannels are based. Defendants also detailed the practical
difficulties in the previous overflow method of distribution which they
sought to eliminate by transferring the programming to the
MetroChannels. Significantly, the overflow programming was never a
separate programming service offered by the Defendants. Moreover, the
fact that the migrated programming represents only a small amount of the
sports programming for the New York area, the majority of which remains
available to Complainants *via* MSG, Fox Sports/NY and other outlets, is
evidence that an evasive intent was not involved.[^77] Finally,
Defendants provided substantial evidence that terrestrial distribution
of the MetroChannels is dramatically less expensive and more technically
appropriate for this type of locally-oriented service than satellite
distribution.[^78] In light of the foregoing, we cannot conclude that
evasive conduct is involved.

Complainants also argue that Defendants\' conduct violates Section
628(b) of the Communications Act. This provision reads as follows:

It shall be unlawful for a cable operator, a satellite cable programming
vendor in which a cable operator has an attributable interest, or a
satellite broadcast programming vendor to engage in unfair methods of
competition or unfair or deceptive acts or practices, the purpose or
effect of which is to hinder significantly or to prevent any
multichannel video programming distributor from providing satellite
cable programming or satellite broadcast programming to subscribers or
consumers.[^79]

Complainants assert that Section 628(b) has broad applicability and does
not require that the unfair practices in question hinder the
distribution of satellite programming directly. Complainants assert that
Defendants\' unfair denial of the terrestrially-delivered overflow
programming violates Section 628(b) because without this programming in
their line up, Complainants\' satellite-delivered programming is less
appealing to subscribers.[^80]

We are not persuaded that the facts alleged are sufficient to establish
a Section 628(b) violation. In order to find a violation of Section
628(b), the Commission must make two independent determinations. First,
the Commission must determine that the defendant has engaged in unfair
methods of competition or unfair or deceptive acts or practices. Second,
the Commission must determine that the unfair acts or practices, if
found, had the purpose or effect of hindering significantly or
preventing an MVPD from providing satellite cable programming to
subscribers or consumers. Here, we do not believe that the record
supports a conclusion that Defendants have engaged in unfair or
deceptive acts in transferring the overflow programming to the
MetroChannels.[^81] In enacting Section 628, Congress determined that
while cable operators generally must make available to competing MVPDs
vertically-integrated programming that is satellite-delivered, they do
not have a similar obligation with respect to programming that is
terrestrially-delivered. Complainants\' argument would have us find that
it is somehow unfair for a cable operator to move a programming service
from satellite delivery to terrestrial delivery if it means that a
competing MVPD may no longer be afforded access to the service. We find
no evidence in Section 628 that Congress intended such a result.
Congress did not prohibit cable operators from delivering any particular
type of service terrestrially, did not prohibit cable operators from
moving any particular service from satellite to terrestrial delivery,
and did not provide that program access obligations remain with a
programming service that has been so moved. Thus, given our prior
finding that Defendants\' actions do not amount to an attempt to evade
our rules, we decline to find that, standing alone, Defendants\'
decision to deliver the overflow programming terrestrially *via* the
MetroChannels and to deny that programming to Complainants is \"unfair\"
under Section 628(b).

Complainants\' final argument is that Defendants\' conduct constitutes
the imposition of an exclusive agreement for which Defendants have not
obtained the prior approval and public interest determination required
under Section 628(c)(2)(D) and the Commission\'s implementing
rules.[^82] Section 628(c)(2)(D) applies to certain exclusive contracts
for \"satellite cable programming or satellite broadcast
programming.\"[^83] As we stated in *DIRECTV* and *EchoStar*:

We believe that the correct reading of Section 628(c) is that the
provisions in question apply to satellite cable programming, not
programming that was \"previously\" satellite-delivered, or the
\"equivalent\" of satellite cable programming, or programming that would
qualify as satellite cable programming, but for its terrestrial
delivery. The statute defines \"satellite cable programming\" as that
which *is* transmitted via satellite.[^84] This reading is consistent
with the legislative history of Section 628 which indicates that the
version of the program access provision that the Senate adopted would
have extended to terrestrially-delivered programming services but the
House bill, that was eventually adopted, did not.[^85] This indicates a
specific intention to limit the scope of the provision to satellite
services.[^86]

As with Complainants\' Section 628(b) argument, Complainants\'
prohibited exclusive contract argument presupposes that Defendants\'
movement of the overflow games from satellite delivery to terrestrial
delivery constitutes improper conduct requiring the treatment of the
programming at issue as satellite delivered programming subject to the
program access rules. To the contrary, we find that the record supports
a conclusion that Defendants have not engaged in unfair or deceptive
acts in transferring the overflow programming to the MetroChannels.
Accordingly, because the programming at issue is terrestrially-delivered
it does not constitute satellite cable programming. We therefore must
deny Complainants\' Section 628(c)(2)(D) claim.

Lastly, in its complaint, RCN requested discovery in order to explore
the motivation for Defendants\' conduct in conjunction with its evasion
claims. Section 76.1003(g) of the Commission\'s rules provides that
Commission staff have discretion to order discovery in program access
disputes if they believe the record is insufficient.[^87] We believe the
pleadings and supporting affidavits submitted in these proceedings
provide sufficient detail regarding the creation of the MetroChannels
and the decision to distribute this service terrestrially, as well as
the decision to shift distribution of the overflow programming to the
MetroChannels. We do not believe that discovery is necessary to
supplement the record and deny RCN\'s petition for discovery.

**VI. ORDERING CLAUSES**

Accordingly, **IT IS ORDERED**, that the complaints filed in CSR
99-5404-P by RCN Telecom Services of New York, Inc. and in CSR 99-5415-P
by Microwave Satellite Technologies, Inc. **ARE DENIED**.

**IT IS FURTHER ORDERED**, that the Petition for Discovery filed by RCN
Telecom Services of New York, Inc. as part of its complaint in CSR
99-5404-P **IS DENIED.**

This action is taken pursuant to authority delegated by Section 0.321 of
the Commission\'s rules, 47 C.F.R. § 0.321.

FEDERAL COMMUNICATIONS COMMISSION

William H. Johnson

Deputy Chief, Cable Services Bureau

[^1]: ^?^ RCN and MST incorrectly identified MSG as \"MSG Sports
    Network, Inc.\" and Fox Sports/NY as \"Fox Sports Network - New
    York\" in the Complaints. MST also incorrectly identified Rainbow as
    \"Rainbow Programming, Holdings, Inc.\" RCN did not name Rainbow as
    a defendant in its complaint.

[^2]: ^?^47 U.S.C. § 548(b), (c).

[^3]: ^?^47 C.F.R. §§ 76.1001, 76.1002(a), (b), (c).

[^4]: ^?^Pub. L. No. 102‑385, 106 Stat. 1460 (1992) (codified as amended
    in scattered sections of 47 U.S.C.).

[^5]: ^?^1992 Cable Act § 2(b)(2), 106 Stat. 1463. *See also*
    Communications Act § 601(6), 47 U.S.C. § 521(6) (\"The purposes of
    this title are to . . . promote competition in cable communications
    and minimize unnecessary regulation that would impose an undue
    economic burden on cable systems.\").

[^6]: ^?^47 U.S.C. § 548.

[^7]: ^?^1992 Cable Act § 2(a)(5), 106 Stat. 1460-61. \"Satellite cable
    programming\" is \"video programming which is transmitted *via*
    satellite and which is primarily intended for the direct receipt by
    cable operators for their retransmission to cable subscribers.\" 47
    U.S.C. § 601(d)(1). \"Satellite broadcast programming\" is broadcast
    programming when such programming is retransmitted by satellite and
    the entity retransmitting such programming is not the broadcaster or
    an entity performing such retransmission on behalf of and with the
    specific consent of the broadcaster. 47 U.S.C. § 548(i)(3).

[^8]: ^?^47 U.S.C. § 548(b).

[^9]: ^?^47 U.S.C. § 548(c)(2)(A).

[^10]: ^?^47 U.S.C. § 548(c)(2)(B). Congress provided limited exceptions
    to this prohibition. A satellite programming vendor is not
    prohibited from:

    \(i\) imposing reasonable requirements for creditworthiness,
    offering of service, and financial stability and standards regarding
    character and technical quality; (ii) establishing different prices,
    terms, and conditions to take into account actual and reasonable
    differences in the cost of creation, sale, delivery, or transmission
    of satellite cable programming or satellite broadcast programming;
    (iii) establishing different prices, terms, and conditions which
    take into account economies of scale, cost savings, or other direct
    and legitimate economic benefits reasonably attributable to the
    number of subscribers served by the distributor; or (iv) entering
    into an exclusive contract that is permitted under subparagraph (D)
    \[of this section\].

    *Id.*

[^11]: ^?^8 FCC Rcd 3359 (1993).

[^12]: ^?^*Id.*

[^13]: ^?^*Id.* (footnote omitted).

[^14]: ^?^RCN Complaint at 6.

[^15]: ^?^MST Complaint at 1.

[^16]: ^?^RCN Complaint at 2.

[^17]: ^?^Defendants\' Answer (RCN), Affidavit of C. Travers at ¶ 3;
    Defendants\' Answer (MST), Affidavit of C. Travers at ¶ 3.

[^18]: ^?^*Id.* at 7.

[^19]: ^?^RCN Complaint at 6-7.

[^20]: ^?^47 U.S.C. §§ 548(a), 605(d)(1).

[^21]: ^?^Defendants\' Answer (MST) at 7.

[^22]: ^?^Defendants\' Answer (RCN) at 7.

[^23]: ^?^Defendants\' Answer (RCN) at 11; Defendants\' Answer (MST) at
    11.

[^24]: ^?^*Id.*

[^25]: ^?^*Id.*

[^26]: ^?^Cablevision Answer (RCN) at 11, n. 20; Cablevision Answer
    (MST) at 11, n. 22.

[^27]: ^?^Defendants\' Answer (RCN) at 11; Defendants\' Answer (MST) at
    11.

[^28]: ^?^*Id.*

[^29]: ^?^*Id.* at 7.

[^30]: ^?^*Id.* at 9-10.

[^31]: ^?^*Id.* at 7.

[^32]: ^?^*Id.* at 11. According to RCN, from the time Defendants began
    distribution *via* the MetroChannels through the end of April 1999,
    there have been approximately 26 overflow games. RCN Complaint at 7.

[^33]: ^?^RCN Complaint at 8.

[^34]: ^?^RCN Complaint at 8-9; MST Complaint at 4.

[^35]: ^?^RCN Complaint, Exh. D; MST Complaint, Exh. B.

[^36]: ^?^47 U.S.C. §§548(b), (c); *see* 47 C.F.R. § 76.1003(a).

[^37]: ^?^RCN Complaint at 11; MST Complaint at 6.

[^38]: ^?^RCN Complaint at 17 (*citing* Communications Act §§ 4(i) and
    303 (r), 47 U.S.C. § 154(i) and 47 U.S.C. § 303(r)). Section 4(i)
    provides that \"the Commission may perform any and all acts, make
    such rules and regulations, and issue such orders, not inconsistent
    with this Act, as may be necessary in the execution of its
    functions.\" Section 303(r) states that one of the general powers of
    the Commission is to \"\[m\]ake such rules and regulations and
    prescribe such restrictions and conditions, not inconsistent with
    law, as may be necessary to carry out the provisions of this Act. .
    . . \" MST did not base its complaint on Sections 4(i) and 303(r)
    but includes a general reference to these provisions in its reply.
    MST Reply at 11.

[^39]: ^?^RCN Complaint at 21.

[^40]: ^?^*Id.* at 20-21. RCN and MST also argue that the Commission has
    general authority under Section 628 itself to police evasions of
    this provision. RCN Complaint at 22; MST Complaint at 8.

[^41]: ^?^*See DIRECTV, Inc. v. Comcast Corp.*, 13 FCC Rcd. 21822
    (1998)*, app. for rev. pending* (\"*DIRECTV*\"); *EchoStar
    Communications Corp.* v. *Comcast Corp.*, 14 FCC Rcd. 2089 (1999)*,
    app. for rev. pending* (\"*EchoStar*\").

[^42]: ^?^RCN Complaint at 21.

[^43]: ^?^RCN Complaint at 14; MST Complaint at 8.

[^44]: ^?^*Id.*

[^45]: ^?^RCN Complaint at 24; RCN Reply at 10. While MST asserts the
    same general argument, it does not elaborate on its reasoning. MST
    Complaint at 10.

[^46]: ^?^RCN Reply at 10-11.

[^47]: ^?^RCN Reply at 10-11; MST Complaint at 10.

[^48]: ^?^47 U.S.C. § 548(c)(2)(D), 47 C.F.R. §§ 76.1002(c)(4), (5).

[^49]: ^?^RCN Complaint at 26-27; MST Complaint at 11.

[^50]: ^?^Defendants\' Answer (RCN) at 12-13; Defendants\' Answer (RCN)
    at 12-13.

[^51]: ^?^*Id.*

[^52]: ^?^Defendants\' Answer (RCN) at 16-17; Defendants\' Answer (MST)
    at 15-16. Defendants maintain that the program access provisions
    adopted by the Senate extended to terrestrially-delivered
    programming services, while the House bill, which was ultimately
    enacted, applied only to satellite-delivered programming services.

[^53]: ^?^Defendants\' Answer (RCN) at 20; Defendants\' Answer (MST) at
    19, n. 54.

[^54]: ^?^*Id.* (citing *Green v. Block Laundry Machine Co.*, 490 U.S.
    504 (1989); *Crawford Fitting Co. v. J.T. Gibbons, Inc.*, 499 U.S.
    437 (1991*).*

[^55]: ^?^Defendants\' Answer (RCN) at 17; Defendants\' Answer (MST) at
    16.

[^56]: ^?^Defendants\' Answer (RCN) at 18; Defendants\' Answer (MST) at
    17.

[^57]: ^?^Defendants\' Answer (RCN) at 19; Defendants\' Answer (MST) at
    18.

[^58]: ^?^*Id.*

[^59]: ^?^Defendants\' Answer (RCN) at 23; Defendants\' Answer (MST) at
    20.

[^60]: ^?^Defendants\' Answer (RCN) at 24; Defendants\' Answer (MST) at
    21.

[^61]: ^?^Defendants\' Answer (RCN) at 25-26; Defendants\' Answer (MST)
    at 22-23.

[^62]: ^?^Defendants\' Answer (RCN) at 25; Defendants\' Answer (MST) at
    22.

[^63]: ^?^*Id.*

[^64]: ^?^Defendants\' Answer (RCN) at 30; Defendants\' Answer (MST) at
    27.

[^65]: ^?^Defendants\' Answer (RCN) at 31; Defendants\' Answer (MST) at
    29.

[^66]: ^?^*Id.*

[^67]: ^?^Defendants\' Answer (RCN) at 32; Defendants\' Answer (MST) at
    29.

[^68]: ^?^Defendants\' Answer (RCN) at 33; Defendants\' Answer (MST) at
    30.

[^69]: ^?^Defendants\' Answer (RCN) at 34; Defendants\' Answer (MST) at
    31.

[^70]: ^?^Defendants\' Answer (RCN) at 35-36; Defendants\' Answer (MST)
    at 32-33.

[^71]: ^?^RCN Reply at 18-19.

[^72]: ^?^*Id.* at 18.

[^73]: ^?^Defendants\' Answer (RCN) at 41; Defendants\' Answer (MST) at
    37.

[^74]: ^?^Communications Act § 628(c)(2)(B), 47 U.S.C. § 548 (c)(2)(B).

[^75]: ^?^In its reply, RCN argues that if the overflow games
    transmitted from distant venues are delivered *via* satellite to
    Defendants\' headend, these \"away\" games are covered by the
    express terms of Section 628. RCN Reply at 11. Because RCN did not
    plead sufficient facts to support this argument and raises it in an
    untimely manner on reply, we will not consider the argument in these
    proceedings.

[^76]: ^?^*See Implementation of Sections 12 and 19 of the Cable
    Television Consumer Protection and Competition Act of 1992: Petition
    for Rulemaking of Ameritech New Media, Inc.*, Report and Order, 13
    FCC Rcd. 15,822, 15,856 (1998). In this Report and Order, the
    Commission stated:

    The record developed in this proceeding fails to establish that the
    conduct complained of, *i.e*., moving the transmission of
    programming from satellite to terrestrial delivery to avoid the
    program access rules, is significant and causing demonstrative
    competitive harm at this time. The Commission has received only two
    complaints against the same vertically-integrated programmer related
    to moving the transmission of programming from satellite to
    terrestrial delivery to avoid the program access rules. Where the
    record fails to indicate a significant competitive problem, we are
    reluctant to promulgate general rules prohibiting activity
    particularly where reasonable issues are raised regarding the scope
    of the statutory language. In circumstances where anti-competitive
    harm has not been demonstrated, we perceive no reason to impose
    detailed rules on the movement of programming from satellite
    delivery to terrestrial delivery that would unnecessarily inject the
    Commission into the day-to-day business decisions of
    vertically-integrated programmers. While the record does not
    indicate a significant anti-competitive impact necessitating
    Commission action at this time, we believe that the issue of
    terrestrial distribution of programming could eventually have
    substantial impact on the ability of alternative MVPDs to compete in
    the video marketplace. We note that Congress is considering
    legislation which, if enacted, would introduce important changes to
    the program access provisions, including clarification of the
    Commission\'s jurisdiction over terrestrially-delivered programming.
    The Commission will continue to monitor this issue and its impact on
    competition in the video marketplace.

    *Id.*

[^77]: ^?^According to Defendants, over 600 games telecast in the New
    York area between October 1998 and October 1999 will be available to
    Complainants. Defendants\' Answer (RCN) at 27, n. 83; Defendants\'
    Answer (MST) at 24, n. 73. RCN asserts that between January and
    April 1999, it was denied access to 26 overflow games as a result of
    movement of this programming. RCN Complaint at 7.

[^78]: ^?^Defendants stated that terrestrial distribution of the
    MetroChannels would cost approximately \$205,000 per month, as
    compared to between \$800,000 and \$1,500,000 per month for
    satellite delivery or approximately \$550,000 per month for delivery
    *via* a shared digital uplink facility. Defendants\' Answer (RCN),
    Exh. 1 at ¶12; Defendants\' Answer (MST), Exh. 1 at ¶12.

[^79]: ^?^ 47 U.S.C. § 548 (b).

[^80]: ^?^RCN Reply at 10-11; MST Complaint at 10.

[^81]: ^?^Because we do not find Defendants\' actions to be unfair or
    deceptive, we need not address whether such actions had the purpose
    or effect of hindering significantly or preventing an MVPD from
    providing satellite cable programming to subscribers or consumers.

[^82]: ^?^47 U.S.C. § 548(c)(2)(D); 47 C.F.R. § 76.1002(c)(4), (5).

[^83]: ^?^47 U.S.C. § 548(c)(2)(D).

[^84]: ^?^47 U.S.C. § 605(d)(1)(emphasis added).

[^85]: ^?^*See* H.R. Conf. Rep. No. 862, 102d Cong., 2d Sess. at 91-3
    (1993).

[^86]: ^?^*DIRECTV*, 13 FCC Rcd at 21,834 (footnote omitted);
    *EchoStar*, 14 FCC Rcd at 2099 (footnote omitted).

[^87]: ^?^47 C.F.R. § 76.1003(g).