**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | MB Docket No. 07-29          |
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| Implementation of the Cable      | ) | MB Docket No. 07-198         |
| Television Consumer              | * |                              |
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| Protection and Competition Act   |   |                              |
| of 1992                          | * |                              |
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| Development of Competition and   | ) |                              |
| Diversity                        | * |                              |
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| in Video Programming             |   |                              |
| Distribution:                    | * |                              |
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| Section 628(c)(5) of the         | ) |                              |
| Communications Act:              | * |                              |
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| Sunset of Exclusive Contract     |   |                              |
| Prohibition                      | * |                              |
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| Review of the Commission's       | ) |                              |
| Program Access Rules and         | * |                              |
| Examination of Programming Tying | * |                              |
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+----------------------------------+---+------------------------------+

**REPORT AND ORDER AND**

**NOTICE OF PROPOSED RULEMAKING**

**Adopted: September 11, 2007** **Released: October 1, 2007**

**Comment Date: 30 days after date of publication in the Federal
Register**

**Reply Comment Date: 45 days after date of publication in the Federal
Register**

By the Commission: Chairman Martin and Commissioners Adelstein, Tate and
McDowell issuing separate statements; Commissioner Copps approving in
part, concurring in part and issuing a statement

Table of Contents

Heading Paragraph \#

I. INTRODUCTION AND EXECUTIVE SUMMARY 1

II\. BACKGROUND 3

A. Exclusive Contract Prohibition 3

B. Program Access Complaint Procedures 8

III\. DISCUSSION 12

A. Exclusive Contract Prohibition 12

1\. Standard of Review 13

2\. Status of the MVPD Market: 2002-2007 16

3\. Ability and Incentive 29

a\. Ability 30

b\. Incentive 43

c\. Impact on Programming 64

4\. Scope of Exclusive Contract Prohibition 67

a\. Narrowing the Prohibition 68

\(i\) Narrowing Based on Status of Programming Network 68

\(ii\) Narrowing Based on Status of Cable Operator 70

\(iii\) Narrowing Based on Status of Competitive MVPD 73

b\. Expanding the Prohibition 75

\(i\) Expanding the Prohibition to Non-Cable-Affiliated Programming 75

\(ii\) Expanding the Prohibition to Terrestrially Delivered Programming
75

5\. Length of New Term 79

6\. Other Programming Issues 82

B. Modification of Program Access Complaint Procedures 83

1\. Pleading Cycle 86

2\. Discovery 91

3\. Time Frame for Resolving Program Access Complaints 104

4\. Arbitration 109

IV\. NOTICE OF PROPOSED RULEMAKING 114

A. Procedure for Shortening Term of Extension of Exclusive Contract
Prohibition 114

B. Extending Program Access Rules to Terrestrially Delivered
Cable-Affiliated Programming 114

C. Expanding the Exclusive Contract Prohibition to Non-Cable-Affiliated
Programming 118

D. Tying of Desired Programming with Undesired Programming 119

E. Program Access Concerns Raised by Small and Rural MVPDs 133

F. Modification of Program Access Complaint Procedures 134

V. PROCEDURAL MATTERS 138

A. Filing Requirements 138

B. Initial and Final Regulatory Flexibility Analysis 143

C. Paperwork Reduction Act Analysis 145

D. Congressional Review Act 151

VI\. ORDERING CLAUSES 152

APPENDIX A -- List of Commenters

APPENDIX B -- Response to Cablevision Regarding Analysis in *Adelphia
Order*

APPENDIX C -- Impact of Clustering on Withholding Strategy and Analysis
of Profitability of Withholding Strategy

APPENDIX D -- Revised Rules

APPENDIX E -- Standard Protective Order and Declaration for Use in
Section 628 Program Access Proceedings

APPENDIX F -- Initial Regulatory Flexibility Analysis

APPENDIX G -- Final Regulatory Flexibility Analysis

# INTRODUCTION AND EXECUTIVE SUMMARY 

1.  In areas served by a cable operator, Section 628(c)(2)(D) of the
    Communications Act of 1934, as amended ("Communications Act")
    generally prohibits exclusive contracts for satellite cable
    programming or satellite broadcast programming between vertically
    integrated programming vendors and cable operators (the "exclusive
    contract prohibition").[^1] In this *Order*, we find that the
    exclusive contract prohibition continues to be necessary to preserve
    and protect competition and diversity in the distribution of video
    programming, and accordingly, retain it again for five years, until
    October 5, 2012. In the *Order*, we decline to narrow the scope of
    the exclusive contract prohibition based on the popularity of the
    programming network, based on the competitive circumstances in
    individual geographic areas served by a cable operator, or by
    precluding certain competitive multichannel video programming
    distributors ("MVPDs")[^2] from benefiting from the prohibition. We
    also decline to expand the exclusive contract prohibition to apply
    to non-cable-affiliated programming, and we again conclude that
    terrestrially delivered programming is beyond the scope of the
    exclusive contract prohibition in Section 628(c)(2)(D). In the
    *Notice of Proposed Rulemaking* ("*NPRM*"), we seek comment on
    revisions to the Commission's program access and retransmission
    consent rules and whether it may be appropriate to preclude the
    practice of programmers to tie desired programming with undesired
    programming. First, the Commission seeks comment on whether it can
    establish a procedure that would shorten the term of the five-year
    extension of the exclusive contract prohibition if, after two years
    (*i.e*., October 5, 2009) a cable operator can show competition from
    new entrant MVPDs has reached a certain penetration level in a
    Designated Market Area. Second, the *NPRM* seeks comment on whether
    it would be appropriate to extend the Commission's program access
    rules to all terrestrially delivered cable-affiliated programming
    pursuant to various provisions of the Communications Act. Third, we
    seek comment on whether to expand the exclusive contract prohibition
    to apply to non-cable-affiliated programming that is affiliated with
    a different MVPD, principally a Direct Broadcast Satellite ("DBS")
    provider. Fourth, given the problems associated with programming
    tying arrangements, the *NPRM* seeks comment on whether it may be
    appropriate for the Commission to preclude such arrangements.
    Accordingly, the *NPRM* (i) seeks comment on how retransmission
    consent negotiations are impacted when broadcasters tie carriage of
    their broadcast signals to carriage of other owned or affiliated
    broadcast stations in the same or a distant market or one or more
    affiliated non-broadcast networks; (ii) seeks comment on whether
    Section 628(b) requires satellite cable programmers to offer each of
    their programming services on a stand-alone basis to all MVPDs at
    reasonable rates, term, and conditions; and (iii) seeks comment on
    whether the Commission should require terrestrially delivered cable
    programming networks and programming networks affiliated with
    neither a cable operator nor a broadcaster to be offered on a
    stand-alone basis to all MVPDs at reasonable rates, term, and
    conditions. Fifth, the *NPRM* seeks comment on whether and how we
    should address additional program access concerns raised in this
    proceeding by small and rural MVPDs regarding allegedly onerous and
    unreasonable conditions imposed by some programmers for access to
    their content. In the *NPRM*, we also seek comment on whether to (i)
    establish a process whereby a program access complainant may seek a
    temporary stay of any proposed changes to its existing programming
    contract pending resolution of the complaint; and (ii) require
    parties to submit to the Commission, when requested, "final offer"
    proposals as part of the remedy phase of the complaint process.

2.  Further, we modify our procedures for resolving program access
    disputes by (i) codifying the requirements that a respondent in a
    program access complaint proceeding that expressly relies upon a
    document in asserting a defense include the document as part of its
    answer; (ii) finding that in the context of a complaint proceeding,
    it would be unreasonable for a respondent not to produce all the
    documents either requested by the complainant or ordered by the
    Commission, provided that such documents are in its control and
    relevant to the dispute; (iii) codifying the Commission's authority
    to issue default orders granting a complaint if the respondent fails
    to comply with discovery requests; and (iv) allowing parties to a
    program access complaint proceeding to voluntarily engage in
    alternative dispute resolution, including commercial arbitration,
    during which time Commission action on the complaint will be
    suspended. We also retain our goals of resolving program access
    complaints within five months from the submission of a complaint for
    denial of programming cases, and within nine months for all other
    program access complaints, such as price discrimination cases. We
    decline to (i) mandate electronic filings of pleadings at this time
    (but we note that parties currently may voluntarily submit
    electronic copies of their pleadings to staff via e-mail); (ii)
    adopt a more expedited pleading cycle for program access
    complaints; (iii) mandate weekly status conferences; (iv) shift
    resolution of program access complaints to the Enforcement Bureau;
    or (v) adopt mandatory arbitration.

# BACKGROUND

## Exclusive Contract Prohibition

3.  In enacting the program access provisions, adopted as part of the
    Cable Television Consumer Protection and Competition Act of 1992
    ("1992 Cable Act"), Congress intended to encourage entry into the
    MVPD market by existing or potential competitors to traditional
    cable systems by making available to those entities the programming
    necessary to enable them to become viable competitors.[^3] The 1992
    Cable Act and its legislative history[^4] reflect Congressional
    findings that increased horizontal concentration of cable operators,
    combined with extensive vertical integration,[^5] created an
    imbalance of power, both between cable operators and program vendors
    and between incumbent cable operators and their multichannel
    competitors.[^6] Congress concluded at that time that vertically
    integrated program suppliers had the incentive and ability to favor
    their affiliated cable operators over other MVPDs, such as other
    cable systems, home satellite dish ("HSD") distributors, direct
    broadcast satellite ("DBS") providers, satellite master antenna
    television ("SMATV") systems, and wireless cable operators.[^7]

4.  When the Commission promulgated regulations implementing the program
    access provisions of Section 628,[^8] it recognized that Congress
    placed a higher value on new competitive entry into the MVPD
    marketplace than on the continuation of exclusive distribution
    practices when such practices impede this entry.[^9] Congress
    absolutely prohibited exclusive contracts for satellite cable
    programming or satellite broadcast programming[^10] between
    vertically integrated programming vendors and cable operators in
    areas unserved by cable,[^11] and generally prohibited exclusive
    contracts within areas served by cable:

> with respect to distribution to persons in areas served by a cable
> operator, \[the Commission shall\] prohibit exclusive contracts for
> satellite cable programming or satellite broadcast programming between
> a cable operator and a satellite cable programming vendor in which a
> cable operator has an attributable interest or a satellite broadcast
> programming vendor in which a cable operator has an attributable
> interest, unless the Commission determines . . . that such contract is
> in the public interest.[^12]

Congress recognized that, in areas served by cable, some exclusive
contracts may serve the public interest by providing offsetting benefits
to the video programming market or assisting in the development of
competition among MVPDs.[^13] Any cable operator, satellite cable
programming vendor in which a cable operator has an attributable
interest, or satellite broadcast programming vendor in which a cable
operator has an attributable interest seeking to enforce or enter into
an exclusive contract in an area served by a cable operator must submit
a "petition for exclusivity" to the Commission for approval.[^14]

5.  Congress directed that the exclusive contract prohibition would
    cease to be effective on October 5, 2002, unless the Commission
    found in a proceeding conducted between October 2001 and October
    2002 that the prohibition "continues to be necessary to preserve and
    protect competition and diversity in the distribution of video
    programming."[^15] In October 2001, the Commission sought comment on
    this issue,[^16] and ultimately concluded that the exclusive
    contract prohibition did continue to be "necessary."[^17] The
    Commission therefore extended the prohibition for five years
    (*i.e*., through October 5, 2007).[^18] The Commission explained
    that the prohibition remained necessary because, based on
    marketplace conditions at the time, cable-affiliated programmers
    retained the ability and incentive to withhold programming from
    unaffiliated MVPDs such that competition and diversity in the
    distribution of video programming would be impaired without the
    rule:[^19]

    \[t\]he competitive landscape of the market for the distribution of
    multichannel video programming has changed for the better
    since 1992. The number of MVPDs that compete with cable and the
    number of subscribers served by those MVPDs have increased
    significantly. We find, however, that the concern on which Congress
    based the program access provisions -- that in the absence of
    regulation, vertically integrated programmers have the ability and
    incentive to favor affiliated cable operators over nonaffiliated
    cable operators and programming distributors using other
    technologies such that competition and diversity in the distribution
    of video programming would not be preserved and protected --
    persists in the current marketplace.[^20]

6.  When it extended the exclusive contract prohibition, the Commission
    also resolved a number of other critical issues raised by commenters
    with respect to Section 628(c)(5), such as (i) the definition of
    "necessary" as used in Section 628(c)(5);[^21] (ii) whether the
    Commission can use its predictive judgment in assessing if the
    exclusive contract prohibition continues to be necessary;[^22] (iii)
    whether extending the exclusive contract prohibition withstands an
    intermediate scrutiny test pursuant to First Amendment
    jurisprudence;[^23] (iv) whether there exists a class of "must have"
    programming for which there are no readily available substitutes
    and, without access to which, competitive MVPDs would be limited in
    their ability to compete in the video distribution market;[^24] (v)
    the impact of increased clustering and consolidation of cable
    systems on competition in the video distribution marketplace and the
    necessity of the exclusive contract prohibition;[^25] (vi) the
    relevance of antitrust laws to the Commission's assessment of
    whether to permit the exclusive contract prohibition to
    sunset;[^26] (vii) the relevance of the impact of the exclusive
    contract prohibition on incentives to create
    programming;[^27] (viii) whether terrestrially delivered programming
    falls within the exclusive contract prohibition in Section
    628(c)(2)(D);[^28] (ix) whether treating all satellite cable
    programming and satellite broadcast programming uniformly for
    purposes of the exclusive contract prohibition is consistent with
    the text and intent of Section 628(c)(2)(D);[^29] and (x) whether
    other provisions of the Communications Act, such as Sections 628(b),
    628(c)(2)(A), and 628(c)(2)(B), are adequate substitutes for the
    protection afforded under Section 628(c)(2)(D).[^30] No party sought
    reconsideration or other review of the Commission's decision to
    extend the exclusive contract prohibition or its conclusions on
    these other critical issues.

7.  The Commission further provided that, during the year before the
    expiration of the five-year extension of the exclusive contract
    prohibition, it would conduct another review to determine whether
    the exclusive contract prohibition continues to be necessary to
    preserve and protect competition and diversity in the distribution
    of video programming.[^31] We issued the *Notice* in February 2007
    to initiate this review.[^32] Comments pertaining to the exclusive
    contract prohibition were filed by large incumbent cable
    operators,[^33] new and established competitors to these large
    incumbent cable operators,[^34] consumer groups,[^35] and other
    individuals and entities interested in the exclusive contract
    prohibition.[^36]

## Program Access Complaint Procedures

8.  Section 628 of the Communications Act prohibits unfair methods of
    competition or unfair or deceptive practices that hinder or prevent
    any MVPD from providing satellite-delivered programming to
    consumers.[^37] Section 628(b) provides:

> 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.[^38]

Section 628, among other things, protects access to vertically
integrated cable programming services by competing MVPDs in order to
increase competition and diversity in the MVPD market and foster the
development of competition to traditional cable systems.[^39]

9.  Parties aggrieved by conduct alleged to violate the program access
    provisions have the right to commence an adjudicatory proceeding
    before the Commission.[^40] As instructed by Section 628(c), the
    Commission promulgated regulations implementing a program access
    complaint process.[^41] The Commission determined that a streamlined
    program access complaint process, with limited discovery procedures
    and adjudication based on a complaint, answer, and reply, would
    provide the most flexible and expeditious means of enforcing the
    anti-discrimination program access provisions.[^42] The Commission
    further addressed program access complaint process issues in
    response to a petition for rulemaking filed by Ameritech New Media,
    Inc.[^43] The Commission resolved these and other issues in the
    *1998 Program Access Order*.[^44]

10. In the *1998 Program Access Order*, the Commission affirmed its
    authority to impose damages on a case-by-case basis for program
    access violations and adopted guidelines for resolving program
    access disputes so that denial of programming cases, such as
    unreasonable refusal to sell, petitions for exclusivity, and
    exclusivity complaints, are resolved within five months of the
    submission of the complaint to the Commission and all other program
    access complaints, including price discrimination cases, are
    resolved within nine months of the submission of the complaint to
    the Commission. The Commission subsequently amended the program
    access rules as part of an overhaul of the Commission's pleading and
    complaint rules.[^45]

11. In the *Notice*, in addition to seeking comment on extension of the
    exclusive contract prohibition, we sought comment on whether and how
    our procedures for resolving program access disputes under Section
    628 should be modified.[^46] We sought comment on the costs
    associated with the complaint process and whether the pre-filing
    notice, pleading requirements, evidentiary standards, timing, and
    potential remedies are appropriate and effective. We also sought
    comment on whether specific time limits on the Commission, the
    parties, or others would promote a speedy and just resolution of
    program access complaints. We asked whether the program access
    complaint rules and procedures, including those governing discovery
    and protection of confidential information, are adequate. We also
    asked whether we should adopt alternative procedures or remedies
    such as mandatory standstill agreements or arbitration, as the
    Commission has done in recent mergers.[^47]

#  DISCUSSION

## Exclusive Contract Prohibition

12. Our analysis of whether the exclusive contract prohibition
    "continues to be necessary to preserve and protect competition and
    diversity in the distribution of video programming" proceeds in five
    parts. Based on this five-part analysis, we conclude as explained
    below that the exclusive contract prohibition continues to be
    necessary to preserve and protect competition and diversity in the
    distribution of video programming and, accordingly, retain it again
    for five years. First, we review the standard we must apply in
    determining whether to allow the exclusive contract prohibition to
    continue. Second, we examine the changes that have occurred in the
    video programming and distribution markets since 2002 when we last
    decided that the exclusive contract prohibition continued to be
    necessary to preserve and protect competition. Third, in light of
    the changes that have occurred in the programming and distribution
    market since 2002, we assess whether vertically integrated program
    suppliers today retain both the ability and incentive to favor their
    affiliated cable operators over nonaffiliated MVPDs such that
    competition and diversity in the distribution of video programming
    would not be preserved and protected absent the rule. Fourth, we
    assess proposals presented by commenters to narrow the scope of the
    exclusive contract prohibition and to apply an exclusive contract
    prohibition to programming networks affiliated with non-cable MVPDs
    and to unaffiliated programming networks. Fifth, we consider the
    appropriate length of time for an extension of the exclusive
    contract prohibition. We also briefly address other issues raised by
    some small and rural MVPDs regarding program access issues other
    than the exclusive contract prohibition.

### Standard of Review

13. Various cable MSOs repeat arguments made in response to the *2001
    Sunset NPRM* that the Commission should construe the term
    "necessary" as used in Section 628(c)(5) as requiring the exclusive
    contract prohibition to be "indispensable" or "essential" to prevent
    harm to competition.[^48] In the *2002 Extension Order*, the
    Commission explained that the term "necessary" has been interpreted
    differently depending on the statutory context.[^49] In some cases,
    courts have interpreted the term to mean "useful," "convenient," or
    "appropriate"[^50] while in other contexts courts have interpreted
    the term in a more restrictive sense to mean "indispensable" or
    "essential."[^51] Consistent with judicial precedent, the Commission
    construed the term "necessary" in its statutory context[^52] and
    determined that the exclusive contract prohibition continues to be
    "necessary" if, in the absence of the prohibition, competition and
    diversity in the distribution of video programming would not be
    preserved and protected.[^53] We find no basis to revisit the
    conclusions reached in the *2002 Extension Order*, which, we note,
    were never challenged. We continue to believe that Section
    628(c)(5), when construed in its statutory context, requires the
    exclusive contract prohibition to be extended if we find that, in
    the absence of the prohibition, competition and diversity in the
    distribution of video programming would not be preserved and
    protected.

14. We disagree with Cablevision to the extent it argues that the
    Commission must rely exclusively on specific factual evidence and
    cannot use its predictive judgment in assessing whether the
    exclusive contract prohibition continues to be "necessary" to
    preserve and protect competition and diversity in the distribution
    of video programming.[^54] Rather, as the Commission concluded in
    the *2002 Extension Order*, while specific factual evidence is a
    necessary part of our analysis, it may not be sufficient in order
    for us to make a reasoned determination. Indeed, because the
    exclusive contract prohibition has been in effect since 1992, it is
    difficult to obtain specific factual evidence of the impact on
    competition in the video distribution market if the prohibition were
    lifted.[^55] Accordingly, we continue to believe that we can also
    rely on economic theory and predictive judgment in addition to
    specific factual evidence in reaching our decision concerning the
    continued need for the exclusive contract prohibition.

15. We find that there is no statutory bar to a second extension of the
    exclusive contract prohibition. Cablevision claims that Section
    628(c)(5) requires the Commission to conduct its review of the
    exclusive contract prohibition only once.[^56] There is nothing in
    the statute, however, that limits the Commission to a single review.
    Nor does Section 628(c)(5) specify a time period for how long the
    prohibition must continue in the event the Commission finds a
    continuing need for the prohibition. Rather, it was left to the
    Commission's discretion to prescribe the period of any such
    extension.[^57] Establishing a fixed date for sunset of the
    prohibition without conducting a further proceeding to determine
    whether the prohibition is still "necessary to preserve and protect
    competition and diversity in the distribution of video programming"
    would not be consistent with congressional intent.[^58] The
    Commission thus concluded in the *2002 Extension Order* that the
    adoption of a five-year extension was conditioned on an additional
    review during the last year of this extension.[^59] We note that
    neither Cablevision nor any other commenter challenged the
    Commission's decision in the *2002 Extension Order* to conduct a
    further review of the exclusive contract prohibition.

### Status of the MVPD Market: 2002-2007

16. We examine below the changes that have occurred in the programming
    and distribution markets since 2002 when the Commission last
    reviewed whether the exclusive contract prohibition continued to be
    necessary to preserve and protect competition. As discussed below,
    the markets for both programming and distribution reflect some
    pro-competitive trends since 2002: (i) an increase in programming
    networks; (ii) a decrease in the percentage of popular national and
    regional networks that are affiliated with cable operators;
    and (iii) an increase in the market penetration of MVPDs that
    compete with incumbent cable operators.[^60] As discussed in Section
    III.A.3 below, however, we conclude that, even with these
    developments in the programming and distribution markets, the
    concerns upon which Congress based the program access provisions
    persist in the marketplace, and thus we find the exclusive contract
    prohibition continues to be necessary to preserve and protect
    competition and diversity in the distribution of video programming.

17. *Satellite-Delivered National Programming Networks*. The number of
    satellite-delivered national programming networks available to MVPDs
    has increased by 237 since 2002, from 294 networks[^61] to 531
    networks.[^62] This amounts to an eighty percent increase in
    satellite-delivered national programming networks available to
    MVPDs.

18. *Vertically Integrated Satellite-Delivered National Programming
    Networks*. The number of satellite-delivered national programming
    networks that are vertically integrated with cable operators has
    increased by twelve since 2002, from 104 networks[^63] to 116
    networks.[^64] The percentage of all satellite-delivered national
    programming networks that are vertically integrated with cable
    operators has declined since 2002, from 35 percent[^65] to 22
    percent.[^66] EchoStar argues that, if international and non-English
    programming is excluded, then the percentage of all
    satellite-delivered national programming networks that are
    vertically integrated with cable operators has only declined from 36
    percent to 34 percent since 2002.[^67] Comcast contends that, if the
    vertically integrated iN DEMAND pay-per-view network is considered
    as a single network rather than sixty separate networks, then the
    percentage of all satellite-delivered national programming networks
    that are vertically integrated with cable operators is as low as
    13.5 percent.[^68]

19. The amount of the most popular programming that is vertically
    integrated with cable operators has declined slightly since 2002.
    While nine of the Top 20 (45 percent) satellite-delivered national
    programming networks (as ranked by subscribership) were vertically
    integrated in 2002 when the Commission last reviewed the exclusive
    contract prohibition,[^69] commenters state that this number has
    decreased to seven (35 percent): The Discovery Channel, CNN, TNT,
    TBS, TLC, Headline News, and Cartoon Network.[^70] As discussed
    below, we find that this number has decreased to six.[^71] EchoStar
    notes that four cable-affiliated networks are among the Top 10
    networks as ranked by subscribership, the same number as in
    2002.[^72] AT&T notes further that of the 91 non-premium cable
    programming networks with at least 20 million subscribers, 33
    networks (or 36 percent) are affiliated with cable operators.[^73]
    While seven of the Top 20 (35 percent) satellite-delivered national
    programming networks (as ranked by prime time ratings) were
    vertically integrated in 2002,[^74] commenters state that this
    number has decreased to four of the Top 20 (20 percent): TNT, TBS,
    The Discovery Channel, and Cartoon Network.[^75] As discussed below,
    we find that this number has remained the same at seven.[^76]
    Cablevision states that (i) less than one-third of the forty
    most-popular national programming networks as ranked by prime-time
    ratings are affiliated with cable operators; and (ii) only three
    cable-affiliated networks have an average prime-time rating above
    1.0.[^77] AT&T notes that (i) TNT has remained the number one
    prime-time rated cable network for every year since 2002;[^78]
    and (ii) as ranked by all-day ratings, five cable-affiliated
    networks are among the Top 20, including two of the top three: TNT
    (ranked number two); Cartoon Network (ranked number three); TBS
    (ranked number seven); CNN (ranked number nineteen); and The
    Discovery Channel (ranked number twenty).[^79]

20. Only the largest cable MSOs tend to own vertically integrated
    programming.[^80] In the *2002 Extension Order*, the Commission
    noted that all vertically integrated programming was attributable to
    five cable operators, four of which were among the seven largest
    cable MSOs.[^81] Today, all vertically integrated programming is
    attributable to five cable operators, all of which are among the six
    largest cable MSOs: Comcast, Time Warner, Cox, Cablevision, and
    Advance/Newhouse.[^82]

21. *Regional Programming Networks*. The number of regional programming
    networks available to MVPDs has increased by sixteen since 2002,
    from 80 networks[^83] to 96 networks.[^84] This amounts to a 20
    percent increase since 2002 in regional programming networks
    available to MVPDs. The number of regional sports networks ("RSNs")
    has increased by approximately 36 percent since 2002, from 28
    networks[^85] to 39 networks, by some estimates.[^86]

22. *Vertically Integrated Regional Programming Networks*. The number of
    regional programming networks that are vertically integrated with
    cable operators has increased by five since 2002, from 39
    networks[^87] to 44 networks.[^88] The percentage of all regional
    programming networks that are vertically integrated with cable
    operators, however, has declined slightly since 2002, from 49
    percent[^89] to 46 percent.[^90] The number of RSNs that are
    vertically integrated with cable operators has decreased by six
    since 2002, from 24 networks[^91] to 18 networks, by some
    estimates.[^92] The percentage of all RSNs that are vertically
    integrated has declined since 2002, from 86 percent[^93] to
    approximately 46 percent.[^94]

23. *MVPD Market*. Since the Commission last examined the exclusive
    contract prohibition in 2002, the percentage of MVPD subscribers
    receiving their video programming from a cable operator has declined
    from 78 percent[^95] to 67 percent, by some estimates.[^96] The
    number of cable subscribers has declined by 3.4 million since 2002,
    from 69 million[^97] to 65.4 million.[^98] During this same period,
    the percentage of MVPD subscribers receiving their video programming
    from a DBS operator has increased from 18 percent[^99] to over 30
    percent, by some estimates.[^100] The number of DBS subscribers has
    increased by 11.6 million since 2002, from 18 million[^101] to 29.6
    million, by some estimates.[^102]

24. A significant development since 2002 is the emergence of video
    services offered by telephone companies, including AT&T, Qwest, and
    Verizon. As of the end of the second quarter of 2007, AT&T's U-Verse
    fiber-based video and Internet service passed over 4 million
    households.[^103] AT&T also recently announced that its U-Verse
    video service has more than 100,000 customers.[^104] Qwest has
    twenty-one cable franchises and provides nearly 60,000 subscribers
    with multichannel video service in Arizona, Colorado, Nebraska, and
    Utah.[^105] Verizon, which introduced its fiber-based FiOS TV
    service in September 2005, had 515,000 video subscribers at the end
    of the second quarter of 2007.[^106] Verizon's FiOS TV was available
    for sale to nearly 3.9 million premises in nearly 500 communities in
    12 states as of the end of the second quarter of 2007.[^107]  Other
    wireline Broadband Service Providers ("BSPs") also offer video
    services in competition with cable operators, including RCN,
    WideOpenWest, Knology, and Grande.[^108] Some wireline entrants cite
    a 2004 Government Accountability Office ("GAO") Report which
    concludes that wireline video entry provides more price discipline
    to cable than DBS and is more likely to cause cable operators to
    enhance their own services and to improve customer service.[^109] In
    response, cable MSOs argue that wireline entry does not have a
    greater impact on cable prices than DBS entry.[^110] Despite the
    significant investments made in competitive wireline networks, AT&T
    notes NCTA's estimate that wireline entrants have no more than 1.9
    percent of all MVPD subscribers.[^111]

25. The cable industry also cites other potential sources of video
    competition, such as SMATV systems,[^112] providers of video on the
    Internet (such as YouTube, Google, and Akimbo),[^113] over-the-air
    broadcast television,[^114] DVDs and videotape purchases and
    rentals,[^115] municipal and non-municipal utilities,[^116] and
    providers of mobile video services.[^117] Comcast also argues that
    in every community, consumers can choose from a minimum of three
    MVPDs, and states that in many communities a fourth or fifth MVPD is
    available or will be soon.[^118] Cablevision states that DIRECTV and
    EchoStar have at least double the number of subscribers of every
    cable MSO, with the exception of Time Warner and Comcast.[^119]
    Comcast asserts that the competition that exists today far exceeds
    that which existed three years ago when the Commission concluded
    that "\[T\]he vast majority of Americans enjoy more choice, more
    programming and more services than any time in history."[^120]

26. Commenters in favor of extending the prohibition state that the
    figures cited by the cable industry are misleading. EchoStar claims
    that national DBS penetration figures obscure the extent of
    competition on a local or regional basis where DBS penetration is
    much lower than the national average.[^121] While the number of DBS
    subscribers has increased by 11.6 million since the *2002 Extension
    Order*, CA2C notes that cable subscribership during the same period
    decreased by less than one million, demonstrating that cable
    operators have maintained their position in the market.[^122] Some
    competitive MVPDs argue that the continued ability of cable
    operators to raise prices in excess of inflation demonstrates the
    lack of competition in the video marketplace.[^123] Competitive
    MVPDs also assert that barriers in the MVPD market still persist, as
    demonstrated by the Commission's efforts to promote greater
    competition.[^124] CA2C notes that the Commission in its decision on
    cable franchising reform found that in the vast majority of
    communities around the country, "cable competition simply does not
    exist."[^125] Some competitive MVPDs disagree with the assertion by
    the cable industry that mobile video, Internet video, and DVDs are
    substitutes for cable television.[^126] Moreover, competitive MVPDs
    state that only 2.9 percent of MVPD subscribers receive service from
    an alternative provider to cable or DBS.[^127]

27. *Consolidation of the Cable Industry*. The cable industry has
    continued to consolidate since 2002. During this period, the
    percentage of MVPD subscribers receiving their video programming
    from one of the four largest cable MSOs (Comcast, Time Warner, Cox,
    and Charter) has increased from 48 percent[^128] to between 53 and
    60 percent, by some estimates, after taking into account the recent
    acquisition by Comcast and Time Warner of cable systems formerly
    owned by Adelphia.[^129] Moreover, the percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest *vertically integrated* cable MSOs (Comcast, Time Warner,
    Cox, and Cablevision) has increased significantly since 2002, from
    34 percent[^130] to between 54 and 56.75 percent, by some
    estimates.[^131] Thus, as EchoStar notes, while the market share of
    small-to-medium sized, non-vertically integrated cable operators has
    declined, the market share of the large vertically integrated cable
    operators has increased since 2002.[^132] Verizon notes that, in
    2002, only three of the largest six cable operators owned satellite
    programming networks, whereas today five of the largest six cable
    operators own satellite programming networks.[^133]

28. *Clustering of Cable Systems*. The amount of regional clustering of
    cable systems has remained significant.[^134] The percentage of
    cable subscribers that are served by systems that are part of
    regional clusters has increased since 2002, from 80 percent[^135] to
    as much as 85 to 90 percent, by some estimates, taking into account
    the acquisition by Comcast and Time Warner of cable systems formerly
    owned by Adelphia.[^136]

### Ability and Incentive

29. Our analysis of whether the exclusive contract prohibition continues
    to be necessary requires us to assess whether, in the absence of the
    exclusive contract prohibition, vertically integrated programmers
    would have the ability and incentive to favor their affiliated cable
    operators over nonaffiliated competitive MVPDs and, if so, whether
    such behavior would result in a failure to protect and preserve
    competition and diversity in the distribution of video
    programming.[^137] As discussed below, we conclude that there are no
    good substitutes for some satellite-delivered vertically integrated
    programming and that such programming therefore remains necessary
    for viable competition in the video distribution market. Based on
    this finding, we conclude that vertically integrated programmers
    continue to have the ability to favor their affiliated cable
    operators over competitive MVPDs such that competition and diversity
    in the distribution of video programming would not be preserved and
    protected absent the rule. Although we find some trends in the
    markets for both video programming and video distribution since 2002
    that might decrease the incentive of vertically integrated
    programmers to withhold programming from competitive MVPDs, we also
    find some trends that increase their incentive to withhold
    programming, such as the increase in horizontal consolidation of the
    cable industry, the increase in cable clustering, and the recent
    emergence of new competitors. We also find specific factual evidence
    that, where the exclusive contract prohibition does not apply, such
    as in the case of terrestrially delivered programming, vertically
    integrated programmers have withheld and continue to withhold
    programming from competitive MVPDs. We thus conclude that vertically
    integrated programmers continue to have the incentive to favor their
    affiliated cable operators over competitive MVPDs. Accordingly, we
    conclude that the exclusive contract prohibition "continues to be
    necessary to preserve and protect competition and diversity in the
    distribution of video programming."[^138] We note, however, that
    Congress intended for the exclusive contract prohibition to sunset
    at a point when market conditions warrant. While we conclude herein
    that market developments since 2002 were not sufficient to allow us
    to lift the exclusive contract prohibition at this time, there
    nevertheless may come a point when these developments will be
    sufficient to allow the prohibition to sunset. We caution
    competitive MVPDs to take any steps they deem appropriate to prepare
    for the eventual sunset of the prohibition, including further
    investments in their own programming.

#### Ability

30. As discussed in this section, we conclude that satellite-delivered
    vertically integrated programming remains programming for which
    there are often no good substitutes and that such programming is
    necessary for viable competition in the video distribution market.
    In the *2002 Extension Order*, the Commission determined that the
    question of whether satellite-delivered vertically integrated
    programmers retain the ability to favor their affiliated cable
    operators over nonaffiliated MVPDs requires us to assess whether
    satellite-delivered vertically integrated programming remains
    programming that is necessary to the viability of competitive MVPDs
    and for which there are often no good substitutes.[^139] If we
    conclude that satellite-delivered vertically integrated programming
    remains necessary to maintain the competitiveness of MVPDs in the
    current market, then favoritism by satellite-delivered vertically
    integrated programmers of their affiliated cable operators over
    competitive MVPDs would impair competition and diversity in the
    distribution of video programming.[^140] In assessing the ability of
    satellite-delivered vertically integrated programmers to favor their
    affiliated cable operators to the detriment of competing MVPDs, we
    consider whether developments in the last five years have diminished
    the importance of satellite-delivered vertically integrated
    programming or have affected the ability of satellite-delivered
    vertically integrated programmers to favor their affiliated cable
    operators over other MVPDs.[^141]

31. Cable MSOs note that the number of satellite-delivered national
    programming networks available to MVPDs has increased from 294 in
    2002[^142] to 531 in 2005.[^143] While the number of vertically
    integrated satellite-delivered national programming networks has
    increased by twelve since 2002, cable MSOs note that the percentage
    of all satellite-delivered national programming networks that are
    vertically integrated has declined from 35 percent in 2002 to
    between 13.5 percent and 22 percent at present.[^144] Comcast notes
    that 57 percent of national programming networks were vertically
    integrated when the exclusive contract prohibition in the 1992 Cable
    Act was enacted.[^145] Cablevision argues that with over 500
    programming channels available and more than 80 percent of these
    channels unaffiliated with cable, it is implausible that competition
    would be harmed if competitive MVPDs were denied access to a
    cable-affiliated network.[^146]

32. Competitive MVPDs counter that the decrease in the percentage of
    satellite-delivered national programming networks that are
    vertically integrated is meaningless because it is attributable to
    an increase in the number of total programming networks available,
    most of which they contend have minimal subscriber bases and are
    targeted towards niche markets.[^147] The more salient fact,
    competitive MVPDs argue, is that cable MSOs still control essential
    "must have" programming and that access to this programming remains
    key to the ability of competitive MVPDs to compete in the video
    distribution market.[^148] They argue that it is not necessary for
    cable MSOs to control all essential programming to impact
    competition; rather, cable MSOs need only control certain
    programming that is "key to the decision by each major demographic
    group in choosing between alternate providers."[^149] Numerous
    competitive MVPDs contend that, without access to such programming,
    their ability to compete will be compromised.[^150]

33. With respect to regional programming, cable MSOs note that the
    number of regional programming networks, including RSNs, that are
    vertically integrated has declined since 2002.[^151] With respect to
    non-sports regional networks, Cablevision notes that DBS providers
    carry few, if any, of these networks even though they are
    satellite-delivered and therefore subject to the program access
    requirements, including the exclusive contract prohibition.[^152]
    Cablevision argues that this is consistent with the Commission's
    previous conclusion that the record in the *Adelphia* proceeding did
    not indicate that an MVPD's lack of access to regional non-sports
    programming would harm competition or consumers.[^153] With respect
    to RSNs, cable MSOs note that the number of vertically integrated
    RSNs has decreased from twenty-four in 2002 to seventeen in
    2005.[^154] Moreover, Cablevision asserts that there are numerous
    substitutes for sports programming, such as unaffiliated team-owned
    and league-owned sports networks, sports content that is available
    over the Internet, and sports programming available from nearly
    every major broadcast network.[^155] While DBS operators claim
    competitive harm from being unable to access the terrestrially
    delivered Comcast SportsNet Philadelphia, Cablevision notes that DBS
    market penetration in Philadelphia has in fact tripled from four
    percent in 2000 to twelve percent at the end of 2006.[^156]
    Moreover, Cablevision claims that DBS market penetration in
    Philadelphia is higher than in other metropolitan areas
    (Hartford-New Haven, Providence, and Springfield) and comparable to
    Boston and Baltimore.[^157] Cablevision also notes that the
    Commission concluded in the *Adelphia* proceeding that DIRECTV
    failed to demonstrate that lack of access to an RSN in San Diego had
    a statistically significant effect on its market penetration.[^158]

34. Competitive MVPDs counter that the ability of vertically integrated
    programmers to disadvantage unaffiliated competitors is particularly
    acute for regional programming -- particularly RSNs.[^159]
    Competitive MVPDs argue that RSNs are "must have" programming and
    that there are no readily acceptable substitutes for such
    programming.[^160] Competitive MVPDs cite the Commission's decision
    in the *Adelphia* proceeding that "programming provided by RSNs is
    unique because it is particularly desirable and cannot be
    duplicated."[^161] Competitive MVPDs note that DBS market
    penetration in Philadelphia and San Diego drops almost in half due
    to the lack of access to RSNs as compared to other similar markets
    where they have access to RSNs.[^162] In response to the argument of
    cable MSOs that there is sufficient non-cable-affiliated sports
    programming available, competitive MVPDs argue that, where one MVPD
    has access to the most popular local sports programming and a
    competing MVPD does not, the availability of other sports
    programming to the competing MVPD is largely irrelevant.[^163]

35. Cablevision disputes that there is any cable programming that can be
    considered "must have" and states that no commenter has provided
    empirical evidence to demonstrate that certain cable programming is
    "must have."[^164] Cablevision argues that every type of national
    programming network faces ample competition.[^165] Moreover,
    Cablevision notes that some competitive MVPDs do not carry certain
    RSNs despite their claims that such programming is "must
    have."[^166] In response, competitive MVPDs cite the Commission's
    economic analysis in the *Adelphia* proceeding where it concluded
    that exclusive access of cable operators to RSNs reduces the number
    of DBS subscribers.[^167] Cablevision states that the Commission's
    findings in the *Adelphia Order* were based on a flawed regression
    analysis, thus precluding the Commission from relying on that
    decision here.[^168]

36. Competitive MVPDs argue that access to vertically integrated
    programming is particularly critical for recent entrants in the
    video distribution market, such as telephone companies that have
    begun to enter the market since we last reviewed the exclusive
    contract prohibition.[^169] They argue that access to vertically
    integrated programming is as critical for these recent entrants as
    it was for DBS entrants in the early 1990s.[^170] Cable MSOs counter
    that one class of recent entrant -- telephone companies such as AT&T
    and Verizon \-- have far more resources than the cable MSOs and,
    therefore, they do not need government assistance to compete.[^171]
    Moreover, they assert that there is no indication that recent
    entrants are having trouble securing programming.[^172] Some
    competitive MVPDs argue that "must have" programming is essential to
    offering a viable video service and, in turn, the ability to offer a
    viable video service is "linked intrinsically" to broadband
    deployment.[^173] Accordingly, CA2C argues that extending the
    exclusive contract prohibition is supported by Section 706 of the
    Telecommunications Act of 1996, which directs the Commission to
    encourage broadband deployment by utilizing "measures that promote
    competition ... or other regulating methods that remove barriers to
    infrastructure investment."[^174]

37. *Discussion*. Despite some pro-competitive developments over the
    past five years, we find that access to vertically integrated
    programming continues to be necessary in order for competitive MVPDs
    to remain viable substitutes to the incumbent cable operator in the
    eyes of consumers. What is most significant to our analysis is not
    the percentage of total available programming that is vertically
    integrated with cable operators, but rather the popularity of the
    programming that is vertically integrated and how the inability of
    competitive MVPDs to access this programming will affect the
    preservation and protection of competition in the video distribution
    marketplace.[^175] While there has been a decrease since 2002 in the
    percentage of the most popular programming networks that are
    vertically integrated, we find that the four largest cable MSOs
    (Comcast, Time Warner, Cox, and Cablevision) still have an interest
    in six of the Top 20 satellite-delivered networks as ranked by
    subscribership,[^176] seven of the Top 20 satellite-delivered
    networks as ranked by prime time ratings,[^177] almost half of all
    RSNs,[^178] popular subscription premium networks, such as HBO and
    Cinemax,[^179] and video-on-demand ("VOD") networks, such as iN
    DEMAND.[^180] Moreover, as discussed in Section III.A.3.b
    below,[^181] the percentage of MVPD subscribers receiving their
    video programming from one of the four largest vertically integrated
    cable MSOs has increased from 34 percent[^182] to between 54 and
    56.75 percent.[^183] The record thus reflects that popular national
    programming networks, such as CNN, TNT, TBS, and The Discovery
    Channel, among many others, in addition to premium programming
    networks, RSNs, and VOD networks, are affiliated with the four
    largest vertically integrated cable MSOs and that such programming
    networks are demanded by MVPD subscribers. We thus find that
    cable-affiliated programming continues to represent some of the most
    popular and significant programming available today. As discussed in
    more detail below, the record shows that vertically integrated
    programming, if denied to cable's competitors, would adversely
    affect competition in the video distribution market.[^184]

38. We disagree with cable MSOs to the extent they argue that there is
    no programming that can be considered essential for viable
    competition and that all programming networks have one or more
    competitively equal substitutes.[^185] We recognize that there has
    been a net increase in the total amount of available programming
    networks and that there may be substitutes for some cable-affiliated
    programming networks.[^186] Nevertheless, there exists a continuum
    of vertically integrated programming, "ranging from services for
    which there may be substitutes (the absence of which from a rival
    MVPD's program lineup would have little impact), to those for which
    there are imperfect substitutes, to those for which there are no
    close substitutes at all (the absence of which from a rival MVPD's
    program lineup would have a substantial negative impact)."[^187] As
    we stated in the *2002 Extension Order*, "cable programming -- be it
    news, drama, sports, music, or children's programming -- is not akin
    to so many widgets."[^188] We further explained that, when an MVPD
    "loses access to a popular national news channel, there is little
    competitive solace that there is a music channel or children's
    programming channel to replace it. Even when there is another news
    channel available, an MVPD may not be made whole because viewers
    desire the programming and personalities packaged by the unavailable
    news channel. Moreover, even if an acceptable substitute is found,
    the competitive MVPD is still harmed because its competitor can
    likely offer to subscribers both the unavailable programming and its
    substitute."[^189] Cable MSOs do not provide sufficient evidence of
    adequate substitutes for popular cable-affiliated programming.[^190]
    We doubt, for example, that fans of one of the most popular cable
    programs, such as HBO's "The Sopranos," had their competitive MVPD
    been denied access to the cable-affiliated HBO network, would have
    regarded the original programming on other premium networks, such as
    Showtime, an adequate substitute for their favorite show. Despite
    the increase in available programming over the past five years, we
    find that cable operators still own popular programming for which
    there are no close substitutes.[^191] The availability of new,
    non-integrated networks does not mitigate the adverse impact on
    competition of a competitive MVPD's inability to access popular
    vertically integrated programming. The record reflects that numerous
    national programming networks, RSNs, premium programming networks,
    and VOD networks are cable-affiliated programming networks that are
    demanded by MVPD subscribers and for which there are no adequate
    substitutes.[^192]

39. We find that access to this non-substitutable programming is
    necessary for competition in the video distribution market to remain
    viable. An MVPD's ability to compete will be significantly harmed if
    denied access to popular vertically integrated programming for which
    no good substitute exists.[^193] Because the exclusive contract
    prohibition applicable to satellite-delivered programming has been
    in effect since 1992, we do not have specific empirical evidence of
    the impact of withholding of satellite-delivered programming.
    However, for vertically integrated programming that is delivered
    terrestrially and therefore beyond the scope of Section
    628(c)(2)(D), there is factual evidence that cable operators have
    withheld this programming from competitors and, in two instances --
    in San Diego and Philadelphia -- there is empirical evidence that
    such withholding has had a material adverse impact on competition in
    the video distribution market. In the *Adelphia Order*, the
    Commission conducted an analysis which concluded that lack of access
    to RSN programming can decrease an MVPD's market share significantly
    because a large number of consumers will refuse to purchase the
    MVPD's service and will instead elect to purchase service from the
    cable operator that offers the RSN.[^194] The analysis concluded
    that, without access to the cable-affiliated RSN in Philadelphia,
    the percentage of television households that subscribe to DBS
    service in Philadelphia is 40 percent below what would otherwise be
    expected.[^195] In San Diego, the analysis concluded that lack of
    access to the cable-affiliated RSN results in a 33 percent reduction
    in the households subscribing to DBS service.[^196] We also believe
    that a competitive MVPD's lack of access to popular non-RSN networks
    would not have a materially different impact on the MVPD's
    subscribership than would lack of access to an RSN. We are unaware
    of examples of nationally distributed programming being withheld
    from willing buyers as has occurred with some RSNs. Instead, we must
    turn to indirect evidence of the popularity of nationally
    distributed programming networks. A number of networks receive
    ratings higher than or equal to those of RSNs that are currently
    withheld from DBS providers.[^197] While ratings are not a perfect
    predictor of consumer response to the withholding of a network, they
    do provide us with sufficient evidence to conclude that some
    nationally distributed networks are sufficiently valuable to viewers
    such that some viewers may switch to an alternative MVPD if the
    popular programming were not made available on their current MVPD.

40. We disagree with Cablevision's criticisms of the Commission's
    analysis in the *Adelphia* *Order*.[^198] In that decision, the
    Commission conducted a statistical (regression) analysis which
    found, after holding other relevant factors constant, that non-cable
    MVPDs had significantly lower market shares in markets where they
    were denied access to an RSN.[^199] As a threshold matter, the
    Commission's regression analysis is just one component of an
    economic analysis of a possible "uniform price increase strategy"
    that a cable operator (in particular, one of the applicants to
    acquire Adelphia cable systems) might follow with regard to RSNs.
    Under this scenario, a vertically integrated cable operator that has
    just increased the number of homes that it passes in a market where
    it also owns an RSN raises the price of the RSN to all MVPDs in the
    market, but not by an amount large enough to induce the rival MVPD
    in the market to stop carrying the RSN. The question posed by the
    analysis is whether this (sustainable) price increase is greater
    than the five percent level specified in the Department of Justice
    ("DOJ") Merger Guidelines. In the *Adelphia Order*, the Commission
    stated that "price increases of five percent or more would likely
    harm rival MVPDs' ability to compete and/or be passed on to
    consumers in some form, such as increased rates or reductions in
    quality or customer service."[^200] In other words, based on the
    analysis in the *Adelphia Order* showing that RSN prices would rise
    significantly in several markets post-merger, the Commission
    concluded that MVPD customers would be harmed. One of several
    parameters needed to assess the uniform price increase scenario is
    the amount by which subscribership to a competitive MVPD would fall
    if that MVPD were to choose not to carry the RSN. Cablevision's
    critique does not address the full uniform price increase analysis.
    Rather, it focuses on the regression equation. Cablevision offers
    several criticisms of the regression model, most of which amount to
    the assertion that some relevant explanatory variables were left out
    of the equation. These and other criticisms are addressed in detail
    in Appendix B. As explained therein, some of the variables claimed
    to be left out were, in fact, included. Moreover, even if some
    relevant variables were left out, that does not, in and of itself,
    indicate that the coefficients on the relevant dummy variables are
    inaccurate or biased. Moreover, we have estimated additional
    regression equations designed to include some of the variables that
    Cablevision claims should have been included. The new results, in
    fact, support the Commission's analysis in the *Adelphia Order*, and
    in some respects strengthen the conclusions reached in that
    decision. In sum, we do not find persuasive the Cablevision critique
    of our analysis in the *Adelphia Order*, including the regression
    analysis. We remain convinced that the regression analysis
    demonstrates that, with regard to RSNs and programming with similar
    characteristics (such as popularity and similar monthly per
    subscriber affiliate fee and network advertising revenue),
    withholding programming from rivals can be a profitable strategy for
    a vertically integrated cable programmer and that such withholding
    can have a significant impact on subscribership to the rival MVPDs.
    Such practices, in turn, predictably harm competition and diversity
    in the distribution of video programming, to the detriment of
    consumers.

41. We find that access to vertically integrated programming is
    essential for new entrants in the video marketplace to compete
    effectively. If the programming offered by a competitive MVPD lacks
    "must have" programming that is offered by the incumbent cable
    operator, subscribers will be less likely to switch to the
    competitive MVPD.[^201] We give little weight to the claims by cable
    operators that recent entrants, such as telephone companies, have
    not experienced "any trouble" to date in acquiring access to
    satellite-delivered vertically integrated programming.[^202] As an
    initial matter, we note that competitive MVPDs state that they pay
    significant amounts for access to satellite-delivered vertically
    integrated programming.[^203] Moreover, because the exclusive
    contract prohibition is currently in effect and has been since 1992,
    vertically integrated programmers delivering programming to MVPDs
    via satellite were not able to deny competitors access to their
    programming.[^204] As discussed in Section III.A.3.b below, however,
    there is substantial evidence that, when the exclusive contract
    prohibition does not apply, such as in the case of terrestrially
    delivered programming, vertically integrated programmers may have an
    incentive to withhold programming from these recent entrants.[^205]
    We also reject the cable MSOs' suggestion that the resources of some
    competitors in the video distribution market (*i.e.,* telephone
    companies) should change our analysis of whether to extend the
    prohibition at this time.[^206] The competitors to which the cable
    operators refer are new entrants to the video distribution market,
    and have no established customer base. If cable operators have
    exclusive access to content that is essential for viable competition
    and for which there are no close substitutes, and they have the
    incentive to withhold such content, they can significantly impede
    the ability of new entrants to compete effectively in the
    marketplace, regardless of their level of resources.[^207] As we
    concluded in the *Adelphia Order*, excluding "must have"
    cable-affiliated content from DBS operators has reduced the
    percentage of households that subscribe to DBS service to as much as
    40 percent below what would otherwise be expected.[^208]

42. For the reasons discussed above, we conclude that there are no close
    substitutes for some satellite-delivered vertically integrated
    programming and that such programming is necessary for viable
    competition in the video distribution market.[^209] Having made this
    determination, we further conclude that vertically integrated
    programmers continue to have the ability to favor their affiliated
    cable operators over competitive MVPDs such that competition and
    diversity in the distribution of video programming would not be
    preserved and protected.[^210] Accordingly, assuming vertically
    integrated programmers continue to have the incentive to favor their
    affiliated cable operators, allowing vertically integrated
    programmers to enter into exclusive arrangements with their
    affiliated cable operators will fail to protect and preserve
    competition and diversity in the distribution of video
    programming.[^211]

#### Incentive

43. We next assess whether vertically integrated programmers continue to
    have the incentive to favor their affiliated cable operators over
    competitive MVPDs.[^212] This requires us to analyze (i) whether
    cable operators, through the number of subscribers they serve, the
    number of homes they pass, and their affiliations with programmers,
    continue to have market dominance of sufficient magnitude that, in
    the absence of the prohibition, they would be able to act in an
    anticompetitive manner; and (ii) whether there continues to be an
    economic rationale for vertically integrated programmers to engage
    in exclusive agreements with cable operators that will cause such
    anticompetitive harms.[^213] As discussed in this section, we
    conclude that vertically integrated programmers continue to have the
    incentive to favor their affiliated cable operators over competitive
    MVPDs.

44. We briefly reiterate here how a vertically integrated cable
    programmer might attempt to harm the ability of rival MVPDs to
    compete through the use of exclusive contracts.[^214] An exclusive
    arrangement between a cable-affiliated programmer and its affiliated
    cable operator will reduce the number of platforms distributing the
    cable-affiliated programming network and thus the total number of
    subscribers to the network. This results in a reduction in potential
    advertising or subscription revenues that would otherwise be
    available to the network. In the long term, however, the
    cable-affiliated programmer would gain from an increased number of
    subscribers as customers switch to the affiliated cable distribution
    service in order to receive the exclusive programming. Thus, an
    exclusive contract is a kind of "investment," in which an initial
    loss of profits from programming is incurred in order to achieve
    higher profits later from increased cable distribution. This type of
    arrangement is most profitable when the costs of the investment are
    low and its benefits are high. The costs are lowest when the initial
    loss in programming revenue is low, such as when the rival
    distributors that are excluded serve relatively fewer customers. The
    benefits of the investment tend to be highest when the vertically
    integrated cable programmer ultimately expects to serve a large
    number of subscribers, and will be able to charge them substantially
    more for cable distribution service than it could if it faced a
    strong rival distribution platform. We explained that the number of
    subscribers that a vertically integrated cable programmer serves is
    of particular importance in calculating the benefits of withholding
    programming from rival MVPDs. The larger the number of subscribers
    controlled by the vertically integrated cable programmer, the larger
    the benefits of withholding that accrue to that programmer. Thus, as
    the number of subscribers rises, so does the likelihood that
    withholding would be profitable.

45. In their comments, cable MSOs assert that they do not have an
    economic incentive to enter into exclusive programming agreements.
    First, they argue that they do not have a sufficient share of the
    MVPD market to make withholding of vertically integrated programming
    a profitable strategy.[^215] Cablevision notes that the success of
    an exclusivity strategy depends on the ability of a vertically
    integrated programmer to recover a substantial portion of its lost
    revenues through increased distribution revenues.[^216] As the
    number of subscribers to competing distributors rises, the
    likelihood of a successful withholding strategy decreases.[^217]
    Cablevision contends that the nearly fifty percent increase in the
    number of customers served by rival MVPDs since 2002 has
    substantially increased the costs of an exclusivity strategy.[^218]
    Second, cable MSOs argue that a typical programming network, no
    matter the ownership structure, will not foreclose opportunities to
    be as widely distributed as possible on multiple platforms.[^219]
    Cablevision notes that a cable-affiliated programmer that enters
    into an exclusive arrangement with its affiliated distributor would
    risk being unable to recoup the significant license fees and
    advertising revenues that it loses by refusing access to competing
    platforms.[^220] Cable MSOs claim that the over 30 million
    subscribers served by competitive MVPDs today represent a
    significant revenue source that no programmer can afford to
    ignore.[^221] Third, cable MSOs argue that competitive MVPDs in
    response to an exclusive arrangement are likely to engage in
    competitive counter-measures, such as cutting prices, acquiring
    other programming on an exclusive basis, or launching new services
    of their own.[^222]

46. Competitive MVPDs argue that vertically integrated cable programmers
    continue to have powerful incentives to withhold vertically
    integrated programming to impede the viability of competitors.[^223]
    CA2C cites an April 2005 GAO Report which concludes that DBS
    operators have relatively fewer subscribers in urban and suburban
    markets where they face a content disadvantage compared to the
    incumbent cable operator. [^224] CA2C also notes that DBS market
    share in Philadelphia and San Diego drops almost in half due to the
    lack of access to RSNs as compared to other similar high-density
    markets where DBS operators have access to RSNs.[^225]

47. Competitive MVPDs disagree with claims by cable MSOs that the
    decrease in the collective market share of cable operators between
    2002 and 2005 means they can no longer profitably withhold
    affiliated programming. First, they note that the 67 percent share
    of MVPD subscribers held by the cable industry remains the dominant
    market position.[^226] Second, they argue that the increase in
    horizontal consolidation of the cable industry increases the ability
    for cable MSOs to leverage power collectively through "cable only"
    exclusives -- *i.e*., the withholding of programming from rival
    MVPDs while selling it to other cable operators with which they do
    not compete.[^227] For example, competitive MVPDs note that Comcast
    makes Comcast SportsNet Philadelphia available to all
    Philadelphia-area cable operators, but not to DIRECTV or
    EchoStar.[^228] They also emphasize that while the market share of
    small-to-medium sized, non-vertically integrated cable operators has
    declined, the market share of the four largest vertically integrated
    cable operators has increased substantially since 2002.[^229] Third,
    they point to an increase in regional clustering, which, they say,
    has increased the market share of individual cable operations within
    the footprints of regional programming and created expanded
    opportunities to implement exclusive arrangements.[^230] In response
    to these concerns, Comcast notes that both the Commission and the
    Director of the Bureau of Economics of the Federal Trade Commission
    ("FTC") have acknowledged that clustering may enable cable operators
    to achieve greater economies of scale and scope, thereby reducing
    costs.[^231]

48. Some competitive MVPDs argue that the recent entry of telephone
    companies into the video market provides cable operators with an
    increased incentive to withhold programming to stifle
    competition.[^232] They contend that video service offered by
    telephone companies provides more price discipline to cable than
    does DBS and that telephone companies also offer broadband services
    in competition with cable operators.[^233] They also note that
    wireline entry is still well below two percent of the nation's total
    MVPD subscribership.[^234] AT&T and Verizon characterize as
    insignificant the short-term costs to cable incumbents of foregoing
    revenues from providing programming to the minimal subscriber bases
    of new entrants.[^235] In the long term, they claim, the benefits to
    cable operators of limiting new entry will far outweigh the costs of
    lost revenues from excluding new entrants with minimal
    subscribership from their programming.[^236] AT&T notes that the
    Commission in the *2002 Extension Order* found that cable operators
    had an economic incentive to withhold programming from DBS operators
    when the market share of DBS operators was 18 percent.[^237] AT&T
    claims that the incentive for cable-affiliated programmers to
    withhold programming from new telephone company entrants with only a
    two percent market penetration is far greater.[^238]

49. While cable MSOs argue that they have no incentive to withhold
    programming, competitive MVPDs provide the following examples which
    they claim demonstrate that cable MSOs will withhold programming if
    advantageous and permitted.[^239] Competitive MVPDs argue that many
    of the examples listed below, involving terrestrially delivered
    programming (sports as well as non-sports) -- for which the
    exclusive contract prohibition does not apply -- demonstrate the
    incentive and ability of vertically integrated cable operators to
    deny access to programming where permitted by the statute.

    *Sports Programming*

-   *Comcast SportsNet Philadelphia*. Some competitive MVPDs state that
    Comcast refuses to make the terrestrially delivered Comcast
    SportsNet Philadelphia channel available to EchoStar and
    DIRECTV.[^240] Competitive MVPDs cite the Commission's conclusion in
    the *Adelphia* *Order* that the percentage of households that
    subscribe to DBS service in Philadelphia is 40 percent below what
    would otherwise be expected.[^241] In response, Comcast notes that
    Comcast SportsNet Philadelphia is available to RCN.[^242]

-   *Channel 4 San Diego*. Some competitive MVPDs claim that Cox makes
    available its Channel 4 San Diego network, which has exclusive
    rights to San Diego Padres baseball games, only to cable operators
    that do not directly compete with Cox and not to DIRECTV, EchoStar,
    and AT&T. [^243] While competitive MVPDs state that DIRECTV's market
    penetration in San Diego is half of its national average,[^244]
    Cablevision notes that DIRECTV in the *Adelphia* proceeding reported
    that it did not find a statistically significant effect on its
    market penetration in San Diego resulting from its inability to
    access this RSN.[^245]

-   *Overflow sports programming in New York, NY*. RCN notes that it was
    deprived of access to overflow sports programming from Cablevision
    after Cablevision revised its distribution system from satellite to
    terrestrial delivery.[^246] While RCN filed a program access
    complaint, the Cable Services Bureau denied the complaint because
    the programming was terrestrially delivered and thus beyond the
    scope of Section 628(c)(2)(D).[^247] The Bureau also found that
    Cablevision did not evade the Commission's rules by changing its
    distribution system from satellite to terrestrial delivery.[^248]

-   *RSNs Affiliated with Cablevision in New York and New England*.
    Verizon notes that it was forced to file a program access complaint
    against Cablevision and its vertically integrated programming
    subsidiary, Rainbow Media Holdings, LLC, in order to obtain access
    to RSNs in the New York City metropolitan area and New
    England.[^249] While the dispute was eventually settled, competitive
    MVPDs state that the case illustrates the efforts of cable operators
    and their vertically integrated programmers to forestall competition
    from new entrants such as Verizon.[^250]

-   *High Definition ("HD") Feeds of RSNs Affiliated with Cablevision*.
    While Rainbow has made available standard definition feeds of its
    RSNs, Verizon states that Rainbow is delivering HD feeds of this
    programming terrestrially to avoid the program access rules.[^251]
    Verizon also claims that Cablevision's advertising campaign in New
    York City emphasizes its ability to offer more HD sports than its
    competitors.[^252] In response, Comcast states that HD networks are
    distinct from their analog counterparts and that the Commission has
    recognized this distinction.[^253]

    *Non-Sports Programming*

-   *New England Cable News ("NECN") in Boston, MA.* One commenter
    claims that RCN was provided with access to NECN, a terrestrially
    delivered network that is 50 percent owned by Comcast, only after
    the Senate Judiciary Committee indicated that they were considering
    legislative action to apply an exclusive contract prohibition to
    terrestrially delivered programming.[^254]

-   *PBS Kids Sprout*. AT&T and RCN claim that after PBS Kids Sprout
    became vertically integrated with Comcast, RCN lost access to the
    network, resulting in an 83 percent drop in the usage of its
    children's VOD service.[^255] Comcast and PBS Kids Sprout dispute
    these allegations, stating that this programming is available to all
    MVPDs and, in fact, RCN, Verizon, and AT&T currently distribute PBS
    Kids Sprout.[^256]

-   *iN DEMAND*. CA2C notes that iN DEMAND is jointly owned by Time
    Warner, Comcast, and Cox.[^257] CA2C argues that iN DEMAND has taken
    the position that its programming is beyond the scope of the
    exclusive contract prohibition in Section 628(c)(2)(D) because iN
    DEMAND programming is delivered to MVPDs terrestrially.[^258] CA2C
    claims that iN DEMAND initially refused to provide its service to
    BSPs that competed with incumbent cable operators and that it
    reversed this position only after meetings were held with the
    Antitrust Subcommittee of the Senate Judiciary Committee.[^259]
    Nonetheless, CA2C contends that iN DEMAND has refused to provide its
    service to Hiawatha Broadband because of the technology Hiawatha
    uses for its distribution system.[^260] Qwest provides a declaration
    regarding its alleged inability to acquire iN DEMAND's sports
    packages in a timely manner.[^261]

-   *CN8 -- The Comcast Network*. Qwest claims that CN8 -- The Comcast
    Network is a local news and information channel that serves 12
    states and 20 television markets but is only available to Comcast
    and Cablevision subscribers because it is terrestrially delivered
    and therefore beyond the scope of Section 628(c)(2)(D).[^262]

-   *NRTC*. NRTC, which acts as a "buying group" on behalf of its
    members, claims that it has been denied access to two vertically
    integrated programming networks, the identities of which it claims
    it cannot disclose due to non-disclosure agreements.[^263]

AT&T argues that if cable-affiliated programmers had an economic
incentive to distribute their programming as widely as possible, as
cable MSOs claim, then there would be no examples of any such
exclusionary behavior.[^264] AT&T also notes that cable operators
actively advertise their exclusive access to certain content in order to
attract and retain subscribers.[^265] Comcast contends these examples do
not offer sufficient proof of market failure that requires government
intervention.[^266]

50. *Discussion*. We conclude that vertically integrated cable
    programmers retain the incentive to withhold programming from their
    competitors. We recognize the pro-competitive developments in the
    MVPD market since the *2002 Extension Order*, such as the reduction
    in the cable industry's share of MVPD subscribers from 78 percent to
    an estimated 67 percent and the increase in the DBS industry's
    market share from 18 percent to approximately 30 percent.[^267]
    Despite these positive trends, however, almost seven out of ten
    subscribers still choose cable over competitive MVPDs, the
    percentage of all MVPD subscribers nationwide served by one of the
    four largest vertically integrated cable operators has increased
    substantially since 2002, and cable operators have continued to
    raise prices in excess of inflation.[^268] While cable MSOs claim
    that the emergence of telephone companies as new video competitors
    demonstrates that competition is flourishing, the fact is that,
    based on estimates provided by the cable industry, competitive
    MVPDs, excluding DBS operators, serve approximately three percent of
    all MVPD subscribers nationwide, which accounts for less than three
    million total MVPD subscribers.[^269] Moreover, as we explained in
    our decision on franchising reform, competition from cable
    overbuilders is minimal, with only a few hundred examples of
    competitive franchises throughout the nation.[^270] This is one
    reason why we have explored ways to lower barriers to entry in the
    video marketplace.[^271] Although we are encouraged by developments
    since 2002, we do not believe these developments have been
    significant enough for us to reverse the Commission's previous
    conclusion that cable operators have market dominance of sufficient
    magnitude that, in the absence of the prohibition, they would be
    able to act in an anticompetitive manner.[^272]

51. We also conclude that cable-affiliated programmers continue to have
    an economic incentive to favor their affiliated cable operators over
    competitive MVPDs by entering into exclusive agreements. We agree
    that in many instances a cable-affiliated programmer may choose to
    provide its programming to as many platforms as possible in order to
    maximize advertising and subscription revenues. In other cases,
    however, cable-affiliated programmers will have an incentive to
    withhold programming from competitive MVPDs in order to favor their
    affiliated cable operator. Our conclusion that vertically integrated
    cable programmers retain the incentive to withhold programming from
    their competitors is reinforced by specific factual evidence that
    vertically integrated programmers have withheld and continue to
    withhold programming, including both sports and non-sports
    programming, from competitive MVPDs.[^273] While many of these
    examples pertain to terrestrially delivered programming that is
    beyond the scope of Section 628(c)(2)(D), we find that these
    examples are nonetheless significant because they demonstrate that,
    absent a prohibition, cable-affiliated programmers will engage in
    withholding of programming from competitive MVPDs. Moreover, because
    it is outside of the scope of the program access provisions, the
    withholding of terrestrially delivered programming presents the most
    direct, factually based evidence of cable MSO behavior if the
    prohibition is permitted to lapse. If vertically integrated
    programmers had no economic incentive other than to distribute their
    programming to as many platforms as possible, then we would not
    expect to see such examples of withholding.[^274]

52. While the cable industry's share of MVPD subscribers nationwide has
    decreased from 78 percent to approximately 67 percent since the
    *2002 Extension Order*,[^275] we conclude that this market share is
    still sufficient to enable cable-affiliated programmers to make
    withholding vertically integrated programming a profitable strategy.
    Moreover, while the cable industry's share of MVPD subscribers
    nationwide has declined since the *2002 Extension Order*, it has
    remained above or near the 78 percent level in many Designated
    Market Areas ("DMAs"),[^276] indicating that cable operators retain
    the same share of MVPD subscribers in many markets as in 2002.[^277]
    In the *2002 Extension Order*, based on the cable industry's 78
    percent national market share at the time, the Commission found that
    a "cable-only" distribution strategy would reduce potential
    subscribership or viewership for a cable-affiliated programming
    network by one-fifth.[^278] The Commission concluded that the
    revenues foregone by a cable-affiliated programmer by refusing to
    sell to competitive MVPDs would thus be "relatively low."[^279]
    While the reduction in potential nationwide subscribership or
    viewership has now increased to one-third based on the cable
    industry's current national market share of approximately 67
    percent, we find that this reduction in potential subscribership or
    viewership has not reached a point where withholding would be
    unprofitable.[^280] Moreover, because the share of MVPD subscribers
    held by cable operators is above or near 78 percent in many DMAs,
    there is no reduction in potential subscribership or viewership in
    many regional areas from that which we observed in the *2002
    Extension Order*.[^281] As the Commission did in the *2002 Extension
    Order*, we find that the costs (*i.e*., foregone revenues) incurred
    by a cable-affiliated programmer by refusing to sell to competitive
    MVPDs would be offset by (i) revenues from increased subscriptions
    to the services of its affiliated cable operator resulting from
    subscribers that switch to cable to obtain access to the
    cable-exclusive programming;[^282] (ii) revenues from increased
    rates charged by the affiliated cable operator in response to
    increased demand for its services resulting from its ability to
    offer exclusive programming;[^283] and (iii) revenues resulting from
    the ability of the cable-affiliated programmer to raise the price it
    charges for programming to other cable operators in return for
    exclusivity.[^284] Thus, particularly where competitive MVPDs are
    limited in their market share, a cable-affiliated programmer will be
    able to recoup a substantial amount, if not all, of the revenues
    foregone by pursuing a withholding strategy. In the long term, a
    withholding strategy may result in a reduction in competition in the
    video distribution market, thereby allowing the affiliated cable
    operator to raise rates. As discussed in Appendix C, we have also
    made critical value calculations which conclude that withholding of
    some nationally distributed programming networks could be profitable
    if as little as 1.9 percent of non-cable subscribers were to switch
    to cable as a result of the withholding.[^285] We believe that these
    subscriber numbers are sufficiently low as to make it likely that
    cable MSOs will pursue national "cable only" withholding strategies
    with some networks in the absence of the exclusivity prohibition. We
    thus conclude that the one-third share of the MVPD market held by
    competitive MVPDs remains limited enough to allow cable-affiliated
    programmers to successfully and profitably implement a withholding
    strategy.

53. We also find that three additional developments since 2002 provide
    cable-affiliated programmers with an even greater economic incentive
    to withhold programming from competitive MVPDs: (i) the increase in
    horizontal consolidation in the cable industry; (ii) the increase in
    clustering of cable systems; and (iii) the recent emergence of new
    entrants in the video market place, such as telephone companies.

54. *Horizontal Consolidation*. The cable industry has continued to
    consolidate since 2002. Since this time, the percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest vertically integrated cable MSOs (Comcast, Time Warner, Cox,
    and Cablevision) has increased from 34 percent[^286] to between 54
    and 56.75 percent.[^287] Moreover, the percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest cable MSOs (Comcast, Time Warner, Cox, and Charter) has
    increased from 48 percent[^288] to between 53 and 60 percent after
    taking into account the recent acquisition by Comcast and Time
    Warner of cable systems formerly owned by Adelphia.[^289] Thus,
    while the evidence demonstrates that the market share of
    small-to-medium sized, non-vertically integrated cable operators has
    declined, the market share of large cable operators, and in
    particular those that own cable programming, has increased
    substantially since 2002. In the *2002 Extension Order*, the
    Commission observed that because four of the five largest vertically
    integrated cable operators served 34 percent of all MVPD
    subscribers, they could reap a substantial portion of the gains from
    withholding programming from their rivals.[^290] Now that the market
    share of the four largest vertically integrated cable MSOs has
    increased to between 54 and 56.75 percent, the largest vertically
    integrated cable operators stand to gain even more from a
    withholding strategy.[^291] Thus, the increase in horizontal
    consolidation in the cable industry since 2002 increases the
    incentive to pursue anticompetitive withholding strategies.

55. *Clustering*. The cable industry has continued to form regional
    clusters since the *2002 Extension Order*, when approximately 80
    percent of cable subscribers were served by systems that were part
    of regional clusters.[^292] Today, taking into account the sale of
    Adelphia's systems to Comcast and Time Warner, some estimate that
    the percentage of cable subscribers served by systems that are part
    of regional clusters has increased to between 85 and 90
    percent.[^293] The Commission concluded in the *2002 Extension
    Order* that horizontal consolidation and clustering combined with
    affiliation with regional programming contributed to the cable
    industry's overall market dominance.[^294] Given the increase in
    horizontal consolidation and regional clustering since 2002, this
    statement is no less true today. With a regional programming denial
    strategy, a cable-affiliated programmer foregoes only those revenues
    associated with the subscribers of competitive MVPDs within the
    cluster, not the revenues associated with subscribers of competitive
    MVPDs nationwide.[^295] As the Commission concluded previously, in
    many cities where cable MSOs have clusters, the market penetration
    of competitive MVPDs is much lower and cable market penetration is
    much higher than their nationwide penetration rates.[^296] Moreover,
    due to the national distribution of DBS services and the
    insufficient mass of DBS subscribers on a regional basis, DBS
    operators do not have an economic base for substantial regional
    programming investments on a market-by-market basis.[^297] As a
    result, the cost to a cable-affiliated programmer of withholding
    regional programming is lower in many cases than the cost of
    withholding national programming. Moreover, the affiliated cable
    operator will obtain a substantial share of the benefits of a
    withholding strategy because its share of subscribers within the
    cluster is likely to be inordinately high.[^298] While Comcast
    claims that increased clustering may result in synergies and
    cost-saving efficiencies, this has no relevance to the issue of the
    impact of increased clustering on the potential for regional
    programming denial strategies.[^299]

56. As discussed further in Appendix C, although cable's national share
    of total MVPD subscribers has declined, the situation is somewhat
    different at the individual market level. In some markets, the cable
    share of MVPD subscribers remains high, well above the average level
    and, indeed, above the 2002 national level of 78 percent that we
    found problematic in the *2002 Extension Order*.[^300] However,
    clustering \-- an increase over time in the number of cable
    subscribers and homes passed by a single MSO in particular markets
    (accomplished via internal growth as well as by acquisitions) \--
    also enhances the potential profitability of withholding regional
    programming from rivals. To understand the impact of this
    development in the cable television sector, we consider the
    calculations of a vertically integrated satellite cable programmer
    ("VISCP") that is contemplating a "cable-only" strategy of
    withholding its RSN from DBS and other non-cable MVPDs in the
    market. If the RSN is withheld, the VISCP will lose, initially, all
    those subscribers who were receiving the RSN via non-cable MVPDs.
    Some of those subscribers will switch to cable in order to retain
    access to the RSN. Of course, only those subscribers whose homes are
    passed by cable have the option to switch. Thus, the share of
    television households in the market that are passed by cable, either
    the VISCP's cable affiliate or other operators, is of importance.
    With respect to those subscribers that switch to a cable operator
    other than the VISCP's cable affiliate, the VISCP will simply regain
    the revenues (affiliation fee and network advertising revenue per
    subscriber) lost due to withholding from the non-cable MVPDs.
    However, with respect to those who switch to the VISCP's cable
    affiliate, the VISCP will gain substantially more. Those who switch
    to the VISCP's cable affiliate do not simply purchase the RSN.
    Rather, they must purchase a full video package from the VISCP's
    cable affiliate. Thus, the VISCP and its cable affiliate gain the
    full additional profit from a new subscriber, in addition to
    regaining the network advertising revenue per subscriber lost
    temporarily due to the withholding.[^301] The key point is that the
    larger the share of television households in the market that is
    served by the VISCP's cable affiliate (*i.e*., the larger the ratio
    of homes passed by the VISCP's cable affiliate to total television
    households), the larger is the total number of switching subscribers
    that switch to the VISCP's cable affiliate (as opposed to switching
    to another cable operator), and the greater is the potential
    compensating gain to the VISCP and its cable affiliate.

57. Thus, separate from what has been occurring in the national MVPD
    market, certain developments in the cable market may have made
    withholding of regional networks potentially more profitable than
    previously. Two types of empirical analyses can be performed to
    assess these developments. First, it is possible to track changes in
    clustering from 2002 to 2007 for certain key MSOs. Second, it is
    possible, under certain simplifying assumptions, to assess the
    circumstances under which withholding of regional programming would
    be profitable in the absence of the exclusivity restriction. [^302]

58. *Analysis of* *Increase in Clustering from 2002 to 2007*.
    Substantial increases in clustering, *i.e.*, the number of DMAs in
    which homes passed by a single cable operator is a large share of
    total television households, would mean that withholding is likely
    more profitable than it was before. This calculus (assuming the
    market structure and financial parameters stated in Appendix C)
    applies not only to markets where there is a VISCP, but to any
    market, since, if the exclusivity limit were relaxed, any cable
    operator would be permitted to start a new regional network or
    acquire an existing one and then withhold it from rivals. As
    discussed in Appendix C, we conclude that there has been a
    substantial increase in clustering among the two largest vertically
    integrated cable operators since adoption of the *2002 Extension
    Order*.

59. *Analysis of Profitability of Withholding of Regional Programming*.
    The second type of analysis we conducted was to estimate directly
    the profitability of withholding a regional network based on the
    structure of the market[^303]and certain financial parameters.[^304]
    These calculations were made for all DMAs for which data were
    available, using Comcast and Time Warner subscriber and
    profitability estimates from public sources, and using 2006 data on
    the average affiliate fee and network advertising revenue per
    subscriber for an RSN. The analysis yields a "critical value,"
    representing the percentage of current non-cable MVPD subscribers in
    a DMA that would need to switch to cable in response to withholding
    of an RSN in order to make this strategy profitable. In order to
    determine what critical value is realistic, we examined the case of
    Philadelphia, where Comcast is currently withholding its RSN from
    DBS operators. As explained in Appendix C, withholding in the
    Philadelphia DMA of an RSN with average profile would be profitable
    if 5.45 to 8.4 percent of non-cable MVPD subscribers switched to
    cable. Conducting the analysis using the actual 2006 profile of the
    Comcast SportsNet Philadelphia RSN yields critical values in the
    6.81 to 10.49 percent range. As explained in detail in Appendix C,
    the data demonstrates that (i) withholding would be profitable for
    Comcast in as many as 39 DMAs;[^305] and (ii) withholding would be
    profitable for Time Warner in as many as 20 DMAs.[^306] The
    calculations further demonstrate that, using Comcast profitability
    figures and the Comcast SportsNet Philadelphia RSN profile,
    withholding becomes profitable when a single MSO reaches homes
    passing roughly 60 percent of television households in a DMA. Using
    Time Warner profitability and the Comcast SportsNet Philadelphia RSN
    profile, withholding would become profitable when a single MSO
    reaches homes passing at least 80 percent of television households
    in a DMA. Our assessment of the calculated critical values convinces
    us that, in a significant range of cases, withholding of an RSN
    would be profitable for the VISCP and that, absent the exclusivity
    prohibition, valuable programming would be withheld from rival
    MVPDs.

60. *Recent Entrants*. Another significant development since 2002 is the
    emergence of new entrants into the video marketplace, including
    telephone companies.[^307] We agree that vertically integrated cable
    programmers may have an even greater economic incentive to withhold
    programming from these recent entrants in the video marketplace.
    Because recent entrants have minimal subscriber bases at this time,
    the costs that a cable-affiliated programmer would incur from
    withholding programming from recent entrants are negligible.[^308]
    To be sure, a vertically integrated programmer that withholds
    programming from one competitive MVPD in a market would generally
    need to withhold the programming from all other competitive MVPDs in
    the market, thereby increasing the foregone revenues resulting from
    a withholding strategy.[^309] Even so, the short term costs to the
    vertically integrated programmer of withholding its programming from
    all competitive MVPDs (*i.e*., the reduction in potential
    advertising or subscription revenues) are likely to be outweighed by
    the long term benefits to its affiliated cable operator of (i)
    hindering and potentially eliminating competition from new entrants,
    including those with substantial resources such as incumbent
    telephone companies; and (ii) increased revenues resulting from
    attracting subscribers away from competitive MVPDs. Cable MSOs
    suggest that if the justification for extending the exclusive
    contract prohibition is the emergence of new competitors, then the
    exclusive contract prohibition could be extended in perpetuity
    whenever new potential competitors emerge.[^310] We disagree. As
    discussed above, vertically integrated programmers are likely to
    have the incentive to withhold programming only when their
    affiliated cable operators have a sufficient share of the
    distribution market to minimize the impact of foregone subscription
    and advertising revenues from denying access to other distributors.
    At this time, we conclude that vertically integrated programmers are
    likely to retain this incentive given the 67 percent share of the
    video distribution market held by cable operators. If competition in
    the MVPD market continues to develop and cable market share
    continues to decline, however, the incentive of vertically
    integrated programmers to engage in withholding will presumably
    diminish to the extent that we may be able to relax the exclusive
    contract prohibition. Moreover, the availability of exclusivity
    petitions pursuant to Section 628(c)(2) and (4) allows for
    appropriate treatment of unique competitive situations.

61. Cable MSOs argue that new entrants in the video marketplace such as
    AT&T and Verizon will never exit the video distribution market
    regardless of whether they are denied access to cable-affiliated
    programming because of the substantial sunk investments they have
    already made in video distribution networks.[^311] In considering
    whether to allow the exclusive contract prohibition to sunset, our
    primary focus is on the impact that sunset would have on competition
    and diversity in the distribution of video programming generally,
    not on individual competitors and not on programming
    diversity.[^312] Thus, the more salient point for our analysis is
    not whether individual competitors will remain in the market if the
    exclusive contract prohibition were to sunset, but how competition
    in the video distribution market will be impacted if the exclusive
    contract prohibition were to sunset. We find that absent the
    exclusive contract prohibition, the ability of competitive MVPDs,
    including large and established companies, to compete will be
    severely hindered, thereby adversely impacting the market for
    distribution of video services.[^313] Cablevision argues that a
    competitive MVPD could engage in competitive countermeasures in
    reaction to a cable-affiliated programmer's decision to withhold
    "must have" programming, such as lowering prices, acquiring other
    programming on an exclusive basis, or launching new services of its
    own.[^314] We find, however, that these countermeasures would not be
    sufficient to deprive cable-affiliated programmers of the incentive
    to withhold programming or to mitigate the impact to the competitive
    MVPD of being unable to offer subscribers essential programming. The
    record reflects that, despite the availability of these
    countermeasures, cable-affiliated programmers have withheld
    programming from competitive MVPDs and in two instances -- San Diego
    and Philadelphia -- that such withholding has had a material adverse
    impact on competition in the video distribution market.[^315] As the
    Commission concluded in the *2002 Sunset Order*, the prohibition on
    exclusivity therefore remains necessary to preserve and protect
    diversity in distribution of video programming.

62. We disagree with cable MSOs that argue that enforcement of antitrust
    laws will be sufficient to address anticompetitive use of exclusive
    contracts.[^316] In passing the exclusive contract prohibition in
    Section 628(c)(2)(D), Congress concluded the opposite by requiring
    the Commission to enforce a presumptive ban on exclusive contracts
    rather than relying on reactive application of antitrust laws to
    existing exclusive arrangements.[^317] Moreover, the legislative
    history of the 1992 Cable Act reflects Congress's concern regarding
    the "prohibitive cost of pursuing an antitrust suit."[^318] As the
    Commission emphasized in the *2002 Extension Order*, "Congress
    already determined that antitrust laws were not a viable alternative
    for achieving the government's goals in this instance."[^319] As
    discussed above, we do not believe that Congress's goal of achieving
    competition and diversity in the video distribution marketplace has
    been achieved. Accordingly, we believe that continued reliance on
    the exclusive contract prohibition in Section 628(c)(2)(D) rather
    than reliance solely on antitrust laws better serves the intent of
    Congress.[^320]

63. We recognize the benefits of exclusive contracts and vertical
    integration cited by some cable MSOs, such as encouraging innovation
    and investment in programming and allowing for "product
    differentiation" among distributors.[^321] We do not believe,
    however, that these purported benefits outweigh the harm to
    competition and diversity in the video distribution marketplace that
    would result if we were to lift the exclusive contract prohibition.
    In addition, the Commission's rules permit cable-affiliated
    programmers to seek approval to enter into an exclusive contract
    based on a demonstration that the exclusive arrangement serves the
    public interest consistent with factors established by
    Congress.[^322] Despite the option to seek approval to enter into
    exclusive contracts, only ten exclusivity petitions have been filed
    in the fifteen years since enactment of Section 628(c)(2)(D) in the
    1992 Cable Act. Of these petitions, two were granted,[^323] three
    were denied,[^324] and five were dismissed at the request of the
    parties. Of the three exclusivity petitions that have been denied,
    all of the networks that were the subject of these petitions (Court
    TV, Speed, and Sci-Fi Channel) have flourished despite the lack of
    exclusivity.[^325]

#### Impact on Programming

64. We find above that the exclusive contract prohibition continues to
    be necessary to preserve and protect diversity in the distribution
    of programming.[^326] While cable MSOs contend that the exclusive
    contract prohibition reduces incentives for cable operators and
    competitive MVPDs to create and invest in new programming, we find
    no evidence to support this theory.[^327] To the contrary, the
    number of vertically integrated satellite-delivered national
    programming networks has more than doubled since 1994 when the rule
    implementing the exclusive contract prohibition took effect[^328]
    and has continued to increase since 2002 when the Commission last
    examined the exclusive contract prohibition.[^329] Moreover, the
    number of national programming networks has increased by almost 400
    percent since 1994[^330] and by 80 percent since 2002.[^331] There
    is also evidence that some competitive MVPDs have begun to invest in
    their own programming despite their ability to access
    cable-affiliated programming based on the exclusive contract
    prohibition and the program access rules.[^332] Accordingly, we find
    no basis to conclude that extending the exclusive contract
    prohibition will create a disincentive for the creation of new
    programming.[^333]

65. We are mindful that our decision to extend the exclusive contract
    prohibition must withstand an intermediate scrutiny test pursuant to
    First Amendment jurisprudence.[^334] As the D.C. Circuit explained
    in rejecting a facial challenge to the constitutionality of the
    exclusive contract prohibition in Section 628(c)(2)(D), the
    prohibition will survive intermediate scrutiny if it "furthers an
    important or substantial governmental interest; if the governmental
    interest is unrelated to the suppression of free expression; and if
    the incidental restriction on alleged First Amendment freedoms is no
    greater than is essential to the furtherance of that
    interest."[^335] For the reasons discussed herein, our decision to
    extend the exclusive contract prohibition satisfies this
    intermediate scrutiny test. First, in *Time Warner*, the court found
    that the governmental interest Congress intended to achieve in
    enacting the exclusive contract prohibition was "the promotion of
    fair competition in the video marketplace," and that this interest
    was substantial.[^336] Moreover, the court noted Congress'
    conclusion that "the benefits of these provisions \-- the increased
    speech that would result from fairer competition in the video
    programming marketplace \-- outweighed the disadvantages \[resulting
    in\] the possibility of reduced economic incentives to develop new
    programming."[^337] We disagree with cable MSOs to the extent they
    argue that the substantial government interest in achieving
    competition in the video distribution market has been met.[^338] As
    discussed above, cable operators still have a dominant share of MVPD
    subscribers (approximately 67 percent), have raised prices in excess
    of inflation despite the emergence of new competitors,[^339] and
    still own significant programming networks.[^340] Accordingly, we
    conclude that competition and diversity in the video distribution
    market has not reached the level at which Congress intended the
    exclusive contract prohibition would sunset.[^341] Second, in *Time
    Warner*, the court held that the governmental objective in adopting
    the exclusive contract prohibition in Section 628(c)(2)(D) was
    unrelated to the suppression of free speech.[^342] In this *Order*,
    we extend the exclusive contract prohibition for an additional five
    years but do not otherwise modify the prohibition. Thus, the
    prohibition remains unrelated to the suppression of free speech, as
    the D.C. Circuit Court of Appeals previously held.[^343] Third, in
    *Time Warner*, the court rejected claims that the exclusive contract
    prohibition was not narrowly tailored to achieve the stated
    government interest.[^344] In this *Order*, we extend the exclusive
    contract prohibition for a term of five years but do not otherwise
    modify the prohibition. Thus, the prohibition remains narrowly
    tailored to meet the statute's objective, and any incidental
    restriction on alleged First Amendment freedoms is no greater than
    is essential to the furtherance of that objective.[^345]

66. We note that cable MSOs argue that the exclusive contract
    prohibition is not narrowly tailored because it is allegedly both
    overinclusive (in that it applies to "new," "unpopular," and other
    types of programming that are arguably not essential to the
    viability of competition in the video distribution market) and
    underinclusive (in that it does not apply to certain
    non-cable-affiliated programming that may be necessary for viable
    competition in the MVPD market).[^346] We reject proposals to modify
    the scope of the exclusive contract prohibition for the reasons
    discussed in Section III.A.4. Moreover, we note that the exclusive
    contract prohibition in Section 628(c)(2)(D) is not absolute.
    Rather, cable-affiliated programmers may seek approval to enter into
    exclusive programming contracts that satisfy the criteria set forth
    by Congress in Section 628(c)(2) and (4).[^347] Thus, requests to
    enter into exclusive contracts for "new," "unpopular," and other
    types of programming cited by cable MSOs as non-essential to the
    viability of competition can be addressed through individual
    exclusivity petitions.[^348] Finally, as discussed above, we have
    found no evidence that the exclusive contract prohibition is
    creating a disincentive for the creation of new programming.[^349]
    Despite claims that the exclusive contract prohibition deprives
    cable operators and others of the incentive to invest in new
    programming, thereby restricting the creation of new programming,
    the record reflects the opposite.[^350] Thus, contrary to these
    contentions, the prohibition has fostered, not restricted, speech.

### Scope of Exclusive Contract Prohibition

67. Various commenters argue that the exclusive contract prohibition is
    both overinclusive and underinclusive with respect to the type of
    programming and MVPDs it covers. Some commenters ask the Commission
    to either narrow or expand the scope of the prohibition accordingly.
    Some cable MSOs argue that this alleged overinclusiveness and
    underinclusiveness render the exclusive contract prohibition
    arbitrary and capricious under the Administrative Procedures
    Act.[^351] As discussed below, we decline to either narrow or expand
    the exclusive contract prohibition.

#### Narrowing the Prohibition

##### Narrowing Based on Status of Programming Network

68. For the reasons discussed below, we decline to narrow the scope of
    the exclusive contract prohibition based on the status of the
    programming network. The exclusive contract prohibition in Section
    628(c)(2)(D) and the implementing rules pertain to all
    satellite-delivered programming networks that are vertically
    integrated with a cable operator, regardless of their popularity.
    Some cable MSOs argue that the prohibition is thus overinclusive
    because it includes new and unpopular programming networks that are
    not essential to the ability of an MVPD to compete. These cable MSOs
    ask the Commission to narrow the scope of the exclusion contract
    prohibition based on the status of the programming network by (i)
    allowing exclusive arrangements for new and unpopular
    programming;[^352] (ii) allowing exclusive arrangements for regional
    non-sports programming;[^353] and (iii) allowing exclusive
    arrangements for RSNs in DMAs served by more than one unaffiliated
    RSN.[^354]

69. As an initial matter, we note that in adopting the exclusive
    contract prohibition in Section 628(c)(2)(D), Congress applied the
    prohibition to all cable-affiliated programming. Congress did not
    distinguish between different types of cable-affiliated programming.
    Instead, Congress in Section 628(c)(4) established criteria whereby
    cable-affiliated programmers could petition the Commission for
    authority to enter into exclusive arrangements despite the general
    rule prohibiting all such exclusive arrangements.[^355] Requests to
    remove certain cable-affiliated programming networks from the
    prohibition can be addressed through these individual exclusivity
    petitions.[^356] Accordingly, as the Commission concluded in the
    *2002 Extension Order*, we believe that treating all satellite cable
    programming and satellite broadcast programming uniformly for
    purposes of the exclusive contract prohibition is consistent with
    Section 628(c)(2)(D) and the definitions set forth in Sections
    628(i)(1) and (3).[^357] Moreover, no commenter has provided a
    rational and workable definition of "must have" programming that
    would allow us to apply the exclusive contract prohibition to only
    this type of programming. In the *2002 Extension Order*, the
    Commission recognized "the difficulty of developing an objective
    process of general applicability to determine what programming may
    or may not be essential to preserve and protect competition" and
    further noted that any attempt to distinguish between different
    types of cable-affiliated programming is likely to raise
    Constitutional concerns.[^358] Cable MSOs asking us to narrow the
    scope of the prohibition suggest no workable mechanisms for
    alleviating these concerns.

##### Narrowing Based on Status of Cable Operator

70. For the reasons discussed below, we decline to narrow the scope of
    the exclusive contract prohibition based on the status of the cable
    operator. Cable MSOs argue that we should narrow the exclusive
    contract prohibition by allowing certain types of exclusive
    arrangements based on the status of the cable operator, such as (i)
    those involving an affiliated cable operator whose network passes
    only a small number of households throughout the nation;[^359] (ii)
    those between a cable operator and an affiliated programming network
    outside the footprint of the affiliated cable operator;[^360]
    and (iii) those involving affiliated cable operators that face
    competition from both DBS and telephone companies.[^361]

71. In adopting the exclusive contract prohibition in Section
    628(c)(2)(D), Congress applied the prohibition to *all* cable
    operators. Congress did not distinguish between different types of
    cable operators for purposes of Section 628(c)(2)(D). Moreover, in
    adopting the exclusive contract prohibition, Congress has already
    delineated a geographic demarcation applicable to the prohibition --
    "areas served by a cable operator."[^362] Congress did not provide
    that the exclusive contract prohibition should vary based on the
    competitive circumstances in individual geographic areas served by a
    cable operator.[^363]

72. We also find that these attempts to narrow the exclusive contract
    prohibition would harm competition in the video distribution
    marketplace. One of the key anticompetitive practices that the
    exclusive contract prohibition addresses is the practice of
    leveraging cable's market power collectively by withholding
    affiliated programming from rival MVPDs while selling the affiliated
    programming to other cable operators which do not compete with one
    another. A cable operator may gain by weakening a current or
    potential rival (such as a DBS operator) even in markets that the
    cable operator itself does not serve.[^364] Thus, proposals to
    narrow the exclusive contract prohibition by allowing exclusive
    arrangements outside of the footprint of the affiliated cable
    operator or with cable operators whose networks pass only a small
    number of households throughout the nation will impede competition
    in the video distribution marketplace. We similarly find that
    allowing exclusive arrangements for affiliated cable operators that
    face competition from both DBS and telephone companies would harm
    competition in the video distribution marketplace. We conclude
    herein that a cable operator will not lose the incentive and ability
    to enter into an exclusive arrangement in a given geographic area
    simply because it faces competition from both DBS operators and
    telephone companies in that area. As discussed above, the key
    consideration is the market share of the cable operator relative to
    other competitors. Indeed, in areas where a telephone company has
    recently entered the video distribution market, its market share
    will be minimal, providing cable operators with the ability and
    incentive to enter into exclusive arrangements that adversely impact
    competition.[^365]

##### Narrowing Based on Status of Competitive MVPD

73. For the reasons discussed below, we decline to narrow the exclusive
    contract prohibition by precluding certain competitive MVPDs from
    benefiting from the prohibition. Comcast and Cablevision ask us to
    narrow the exclusive contract prohibition by precluding certain
    competitive MVPDs from benefiting from the prohibition, such as
    competitive MVPDs that (i) have been in the MVPD market for more
    than five years;[^366] (ii) have extensive resources;[^367] or (iii)
    enter into exclusive contracts for programming.[^368]

74. Section 628 makes no distinction among MVPDs of the kind suggested
    by these commenters. Moreover, we find that adopting such
    restrictions on the entities that can benefit from the prohibition
    will limit competition in the video distribution market[^369] and
    will result in no discernible public interest benefits.[^370] The
    resources of competitors or the number of years they have spent in
    the market has no bearing on the goal of Section 628(c)(2)(D) to
    preclude exclusive contracts in order to facilitate competition in
    the video distribution market. Rather, if cable operators have
    exclusive access to non-substitutable content that is essential for
    viable competition and they have the incentive to withhold such
    content, the amount of resources of competitive MVPDs or their
    longevity in the market will not be able to overcome that
    competitive advantage.[^371] Comcast asks us to prevent competitive
    MVPDs that themselves enter into exclusive programming contracts
    from being the beneficiaries of the exclusive contract prohibition
    applied to cable-affiliated programmers.[^372] Section 628, however,
    does not exempt cable operators from its restrictions based on the
    contracting practices of non-cable MVPDs.

#### Expanding the Prohibition

##### Expanding the Prohibition to Non-Cable-Affiliated Programming

75. For the reasons discussed below, we decline to apply an exclusive
    contract prohibition to non-cable-affiliated programming. The
    exclusive contract prohibition in Section 628(c)(2)(D) and the
    implementing rules pertain only to programming networks that are
    vertically integrated with a "cable operator," as that term is
    defined in the Communications Act.[^373] Competitive MVPDs, as well
    as some cable MSOs,[^374] argue that the prohibition is thus
    underinclusive because it does not pertain to certain
    non-cable-affiliated programming that is necessary for MVPDs to
    compete. They ask the Commission to prohibit exclusive contracts
    for (i) all "must have" programming networks, regardless of whether
    the network is affiliated with a cable operator;[^375] and (ii) all
    programming networks vertically integrated with any MVPD, including
    DBS operators and new MVPDs such as AT&T and Verizon.[^376]

76. As an initial matter, to the extent that an MVPD meets the
    definition of a "cable operator" under the Communications Act, the
    exclusive contract prohibition in Section 628(c)(2)(D) already
    applies to its affiliated programming and, thus, no further action
    is required on our part.[^377] We have previously explained that the
    exclusive contract prohibition in Section 628(c)(2)(D) does not
    extend to unaffiliated programming networks and programming networks
    affiliated with non-cable MVPDs, such as DBS operators.[^378]

77. Moreover, the record before us in this proceeding does not provide
    sufficient evidence upon which to conclude that non-cable-affiliated
    programming is being withheld from MVPDs to a significant extent or
    that such withholding is adversely impacting competition in the
    video distribution market. Accordingly, we seek comment on this
    issue in the *NPRM*. We agree with DIRECTV that the economic premise
    underlying the exclusive contract prohibition in Section
    628(c)(2)(D) is that the cable industry's dominance of the video
    distribution market enables cable operators to successfully withhold
    affiliated programming from rival MVPDs in order to limit
    competition in the distribution market.[^379] The record before us
    in this proceeding does not provide us with adequate evidence to
    conclude that those exclusive programming arrangements entered into
    by non-cable MVPDs have harmed competition in the video distribution
    market.[^380] Because we have not been presented with sufficient
    evidence in this proceeding to consider a rule that prohibits
    exclusive contracts for non-cable-affiliated programming, we need
    not address here our statutory authority to apply an exclusive
    contract prohibition to such programming.[^381]

##### Expanding the Prohibition to Terrestrially Delivered Programming

78. We decline to apply an exclusive contract prohibition to
    terrestrially delivered programming at this time. Some competitive
    MVPDs argue that the Commission should apply the exclusive contract
    prohibition to terrestrially delivered programming networks, citing
    various provisions of the Communications Act in addition to Section
    628(c) for statutory support.[^382] The exclusive contract
    prohibition in Section 628(c)(2)(D) pertains only to vertically
    integrated "satellite cable programming" and vertically integrated
    "satellite broadcast programming."[^383] The Communications Act
    defines both terms to include only programming transmitted or
    retransmitted by satellite for reception by cable operators.[^384]
    Based on these definitions as well as the legislative history of the
    1992 Cable Act, the Commission has previously concluded that
    terrestrially delivered programming (such as programming delivered
    by programmers to cable operators by fiber) is "outside of the
    direct coverage" of the exclusive contract prohibition in Section
    628(c)(2)(D).[^385] As we have concluded previously, we decline to
    apply the exclusive contract prohibition to terrestrially delivered
    programming pursuant to Section 628(c)(2)(D).[^386] Commenters have
    failed to provide any new evidence or arguments that would lead us
    to reconsider our previous conclusion that terrestrially delivered
    programming is "outside of the direct coverage" of Section
    628(c)(2)(D).[^387] We continue to believe that the plain language
    of the definitions of "satellite cable programming" and "satellite
    broadcast programming" as well as the legislative history of the
    1992 Cable Act place terrestrially delivered programming beyond the
    scope of Section 628(c)(2)(D).[^388] In the *NPRM*, we seek further
    comment on whether other provisions of the Communications Act
    provide the Commission with statutory authority to extend our
    program access rules, including an exclusive contract prohibition,
    to terrestrially delivered programming, and whether we should extend
    the prohibition to cover such programming.[^389]

### Length of New Term

79. We conclude that the exclusive contract prohibition will be extended
    for five years subject to review during the last year of this
    extension period (*i.e*., between October 2011 and October 2012). As
    we concluded in the *2002 Extension Order*, we do not believe that
    establishing a fixed date for sunset of the exclusive contract
    prohibition without further review will serve the public interest.
    Section 628(c)(5) does not expressly state a term for how long the
    prohibition should continue if we decide that it should be extended,
    thereby providing the Commission with the discretion to prescribe
    this period.[^390] In the *2002 Extension Order*, the Commission
    stated that establishing a fixed date for sunset of the prohibition
    without conducting a further proceeding to determine whether the
    prohibition is still "necessary to preserve and protect competition
    and diversity in the distribution of video programming" is not
    consistent with Congressional intent.[^391] We cannot predict now
    how future changes in the video distribution market will impact the
    continued need for the exclusive contract prohibition. Rather, we
    believe that providing for a limited extension subject to further
    review is a more prudent approach and comports better with
    Congressional intent than a predetermined sunset date.

80. In the *Notice*, we sought comment on whether the exclusive contract
    prohibition should automatically sunset upon a specific event or
    events in the marketplace.[^392] Commenters argue that the exclusive
    contract prohibition should not sunset upon the materialization of
    specific marketplace events.[^393] OPASTCO/ITTA argues that
    technological developments and marketplace evolutions are occurring
    too frequently for the Commission to predict when the rule should
    sunset without a thorough review.[^394] We agree that the evolving
    nature of the video distribution and programming markets makes it
    difficult if not impossible to determine in this proceeding what
    specific marketplace events would demonstrate that competition in
    the MVPD market is sufficient such that the exclusive contract
    prohibition can sunset. We note that commenters have not provided
    adequate suggestions as to such marketplace events. As discussed
    above, we believe that a more appropriate approach that is supported
    by Congressional intent is to continue to assess the developments in
    the video distribution and programming markets to determine if the
    market has evolved in a way that would allow us to abolish the
    exclusive contract prohibition.

81. As the Commission concluded in the *2002 Extension Order*, we will
    review whether the exclusive contract prohibition remains necessary
    during the last year of the five-year extension. We believe that
    five years could be a sufficient amount of time for competition to
    develop in the video distribution and programming markets.[^395]
    Given the marketplace developments over the last five years, such as
    the emergence of telephone companies into the video distribution
    market as well as other pro-competitive trends, including an
    increase in the number of programming networks, a decrease in the
    percentage of popular national and regional networks that are
    vertically integrated with cable operators, and an increase in the
    market penetration of MVPDs that compete with incumbent cable
    operators, we conclude that this review of the continuing necessity
    of the exclusivity prohibition has been a useful exercise of
    Commission resources. Accordingly, we believe that five years is an
    appropriate period of time to revisit the exclusivity prohibition.
    We also emphasize that, if adequate competition emerges before five
    years, the Commission could initiate its review earlier either on
    its own motion or in response to a petition.[^396] Moreover, we will
    continue to evaluate petitions for exclusivity under the public
    interest factors established by Congress.[^397]

### Other Programming Issues

82. Small and rural telephone MVPDs raise additional concerns in their
    comments regarding the difficulties they face in trying to obtain
    access to programming, such as tying of desired with undesired
    programming and unwarranted security requirements.[^398] We find
    that these concerns are beyond the scope of the programming issues
    raised in the *Notice*, which pertained only to the prohibition on
    exclusive contracts for satellite-delivered vertically integrated
    programming under Section 628(c)(2)(D) and the extension of that
    prohibition pursuant to Section 628(c)(5).[^399] We did not seek
    comment on these issues in the *Notice* and, accordingly, do not
    have a sufficient record upon which to address these concerns in
    this *Order*. We seek further comment on these issues in the *NPRM*.

## Modification of Program Access Complaint Procedures

83. As discussed below, we revise our program access complaint
    procedures. Specifically, we codify the existing requirement that
    respondents to program access complaints must attach to their
    answers copies of any documents that they rely on in their defense;
    find that in the context of a complaint proceeding, it would be
    unreasonable for a respondent not to produce all the documents
    requested by the complainant or ordered by the Commission, provided
    that such documents are in its control and relevant to the dispute;
    codify the Commission's authority to issue default orders granting a
    complaint if a respondent fails to comply with discovery requests;
    and allow parties to choose, within 20 days of the close of the
    pleading cycle, to engage in voluntary commercial arbitration of
    their program access complaints.

84. In the *Notice*, the Commission sought comment on whether and how
    the procedures for resolving program access disputes under Section
    628 should be modified.[^400] In general, Comcast, NCTA, and Time
    Warner, as well as the Broadcast Networks, argue that changes to the
    Commission's program access complaint procedures are not
    necessary.[^401] Comcast asserts that the Commission has carefully
    designed the program access procedural rules to provide effective
    relief by placing the least evidentiary burdens on those seeking
    relief and ensuring a speedy resolution of complaints; and that
    proposed changes to the process will make the program access
    complaint process more complicated, more costly, and more
    time-consuming.[^402] NCTA asserts that most program access
    complaints have been disposed of relatively quickly or resulted in
    settlements.[^403] Time Warner asserts that the appropriate way to
    resolve carriage disputes is for the parties to hash out their
    differences at the bargaining table, and the Commission should
    retain its existing policies and procedures, which encourage such
    negotiations.[^404] Time Warner argues that expanding the program
    access rules would be inconsistent with the norm of relying on the
    marketplace to govern contracts between private parties.[^405] Time
    Warner asserts that because the rules apply to only a very small
    number of program networks, these networks are forced to face a
    burdensome regulatory regime not encountered by the vast majority of
    their program network competitors.[^406] The Broadcast Networks also
    opposes changes to the process.[^407]

85. Parties recommending changes to the rules urge the Commission to
    focus on three areas of reform: acceleration of the deliberative
    process; providing a workable discovery mechanism; and protecting
    consumers during the pendency of complaint proceedings.[^408]
    OPASTCO/ITAA argues that the current process is so costly and
    time-consuming that it is impracticable for rural carriers to pursue
    a program access complaint.[^409] NTCA states that small rural
    carriers are at a disadvantage under the current procedures.[^410]
    EchoStar relies on its own experience to conclude that the current
    process does not provide an effective regulatory backstop to protect
    against protracted negotiations that can result in loss of
    subscribers and significant financial uncertainty for competitive
    MVPDs.[^411] In addition, EchoStar argues that the current
    procedures fail to provide a reliable means to ensure that all
    relevant documentation is available to Commission staff and the
    parties.[^412] AT&T urges reforms to make Section 628 a more
    effective deterrent to anticompetitive conduct by cable
    incumbents.[^413] Specifically, parties wishing to change the
    current process raise five issues: the length of the pleading cycle;
    discovery options; the parties' status pending resolution of
    complaints; time limits for resolving complaints; and arbitration as
    an alternate route to filing a complaint. We address all these
    issues below with the exception of the parties' status pending
    complaint resolution, which we address in the *NPRM*.

### Pleading Cycle

86. In this *Order*, we retain our existing pleading cycle. The
    Commission's existing rules provide that an MVPD aggrieved by
    conduct that it believes constitutes a violation of Section 628 and
    the Commission's program access rules may file a complaint with the
    Commission.[^414] A complainant must first notify the programming
    vendor that it intends to file the complaint and allow the vendor 10
    days to respond.[^415] Once a complaint is filed, the cable operator
    or satellite programming vendor must answer within 20 days of
    service of the complaint.[^416] Replies to the answer are due within
    15 days of service of the answer.[^417]

87. EchoStar asserts that a tighter pleading cycle will be more
    conducive to an efficient resolution of complaints.[^418] It
    suggests a 10-day limit for filing an answer and a 5-day reply
    period.[^419] It recommends that all service be electronic and that
    weekly status conferences be held to ensure progress.[^420] AT&T
    suggests that the Commission apply its existing formal complaint
    process to program access complaints and delegate resolution to the
    Enforcement Bureau.[^421] NCTA opposes a more expeditious pleading
    cycle because the cycle is already among the shortest time frames in
    Commission regulation.[^422] NCTA argues that reducing the timing of
    the pleading cycle further would not materially affect the overall
    time frame for resolving disputes, and would impose additional
    hardship on respondents.[^423]

88. The original program access complaint pleading cycle called for a
    30-day response time and 20-day reply window. In the *1998 Program
    Access Order*, the Commission adopted a more streamlined pleading
    cycle and reduced those times to 20 and 15 days respectively. The
    Commission's rules generally require answers to complaints to
    "advise the parties and the Commission fully and completely of the
    nature of any and all defenses" and "respond specifically to all
    material allegations of the complaint" or risk being deemed in
    default and having the complaint granted.[^424] In addition, answers
    to program access complaints must contain specific information
    pertinent to the type of complaint, whether it is an exclusivity
    complaint, a discrimination complaint, or a price discrimination
    complaint, and must include written documentary evidence.[^425]

89. *Discussion*. We find that the existing 20-day response time is
    necessary to allow sufficient time for a respondent to provide a
    complete defense. We encourage resolution of program access
    complaints based on the pleadings.[^426] A shorter pleading cycle
    would not necessarily improve the overall time for complaint
    resolution because incomplete or rushed responses could lead to the
    need for further pleadings and discovery. We therefore decline to
    adopt a more expedited pleading cycle. However, we believe that
    electronic filing may help improve the speed of resolution and,
    therefore, we will continue to study this issue internally to
    determine if it is technologically feasible to require electronic
    filing for program access complaints, which necessarily involve a
    number of confidential documents. Currently, parties may voluntarily
    submit electronic copies of their pleadings to staff via e-mail in
    order to expedite review.

90. Regarding mandatory weekly status conferences, the Commission
    currently has the authority to hold status conferences at any time
    and any party may request that a status conference be held.[^427] We
    believe that this provides the necessary flexibility to conduct
    status conferences as frequently as needed and decline to modify
    this rule to require mandatory weekly status conferences. Finally,
    we decline to shift the burden of complaint resolution to the
    Enforcement Bureau. We believe that program access complaints are
    more appropriately handled by Media Bureau staff with expertise on
    the issues involved in program access disputes.

### Discovery

91. In this *Order*, after reviewing our discovery rules pertaining to
    program access disputes, we codify the existing requirement that
    respondents to program access complaints must attach to their
    answers copies of any documents that they rely on in their defense;
    find that in the context of a complaint proceeding, it would be
    unreasonable for a respondent not to produce all the documents
    either requested by the complainant or ordered by the Commission,
    provided that such documents are in its control and relevant to the
    dispute; and emphasize that the Commission will use its authority to
    issue default orders granting a complaint if a respondent fails to
    comply with its discovery requests. The respondent shall have the
    opportunity to object to any request for documents.[^428] Such
    request shall be heard, and determination made, by the Commission.
    The respondent need not produce the disputed discovery material
    until the Commission has ruled on the discovery request.

92. Competitive MVPDs urge the Commission to revise the discovery rules
    applicable to program access complaint proceedings.[^429] USTelecom
    argues for mandatory automatic disclosure of specific information in
    response to a complaint to ensure adequate factual information is
    available to resolve the complaint.[^430] USTelecom urges the
    Commission to permit party-directed discovery on a case-by-case case
    basis and to craft case-specific confidentiality protections for
    sensitive information.[^431] RCN proposes that programmers' carriage
    contracts be available, subject to confidential treatment, because
    such agreements are essential for determining whether the programmer
    is discriminating in price, terms, and conditions.[^432] RCN argues
    that restrictive confidentiality and non-disclosure requirements
    prevent buyers from knowing whether the rates, terms, and conditions
    offered are consistent with those provided to affiliated MVPDs and
    competitors.[^433] EchoStar argues for discovery that is
    simultaneous with the complaint that includes six carriage
    contracts, both affiliated and unaffiliated, with discovery disputes
    resolved within ten days.[^434] EchoStar also urges the Commission
    to incorporate the discovery mechanism used in common carrier
    complaint proceedings.[^435]

93. According to CA2C, while the Commission may have been seeking to
    prevent excessive discovery cost and delay in establishing its
    current rules, the result has been that key documents are not made
    available in complaint proceedings, including programming contracts
    with competitors that are necessary to show *prima facie*
    discrimination.[^436] CA2C and BSPA urge the Commission to make
    clear that respondents to discrimination complaints must produce
    these contracts, subject to confidential treatment.[^437] These
    parties also request that the Commission make clear that staff may
    order discovery, in consultation with or at the request of the
    parties, in order to facilitate resolution of the case.[^438] AT&T
    asserts that the Commission should apply its procedures for
    adjudicating formal complaints to program access disputes, including
    rules governing pleading, discovery, and motions.[^439] AT&T asserts
    that respondents should submit copies of all contracts and documents
    relevant to the complaint, subject to a codified and standardized
    protective order.[^440] The Consumer Groups also supports additional
    tools for discovery.[^441]

94. Comcast, NCTA, and Time Warner see no need for changes to the
    discovery rules.[^442] NCTA argues that the proposed changes would
    automatically force programmers to disclose highly confidential and
    proprietary information and that the Commission considered and
    rejected similar suggestions in 1998 when it affirmed the use of
    Commission-controlled discovery.[^443] Time Warner asserts that
    EchoStar's proposal to require a programmer to submit six carriage
    contracts for comparison with the complainant's contract would allow
    MVPDs to engage in "fishing expeditions" for highly confidential and
    competitively sensitive information and would give them
    substantially increased and unfair leverage in their negotiations
    with programmers.[^444] Time Warner argues that the current rules
    permit discovery where warranted and that expanded discovery would
    create a procedural quagmire due to the complex nature of
    programming contracts.[^445] Time Warner asserts that protective
    orders do not adequately eliminate the potential for harm from
    disclosure of confidential information.[^446]

95. *Discussion*. We take measures to ensure that the Commission has the
    information necessary to expeditiously resolve program access
    complaints. In this regard, we take two actions: 1) we codify the
    requirement that a respondent must attach to its answer all
    documents that it expressly references or relies upon in defending a
    program access claim; and 2) we find that in the context of a
    complaint proceeding, it would be unreasonable for a respondent not
    to produce all the documents either requested by the complainant or
    ordered by the Commission, provided that such documents are in its
    control and relevant to the dispute. The respondent shall have the
    opportunity to object to any request for documents that are not in
    its control or relevant to the dispute. Such request shall be heard,
    and determination made, by the Commission. Until the objection is
    ruled upon, the obligation to produce the disputed material is
    suspended. Any party who fails to timely provide discovery requested
    by the opposing party to which it has not raised an objection as
    described above may be deemed in default and an order may be entered
    in accordance with the allegations contained in the complaint, or
    the complaint may be dismissed with prejudice.

96. *Respondent's Answer.* In the *1998 Program Access Order*, the
    Commission clarified that, to the extent that a respondent expressly
    references and relies upon a document or documents in defending a
    program access claim, the respondent must attach that document or
    documents to its answer.[^447] In this *Order*, we expressly codify
    that requirement in the Commission's rules.[^448] To the extent that
    there has been any confusion about this requirement in the past, we
    clarify that a respondent must attach the necessary documentation to
    its answer to a program access complaint, subject to our rules on
    confidential filings. Subsequent to the *1998 Program Access Order*,
    the Commission, in the *1998 Biennial Review*, further clarified the
    response requirements for specific types of program access
    complaints.[^449] To the extent that a respondent fails to include
    the permissive attachments identified in our rules that are
    necessary to a resolution of the complaint, the Commission may
    require the production of further documents.[^450] Moreover, a
    program access complainant is entitled, either as part of its
    complaint or through a motion filed after the respondent's answer is
    submitted, to request that Commission staff order discovery of any
    evidence necessary to prove its case.[^451] Respondents are also
    free to request discovery.

97. *Submission of Necessary Information.* We believe that expanded
    discovery will improve the quality and efficiency of the
    Commission's resolution of program access complaints. Accordingly,
    we find that it would be unreasonable for a respondent not to
    produce all the documents either requested by the complainant or
    ordered by the Commission,[^452] provided that such documents are in
    its control and relevant to the dispute. In reaching this finding,
    we agree with the assertions of RCN and other competitors that the
    availability of programmers' carriage contracts, subject to
    confidential treatment, are essential for determining whether the
    programmer is discriminating in price, terms, and conditions. The
    Commission's rules allow the Commission staff to order production of
    any documents necessary to the resolution of a program access
    complaint, including documents upon which a complainant must rely to
    make its *prima facie* case.[^453] The subject discovery may require
    the production of confidential material, including the disclosure of
    carriage contracts, subject to our confidentiality rules. While we
    retain this process for the Commission to order the production of
    documents and other discovery, we will also allow parties to a
    program access complaint to serve requests for discovery directly on
    opposing parties.[^454]

98. Parties to a program access complaint may serve requests for
    discovery directly on opposing parties, and file a copy of the
    request with the Commission. As discussed above, the respondent
    shall have the opportunity to object to any request for documents
    that are not in its control or relevant to the dispute. Such request
    shall be heard, and determination made, by the Commission. Until the
    objection is ruled upon, the obligation to produce the disputed
    material is suspended. Any party who fails to timely provide
    discovery requested by the opposing party to which it has not raised
    an objection as described above may be deemed in default and an
    order may be entered in accordance with the allegations contained in
    the complaint, or the complaint may be dismissed with
    prejudice.[^455]

99. We reiterate that respondents to program access complaints must
    produce in a timely manner, the contracts and other documentation
    that are necessary to resolve the complaint, subject to confidential
    treatment.[^456] In order to prevent abuse, the Commission will
    strictly enforce its default rules against respondents who do not
    answer complaints thoroughly or do not respond in a timely manner to
    permissible discovery requests with the necessary documentation
    attached.[^457] Respondents that do not respond in a timely manner
    to all discovery ordered by the Commission will risk penalties,
    including having the complaint against them granted by
    default.[^458] Likewise, a complainant that fails to respond
    promptly to a Commission order regarding discovery will risk having
    its complaint dismissed with prejudice.[^459] Finally, a party that
    fails to respond promptly to a request for discovery to which it has
    not raised a proper objection will be subject to these sanctions as
    well.[^460]

100. *Confidential Material*. We understand that this approach requires
     the submission of confidential and extremely
     competitively-sensitive information.[^461] Accordingly, in order to
     appropriately safeguard this confidential information we believe it
     is necessary to revise the standard protective order and
     declaration ("Protective Order") for use in program access
     proceedings.[^462] The Protective Order sets out the methodology
     for producing and protecting pleading or discovery material that is
     deemed by the submitting party to contain confidential
     information.[^463] The Protective Order states that, once the
     authorized representative of the reviewing party has signed the
     appropriate declaration, the submitting party *shall* provide a
     copy of the confidential information to authorized representatives
     upon request. [^464] Authorized representatives of reviewing
     parties are limited to counsel and their associated attorneys,
     paralegals, clerical staff and other employees, to the extent
     reasonably necessary to render professional services; specified
     persons, including employees of the reviewing parties, requested by
     counsel to furnish technical or other expert advice or service, or
     otherwise engaged to prepare material for the express purpose of
     formulating filings in the program access proceeding, *other than
     persons in a position to use the* *confidential information for
     competitive commercial or business purposes*; and any person
     designated by the Commission in the public interest, upon such
     terms as the Commission may deem proper.[^465] Confidential
     information shall not be used for competitive business purposes,
     and shall not be used or disclosed except in accordance with the
     Protective Order.[^466]

101. To ensure that confidential information is not improperly used for
     competitive business purposes, we intend to make an important
     revision to the Protective Order. Specifically, we revise it to
     reflect that any personnel, including in-house counsel, involved in
     competitive decision-making are prohibited from accessing the
     confidential information. We more specifically define the
     limitations on access by including language that the Commission
     routinely uses in the merger protective orders.[^467] The
     Protective Order currently prohibits access to confidential
     information by specified persons that are in a position to use the
     information for competitive commercial or business purposes. We
     modify the language of the Protective Order to reflect that any
     counsel, or other persons, including in-house counsel, that are
     involved in competitive decision-making are prohibited from access
     to confidential material. We further define competitive
     decision-making to include any activities, association, or
     relationship with any person, including the complainant, client, or
     any authorized representative, that involves rendering advice or
     participation in *any* or all of said person's business decisions
     that are or will be made in light of similar or corresponding
     information about a competitor.[^468]

102. In order to appropriately safeguard confidential information, we
     revise the Protective Order for use in program access proceedings
     to find that any personnel, including in-house counsel, (i) that
     are involved in competitive decision-making, (ii) are in a position
     to use the confidential information for competitive commercial or
     business purposes, or (iii) whose activities, association, or
     relationship with the complainant, client, or any authorized
     representative involve rendering advice or participation in any or
     all of said person's business decisions that are or will be made in
     light of similar or corresponding information about a competitor,
     are prohibited from accessing the confidential information.[^469]

103. A protective order constitutes both an order of the Commission and
     an agreement between the party executing the declaration and the
     submitting party. The Commission has full authority to fashion
     appropriate sanctions for violations of its protective orders,
     including but not limited to suspension or disbarment of attorneys
     from practice before the Commission, forfeitures, cease and desist
     orders, and denial of further access to confidential information in
     Commission proceedings. We intend to vigorously enforce any
     transgressions of the provisions of our protective orders. [^470]

### Time Frame for Resolving Program Access Complaints

104. In this *Order*, we retain our current goals for resolving program
     access complaints with the intent to expedite complaints filed by
     small companies without existing carriage contracts. Under the
     current process, the Commission has set forth goals for the
     resolution of program access complaints as five months from the
     submission of a complaint for denial of programming cases, and nine
     months for all other program access complaints, such as price
     discrimination cases.[^471] Competitive MVPDs believe that the
     Commission should establish a firm deadline by which program access
     complaints must be resolved.[^472] OPASTCO/ITTA claim that the
     current process is so time consuming and costly that rural carriers
     forgo filing complaints and they urge the Commission to establish
     procedures that will provide for timely resolution of
     complaints.[^473] ACA and the Consumer Groups also support
     mandatory time frames for complaint resolution. Verizon urges the
     Commission to establish a firm deadline of five months by which all
     complaints should be resolved.[^474] USTelecom suggests three
     months for denial of programming cases and six months for all other
     complaints.[^475] NTCA urges that a firm rather than suggested
     deadline be established. EchoStar argues for a 45-day "shot clock"
     deadline with a one-time 45-day extension for complex cases.[^476]

105. CA2C advocates a 120-day time frame for all cases, beginning with
     the close of pleadings.[^477] The SBA Office of Advocacy and BSPA
     support this time frame.[^478] CA2C suggests, however, that the
     time limit be suspended to facilitate settlement
     negotiations.[^479] CA2C asserts that, rather than complaints being
     resolved in the five- to nine-month time frame envisioned in the
     *1998 Program Access Order,* complaints often take years to
     resolve, which has a disparate impact on new entrants, through
     prolonged delays in a competitor's ability to carry must have
     programming pending resolution of denial of carriage
     complaints.[^480] CA2C also asserts that the existing time frames
     have a negative impact on existing competitive providers, by
     imposing the continued payment of discriminatory prices over a
     prolonged period of time in price discrimination cases, and forcing
     competitors to divert inordinate resources to prosecution of
     program access complaints.[^481]

106. AT&T asserts that delays in processing a complaint can cripple the
     ability of a new entrant to attract new subscribers and tarnish
     public perception of a new entrant's video offering during a
     critical period when consumers are forming initial impressions of
     that offering.[^482] AT&T argues that the Commission should adopt a
     90-day binding deadline for complaint resolution, consistent with
     the 90-day deadline for Section 271 complaints.[^483] NCTA states
     that it does not oppose a more expedited time frame for Commission
     resolution of complaints, so long as cable operators and
     programmers are provided with sufficient time to respond to
     complaints.[^484] Comcast does not object to the Commission firming
     up its deadlines for action on complaints.[^485]

107. *Discussion*. We agree that program access complaints should be
     resolved in a timely manner, but the time frames for resolving
     complaints must be realistic. We will retain our goals of resolving
     program access complaints within five months from the submission of
     a complaint for denial of programming cases, and nine months for
     all other program access complaints, such as price discrimination
     cases. In the *1998 Program Access Order*, in imposing goals for
     the resolution of complaints, the Commission attempted to ascertain
     what can be accomplished on a consistent basis. The Commission
     found that a single time limit would require the Commission to
     adopt a longer time limit than would be necessary in many
     cases.[^486] Consistent with the Commission's other statutory
     deadlines, the Commission adopted time frames that commenced from
     the time of the filing of a complaint. The Commission's designation
     of a five-month limit was consistent with the five-month period in
     which Congress required the Commission to resolve certain
     complaints against common carriers.[^487] Other program access
     complaints, including price discrimination cases, were given a
     nine-month time frame for resolution, excluding the time necessary
     to resolve bifurcated damages issues.[^488] The Commission
     determined that these were realistic goals, achievable given the
     Commission's limited resources and overall statutory duties. The
     Commission also provided for the suspension of the time limits upon
     motion by parties seeking to pursue settlement negotiations.[^489]

108. We find that these time limits for resolution are still reasonable.
     We fail to see a direct correlation between a more expedited
     process for the resolution of program access complaints and lower
     litigation costs to complainants. Indeed, we believe that overly
     accelerated pleading and discovery time periods can lead to
     increased litigation costs if the parties are required to hire
     additional staff and counsel in attempting to meet unrealistic
     deadlines. However, we are concerned with delays in the resolution
     of complaints filed by new entrants, especially small businesses,
     and therefore, the Commission will expedite the resolution of such
     complaints and, as discussed above in Section III.B.2, will
     strictly enforce its default rules against respondents who do not
     answer complaints thoroughly with the necessary documentation
     attached.[^490]

### Arbitration

109. In this *Order*, we expand the use of voluntary arbitration for
     resolution of program access disputes, by increasing opportunities
     for parties to choose arbitration in lieu of Commission resolution
     of a pending complaint, and refrain from imposing a mandatory
     arbitration requirement at this time. Competitive MVPDs urge the
     Commission to implement arbitration measures into the program
     access complaint process. NTCA, OPASTCO/ITTA, and SureWest, as well
     as the SBA Office of Advocacy, all support some form of
     arbitration.[^491] ACA, BSPA, EchoStar, and RCN, as well as
     Consumer Groups, all urge the adoption of "baseball-style"
     commercial arbitration rules, similar to those approved in
     connection with two recent mergers ("*Adelphia and Hughes
     Orders*").[^492] BSPA believes that the arbitration rules adopted
     in the two merger cases are a good template for arbitration rules
     that the Commission should adopt as part of its program access
     rules. BSPA and RCN point out that the ultimate goal of
     establishing an arbitration option is to push the parties toward
     agreement prior to a complete breakdown in negotiations.[^493] RCN
     points out that the rationale for adopting an arbitration remedy in
     the *Adelphia* and *Hughes* proceedings applies equally in this
     context because vertically integrated programmers have similar
     incentives to use temporary foreclosures during negotiations.[^494]
     BSPA argues that there is precedent for the use of third parties to
     adjudicate disputes under the Communications Act.[^495] EchoStar
     asserts that arbitration of program access complaints is consistent
     with all statutory requirements, including the 1992 Cable Act, the
     Administrative Procedure Act,[^496] and the Administrative Dispute
     Resolution Act of 1996,[^497] as well as with the subdelegation
     doctrine.[^498]

110. Comcast states that the Commission should not require arbitration
     of disputes.[^499] Comcast asserts that Section 628 assigns the
     responsibility to adjudicate disputes to the Commission and there
     is no provision of law that authorizes the Commission to mandate
     binding arbitration.[^500] NCTA asserts that mandatory arbitration
     would improperly delegate the Commission's responsibilities to an
     outside party or, if the Commission provides for *de novo* review
     of the arbitrator's decision, would add an extra, time-consuming
     layer to what is now an expeditious process.[^501] NCTA states that
     establishing a mandatory commercial arbitration provision similar
     to those imposed in the *Adelphia* and *Hughes* proceedings would
     be neither lawful nor advisable.[^502] NCTA points out that the
     Commission already has procedures in place that allow parties to
     agree to invoke alternative dispute resolution ("ADR") to resolve
     certain factual disputes in lieu of referral to an administrative
     law judge, consistent with the Commission's ADR policy which relies
     on ADR as a "purely voluntary" measure.[^503] NCTA continues that
     Section 628 provides the Commission with no authority to adopt
     one-sided arbitration rules and a party cannot be involuntarily
     subjected to arbitration of these complaints.[^504]

111. The Broadcast Networks urge the Commission to refrain from imposing
     binding arbitration as a catch-all solution, contending there is no
     problem in need of solution, the Commission already has sufficient
     and effective remedies in place to resolve program access disputes,
     and the overlay of an additional layer of process would serve to
     prolong the Commission's deliberative process.[^505] Moreover, the
     Broadcast Networks argue that the Commission has no authority to
     delegate its statutory obligation to resolve program access
     complaints.[^506] Time Warner urges the Commission to reject
     mandatory arbitration of program access complaints.[^507] Time
     Warner argues that because arbitration is generally a matter of
     contract, and federal law prohibits an agency from requiring
     consent to arbitration in order to ensure that it is truly
     voluntary, a mandatory arbitration requirement would be *ultra
     vires* and unlawful.[^508]

112. *Discussion*. We decline to impose mandatory arbitration as a rule
     in all program access cases at this time. We would like to see how
     arbitration of program access disputes, either through a merger
     condition or through voluntary arbitration, is working over time,
     to determine if modifications to the arbitration process are
     necessary prior to imposing a mandatory requirement on all parties
     to all program access complaints. Once there is a track record for
     arbitration of program access disputes, we will be able to
     determine which types of disputes lend themselves more readily to
     resolution by arbitration and which may be more judiciously
     resolved by the Commission in the first instance.

113. The current rules allow parties to voluntarily engage in ADR,
     including arbitration, in lieu of an administrative hearing.[^509]
     However, we believe that parties to program access complaints
     should be able to voluntarily choose arbitration prior to the
     Commission making a determination to forward the complaint to an
     administrative law judge and that the *Adelphia Order* provide
     adequate guidance for the arbitration process.[^510] Therefore, the
     Commission will suspend action on a complaint where both parties
     agree to use ADR, including commercial arbitration, within 20 days
     following the close of the pleading cycle. Parties may agree that
     voluntary arbitration is a quick and productive way to resolve
     their commercial disputes. Moreover, we will continue to monitor
     developments in the marketplace and will, if necessary, revisit in
     the future whether to adopt a mandatory arbitration requirement.

#  NOTICE OF PROPOSED RULEMAKING

## Procedure for Shortening Term of Extension of Exclusive Contract Prohibition

114. In light of the five-year extension of the exclusivity ban, the
     Commission seeks comment on whether it can establish a procedure
     that would shorten the term of the extension if, after two years
     (*i.e*., October 5, 2009) a cable operator can show competition
     from new entrant MVPDs has reached a certain penetration level in
     the DMA. We seek comment on what this penetration level should be.
     And, we seek comment on whether two years or some other time frame
     is the appropriate period of time. Finally, we ask parties to
     comment on whether a market-by-market analysis is appropriate as
     both a legal and policy matter.

## Extending Program Access Rules to Terrestrially Delivered Cable-Affiliated Programming

115. In comments on the *NPRM*, competitive MVPDs provided various
     examples of withholding of terrestrially delivered cable-affiliated
     programming.[^511] Moreover, in the *Order*, we note the
     Commission's previous findings that in two instances --
     Philadelphia and San Diego -- withholding of terrestrially
     delivered cable-affiliated programming has had a material adverse
     impact on competition in the video distribution market.[^512] As
     discussed in the *Order*, however, the Commission has previously
     concluded that terrestrially delivered programming is "outside of
     the direct coverage" of the exclusive contract prohibition in
     Section 628(c)(2)(D).[^513] In the *Order*, we state our continued
     view that the plain language of the definitions of "satellite cable
     programming" and "satellite broadcast programming" as well as the
     legislative history of the 1992 Cable Act place terrestrially
     delivered programming beyond the scope of Section
     628(c)(2)(D).[^514] Commenters, however, cite various other
     provisions of the Communications Act as providing the Commission
     with statutory authority to extend the program access rules,
     including an exclusive contract prohibition, to terrestrially
     delivered cable-affiliated programming, such as Sections 4(i),
     201(b), 303(r), 601(6), 612(g), 616(a), 628(b), and 706.[^515]

116. As demonstrated by the examples of withholding of RSNs in San Diego
     and Philadelphia, we believe that withholding of terrestrially
     delivered cable-affiliated programming is a significant concern
     that can adversely impact competition in the video distribution
     market. To address this concern, we seek comment on whether it
     would be appropriate to extend our program access rules to all
     terrestrially delivered cable-affiliated programming pursuant to
     Sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 628(b), or
     706, or any other provision under the Communications Act.[^516] In
     particular, we [note]{.mark} our previous conclusion that the
     ability to offer a viable video service is "linked intrinsically"
     to broadband deployment.[^517] We seek comment on whether the
     ability to offer terrestrially delivered cable-affiliated
     programming is needed to offer a viable video service and,
     accordingly, whether extending the program access rules, including
     the prohibition on exclusive contracts, to terrestrially delivered
     cable-affiliated programming would promote the goal of Section 706
     to facilitate broadband deployment. In addition, we note that the
     plain language of Section 628(b), like Section 628(c)(2)(D),
     specifies "satellite cable programming" and "satellite broadcast
     programming."[^518] We seek comment regarding whether we have the
     authority to extend our program access rules to all terrestrially
     delivered cable-affiliated programming by way of statutory
     provisions granting general authority to the Commission, in light
     of the specific authority in Section 628 that limits their scope to
     satellite programming.

117. We also seek comment on the extent to which cable operators are
     shifting delivery of affiliated programming from satellite delivery
     to terrestrial delivery and whether such action is intended to
     evade the program access rules. We note Verizon's claim that
     Cablevision's programming subsidiary, Rainbow, has made standard
     definition feeds of its RSNs available by satellite, but HD feeds
     available terrestrially, thereby avoiding the program access rules,
     including the exclusive contract prohibition, for HD feeds.[^519]
     We seek comment on whether the program access rules should apply to
     all feeds of the same programming, including both standard and HD
     feeds, regardless of whether one feed is delivered terrestrially.
     We also seek comment on whether shifting the HD feed of vertically
     integrated cable programming to terrestrial delivery is an unfair
     method of competition or an unfair or deceptive act in violation of
     Section 628(b) of the Communications Act.[^520]

## Expanding the Exclusive Contract Prohibition to Non-Cable-Affiliated Programming

118. We also seek comment on whether to expand the exclusive contract
     prohibition to apply to non-cable-affiliated programming that is
     affiliated with a different MVPD, principally a DBS provider. As
     discussed above, to the extent that an MVPD meets the definition of
     a "cable operator" under the Communications Act, the exclusive
     contract prohibition in Section 628(c)(2)(D) already applies to its
     affiliated programming.[^521] Moreover, as noted above, Section
     628(j) of the Communications Act provides that any provision of
     Section 628, including the exclusive contract prohibition in
     Section 628(c)(2)(D), that applies to a cable operator also applies
     to any common carrier or its affiliate that provides video
     programming.[^522] Programming affiliated with other MVPDs, such as
     DBS providers, is beyond the scope of the exclusive contract
     prohibition in Section 628(c)(2)(D). We seek comment on whether to
     extend the exclusive contract prohibition to non-cable-affiliated
     programming that is affiliated with a different MVPD, principally a
     DBS provider, pursuant to Sections 4(i), 201(b), 303(r), 601(6),
     612(g), 616(a), 628(b), or 706, or any other provision under the
     Communications Act.[^523]

## Tying of Desired Programming with Undesired Programming

119. Small and rural cable operators and other MVPDs have raised
     concerns regarding tying of MVPDs' rights to carry broadcast
     stations with carriage of other owned or affiliated broadcast
     stations in the same or a distant market or one or more affiliated
     non-broadcast network.[^524] For example, in 2002, the American
     Cable Association ("ACA"), representing small cable operators,
     filed a Petition for Inquiry stating that broadcast networks and
     station groups engage in unfair retransmission tying
     arrangements.[^525] ACA explains that tying harms small cable
     operators and their consumers by increasing the costs of basic
     cable and reducing program choices.[^526] Small and rural cable
     operators and other MVPDs, in addition to recent program access
     complainants, have also raised concerns regarding the practice of
     programmers to tie marquee programming, such as premium channels or
     regional sports programming, with unwanted, or less desirable,
     programming.[^527] For example, in their comments on the *Notice*,
     OPASTCO/ITAA, representing small and rural MVPDs, cites the
     practice of programmers to require carriage of less popular
     programming in specified (usually basic) tiers in return for the
     right to carry popular programming as an onerous and unreasonable
     condition that denies consumers choice and impedes entry into the
     MVPD market.[^528]

120. When programming is available for purchase only through
     programmer-controlled packages that include both desired and
     undesired programming, MVPDs face two choices. First, the MVPD can
     refuse the tying arrangement, thereby potentially depriving itself
     of desired, and often economically vital, programming that
     subscribers demand and which may be essential to attracting and
     retaining subscribers. Second, the MVPD can agree to the tying
     arrangement, thereby incurring costs for programming that its
     subscribers do not demand and may not want, with such costs being
     passed on to subscribers in the form of higher rates, and also
     forcing the MVPD to allocate channel capacity for the unwanted
     programming in place of programming that its subscribers prefer.
     [^529] In either case, the MVPD and its subscribers are harmed by
     the refusal of the programmer to offer each of its programming
     services on a stand-alone basis. We note that the competitive harm
     and adverse impact on consumers would be the same regardless of
     whether the programmer is affiliated with a cable operator or a
     broadcaster or is affiliated with neither a cable operator nor a
     broadcaster, such as networks affiliated with a non-cable MVPD or a
     non-affiliated independent network. Moreover, we note that small
     cable operators and MVPDs are particularly vulnerable to such tying
     arrangements because they do not have leverage in negotiations for
     programming due to their smaller subscriber bases.[^530] As
     discussed in more detail below, we seek comment on these various
     types of tying arrangements. Given the problems associated with
     such tying arrangements, we seek comment on whether it may be
     appropriate for the Commission to preclude them. We also seek
     comment on the extent to which these disparities in bargaining
     power are the result of media consolidation, and, if so, what steps
     the Commission can and should take to redress the imbalance.

121. *Tying of Broadcast Programming*. We seek comment on the tying of
     MVPDs' rights to carry broadcast stations with carriage of other
     owned or affiliated broadcast stations in the same or a distant
     market or one or more affiliated non-broadcast networks. Section
     325(b)(3)(C) of the Communications Act obligates broadcasters and
     multichannel video programming distributors to negotiate
     retransmission consent agreements in good faith.[^531]
     Specifically, the Commission must establish regulations that:

> until January 1, 2010, prohibit a television broadcast station that
> provides retransmission consent from engaging in exclusive contracts
> for carriage or failing to negotiate in good faith, and it shall not
> be a failure to negotiate in good faith if the television broadcast
> station enters into retransmission consent agreements containing
> different terms and conditions, including price terms, with different
> multichannel video programming distributors if such different terms
> and conditions are based on competitive marketplace
> considerations.[^532]

122. In its *Good Faith Order*, the Commission adopted rules
     implementing the good faith negotiation provisions and the
     complaint procedures for alleged rule violations.[^533] The *Good
     Faith Order* adopted a two-part test for good faith.[^534] The
     first part of the test consists of a brief, objective list of
     negotiations standards.[^535] The second part of the good faith
     test is based on a totality of the circumstances standard.[^536]

123. The Commission has held that "\[r\]efusal by a Negotiating Entity
     to put forth more than a single, unilateral proposal" is a *per se*
     violation of a broadcast licensee's good faith obligation.[^537]
     The Commission has also indicated that such requirement is not
     limited to monetary considerations, but also applies to situations
     where a broadcaster is unyielding in its insistence upon carriage
     of a secondary programming service undesired by the cable operator
     as a condition of granting its retransmission consent:

> "Take it, or leave it" bargaining is not consistent with an
> affirmative obligation to negotiate in good faith. For example, a
> broadcaster might initially propose that, in exchange for carriage of
> its signal, an MVPD carry a cable channel owned by, or affiliated
> with, the broadcaster. The MVPD might reject such offer on the
> reasonable grounds that it has no vacant channel capacity and request
> to compensate the broadcaster in some other way. Good faith
> negotiation requires that the broadcaster at least consider some form
> of consideration other than carriage of affiliated programming. This
> standard does not, in any way, require a broadcaster to reduce the
> amount of consideration it desires for carriage of its signal. This
> standard only requires that the broadcaster be open to discussing more
> than one form of consideration in seeking compensation for
> retransmission of its signal by MVPDs.[^538]

124. As discussed above, ACA in 2002 filed a Petition for Inquiry
     regarding the Commission's retransmission consent rules.[^539]
     ACA's Petition raises concerns about broadcasters' alleged abuse of
     the retransmission consent process.[^540] ACA asserts that
     broadcast networks and station groups engage in unfair
     retransmission tying arrangements. ACA asserts that small cable
     operators have minimal bargaining power during negotiations and are
     targets for abuse because of their lack of resources to file
     complaints and engage in disputes.

125. We seek comment on the current status of carriage negotiations in
     today's marketplace. We seek comment on whether broadcasters are
     tying carriage of their broadcast signals to carriage of other
     owned or affiliated broadcast stations in the same or a distant
     market or one or more affiliated non-broadcast networks and, if so,
     how retransmission consent negotiations are impacted. We ask if
     broadcast networks and station groups engage in retransmission
     consent tying arrangements that result in harm to small cable
     operators and their customers. We ask if the Commission's good
     faith negotiation regulations provide enough protection for small
     cable operators and small broadcasters in the negotiation process,
     taking into account the administrative burdens and costs of
     engaging in a contested case before the Commission. We seek comment
     on whether and how the Commission's good faith negotiation
     regulations should be modified to address these concerns. Also, we
     ask what the effect of any modifications would be on the economic
     underpinnings of broadcast-affiliated programmers.

126. We also seek comment on whether the Commission has the jurisdiction
     to preclude tying arrangements by broadcasters, without
     modification of the retransmission consent regime by Congress. The
     legislative history of Section 325 addresses the right of
     broadcasters to seek carriage of additional channels as part of
     retransmission consent transactions: "Other broadcasters may not
     seek monetary compensation, but instead negotiate other issues with
     cable systems, such as joint marketing efforts, the opportunity to
     provide news inserts on cable channels, or the right to program an
     additional channel on a cable system. It is the Committee's
     intention to establish a marketplace for the disposition of the
     rights to retransmit broadcast signals; it is not the Committee's
     intention in this bill to dictate the outcome of the ensuing
     marketplace negotiations."[^541] Congress appeared to contemplate
     carriage of broadcast-affiliated cable channels as part of
     legitimate retransmission consent negotiations.

127. In addition, we seek comment regarding whether there are grounds
     for the Commission to depart from prior holdings that permitted
     broadcasters to negotiate the carriage of affiliated channels as
     part of retransmission consent negotiations. The Commission has
     stated that examples of bargaining proposals "presumptively...
     consistent with competitive marketplace considerations and the good
     faith negotiation requirement" include "proposals for carriage
     conditioned on carriage of any other programming, such as a
     broadcaster's digital signals, an affiliated cable programming
     service, or another broadcast station either in the same or a
     different market."[^542] We held that such a proposal contains
     "presumptively legitimate terms and conditions or forms of
     consideration" and found nothing to suggest that such a request is
     "impermissible" or anything "other than a competitive marketplace
     consideration."[^543] In 2001, the Commission considered but
     refused to adopt rules specifically prohibiting tying
     arrangements.[^544] The Commission concluded that such arrangements
     are permitted, but stated it would continue to monitor the
     situation with respect to potential anticompetitive conduct by
     broadcasters. We seek comment on whether market circumstances and
     industry practices have changed to warrant a different conclusion.

128. Lastly, we ask whether Commission action to preclude tying
     arrangements is consistent with the First Amendment. On the one
     hand, it could be argued that restricting such arrangements
     infringes the right of broadcasters to express a message by
     packaging together certain content. On the other hand, we note that
     the Supreme Court has observed that "the programming offered on
     various channels" by video distributors consists of "individual,
     unrelated segments that happen to be transmitted together for
     individual selection by members of the audience."[^545] Unlike
     newspapers and magazines, the Court suggested that these segments
     do not "contribute something to a common theme" expressed by the
     distributor to its subscribers.[^546]

129. *Tying of Satellite Cable Programming*. Small and rural MVPDs as
     well as program access complainants have asserted that tying
     practices by satellite cable programmers constitute "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 \[MVPD\] from providing satellite cable programming...to
     subscribers or consumers" in violation of Section 628(b) of the
     Communications Act.[^547] At the time of the *First Report and
     Order*, the Commission declined to adopt specific rules under
     Section 628(b) to address tying, while clearly reserving the right
     to do so if necessary:

> Neither the record of this proceeding nor the legislative history
> offer much insight into the types of practices that might constitute a
> violation of the statute with respect to the unspecified "unfair
> practices" prohibited by Section 628(b).... The objectives of the
> provision, however, are clearly to provide a mechanism for addressing
> those types of conduct, primarily associated with horizontal and
> vertical concentration within the cable and satellite cable
> programming field, that inhibit the development of multichannel video
> distribution competition.
>
> \* \* \* \* \*
>
> Thus, although the types of conduct more specifically referenced in
> the statute, *i.e.*, exclusive contracting, undue influence among
> affiliates, and discriminatory sales practices, appear to be the
> primary areas of congressional concern, Section 628(b) is a clear
> repository of Commission jurisdiction to adopt additional rules or to
> take additional actions to accomplish the statutory objectives should
> additional types of conduct emerge as barriers to competition and
> obstacles to broader distribution of satellite
> cable...programming.[^548]

130. We seek comment on the current status of carriage negotiations in
     today's marketplace. We seek comment on whether satellite cable
     programmers are tying carriage of their desirable channels to
     carriage of other less desirable owned or affiliated channels. We
     ask whether and how such tying arrangements affect small cable
     operators and their customers. We seek comment on whether
     "take-it-or-leave-it" tying arrangements (*i.e.*, where the
     purchase of desired programming is conditioned on the purchase of
     undesired programming) without any alternative offer to provide the
     programming on a stand-alone basis are prevalent in the industry;
     and if so, whether such an arrangement is a violation of Section
     628(b). As discussed above, in such situations, MVPDs are victims
     of an unfair method of competition that hinders significantly or
     prevents MVPDs from providing satellite cable programming to
     subscribers.

131. We also seek comment on whether the Commission has the jurisdiction
     to preclude tying arrangements by satellite cable programmers under
     Section 628(b) or any other statutory authority. We seek comment on
     whether Section 628(b) requires satellite cable programmers to
     offer each of their programming services on a stand-alone basis to
     all MVPDs at reasonable rates, terms, and conditions. Moreover, to
     the extent that we decide in this proceeding to extend the
     Commission's program access rules to terrestrially delivered
     cable-affiliated programming networks, we seek comment on whether
     we should also require terrestrially delivered cable-affiliated
     programming networks to be offered on a stand-alone basis to all
     MVPDs at reasonable rates, terms, and conditions. Lastly, we ask
     whether Commission action to preclude tying arrangements by
     satellite cable programmers is consistent with the First Amendment.

132. *Tying of Other Programming*. We also seek comment on whether we
     have the jurisdiction or authority to require networks that are
     affiliated with neither a cable operator nor a broadcaster, such as
     networks affiliated with a non-cable MVPD or a non-affiliated
     independent network, to be offered on a stand-alone basis to all
     MVPDs at reasonable rates, terms, and conditions. We seek comment
     on the extent to which such programming networks have engaged in
     unfair tying practices or other abusive practices that would
     require regulatory intervention. We seek comment on whether it
     would be appropriate to regulate these programming networks in such
     a manner pursuant to Sections 4(i), 201(b), 303(r), 601(6), 612(g),
     616(a), and 706, or any other provision under the Communications
     Act.

## Program Access Concerns Raised by Small and Rural MVPDs

133. As discussed above, small and rural MVPDs raise additional issues
     in their comments regarding obstacles they face in trying to obtain
     access to programming.[^549] They ask the Commission to examine
     various conditions they describe as onerous and unreasonable, which
     they allege are imposed by programmers on small and rural MVPDs for
     access to content, including restrictions on the use of shared
     headends for receiving content.[^550] NTCA and OPASTCO/ITTA claim
     that use of a shared headend is an economical means for multiple
     rural MVPDs to provide video service in a high-cost area, but that
     programmers have expressed concern with the potential for the use
     of shared headends to result in unauthorized reception of
     programming.[^551] NTCA states that while shared headend providers
     are currently negotiating with content providers to resolve these
     issues, it is concerned that rural consumers served by shared
     headends may lose access to programming if these negotiations
     fail.[^552] In addition to the issue of shared headends, small and
     rural MVPDs ask the Commission to examine other conditions imposed
     by programmers, including (i) requiring MVPDs to enter into
     mandatory non-disclosure agreements with programmers, which
     prevents small and rural MVPDs from obtaining information about the
     market value of programming;[^553] (ii) requiring small and rural
     MVPDs to provide programmers with "hundreds of advertising
     slots";[^554] and (iii) mandating unwarranted security requirements
     that extend beyond the legitimate need to protect
     programming.[^555] OPASTCO/ITTA claim that all of these conditions
     impede the entry of small and rural telephone companies into the
     video distribution marketplace. We seek comment on the extent to
     which such practices are occurring in the marketplace and, if so,
     whether we should, and whether we have the authority to, take
     action to address these practices.

## Modification of Program Access Complaint Procedures

134. *Remedies for Violations*. We seek comment on whether to add an
     arbitration-type step as part of the Commission's determination of
     an appropriate remedy for program access violations. We agree with
     commenters that commercial arbitration requires parties to put
     forth their best effort to resolve disputes or risk the arbitrator
     adopting the opposing parties' proposals.[^556] This type of
     pressure can encourage the parties to resolve their differences
     through settlement. We believe that a modified version of this
     method can encourage negotiation among the parties. Therefore, we
     seek comment on whether, when feasible, the Commission should
     request, as part of its evaluation of the appropriate remedy to
     impose for program access violations, that the parties each submit
     their best "final offer" proposal for the rates, terms, or
     conditions under review. We seek comment on whether the Commission
     should have the discretion to adopt one of the parties' proposals
     as the remedy for the program access complaint.

135. *Status of Existing Contract Pending Resolution of Program Access
     Complaint.* While we decline to adopt mandatory arbitration in lieu
     of the Commission's complaint process in the *Order*, we issue this
     *NPRM* on the issue of a provision for complainants to request a
     stay of any action or proposed action that would change an existing
     program contract that is the subject of a program access complaint,
     pending the resolution of the program access complaint. Some
     competitive providers recommend a "standstill" requirement for
     pre-existing carriage contracts during adjudication of program
     access disputes, to preserve the *status quo* until the program
     access complaint has been resolved.[^557] In a recent merger
     transaction, in adopting conditions for arbitration of program
     access disputes, the Commission required that an aggrieved MVPD
     have continued access to the programming in question under the
     terms and conditions of the expired contract, pending resolution of
     the dispute.[^558] Verizon supports a five-month long standstill
     provision while complaints are being resolved. BSPA, RCN, and
     USTelecom support a standstill provision pending the resolution of
     the complaint, wherein carriage is continued and the parties are
     subject to the same price, terms, and conditions of the existing
     contract, with any new price arising out of resolution to be
     applied retroactively to the date of the complaint.[^559] BSPA
     asserts that vertically integrated programmers covered by the
     program access rules have incentives to use temporary foreclosure
     strategies during negotiations for programming and, therefore,
     standstill agreements should be made part of the program access
     complaint procedures.[^560] Other parties favoring a standstill
     provision include ACA, EchoStar, and SureWest.[^561] EchoStar
     asserts that there can be no doubt that the Commission has the
     authority to promulgate a standstill requirement as a lesser
     interim remedy where interruption of carriage threatens to cause
     irreparable injury to the public.[^562]

136. NCTA opposes any "standstill" provision and states that there is no
     authority that allows the Commission to interfere in the right to
     contract in this way.[^563] Time Warner asserts that the standstill
     requirement would prohibit a network from de-authorizing carriage
     by an MVPD, but would allow the MVPD to drop the network, creating
     an unfair bargaining situation.[^564] Time Warner believes that any
     standstill requirement would increase the likelihood of program
     access complaints because the MVPD will have a strong incentive to
     file a complaint just to protect the *status quo* and decrease the
     chances that parties will resolve their disputes because the
     incentive of either party to negotiate could be reduced once the
     *status quo* is protected.[^565] Comcast and the Broadcast Networks
     also oppose any "standstill" requirement.[^566]

137. We agree that the threat of temporary foreclosure pending
     resolution of a complaint may impair settlement negotiations and
     may discourage parties from filing legitimate complaints.[^567] We
     request comment on whether the issuance of temporary stay orders
     would encourage parties to resolve program access disputes and to
     make use of the Commission's complaint procedures when needed. We
     request comment on whether complainants must formally request such
     relief from the Commission and must establish that they are likely
     to prevail on the merits of their complaint; will suffer
     irreparable harm absent a stay; that the balance of harms to the
     parties favors grant of a stay; and that the public interest favors
     grant of the stay.[^568] We request comment on whether, as part of
     a showing of irreparable harm, complainants may discuss the
     likelihood that subscribers would switch MVPDs to obtain the
     programming in dispute for a long enough period to make the
     strategy profitable to the respondent. We request comment on
     whether these stays should be routinely granted when the facts
     support their issuance and that they will help to encourage
     settlement negotiations. We request comment on the nature of the
     stay, that is, whether both the complainant and the respondent will
     be subject to the stay order, and required to fulfill their
     respective obligations under the terms and conditions of the
     carriage contract in issue, while the stay is in effect. We request
     comment on whether complainants will be permitted to drop the
     programming that is the subject of the program access dispute
     unless and until a request to dismiss the complaint with prejudice
     is granted by the Commission. We request comment on whether the
     length of the stay should be entirely discretionary. Finally, we
     request comment on whether the Commission should include, as part
     of its final order resolving the complaint or resolving damages,
     adjustments to its remedies that make the terms of the new
     agreement between the parties retroactive to the expiration date of
     the previous agreement.

# PROCEDURAL MATTERS

## Filing Requirements 

138. *Ex Parte Rules*. The *Notice of Proposed Rulemaking* in this
     proceeding will be treated as "permit-but-disclose" subject to the
     "permit-but-disclose" requirements under Section 1.1206(b) of the
     Commission's rules.[^569] *Ex parte* presentations are permissible
     if disclosed in accordance with Commission rules, except during the
     Sunshine Agenda period when presentations, *ex parte* or otherwise,
     are generally prohibited. Persons making oral *ex parte*
     presentations are reminded that a memorandum summarizing a
     presentation must contain a summary of the substance of the
     presentation and not merely a listing of the subjects discussed.
     More than a one- or two-sentence description of the views and
     arguments presented is generally required.[^570] Additional rules
     pertaining to oral and written presentations are set forth in
     Section 1.1206(b).

139. *Comments and Reply Comments*. Pursuant to sections 1.415 and 1.419
     of the Commission's rules, 47 CFR §§ 1.415, 1.419, interested
     parties may file comments and reply comments on or before the dates
     indicated on the first page of this document. Comments may be filed
     using: (1) the Commission's Electronic Comment Filing System
     (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by
     filing paper copies.[^571]

-   Electronic Filers: Comments may be filed electronically using the
    Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the
    Federal eRulemaking Portal: http://www.regulations.gov. Filers
    should follow the instructions provided on the website for
    submitting comments.

    -   For ECFS filers, if multiple docket or rulemaking numbers appear
        in the caption of this proceeding, filers must transmit one
        electronic copy of the comments for each docket or rulemaking
        number referenced in the caption. In completing the transmittal
        screen, filers should include their full name, U.S. Postal
        Service mailing address, and the applicable docket or rulemaking
        number. Parties may also submit an electronic comment by
        Internet e-mail. To get filing instructions, filers should send
        an e-mail to ecfs@fcc.gov, and include the following words in
        the body of the message, "get form." A sample form and
        directions will be sent in response.

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-   Paper Filers: Parties who choose to file by paper must file an
    original and four copies of each filing. If more than one docket or
    rulemaking number appears in the caption of this proceeding, filers
    must submit two additional copies for each additional docket or
    rulemaking number. Filings can be sent by hand or messenger
    delivery, by commercial overnight courier, or by first-class or
    overnight U.S. Postal Service mail (although we continue to
    experience delays in receiving U.S. Postal Service mail). All
    filings must be addressed to the Commission's Secretary, Office of
    the Secretary, Federal Communications Commission.

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-   The Commission's contractor will receive hand-delivered or
    messenger-delivered paper filings for the Commission's Secretary at
    236 Massachusetts Avenue, NE, Suite 110, Washington, DC 20002. The
    filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand
    deliveries must be held together with rubber bands or fasteners. Any
    envelopes must be disposed of [before]{.underline} entering the
    building.

-   Commercial overnight mail (other than U.S. Postal Service Express
    Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
    Capitol Heights, MD 20743.

-   U.S. Postal Service first-class, Express, and Priority mail must be
    addressed to 445 12^th^ Street, SW, Washington DC 20554.

140. People with Disabilities: To request materials in accessible
     formats for people with disabilities (braille, large print,
     electronic files, audio format), send an e-mail to fcc504@fcc.gov
     or call the Consumer & Governmental Affairs Bureau at 202-418-0530
     (voice), 202-418-0432 (tty).

141. *Availability of Documents*. Comments, reply comments, and *ex
     parte* submissions will be available for public inspection during
     regular business hours in the FCC Reference Center, Federal
     Communications Commission, 445 12^th^ Street, S.W., CY-A257,
     Washington, D.C., 20554. Persons with disabilities who need
     assistance in the FCC Reference Center may contact Bill Cline
     at (202) 418-0267 (voice), (202) 418-7365 (TTY), or
     bill.cline@fcc.gov. These documents also will be available from the
     Commission's Electronic Comment Filing System. Documents are
     available electronically in ASCII, Word 97, and Adobe Acrobat.
     Copies of filings in this proceeding may be obtained from Best Copy
     and Printing, Inc., Portals II, 445 12^th^ Street, S.W., Room
     CY-B402, Washington, D.C., 20554; they can also be reached by
     telephone, at (202) 488-5300 or (800) 378-3160; by e-mail at
     fcc@bcpiweb.com; or via their website at http://www.bcpiweb.com. To
     request materials in accessible formats for people with
     disabilities (Braille, large print, electronic files, audio
     format), send an e-mail to fcc504@fcc.gov or call the Consumer and
     Governmental Affairs Bureau at (202) 418-0531 (voice), (202)
     418-7365 (TTY).

142. *Information*. For additional information on this proceeding,
     contact Steven Broeckaert, Steven.Broeckaert@fcc.gov; David
     Konczal, David.Konczal@fcc.gov; or Katie Costello,
     Katie.Costello@fcc.gov; of the Media Bureau, Policy Division, (202)
     418-2120.

## Initial and Final Regulatory Flexibility Analysis

143. *Initial Regulatory Flexibility Analysis ("IRFA")*. The Regulatory
     Flexibility Act of 1980, as amended ("RFA"),[^572] requires that a
     regulatory flexibility analysis be prepared for notice and comment
     rule making proceedings, unless the agency certifies that "the rule
     will not, if promulgated, have a significant economic impact on a
     substantial number of small entities."[^573] The RFA generally
     defines the term "small entity" as having the same meaning as the
     terms "small business," "small organization," and "small
     governmental jurisdiction."[^574] In addition, the term "small
     business" has the same meaning as the term "small business concern"
     under the Small Business Act.[^575] A "small business concern" is
     one which: (1) is independently owned and operated; (2) is not
     dominant in its field of operation; and (3) satisfies any
     additional criteria established by the Small Business
     Administration (SBA).[^576] As required by the RFA,[^577] the
     Commission has prepared an Initial Regulatory Flexibility Analysis
     ("IRFA") of the possible significant economic impact on a
     substantial number of small entities of the proposals addressed in
     the *NPRM*. The IRFA is set forth in Appendix F.

144. *Final Regulatory Flexibility Analysis ("FRFA")*. As required by
     the RFA,[^578] the Commission has prepared an FRFA relating to the
     *Report and Order*. The FRFA is set forth in Appendix G.

## Paperwork Reduction Act Analysis

145. *Initial Paperwork Reduction Act* *Analysis*. The *NPRM* has been
     analyzed with respect to the Paperwork Reduction Act of 1995
     ("PRA"),[^579] and contains proposed information collection
     requirements. The Commission, as part of its continuing effort to
     reduce paperwork burdens, invites the general public and the Office
     of Management and Budget (OMB) to comment on the proposed
     information collection requirements contained in this Notice, as
     required by the PRA.

146. Written comments on the PRA proposed information collection
     requirements must be submitted by the public, the OMB, and other
     interested parties on or before 60 days after publication in the
     *Federal Register*. Comments should address: (a) whether the
     proposed collection of information is necessary for the proper
     performance of the functions of the Commission, including whether
     the information shall have practical utility; (b) the accuracy of
     the Commission's burden estimates; (c) ways to enhance the quality,
     utility, and clarity of the information collected; and (d) ways to
     minimize the burden of the collection of information on the
     respondents, including the use of automated collection techniques
     or other forms of information technology. In addition, pursuant to
     the Small Business Paperwork Relief Act of 2002,[^580] we seek
     specific comment on how we might "further reduce the information
     collection burden for small business concerns with fewer than 25
     employees."

147. In addition to filing comments with the Office of the Secretary, a
     copy of any comments on the proposed information collection
     requirements contained herein should be submitted to Cathy
     Williams, Federal Communications Commission, 445 12th St, S.W.,
     Room 1-C823, Washington, D.C., 20554, or via the Internet at
     PRA@fcc.gov; and also to Jasmeet Seehra, OMB Desk Officer, Room
     10236 NEOB, 725 17th Street, N.W., Washington, D.C. 20503, or via
     Internet to Jasmeet_K.\_Seehra@omb.eop.gov, or via fax at
     202-395-5167.

148. *Further Information.* For additional information concerning the
     PRA proposed information collection requirements contained in this
     *NPRM*, contact Cathy Williams at 202-418-2918, or via the Internet
     at PRA@fcc.gov.

149. *Final Paperwork Reduction Act* *Analysis*. This document contains
     new information collection requirements subject to the Paperwork
     Reduction Act of 1995 (PRA), Public Law 104-13. It will be
     submitted to the OMB for review under Section 3507(d) of the PRA.
     OMB, the general public, and other Federal agencies are invited to
     comment on the new information collection requirements contained in
     this proceeding. In addition, we note that pursuant to the Small
     Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
     U.S.C. 3506(c)(4), we will seek specific comment on how the
     Commission might "further reduce the information collection burden
     for small business concerns with fewer than 25 employees."

150. We have assessed the effects of the new information collection
     requirements, and find that those requirements will benefit
     companies with fewer than 25 employees by facilitating the
     resolution of program access complaints and that these requirements
     will not burden those companies.

## Congressional Review Act

151. *Congressional Review Act*. The Commission will send a copy of this
     *Report and Order and Notice of Proposed Rulemaking* in a report to
     be sent to Congress and the Government Accountability Office
     pursuant to the Congressional Review Act, *see* 5 U.S.C. §
     801(a)(1)(A).

# ORDERING CLAUSES

152. Accordingly, **IT IS ORDERED**, pursuant to the authority found in
     Sections 4(i), 303(r), and 628 of the Communications Act of 1934,
     as amended, 47 U.S.C. §§ 154(i), 303(r), and 548, this *Report and
     Order and Notice of Proposed Rulemaking* **IS ADOPTED**.

153. **IT IS ORDERED** that, pursuant to the authority found in Sections
     4(i), 303(r), and 628 of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 154(i), 303(r), and 548, the Commission's
     rules **ARE HEREBY AMENDED** as set forth in Appendix D.

154. **IT IS FURTHER ORDERED** that (i) pursuant to 5 U.S.C. § 553(d)(3)
     and 47 C.F.R. § 1.427(b), the amendment to Section 76.1002(c)(6)
     and new Sections 76.1003(i) and 76.1003(k) **WILL BECOME
     EFFECTIVE** upon publication in the *Federal Register*;[^581]
     and (ii) the amendment to Section 76.1003(e)(1) and new Section
     76.1003(j) contain information collection requirements subject to
     the PRA and **WILL BECOME EFFECTIVE** upon approval by the Office
     of Management and Budget.[^582]

155. **IT IS FURTHER ORDERED** that the Commission's Consumer and
     Governmental Affairs Bureau, Reference Information Center, **SHALL
     SEND** a copy of this *Report and* *Order* *and Notice of Proposed
     Rulemaking* including the Initial and Final Regulatory Flexibility
     Analysis, to the Chief Counsel for Advocacy of the Small Business
     Administration.

156. **IT IS FURTHER ORDERED** that the Commission **SHALL SEND** a copy
     of this *Report and Order and Notice of Proposed Rulemaking* in a
     report to be sent to Congress and the Government Accountability
     Office pursuant to the Congressional Review Act, *see* 5 U.S.C. §
     801(a)(1)(A).

     FEDERAL COMMUNICATIONS COMMISSION

     Marlene H. Dortch

     Secretary

     **APPENDIX A**

     **List of Commenters**

     **Comments filed in MB Docket No. 07-29**

American Cable Association

AT&T Inc.

Broadband Service Providers Association

Cablevision Systems Corp.

Carol L. Carlson

Coalition for Competitive Access to Content

Comcast Corporation

DIRECTV, Inc.

EATEL Video, LLC

EchoStar Satellite L.L.C.

National Cable & Telecommunications Association

National Rural Telecommunications Cooperative

National Telecommunications Cooperative Association

Office of Advocacy of the United States Small Business Administration

Organization for the Promotion and Advancement of Small
Telecommunications Companies and the Independent Telephone and
Telecommunications Alliance (Joint Comments)

Qwest Communications International Inc.

RCN Telecom Services, Inc.

The Rural Independent Competitive Alliance

SureWest Communications

The United States Telecom Association

Verizon

**Reply Comments filed in MB Docket No. 07-29**

American Cable Association

AT&T Inc.

Cablevision Systems Corp.

Coalition for Competitive Access to Content

Comcast Corporation

Consumer Federation of America, Consumers Union, Free Press, Media
Access Project, and Communications Workers of America (Joint Reply
Comments)

DIRECTV, Inc.

EchoStar Satellite L.L.C.

National Cable & Telecommunications Association

Qwest Communications International Inc.

RCN Telecom Services, Inc.

SureWest Communications

Time Warner Inc.

Verizon

The Walt Disney Company, CBS Corporation, Fox Entertainment Group, and
NBC Universal (Joint Reply Comments)

**APPENDIX B**

**Response to Cablevision Regarding Analysis in *Adelphia Order***

1.  This Appendix provides further details of the review of
    Cablevision's critique of the Commission's RSN analysis in Appendix
    D of the *Adelphia Order*.[^583] In the *Adelphia Order*, the
    Commission conducted a statistical (regression) analysis that found,
    after holding other relevant factors constant, that non-cable MVPDs
    had significantly lower market shares in markets where they were
    denied access to a RSN.[^584] The regression analysis was part of a
    larger "uniform price increase strategy" analysis, designed to
    assess the impact of changes in regional market shares for Comcast
    and Time Warner on their incentives to raise RSN prices. The
    resulting calculations indicate that in some markets the largest
    applicant would have an incentive to raise RSN prices by more than
    five percent. This result formed part of the rationale for imposing
    certain conditions on the Adelphia applicants.

2.  One parameter needed for the uniform price increase strategy
    analysis is the amount by which subscribership to a competitive MVPD
    would fall if that MVPD were to choose not to carry the RSN.
    Cablevision asserts that "the analysis confuses harm to competitors
    with harm to consumers . . . . Importantly, it tells us nothing
    about the effects of exclusive RSN deals on consumer welfare."[^585]
    Neither the regression analysis nor the larger uniform price
    increase strategy analysis in which it is embedded purport to
    provide a numerical estimate of the strategy's impact on consumer
    welfare. However, the results of the analysis inform the
    Commission's predictive judgment, based on the mode of analysis
    employed in the Department of Justice ("DOJ") Merger Guidelines,
    that withholding RSNs from rival MVPDs would reduce MVPD competition
    and harm customers. Therefore, we do not agree that the regression
    analysis tells us nothing about the effects of exclusive RSN deals
    on consumer welfare.

3.  In order to assess Cablevision's critique of the regression analysis
    itself, it is necessary to describe the analysis briefly. Commission
    staff specified and estimated a model to explain DBS penetration
    (the actual dependent variable is the "alternative delivery system"
    penetration, from Nielsen Media Research) as a function of "cable
    prices, cable system characteristics, population demographics, and
    DBS program offerings."[^586] The cable system data came from the
    2005 FCC Cable Price Survey and the demographic data for the county
    within which each cable system in the sample is located came from
    the U.S. Census.

4.  The regression equation contains dummy variables for the three
    markets, Philadelphia, San Diego, and Charlotte, in which local RSNs
    were not made available to DBS. The estimated coefficients on these
    dummy variables are negative in all three cases and statistically
    significant in the case of Philadelphia and San Diego. The magnitude
    of the coefficients indicates that in Philadelphia, DBS penetration
    is 40.5% lower than it would be if the local RSN were available to
    DBS. The corresponding figure for San Diego is 33.3%.

5.  Most of Cablevision's criticisms of the regression model address the
    claimed omission of certain possibly relevant explanatory variables.
    However, some of the variables claimed to be left out were, in fact,
    included. Moreover, omission of an explanatory variable does not
    necessarily indicate that the coefficients on the relevant dummy
    variables are inaccurate or biased. In other words, the impact on
    DBS penetration of withholding an RSN could still be measured
    accurately, even if not every relevant explanatory variable were
    included in the regression. Nevertheless, after reviewing some
    specific Cablevision comments, we report on supplementary regression
    results that explicitly include variables that the Cablevision
    critique claims were inappropriately omitted.

6.  As an initial matter, we examine some specific assertions made by
    Cablevision:

> "The analysis simply tests whether DBS penetration is different in
> Philadelphia, San Diego, and Charlotte than it is elsewhere, but not
> why it is different in those places.
>
> Results of the FCC analysis show that the control variables do not
> explain all of the differences between Philadelphia, San Diego, and
> the rest of the nation, but provides no reason to believe that the
> lack of access to an RSN is the key factor.
>
> Many variables likely to be important in explaining DBS penetration
> are omitted, such as the extent of local marketing of DBS, the quality
> of local DBS service, terrain and foliage coverage, and the extent and
> local marketing of cable, among others.
>
> ...the model should include some information about the number and
> quality of RSNs in an area...It is not possible to capture all the
> relevant information related to RSNs in a dichotomous variable
> indicating whether there is an exclusive RSN in a region. Moreover,
> the analysis should control for city or regional fixed effects, not
> include a few and claim that tests the effects of RSN access."[^587]

7.  In fact, the analysis is designed to hold constant other relevant
    determinants of variations in DBS penetration. If it does so, then
    the coefficients on the dummy variables for the three cities would
    capture the effect of RSN exclusivity. Moreover, the fact that the
    control variables do not explain all of the variation in DBS
    penetration does not mean that the coefficients on the dummy
    variables are biased. Additionally, omitted variables would affect
    the coefficients of the dummy variables only if they are correlated
    with any included variables, and Cablevision does not assert any
    such correlation.[^588] Moreover, some of the variables Cablevision
    claims are omitted are actually included. The variable reflecting
    carriage of local broadcast signals is a prominent indicator of "the
    quality of local DBS service." Other than that, DBS channel lineups
    do not differ across markets. Furthermore, the latitude variable
    takes account, albeit indirectly, of terrain variations. The "look
    angle" for a satellite dish is greater at lower latitudes, which
    means that it takes a greater degree of terrain roughness to obscure
    the view of the satellite.

8.  One consequence of differences across markets in the number and
    quality of RSNs is differences in demand for these networks. The
    Commission analysis does, in fact, control for systematic
    differences across markets in demand for RSNs via the "key DMA"
    variable, which takes on a value of one when the relevant cable
    system is in a DMA that is home to a professional sports team from
    one of the four major sports leagues. The presumption is that demand
    for RSNs is higher in these home markets than in others. To the
    extent that the primary determinant of RSN demand and quality is
    availability of local professional teams from the major sports
    leagues, the key issues are whether there is a local team or teams,
    and whether the team or teams is available to DBS subscribers as
    well as cable subscribers. By and large, all RSNs (even in markets
    with more than one RSN splitting carriage of local major league
    teams) are available to DBS in markets outside the three specified.
    Although Cablevision provides no specific suggestion on how to
    characterize RSN "quality" more precisely, we attempt to account for
    it in the new regression results reported below.

9.  Cablevision also asserts that "even if one believes the model is
    valid, the results on the Charlotte dummy variable contradict the
    FCC's interpretation."[^589] In fact, the coefficient on the
    Charlotte dummy is negative, which is in accord with, rather than
    contradictory to, the hypothesis. However, the estimated coefficient
    does not meet standard benchmarks for statistical significance. The
    Charlotte RSN carried one relevant professional team and, as pointed
    out in the text of the *Adelphia Order*: "\[T\]he Charlotte Bobcats
    are a relatively new team and do not yet have a strong enough
    following to induce large numbers of subscribers to switch
    MVPDs."[^590] Accordingly, this result may be one specific
    manifestation of the quality differences that Cablevision speaks of
    in general terms. Moreover, unlike many other cases, the Charlotte
    RSN was carried on the digital tier, which made it unusually
    expensive to acquire.[^591]

10. Cablevision's suggestion that a full-blown "fixed effects" model
    would be appropriate is reasonable in principle.[^592] However,
    Cablevision fails to note that, to estimate such a model, it would
    be necessary to have data for a time period or periods when the RSNs
    were made available to all MVPDs in addition to data for a time
    period or periods when the RSNs were withheld from rival MVPDs. Data
    for the former situation are not available, so it was not possible
    to estimate a full-blown "fixed effects" model. However, it is
    possible to estimate the *Adelphia Order* Appendix D model with some
    additional variables added.

11. The results reported below address Cablevision's claim that the
    regression equation reported in Appendix D of the *Adelphia* Order
    suffers from omitted variable bias, which could call into question
    the results of that regression. Our analysis indicates that this
    claim is unfounded. Indeed, adding the variables suggested by
    Cablevision to our previous regressions appears to strengthen the
    conclusions in Appendix D of the *Adelphia Order*. Our analysis
    indicates that Appendix D of the *Adelphia Order* may have been
    unduly conservative in its assessment of the reduction in DBS
    subscribership in DMAs in which DBS operators are denied RSNs.

12. Cablevision claims that we did not adjust for the quality of the RSN
    in our regression, instead treating all RSNs as equal. We know of no
    available direct measure of RSN quality, but we did, in fact,
    include a rough proxy for RSN quality: "key DMA," a dummy variable
    which equals one if there is a professional sports team in a given
    DMA, zero otherwise. This would adjust the regression if demand is
    different for multichannel video services in DMAs that contain
    professional sports teams. Nonetheless, in response to the critique
    we include in our analysis below an additional variable: a count of
    professional sports teams in each DMA, excluding National Football
    League teams, which generally do not appear on RSNs. Instead of just
    one or zero, this count ranges from zero to seven, and potentially
    could represent a supply-side "potential quality" measure for RSNs.
    As shown in the results below, this variable does not alter our
    previous conclusions and, in fact, strengthens them.

13. Cablevision also claims that adjusting for the roughness of terrain
    will explain variations in DBS subscribership, and the lack of a
    variable measuring terrain biases our results. Again, we previously
    included a rough proxy for terrain, the natural log of latitude.
    Since DBS satellites are located over the southern United States, as
    latitude increases moving northward, DBS dishes must be pointed
    closer to the horizon. Presumably, the closer the dish is pointed to
    the horizon, the more likely terrain will interfere with the
    required clear view of DBS satellites. As expected, this variable in
    our previous regression shows a negative sign, although it was not
    statistically significant.[^593] Nonetheless, we included several
    new variables that measure more directly the effect of terrain.
    First, we include the natural log of the standard deviation of the
    elevation in the county, which is a measure of roughness of
    terrain.[^594] The log of latitude remains, and we also include an
    interactive variable between the log of standard deviation of
    elevation and the log of latitude, which will capture the combined
    effect of roughness of terrain and dish angle. Again, addition of
    these variables only strengthens the conclusions reached in the
    *Adelphia Order*.

14. As before, we follow Wise and Duwadi (2005) in the specification of
    a model to examine DBS penetration and the variables that affect it.
    The model estimates the impact of cable prices, cable system
    characteristics, population demographics, and DBS program offerings
    on the percent of television households subscribing to DBS service.
    Each observation in our data corresponds to an incumbent cable
    system responding to the 2005 FCC Cable Price Survey.[^595] The
    survey provides information on the service rates and characteristics
    of the responding cable operators' cable systems. We use an estimate
    from Nielsen Media Research of the number of households subscribing
    to "alternative delivery systems" in a county to construct our
    measure of DBS penetration. Demographic variables are also available
    at the county level from the 2000 Census.

15. We use a partial log-linear functional form where the dependent and
    continuous independent variables are transformed using the natural
    logarithm.[^596] We estimate variations of the following equation:

LN DBS PENETRATION = Β~0~ + Β~1~·LN CABLE PRICE + Β~2~·LN CABLE CHANNELS
+

Β~3~·PHILLY + Β~4~·SANDIEGO + Β~5~·CHARLOTTE + Β~6~· KEYDMA +Β~7~· TEAM
COUNT (or KEYDMA) + Β~8~· DBSOVERAIR + Β~9~· CABLECOMP + Β~10~·HDTV +
Β~11~·INTERNET + Β~12~·LN INCOME + Β~13~·LN MULTIDWELL + Β~14~·LN
LATITUDE + Β~15~·LN STANDARD DEVIATION ELEVATION + Β~16~·LN STANDARD
DEVIATION ELEVATION\*LATITUDE + ε

Where:

> LN DBS PENETRATION is the log of the percent of television households
> subscribing to an "alternative delivery system" in the county
> containing the responding cable system;
>
> LN CABLE PRICE is the log of the recurring monthly charge for the
> basic tier plus the next additional package of channels offered by the
> responding cable system;[^597]
>
> LN CABLE CHANNELS is the log of the number of cable channels offered
> by the responding cable system on the basic tier plus the next
> additional package of channels;
>
> PHILLY is an indicator variable taking on the value of 1 when the
> responding cable system is located in the Philadelphia DMA;
>
> SANDIEGO is an indicator variable taking on the value of 1 when the
> responding cable system is located in the San Diego DMA;
>
> CHARLOTTE is an indicator variable taking on the value of 1 when the
> responding cable system is located in the Charlotte DMA;
>
> TEAM COUNT is a count of professional sports teams by DMA, excluding
> National Football League teams.
>
> KEYDMA is an indicator variable taking on the value of 1 when the
> responding cable system is located in a DMA that is home to a
> professional sports team that is a member of Major League Baseball,
> the National Basketball Association, the National Football League, or
> the National Hockey League;
>
> DBSOVERAIR is an indicator variable taking on the value of 1 when one
> or both DBS operators offer local broadcast signals in the DMA where
> the responding cable system is located;
>
> CABLECOMP is an indicator variable taking on the value of 1 when the
> cable system competes against a second cable operator;
>
> HDTV is an indicator variable taking on the value of 1 when the
> responding cable system offers one or more channels in high-definition
> format;
>
> INTERNET is an indicator variable taking on the value of 1 when the
> responding cable system offers high-speed Internet access;
>
> LN INCOME is the log of the median household income in the county
> containing the responding system;
>
> LN MULTIDWELL is the log of the percent of households in multiple
> dwelling units ("MDUs") in the county containing the responding
> system;[^598]
>
> LN LATITUDE is the log of the latitude of the county containing the
> responding system.
>
> LN STANDARD DEVIATION ELEVATION is the log of the standard deviation
> of the elevation of the county containing the responding system; and
>
> LN STANDARD DEVIATION ELEVATION\*LATITUDE is an interaction variable
> between LN STANDARD DEVIATION ELEVATION and LN LATITUDE.

16. We use instrumental variables to account for possible endogeneity of
    the cable price and the number of cable channels. We use the natural
    logs of system capacity (MHz) and the number of subscribers served
    nationally by the cable system owner, as well as the number of
    networks with which the cable system owner is vertically integrated,
    as excluded instruments. We perform estimation using the generalized
    method of moments.

17. The first regression differs from the *Adelphia Order* only in
    adding TEAM COUNT.

**Table 1**

DBS Penetration and RSN Access

  ----------------------- ----------------------- -----------------------
  **Independent           **Dependent Variable:   
  Variables**             LN DBS PENETRATION**    

                          **Coefficient**         **z-statistic**

  LN CABLE PRICE          2.11\*                  2.15

  LN CABLE CHANNELS       -1.11\*                 -2.61

  PHILLY                  -0.53\*                 -6.59

  SANDIEGO                -0.47\*                 -5.52

  CHARLOTTE               -0.21                   -1.45

  KEYDMA                  0.21\*                  3.29

  TEAM COUNT              -0.03                   -1.94

  DBSOVERAIR              -0.09                   -1.43

  CABLECOMP               0.27                    1.18

  HDTV                    -0.12                   -1.53

  INTERNET                -0.06                   -0.52

  LN INCOME               -0.29\*                 -2.44

  LN MULTIDWELL           -0.37\*                 -10.45

  LN LATITUDE             -0.01                   -0.03

  CONSTANT                -0.73                   -0.26

  Observations            676                     

  Centered R-Squared      0.26                    

  F-Statistic (14, 661)   40.57                   

  Hansen J Statistic      27.22                   
  ----------------------- ----------------------- -----------------------

*\* - significant at 95% confidence level*

Most coefficients change only slightly in terms of statistical
significance or magnitude as compared to the results reported in
Appendix D of the *Adelphia Order*. The magnitude of both PHILLY and
SANDIEGO rise, and both are still highly statistically significant.
CHARLOTTE drops slightly, but remains not statistically significant. In
sum, the addition of TEAM COUNT only strengthens the approach taken in
the *Adelphia Order*.

18. The second regression differs from the *Adelphia Order* by adding
    TEAM COUNT, LN STANDARD DEVIATION ELEVATION and LN STANDARD
    DEVIATION ELEVATION\*LATITUDE. Thus, it addresses all of the omitted
    variable claims.

**Table 2**

DBS Penetration and RSN Access

  ----------------------- ----------------------- -----------------------
  **Independent           **Dependent Variable:   
  Variables**             LN DBS PENETRATION**    

                          **Coefficient**         **z-statistic**

  LN CABLE PRICE          1.06                    1.22

  LN CABLE CHANNELS       -0.72\*                 -1.96

  PHILLY                  -0.51\*                 -6.59

  SANDIEGO                -0.87\*                 -9.37

  CHARLOTTE               -0.22                   -1.64

  KEYDMA                  0.23\*                  4.13

  TEAM COUNT              -0.04\*                 -3.03

  DBSOVERAIR              -0.09                   -1.59

  CABLECOMP               0.04                    0.18

  HDTV                    -0.11                   -1.57

  INTERNET                -0.02                   -0.21

  LN INCOME               -0.21                   -1.89

  LN MULTIDWELL           -0.39\*                 -11.53

  LN LATITUDE             0.38                    0.91

  LN STANDARD DEVIATION   1.01\*                  2.59
  ELEVATION                                       

  LN STANDARD DEVIATION   -0.25\*                 -2.31
  ELEVATION\*LATITUDE                             

  CONSTANT                -1.08                   -0.34

  Observations            674                     

  Centered R-Squared      0.42                    

  F-Statistic (16, 657)   81.41                   

  Hansen J Statistic      30.65                   
  ----------------------- ----------------------- -----------------------

*\* - significant at 95% confidence level*

This model also does not change the conclusions in the *Adelphia Order*
and, if anything, strengthens them. The magnitude of the PHILLY and
CHARLOTTE coefficients are virtually the same (although CHARLOTTE is
closer to statistical significance), but the magnitude of SANDIEGO is
more than double. This indicates that we may, in fact, have
underestimated the effect of denial of RSNs on DBS subscribership.

19. *Conclusion*. In summary, while the added variables may add some
    precision and understanding to the dynamics behind DBS subscription,
    they do not alter the conclusions of our earlier analysis. The
    addition or subtraction of variables will yield different magnitudes
    for the coefficients measuring the effect on DBS penetration in
    areas in which DBS is unable to carry RSNs, but whatever the mix of
    variables, the negative effect on DBS penetration of RSN withholding
    remains clear. Adding variables to our equation, in response to
    suggestions made by Cablevision, actually appears to strengthen our
    results and confirms that the analytic approach in the *Adelphia
    Order* was a reasonable one.

**APPENDIX C**

**Impact of Clustering on Withholding Strategy and**

**Analysis of Profitability of Withholding Strategy**

1.  This appendix (i) examines changes in the magnitude of clustering
    since the *2002 Extension Order;* (ii) assesses the impact of
    clustering on the incentives of cable operators to withhold regional
    programming from rivals; and (iii) assesses the incentives of cable
    operators to withhold national programming from rivals. The analysis
    focuses on the two largest MSOs, Comcast and Time Warner, both of
    which are vertically integrated.

**I. Data**

2.  The analysis draws on two sets of data from Warren Publishing
    ("Warren") pertaining to cable subscribership and homes passed, with
    each set designed as a census of all cable systems in the U.S. The
    first dataset contains data from January 2003, and the second
    dataset contains data from July 2007.[^599] From each one, we
    extracted the data for all systems owned by Time Warner and by
    Comcast. Once the data for each cable operator were extracted,
    systems were sorted according to the respective cable operator, and
    then were sorted again by Designated Market Area (DMA). For each
    cable operator, we counted all of the subscriber and homes passed
    (HP) data for each DMA served. Each of these figures was entered
    into a spreadsheet showing the total number of homes passed and
    subscribers that each cable operator had in each DMA for each time
    period. A column was then added to each spreadsheet to provide the
    Nielsen television household (TVHH) count for each DMA for the
    relevant time period.

3.  Since Warren generates its datasets through polling of each system,
    and because the responses are voluntary, each of the Warren datasets
    contained missing or incomplete information. At times, the
    subscriber data presented exceeded Nielsen TVHH counts, and more
    often, the HP data presented exceeded Nielsen's statistic for the
    number of TVHH in the DMA, or subscribers exceeded HP. In order to
    resolve these inconsistencies, we obtained datasets from another
    source for each of the two time periods examined. The additional
    data are from Centris, which uses random sampling to generate
    estimates of each MSO's ownership of cable subscribers in each
    DMA.[^600]

4.  The following describes the cases in which we attempted adjustments
    to the Warren data and the adjustments actually made.

Problem #1. Subscribers \> Nielsen TVHH.[^601] In these cases, where
possible, we replaced the subscriber figure according to formula #1.

Problem #2. HP \> Nielsen TVHH.[^602] In these cases, where possible, we
replaced the HP figure according to formula #2.

Problem #3. HP\< Subs.[^603] In these cases, where possible, we replaced
the HP figure according to formula #2.

Problem #4. Subscriber data, HP data, or both were deemed insufficient
because of lack of systems reporting in that DMA.[^604] In these cases,
where possible, we replaced the Warren subscriber statistic according to
formula #1, and we replaced the HP figure according to formula #2.

The data adjustment formulas are as follows:

Formula #1. Subscribers = Centris-reported subscribers (16 cases)

Formula #2. HP = (Centris subscriber count for cable operator/Centris
subscriber count for entire DMA)\*Nielsen TVHH (79 cases).[^605]

5.  After making the modifications described, it became evident that
    some of these modifications had created new inconsistencies. We
    applied formula #1 or formula #2 as appropriate (6 cases).[^606]
    This process left 12 cases that required additional attention,
    because there was not sufficient Centris data available to apply our
    adjustment formulas.

In four cases, we used an adaptation of Formula #2 as follows:

Formula #3: HP = (Warren subscriber count for cable operator/Warren
subscriber count for entire DMA)\*Nielsen TVHH.[^607]

6.  Of the remaining cases, we eliminated seven from our dataset on the
    grounds that the presence of the MSO in question was apparently very
    small,[^608] and we eliminated one case, even though the presence of
    the MSO in question was not small, because we did not have enough
    additional data to correct properly the apparent inconsistency in
    the data.[^609]

**II. Analysis of Increase in Clustering from 2002 to 2007**

7.  The above-described procedures have generated a set of data that
    reasonably represents the state of ownership of cable systems by
    Comcast and Time Warner as of January 2003[^610] and July 2007. It
    is also important to note that the *2002 Extension Order* was
    adopted prior to Comcast's acquisition of AT&T Broadband. For this
    reason, the following results include separate calculations for
    Comcast with and without AT&T Broadband.

-   For Comcast with AT&T Broadband, the share of homes passed in total
    television households increased in 61 markets, decreased in 57
    markets, and remained the same in 90 markets.

-   For Comcast without AT&T Broadband, the share of homes passed in
    total television households increased in 73 markets, decreased in 25
    markets, and remained the same in 110 markets.[^611]

-   For Time Warner, the share of homes passed in total television
    households increased in 60 markets, decreased in 40 markets, and
    stayed the same in 105 markets.[^612]

8.  Focusing on markets that saw the largest changes in the ratio of
    homes passed to television households by a single MSO:

-   Comcast with AT&T Broadband had 23 markets with an increase of at
    least 20 percentage points and only 16 with a decrease of at least
    that magnitude.

-   Comcast without AT&T Broadband had 43 markets with an increase of at
    least 20 percentage points and two with a decrease of at least that
    magnitude.

-   Time Warner had 18 markets with an increase of at least 20
    percentage points and 14 with a decrease of at least that magnitude.

9.  Focusing on markets in which the ratio of homes passed to total
    television households is the largest:

-   The number of markets in which Comcast's share is 70 percent or more
    increased from 18 to 30 (with AT&T Broadband) and from seven to 30
    (without AT&T Broadband).

-   The number of markets in which Time Warner's share is 70 percent or
    more dropped from 24 to 23.

**III. Analysis of Profitability of Withholding of Regional
Programming**

10. The "critical value" analysis is designed to examine the costs and
    benefits to a vertically integrated satellite cable programmer
    (VISCP) of withholding an RSN from non-cable MVPDs in the local
    market. This is sometimes referred to as the "cable only"
    distribution strategy. The critical value is the minimum share of
    subscribers to non-cable MVPDs in the market that would have to
    switch to cable in response to withholding in order to make the
    strategy profitable. The critical value calculations are based on
    current DMA market structure, specifically the shares of television
    households (TVHH) passed by Comcast and Time Warner, financial data
    for Comcast and Time Warner, and the 2006 average profile of RSNs
    (*i.e.*, average affiliation fees and network advertising revenues
    per subscriber per month).

11. The calculations are based on publicly-available data and are
    designed to establish that, under plausible conditions, it would be
    profitable for a VISCP to withhold a RSN from all non-cable MVPDs in
    the DMA. It is assumed that some share of non-cable MVPD subscribers
    would switch to cable in response to withholding and that these
    subscribers are in the same areas of the market served by the
    VISCP's cable affiliate and in areas served by other cable
    operators. Moreover, it is assumed that all TVHH in the market are
    passed by cable.[^613] The homes passed data for Comcast and Time
    Warner are taken directly from the Warren Publishing database; it is
    assumed that all other TVHH are passed by other cable operators. The
    calculations also assume that, prior to withholding, all MVPD
    subscribers receive the RSN.

The following notation is used to define the critical value:

V the critical value

TVHH number of television households in the DMA

HPASSED the number of TVHH in the DMA passed by the VISCP's cable
affiliate

ADS the share of TVHH in the DMA that subscribes to non-cable MVPDs

P the monthly per-subscriber profit that the VISCP's cable affiliate
earns on an additional subscriber (net of amortized set-top box ("STB")
cost)

FEE the monthly per-subscriber affiliation fee charged by the VISCP
(prior to withholding)

AD the monthly per-subscriber network advertising revenues earned by the
RSN

12. The critical value is the share of non-cable MVPD subscribers that
    would switch to cable in response to withholding. It is calculated
    by comparing the losses and gains associated with withholding.

The loss from withholding is: (ADS\*TVHH) \* (AD + FEE). This is the
total number of MVPD subscribers in the DMA that do *not* subscribe to
cable multiplied by the loss per subscriber of advertising revenue and
affiliate fee.

The gain from withholding is:

\[**V \***(ADS\*TVHH)\] \*

\[((HPASSED/TVHH)\*(P + AD)) + (1-(HPASSED/TVHH))\* (AD + FEE)\]

The expression on the first line is the number of non-cable MVPD
subscribers who chose to switch to cable. The expression on the second
line is the average gain to the VISCP and its cable affiliate per
subscriber who switches. It is a weighted average of the gain from a
subscriber who switches to the VISCP and its cable affiliate (marginal
profits from a new subscriber plus regained network advertising revenue)
and the gain from a subscriber who switches to another cable operator in
the market (regained affiliate fee and network advertising revenue). In
order for withholding to be profitable, gains have to be equal to or
greater than losses. Setting the term for gains equal to the term for
losses makes it possible to solve for V, the critical value.
Specifically, the critical value is:

(AD + FEE)/((HPASSED/TVHH)\* (P+AD)) + ((1-(HPASSED/TVHH)\* (AD +
FEE))[^614]

13. As noted above, HPASSED data come from Warren Publishing.[^615] TVHH
    figures by DMA are available from Nielsen.[^616] Average RSN revenue
    profiles (AD and FEE) are available from Kagan Research LLC. For
    2006, FEE was \$1.44 and AD was \$0.45.[^617] The current analysis
    examines the profitability of withholding a regional network with
    this particular revenue profile and thus would apply to a network
    with some other type of content as long as the revenue profile is
    the same. Marginal profit per subscriber figures were compiled by
    FCC staff for two major vertically integrated MSOs---Time Warner and
    Comcast. In each case, average revenue per subscriber per month and
    average variable cost per subscriber per month were obtained from
    company public financial reports (Annual Report and Form 10K). For
    each company, an upper bound and a lower bound profit figure was
    computed. The upper bound figure is based on the assumption that
    those subscribers that switch to the VISCP's cable affiliate
    purchase voice, video, and data services in the same proportion as
    do the firm's existing video subscribers. The lower bound figure is
    based on the assumption that those subscribers that switch to the
    VISCP's cable affiliate purchase only video services, but in the
    same proportion as the firm's existing video subscribers.

14. The analysis requires the marginal profit when a cable operator
    acquires an additional customer due to the lack of programming on a
    competing MVPD.  We use measures of the cable operator's average
    revenue per subscriber to estimate the additional revenue that the
    firm would gain.  To estimate the cost of serving the additional
    customer, we use the cable operator's costs net of
    its infrastructure and other overhead costs since serving an
    additional customer would not require building additional cable
    plant or expanding the size of the operator's headquarters staff.
    The profit calculations are made for the year 2006. Year-end total
    revenues are derived from the 10-K or Annual Report.[^618] From
    this, total expensed costs associated with the same year-end period
    (represented in the 10-K or Annual Report as either total "cost of
    revenues" or total "operating expenses.") are subtracted from
    Revenues.[^619] This result, divided by the total number of
    subscribers served,[^620] and then divided by 12 yields the marginal
    profit (gross of subscriber acquisition cost) per subscriber per
    month for the MSOs entire cable operation. The marginal profit per
    subscriber is closely related to the degree of competition within
    the MVPD market. As such, the results of the analysis will vary
    based upon the amount of competition. When competition is vigorous
    in the market, marginal profit per subscriber will be low and the
    incumbent cable operator will be less likely to find it profitable
    to withhold programming. When competition in the MVPD market is
    weak, marginal profit per subscriber will be high and it will
    generally be profitable to withhold programming. Accordingly, the
    calculation incorporates the current degree of competition in the
    MVPD market. One empirical indicator of the degree of competition is
    the cable share of MVPD households.

15. The lower bound of the marginal profit estimate is derived from a
    calculation of marginal profit based on the revenues generated by
    the video services provided by the MSO. This assumes that new
    subscribers never purchase voice and data services, and purchase
    video services in the same proportion as existing customers.
    Segmented revenues figures are commonly broken out by cable MSO's in
    the "Segment Operating Results" section of the 10-K or Annual
    Report.[^621] The elements of video-related revenues typically
    consist of subscription revenues and advertising revenues.[^622]
    Since operating expenses are typically not broken out by type of
    service (or at least not all of the elements of operating expenses),
    a proportional rate must be derived from total revenues and total
    expenses to approximate the video portion of operating expenses.
    Depending on the method of reporting employed by each MSO, the
    application of the proportion is in some instances applied to the
    total operating expenses. In instances where specific video-related
    costs (*e.g.*, programming costs) are broken out by the MSO, the
    proportion is simply applied to the other categories of expenses
    that that are not easily segmented across video and data
    services.[^623] Subtracting a proportional estimate of operating
    expenses from video-related revenues and dividing by total
    subscribers served[^624] and by 12 yields an estimate of marginal
    profit per subscriber per month (gross of subscriber acquisition
    cost)for the video-related services of the entire corporation.

16. In order to conduct the critical value analysis, it is necessary to
    compute marginal profit net of amortized subscriber acquisition
    costs. The data on subscriber acquisition costs come from an analyst
    report on Comcast.[^625] The report assumes that each new subscriber
    requires two digital set-top boxes and that those who subscribe to
    advanced digital services (*i.e.*, HD and/or DVR) have one advanced
    and one standard set-top box. The report assigns a cost of \$400 to
    advanced set-top boxes and a cost of \$120 to standard set-top
    boxes. The report estimates that \$45 per new subscriber of
    installation costs is amortized. It provides a weighted average
    subscriber acquisition cost of \$278 and an average subscriber life
    of 45 months over which to amortize subscriber acquisition
    costs.[^626] The calculations assume a discount rate of 10
    percent.[^627] The monthly per-subscriber profit that the VISCP's
    cable affiliate earns on an additional subscriber (net of amortized
    STB cost) is calculated as average revenue per subscriber per month
    less average variable cost per subscriber per month less monthly
    amortized subscriber acquisition cost.[^628]

17. Critical value calculations are made for every DMA in which either
    Comcast or Time Warner had subscribers as of 2007. The results will
    vary with the share of homes passed by the VISCP's cable affiliate.
    If the percentage of homes passed is very low, then a high
    percentage of subscribers would need to shift in order to make
    withholding of the prototype network profitable. When the percentage
    of homes passed is very high, then a lower percentage of subscribers
    would need to shift in order to make withholding of the prototype
    network profitable. In order to decide on plausible critical values,
    we examine the most prominent example of RSN withholding, Comcast
    SportsNet Philadelphia. Using the average RSN revenue profile and
    Comcast's value for HPASSED/TVHH in the Philadelphia DMA, the
    critical values for Philadelphia (where we know that withholding is
    profitable) are 5.45% for the upper bound profitability and 8.40%
    for the lower bound profitability. We calculate the minimum amount
    of switching that must occur for the withholding of Comcast
    SportsNet Philadelphia to be a profitable endeavor for Comcast. 
    This calculation uses the high and low estimates for the marginal
    profit earned by Comcast and the actual 2006 revenue profile of
    Comcast SportsNet Philadelphia.  If Comcast's marginal profit is
    high, then at least 6.81% of competing MVPDs customers must have
    switched to Comcast for the withholding to be profitable.  If
    Comcast's marginal profit is low, then at least 10.49% of competing
    MVPDs customers must have switched to Comcast for the withholding to
    be profitable.  This gives us a range of the minimum subscriber
    shifts that must be occurring in Philadelphia for the endeavor to be
    profitable.  This is an estimate of the critical value in
    Philadelphia in regards to Comcast SportsNet.

18. Applying these cutoff values for V to the calculated switching
    values yields the following results. For Comcast, using the average
    RSN profile, withholding would be profitable in 26 DMAs.[^629] These
    are the DMAs in which Comcast's share of TVHH passed is greater than
    73.7%; 13 of the 26 are among the top 50 DMAs in size. Using the
    Comcast SportsNet Philadelphia profile, withholding would be
    profitable in an additional 13 DMAs, of which 8 are in the top
    50.[^630] At this threshold, the Comcast share of TVHH passed is at
    least 60.4%.

19. With regard to Time Warner, it is appropriate to apply the cutoffs
    derived from the upper bound profitability calculations to the upper
    bound calculated critical values and the cutoffs derived from the
    lower bound profitability calculations to the lower bound critical
    values, since the upper and lower bound calculations embody
    different assumptions about the behavior of those who switch to
    cable. For the upper bound calculations, there are five DMAs in
    which it would be profitable for Time Warner to withhold an RSN of
    average revenue profile using the lower (5.46%) criterion and an
    additional 15 DMAs using the higher (6.83%) criterion.[^631] Seven
    of the 20 DMAs in question are among the top 50. For the lower bound
    Time Warner calculations, there are no markets in which withholding
    would be profitable using the lower (8.44%) criterion and 13 DMAs in
    which withholding would be profitable using the upper (10.54%)
    criterion. Four of the 13 are in the top 50 DMAs.

20. *Conclusion*. The critical value calculations are forward-looking in
    nature. Although based on imperfect data, they nonetheless provide a
    basis for concluding that, absent the program access exclusivity
    prohibition, withholding of a RSN (or any other regional network
    with similar revenue profile) would be profitable in a significant
    number of DMAs. The calculations suggest that if, through
    clustering, Time Warner, Comcast, or any other VISCP attained a
    sufficiently high share of television households passed by its cable
    systems in a particular DMA, withholding could be profitable there
    as well.

**IV. Analysis of Profitability of Withholding of National Programming**

21. It is also possible to calculate the minimum fraction of non-cable
    subscribers that must shift to cable in order to make withholding
    profitable. The method used to calculate these critical values is
    the same as that for regional programming, and the profitability
    estimates used are the same. The Warren data permit us to calculate
    the national share of cable homes passed by Comcast (34.08%) and
    Time Warner (21.89%). We retain the assumption that all homes
    nationwide are passed by cable. Data on affiliation fees and network
    advertising revenue per subscriber per month are available from
    Kagan Research LLC.[^632] Calculations were made for 11 popular
    networks, on the assumption that they were owned by Comcast or by
    Time Warner. For Comcast, the critical values of the 11 networks
    ranged from 1.9 to 28.3 percent for the upper bound profitability
    scenario and from 3 to 40 percent for the lower bound profitability
    scenario. For Time Warner, the upper bound profitability scenario
    critical value range was 3.9 to 45.8 percent, while the lower bound
    profitability scenario critical value range was 6.7 to 63.6 percent
    for the 11 networks.

**APPENDIX D**

**Revised Rules**

Part 76 of Title 47 of the Code of Federal Regulations is amended as
follows:

Part 76 --- MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

1\. The authority citation for Part 76 continues to read as follows:

AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307,
308, 309, 312, 315, 317, 325, 338, 339, 340, 503, 521, 522, 531, 532,
533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572 and 573.

2\. Section 76.1002 is amended by revising paragraph (c)(6) to read as
follows:

**§76.1002** **Specific Unfair Practices Prohibited.**

\* \* \* \* \*

\(c\) \*\*\*

\(6\) **Sunset provision.** The prohibition of exclusive contracts set
forth in paragraph (c)(2) of this section shall cease to be effective on
October 5, 2012, unless the Commission finds, during a proceeding to be
conducted during the year preceding such date, that said prohibition
continues to be necessary to preserve and protect competition and
diversity in the distribution of video programming.

3\. Section 76.1003 is amended by adding a sentence to the end of
paragraph (e)(1) and by adding paragraphs (i), (j) and (k) to read as
follows:

**§76.1003  ** **Program access proceedings.**

\* \* \* \* \*

\(e\) *Answer*. (1) \* \* \* To the extent that a cable operator,
satellite cable programming vendor or satellite broadcast programming
vendor expressly references and relies upon a document or documents in
asserting a defense or responding to a material allegation, such
document or documents shall be included as part of the answer.

\* \* \* \* \*

\(i\) *Alternative dispute resolution*. Within 20 days of the close of
the pleading cycle, the parties to the program access dispute may
voluntarily engage in alternative dispute resolution, including
commercial arbitration. The Commission will suspend action on the
complaint if both parties agree to use alternative dispute resolution.

\(j\) *Discovery*. In addition to the general pleading and discovery
rules contained in § 76.7 of this part, parties to a program access
complaint may serve requests for discovery directly on opposing parties,
and file a copy of the request with the Commission. The respondent shall
have the opportunity to object to any request for documents that are not
in its control or relevant to the dispute. Such request shall be heard,
and determination made, by the Commission. Until the objection is ruled
upon, the obligation to produce the disputed material is suspended. Any
party who fails to timely provide discovery requested by the opposing
party to which it has not raised an objection as described above, or who
fails to respond to a Commission order for discovery material, may be
deemed in default and an order may be entered in accordance with the
allegations contained in the complaint, or the complaint may be
dismissed with prejudice.

\(k\) *Protective Orders*. In addition to the procedures contained in §
76.9 of this part related to the protection of confidential material,
the Commission may issue orders to protect the confidentiality of
proprietary information required to be produced for resolution of
program access complaints. A protective order constitutes both an order
of the Commission and an agreement between the party executing the
protective order declaration and the party submitting the protected
material. The Commission has full authority to fashion appropriate
sanctions for violations of its protective orders, including but not
limited to suspension or disbarment of attorneys from practice before
the Commission, forfeitures, cease and desist orders, and denial of
further access to confidential information in Commission proceedings.

**APPENDIX E**

**Standard Protective Order and Declaration For Use in Section 628
Program Access Proceedings**

**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+--------------------------------+-----+------------------------------+
| In the Matter of               | **  | Docket No.                   |
|                                | )** | \_\_                         |
| \[Name of Proceeding\]         |     | \_\_\_\_\_\_\_\_\_\_\_\_\_\_ |
|                                | **  |                              |
|                                | )** |                              |
|                                |     |                              |
|                                | **  |                              |
|                                | )** |                              |
+--------------------------------+-----+------------------------------+

PROTECTIVE ORDER

1.  This Protective Order is intended to facilitate and expedite the
    review of documents obtained from a person in the course of
    discovery that contain trade secrets and privileged or confidential
    commercial or financial information. It establishes the manner in
    which "Confidential Information," as that term is defined herein, is
    to be treated. The Order is not intended to constitute a resolution
    of the merits concerning whether any Confidential Information would
    be released publicly by the Commission upon a proper request under
    the Freedom of Information Act or other applicable law or
    regulation, including 47 C.F.R. § 0.442.

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1.  [Definitions]{.underline}.

    a\. [Authorized Representative]{.underline}. "Authorized
    Representative" shall have the meaning set forth in Paragraph 7.

    b\. [Commission]{.underline}. "Commission" means the Federal
    Communications Commission or any arm of the Commission acting
    pursuant to delegated authority.

    c\. [Confidential Information]{.underline}. "Confidential
    Information" means (i) information submitted to the Commission by
    the Submitting Party that has been so designated by the Submitting
    Party and which the Submitting Party has determined in good faith
    constitutes trade secrets and commercial or financial information
    which is privileged or confidential within the meaning of Exemption
    4 of the Freedom of Information Act, 5 U.S.C. § 552(b)(4) and (ii)
    information submitted to the Commission by the Submitting Party that
    has been so designated by the Submitting Party and which the
    Submitting Party has determined in good faith falls within the terms
    of Commission orders designating the items for treatment as
    Confidential Information. Confidential Information includes
    additional copies of, notes, and information derived from
    Confidential Information.

    d\. [Declaration]{.underline}. "Declaration" means Attachment A to
    this Protective Order.

    e\. [Reviewing Party]{.underline}. "Reviewing Party" means a person
    or entity participating in this proceeding or considering in good
    faith filing a document in this proceeding.

    f\. [Submitting Party]{.underline}. "Submitting Party" means a
    person or entity that seeks confidential treatment of Confidential
    Information pursuant to this Protective Order.

    2\. [Claim of Confidentiality]{.underline}. The Submitting Party may
    designate information as "Confidential Information" consistent with
    the definition of that term in Paragraph 2.c of this Protective
    Order. The Commission may, *sua sponte* or upon petition, pursuant
    to 47 C.F.R. §§ 0.459 and 0.461, determine that all or part of the
    information claimed as "Confidential Information" is not entitled to
    such treatment.

2.  [Procedures for Claiming Information is Confidential]{.underline}.
    Confidential Information submitted to the Commission shall be filed
    under seal and shall bear on the front page in bold print, "CONTAINS
    PRIVILEGED AND CONFIDENTIAL INFORMATION - DO NOT RELEASE."
    Confidential Information shall be segregated by the Submitting Party
    from all non-confidential information submitted to the Commission.
    To the extent a document contains both Confidential Information and
    non-confidential information, the Submitting Party shall designate
    the specific portions of the document claimed to contain
    Confidential Information and shall, where feasible, also submit a
    redacted version not containing Confidential Information.

3.  [Storage of Confidential Information at the Commission]{.underline}.
    The Secretary of the Commission or other Commission staff to whom
    Confidential Information is submitted shall place the Confidential
    Information in a non-public file. Confidential Information shall be
    segregated in the files of the Commission, and shall be withheld
    from inspection by any person not bound by the terms of this
    Protective Order, unless such Confidential Information is released
    from the restrictions of this Order either through agreement of the
    parties, or pursuant to the order of the Commission or a court
    having jurisdiction.

4.  [Access to Confidential Information]{.underline}. Confidential
    Information shall only be made available to Commission staff,
    Commission consultants and to counsel to the Reviewing Parties, or
    if a Reviewing Party has no counsel, to a person designated by the
    Reviewing Party. Before counsel to a Reviewing Party or such other
    designated person designated by the Reviewing Party may obtain
    access to Confidential Information, counsel or such other designated
    person must execute the attached Declaration. Consultants under
    contract to the Commission may obtain access to Confidential
    Information only if they have signed, as part of their employment
    contract, a non-disclosure agreement the scope of which includes the
    Confidential Information, or if they execute the attached
    Declaration.

5.  [Disclosure]{.underline}. Counsel to a Reviewing Party or such other
    person designated pursuant to Paragraph 5 may disclose Confidential
    Information to other Authorized Representatives to whom disclosure
    is permitted under the terms of paragraph 7 of this Protective Order
    only after advising such Authorized Representatives of the terms and
    obligations of the Order. In addition, before Authorized
    Representatives may obtain access to Confidential Information, each
    Authorized Representative must execute the attached Declaration.

6.  [Authorized Representatives shall be limited to]{.underline}:

    a\. Subject to Paragraph 7.d, counsel for the Reviewing Parties to
    this proceeding, including in-house counsel, actively engaged in the
    conduct of this proceeding and their associated attorneys,
    paralegals, clerical staff and other employees, to the extent
    reasonably necessary to render professional services in this
    proceeding;

    b\. Subject to Paragraph 7.d, specified persons, including employees
    of the Reviewing Parties, requested by counsel to furnish technical
    or other expert advice or service, or otherwise engaged to prepare
    material for the express purpose of formulating filings in this
    proceeding; and

    c\. Subject to Paragraph 7.d., any person designated by the
    Commission in the public interest, upon such terms as the Commission
    may deem proper; except that,

    d\. disclosure shall be prohibited to any persons in a position to
    use the Confidential Information for competitive commercial or
    business purposes, including persons involved in competitive
    decision-making, which includes, but is not limited to, persons
    whose activities, association or relationship with the Reviewing
    Parties or other Authorized Representatives involve rendering advice
    or participating in any or all of the Reviewing Parties', Associated
    Representatives' or any other person's business decisions that are
    or will be made in light of similar or corresponding information
    about a competitor.

7.  [Inspection of Confidential Information]{.underline}. Confidential
    Information shall be maintained by a Submitting Party for inspection
    at two or more locations, at least one of which shall be in
    Washington, D.C. Inspection shall be carried out by Authorized
    Representatives upon reasonable notice not to exceed one business
    day during normal business hours.

8.  [Copies of Confidential Information]{.underline}. The Submitting
    Party shall provide a copy of the Confidential Material to
    Authorized Representatives upon request and may charge a reasonable
    copying fee not to exceed twenty five cents per page. Authorized
    Representatives may make additional copies of Confidential
    Information but only to the extent required and solely for the
    preparation and use in this proceeding. Authorized Representatives
    must maintain a written record of any additional copies made and
    provide this record to the Submitting Party upon reasonable request.
    The original copy and all other copies of the Confidential
    Information shall remain in the care and control of Authorized
    Representatives at all times. Authorized Representatives having
    custody of any Confidential Information shall keep the documents
    properly and fully secured from access by unauthorized persons at
    all times.

9.  [Filing of Declaration]{.underline}. Counsel for Reviewing Parties
    shall provide to the Submitting Party and the Commission a copy of
    the attached Declaration for each Authorized Representative within
    five (5) business days after the attached Declaration is executed,
    or by any other deadline that may be prescribed by the Commission.

10. [Use of Confidential Information]{.underline}. Confidential
    Information shall not be used by any person granted access under
    this Protective Order for any purpose other than for use in this
    proceeding (including any subsequent administrative or judicial
    review), shall not be used for competitive business purposes, and
    shall not be used or disclosed except in accordance with this Order.
    This shall not preclude the use of any material or information that
    is in the public domain or has been developed independently by any
    other person who has not had access to the Confidential Information
    nor otherwise learned of its contents.

11. [Pleadings Using Confidential Information]{.underline}. Submitting
    Parties and Reviewing Parties may, in any pleadings that they file
    in this proceeding, reference the Confidential Information, but only
    if they comply with the following procedures:

    a\. Any portions of the pleadings that contain or disclose
    Confidential Information must be physically segregated from the
    remainder of the pleadings and filed under seal;

    b\. The portions containing or disclosing Confidential Information
    must be covered by a separate letter referencing this Protective
    Order;

    c\. Each page of any Party\'s filing that contains or discloses
    Confidential Information subject to this Order must be clearly
    marked: "Confidential Information included pursuant to Protective
    Order, \[cite proceeding\];" and

    d\. The confidential portion(s) of the pleading, to the extent they
    are required to be served, shall be served upon the Secretary of the
    Commission, the Submitting Party, and those Reviewing Parties that
    have signed the attached Declaration. Such confidential portions
    shall be served under seal, and shall not be placed in the
    Commission\'s Public File unless the Commission directs otherwise
    (with notice to the Submitting Party and an opportunity to comment
    on such proposed disclosure). A Submitting Party or a Reviewing
    Party filing a pleading containing Confidential Information shall
    also file a redacted copy of the pleading containing no Confidential
    Information, which copy shall be placed in the Commission\'s public
    files. A Submitting Party or a Reviewing Party may provide courtesy
    copies of pleadings containing Confidential Information to
    Commission staff so long as the notations required by this Paragraph
    12 are not removed.

12. [Violations of Protective Order]{.underline}. Should a Reviewing
    Party that has properly obtained access to Confidential Information
    under this Protective Order violate any of its terms, it shall
    immediately convey that fact to the Commission and to the Submitting
    Party. Further, should such violation consist of improper disclosure
    or use of Confidential Information, the violating party shall take
    all necessary steps to remedy the improper disclosure or use. The
    Violating Party shall also immediately notify the Commission and the
    Submitting Party, in writing, of the identity of each party known or
    reasonably suspected to have obtained the Confidential Information
    through any such disclosure. The Commission retains its full
    authority to fashion appropriate sanctions for violations of this
    Protective Order, including but not limited to suspension or
    disbarment of attorneys from practice before the Commission,
    forfeitures, cease and desist orders, and denial of further access
    to Confidential Information in this or any other Commission
    proceeding. Nothing in this Protective Order shall limit any other
    rights and remedies available to the Submitting Party at law or
    equity against any party using Confidential Information in a manner
    not authorized by this Protective Order.

13. [Termination of Proceeding]{.underline}. Within two weeks after
    final resolution of this proceeding (which includes any
    administrative or judicial appeals), Authorized Representatives of
    Reviewing Parties shall, at the direction of the Submitting Party,
    destroy or return to the Submitting Party all Confidential
    Information as well as all copies and derivative materials made, and
    shall certify in a writing served on the Commission and the
    Submitting Party that no material whatsoever derived from such
    Confidential Information has been retained by any person having
    access thereto, except that counsel to a Reviewing Party may retain
    two copies of pleadings submitted on behalf of the Reviewing Party.
    Any confidential information contained in any copies of pleadings
    retained by counsel to a Reviewing Party or in materials that have
    been destroyed pursuant to this paragraph shall be protected from
    disclosure or use indefinitely in accordance with paragraphs 9 and
    11 of this Protective Order unless such Confidential Information is
    released from the restrictions of this Order either through
    agreement of the parties, or pursuant to the order of the Commission
    or a court having jurisdiction.

14. [No Waiver of Confidentiality]{.underline}. Disclosure of
    Confidential Information as provided herein shall not be deemed a
    waiver by the Submitting Party of any privilege or entitlement to
    confidential treatment of such Confidential Information. Reviewing
    Parties, by viewing these materials: (a) agree not to assert any
    such waiver; (b) agree not to use information derived from any
    confidential materials to seek disclosure in any other proceeding;
    and (c) agree that accidental disclosure of Confidential Information
    shall not be deemed a waiver of the privilege.

15. [Additional Rights Preserved]{.underline}. The entry of this
    Protective Order is without prejudice to the rights of the
    Submitting Party to apply for additional or different protection
    where it is deemed necessary or to the rights of Reviewing Parties
    to request further or renewed disclosure of Confidential
    Information.

16. [Effect of Protective Order]{.underline}. This Protective Order
    constitutes an Order of the Commission and an agreement between the
    Reviewing Party, executing the attached Declaration, and the
    Submitting Party.

17. [Authority]{.underline}. This Protective Order is issued pursuant to
    Sections 4(i) and 4(j) of the Communications Act as amended, 47
    U.S.C. §§ 154(i), (j) and 47 C.F.R. § 0.457(d).

    Attachment A to Standard Protective Order

    DECLARATION

    In the Matter of )

    \[Name of Proceeding\] ) Docket No.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    I, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
    hereby declare under penalty of perjury that I have read the
    Protective Order that has been entered by the Commission in this
    proceeding, and that I agree to be bound by its terms pertaining to
    the treatment of Confidential Information submitted by parties to
    this proceeding. I understand that the Confidential Information
    shall not be disclosed to anyone except in accordance with the terms
    of the Protective Order and shall be used only for purposes of the
    proceedings in this matter. I acknowledge that a violation of the
    Protective Order is a violation of an order of the Federal
    Communications Commission. I acknowledge that this Protective Order
    is also a binding agreement with the Submitting Party. I am not in a
    position to use the Confidential Information for competitive
    commercial or business purposes, including competitive
    decision-making, and my activities, association or relationship with
    the Reviewing Parties, Authorized Representatives, or other persons
    does not involve rendering advice or participating in any or all of
    the Reviewing Parties', Associated Representatives' or other
    persons' business decisions that are or will be made in light of
    similar or corresponding information about a competitor.

    (signed) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (printed name) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (representing) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (title) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (employer) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (address) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    (phone) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(date) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**APPENDIX F**

**Initial Regulatory Flexibility Analysis**

#  {#section .unnumbered}

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (the "RFA")[^633] the Commission has prepared this Initial
    Regulatory Flexibility Analysis ("IRFA") of the possible significant
    economic impact on small entities by the policies and rules proposed
    in the *Notice of Proposed Rulemaking* ("*NPRM*").[^634] Written
    public comments are requested on this IRFA. Comments must be
    identified as responses to the IRFA and must be filed by the
    deadlines for comments provided on the first page of the document.
    The Commission will send a copy of the *NPRM*, including this IRFA,
    to the Chief Counsel for Advocacy of the Small Business
    Administration ("SBA").[^635] In addition, the *NPRM* and IRFA (or
    summaries thereof) will be published in the *Federal
    Register*.[^636]

    **A. Need for, and Objectives of, the Proposed Rules**

2.  *Overview*. The *NPRM* considers Commission action with respect to
    seven issues. First, the Commission is considering whether it can
    establish a procedure that would shorten the term of the five-year
    extension of the exclusive contract prohibition if, after two years
    (*i.e*., October 5, 2009) a cable operator can show competition from
    new entrant MVPDs has reached a certain penetration level in a
    Designated Market Area.[^637] Second, the Commission is
    contemplating the extension of its program access rules to
    terrestrially delivered cable-affiliated programmers in order to
    facilitate competition in the video distribution market.[^638]
    Third, the Commission is considering whether to expand the exclusive
    contract prohibition to apply to non-cable-affiliated programming
    that is affiliated with a different MVPD, principally a Direct
    Broadcast Satellite ("DBS") provider.[^639] Fourth, the *NPRM* is
    contemplating whether it may be appropriate for the Commission to
    preclude the practice of programmers to require multichannel video
    programming distributors ("MVPDs") to purchase and carry undesired
    programming in return for the ability to purchase and carry desired
    programming.[^640] The *NPRM* considers whether to instead require
    programmers to offer each of their programming services on a
    stand-alone basis to all MVPDs. Fifth, the *NPRM* contemplates
    action to address concerns raised by small and rural MVPDs regarding
    conditions imposed by programmers for access to content.[^641] The
    *NPRM* also contemplates revising the Commission's program access
    complaint procedures in two respects.[^642] First, the *NPRM* is
    considering whether to establish a process whereby a program access
    complainant may seek a temporary stay of any proposed changes to its
    existing programming contract pending resolution of a
    complaint.[^643] Second, the *NPRM* contemplates revising the
    Commission's program access complaint procedures by requiring
    parties to submit to the Commission, when requested, "final offer"
    proposals as part of the remedy phase of the complaint
    process.[^644] Each of these issues is discussed in further detail
    below.

3.  *Procedure for Shortening Term of Extension of Exclusive Contract
    Prohibition*. Section 628(c)(2)(D) of the Communications Act
    prohibits, in areas served by a cable operator, exclusive contracts
    for satellite cable programming or satellite broadcast programming
    between vertically integrated programming vendors and cable
    operators unless the Commission determines that such exclusivity is
    in the public interest.[^645] In MB Docket 07-29, the Commission
    decided to extend this prohibition for five years, until October
    5, 2012. In light of the five-year extension of the exclusivity ban,
    the *NPRM* considers whether it can establish a procedure that would
    shorten the term of the extension if, after two years (*i.e*.,
    October 5, 2009), a cable operator can show competition from new
    entrant MVPDs has reached a certain penetration level in the DMA.
    The *NPRM* contemplates what this penetration level should be,
    whether two years or some other time frame is the appropriate period
    of time, and whether a market-by-market analysis is appropriate as
    both a legal and policy matter.

4.  *Terrestrially Delivered Cable-Affiliated Programming*. Congress
    enacted the program access provisions contained in Section 628 of
    the Communications Act of 1934, as amended, as part of the Cable
    Television Consumer Protection and Competition Act of 1992 ("1992
    Act").[^646] The program access provisions are intended to increase
    competition and diversity in the multichannel video programming
    market, as well as to foster the development of competition to
    traditional cable systems, by prescribing regulations that govern
    the access by competing MVPDs to "satellite cable programming" and
    "satellite broadcast programming."[^647] The Commission has
    previously concluded that terrestrially delivered programming
    (*i.e*., programming transmitted or retransmitted by satellite for
    direct reception by cable operators) is not covered by the
    definitions of "satellite cable programming" and "satellite
    broadcast programming."[^648] Thus, terrestrially delivered
    programming is not subject to the program access provisions. The
    Commission has previously found that cable operators have withheld
    terrestrially delivered cable-affiliated programming from
    competitive MVPDs and that this has resulted in a material adverse
    impact on competition in the video distribution market.[^649] To
    remedy this concern, the *NPRM* considers whether to extend the
    program access provisions to all terrestrially delivered
    cable-affiliated programming pursuant to various provisions of the
    Communications Act, such as Sections 4(i), 201(b), 303(r), 601(6),
    612(g), 616(a), 628(b), and 706.[^650] The Commission also seeks
    information as to whether cable operators, again with
    anti-competitive results, are shifting delivery of affiliated
    programming from satellite delivery to terrestrial delivery and
    whether such action is intended to evade the program access rules.

5.  *Expanding the Exclusive Contract Prohibition to
    Non-Cable-Affiliated Programming*. The *NPRM* is considering whether
    to expand the exclusive contract prohibition to apply to
    non-cable-affiliated programming that is affiliated with a different
    MVPD, principally a DBS provider. To the extent that an MVPD meets
    the definition of a "cable operator" under the Communications Act,
    the exclusive contract prohibition in Section 628(c)(2)(D) already
    applies to its affiliated programming.[^651] Moreover, Section
    628(j) of the Communications Act provides that any provision of
    Section 628, including the exclusive contract prohibition in Section
    628(c)(2)(D), that applies to a cable operator also applies to any
    common carrier or its affiliate that provides video
    programming.[^652] Programming affiliated with other MVPDs, such as
    DBS providers, is beyond the scope of the exclusive contract
    prohibition in Section 628(c)(2)(D). The *NPRM* is considering
    whether to extend the exclusive contract prohibition to
    non-cable-affiliated programming that is affiliated with a different
    MVPD, principally a DBS provider, pursuant to Sections 4(i), 201(b),
    303(r), 601(6), 612(g), 616(a), 628(b), or 706, or any other
    provision under the Communications Act.

6.  *Tying*. Various MVPDs have raised concerns regarding the practice
    of some programmers to require MVPDs to purchase and carry undesired
    programming in return for the right to carry desired programming,
    referred to as "tying." When presented with a tying arrangement,
    MVPDs face two choices. First, the MVPD can refuse the tying
    arrangement, thereby potentially depriving itself of desired, and
    often economically vital, programming that subscribers demand and
    which may be essential to attracting and retaining subscribers.
    Second, the MVPD can agree to the tying arrangement, thereby
    incurring costs for programming that its subscribers do not demand
    and may not want, with such costs being passed on to subscribers in
    the form of higher rates, and also forcing the MVPD to allocate
    channel capacity for the unwanted programming in place of
    programming that its subscribers prefer. In either case, the MVPD
    and its subscribers are harmed by the refusal of the programmer to
    offer each of its programming services on a stand-alone basis. The
    *NPRM* explains that small cable operators and MVPDs are
    particularly vulnerable to such tying arrangements because they do
    not have leverage in negotiations for programming due to their
    smaller subscriber bases. Given the problems associated with such
    tying arrangements, the *NPRM* is contemplating whether it may be
    appropriate for the Commission to preclude them and to instead
    require each programming service to be offered on a stand-alone
    basis to all MVPDs. The *NPRM* considers precluding the tying
    practices of broadcasters, satellite cable programmers,
    terrestrially delivered cable-affiliated programmers, and
    programmers that are affiliated with neither a cable operator nor a
    broadcaster, such as networks affiliated with a non-cable MVPD or a
    non-affiliated independent programmer.

7.  *Concerns Raised by Small and Rural MVPDs*. Small and rural MVPDs
    have raised concerns regarding obstacles they face in trying to
    obtain access to programming which impede competition in the video
    distribution marketplace. These obstacles include (i) restrictions
    on the use of shared headends for receiving content; (ii) requiring
    small and rural MVPDs to enter into mandatory non-disclosure
    agreements with programmers; (iii) requiring small and rural MVPDs
    to provide programmers with advertising slots; and (iv) mandating
    unwarranted security requirements. The *NPRM* contemplates
    Commission action to address these practices.

8.  *Modification of Program Access Complaint Procedures*. The *NPRM*
    also contemplates revising the Commission's program access complaint
    procedures in two respects. First, the *NPRM* contemplates adding an
    arbitration-type step as part of the Commission's determination of
    an appropriate remedy for program access violations. The *NPRM* is
    considering whether, when feasible, the Commission should request,
    as part of its evaluation of the appropriate remedy to impose for
    program access violations, that the parties each submit their best
    "final offer" proposal for the rates, terms or conditions under
    review. The *NPRM* considers whether the Commission should have the
    discretion to adopt one of the parties' proposals as the remedy for
    the program access complaint. Second, the *NPRM* is considering
    whether to allow complainants to request a stay of any action or
    proposed action that would change an existing program contract that
    is the subject of a program access complaint, pending the resolution
    of the program access complaint. In the *NPRM,* the Commission
    agrees that the threat of temporary foreclosure pending resolution
    of a complaint may impair settlement negotiations and may discourage
    parties from filing legitimate complaints. The *NPRM* thus
    contemplates whether the issuance of temporary stay orders would
    encourage parties to resolve program access disputes and to make use
    of the Commission's complaint procedures when needed. The *NPRM*
    considers whether complainants should be required to formally
    request such relief from the Commission and establish that they are
    likely to prevail on the merits of their complaint; will suffer
    irreparable harm absent a stay; that the balance of harms to the
    parties favors grant of a stay; and that the public interest favors
    grant of the stay. The *NPRM* also considers whether, as part of a
    showing of irreparable harm, complainants may discuss the likelihood
    that subscribers would switch MVPDs to obtain the programming in
    dispute for a long enough period to make the strategy profitable to
    the respondent. The *NPRM* further contemplates whether these stays
    should be routinely granted when the facts support their issuance
    and that they will help to encourage settlement negotiations. The
    *NPRM* considers the nature of the stay, that is, whether both the
    complainant and the respondent will be subject to the stay order,
    and required to fulfill their respective obligations under the terms
    and conditions of the carriage contract in issue, while the stay is
    in effect. The *NPRM* also contemplates whether complainants will be
    permitted to drop the programming that is the subject of the program
    access dispute unless and until a request to dismiss the complaint
    with prejudice is granted by the Commission. The *NPRM* considers
    whether the length of the stay should be entirely discretionary. The
    *NPRM* also considers whether the Commission should include, as part
    of its final order resolving the complaint or resolving damages,
    adjustments to its remedies that make the terms of the new agreement
    between the parties retroactive to the expiration date of the
    previous agreement.

9.  In the *NPRM*, the Commission seeks comment on the foregoing issues.
    In particular, the *NPRM* invites comment on issues that may impact
    small entities, including MVPDs and programmers.

    **B.** **Legal Basis**

10. The authority for the action proposed in the rulemaking is contained
    in Section 4(i), 303, and 628 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 154(i), 303, and 548.

    **C. Description and Estimate of the Number of Small Entities to
    Which the Proposed Rules Will Apply**

11. The RFA directs agencies to provide a description of, and where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^653] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^654] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^655] A "small business concern" is
    one which: (1) is independently owned and operated; (2) is not
    dominant in its field of operation; and (3) satisfies any additional
    criteria established by the Small Business Administration
    ("SBA").[^656]

12. *Wired Telecommunications Carriers*. The 2007 North American
    Industry Classification System ("NAICS") defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include the
    following three classifications which were listed separately in the
    2002 NAICS: Wired Telecommunications Carriers (2002 NAICS Code
    517110), Cable and Other Program Distribution (2002 NAISC Code
    517510), and Internet Service Providers (2002 NAISC Code
    518111).[^657] The 2007 NAISC defines this category as follows:
    "This industry comprises establishments primarily engaged in
    operating and/or providing access to transmission facilities and
    infrastructure that they own and/or lease for the transmission of
    voice, data, text, sound, and video using wired telecommunications
    networks. Transmission facilities may be based on a single
    technology or a combination of technologies. Establishments in this
    industry use the wired telecommunications network facilities that
    they operate to provide a variety of services, such as wired
    telephony services, including VoIP services; wired (cable) audio and
    video programming distribution; and wired broadband Internet
    services. By exception, establishments providing satellite
    television distribution services using facilities and infrastructure
    that they operate are included in this industry."[^658] The SBA has
    developed a small business size standard for Wired
    Telecommunications Carriers, which is all firms having 1,500
    employees or less.[^659] According to Census Bureau data for 2002,
    there were a total of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC Code 517110) that operated for the
    entire year; 6,021 firms in the Cable and Other Program Distribution
    category (2002 NAISC Code 517510) that operated for the entire year;
    and 3,408 firms in the Internet Service Providers category (2002
    NAISC Code 518111) that operated for the entire year.[^660] Of these
    totals, 25,374 of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC Code 517110) had less than 100
    employees; 5,496 of 6,021 firms in the Cable and Other Program
    Distribution category (2002 NAISC Code 517510) had less than 100
    employees; and 3,303 of the 3,408 firms in the Internet Service
    Providers category (2002 NAISC Code 518111) had less than 100
    employees.[^661] Thus, under this size standard, the majority of
    firms can be considered small.

13. *Cable and Other Program Distribution.* The 2002 NAICS defines this
    category as follows: "This industry comprises establishments
    primarily engaged as third-party distribution systems for broadcast
    programming. The establishments of this industry deliver visual,
    aural, or textual programming received from cable networks, local
    television stations, or radio networks to consumers via cable or
    direct-to-home satellite systems on a subscription or fee basis.
    These establishments do not generally originate programming
    material."[^662] This category includes, among others, cable
    operators, direct broadcast satellite ("DBS") services, home
    satellite dish ("HSD") services, satellite master antenna television
    ("SMATV") systems, and open video systems ("OVS"). The SBA has
    developed a small business size standard for Cable and Other Program
    Distribution, which is all such firms having \$13.5 million or less
    in annual receipts.[^663] According to Census Bureau data for 2002,
    there were a total of 1,191 firms in this category that operated for
    the entire year.[^664] Of this total, 1,087 firms had annual
    receipts of under \$10 million, and 43 firms had receipts of \$10
    million or more but less than \$25 million.[^665] Thus, under this
    size standard, the majority of firms can be considered small.

14. *Cable System Operators (Rate Regulation Standard).* The Commission
    has also developed its own small business size standards for the
    purpose of cable rate regulation. Under the Commission's rules, a
    "small cable company" is one serving 400,000 or fewer subscribers
    nationwide.[^666] As of 2006, 7,916 cable operators qualify as small
    cable companies under this standard.[^667] In addition, under the
    Commission's rules, a "small system" is a cable system serving
    15,000 or fewer subscribers.[^668] Industry data indicate that 6,139
    systems have under 10,000 subscribers, and an additional 379 systems
    have 10,000-19,999 subscribers.[^669] Thus, under this standard,
    most cable systems are small.

15. *Cable System Operators (Telecom Act Standard)*. The Communications
    Act of 1934, as amended, also contains a size standard for small
    cable system operators, which is "a cable operator that, directly or
    through an affiliate, serves in the aggregate fewer than 1 percent
    of all subscribers in the United States and is not affiliated with
    any entity or entities whose gross annual revenues in the aggregate
    exceed \$250,000,000."[^670] There are approximately 65.4 million
    cable subscribers in the United States today.[^671] Accordingly, an
    operator serving fewer than 654,000 subscribers shall be deemed a
    small operator, if its annual revenues, when combined with the total
    annual revenues of all its affiliates, do not exceed \$250 million
    in the aggregate.[^672] Based on available data, we find that the
    number of cable operators serving 654,000 subscribers or less totals
    approximately 7,916.[^673] We note that the Commission neither
    requests nor collects information on whether cable system operators
    are affiliated with entities whose gross annual revenues exceed
    \$250 million.[^674] Although it seems certain that some of these
    cable system operators are affiliated with entities whose gross
    annual revenues exceed \$250,000,000, we are unable at this time to
    estimate with greater precision the number of cable system operators
    that would qualify as small cable operators under the definition in
    the Communications Act.

16. *Direct Broadcast Satellite ("DBS") Service.* DBS service is a
    nationally distributed subscription service that delivers video and
    audio programming via satellite to a small parabolic "dish" antenna
    at the subscriber's location. Because DBS provides subscription
    services, DBS falls within the SBA-recognized definition of Cable
    and Other Program Distribution.[^675] This definition provides that
    a small entity is one with \$13.5 million or less in annual
    receipts.[^676] Currently, three operators provide DBS service,
    which requires a great investment of capital for operation: DIRECTV,
    EchoStar (marketed as the DISH Network), and Dominion Video
    Satellite, Inc. ("Dominion") (marketed as Sky Angel).[^677] All
    three currently offer subscription services. Two of these three DBS
    operators, DIRECTV[^678] and EchoStar Communications Corporation
    ("EchoStar"),[^679] report annual revenues that are in excess of the
    threshold for a small business. The third DBS operator, Dominion's
    Sky Angel service, serves fewer than one million subscribers and
    provides 20 family and religion-oriented channels.[^680] Dominion
    does not report its annual revenues. The Commission does not know of
    any source which provides this information and, thus, we have no way
    of confirming whether Dominion qualifies as a small business.
    Because DBS service requires significant capital, we believe it is
    unlikely that a small entity as defined by the SBA would have the
    financial wherewithal to become a DBS licensee. Nevertheless, given
    the absence of specific data on this point, we recognize the
    possibility that there are entrants in this field that may not yet
    have generated \$13.5 million in annual receipts, and therefore may
    be categorized as a small business, if independently owned and
    operated.

17. *Private Cable Operators (PCOs) also known as Satellite Master
    Antenna Television (SMATV) Systems*. PCOs, also known as SMATV
    systems or private communication operators, are video distribution
    facilities that use closed transmission paths without using any
    public right-of-way. PCOs acquire video programming and distribute
    it via terrestrial wiring in urban and suburban multiple dwelling
    units such as apartments and condominiums, and commercial multiple
    tenant units such as hotels and office buildings. The SBA definition
    of small entities for Cable and Other Program Distribution Services
    includes PCOs and, thus, small entities are defined as all such
    companies generating \$13.5 million or less in annual
    receipts.[^681] Currently, there are approximately 150 members in
    the Independent Multi-Family Communications Council (IMCC), the
    trade association that represents PCOs.[^682] Individual PCOs often
    serve approximately 3,000-4,000 subscribers, but the larger
    operations serve as many as 15,000-55,000 subscribers. In total,
    PCOs currently serve approximately one million subscribers.[^683]
    Because these operators are not rate regulated, they are not
    required to file financial data with the Commission. Furthermore, we
    are not aware of any privately published financial information
    regarding these operators. Based on the estimated number of
    operators and the estimated number of units served by the largest
    ten PCOs, we believe that a substantial number of PCO may qualify as
    small entities.

18. *Home Satellite Dish ("HSD") Service.* Because HSD provides
    subscription services, HSD falls within the SBA-recognized
    definition of Cable and Other Program Distribution, which includes
    all such companies generating \$13.5 million or less in revenue
    annually.[^684] HSD or the large dish segment of the satellite
    industry is the original satellite-to-home service offered to
    consumers, and involves the home reception of signals transmitted by
    satellites operating generally in the C-band frequency. Unlike DBS,
    which uses small dishes, HSD antennas are between four and eight
    feet in diameter and can receive a wide range of unscrambled (free)
    programming and scrambled programming purchased from program
    packagers that are licensed to facilitate subscribers' receipt of
    video programming. There are approximately 30 satellites operating
    in the C-band, which carry over 500 channels of programming
    combined; approximately 350 channels are available free of charge
    and 150 are scrambled and require a subscription. HSD is difficult
    to quantify in terms of annual revenue. HSD owners have access to
    program channels placed on C-band satellites by programmers for
    receipt and distribution by MVPDs. Commission data shows that,
    between June 2004 and June 2005, HSD subscribership fell from
    335,766 subscribers to 206,358 subscribers, a decline of more than
    38 percent.[^685] The Commission has no information regarding the
    annual revenue of the four C-Band distributors.

19. *Broadband Radio Service and Educational Broadband Service*.
    Broadband Radio Service comprises Multichannel Multipoint
    Distribution Service (MMDS) systems and Multipoint Distribution
    Service (MDS).[^686] MMDS systems, often referred to as "wireless
    cable," transmit video programming to subscribers using the
    microwave frequencies of MDS and Educational Broadband Service (EBS)
    (formerly known as Instructional Television Fixed Service
    (ITFS)).[^687] We estimate that the number of wireless cable
    subscribers is approximately 100,000, as of March 2005. As
    previously noted, the SBA definition of small entities for Cable and
    Other Program Distribution, which includes such companies generating
    \$13.5 million in annual receipts, appears applicable to MDS and
    ITFS.[^688]

20. The Commission has also defined small MDS (now BRS) entities in the
    context of Commission license auctions. For purposes of the 1996 MDS
    auction, the Commission defined a small business as an entity that
    had annual average gross revenues of less than \$40 million in the
    previous three calendar years.[^689] This definition of a small
    entity in the context of MDS auctions has been approved by the
    SBA.[^690] In the MDS auction, 67 bidders won 493 licenses.[^691] Of
    the 67 auction winners, 61 claimed status as a small business. At
    this time, the Commission estimates that of the 61 small business
    MDS auction winners, 48 remain small business licensees. In addition
    to the 48 small businesses that hold BTA authorizations, there are
    approximately 392 incumbent MDS licensees that have gross revenues
    that are not more than \$40 million and are thus considered small
    entities.[^692] MDS licensees and wireless cable operators that did
    not receive their licenses as a result of the MDS auction fall under
    the SBA small business size standard for Cable and Other Program
    Distribution, which includes all such entities that do not generate
    revenue in excess of \$13.5 million annually.[^693] Information
    available to us indicates that there are approximately 850 of these
    licensees and operators that do not generate revenue in excess of
    \$13.5 million annually. Therefore, we estimate that there are
    approximately 850 small entity MDS (or BRS) providers, as defined by
    the SBA and the Commission's auction rules.

21. Educational institutions are included in this analysis as small
    entities; however, the Commission has not created a specific small
    business size standard for ITFS (now EBS).[^694] We estimate that
    there are currently 2,032 ITFS (or EBS) licensees, and all but 100
    of the licenses are held by educational institutions. Thus, we
    estimate that at least 1,932 ITFS licensees are small entities.

22. *Local Multipoint Distribution Service.* Local Multipoint
    Distribution Service (LMDS) is a fixed broadband point-to-multipoint
    microwave service that provides for two-way video
    telecommunications.[^695] The SBA definition of small entities for
    Cable and Other Program Distribution, which includes such companies
    generating \$13.5 million in annual receipts, appears applicable to
    LMDS.[^696] The Commission has also defined small LMDS entities in
    the context of Commission license auctions. In the 1998 and 1999
    LMDS auctions,[^697] the Commission defined a small business as an
    entity that had annual average gross revenues of less than \$40
    million in the previous three calendar years.[^698] Moreover, the
    Commission added an additional classification for a "very small
    business," which was defined as an entity that had annual average
    gross revenues of less than \$15 million in the previous three
    calendar years.[^699] These definitions of "small business" and
    "very small business" in the context of the LMDS auctions have been
    approved by the SBA.[^700] In the first LMDS auction, 104 bidders
    won 864 licenses. Of the 104 auction winners, 93 claimed status as
    small or very small businesses. In the LMDS re-auction, 40 bidders
    won 161 licenses. Based on this information, we believe that the
    number of small LMDS licenses will include the 93 winning bidders in
    the first auction and the 40 winning bidders in the re-auction, for
    a total of 133 small entity LMDS providers as defined by the SBA and
    the Commission's auction rules.

23. *Open Video Systems ("OVS").* The OVS framework provides
    opportunities for the distribution of video programming other than
    through cable systems. Because OVS operators provide subscription
    services,[^701] OVS falls within the SBA-recognized definition of
    Cable and Other Program Distribution Services, which provides that a
    small entity is one with \$ 13.5 million or less in annual
    receipts.[^702] The Commission has approved approximately 120 OVS
    certifications with some OVS operators now providing service.[^703]
    Broadband service providers (BSPs) are currently the only
    significant holders of OVS certifications or local OVS franchises,
    even though OVS is one of four statutorily-recognized options for
    local exchange carriers (LECs) to offer video programming services.
    As of June 2005, BSPs served approximately 1.4 million subscribers,
    representing 1.49 percent of all MVPD households.[^704] Among BSPs,
    however, those operating under the OVS framework are in the
    minority.[^705] As of June 2005, RCN Corporation is the largest BSP
    and 14th largest MVPD, serving approximately 371,000
    subscribers.[^706] RCN received approval to operate OVS systems in
    New York City, Boston, Washington, D.C. and other areas. The
    Commission does not have financial information regarding the
    entities authorized to provide OVS, some of which may not yet be
    operational. We thus believe that at least some of the OVS operators
    may qualify as small entities.

24. *Cable and Other Subscription Programming.* The Census Bureau
    defines this category as follows: "This industry comprises
    establishments primarily engaged in operating studios and facilities
    for the broadcasting of programs on a subscription or fee basis . .
    . . These establishments produce programming in their own facilities
    or acquire programming from external sources. The programming
    material is usually delivered to a third party, such as cable
    systems or direct-to-home satellite systems, for transmission to
    viewers."[^707] The SBA has developed a small business size standard
    for firms within this category, which is all firms with \$13.5
    million or less in annual receipts.[^708] According to Census Bureau
    data for 2002, there were 270 firms in this category that operated
    for the entire year.[^709] Of this total, 217 firms had annual
    receipts of under \$10 million and 13 firms had annual receipts of
    \$10 million to \$24,999,999.[^710] Thus, under this category and
    associated small business size standard, the majority of firms can
    be considered small.

25. *Small Incumbent Local Exchange Carriers*. We have included small
    incumbent local exchange carriers in this present RFA analysis. A
    "small business" under the RFA is one that, *inter alia*, meets the
    pertinent small business size standard (*e.g.*, a telephone
    communications business having 1,500 or fewer employees), and "is
    not dominant in its field of operation."[^711] The SBA's Office of
    Advocacy contends that, for RFA purposes, small incumbent local
    exchange carriers are not dominant in their field of operation
    because any such dominance is not "national" in scope.[^712] We have
    therefore included small incumbent local exchange carriers in this
    RFA, although we emphasize that this RFA action has no effect on
    Commission analyses and determinations in other, non-RFA contexts.

26. *Incumbent Local Exchange Carriers ("LECs")*. Neither the Commission
    nor the SBA has developed a small business size standard
    specifically for incumbent local exchange services. The appropriate
    size standard under SBA rules is for the category Wired
    Telecommunications Carriers. Under that size standard, such a
    business is small if it has 1,500 or fewer employees.[^713]
    According to Commission data,[^714] 1,307 carriers have reported
    that they are engaged in the provision of incumbent local exchange
    services. Of these 1,307 carriers, an estimated 1,019 have 1,500 or
    fewer employees and 288 have more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    incumbent local exchange service are small businesses.

27. *Competitive Local Exchange Carriers, Competitive Access Providers
    (CAPs), Shared-Tenant Service Providers," and "Other Local Service
    Providers."* Neither the Commission nor the SBA has developed a
    small business size standard specifically for these service
    providers. The appropriate size standard under SBA rules is for the
    category Wired Telecommunications Carriers. Under that size
    standard, such a business is small if it has 1,500 or fewer
    employees.[^715] According to Commission data,[^716] 859 carriers
    have reported that they are engaged in the provision of either
    competitive access provider services or competitive local exchange
    carrier services. Of these 859 carriers, an estimated 741 have 1,500
    or fewer employees and 118 have more than 1,500 employees. In
    addition, 16 carriers have reported that they are "Shared-Tenant
    Service Providers," and all 16 are estimated to have 1,500 or fewer
    employees. In addition, 44 carriers have reported that they are
    "Other Local Service Providers." Of the 44, an estimated 43 have
    1,500 or fewer employees and one has more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    competitive local exchange service, competitive access providers,
    "Shared-Tenant Service Providers," and "Other Local Service
    Providers" are small entities.

28. *Electric Power Generation, Transmission and Distribution*. The
    Census Bureau defines this category as follows: "This industry group
    comprises establishments primarily engaged in generating,
    transmitting, and/or distributing electric power. Establishments in
    this industry group may perform one or more of the following
    activities: (1) operate generation facilities that produce electric
    energy; (2) operate transmission systems that convey the electricity
    from the generation facility to the distribution system; and (3)
    operate distribution systems that convey electric power received
    from the generation facility or the transmission system to the final
    consumer."[^717] The SBA has developed a small business size
    standard for firms in this category: "A firm is small if, including
    its affiliates, it is primarily engaged in the generation,
    transmission, and/or distribution of electric energy for sale and
    its total electric output for the preceding fiscal year did not
    exceed 4 million megawatt hours."[^718] According to Census Bureau
    data for 2002, there were 1,644 firms in this category that operated
    for the entire year.[^719] Census data do not track electric output
    and we have not determined how many of these firms fit the SBA size
    standard for small, with no more than 4 million megawatt hours of
    electric output. Consequently, we estimate that 1,644 or fewer firms
    may be considered small under the SBA small business size standard.

29. *Television Broadcasting.* The SBA defines a television broadcast
    station as a small business if such station has no more than \$13.0
    million in annual receipts.[^720] Business concerns included in this
    industry are those "primarily engaged in broadcasting images
    together with sound."[^721] The Commission has estimated the number
    of licensed commercial television stations to be 1,376.[^722]
    According to Commission staff review of the BIA Financial Network,
    MAPro Television Database ("BIA") on March 30, 2007, approximately
    986 of an estimated 1,374 commercial television stations[^723] (or
    approximately 72 percent) have revenues of \$13.5 million or less.
    We note, however, that, in assessing whether a business concern
    qualifies as small under the above definition, business (control)
    affiliations[^724] must be included. Our estimate, therefore, likely
    overstates the number of small entities that might be affected by
    our action, because the revenue figure on which it is based does not
    include or aggregate revenues from affiliated companies. The
    Commission has estimated the number of licensed NCE television
    stations to be 380.[^725] The Commission does not compile and
    otherwise does not have access to information on the revenue of NCE
    stations that would permit it to determine how many such stations
    would qualify as small entities.

30. In addition, an element of the definition of "small business" is
    that the entity not be dominant in its field of operation. We are
    unable at this time to define or quantify the criteria that would
    establish whether a specific television station is dominant in its
    field of operation. Accordingly, the estimate of small businesses to
    which rules may apply do not exclude any television station from the
    definition of a small business on this basis and are therefore
    over-inclusive to that extent. Also, as noted, an additional element
    of the definition of "small business" is that the entity must be
    independently owned and operated. We note that it is difficult at
    times to assess these criteria in the context of media entities and
    our estimates of small businesses to which they apply may be
    over-inclusive to this extent.

    **D. Description of Proposed Reporting, Recordkeeping and other
    Compliance Requirements**

31. The rules ultimately adopted as a result of this *NPRM* may contain
    new or modified information collections. We anticipate that none of
    the changes would result in an increase to the reporting and
    recordkeeping requirements of small entities. We invite small
    entities to comment in response to the *NPRM*.

    **E. Steps Taken to Minimize Significant Impact on Small Entities
    and Significant Alternatives Considered**

32. The RFA requires an agency to describe any significant alternatives
    that it has considered in proposing regulatory approaches, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^726] First, regarding the establishment of a
    procedure that would shorten the five-year term of the extension of
    the exclusive contract prohibition, the Commission may choose to
    establish such a procedure or, in the alternative, it may not choose
    to do so. Second, regarding the extension of the program access
    rules to terrestrially delivered cable-affiliated programmers, the
    Commission may choose to extend these rules to terrestrially
    delivered cable-affiliated programmers or, in the alternative, it
    may choose not to extend these rules to such programmers. Third,
    regarding expansion of the exclusive contract prohibition to apply
    to non-cable-affiliated programming that is affiliated with a
    different MVPD, principally a DBS provider, the Commission may
    choose to extend the exclusive contract prohibition to apply to such
    non-cable-affiliated programming or, in the alternative, it may
    choose not to extend the exclusive contract prohibition to such
    programming. Fourth, regarding the practice of programmers to engage
    in tying of desired with undesired programming, the Commission may
    choose to preclude all such tying arrangements or, in the
    alternative, it may choose not to preclude any such arrangements or,
    in the alternative, it may choose to preclude only certain tying
    arrangements. Fifth, with respect to concerns raised by small and
    rural MVPDs regarding conditions imposed by programmers for access
    to content, the Commission may choose to take action to address some
    or all of these concerns or, in the alternative, it may choose not
    to take action to address these concerns. Sixth, regarding the
    establishment of a process whereby a program access complainant may
    seek a temporary stay of any proposed changes to its existing
    programming contract pending resolution of the complaint, the
    Commission may establish such a process or, in the alternative, it
    may choose not to establish such a process. Seventh, regarding the
    requirement that parties submit to the Commission, when requested,
    "final offer" proposals as part of the remedy phase of the complaint
    process, the Commission may adopt such a requirement or, in the
    alternative, it may choose not to adopt such a requirement. We
    invite comment on the options the Commission is considering, or
    alternatives thereto as referenced above, and on any other
    alternatives commenters may wish to propose for the purpose of
    minimizing significant economic impact on smaller entities.

    **F. Federal Rules Which Duplicate, Overlap, or Conflict with the
    Commission's Proposals**

    None.

**APPENDIX G**

**Final Regulatory Flexibility Analysis**

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    ("RFA"),[^727] an Initial Regulatory Flexibility Analysis ("IRFA")
    was incorporated in the *Notice of Proposed Rulemaking* in MB Docket
    No. 07-29 (hereinafter referred to as the *Notice)*.[^728] The
    Commission sought written public comment on the proposals in the
    *Notice*, including comment on the IRFA. The comments received are
    discussed below. This present Regulatory Flexibility Analysis
    ("FRFA") conforms to the RFA.[^729]

    **A. Need for, and Objectives of, the Rules Adopted**

2.  *Background*. Congress enacted the program access provisions
    contained in Section 628 of the Communications Act of 1934, as
    amended, as part of the Cable Television Consumer Protection and
    Competition Act of 1992 ("1992 Act"). Section 628 is intended to
    encourage entry into the multichannel video programming distribution
    ("MVPD") market by existing or potential competitors to traditional
    cable operators by requiring cable operators to make available to
    MVPDs the programming necessary for them to become viable
    competitors.[^730] Specifically, this proceeding involves (i)
    Section 628(c)(2)(D), which prohibits, in areas served by a cable
    operator, exclusive contracts for satellite cable programming or
    satellite broadcast programming between vertically integrated
    programming vendors and cable operators unless the Commission
    determines that such exclusivity is in the public interest;[^731]
    and (ii) the Commission's procedures for resolving program access
    disputes under Section 628.

3.  *Extension of Exclusive Contract Prohibition*. Section 628(c)(5) of
    the Communications Act directed that the exclusive contract
    prohibition in Section 628(c)(2)(D) would cease to be effective on
    October 5, 2002, unless the Commission found in a proceeding
    conducted between October 2001 and October 2002 that the prohibition
    "continues to be necessary to preserve and protect competition and
    diversity in the distribution of video programming."[^732] In
    October 2001, the Commission issued a *Notice of Proposed
    Rulemaking* seeking comment on whether the exclusive contract
    prohibition continued to be "necessary" pursuant to the criteria set
    forth in Section 628(c)(5).[^733] In June 2002, the Commission
    issued a decision concluding that the exclusive contract prohibition
    continued to be "necessary" pursuant to these criteria and therefore
    extended the prohibition for five years (*i.e*., through October 5,
    2007).[^734] The Commission also provided that, during the year
    before the expiration of the five-year extension of the exclusive
    contract prohibition, it would conduct another review to determine
    whether the exclusive contract prohibition continues to be necessary
    to preserve and protect competition and diversity in the
    distribution of video programming.[^735] We issued the *Notice* in
    February 2007 to initiate this review.[^736]

4.  The *Order* herein adopted retains for five years (until October
    5, 2012) the prohibition on exclusive contracts for satellite cable
    programming and satellite broadcast programming between vertically
    integrated programming vendors and cable operators as set forth in
    Section 628(c)(2)(D) of the Communications Act and Section
    76.1002(c)(2) of the Commission's rules.

5.  In the *Order*, we analyze the changes that have occurred in the
    video programming and distribution markets since 2002 when we last
    decided that the exclusive contract prohibition continued to be
    necessary to preserve and protect competition. While the markets for
    both programming and distribution reflect some pro-competitive
    trends since 2002, we conclude that these developments are not
    sufficient to allow us to decide that the exclusive contract
    prohibition is no longer necessary to preserve and protect
    competition and diversity in the distribution of video programming.
    We then assess whether vertically integrated programmers today
    retain both the ability and incentive to favor their affiliated
    cable operators over nonaffiliated MVPDs such that competition and
    diversity in the distribution of video programming would not be
    preserved and protected. We conclude that vertically integrated
    programmers retain this ability and incentive. Thus, we find that
    the exclusive contract prohibition is necessary to preserve and
    protect competition and diversity in the distribution of video
    programming. We therefore extend the exclusive contract prohibition
    for five years subject to review during the last year of this
    extension period.

6.  In the *Order*, we also reject proposals presented by some
    commenters to narrow the exclusive contract prohibition based on the
    status of the programming, the cable operator, or the competitive
    MVPD. We find that narrowing the prohibition in this manner is not
    supported by the Communications Act and would not promote
    competition. We also reject proposals presented by some commenters
    to expand the exclusive contract prohibition to non-cable-affiliated
    programming and unaffiliated programming. We find that expanding the
    prohibition is not supported by the Communications Act and that
    there is no record evidence to support such an expansion of the
    prohibition. We also considered the possibility of allowing the
    exclusive contract prohibition to sunset. Because we conclude that
    the exclusive contract prohibition is necessary to preserve and
    protect competition and diversity in the video distribution market,
    we decide not to allow the exclusive contract prohibition to sunset.
    The decision to retain the exclusive contract prohibition will
    facilitate competition in the video distribution market, thereby
    benefiting various competitive MVPDs including those that are
    smaller entities. Therefore, we conclude that our decision to retain
    the exclusive contract prohibition set forth in Section 628(c)(2)(D)
    benefits smaller entities as well as larger entities.

7.  *Modification of Program Access Complaint Procedures*. The
    Commission's rules provide that any MVPD aggrieved by conduct that
    it believes constitutes a violation of Section 628 and the
    Commission's program access rules may file a complaint at the
    Commission.[^737] In the *Notice*, we considered whether and how our
    procedures for resolving program access disputes under Section 628
    should be modified.[^738] Among other things, we considered (i)
    whether specific time limits on the Commission, the parties, or
    others would promote a speedy and just resolution of these
    disputes; (ii) whether our rules governing discovery and protection
    of confidential information are adequate; and (iii) whether the
    Commission should adopt alternative procedures or remedies such as
    mandatory standstill agreements and arbitration.[^739]

8.  In the *Order*, to facilitate the resolution of program access
    complaints, we modify our procedures for resolving such complaints
    by (i) codifying the requirements that a respondent in a program
    access complaint proceeding who expressly relies upon a document in
    asserting a defense must include the document as part of its
    answer; (ii) finding that in the context of a complaint proceeding,
    it would be unreasonable for a respondent not to produce all the
    documents either requested by the complainant or ordered by the
    Commission, provided that such documents are in its control and
    relevant to the dispute; (iii) codifying the Commission's authority
    to issue default orders granting a complaint if the respondent fails
    to comply with discovery requests; and (iv) allowing parties to a
    program access complaint proceeding to voluntarily engage in
    alternative dispute resolution, including commercial arbitration,
    during which time Commission action on the complaint will be
    suspended. We also retain our goals of resolving program access
    complaints within five months from the submission of a complaint for
    denial of programming cases, and within nine months for all other
    program access complaints, such as price discrimination cases.

    **B.** **Summary of Significant Issues Raised by Public Comments in
    Response to the IRFA**

9.  In its Comments on the IRFA, the Office of Advocacy of the United
    States Small Business Administration ("SBA Office of Advocacy")
    claims that the Commission's IRFA in this proceeding was inadequate
    because it allegedly (i) did not contain a complete economic
    analysis of the impact of a decision to allow the exclusive contract
    prohibition to sunset on the small entities listed in the IRFA; (ii)
    failed to consider alternatives to allowing the prohibition to
    sunset that will achieve the Commission's goals while minimizing
    burdens on small entities; and (iii) failed to collect data on the
    impact of a sunset of the prohibition on small businesses that offer
    video programming to customers, such as sports bars, smalls entities
    in the hospitality industry, and certain housing developments.[^740]
    The SBA Office of Advocacy Office argues that without access to
    video content demanded by subscribers, small providers of video
    services will not be able to compete in the MVPD market.[^741]
    Accordingly, the SBA Office of Advocacy urges a three-year extension
    of the exclusive contract prohibition.[^742] Although not filed
    specifically in response to the IRFA, comments were filed in
    response to the *Notice* by small competitive MVPDs and small cable
    operators that urged the Commission to retain the exclusive contract
    prohibition and to revise the procedures for resolving program
    access complaints. These commenters argued that they will be unable
    to viably compete in the video distribution market if denied access
    to vertically integrated programming. Moreover, they argued that the
    current program access complaint process is costly and
    time-consuming such that it makes it impracticable for small
    carriers to pursue filing a program access complaint. Our response
    to all such comments is contained in paragraph 31 *infra*.

    **C. Description and Estimate of the Number of Small Entities to
    Which the Proposed Rules Will Apply**

10. The RFA directs agencies to provide a description of, and where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^743] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^744] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^745] A "small business concern" is
    one which: (1) is independently owned and operated; (2) is not
    dominant in its field of operation; and (3) satisfies any additional
    criteria established by the Small Business Administration
    ("SBA").[^746]*\\*

11. *Wired Telecommunications Carriers*. The 2007 North American
    Industry Classification System ("NAICS") defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include the
    following three classifications which were listed separately in the
    2002 NAICS: Wired Telecommunications Carriers (2002 NAICS Code
    517110), Cable and Other Program Distribution (2002 NAISC Code
    517510), and Internet Service Providers (2002 NAISC Code
    518111).[^747] The 2007 NAISC defines this category as follows:
    "This industry comprises establishments primarily engaged in
    operating and/or providing access to transmission facilities and
    infrastructure that they own and/or lease for the transmission of
    voice, data, text, sound, and video using wired telecommunications
    networks. Transmission facilities may be based on a single
    technology or a combination of technologies. Establishments in this
    industry use the wired telecommunications network facilities that
    they operate to provide a variety of services, such as wired
    telephony services, including VoIP services; wired (cable) audio and
    video programming distribution; and wired broadband Internet
    services. By exception, establishments providing satellite
    television distribution services using facilities and infrastructure
    that they operate are included in this industry."[^748] The SBA has
    developed a small business size standard for Wired
    Telecommunications Carriers, which is all firms having 1,500
    employees or less.[^749] According to Census Bureau data for 2002,
    there were a total of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC Code 517110) that operated for the
    entire year; 6,021 firms in the Cable and Other Program Distribution
    category (2002 NAISC Code 517510) that operated for the entire year;
    and 3,408 firms in the Internet Service Providers category (2002
    NAISC Code 518111) that operated for the entire year.[^750] Of these
    totals, 25,374 of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC Code 517110) had less than 100
    employees; 5,496 of 6,021 firms in the Cable and Other Program
    Distribution category (2002 NAISC Code 517510) had less than 100
    employees; and 3,303 of the 3,408 firms in the Internet Service
    Providers category (2002 NAISC Code 518111) had less than 100
    employees.[^751] Thus, under this size standard, the majority of
    firms can be considered small.

12. *Cable and Other Program Distribution.* The 2002 NAICS defines this
    category as follows: "This industry comprises establishments
    primarily engaged as third-party distribution systems for broadcast
    programming. The establishments of this industry deliver visual,
    aural, or textual programming received from cable networks, local
    television stations, or radio networks to consumers via cable or
    direct-to-home satellite systems on a subscription or fee basis.
    These establishments do not generally originate programming
    material."[^752] This category includes, among others, cable
    operators, direct broadcast satellite ("DBS") services, home
    satellite dish ("HSD") services, satellite master antenna television
    ("SMATV") systems, and open video systems ("OVS"). The SBA has
    developed a small business size standard for Cable and Other Program
    Distribution, which is all such firms having \$13.5 million or less
    in annual receipts.[^753] According to Census Bureau data for 2002,
    there were a total of 1,191 firms in this category that operated for
    the entire year.[^754] Of this total, 1,087 firms had annual
    receipts of under \$10 million, and 43 firms had receipts of \$10
    million or more but less than \$25 million.[^755] Thus, under this
    size standard, the majority of firms can be considered small.

13. *Cable System Operators (Rate Regulation Standard).* The Commission
    has also developed its own small business size standards for the
    purpose of cable rate regulation. Under the Commission's rules, a
    "small cable company" is one serving 400,000 or fewer subscribers
    nationwide.[^756] As of 2006, 7,916 cable operators qualify as small
    cable companies under this standard.[^757] In addition, under the
    Commission's rules, a "small system" is a cable system serving
    15,000 or fewer subscribers.[^758] Industry data indicate that 6,139
    systems have under 10,000 subscribers, and an additional 379 systems
    have 10,000-19,999 subscribers.[^759] Thus, under this standard,
    most cable systems are small.

14. *Cable System Operators (Telecom Act Standard)*. The Communications
    Act of 1934, as amended, also contains a size standard for small
    cable system operators, which is "a cable operator that, directly or
    through an affiliate, serves in the aggregate fewer than 1 percent
    of all subscribers in the United States and is not affiliated with
    any entity or entities whose gross annual revenues in the aggregate
    exceed \$250,000,000."[^760] There are approximately 65.4 million
    cable subscribers in the United States today.[^761] Accordingly, an
    operator serving fewer than 654,000 subscribers shall be deemed a
    small operator, if its annual revenues, when combined with the total
    annual revenues of all its affiliates, do not exceed \$250 million
    in the aggregate.[^762] Based on available data, we find that the
    number of cable operators serving 654,000 subscribers or less totals
    approximately 7,916.[^763] We note that the Commission neither
    requests nor collects information on whether cable system operators
    are affiliated with entities whose gross annual revenues exceed
    \$250 million.[^764] Although it seems certain that some of these
    cable system operators are affiliated with entities whose gross
    annual revenues exceed \$250,000,000, we are unable at this time to
    estimate with greater precision the number of cable system operators
    that would qualify as small cable operators under the definition in
    the Communications Act.

15. *Direct Broadcast Satellite ("DBS") Service.* DBS service is a
    nationally distributed subscription service that delivers video and
    audio programming via satellite to a small parabolic "dish" antenna
    at the subscriber's location. Because DBS provides subscription
    services, DBS falls within the SBA-recognized definition of Cable
    and Other Program Distribution.[^765] This definition provides that
    a small entity is one with \$13.5 million or less in annual
    receipts.[^766] Currently, three operators provide DBS service,
    which requires a great investment of capital for operation: DIRECTV,
    EchoStar (marketed as the DISH Network), and Dominion Video
    Satellite, Inc. ("Dominion") (marketed as Sky Angel).[^767] All
    three currently offer subscription services. Two of these three DBS
    operators, DIRECTV[^768] and EchoStar Communications Corporation
    ("EchoStar"),[^769] report annual revenues that are in excess of the
    threshold for a small business. The third DBS operator, Dominion's
    Sky Angel service, serves fewer than one million subscribers and
    provides 20 family and religion-oriented channels.[^770] Dominion
    does not report its annual revenues. The Commission does not know of
    any source which provides this information and, thus, we have no way
    of confirming whether Dominion qualifies as a small business.
    Because DBS service requires significant capital, we believe it is
    unlikely that a small entity as defined by the SBA would have the
    financial wherewithal to become a DBS licensee. Nevertheless, given
    the absence of specific data on this point, we recognize the
    possibility that there are entrants in this field that may not yet
    have generated \$13.5 million in annual receipts, and therefore may
    be categorized as a small business, if independently owned and
    operated.

16. *Private Cable Operators (PCOs) also known as Satellite Master
    Antenna Television (SMATV) Systems*. PCOs, also known as SMATV
    systems or private communication operators, are video distribution
    facilities that use closed transmission paths without using any
    public right-of-way. PCOs acquire video programming and distribute
    it via terrestrial wiring in urban and suburban multiple dwelling
    units such as apartments and condominiums, and commercial multiple
    tenant units such as hotels and office buildings. The SBA definition
    of small entities for Cable and Other Program Distribution Services
    includes PCOs and, thus, small entities are defined as all such
    companies generating \$13.5 million or less in annual
    receipts.[^771] Currently, there are approximately 150 members in
    the Independent Multi-Family Communications Council (IMCC), the
    trade association that represents PCOs.[^772] Individual PCOs often
    serve approximately 3,000-4,000 subscribers, but the larger
    operations serve as many as 15,000-55,000 subscribers. In total,
    PCOs currently serve approximately one million subscribers.[^773]
    Because these operators are not rate regulated, they are not
    required to file financial data with the Commission. Furthermore, we
    are not aware of any privately published financial information
    regarding these operators. Based on the estimated number of
    operators and the estimated number of units served by the largest
    ten PCOs, we believe that a substantial number of PCO may qualify as
    small entities.

17. *Home Satellite Dish ("HSD") Service.* Because HSD provides
    subscription services, HSD falls within the SBA-recognized
    definition of Cable and Other Program Distribution, which includes
    all such companies generating \$13.5 million or less in revenue
    annually.[^774] HSD or the large dish segment of the satellite
    industry is the original satellite-to-home service offered to
    consumers, and involves the home reception of signals transmitted by
    satellites operating generally in the C-band frequency. Unlike DBS,
    which uses small dishes, HSD antennas are between four and eight
    feet in diameter and can receive a wide range of unscrambled (free)
    programming and scrambled programming purchased from program
    packagers that are licensed to facilitate subscribers' receipt of
    video programming. There are approximately 30 satellites operating
    in the C-band, which carry over 500 channels of programming
    combined; approximately 350 channels are available free of charge
    and 150 are scrambled and require a subscription. HSD is difficult
    to quantify in terms of annual revenue. HSD owners have access to
    program channels placed on C-band satellites by programmers for
    receipt and distribution by MVPDs. Commission data shows that,
    between June 2004 and June 2005, HSD subscribership fell from
    335,766 subscribers to 206,358 subscribers, a decline of more than
    38 percent.[^775] The Commission has no information regarding the
    annual revenue of the four C-Band distributors.

18. *Broadband Radio Service and Educational Broadband Service*.
    Broadband Radio Service comprises Multichannel Multipoint
    Distribution Service (MMDS) systems and Multipoint Distribution
    Service (MDS).[^776] MMDS systems, often referred to as "wireless
    cable," transmit video programming to subscribers using the
    microwave frequencies of MDS and Educational Broadband Service (EBS)
    (formerly known as Instructional Television Fixed Service
    (ITFS)).[^777] We estimate that the number of wireless cable
    subscribers is approximately 100,000, as of March 2005. The SBA
    definition of small entities for Cable and Other Program
    Distribution, which includes such companies generating \$13.5
    million in annual receipts, appears applicable to MDS and
    ITFS.[^778]

19. The Commission has also defined small MDS (now BRS) entities in the
    context of Commission license auctions. For purposes of the 1996 MDS
    auction, the Commission defined a small business as an entity that
    had annual average gross revenues of less than \$40 million in the
    previous three calendar years.[^779] This definition of a small
    entity in the context of MDS auctions has been approved by the
    SBA.[^780] In the MDS auction, 67 bidders won 493 licenses.[^781] Of
    the 67 auction winners, 61 claimed status as a small business. At
    this time, the Commission estimates that of the 61 small business
    MDS auction winners, 48 remain small business licensees. In addition
    to the 48 small businesses that hold BTA authorizations, there are
    approximately 392 incumbent MDS licensees that have gross revenues
    that are not more than \$40 million and are thus considered small
    entities.[^782] MDS licensees and wireless cable operators that did
    not receive their licenses as a result of the MDS auction fall under
    the SBA small business size standard for Cable and Other Program
    Distribution, which includes all such entities that do not generate
    revenue in excess of \$13.5 million annually.[^783] Information
    available to us indicates that there are approximately 850 of these
    licensees and operators that do not generate revenue in excess of
    \$13.5 million annually. Therefore, we estimate that there are
    approximately 850 small entity MDS (or BRS) providers, as defined by
    the SBA and the Commission's auction rules.

20. Educational institutions are included in this analysis as small
    entities; however, the Commission has not created a specific small
    business size standard for ITFS (now EBS).[^784] We estimate that
    there are currently 2,032 ITFS (or EBS) licensees, and all but 100
    of the licenses are held by educational institutions. Thus, we
    estimate that at least 1,932 ITFS licensees are small entities.

21. *Local Multipoint Distribution Service.* Local Multipoint
    Distribution Service (LMDS) is a fixed broadband point-to-multipoint
    microwave service that provides for two-way video
    telecommunications.[^785] The SBA definition of small entities for
    Cable and Other Program Distribution, which includes such companies
    generating \$13.5 million in annual receipts, appears applicable to
    LMDS.[^786] The Commission has also defined small LMDS entities in
    the context of Commission license auctions. In the 1998 and 1999
    LMDS auctions,[^787] the Commission defined a small business as an
    entity that had annual average gross revenues of less than \$40
    million in the previous three calendar years.[^788] Moreover, the
    Commission added an additional classification for a "very small
    business," which was defined as an entity that had annual average
    gross revenues of less than \$15 million in the previous three
    calendar years.[^789] These definitions of "small business" and
    "very small business" in the context of the LMDS auctions have been
    approved by the SBA.[^790] In the first LMDS auction, 104 bidders
    won 864 licenses. Of the 104 auction winners, 93 claimed status as
    small or very small businesses. In the LMDS re-auction, 40 bidders
    won 161 licenses. Based on this information, we believe that the
    number of small LMDS licenses will include the 93 winning bidders in
    the first auction and the 40 winning bidders in the re-auction, for
    a total of 133 small entity LMDS providers as defined by the SBA and
    the Commission's auction rules.

22. *Open Video Systems ("OVS").* The OVS framework provides
    opportunities for the distribution of video programming other than
    through cable systems. Because OVS operators provide subscription
    services,[^791] OVS falls within the SBA-recognized definition of
    Cable and Other Program Distribution Services, which provides that a
    small entity is one with \$ 13.5 million or less in annual
    receipts.[^792] The Commission has approved approximately 120 OVS
    certifications with some OVS operators now providing service.[^793]
    Broadband service providers (BSPs) are currently the only
    significant holders of OVS certifications or local OVS franchises,
    even though OVS is one of four statutorily-recognized options for
    local exchange carriers (LECs) to offer video programming services.
    As of June 2005, BSPs served approximately 1.4 million subscribers,
    representing 1.49 percent of all MVPD households.[^794] Among BSPs,
    however, those operating under the OVS framework are in the
    minority.[^795] As of June 2005, RCN Corporation is the largest BSP
    and 14th largest MVPD, serving approximately 371,000
    subscribers.[^796] RCN received approval to operate OVS systems in
    New York City, Boston, Washington, D.C. and other areas. The
    Commission does not have financial information regarding the
    entities authorized to provide OVS, some of which may not yet be
    operational. We thus believe that at least some of the OVS operators
    may qualify as small entities.

23. *Cable and Other Subscription Programming.* The Census Bureau
    defines this category as follows: "This industry comprises
    establishments primarily engaged in operating studios and facilities
    for the broadcasting of programs on a subscription or fee basis . .
    . . These establishments produce programming in their own facilities
    or acquire programming from external sources. The programming
    material is usually delivered to a third party, such as cable
    systems or direct-to-home satellite systems, for transmission to
    viewers."[^797] The SBA has developed a small business size standard
    for firms within this category, which is all firms with \$13.5
    million or less in annual receipts.[^798] According to Census Bureau
    data for 2002, there were 270 firms in this category that operated
    for the entire year.[^799] Of this total, 217 firms had annual
    receipts of under \$10 million and 13 firms had annual receipts of
    \$10 million to \$24,999,999.[^800] Thus, under this category and
    associated small business size standard, the majority of firms can
    be considered small.

24. *Small Incumbent Local Exchange Carriers*. We have included small
    incumbent local exchange carriers in this present RFA analysis. A
    "small business" under the RFA is one that, *inter alia*, meets the
    pertinent small business size standard (*e.g.*, a telephone
    communications business having 1,500 or fewer employees), and "is
    not dominant in its field of operation."[^801] The SBA's Office of
    Advocacy contends that, for RFA purposes, small incumbent local
    exchange carriers are not dominant in their field of operation
    because any such dominance is not "national" in scope.[^802] We have
    therefore included small incumbent local exchange carriers in this
    RFA, although we emphasize that this RFA action has no effect on
    Commission analyses and determinations in other, non-RFA contexts.

25. *Incumbent Local Exchange Carriers ("LECs")*. Neither the Commission
    nor the SBA has developed a small business size standard
    specifically for incumbent local exchange services. The appropriate
    size standard under SBA rules is for the category Wired
    Telecommunications Carriers. Under that size standard, such a
    business is small if it has 1,500 or fewer employees.[^803]
    According to Commission data,[^804] 1,307 carriers have reported
    that they are engaged in the provision of incumbent local exchange
    services. Of these 1,307 carriers, an estimated 1,019 have 1,500 or
    fewer employees and 288 have more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    incumbent local exchange service are small businesses.

26. *Competitive Local Exchange Carriers, Competitive Access Providers
    (CAPs), Shared-Tenant Service Providers," and "Other Local Service
    Providers."* Neither the Commission nor the SBA has developed a
    small business size standard specifically for these service
    providers. The appropriate size standard under SBA rules is for the
    category Wired Telecommunications Carriers. Under that size
    standard, such a business is small if it has 1,500 or fewer
    employees.[^805] According to Commission data,[^806] 859 carriers
    have reported that they are engaged in the provision of either
    competitive access provider services or competitive local exchange
    carrier services. Of these 859 carriers, an estimated 741 have 1,500
    or fewer employees and 118 have more than 1,500 employees. In
    addition, 16 carriers have reported that they are "Shared-Tenant
    Service Providers," and all 16 are estimated to have 1,500 or fewer
    employees. In addition, 44 carriers have reported that they are
    "Other Local Service Providers." Of the 44, an estimated 43 have
    1,500 or fewer employees and one has more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    competitive local exchange service, competitive access providers,
    "Shared-Tenant Service Providers," and "Other Local Service
    Providers" are small entities.

27. *Electric Power Generation, Transmission and Distribution*. The
    Census Bureau defines this category as follows: "This industry group
    comprises establishments primarily engaged in generating,
    transmitting, and/or distributing electric power. Establishments in
    this industry group may perform one or more of the following
    activities: (1) operate generation facilities that produce electric
    energy; (2) operate transmission systems that convey the electricity
    from the generation facility to the distribution system; and (3)
    operate distribution systems that convey electric power received
    from the generation facility or the transmission system to the final
    consumer."[^807] The SBA has developed a small business size
    standard for firms in this category: "A firm is small if, including
    its affiliates, it is primarily engaged in the generation,
    transmission, and/or distribution of electric energy for sale and
    its total electric output for the preceding fiscal year did not
    exceed 4 million megawatt hours."[^808] According to Census Bureau
    data for 2002, there were 1,644 firms in this category that operated
    for the entire year.[^809] Census data do not track electric output
    and we have not determined how many of these firms fit the SBA size
    standard for small, with no more than 4 million megawatt hours of
    electric output. Consequently, we estimate that 1,644 or fewer firms
    may be considered small under the SBA small business size standard.

    **D. Description of Reporting, Recordkeeping and other Compliance
    Requirements**

28. The rules adopted in the *Report and Order* will impose additional
    reporting, recordkeeping, and compliance requirements on
    complainants and respondents in program access disputes by (i)
    codifying the requirements that a respondent in a program access
    complaint proceeding who expressly relies upon a document in
    asserting a defense must include the document as part of its answer;
    and (ii) finding that in the context of a complaint proceeding, it
    would be unreasonable for a respondent not to produce all the
    documents either requested by the complainant or ordered by the
    Commission, provided that such documents are in its control and
    relevant to the dispute.

    **E. Steps Taken to Minimize Significant Impact on Small Entities
    and Significant Alternatives Considered**

29. The RFA requires an agency to describe any significant alternatives
    that it has considered in proposing regulatory approaches, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^810]

30. The *Notice* invited comment on issues that had the potential to
    have significant economic impact on some small entities,
    including (i) whether the exclusive contract prohibition remains
    necessary to preserve and protect competition in the video
    distribution market; and (ii) whether and how our procedures for
    resolving program access disputes under Section 628 should be
    modified.

31. *Extension of Exclusive Contract Prohibition*. As discussed in
    Section A, the decision to extend the exclusive contract prohibition
    for five years will facilitate competition in the video distribution
    market by ensuring that competitive MVPDs continue to have access to
    the programming they need to compete. The decision therefore confers
    benefits upon various competitive MVPDs, including those that are
    smaller entities. Moreover, the decision avoids the adverse impact
    to smaller entities that the SBA Office of Advocacy Office and
    others stated would occur if the prohibition were to sunset.[^811]
    Therefore, we conclude that our decision to retain the exclusive
    contract prohibition set forth in Section 628(c)(2)(D) benefits
    smaller entities as well as larger entities. The alternative of
    allowing the exclusive contract prohibition to expire would hinder
    competition in the video distribution market, thereby harming
    smaller entities.

32. *Modification of Program Access Complaint Procedures*. As discussed
    in Section A, the decision to modify the procedures for resolving
    program access disputes will facilitate the processing and
    resolution of program access complaints, thereby conferring benefits
    upon smaller entities as well as larger entities that seek to
    compete in the video distribution marketplace. The alternative of
    retaining the current program access complaint procedures would not
    facilitate the resolution of program access complaints and would
    thereby harm smaller entities that file such complaints.

    **F. Report to Congress**

33. The Commission will send a copy of the *Report and Order and Notice
    of Proposed Rulemaking*, including this FRFA, in a report to be sent
    to Congress pursuant to the Congressional Review Act.[^812] In
    addition, the Commission will send a copy of the *Report and Order
    and Notice of Proposed Rulemaking*, including this FRFA, to the
    Chief Counsel for Advocacy of the SBA. A copy of the *Report and
    Order and Notice of Proposed Rulemaking* and FRFA (or summaries
    thereof) will also be published in the Federal Register.[^813]

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

Re: *In the Matter of Implementation of the Cable Television Consumer
Protection and Competition Act of 1992 --Development of Competition and
Diversity in Video Programming Distribution: Section 628(c)(5) of the
Communications Act: Sunset of Exclusive Contract Prohibition\--Review of
the Commission's Program Access Rules and Examination of Programming
Tying Arrangements*

Fostering greater competition in the market for the delivery of
multichannel video programming is a primary and long-standing goal of
federal communications policy. The program access rules, in particular
the prohibition against exclusive contracts, have been instrumental in
the growth of viable competitors in the multichannel video programming
distribution (MVPD) market. Today we determine that while competition
has improved, vertically integrated programmers still have an incentive
and ability to favor their affiliated cable operators over competitive
MVPDs. The item we adopt today ensures that the competition in this
market will continue unabated by retaining the ban on exclusive
contracts for vertically integrated programmers for another five years.
We therefore make sure that new entrants, in addition to existing
players, will continue to have access to critical programming on a
nondiscriminatory basis.

Significantly, today's Order makes the program access complaint process
more effective by requiring the production of the information necessary
to fairly and objectively adjudicate a complaint. This expanded
discovery will improve the quality and efficiency of the Commission's
resolution of program access complaints. The availability of
programmers' carriage contracts, subject to confidential treatment, is
essential for determining whether the programmer is discriminating in
price, terms, and conditions.

I am particularly pleased that the Commission has initiated an inquiry
into the "tying" practices of programmers. Broadcast and cable
programmers routinely tie marquee programming, such as premium channels
or regional sports programming, with unwanted or less desirable
programming. The Commission seeks comment on whether to end these
practices by requiring programmers to offer channels to MVPDs on a
stand-alone basis. I believe that if a cable operator only wants one
channel, it should not have to take 10 or 20 channels in order to get
that one. This is a particularly important issue for small and rural
MVPDs and can be a significant obstacle to becoming a viable competitor
in the MVPD market. And, I am also concerned about the impact the tying
of channels has on consumers who ultimately bear the costs of unwanted
programming in the form of higher prices.

Consumers have seen their cable bills double over the last decade at the
same time the costs for all other communications services have declined.
I take cable operators at their word when they point to the increased
cost of programming as the reason for the increased cost borne by
consumers. As the Commission begins its examination of these tying
arrangements we should bear in mind their impact on consumers in terms
of prices and program choice.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**APPROVING IN PART, AND CONCURRING IN PART**

*Re: In the Matter of Implementation of the Cable Television Consumer
Protection and Competition Act of 1992 - Development of Competition and
Diversity in Video Programming Distribution: Section 628(c)(5) of the
Communications Act: Sunset of Exclusive Contract Prohibition; Review of
the Commission's Program Access Rules and Examination of Programming
Tying Arrangements*

  

The program access rules are one of the true success stories of the 1992
Cable Act.  It is no exaggeration to say that without these rules, the
DBS industry as we know it would not exist.  Cable operators still have
the incentive and ability to discriminate against their competitors
regarding access to affiliated programming.  Access to cable-affiliated
programming was---and continues to be---vital for the growth of a
competitive marketplace.  New entrants unanimously remind us of this and
today the Commission once again unanimously so concludes.  

 

            The Commission will look at the exclusivity ban in another
five years.  I cannot say with certainty what the marketplace will look
like in 2012 and whether the exclusivity ban can safely be sunset.  I do
know it cannot be permitted to do so in 2007. In this regard, I would
not have raised the possibility of shortening the term of extension in
markets where new entrants are gaining a foothold. It seems to me that
this is ***precisely*** the time that an incumbent's incentive to
unfairly deny programming to a competitor is most acute.

 

            On the "tying" issue, I would make two points.  First, this
is primarily about the imbalance in bargaining power when a small MVPD
negotiates with large media programming conglomerates.  But what this
issue is really tied to, like so many other broadcast and cable issues,
is media consolidation, and if we fail to view it as such we do serious
injustice to the future of our nation's all-important media. There are
huge imbalances in the media industry brought on by consolidation, and
this Commission needs to understand these imbalances and
interconnections and deal with them broadly and effectively.  Second, I
do not want to broadly inhibit broadcast stations from negotiating for
carriage of their multicast signals in exchange for carriage of their
main digital signal.  Perhaps one day the industry and the Commission
will get serious about the public interest obligations of DTV
broadcasters and we can be talking about program that really serves the
interests of localism, diversity and competition, but precluding
negotiations about multicast programming that could ultimately serve the
public interest may foreclose options that we may not really want to
foreclose. 

 

            Finally, while I am generally in favor of ensuring that
complainants at the Commission have the information they need to prove
their case, I believe that the discovery procedures adopted in this item
go too far, and, paradoxically, not far enough. They go too far in
establishing a bare "relevance and control" standard for discovery
requests with no apparent limits on requests that are duplicative or
unduly burdensome. I fear that these rules will embroil the Commission
in an endless stream of discovery disputes as the parties vie for
competitive advantage. On the other hand, I believe the decision does
not go far enough because if we are going to liberalize our discovery
rules, it ought to apply to contexts beyond program access -- such as
cases dealing with petitions to deny broadcast station license renewals
and transfers. I hope that parties in other disputes file waivers with
the Commission asking for liberalized discovery.  If sunshine is the
best disinfectant, we ought to let the sun shine into every nook and
cranny of the Commission.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: In the Matter of Implementation of the Cable Television Consumer
Protection and Competition Act of 1992 -- Development of Competition and
Diversity in Video Programming Distribution: Section 628(c)(5) of the
Communications Act: Sunset of Exclusive Contract Prohibition Report and
Order*; *Review of the Commission's Program Access Rules and Examination
of Programming Tying Arrangements*

Today, I am pleased to support a five-year extension of the Commission's
program access rules, specifically the prohibition on exclusive
contracts between vertically-integrated satellite cable or broadcast
programmers and cable operators. These rules continue to be necessary to
not only promote competition and diversity in the distribution of video
programming, but to also encourage further investment in the deployment
of broadband and other advanced services. Extending the program access
rules truly promotes the twin goals of enhanced cable competition and
accelerated broadband deployment.

As it turns out, video programming is a killer application that is
driving broadband and indeed the entire communications industry. Almost
86 percent of U.S. households get their video programming from a
multi-channel video programming distributor (MVPD). Competitive access
to video programming, therefore, serves as an important incentive to
entrepreneurs, from small businesses to major companies like Verizon,
AT&T and Qwest, to enter the video delivery market, make substantial
investments to upgrade their networks, and provide consumers with
competitive video, voice and data bundled service offerings.

According to the Coalition for Competitive Access to Content, a leading
group of competitive video providers, trade associations and consumer
groups, video revenues represent between 35 and 55 percent of the total
broadband networks revenues. Simply put, "video revenues are essential
for the economic success of capital investment" in broadband networks.

I have always supported legally permissible, sustainable means to
promote video competition and broadband deployment. Today's decision
does just that. It ensures that some, though not all, cable programming
will be available to competitive video providers on fair and
non-discriminatory terms and conditions. It preserves the program access
regime's recognition that product differentiation is a legitimate
competitive tool, but the withholding of highly sought programming by a
dominant provider leads to barriers of entry that harm competition, the
industry and consumers.

As our most recent *Video Competition Report* shows, competition in
video distribution and programming markets has intensified, and with the
entry of local exchange carriers and other broadband providers,
competition in certain areas will truly be robust. According to our
*Report,* from 2001 to 2005, the number of cable subscribers, as a share
of total MVPD subscribers, has decreased from 77 percent to 69 percent.
Commensurately, DBS subscribership has increased from 18 percent to 27
percent. While the competitive presence of DBS has reduced cable's
dominance, concentration remains a concern: the top four MVPDs serve 63
percent of all MVPD subscribers, up five percent from 2004. Program
access and vertical integration remain major areas of concern.

The *Order* and *Further Notice* address these concerns by extending our
program access rules and seeking comment on whether DBS should be
subject to the program access rules. While the only
vertically-integrated DBS provider currently complies with our access
rules pursuant to a merger condition,[^814] we should examine whether
the rules should apply, especially since our program access regime
applies to cable and common carriers.

I believe that video distribution and the resultant revenue stream will
continue to drive broadband deployment, which can benefit consumers and
the free flow of information beyond the video marketplace. Consumers
will benefit not only from more choices, better service and lower
prices, but consumers also stand to gain from a more robust exchange in
the marketplace of ideas.

I have long expressed grave concerns about the negative effects of media
consolidation in this country, and have focused on the problems raised
by growing vertical integration of programming and distribution. Vast
new distribution networks promise to limit the ability of any vertically
integrated conglomerates from imposing an economic, cultural or
political agenda on the public with few alternative choices. I truly
believe the benefits of video competition extend beyond the many typical
advantages of competition that accrue to consumers, and can actually
improve the health of our overall democracy.

One note of concern about this *Order* is the curious turn it takes in
revising the discovery process. The Commission decides here it is
unreasonable for a respondent not to produce on request all the relevant
documents requested by the complainant without a clear discovery
standard and a meaningful mediation process. The modification to our
existing rules is surprising because, to date, there has not been a
[single]{.underline} instance where the Commission has requested
documents that a party has refused to produce.

The *Order* provides no articulated basis in law, administrative policy
or practice to justify such a radical change in Commission policy. The
problem with the production of documents has not been a failure of our
procedural rules; rather, it has been a failure of will -- the
Commission's will. It has taken the Commission, on average, seven months
to resolve on the merits three out of the 13 complaints filed since
December 1998 that the parties did not settle.

The persistent failure of this Commission to act on program access
complaints and to request documents in a diligent manner will not be
remedied by opening the floodgates to unfettered discovery. Nor will it
lead to prompt resolution of access complaints. Indeed, this novel
discovery scheme will inevitably frustrate the process and create
inefficiency. While I certainly support improving the discovery process
to expedite access to relevant documents, the *Order* goes further than
warranted by the record in this proceeding.

In sum, the extension of our program access regime is urgently needed to
facilitate emerging video competition. I am pleased we are doing so
before the current regime expires, and thank my colleagues for working
to make many needed improvements in this *Order*.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

*Re: In the Matter of Implementation of the Cable Television Consumer
Protection and Competition Act of 1992 and Development of Competition
and Diversity in Video Programming Distribution: Section 628(c)(5) of
the Communications Act, and Sunset of Exclusive Contract Prohibition
Review of the Commission's Program Access Rules and Examination of
Programming Tying Arrangements*

One of this Commission's top priorities continues to be the development
of a diversity of viewpoints. Such diversity can best be achieved when
viewers have access to a variety of programming options. To encourage
the development of new programming, and sustain the viability of current
programming, we must encourage broadcasters, and cable and satellite
operators, to offer viewers a broad array of content and voices.

This item extends the current ban on exclusive contracts between cable
operators and satellite cable programming vendors, or satellite
broadcast programming vendors, for five years. While much has changed in
the world of cable programming, at the current time it is necessary to
provide certainty to consumers that they will have access to a variety
of necessary programming by banning exclusive contracts. By reviewing
this issue again in five years, we allow ourselves the flexibility to
respond to further changes in the programming market.

It should be our goal to see all disputes resolved as efficiently and
impartially as possible. I look forward to reviewing the comments
regarding whether we should make changes to our current process to
fulfill these goals.

**STATEMENT OF**

**COMMISSIONER ROBERT M. McDOWELL**

*Re:* *In the Matter of Implementation of the Cable Television Consumer
Protection and Competition Act of 1992 -- Development of Competition and
Diversity in Video Programming Distribution: Section 628(c)(5) of the
Communications Act: Sunset of Exclusive Contract Prohibition*; *Review
of the Commission's Program Access Rules and Examination of Programming
Tying Arrangements*

In this Order, we extend the prohibition on exclusive contracts between
vertically integrated programming vendors and cable operators for
satellite-delivered programming for five years, until October 5, 2012,
given the ongoing need to preserve and protect competition and diversity
in the distribution of video programming. Although the video
distribution marketplace has changed significantly since enactment of
the ban, because of increased consolidation in the cable industry and
significant regional clustering of cable systems, the ban remains
warranted. I am supporting the extension of the exclusivity ban to help
further encourage competition in the video distribution market. More
competition in a particular market obviates the need for regulation.

With respect to the Notice of Proposed Rulemaking that we launch here to
examine negotiations in the marketplace for retransmission consent and
programming carriage, I support seeking comment on the questions my
colleagues have raised. That said, I want to make clear at the outset
that I am concerned about the Commission venturing into what has long
been squarely within the realm of the private sector. We should give
careful consideration before we regulators take any action that may
interfere with private contracts. And as always, we must pay careful
attention to Congress' mandates and intentions with respect to these
issues. I look forward to reviewing the comments from all interested
parties.

Many thanks to the Bureau for the many late nights you have sacrificed
on these and other matters.

[^1]: 47 U.S.C. § 548(c)(2)(D).

[^2]: 47 U.S.C. § 522(13) ("multichannel video programming distributor"
    means "a person such as, but not limited to, a cable operator, a
    multichannel multipoint distribution service, a direct broadcast
    satellite service, or a television receive-only satellite program
    distributor, who makes available for purchase, by subscribers or
    customers, multiple channels of video programming"). The term
    "competitive MVPD" refers to MVPDs that compete with incumbent cable
    operators.

[^3]: *See* Cable Television Consumer Protection and Competition Act of
    1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^4]: *See* H.R. Rep. No. 102-628 (1992); S. Rep. No. 102-92 (1991),
    *reprinted in* 1992 U.S.C.C.A.N. 1133; H.R. Rep. No. 102-862 (1992)
    (Conf. Rep.), *reprinted in* 1992 U.S.C.C.A.N. 1231.

[^5]: Vertical integration means the combined ownership of cable systems
    and suppliers of cable programming.

[^6]: 1992 Cable Act § 2(a)(2).

[^7]: *See 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*, 8 FCC Rcd 3359, 3365-67, ¶ 21 (1993) ("*First Report and
    Order*"), *recon.*, 10 FCC Rcd 1902 (1994), *further recon*., 10 FCC
    Rcd 3105 (1994).

[^8]: *See* *First Report and Order*, 8 FCC Rcd 3359 (1993).

[^9]: *See* *id.* at 3384, ¶ 63.

[^10]: The term "satellite cable programming" means "video programming
    which is transmitted via satellite and which is primarily intended
    for direct receipt by cable operators for their retransmission to
    cable subscribers," except that such term does not include satellite
    broadcast programming. 47 U.S.C. § 548(i)(1); 47 U.S.C. § 605(d)(1);
    *see also* 47 C.F.R. § 76.1000(h). The term "satellite broadcast
    programming" means "broadcast video 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); *see also*
    C.F.R. § 76.1000(f).

[^11]: 47 U.S.C. § 548(c)(2)(C).

[^12]: 47 U.S.C. § 548(c)(2)(D); *see also* 47 C.F.R. § 76.1002(c)(2).

[^13]: 47 U.S.C. § 548(c)(2)(4). In determining whether an exclusive
    contract is in the public interest, Congress instructed the
    Commission to consider each of the following factors: (i) the effect
    of such exclusive contract on the development of competition in the
    local and national MVPD markets; (ii) the effect of such exclusive
    contract on competition from MVPD technologies other than cable;
    (iii) the effect of such exclusive contract on the attraction of
    capital investment in the production and distribution of new
    satellite cable programming; (iv) the effect of such exclusive
    contract on diversity of programming in the MVPD market; and (v) the
    duration of the exclusive contract. *See id.*

[^14]: *See* 47 C.F.R. § 76.1002(c)(5).

[^15]: 47 U.S.C. § 548(c)(5).

[^16]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992 -- Development of Competition and
    Diversity in Video Programming Distribution: Section 628(c)(5) of
    the Communications Act: Sunset of Exclusive Contract Prohibition*,
    Notice of Proposed Rulemaking, 16 FCC Rcd 19074 (2001) ("*2001
    Sunset NPRM*").

[^17]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992 -- Development of Competition and
    Diversity in Video Programming Distribution: Section 628(c)(5) of
    the Communications Act: Sunset of Exclusive Contract Prohibition*,
    Report and Order, 17 FCC Rcd 12124, 12153-54, ¶ 65 (2002) ("*2002*
    *Extension Order*").

[^18]: *See id*.

[^19]: *See id*. at 12125, ¶ 3.

[^20]: *See id*. at 12153-54, ¶ 65.

[^21]: *See id*. at 12128-30, ¶¶ 10-14 ("\[W\]e conclude that the
    exclusivity prohibition continues to be 'necessary' if, in the
    absence of the prohibition, competition and diversity would not be
    preserved and protected.") (footnotes omitted).

[^22]: *See id*. at 12130-31, ¶ 16 ("While specific factual evidence is
    necessary, it alone may not be sufficient to make that
    determination; we believe that the Commission may also rely on
    economic theory and its predictive judgment.") (footnotes omitted);
    *id*. at 12135-36, ¶ 25 ("\[I\]n determining whether to sunset the
    exclusivity prohibition, we will rely on the factual evidence
    available, economic theory and the Commission's predictive judgment
    of the direction in which the future public interest lies.").

[^23]: *See id*. at 12143, ¶ 45 n.138 ("Further, we reject AOLTW's
    argument that First Amendment concerns mandate sunset of the
    exclusivity prohibition. . . . The exclusivity prohibition was
    previously upheld in the face of a First Amendment challenge. . . .
    \[A\]s described herein, we believe the record fully supports our
    finding that vertically integrated programming continues to be
    necessary in order for competitive MVPDs to remain viable in the
    marketplace and diversity in the distribution of video programming
    preserved and protected.").

[^24]: *See id*. at 12139, ¶ 33 ("We agree with the competitive MVPDs'
    assertion that if they were to be deprived of only some of this
    "must have" programming, their ability to retain subscribers would
    be jeopardized.").

[^25]: *See id*. at 12145, ¶ 47 ("We believe that clustering,
    accompanied by an increase in vertically integrated regional
    programming networks affiliated with cable MSOs that control system
    clusters, will increase the incentive of cable operators to practice
    anticompetitive foreclosure of access to vertically integrated
    programming."); *id*. at 12150-51, ¶ 58 ("\[C\]onsolidation within
    the industry since passage of the 1992 Act affords \[cable\]
    operators greater direct incentives to advantage their own system
    operations even at the cost of some immediate advantage in terms of
    foregone revenues from content distribution to competitors.").

[^26]: *See id*. at 12143, ¶ 45 n.138 ("By passing Section 628, Congress
    already determined that antitrust laws were not a viable alternative
    for achieving the government's goals in this instance.")

[^27]: *See id*. at 12152, ¶ 62 ("\[I\]n considering whether to retain
    the exclusivity prohibition, our primary focus should be on
    preserving and protecting diversity in the *distribution* of video
    programming.") (emphasis added).

[^28]: *See id*. at 12158, ¶ 73 ("\[T\]he Commission has concluded that
    . . . terrestrially delivered programming is 'outside of the direct
    coverage of Section 628(c).' We have been presented with no basis to
    alter that conclusion in this proceeding. To the contrary, the
    legislative history to Section 628 reinforces our conclusion."
    (citing *DIRECTV, Inc. v. Comcast Corp. et al.,* 15 FCC Rcd 22802
    (2000))).

[^29]: *See id*. at 12156, ¶ 69 ("We believe treating all satellite
    cable programming and satellite broadcast programming uniformly for
    purposes of the exclusivity prohibition is consistent with Section
    628(c)(2)(D) and the definitions set forth in Sections 628(i)(1) and
    (3). We will therefore not narrow the scope of the exclusivity
    prohibition to only so-called essential programming services.")
    (footnote omitted).

[^30]: *See id*. at 12154, ¶ 65 n. 206 ("We do not believe other
    provisions in the statute -- namely, Sections 628(b), 628(c)(2)(A),
    and 628(c)(2)(B) -- are adequate substitutes for the particularized
    protection afforded under Section 628(c)(2)(D).").

[^31]: *See id.* at 12161, ¶ 80.

[^32]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992 -- Development of Competition and
    Diversity in Video Programming Distribution: Section 628(c)(5) of
    the Communications Act: Sunset of Exclusive Contract Prohibition*,
    Notice of Proposed Rulemaking, 22 FCC Rcd 4252, 4252-53, ¶ 1 (2007)
    ("*Notice*").

[^33]: In their comments, large incumbent cable operators urge the
    Commission to allow the exclusive contract prohibition to sunset.
    This group of commenters is collectively referred to herein as
    "cable multiple system operators" or "cable MSOs." This group of
    commenters includes the following: Cablevision Systems Corp.
    ("Cablevision"); Comcast Corporation ("Comcast"); National Cable &
    Telecommunications Association ("NCTA"); and Time Warner Inc. ("Time
    Warner").

[^34]: In their comments, new and established competitors to the cable
    MSOs urge the Commission to allow the exclusive contract prohibition
    to continue. This group of commenters includes (i) established
    competitors (such as DBS operators); (ii) new competitors (such as
    wireline entrants, including telephone companies beginning to enter
    the video distribution market); and (iii) small and rural incumbent
    cable operators that assert that they do not have the means to
    invest in their own programming and thus stand to be harmed rather
    than benefit from sunset of the exclusive contract prohibition. This
    group of commenters is collectively referred to herein as
    "competitive MVPDs." This group of commenters includes the
    following: American Cable Association ("ACA"); AT&T Inc. ("AT&T");
    Broadband Service Providers Association ("BSPA"); Coalition for
    Competitive Access to Content ("CA2C"); DIRECTV, Inc. ("DIRECTV");
    EATEL Video, LLC ("EATEL"); EchoStar Satellite L.L.C. ("EchoStar");
    National Rural Telecommunications Cooperative ("NRTC"); National
    Telecommunications Cooperative Association ("NTCA"); Organization
    for the Promotion and Advancement of Small Telecommunications
    Companies and the Independent Telephone and Telecommunications
    Alliance ("OPASTCO/ITTA"); Qwest Communications International Inc.
    ("Qwest"); RCN Telecom Services, Inc. ("RCN"); The Rural Independent
    Competitive Alliance ("RICA"); SureWest Communications ("SureWest");
    The United States Telecom Association ("USTelecom"); and Verizon.

[^35]: The Consumer Federation of America, Consumers Union, Free Press,
    Media Access Project, and Communications Workers of America
    (collectively, "Consumer Groups") argue that the exclusive contract
    prohibition remains essential to promoting video competition and
    that the Commission should therefore extend the exclusive contract
    prohibition for at least an additional five years. *See* Consumer
    Groups Reply Comments at 7.

[^36]: Other parties that filed comments include Carol L. Carlson; The
    Walt Disney Company, CBS Corporation, Fox Entertainment Group, and
    NBC Universal (collectively, the "Broadcast Networks"); and Office
    of Advocacy of the United States Small Business Administration ("SBA
    Advocacy Office").

[^37]: 47 U.S.C. § 548.

[^38]: *Id.* § 548(b). As part of the Telecommunications Act of 1996,
    Congress expanded program access protection to include common
    carriers and their affiliates that provide video programming by any
    means directly to subscribers, and to satellite cable programming
    vendors in which a common carrier has an attributable interest. *See
    id.* § 548(j).

[^39]: *Id.* § 548(a).

[^40]: *Id.* § 548(d).

[^41]: *See* *First Report and Order,* 8 FCC Rcd 3359 (1993).

[^42]: *See id.* at 3416, ¶ 123.

[^43]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992: Petition for Rulemaking of Ameritech
    New Media, Inc. Regarding Development of Competition and Diversity
    in Video Programming Distribution and Carriage*, Memorandum Opinion
    and Order and Notice of Proposed Rulemaking, 12 FCC Rcd 22840
    (1997). Ameritech requested that the Commission amend its rules to
    provide time limits for the resolution of program access complaints;
    to provide program access litigants discovery as-of-right; and to
    impose damages for adjudicated program access violations. *Id*. at
    22855-61, ¶¶ 37-49.

[^44]: *See* *Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992: Petition for Rulemaking of Ameritech
    New Media, Inc. Regarding Development of Competition and Diversity
    in Video Programming Distribution and Carriage*, Report and Order,
    13 FCC Rcd 15822 (1998) ("*1998 Program Access Order*").

[^45]: *See* *1998 Biennial Review - Part 76 Cable Television Service
    Pleading and Complaint Rules*, Report and Order, 14 FCC Rcd 418
    (1999) ("*1998 Biennial Review*"); *recon. denied*, FCC 99-258, 1999
    WL 766253 (rel. Sept. 29, 1999).

[^46]: *See* *Notice*, 22 FCC Rcd at 4259-60, ¶¶ 13-16.

[^47]: *See Applications for Consent to the Assignment and/or Transfer
    of Control of Licenses, Adelphia Communications Corporation,
    Assignors to Time Warner Cable, Inc., Assignees, et al.,* Memorandum
    Opinion and Order, 21 FCC Rcd 8203, 8274-77, ¶¶ 156-65 (2006)
    ("*Adelphia Order*"); *In the Matter of General Motors Corporation
    and Hughes Electronics Corporation, Transferors and The News
    Corporation Limited, Transferee*, Memorandum Opinion and Order, 19
    FCC Rcd 473, 552-55, ¶¶ 172-79 (2004) ("*Hughes Order*").

[^48]: *See* Cablevision Comments at 6; Comcast Comments at 5 n.4.

[^49]: *See 2002 Extension Order*, 17 FCC Rcd at 12129-30, ¶ 14.

[^50]: *See id*. at 12129, ¶ 14 n.30 (citing *Morgan v. Commonwealth of
    Virginia*, 328 U.S. 373, 377-78 (1946) (state legislation "invalid
    if it unduly burdens commerce in matters where uniformity is
    necessary in the constitutional sense of useful in accomplishing a
    permitted purpose"); *Armour & Co. v. Wantouk*, 323 U.S. 126, 129-30
    (1944) (term "necessary" in the Fair Labor Standards Act, in
    context, means reasonably necessary to production, and not
    "indispensable," "essential," or "vital"); *McCulloch v. Maryland*,
    17 U.S. (4 Wheat.) 316, 413 (1819) (term "necessary" in the
    "necessary and proper" clause of the U.S. Constitution means
    "convenient, or useful," and does not limit congressional power to
    the "most direct and simple" means available); *Independent
    Insurance Agents of America, Inc. v. Hawke*, 211 F.3d 638 (D.C. Cir.
    2000) (term "necessary" in the National Bank Act means "convenient"
    or "useful")). *See also* AT&T Reply Comments at 3 n.4 (citing
    *Cellco Partnership v FCC*, 357 F.3d 88, 97 (D.C. Cir. 2004) (noting
    that "necessary" does not always mean "indispensable" or
    "essential"); *Prometheus Radio Project v. FCC*, 373 F.3d 372,
    390-95 (3d Cir. 2004) (upholding a standard under which "necessary"
    means "convenient, useful, or helpful"), *cert. denied*, 545 U.S.
    1123 (2005)).

[^51]: *See id*. at 12129, ¶ 14 n.31 (citing *Kirschbaum v. Arsenal
    Building Corp.*, 316 U.S. 517, 525-26 (1942) (term "necessary" in
    the Fair Labor Standards Act means "indispensable" and
    "essential")). *See also* Cablevision Comments at 6 n.16; Comcast
    Comments at 5 n.4 (citing *AT&T Corp. v. Iowa Utils. Bd. ,* 525 U.S.
    366, 388-90 (1999); *GTE Serv. Corp. v. FCC*, 205 F.3d 416, 424
    (D.C. Cir. 2000)).

[^52]: *See 2002 Extension Order,* 17 FCC Rcd at 12130, ¶ 14 n.32
    (citing *Conroy v. Aniskoff*, 507 U.S. 511, 515 (1993) (statute must
    be read as a whole, since the meaning of statutory language, plain
    or not, depends on context)).

[^53]: *See 2002 Extension Order,* 17 FCC Rcd at 12129-30, ¶ 14.

[^54]: *See* Cablevision Comments at 7.

[^55]: *See 2002 Extension Order,* 17 FCC Rcd at 12135-36, ¶ 25; s*ee
    also* Verizon Comments at 3 (noting that it has not faced difficulty
    in obtaining satellite-delivered vertically integrated programming
    while the exclusive contract prohibition is in effect but that it
    expects the situation to change if the prohibition were allowed to
    sunset). We note, however, that for vertically integrated
    programming that is delivered terrestrially and therefore is beyond
    the scope of Section 628(c), there is specific factual evidence that
    cable operators have withheld this programming from competitors and
    that such withholding has had a material adverse impact on
    competition in the video distribution market. *See* *infra* Section
    III.A.3.b; *see also* AT&T Comments at 4; BSPA Comments at 17; CA2C
    Comments at 17; RICA Comments at 5; SureWest Comments at 5-6;
    EchoStar Reply Comments at 16-17.

[^56]: *See* Cablevision Comments at n.13 (citing 47 U.S.C. § 548(c)(5)
    ("The prohibition . . . shall cease to be effective 10 years after
    the date of enactment of this section, unless the Commission finds,
    in a proceeding conducted during the last year of such 10-year
    period, that such prohibition continues to be necessary . . . .")).

[^57]: *See 2002 Extension Order,* 17 FCC Rcd at 12159-60, ¶ 77.

[^58]: *See id*. at 12160, ¶ 78; *see* AT&T Reply Comments at 13 n.50;
    EchoStar Reply Comments at 13 n.22.

[^59]: *See 2002 Extension Order,* 17 FCC Rcd at 12161, ¶ 80.

[^60]: For the most part, the data noted herein comes from our *12^th^
    Annual Report* on video competition, which reflects data on the
    video distribution and programming markets as of June 2005. *See
    Annual Assessment of the Status of Competition in the Market for the
    Delivery of Video Programming*, Twelfth Annual Report, 21 FCC Rcd
    2503 (2006) ("*12^th^ Annual Report*"). To the extent indicated, we
    also note more recent data and significant changes since the *12^th^
    Annual Report* which were provided by commenters.

[^61]: *See 2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18 (citing
    *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming*, Eighth Annual Report, 17 FCC Rcd
    1244, 1309-10, ¶ 157 (2002) ("*8^th^ Annual Report*")).

[^62]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157.
    Commenters do not provide data indicating that this information has
    changed significantly since the *12^th^ Annual Report*. *See*
    Cablevision Comments at 19 (citing *12^th^ Annual Report*, 21 FCC
    Rcd at 2575, ¶ 157); Comcast Comments at 12 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2575, ¶ 157); USTelecom Comments at 19
    (citing *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157).

[^63]: *See 2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1309-10, ¶ 157).

[^64]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157.
    Commenters do not provide data indicating that this information has
    changed significantly since the *12^th^ Annual Report*.

[^65]: *See* *2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1309-10, ¶ 157).

[^66]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2509-10, ¶ 21 and
    2575, ¶ 157. Commenters do not provide data indicating that this
    information has changed significantly since the *12^th^ Annual
    Report*. *See* Cablevision Comments at 19 and 28 n.100 (citing
    *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157); Comcast Comments
    at 12 (citing *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157);
    NCTA Comments at 5; Verizon Comments at 8 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2509-10, ¶ 21).

[^67]: *See* EchoStar Comments at 9-10. Verizon notes that approximately
    32 percent of the more than 250 regional and national networks that
    comprise Verizon's FiOS TV service are vertically integrated with
    incumbent video providers. *See* Verizon Comments at 8.

[^68]: Cable MSOs argue that the higher percentage (22 percent)
    calculated by the Commission in the *12^th^ Annual Report* is
    overstated because the Commission considered the iN DEMAND
    pay-per-view network as if it were sixty separate networks. *See*
    Comcast Comments at 12 n.36; NCTA Comments at 5 n.12; Comcast Reply
    Comments at 9 n.21.

[^69]: *See* *2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1363, Table D-6).

[^70]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2578-79, ¶ 163 and
    2654, Table C-5. While the *12^th^ Annual Report* does not list
    Cartoon Network among the Top 20 networks as ranked by
    subscribership, AT&T notes data as of December 2006 that lists
    Cartoon Network among the Top 20. *See* AT&T Comments at 12 n.22
    (citing "Top Cable Program Networks -- as of December 2006,"
    available at http://www.ncta.com/ContentView.aspx?contentId=74
    (citing Kagan Research, LLC, "Cable Program Investor," Jan. 31,
    2007) (last visited August 6, 2007)).

[^71]: *See infra* ¶ 37. These networks are The Discovery Channel, CNN,
    TNT, TBS, TLC, and Headline News. *See* Kagan Research, LLC,
    *Network Census: June 30*; *Cable Program Investor* (July 28, 2006)
    at 11.

[^72]: *See* EchoStar Comments at 6 (citing *8^th^ Annual Report*, 17
    FCC Rcd at 1363, Table D-6 and *12^th^ Annual Report*, 21 FCC Rcd at
    2654, Table C-5). These networks are The Discovery Channel, CNN,
    TNT, and TBS. *See 12^th^ Annual Report*, 21 FCC Rcd at 2654, Table
    C-5.

[^73]: *See* AT&T Comments at 12-13 (citing Kagan Research, LLC,
    *Economics of Basic Cable Networks -- 13^th^ Annual Edition* at
    97-519 (2007)).

[^74]: *See* *2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1364, Table D-7).

[^75]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2579, ¶ 164 and 2655,
    Table C-6. In the *2002 Extension Order*, the Commission noted data
    from the *8^th^ Annual Report*, which listed the Top 20 cable
    networks as ranked by prime time ratings. *See* *2002 Extension
    Order,* 17 FCC Rcd at 12131-32, ¶ 18 (citing *8^th^ Annual Report*,
    17 FCC Rcd at 1364, Table D-7). The *12^th^ Annual Report* lists the
    Top 15 cable networks as ranked by prime time ratings, rather than
    the Top 20. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2579, ¶ 164
    and 2655, Table C-6. While the *12^th^ Annual Report* does not list
    Cartoon Network among the Top 15 networks as ranked by prime time
    ratings, AT&T cites recent data indicating that Cartoon Network is
    still among the Top 20. *See* AT&T Reply Comments at 7 n.22 (citing
    Kagan Research, LLC, *Economics of Basic Cable Networks -- 13^th^
    Annual Edition* at 50 (2007)).

[^76]: These networks are TNT, Adult Swim, HBO, TBS, American Movie
    Classics, Cartoon Network, and The Discovery Channel. *See* Nielsen
    Media Research, *Top 50 Cable Networks Primetime* (June 2006).

[^77]: *See* Cablevision Comments at 2-3 (citing Kagan Research LLC,
    *Economics of Basic Cable Networks* at 50 (2006)); Cablevision Reply
    Comments at 9 (same).

[^78]: *See* AT&T Reply Comments at 7 (citing Kagan Research, LLC,
    *Economics of Basic Cable Networks -- 13^th^ Annual Edition* at 50
    (2007)).

[^79]: *See* *id*. (citing Kagan Research, LLC, *Economics of Basic
    Cable Networks -- 13^th^ Annual Edition* at 51-52 (2007)).

[^80]: *See* *2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18.

[^81]: *See* *id*.

[^82]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3.

[^83]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^84]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22 and
    2579-80, ¶ 166. Commenters do not provide data indicating that this
    information has changed significantly since the *12^th^ Annual
    Report*. *See* Cablevision Comments at 22 n.75 (citing *12^th^
    Annual Report*, 21 FCC Rcd at 2579-80, ¶ 166); EchoStar Comments at
    6 (citing *12^th^ Annual Report*, 21 FCC Rcd at 2579-80, ¶ 166);
    Verizon Comments at 9-10 (citing *12^th^ Annual Report*, 21 FCC Rcd
    at 2510, ¶ 22).

[^85]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^86]: We note that, according to the Commission's most recent annual
    competition report, there were 37 RSNs as of June 2005. *See*
    *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22 and 2586, ¶ 183.
    More recent data indicates that there are now 39 RSNs. *See*
    Cablevision Comments at 23 n.80 (stating that the *12^th^ Annual
    Report* did not include the Mid-Atlantic Sports Network ("MASN"), an
    RSN that is not affiliated with cable operators); Verizon Comments
    at 10 n.16 (stating that the *12^th^ Annual Report* did not include
    SportsNet New York, an RSN affiliated with Comcast).

[^87]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^88]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22 and
    2579-80, ¶ 166. Commenters do not provide data indicating that this
    information has changed significantly since the *12^th^ Annual
    Report*. *See* EchoStar Reply Comments at 11-12 n.19 (citing *12^th^
    Annual Report*, 21 FCC Rcd at 2579-80, ¶ 166).

[^89]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^90]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22 and
    2579-80, ¶ 166. Commenters do not provide data indicating that this
    information has changed significantly since the *12^th^ Annual
    Report*. *See* USTelecom Comments at 19 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2579-80, ¶ 166). Verizon states that eighty
    percent of the regional networks it offers as part of FiOS TV are
    vertically integrated with cable operators. *See* Verizon Comments
    at 9.

[^91]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^92]: We note that, according to the Commission's most recent annual
    competition report, there were 17 vertically integrated RSNs as of
    June 2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22
    and 2586, ¶ 183. More recent data indicates that there are now 18
    vertically integrated RSNs. *See* Verizon Comments at 10 n.16
    (stating that the *12^th^ Annual Report* did not include SportsNet
    New York, an RSN affiliated with Comcast, thereby increasing the
    number of vertically integrated RSNs to 18).

[^93]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132, ¶ 19 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1354-56, Table D-3).

[^94]: We note that, according to the Commission's most recent annual
    competition report, 45.9 percent of RSNs were vertically integrated
    as of June 2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶
    22 and 2586, ¶ 183. If the unaffiliated MASN and the
    cable-affiliated SportsNet New York are included, then 18 out of 39
    RSNs, or 46.1 percent, are vertically integrated. *See* Cablevision
    Comments at 23 n.80 (stating that the *12^th^ Annual Report* did not
    include MASN); Verizon Comments at 10 n.16 (stating that the *12^th^
    Annual Report* did not include SportsNet New York). Comcast notes
    that it is affiliated with eight regional programming networks that
    show some sports programming: Comcast Sports Southeast; Comcast
    SportsNet Philadelphia; Comcast SportsNet Mid-Atlantic; Comcast
    SportsNet Chicago; Comcast SportsNet West; SportsNet New York; Fox
    Sports New England; and Comcast Local (Detroit). *See* Comcast
    Comments at 13 n.39.

[^95]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132-33, ¶ 20
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1247, ¶ 5).

[^96]: We note that, according to the Commission's annual competition
    reports, the percentage of MVPD subscribers receiving their video
    programming from a cable operator was 78.11 percent as of June 2001
    and 69.41 percent as of June 2005. *Compare 8^th^ Annual Report*, 17
    FCC Rcd at 1338, Table C-1 (78.11 percent) *with* *12^th^ Annual
    Report*, 21 FCC Rcd at 2617, Table B-1 (69.41 percent). More recent
    data indicates that the portion of MVPD subscribers served by cable
    operators is now approximately 67 percent. *See* Cablevision
    Comments at 2 (stating that cable's market share is 67 percent);
    Comcast Comments at 8 (stating that cable's market share is 67.8
    percent as of the end of 2006); NCTA Comments at 4 (stating that
    cable's market share is 66.9 percent).

[^97]: *See 2002 Extension Order,* 17 FCC Rcd at 12132-33, ¶ 20 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1247, ¶ 7).

[^98]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2507, ¶ 10 and 2617,
    Table B-1; *see also* CA2C Comments at 5 (stating that there were
    65.6 million cable subscribers as of December 2006).

[^99]: *See* *2002 Extension Order,* 17 FCC Rcd at 12134, ¶ 23 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1338, Table C-1).

[^100]: We note that, according to the Commission's annual competition
    reports, the percentage of MVPD subscribers receiving their video
    programming from a DBS operator was 18.2 percent as of June 2001 and
    27.72 percent as of June 2005. *Compare* *8^th^ Annual Report*, 17
    FCC Rcd at 1388, Table C-1 (18.2 percent) *with* *12^th^ Annual
    Report*, 21 FCC Rcd at 2617, Table B-1 (27.72 percent). More recent
    data indicates that the portion of MVPD subscribers served by DBS
    operators is now over 30 percent. *See* Letter from Stephanie L.
    Podey, Counsel for Comcast Corporation, to Ms. Marlene H. Dortch,
    FCC, MB Docket Nos. 07-29, 06-189 (June 13, 2007), Attachment at 1
    (stating that DBS operators have an over 30 percent share of the
    MVPD market); *see also* NCTA Comments at 6 (same); Time Warner
    Reply Comments at 1 (same).

[^101]: *See* *2002 Extension Order,* 17 FCC Rcd at 12134, ¶ 23.

[^102]: We note that, according to the Commission's annual competition
    reports, the number of MVPD subscribers receiving their video
    programming from a DBS operator was 16.07 million as of June 2001
    and 26.12 million as of June 2005. *Compare 8^th^ Annual Report*, 17
    FCC Rcd at 1338, Table C-1 (16.07 million) *with* *12^th^ Annual
    Report*, 21 FCC Rcd at 2617, Table B-1 (26.12 million). More recent
    data indicates that the number of DBS subscribers is now 29.6
    million. *See* Letter from Stephanie L. Podey, Counsel for Comcast
    Corporation, to Ms. Marlene H. Dortch, FCC, MB Docket Nos. 07-29,
    06-189 (June 13, 2007), Attachment at 1 (stating that, as of March
    31, 2007, DIRECTV had 16.19 million subscribers and EchoStar had
    13.42 million subscribers)*; see also* Cablevision Comments at 12
    (stating that DIRECTV has 16 million subscribers and EchoStar has
    13.1 million subscribers).

[^103]: *See* Media Kits: AT&T U-Verse,
    http://www.att.com/gen/press-room?pid=5838 (last visited Sept. 4,
    2007).

[^104]: *See* More Than 100,000 Customers Choose AT&T U-verse Over
    Cable,
    http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=24309
    (last visited Sept. 7, 2007).

[^105]: *See* Qwest Comments at 1 n.2.

[^106]: *See* Verizon Posts Strong 2Q 2007 Results Highlighted by Gains
    in Earnings, Consolidated Margins and Cash Flows,
    http://newscenter.verizon.com/press-releases/verizon/2007/verizon-posts-strong-2q-2007.html

    (last visited Sept. 4, 2007).

[^107]: *See* *id*.

[^108]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2549-50, ¶¶ 89-90.

[^109]: *See* BSPA Comments at 3 (citing Government Accountability
    Office ("GAO"), *Telecommunications: Wire-Based Competition
    Benefited Consumers in Selected Markets*, GAO-04-241 (Feb. 2004));
    *see also* AT&T Comments at 3; CA2C Comments at 8 (citing
    *Implementation of Section 3 of the Cable Television Consumer
    Protection and Competition Act of 1992: Statistical Report on
    Average Rates for Basic Service, Cable Programming Service, and
    Equipment, Report on Cable Industry Prices*, 21 FCC Rcd 15087, 15091
    (2006) ("*2006 Cable Price Report*")); Qwest Comments at 5-6;
    Verizon Reply Comments at 7-8.

[^110]: *See* Comcast Reply Comments at 11. Comcast claims that the GAO
    Report cited by competitive MVPDs is deficient in significant
    respects. *Id.* NCTA cites a previous study which it claims
    demonstrate that lower prices are the result of anomalous
    circumstances not relevant to wireline entry. *See* NCTA Reply
    Comments at 5 (citing Reply Comments of NCTA, MB Docket No. 04-227
    (August 25, 2004) (attaching Steven S. Wildman, "Assessing the
    Policy Implications of Overbuild Competition")); *see also* Comcast
    Reply Comments at 10-12.

[^111]: *See* AT&T Comments at 4 (citing NCTA Comments, MB Docket No.
    06-189 (November 29, 2006) at 9).

[^112]: *See* Cablevision Comments at 13 (citing *12^th^ Annual Report*,
    21 FCC Rcd at 2564-65, ¶ 130) and Appendix A at A-11.

[^113]: *See* Cablevision Comments at 14, 21 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2567-68, ¶ 138) and Appendix A at A-12 -
    A-13; Comcast Comments at 8-11. Cable MSOs also note that some
    popular programs are available online in their entirety and that
    some networks are developing original content for the Internet.
    *See* Cablevision Comments at Appendix A at A-12 - A -13; Comcast
    Comments at 10.

[^114]: *See* Cablevision Comments at 15; Comcast Comments at 9.

[^115]: *See* Cablevision Comments at 15; Comcast Comments at 9.

[^116]: *See* Cablevision Comments at 13-14 and Appendix A at A-10,
    A-18.

[^117]: *See* Cablevision Comments, Appendix A at A-14 - A-18; Comcast
    Comments at 9.

[^118]: *See* Comcast Comments at 6-7.

[^119]: *See* Cablevision Comments, Appendix A at A-1.

[^120]: *See* Comcast Comments at 6 (citing *Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming*, Tenth Annual Report, 19 FCC Rcd 1606, ¶ 4 (2004)).

[^121]: *See* EchoStar Reply Comments at 4-5 (stating that in some major
    markets, cable's market share is above 80 percent, and noting that
    the two DBS operators have only a collective market share of 15
    percent in Cablevision's market areas).

[^122]: *See* CA2C Comments at 5; *see also* AT&T Comments 3-4;
    USTelecom Comments at 4.

[^123]: *See* CA2C Comments at 7 (stating that annual cable rate
    increases have been more than double the general rate of inflation
    in most markets); *see also* Consumer Groups Reply Comments at 2.

[^124]: *See* CA2C Comments at 6 (citing *Implementation of Section
    621(a)(1) of the Cable Communications Policy Act of 1984 as amended
    by the Cable Television Consumer Protection and Competition Act of
    1992*, 22 FCC Rcd 5101 (2007) ("*Local Franchising Report and
    Order*"); *Exclusive Service Contracts for Provision of Video
    Services in Multiple Dwelling Units and Other Real Estate
    Developments,* Notice of Proposed Rulemaking, 22 FCC Rcd 5935 (2007)
    ("*MDU Access NPRM*")); USTelecom Comments at 3.

[^125]: *See* CA2C Comments at 5 n.7 (citing *Local Franchising Report
    and Order*, 22 FCC Rcd at 5110, ¶ 19).

[^126]: *See* AT&T Reply Comments at 11; EchoStar Reply Comments at 6
    n.8; RCN Reply Comments at 4-5.

[^127]: *See* USTelecom Comments at 10 (citing *12^th^ Annual Report*,
    21 FCC Rcd at 2506-07, ¶ 8).

[^128]: *See 2002 Extension Order,* 17 FCC Rcd at 12133, ¶ 21(citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3).

[^129]: We note that, according to the Commission's annual competition
    reports, the percentage of MVPD subscribers receiving their video
    programming from one of the four largest cable MSOs was 47.67
    percent as of June 2001 and 47.78 percent as of June 2005. *Compare*
    *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3 (47.67 percent)
    *with* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3 (47.78
    percent). More recent data indicates that the percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest cable MSOs (Comcast, Time Warner, Cox, and Charter) has
    increased to between 53 and 60 percent. *See* Verizon Comments at 11
    (calculating a percentage of 53 percent by adding the percentage of
    subscribers served by Adelphia (5.50 percent) to the percentage of
    subscribers served by Comcast (22.99 percent), Time Warner (11.69
    percent), Cox (6.73 percent), and Charter (6.37 percent), as those
    figures are stated in the *12^th^ Annual Report* (21 FCC Rcd at
    2620, Table B-3)); USTelecom Comments at 9 (calculating this
    percentage using market share figures for Cox (6.73 percent) and
    Charter (6.37 percent) from the *12^th^ Annual Report* (21 FCC Rcd
    at 2620*,* Table B-3) and for Comcast (28.7 percent) and Time Warner
    (17.9 percent) from the *Adelphia Order,* 21 FCC Rcd at 8206, ¶ 2).

[^130]: *See 2002 Extension Order,* 17 FCC Rcd at 12133, ¶ 20 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3).

[^131]: We note that, according to the Commission's annual competition
    reports, the percentage of MVPD subscribers receiving their video
    programming from one of the four largest vertically integrated cable
    MSOs was 34.26 percent as of June 2001 and 44.63 percent as of June
    2005. *Compare* *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3
    (34.26 percent) *with* *12^th^ Annual Report*, 21 FCC Rcd at 2620,
    Table B-3 (44.63 percent). More recent data indicates that the
    percentage of MVPD subscribers receiving their video programming
    from one of the four largest vertically integrated cable MSOs
    (Comcast, Time Warner, Cox, and Cablevision) has increased to
    between 54 and 56.75 percent. *See* EchoStar Comments at 5
    (calculating a percentage of 56.75 percent using market share
    figures for Cox (6.73 percent) and Cablevision (3.22 percent) from
    the *12^th^ Annual Report* (21 FCC Rcd at 2620*,* Table B-3) and for
    Comcast (28.90 percent) and Time Warner (17.9 percent) from the
    *Adelphia Order* (21 FCC Rcd at 8206, ¶ 2)); Cablevision Reply
    Comments at 10-11 n.36 (calculating a percentage of 54 percent
    taking into account an increase in the total number of MVPD
    households by 4.5 million since the *Adelphia Order* and Comcast's
    net loss of 600,000 subscribers arising from its Patriot Media and
    Insight Communications transaction announcements). Cablevision
    contends that the percentage of MVPD subscribers receiving their
    video programming from one of the four largest vertically integrated
    cable MSOs is the same as in 2001. *See* Cablevision Reply Comments
    at 10-11 n.36.

[^132]: *See* EchoStar Reply Comments at 4-5.

[^133]: *See* Verizon Comments at 11-12 (citing *2002 Extension Order*,
    17 FCC Rcd at 12131-32, ¶ 18 and *12^th^ Annual Report*, 21 FCC Rcd
    at 2622-25, Table C-1 and 2644-49, Table C-3).

[^134]: Clustering refers to a strategy whereby cable MSOs concentrate
    their operations in regional geographic areas by acquiring cable
    systems in regions where the MSO already has a significant presence,
    while giving up other holdings scattered across the country. *See
    Adelphia Order*, 21 FCC Rcd at 8315, ¶ 264. This strategy is
    accomplished through purchases and sales of cable systems, or by
    system "swapping" among MSOs. *See id*.

[^135]: *See 2002 Extension Order,* 17 FCC Rcd at 12133-34, ¶ 22 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1252, ¶ 14).

[^136]: We note that, according to the Commission's annual competition
    reports, the percentage of cable subscribers served by systems that
    are part of regional clusters was 80.4 percent as of 2000 and 77.9
    percent as of 2004. *Compare* *8^th^ Annual Report*, 17 FCC Rcd at
    1340, Table C-2 (stating that, as of 2000, 108 cable system clusters
    were serving 54.4 million subscribers, or 80.4 percent of cable
    subscribers) *with* *12^th^ Annual Report*, 21 FCC Rcd at 2619,
    Table B-2 (stating that, as of 2004, 118 cable system clusters were
    serving 51.5 million subscribers, or 78.7 percent of cable
    subscribers). More recent data indicates that the percentage of
    cable subscribers that are served by systems that are part of
    regional clusters has increased to between 85 and 90 percent. *See*
    Consumer Group Reply Comments at 4-5 (estimating that 85 to 90
    percent of cable subscribers are currently served by regional
    clusters after taking into account the acquisition by Comcast and
    Time Warner of cable systems formerly owned by Adelphia).

[^137]: *See 2002 Extension Order*, 17 FCC Rcd at 12130-31, ¶ 16.

[^138]: 47 U.S.C. § 548(c)(5).

[^139]: *See id*. at 12135, ¶ 24.

[^140]: *See id*.

[^141]: *See id*.

[^142]: *See id.* at 12131-32, ¶ 18 (citing *8^th^ Annual Report*, 17
    FCC Rcd at 1309-10, ¶ 157).

[^143]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157; *see
    also* Cablevision Comments at 19 (citing *12^th^ Annual Report*, 21
    FCC Rcd at 2575, ¶ 157).

[^144]: *See supra* ¶ 18; *see also* Cablevision Comments at 19 (citing
    *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157); Comcast Comments
    at 12 (same); NCTA Comments at 5-6 (same).

[^145]: *See* Cablevision Comments at 19; Comcast Comments at 11-12;
    Comcast Reply Comments at 9.

[^146]: *See* Cablevision Reply Comments at 8.

[^147]: *See* CA2C Comments at 15; AT&T Reply Comments at 6-7; Verizon
    Reply Comments at 9.

[^148]: *See* ACA Comments at 4; AT&T Comments at 8; BSPA Comments at 4;
    CA2C Comments at 9, 14; DIRECTV Comments at 6-7; EATEL Video
    Comments at 4; EchoStar Comments at 2; NRTC Comments at 6-7; NTCA
    Comments at 1; OPASTCO and ITTA Comments at 5; Qwest Comments at
    5-7; RCN Comments at 3; SureWest Comments at 2-4; USTelecom Comments
    at 12; Verizon at 9; Consumer Groups Reply Comments at 6; SureWest
    Reply Comments at 3.

[^149]: *See* CA2C Comments at 14; *see also* BSPA Comments at 4;
    DIRECTV Comments at 6-7.

[^150]: *See* EATEL Comments at 1 (arguing that sunset of the exclusive
    contract prohibition would "effectively destroy" its ability to
    offer service); EchoStar Comments at 9 (stating that access to
    programming will "make or break" the ability of new entrants to
    compete); NRTC Comments at 20 (stating that an MVPD cannot "operate
    successfully" if that system lacks access to cable-affiliated
    networks such as CNN, HBO, TNT, and The Discovery Channel);
    OPSATCO/ITAA at 4 (arguing that rural telephone companies that serve
    as MVPDs would "no longer be economically viable" if the exclusive
    contract prohibition were to sunset); RCN Comments at 4 (stating
    that competitive MVPDs will "confront serious problems retaining
    subscribers" if access to "must have" programming is denied);
    SureWest Comments at 2 (stating that it would not survive "without
    access to the most popular video content").

[^151]: *See* *supra* ¶ 22; *see also* Cablevision Comments at 23.

[^152]: *See* Cablevision Comments at 22.

[^153]: *See* *id*. at 22 (citing *Adelphia Order*, 21 FCC Rcd at 8279,
    ¶ 169).

[^154]: *But see* *supra* ¶ 22 (concluding that there are now eighteen
    vertically integrated RSNs); *see also* Cablevision Comments at 23
    (citing *2002 Extension Order*, 17 FCC Rcd at 12145, ¶ 47; *12^th^
    Annual Report*, 21 FCC Rcd at 2586, ¶ 183).

[^155]: *See* Cablevision Comments at 4, 24 and Appendix B at 21-22.
    Cablevision also contends that the claimed "must have" status of RSN
    programming is refuted by the fact that it lost only 2.1 percent of
    its subscribers during 2002 when it was unable to carry the YES
    network. *See* *id*. at 24. In response, Verizon argues that the
    "loss of a few subscribers by an entrenched incumbent cable operator
    due to the unavailability of programming pales in competitive
    significance to the inability of a new entrant to attract
    subscribers in the first place because it cannot offer 'must have'
    programming offered by the entrenched cable incumbent." *See*
    Verizon Reply Comments at 10 n.28.

[^156]: *See* Cablevision Comments at 25; Cablevision Reply Comments at
    12.

[^157]: *See* Cablevision Comments at 25; Cablevision Reply Comments at
    12.

[^158]: *See* Cablevision Comments at 26 (citing *Adelphia Order*, 21
    FCC Rcd at 8271, ¶ 148).

[^159]: *See* AT&T Comments at 15-16; BSPA Comments at 6, 17; CA2C
    Comments at 17; EchoStar Comments at 4; NTCA Comments at 4;
    OPASTCO/ITAA Comments at 5-6; RCN Comments at 4, 9; RICA Comments at
    5; SureWest Comments at 3; USTelecom Comments at 14-15; Verizon
    Comments at 9-10; AT&T Reply Comments at 4; EchoStar Reply Comments
    at 11-12.

[^160]: *See* ACA Comments at 6; NTCA Comments at 4; OPASTCO/ITTA
    Comments at 5-6; RCN Comments at 4, 9; Verizon Comments at 9; AT&T
    Reply Comments at 4-5.

[^161]: *Adelphia Order*, 21 FCC Rcd at 8287, ¶ 189.

[^162]: *See* AT&T Comments at 17-18; CA2C Comments at 9.

[^163]: *See* AT&T Reply Comments at 5; RCN Reply Comments at 8; Verizon
    Reply Comments at 10.

[^164]: *See* Cablevision Reply Comments at 2, 8-9; *see also* Time
    Warner Reply Comments at 13 n.23. Cablevision, however, has referred
    to certain broadcast programming as "must have" in another
    Commission proceeding. *See* Comments of Cablevision Systems Corp.,
    MB Docket No. 03-124 (June 16, 2003) at 3, 13-14, 18, 28 (referring
    to the Fox broadcast network as "must have").

[^165]: *See* Cablevision Comments, Appendix B at 14.

[^166]: *See* Cablevision Reply Comments at 12 (stating that EchoStar
    declined to carry an RSN in Washington, D.C. (MASN) for two years,
    and that it still declines to carry an RSN serving New York City
    (YES)).

[^167]: *See* Verizon Reply Comments at 10; *see also* EchoStar Reply
    Comments at 7-8. RCN also refers to surveys it conducted which
    determined that approximately 40 to 58 percent of subscribers would
    refuse to change MVPDs if the new MVPD did not carry local sports
    programming. *See* RCN Comments at 10 n.27. In response, Cablevision
    argues that (i) this survey is five years old; (ii) RCN provides no
    information on its survey methodology; and (iii) on its face, the
    survey indicates that up to 60 percent of subscribers are
    indifferent to local sports programming. *See* Cablevision Reply
    Comments at 12 n.41.

[^168]: *See* Cablevision Comments, Appendix B at 24-25.

[^169]: *See* AT&T Comments at 9; Qwest Comments at 5; USTelecom
    Comments at 4, 6; Verizon Comments at 3, 6-7; Verizon Reply Comments
    at 11.

[^170]: *See* AT&T Comments at 2; CA2C Comments at 12.

[^171]: *See* Cablevision Comments at 5 ("Cablevision faces competition
    from . . . Verizon and AT&T, whose market capitalizations are 10 and
    25 times larger, respectively, than Cablevision's. Each of those
    entities has the ability to invest in its own programming, just as
    Cablevision did."); Comcast Comments at 20; Time Warner Reply
    Comments at 21.

[^172]: *See* Cablevision Comments at 13; Comcast Comments at 18-21;
    Comcast Reply Comments at 17-19.

[^173]: *See Local Franchising Report and Order*, 22 FCC Rcd at 5132-33,
    ¶ 62 ("The record here indicates that a provider's ability to offer
    video service and to deploy broadband networks are linked
    intrinsically, and the federal goals of enhanced cable competition
    and rapid broadband deployment are interrelated.") (footnote
    omitted); *see also* ACA Comments at 14; CA2C Comments at 19;
    OPASTCO/ITTA Comments at 2; USTelecom Comments at 6-7; CA2C Reply
    Comments at 10-11; Qwest Reply at 3.

[^174]: *See* Telecommunications Act of 1996, Pub. L. No. 104-104, §
    706, 110 Stat. 56, 153 (codified at 47 U.S.C. § 157 note); *see
    also* CA2C Comments at 19; CA2C Reply Comments at 10-11.

[^175]: *See 2002 Extension Order*, 17 FCC Rcd at 12138, ¶ 32; DIRECTV
    Comments at 7 ("There is -- to be sure -- more programming available
    now than there was in 2002. But, as the Commission explained then,
    the sheer amount of programming available has little to do with the
    must-see nature of any particular network."); *see also* AT&T
    Comments at 10-11; EchoStar Comments at 7; AT&T Reply Comments at
    6-7; Qwest Reply Comments at 3-4; Verizon Reply Comments at 8-9.
    Indeed, the largest cable MSO -- Comcast -- concedes that "to the
    extent that MVPDs cannot survive without access to certain
    programming . . . what matters is whether that programming is
    'must-have' in order to compete." *See* Comcast Comments at 24.

[^176]: These networks are The Discovery Channel, CNN, TNT, TBS, TLC,
    and Headline News. *See* Kagan Research, LLC, *Network Census: June
    30*; *Cable Program Investor* (July 28, 2006) at 11. We note that
    AT&T cites data which also includes Cartoon Network among the Top 20
    satellite-delivered networks as ranked by subscribership. *See
    supra* note 70.

[^177]: These networks are TNT, Adult Swim, HBO, TBS, American Movie
    Classics, Cartoon Network, and The Discovery Channel. *See* Nielsen
    Media Research, *Top 50 Cable Networks Primetime* (June 2006).

[^178]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2510, ¶ 22 and 2586,
    ¶ 183.

[^179]: *See 2002 Extension Order*, 17 FCC Rcd at 12138, ¶ 32 (stating
    that although subscription premium networks such as HBO and Cinemax
    "are not among the top programming services in subscribership," they
    nonetheless "make an important contribution to an MVPD's revenue and
    profits"). Competitive MVPDs argue that first-run programming
    produced by HBO and other premium networks are essential for a
    competitive MVPD to offer to potential subscribers in order to
    compete with the incumbent cable operator. *See* AT&T Comments at
    13-14 (quoting a cable executive as stating in 1990 that "certain
    channels such as . . . HBO are, for all practical purposes, 'must
    carries' for all cable systems" and contending that this statement
    "is only more true today" (citing *Competition, Rate Deregulation
    and the Commission's Policies Relating to the Provision of Cable
    Television Service,* 5 FCC Rcd 4962, 5027, ¶ 118 (1990))); BSPA
    Comments at 6; Verizon Comments at 9 (stating that a new entrant
    needs to be able to offer customers premium programming such as HBO
    and Cinemax "in order to compete successfully against an established
    video provider").

[^180]: Competitive MVPDs argue that movie libraries owned by VOD
    networks are essential for a competitive MVPD to offer to potential
    subscribers in order to compete with the incumbent cable operator.
    *See* RCN Comments at 4 ("film libraries are similarly 'must have'
    for video on demand offerings (there is only one Gone with the
    Wind)").

[^181]: *See infra* Section III.A.3.b.

[^182]: *See 2002 Extension Order,* 17 FCC Rcd at 12133, ¶ 20 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3).

[^183]: *See* *supra* note 131 (discussing percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest vertically integrated cable MSOs).

[^184]: *See infra* ¶ 39 (discussing impact on competitive MVPD
    subscribership from withholding of cable-affiliated programming).

[^185]: *See* Cablevision Reply Comments at 2, 8-9 and Appendix B at 14;
    *see also* Time Warner Reply Comments at 13 n.23.

[^186]: *See* Cablevision Comments at 2-3, 18-27; Comcast Comments at
    11-13; NCTA Comments at 5-7; Time Warner Reply Comments at 2.

[^187]: *2002 Extension Order*, 17 FCC Rcd at 12139, ¶ 33.

[^188]: *Id*.

[^189]: *Id*.

[^190]: Cablevision lists various cable networks that offer certain
    categories of programming (such as news, sports, weather, and
    music), but offers no evidence that these networks are substitutable
    for one another. *See* Cablevision Comments at 20 n.69.

[^191]: *See* *supra* ¶¶ 18, 22, 37 (discussing cable's ownership of
    significant programming networks).

[^192]: *See 2002 Extension Order*, 17 FCC Rcd at 12138, ¶ 32 ("We agree
    with competitive MVPDs that access to vertically integrated
    programming continues to be necessary in order for these MVPDs to
    remain viable in the marketplace."); *infra* ¶ 39 (discussing impact
    on competitive MVPD subscribership from withholding of
    cable-affiliated programming).

[^193]: *See 2002 Extension Order*, 17 FCC Rcd at 12138, ¶ 32; *Adelphia
    Order*, 21 FCC Rcd at 8287, ¶ 189; *id.* at 8258-59, ¶ 124 (stating
    that "RSNs are often considered 'must-have' programming. . . .
    Hence, an MVPD's ability to gain access to RSNs and the price and
    other terms of conditions of access can be important factors in its
    ability to compete with rivals"); *Hughes Order,* 19 FCC Rcd at 535,
    ¶ 133 (stating that "the basis for the lack of adequate substitutes
    for regional sports programming lies in the unique nature of its
    core component: RSNs typically purchase exclusive rights to show
    sporting events, and sports fans believe that there is no good
    substitute for watching their local and/or favorite team play an
    important game"); *12^th^ Annual Report*, 21 FCC Rcd at 2596, ¶ 205
    ("Access to must have programming, including major national cable
    networks and regional sports networks, on a timely basis and at
    competitive rates is a key competitive issue for all MVPDs."); *see
    also* AT&T Comments at 11 ("MVPDs still remain highly dependent on
    key programming owned by the established cable MSOs, including TBS,
    Discovery, TNT, CNN, TLC, and other popular basic cable networks,
    and also the regional sports network programming that the Commission
    found, in the *Adelphia Order*, could be used as a powerful weapon
    against potential competitors."); EchoStar Comments at 7
    ("Withholding a single 'must have' programming network from
    competitive MVPD platforms can hamper, if not foreclose, the
    development and preservation of viable competition."). Numerous
    competitive MVPDs cite certain national programming networks as
    "must have" programming. *See* NRTC Comments at 20 (stating that an
    MVPD cannot "operate successfully" if that system lacks access to
    cable-affiliated networks such as CNN, HBO, TNT, and The Discovery
    Channel); SureWest Comments at 3 ("no MVPD could survive without
    access to the most popular, 'must-have,' programming channels such
    as CNN, TNT and HBO"); Qwest Comments at 5 ("Since subscribers
    ultimately are most interested in content, Qwest's ability to serve
    its customers is tied directly to its access to 'must-have'
    vertically integrated programming, including CNN, HBO, TNT, iN
    DEMAND pay-per-view content, Discovery, and regional sports
    networks."). Numerous competitive MVPDs also cite sports programming
    as "must have" programming. *See* AT&T Comments at 15 (stating that
    Congress and the Commission "have continued to recognize on multiple
    occasions the 'must have' nature of cable incumbents' regional
    sports networks"); BSPA Comments at 6; RCN Comments at 4 ("'Must
    have' programming is programming that has no close substitutes and
    cannot be duplicated no matter how much time and money are
    committed. Clearly, sports programming is 'must have'
    programming."); SureWest Comments at 3 ("sports programming is also
    core to an MVPD's survival in a competitive market"); USTelecom
    Comments at 14-15; Verizon Comments at 9 (stating that regional
    sports programming "is a key component of a competitive multichannel
    video service").

[^194]: *Adelphia Order*, 21 FCC Rcd at 8267-72, ¶¶ 140-51 and 8341-50,
    Appendix D; *see id* at 8271-72, ¶ 151("We conclude that there is
    substantial evidence that a large number of consumers will refuse to
    purchase DBS service if the provider cannot offer an RSN."); *Hughes
    Order,* 19 FCC Rcd at 546-47, ¶ 159 (stating that withholding of RSN
    programming will cause consumers to lose access to highly desired
    programming and some consumers will leave their preferred MVPD
    provider to access the foreclosed programming on a less-desired MVPD
    platform). []{.mark}

[^195]: *See Adelphia Order*, 21 FCC Rcd at 8271, ¶ 149.

[^196]: *See id.* We also note that, according to data from Nielsen
    Media Research, in two cities where most competitive MVPDs are
    unable to access the cable-affiliated RSN (Philadelphia and San
    Diego), the collective market share of competitive MVPDs is well
    below their national average of 33 percent: Philadelphia (19.8
    percent) and San Diego (13.7 percent). *See* DMA Household Universe
    Estimates July 2007: Cable And/Or ADS (Alternate Delivery Systems),
    http://www.tvb.org/nav/build_frameset.asp (follow "Research Central"
    hyperlink; then follow "Market Track" hyperlink; then follow "Cable
    and ADS Penetration by DMA" hyperlink) (last visited Aug. 2, 2007);
    *see also* AT&T Comments at 17 (noting that DIRECTV's market share
    in San Diego is half of its national average); CA2C Comments at 9,
    16; USTelecom Comments at 15; AT&T Reply Comments at 5 (stating that
    DBS subscription is lower in Philadelphia where Comcast has refused
    to provide RSN access). While Cablevision notes that DBS market
    penetration has in fact tripled in Philadelphia from 4 percent in
    2000 to 12 percent at the end of 2006 despite the inability of DBS
    operators to access an RSN (*see* Cablevision Comments at 25;
    Cablevision Reply Comments at 12), cable market penetration is still
    significantly greater in Philadelphia (81.1 percent) than in
    metropolitan areas with a population similar to that of
    Philadelphia: Phoenix (70.1 percent), San Antonio (70.8 percent);
    and Dallas (53.5 percent). *See id*.

[^197]: According to data collected by Nielsen, Comcast SportsNet earned
    a 1 rating and 2 share in the all-day time period during the May
    2006 ratings period in the Philadelphia DMA. Three programming
    networks earned superior ratings or shares while six networks earned
    equivalent ratings and shares. In the San Diego DMA during the same
    period, four programming networks earned ratings and shares
    equivalent to those earned by San Diego Channel 4, the RSN which
    carries San Diego Padres baseball games. 

[^198]: *See* Cablevision Comments, Appendix B at 24-25.

[^199]: *Adelphia Order*, 21 FCC Rcd at 8267-72, ¶¶ 140-51 and 8341-50,
    Appendix D.

[^200]: *See id*. at 8269, ¶ 143.

[^201]: *See 2002 Extension Order*, 17 FCC Rcd at 12139, ¶ 34; *Adelphia
    Order*, 21 FCC Rcd at 8267-72, ¶¶ 140-51 and 8341-50, Appendix D;
    *supra* ¶ 39 (discussing impact on competitive MVPD subscribership
    from withholding of cable-affiliated programming).

[^202]: *See* Comcast Comments at 21; Comcast Reply Comments at 17; *but
    see* AT&T Reply Comments at 10 ("AT&T and Verizon already have
    experienced the cold shoulder in trying to obtain regional sports
    programming from incumbent cable operators.").

[^203]: *See* EchoStar Reply Comments at 19 (stating that cable
    operators repeatedly increase license fees for their affiliated
    networks); *see also* AT&T Comments at 11 (stating that RCN has told
    investors that it pays 37 percent of its revenues to Time Warner and
    Comcast for programming).

[^204]: *See* Verizon Comments at 3 (noting that it has not faced
    difficulty in obtaining satellite-delivered vertically integrated
    programming while the exclusive contract prohibition is in effect,
    but that it expects the situation to change if the prohibition were
    allowed to sunset).

[^205]: *See infra* Section III.A.3.b.

[^206]: *See* Cablevision Comments at 2, 5; Comcast Comments at 20; Time
    Warner Reply Comments at 21.

[^207]: *See* Verizon Reply Comments at 11-12.

[^208]: *See Adelphia Order*, 21 FCC Rcd at 8271, ¶ 149. As competitive
    MVPDs note, DBS providers have been able to attract and retain
    millions of subscribers because of their ability to offer "must
    have" programming that is affiliated with cable operators. *See*
    AT&T Comments at 10 n.25; CA2C Comments at 12. Moreover, we note
    that the Commission has attributed the increased growth of DBS
    subscribership in part to the ability of DBS operators to offer
    local broadcast signals, which Cablevision has referred to as "must
    have" content. *See* *Annual Assessment of the Status of Competition
    in the Market for the Delivery of Video Programming*, Eleventh
    Annual Report, 20 FCC Rcd 2755, 2792 ¶ 54 (2005); Comments of
    Cablevision Systems Corp., MB Docket No. 03-124 (June 16, 2003) at
    3, 13-14, 18, 28 (referring to the Fox broadcast network as "must
    have").

[^209]: *See 2002 Extension Order*, 17 FCC Rcd at 12135, ¶ 24.

[^210]: *See id.*

[^211]: *See id.*

[^212]: *See id.* at 12139-40, ¶ 35.

[^213]: *See id.*

[^214]: *See id.* at 12140-41, ¶¶ 36-39.

[^215]: *See* Cablevision Comments at 16 and Appendix B at 11.

[^216]: *See id*.

[^217]: *See id*.

[^218]: *See id*. at 17.

[^219]: *See* Cablevision Comments at 4; Comcast Comments at 21-22;
    Comcast Reply Comments at 22; NCTA Reply Comments at 6.

[^220]: *See* Cablevision Comments at 16.

[^221]: *See id*. at 20; NCTA Comments at 6.

[^222]: *See* Cablevision Comments at 8, 17; Cablevision Reply Comments
    at 11-12.

[^223]: *See* AT&T Comments at 3, 18; BSPA Comments at 3, 10; CA2C
    Comments at 7-8; Qwest Comments at 3 & n.6; USTelecom Comments at
    4-5, 7; Verizon Comments at 5; *see also* Consumer Groups Reply
    Comments at 5.

[^224]: *See* CA2C Comments at 8 (citing Government Accountability
    Office ("GAO"), *Telecommunications: Direct Broadcast Satellite
    Subscribership Has Grown Rapidly, but Varies Across Different Types
    of Markets*, GAO-05-257 (April 2005)).

[^225]: *See id*. at 9.

[^226]: *See* DIRECTV Comments at 7-9 (quoting Judge Richard A. Posner
    as stating that "monopoly power" is "ordinarily inferred from
    possession of a dominant share (some courts set the threshold at 50
    percent or occasionally even lower, others at 67 or even 70 percent)
    in a market sufficiently broadly defined to include all close
    substitutes of the defendant's product" (citing Richard A. Posner,
    Antitrust Law 196 (2^nd^ ed. 2001)); USTelecom Comments at 11.

[^227]: *See* DIRECTV Comments at 9-10; EchoStar Comments at 6.

[^228]: *See* AT&T Comments at 16; DIRECTV Comments at 10.

[^229]: *See* EchoStar Reply Comments at 4-5.

[^230]: *See* BSPA Comments at 17; CA2C Comments at 17-18; DIRECTV
    Comments at 10-11; RCN Comments at 7; Consumer Groups Reply Comments
    at 4-5; RCN Reply Comments at 10-11; SureWest Reply Comments at 3.

[^231]: *See* Comcast Reply Comments at 14 n.41 (citing *Eighth Annual
    Report*, 17 FCC Rcd at 1304-05, ¶ 140; *Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming*, Seventh Annual Report, 16 FCC Rcd 6005, 6076, ¶ 166
    (2001); *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, Sixth Annual Report,
    15 FCC Rcd 978, 1051, ¶¶ 161-62 (2000); *Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming*, Fifth Annual Report, 13 FCC Rcd 24284, 24371-72, ¶¶
    144-48 (1998); *Vertically Integrated Sports Programming: Are Cable
    Companies Excluding Competition?: Before the Senate Comm. on the
    Judiciary*, 109^th^ Cong. 4 (2006) (statement of Michael Salinger,
    Director, Bureau of Economics, FTC), available at:
    http://judiciary.senate.gov/testimony.cfm?id=2454&wit_id=5929).

[^232]: *See* AT&T Comments at 22-24; RCN Comments at 12; SureWest Reply
    Comments at 2; AT&T Reply Comments at 8-9.

[^233]: *See* AT&T Comments at 3, 22-23; USTelecom Comments at 6-7.

[^234]: *See* CA2C Comments at 5 (citing Letter from Daniel L. Brenner,
    Senior Vice President, Law & Regulatory Policy, National Cable &
    Telecommunications Association, MB Docket No. 92-264 (Mar. 16, 2007)
    at 4); Qwest Comments at 2-3; USTelecom Comments at 10-11.

[^235]: *See* AT&T Comments at 5; Verizon Comments at 12; RCN Reply
    Comments at 10.

[^236]: *See* AT&T Comments at 18-19.

[^237]: *See* AT&T Comments at 21 (citing *2002 Extension Order*, 17 FCC
    Rcd at 12144-45, ¶ 46).

[^238]: *See id*.

[^239]: *See* AT&T Comments at 4; BSPA Comments at 17; CA2C Comments at
    17; RCN Comments at 10-11; RICA Comments at 5; SureWest Comments at
    5-6; USTelecom Comments at 15-16; Verizon Comments at 12-14; CA2C
    Reply Comments at 7-8; EchoStar Reply Comments at 16-17; Qwest Reply
    Comments at 4; Verizon Reply Comments at 5-6.

[^240]: *See* CA2C Comments at 16; EchoStar Comments at 9; RCN Comments
    at 10; USTelecom Comments at 15.

[^241]: *See* AT&T Comments at 16 (citing *Adelphia Order*, 21 FCC Rcd
    at 8271, ¶ 149).

[^242]: *See* Comcast Reply Comments at 20.

[^243]: *See* AT&T Comments at 17; CA2C Comments at 16; USTelecom
    Comments at 15; Verizon Reply Comments at 5.

[^244]: *See* AT&T Comments at 17.

[^245]: *See* Cablevision Comments at 26 (citing *Adelphia Order*, 21
    FCC Rcd at 8271, ¶ 148).

[^246]: *See* RCN Comments at 10; *see also* CA2C Comments at 17.

[^247]: *See* *RCN Telecom Services of New York, Inc. v. Cablevision
    Systems Corporation et al.*, 14 FCC Rcd 17093 (CSB, 1999),
    *affirmed* *RCN Telecom Services of New York, Inc. v. Cablevision
    Systems Corporation et al.*, 16 FCC Rcd 12048 (2001).

[^248]: *See id*.

[^249]: *See* Verizon Comments at 13.

[^250]: *See* AT&T Comments at 18; USTelecom Comments at 15; Verizon
    Comments at 13.

[^251]: *See* Verizon Comments at 13-14; Verizon Reply Comments at 5.

[^252]: *See* Verizon Comments at 13.

[^253]: *See* Comcast Reply Comments at 29 n.90 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2626-42, Table C-2).

[^254]: *See* CA2C Comments at 16-17.

[^255]: AT&T Comments at 15; RCN Reply Comments at 7.

[^256]: *See* Comcast Reply Comments at 21; Letter from Sandy Wax,
    President, and Adrienne Byrd, Senior Director, Legal Affairs, PBS
    KIDS Sprout, to Ms. Marlene H. Dortch, FCC, MB Docket No. 07-29 (May
    3, 2007).

[^257]: *See* CA2C Reply Comments at 7.

[^258]: *See id*.

[^259]: *See id.* at 7-8.

[^260]: *See id*. at 8.

[^261]: *See* Qwest Reply Comments at 4; *see also* CA2C Reply Comments
    at 8.

[^262]: *See* Qwest Comments at 4.

[^263]: *See* NRTC Comments at 5.

[^264]: *See* AT&T Comments at 19.

[^265]: *See* *id*. at 19-20; AT&T Reply Comments at 4.

[^266]: *See* Comcast Reply Comments at 19.

[^267]: *See supra* note 100 (indicating that DBS operators have an
    approximate 30 percent share of the MVPD market).

[^268]: *See* *2006 Cable Price Report*, 21 FCC Rcd at 15087-88, ¶ 2.

[^269]: *See supra* note 96 (indicating that cable operators have an
    approximate 67 percent share of the MVPD market); *supra* note 100
    (indicating that DBS operators have an approximate 30 percent share
    of the MVPD market); USTelecom Comments at 10 (citing *12^th^ Annual
    Report*, 21 FCC Rcd at 2506-07, ¶ 8 (stating that, as of June 2005,
    only 2.9 percent of MVPD subscribers receive service from an
    alternative provider to cable or DBS)); *see also* CA2C Comments at
    5 ("Despite the growth of DBS, cable operators have still maintained
    their position in the market."); USTelecom Comments at 9 ("Now,
    nearly five years since the \[*2002 Extension Order*\], the MSOs'
    grip on the multichannel video market has remained firm . . . .").

[^270]: *See* *Local Franchising Report and Order*, 22 FCC Rcd at 5110,
    ¶ 19.

[^271]: *See id.* at 5111, ¶ 20*; MDU Access NPRM*, 22 FCC Rcd at 5938,
    ¶ 6.

[^272]: *See* *2002 Extension Order*, 17 FCC Rcd at 12143-45, ¶¶ 45-46.

[^273]: *See* *supra* ¶ 49 (discussing evidence of withholding of
    cable-affiliated programming from competitive MVPDs); *DIRECTV, Inc.
    v. Comcast Corporation*, 15 FCC Rcd 22802, 22807-08, ¶¶ 11-14 (2000)
    (resolving program access dispute), *aff'g*, *EchoStar
    Communications Corporation v. Comcast Corporation*, 14 FCC Rcd 2089
    (1999), *DIRECTV, Inc. v. Comcast Corporation*, 13 FCC Rcd 21822
    (1998), *aff'd sub nom. EchoStar Communications Corporation v. FCC*,
    292 F.3d 749 (D.C. Cir. 2002); *RCN Telecom Services of New York,
    Inc. v. Cablevision Systems Corporation et al.*, 14 FCC Rcd at
    17103-07, ¶¶ 20-27 (resolving program access dispute), *affirmed*
    *RCN Telecom Services of New York, Inc. v. Cablevision Systems
    Corporation et al.*, 16 FCC Rcd 12048 (2001); *see also* *EchoStar
    Comments* at 9 ("Indeed, cable conglomerates have already
    demonstrated their willingness to abuse exclusive programming rights
    to gain market share and harm consumers. The well-worn example of
    Comcast's conduct in Philadelphia with its SportsNet asset is again
    instructive.").

[^274]: While cable MSOs claim that competitive MVPDs were unable to
    demonstrate any harm to their ability to compete in one of these
    cases (Channel 4 San Diego) (*see* Cablevision Comments at 26
    (citing *Adelphia Order*, 21 FCC Rcd at 8271, ¶ 148)), this is
    irrelevant to the issue of whether cable-affiliated programmers have
    the *incentive* to engage in withholding of programming from
    competitive MVPDs. These examples demonstrate that, absent a
    prohibition, cable-affiliated programmers have an incentive to
    engage in withholding.

[^275]: *See supra* note 96 (indicating that cable operators have an
    approximate 67 percent share of the MVPD market).

[^276]: A DMA is a geographic market designation that defines each
    television market exclusive of others, based on measured viewing
    patterns. Each county in the United States is allocated to a market
    based on which home-market stations receive a preponderance of total
    viewing hours in the county. For purposes of this calculation, both
    over-the-air and cable television viewing are included*.* *See Time
    Warner Entertainment*, Memorandum Opinion and Order, DA 07-3400,
    2007 WL 2159623, ¶ 2 (MB, 2007).

[^277]: *See* *2002 Extension Order,* 17 FCC Rcd at 12132-33, ¶ 20
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1247, ¶ 5). Based on
    data from Nielsen Media Research, as of July 2007, the share of MVPD
    subscribers held by cable operators exceeds 78 percent in 36 out of
    210 DMAs and is between 75 and 78 percent in an additional 16 DMAs.
    *See* DMA Household Universe Estimates July 2007: Cable And/Or ADS
    (Alternate Delivery Systems),
    http://www.tvb.org/nav/build_frameset.asp (follow "Research Central"
    hyperlink; then follow "Market Track" hyperlink; then follow "Cable
    and ADS Penetration by DMA" hyperlink) (last visited Aug. 2, 2007).
    These include sixteen of the Top 50 most-populated DMAs: New York
    (No.1; 83.7 percent cable market share); Philadelphia (No. 4; 81.1
    percent cable market share); Boston (No. 7; 87.1 percent cable
    market share); Tampa-St. Pete (No. 12; 81.1 percent cable market
    share); Seattle (No. 14; 79.3 percent cable market share);
    Cleveland-Akron (No. 17; 78.6 percent cable market share); Orlando
    (No. 19; 75.7 percent cable market share); Pittsburgh (No. 22; 79.6
    percent cable market share); Baltimore (No. 24; 80.3 percent cable
    market share); San Diego (No. 27; 87.1 percent cable market share);
    Hartford-New Haven, CT (No. 28; 86.4 percent cable market share);
    Columbus (No. 32; 78 percent cable market share); Milwaukee (No. 34;
    79.1 percent cable market share); Harrisburg-Lancaster, PA (No. 41;
    79.5 percent cable market share); Norfolk-Portsmouth-Newport News,
    VA (No. 42; 77.6 percent cable market share); Las Vegas (No. 43;
    75.9 percent cable market share). *See id*.

[^278]: *See 2002 Extension Order*, 17 FCC Rcd at 12147-48, ¶ 53.

[^279]: *See id*.

[^280]: We also noted in the *2002 Extension Order* that if vertically
    integrated programmers entered into exclusive arrangements with only
    the top ten MVPDs (excluding DBS providers), those programmers would
    still retain access to over 66 percent of all MVPD subscribers,
    which reflected a three percent increase from 1994. *See 2002
    Extension Order*, 17 FCC Rcd at 12148, ¶ 53 n.172. These figures are
    similar in the current video distribution market. Today, if
    vertically integrated programmers entered into exclusive
    arrangements with only the top ten MVPDs (excluding DBS providers),
    those programmers would still retain access to over 60 percent of
    all MVPD subscribers. *See* *12^th^ Annual Report*, 21 FCC Rcd at
    2620, Table B-3.

[^281]: *See 2002 Extension Order*, 17 FCC Rcd at 12147-48, ¶ 53.

[^282]: *See id.*

[^283]: *See id.*

[^284]: *See id.*

[^285]: *See* Appendix C, ¶ 21.

[^286]: *See 2002 Extension Order,* 17 FCC Rcd at 12133, ¶ 20 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1341, Table C-3).

[^287]: *See* *supra* note 131 (discussing percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest vertically integrated cable MSOs).

[^288]: *See 2002 Extension Order,* 17 FCC Rcd at 12133, ¶ 21.

[^289]: *See* *supra* note 129 (discussing percentage of MVPD
    subscribers receiving their video programming from one of the four
    largest cable operators).

[^290]: *See 2002 Extension Order,* 17 FCC Rcd at 12147-48, ¶ 53.

[^291]: *See* EchoStar Comments at 2-6; USTelecom Comments at 9-10; *see
    also supra* note 131 (discussing percentage of MVPD subscribers
    receiving their video programming from one of the four largest
    vertically integrated cable MSOs).

[^292]: *See 2002 Extension Order,* 17 FCC Rcd at 12133-34, ¶ 22 (citing
    *8^th^ Annual Report*, 17 FCC Rcd at 1252, ¶ 14).

[^293]: *See* *Consumer Groups Reply* at 4-5.

[^294]: *See 2002 Extension Order,* 17 FCC Rcd at 12125, ¶ 4.

[^295]: *See id*. at 12148-49, ¶ 54.

[^296]: *See* *id*. For example, according to data from Nielsen Media
    Research, the collective market penetration of competitive MVPDs in
    many DMAs where cable MSOs have clusters is far less than their
    collective nationwide market penetration rate (approximately 33
    percent): San Diego (13.7 percent), New York (18.2 percent),
    Philadelphia (19.8 percent), and San Francisco (26.9 percent). *See*
    DMA Household Universe Estimates July 2007: Cable And/Or ADS
    (Alternate Delivery Systems),
    http://www.tvb.org/nav/build_frameset.asp (follow "Research Central"
    hyperlink; then follow "Market Track" hyperlink; then follow "Cable
    and ADS Penetration by DMA" hyperlink) (last visited Aug. 2, 2007).
    As the Commission acknowledged in the *2002 Extension Order*, this
    market penetration data may not correspond exactly to cable MSO
    cluster boundaries, and there are likely other factors, such as
    line-of-sight, in addition to cable competition that affect city
    market penetration. *See 2002 Extension Order*, 17 FCC Rcd at
    12148-49, ¶ 54 n.177. Nevertheless, we believe that this market
    penetration data provide support for the position that market
    penetration of competitive MVPDs is lower in certain cable cluster
    areas than nationwide. *See id.*

[^297]: *See 2002 Extension Order,* 17 FCC Rcd at 12151, ¶ 59.

[^298]: *See id*.

[^299]: *See* Comcast Reply Comments at 13-14.

[^300]: Nielsen Media Research data for May 2007 indicate that there are
    40 DMAs with a wired cable percentage of total subscription
    television households greater than 78 percent. The 40 comprise: 13
    in the top 50 markets, another 8 in the top 100 markets, and 19 in
    markets above 100. Of the 14 markets with shares between 75 and 78
    percent, there are 4 in the top 50, another 5 in the top 100, and 5
    above 100. *See* DMA Household Universe Estimates May 2007: Cable
    And/Or ADS (Alternate Delivery Systems),
    http://www.tvb.org/nav/build_frameset.asp (follow "Research Central"
    hyperlink; then follow "Market Track" hyperlink; then follow "Cable
    and ADS Penetration by DMA" hyperlink; then follow "ADS Archives"
    hyperlink) (last visited Aug. 2, 2007).

[^301]: There is no gain in affiliation fee, since the VISCP is paying
    that to its affiliate for its own subscribers.

[^302]: *Hughes Order,* 19 FCC Rcd at 633-48, Appendix D (explaining
    methodology).

[^303]: Factors considered include: the share of television households
    in the market passed by a VISCP's cable affiliate; the share of
    television households in the market passed by other cable operators;
    and the share of television households in the market that subscribe
    to a non-cable MVPD.

[^304]: Factors considered include: per subscriber profits (net of
    amortized subscriber acquisition cost) earned per month by the
    VISCP's cable affiliate on a new cable subscriber; affiliate fee
    revenue per subscriber earned by the VISCP from its regional
    network; and network advertising revenue per subscriber earned by
    the VISCP from its regional network.

[^305]: The data indicates that Comcast provides service to at least
    part of 97 DMAs.

[^306]: The data indicates that Time Warner provides service to at least
    part of 89 DMAs.

[^307]: At the time of the *2002 Extension Order*, competition in the
    video marketplace from telephone companies had not yet emerged.
    Indeed, we stated at the time that "the strong overbuild competition
    from local exchange carriers and others that Congress anticipated as
    a result of the 1996 amendments to the Communications Act has, as
    yet, failed to develop." *See 2002 Extension Order,* 17 FCC Rcd at
    12144-45, ¶ 46.

[^308]: *See* AT&T Comments at 5; Verizon Comments at 12; AT&T Reply
    Comments at 8-9; RCN Reply Comments at 10.

[^309]: We note that, if the exclusive contract prohibition in Section
    628(c)(2)(D) were to sunset, other program access provisions in
    Section 628 would remain, including the prohibition on
    discrimination. *See* 47 U.S.C. § 628(c)(2)(B); 47 C.F.R. §
    76.1002(b). Thus, a vertically integrated programmer that withholds
    programming from a recent entrant with a minimal subscriber base but
    chooses to offer the programming to all other competitive MVPDs in
    the market could be found in violation of the program access rules
    based on an unreasonable refusal to sell. *See First Report and
    Order*, 8 FCC Rcd at 3412-13, ¶ 116 (stating that non-price
    discrimination could include a vendor's refusing to initiate
    discussions with a particular distributor when the vendor has sold
    its programming to that distributor's competitor). As discussed
    below, while other program access provisions in Section 628 would
    remain if Section 628(c)(2)(D) were to sunset, we find that these
    other provisions are insufficient to preserve and protect
    competition at this time. *See infra* n. 320.

[^310]: *See* NCTA Reply Comments 2, 4; *see also* Comcast Comments at 5
    n.5.

[^311]: *See* Cablevision Comments at 15-16; Cablevision Reply Comments
    at 11; Time Warner Reply Comments at 21.

[^312]: 47 U.S.C. § 548(c)(2)(D); *see* *2002 Extension Order,* 17 FCC
    Rcd at 12150, ¶ 58 and 12152, ¶ 62; *see infra* Section III.A.3.c.

[^313]: *See* *2002 Extension Order,* 17 FCC Rcd at 12152-53, ¶ 63.

[^314]: *See* Cablevision Comments at 8, 17; Cablevision Reply Comments
    at 11-12.

[^315]: *See supra* ¶ 39 (discussing impact on competitive MVPD
    subscribership from withholding of cable-affiliated programming) and
    ¶ 49 (discussing evidence of withholding of cable-affiliated
    programming from competitive MVPDs).

[^316]: *See* Comcast Comments at 23-24; Comcast Reply Comments at 22.

[^317]: *See* CA2C Reply Comments at 3; EchoStar Reply Comments at
    15-16; Qwest Reply Comments at 7 n.22; Verizon Reply Comments at 6.
    EchoStar notes that antitrust enforcement is slow, time-consuming,
    and provides no means to check anticompetitive behavior
    prospectively, other than through a stay. EchoStar Reply Comments at
    15.

[^318]: S. Rep. No. 102-92, at 29 (1991), *reprinted in* 1992
    U.S.C.C.A.N. 1133, 1162.

[^319]: *See 2002 Extension Order,* 17 FCC Rcd at 12143, ¶ 45 n.138.

[^320]: As we concluded in the *2002 Extension Order*, Sections 628(b),
    628(c)(2)(A), and 628(c)(2)(B) of the Communications Act are not
    adequate substitutes for the particularized protection afforded
    under Section 628(c)(2)(D). *See* *2002 Extension Order,* 17 FCC Rcd
    at 12153-54, ¶ 65 n. 206. We stated that (i) Section 628(c)(2)(D)
    places the burden on the party seeking exclusivity to show that an
    exclusive contract meets the statutory public interest standard and
    that no other program access provision provides this protection;
    (ii) these other provisions were all enacted as part of the 1992
    Cable Act, indicating that, despite the existence of these other
    program access provisions, Congress found the exclusive contract
    prohibition to be necessary to preserve and protect competition and
    diversity; (iii) as compared to Section 628(c)(2)(D), Section 628(b)
    carries with it an added burden "to demonstrate that the purpose or
    effect of the conduct complained of was to 'hinder significantly or
    to prevent' an MVPD from providing programming to subscribers or
    customers"; (iv) conduct of undue influence necessary to establish a
    violation of Section 628(c)(2)(A) "may be difficult for the
    Commission or complainants to establish"; and (v) the prohibition of
    "non-price discrimination" in Section 628(c)(2)(B) requires the
    complainant to demonstrate the conduct was "unreasonable" which may
    be difficult to establish. *See id*. (citing *First Report and
    Order*, 8 FCC Rcd at 3424, ¶ 145). No commenter provides any basis
    for us to revisit these conclusions. Moreover, we note that some
    competitive MVPDs argue that allowing the exclusive contract
    prohibition to sunset would provide cable-affiliated programmers
    with an incentive to enter into exclusive contracts with their
    affiliated cable operators to avoid allegations of unfair acts or
    practices or discrimination with respect to their dealings with
    unaffiliated distributors. *See* EchoStar Comments at 11 n.22;
    USTelecom Comments at 13.

[^321]: *See* Cablevision Comments at 29 and Appendix B at 2 (arguing
    that exclusivity leads to beneficial "product differentiation,"
    whereby creators and distributors respond to exclusivity strategies
    of their rivals by producing and distributing distinct content
    offerings that enable them to maintain a unique presence in the
    marketplace); Comcast Comments at 13-18. Comcast notes that its
    competitor, DIRECTV, has used exclusive arrangements with various
    sports leagues as a competitive tool to attract customers away from
    cable operators. *See* Comcast Comments at 18.

[^322]: 47 U.S.C. § 548(c)(4); *see also* 47 C.F.R. § 76.1002(c)(4).

[^323]: *See* *New England Cable News Channel, Memorandum Opinion and
    Order*, 9 FCC Rcd 3231 (1994); *NewsChannel, Memorandum Opinion and
    Order*, 10 FCC Rcd 691 (CSB, 1994).

[^324]: *See* *Time Warner Cable*, Memorandum Opinion and Order, 9 FCC
    Rcd 3221, 3230, ¶ 55 (1994) (denying exclusivity petition for
    Courtroom Television ("Court TV")); *Outdoor Life Network and
    Speedvision Network*, Memorandum Opinion and Order, 13 FCC Rcd
    12226, 12242, ¶ 28 (CSB, 1998) (denying exclusivity petition for the
    Outdoor Life Network ("OLN") and Speedvision Network
    ("Speedvision")); *Cablevision Industries Corp. and Sci-Fi Channel*,
    Memorandum Opinion and Order, 10 FCC Rcd 9786, 9791, ¶ 32 (CSB,
    1995) (denying exclusivity petition for the Sci-Fi Channel).

[^325]: The following data demonstrates that the three programming
    networks for which exclusivity was denied (Court TV, Speed, and
    Sci-Fi Channel) have prospered despite the lack of exclusivity.
    Court TV's subscribership increased from 16.1 million in 1994 to
    87.9 million in 2006, and its prime-time ratings increased from 0.15
    in 1994 to 0.81 in 2005. *See* Kagan Research, LLC, *Economics of
    Basic Cable Networks -- 13^th^ Annual Edition* at 37-38, 50-52
    (2007) ("*Kagan Report 13^th^ Edition*"); Kagan Research, LLC,
    *Economics of Basic Cable Networks -- 9^th^ Annual Edition* at 42,
    44 (2003) ("*Kagan Report 9^th^ Edition*"). OLN's (now known as
    Versus) subscribership increased from 18 million in 1998 to 67.8
    million in 2006. *See Kagan Report 13^th^ Edition* at 37-38, 50-52.
    Speedvision's (now known as Speed) subscribership increased from 20
    million in 1998 to 65.9 million in 2006. *See id*. The Sci-Fi
    Channel's subscribership increased from 27.4 million in 1995 to 88.1
    million in 2006, and its prime-time ratings increased from 0.65 in
    1995 to 1.04 in 2005, making it the fifteenth-ranked programming
    network by prime-time ratings. *See Kagan Report 13^th^ Edition* at
    37-38, 50-52*; Kagan Report 9^th^ Edition* at 42, 44; *see also*
    *12^th^ Annual Report*, 12 FCC Rcd at 2655, Table C-6; Qwest Reply
    Comments at 6-7 ("\[N\]otwithstanding the Commission's refusal to
    give them an exemption from Section 628(c)(2)(D)'s prohibition on
    exclusivity, \[Speed and Versus\] have grown to become two of the
    more popular 'niche-oriented' cable channels in circulation.").

[^326]: As we stated in the *2002 Extension Order*, while we recognize
    that the exclusive contract prohibition's impact on programming
    diversity is one component of our analysis, Congress directed that
    "our primary focus should be on preserving and protecting diversity
    in the *distribution* of video programming \-- *i.e.*, ensuring that
    as many MVPDs as possible remain viable distributors of video
    programming." *See* *2002 Extension Order,* 17 FCC Rcd at 12152, ¶
    62 (emphasis in original).

[^327]: Cablevision argues that the exclusive contract prohibition (i)
    deprives cable operators of the incentive to invest in new
    programming because the prohibition requires them to share the
    programming with their competitors; and (ii) deprives competitive
    MVPDs of the incentive to invest in programming because the
    prohibition provides them with access to programming developed by
    their competitors. *See* Cablevision Comments at 10, 27-29 and
    Appendix B at 26-27. Cablevision and Comcast also argue that some
    new MVPDs, such as AT&T and Verizon, have sufficient resources to
    invest their own programming. *See* Cablevision Comments at 5, 10,
    29; Comcast Reply Comments at 6.

[^328]: *Compare* *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming,* First Report and
    Order*,* 9 FCC Rcd 7442, 7589-92 (1994) ("*1^st^ Annual Report*")
    (56 vertically integrated national programming networks) *with*
    *12^th^ Annual Report*, 21 FCC Rcd at 2575, ¶ 157 (116 vertically
    integrated national programming networks).

[^329]: *Compare* *2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1309-10, ¶ 157 (104
    vertically integrated national programming networks)) *with* *12^th^
    Annual Report*, 21 FCC Rcd at 2575, ¶ 157 (116 vertically integrated
    national programming networks); *see* EchoStar Comments at 4 ("The
    number of new vertically integrated programming networks since 2002
    described herein undercuts any suggestion that this prohibition
    prevents or limits the ability or desire of cable conglomerates to
    create new programming assets."); USTelecom Comments at 19; Verizon
    Reply Comments at 4 ("\[N\]o reasonable basis exists for the
    Commission to conclude that the exclusive contract prohibition has
    had or will have any adverse impact on the development of
    programming, particularly when experience proves otherwise."); *see
    also* Letter from Stephanie L. Podey, Counsel for Comcast
    Corporation, to Ms. Marlene H. Dortch, FCC, MB Docket Nos. 07-29,
    06-189 (June 13, 2007), Attachment at 3 (stating that "Comcast
    continues to invest in new programming networks" and noting
    Comcast's partnering in 2006 with CSTV to launch The mtn., a
    national network dedicated to sports programming, as well as
    Comcast's investment in additional regional sports networks);
    EchoStar Comments at 7-8 (noting new vertically integrated cable
    networks launched since 2002).

[^330]: *Compare* *1^st^ Annual Report,* 9 FCC Rcd at 7589-92 (107
    satellite-delivered national programming networks) *with* *12^th^
    Annual Report*, 21 FCC Rcd at 2575, ¶ 157 (531 satellite-delivered
    national programming networks).

[^331]: *Compare 2002 Extension Order,* 17 FCC Rcd at 12131-32, ¶ 18
    (citing *8^th^ Annual Report*, 17 FCC Rcd at 1309-10, ¶ 157 (237
    satellite-delivered national programming networks)) with *12^th^
    Annual Report*, 21 FCC Rcd at 2575, ¶ 157 (531 satellite-delivered
    national programming networks).

[^332]: For example, Verizon has invested in new programming for its
    FiOS TV service. In March 2007, Verizon announced that it was
    launching FiOS1, a local television channel for FiOS TV subscribers
    in the Washington, DC metropolitan area that offers local weather,
    traffic, news, sports, and community features.  *See* FiOS1,
    Verizon's First Local TV Channel, Debuts in Washington, D.C., Metro
    Area, FiOS TV Subscribers to Get Local Information, Sports and
    Features All Day on FiOS1,
    http://newscenter.verizon.com/press-releases/verizon/2007/fios1-verizons-first-local.html
    (last visited July 27, 2007). Verizon also announced that it expects
    to launch similar channels in other markets this year. *See id*.

[^333]: *See* *2002 Extension Order,* 17 FCC Rcd at 12153, ¶ 64.

[^334]: *See* Cablevision Comments at 10; Comcast Reply Comments at 3;
    NCTA Reply Comments at 8-10; Time Warner Reply Comments at 20-21.

[^335]: *Time Warner Entertainment Co. L.P. v. FCC*, 93 F.3d 957, 978
    (D.C. Cir. 1996) (quoting *Turner Broadcasting System, Inc. v. FCC,*
    512 U.S. 622, 662 (1994) (quoting *United States v.* *O\'Brien,* 391
    U.S. 367, 377 (1968)).

[^336]: *Id*. Moreover, one of Congress' express findings in enacting
    the 1992 Cable Act was that "\[t\]here is a substantial governmental
    and First Amendment interest in promoting a diversity of views
    provided through multiple technology media." Cable Television
    Consumer Protection and Competition Act of 1992, Pub. L. No.
    102-385, 106 Stat. 1460 (1992), § 2(a)(6).

[^337]: *Time Warner Entertainment Co. L.P.,* 93 F.3d at 979 (citing S.
    Rep. No. 92, 102d Cong., 2d Sess. 4 (1991), at 26-28, *reprinted in*
    1992 U.S.C.C.A.N. 1133, 1159-61).

[^338]: *See* NCTA Reply Comments at 9-10.

[^339]: *See 2006 Cable Price Report*, 21 FCC Rcd at 15087-88, ¶ 2
    ("Overall, cable prices increased more than 5 percent last year and
    by 93 percent since the period immediately prior to Congress's
    enactment of the Telecommunications Act of 1996. Expanded basic
    prices rose more than 6 percent or twice the rate of inflation last
    year.").

[^340]: *See supra* Section III.A.2.

[^341]: *See* AT&T Reply Comments at 13 n.48 (stating that the exclusive
    contract prohibition continues to materially advance an important or
    substantial government interest).

[^342]: *See Time Warner Entertainment Co. L.P.,* 93 F.3d at 978
    ("\[T\]he vertically integrated programming provisions apply to only
    a limited number of companies for a perfectly legitimate reason: the
    antitrust concerns underlying the statute arise precisely because
    the number of vertically integrated companies is small. The
    vertically integrated programmer provisions are thus not 'structured
    in a manner that raise\[s\] suspicions that their objective was, in
    fact, the suppression of certain ideas.'" (*quoting Turner*, 512
    U.S. at 660, 114 S.Ct. at 2468)).

[^343]: *See id*. at 978.

[^344]: *See id*. at 978-79.

[^345]: *See id*.

[^346]: *See* Comcast Reply Comments at 3; NCTA Reply Comments at 9.

[^347]: 47 U.S.C. § 548(c)(2) and (4).

[^348]: As noted above, only ten exclusivity petitions have been filed
    to date. *See supra* ¶ 63. Of these petitions, two were granted,
    three were denied, and five were dismissed at the request of the
    parties.

[^349]: *See supra* ¶ 63.

[^350]: *See id.*

[^351]: *See, e.g*., Cablevision Comments at 30-32; Comcast Comments at
    24-26; Comcast Reply Comments at 25-28. These cable MSOs also raise
    First Amendment concerns, which we address above in Section
    III.A.3.c.

[^352]: *See* Cablevision Comments at 31 (arguing that the following
    types of programming cannot be considered necessary to protect
    competition: (i) national networks with low average prime-time
    ratings; (ii) new programming services since they cannot be
    considered essential to the "continued" viability of competing
    MVPDs; and (iii) cable networks that are not deemed important by
    market participants to warrant carriage to a significant number of
    households).

[^353]: *See id*. (stating that the Commission concluded in the
    *Adelphia* proceeding that access to regional non-sports programming
    is not essential to competition, citing *Adelphia Order* (21 FCC Rcd
    at 8279, ¶ 169)).

[^354]: *See id*. (arguing that where RSNs are competing for sporting
    events, there is little risk that an exclusive arrangement for one
    network will foreclose competition).

[^355]: *See* 47 U.S.C. § 548(c)(4); 47 C.F.R. § 76.1002(c)(4).

[^356]: We remind those cable MSOs urging exemption of certain types of
    programming from the exclusive contract prohibition that the
    Commission will entertain individual exclusivity petitions as
    Congress mandated. *See* 47 U.S.C. § 548(c)(4); 47 C.F.R. §
    76.1002(c)(4). In the *2002 Extension Order*, we provided an example
    of one type of vertically integrated programming that may qualify
    for exclusivity. *See* *2002 Extension Order,* 17 FCC Rcd at
    12135-36, ¶ 25 ("if a vertically integrated programmer contemplates
    the introduction of innovative services with limited or niche
    audiences and believes that these services will not be economically
    viable without a period during which they are offered on an
    exclusive basis, we encourage such programmer to petition the
    Commission to approve a period of exclusivity").

[^357]: *See* *2002 Extension Order,* 17 FCC Rcd at 12156, ¶ 69.

[^358]: *Id*.

[^359]: *See* Cablevision Comments at 30-31.

[^360]: *See* Cablevision Comments at 30-31; Time Warner Reply Comments
    at 20.

[^361]: *See* Cablevision Comments at 31-32.

[^362]: 47 U.S.C. § 548(c)(2)(D); *see also* *2002 Extension Order,* 17
    FCC Rcd at 12156-57, ¶ 70.

[^363]: We again note that through individual exclusivity petitions, the
    Commission may determine (in accordance with statutory criteria)
    whether a particular exclusive contract, otherwise prohibited under
    Section 628(c)(2)(D), is in the public interest. *See* 47 U.S.C. §
    548(c)(4); 47 C.F.R. § 76.1002(c)(4).

[^364]: *See* *2002 Extension Order*, 17 FCC Rcd at 12140-41, ¶¶ 36-39;
    *see also* DIRECTV Comments at 8-9; CA2C Reply Comments at 7.

[^365]: *See supra* ¶ 60 (discussing incentives of vertically integrated
    cable programmers to withhold programming from recent entrants in
    the video marketplace).

[^366]: *See* Comcast Comments at 26 (stating that, after five years in
    the video distribution business, "a competitor should be able to
    sink or swim on its own"); *see also* Cablevision Comments at 5
    ("Cablevision faces competition from two DBS providers, each of
    which has a subscriber base at least four times larger than its own
    . . . . Each of those entities has the ability to invest in its own
    programming, just as Cablevision did.").

[^367]: *See* Comcast Comments at 26 (arguing that the benefits of the
    exclusive contract prohibition should not be available to a company
    with over 10 million customers or to a company that is part of an
    enterprise with a market capitalization of over \$100 billion); *see
    also* Cablevision Comments at 5 ("Cablevision faces competition from
    . . . Verizon and AT&T, whose market capitalizations are 10 and 25
    times larger, respectively, than Cablevision's. Each of those
    entities has the ability to invest in its own programming, just as
    Cablevision did.").

[^368]: *See* Comcast Comments at 26.

[^369]: *See* AT&T Reply Comments at 12-13 (stating that proposals by
    Cablevision and Comcast to narrow the exclusive contract prohibition
    "would gut the rule precisely where it might be of use to
    competitors with a viable opportunity to offer consumers a real
    alternative to cable: those with experience, those with capital, and
    those with a foothold in the market"); CA2C Reply Comments at 9
    (stating that these proposals would "ensure that the rules have no
    application to any significant competitor" that Cablevision and
    Comcast face, thereby "making sure the rules are meaningless");
    Verizon Reply Comments at 12-13.

[^370]: *See supra* Section III.A.3.c (concluding that there is no
    evidence that the exclusive contract prohibition has had an adverse
    impact on the incentives for creation of new programming).

[^371]: *See* Verizon Reply Comments at 11-12 ("That a new video entrant
    may have a large market capitalization or a sizeable number of
    telephone customers does not ensure competitive success in the video
    market when the entrant cannot offer the programming subscribers
    want to see.").

[^372]: *See* Comcast Comments at 26.

[^373]: *See* 47 U.S.C. § 522(5) (defining a "cable operator"); *id*. §
    522(7) (defining a "cable system"); *Definition of a Cable System*,
    5 FCC Rcd 7638, 7638-39, ¶¶ 6-11 (1990).

[^374]: *See, e.g*., Comcast Comments at 24 ("\[T\]o the extent that
    MVPDs cannot survive without access to certain programming, it is
    irrelevant whether that programming is 'affiliated;' what matters is
    whether that programming is 'must have' in order to compete."); *see
    also* Cablevision Comments at 27.

[^375]: *See* NCTA Comments at 4-5; RCN Comments at 12-18; SureWest
    Comments at 9; ACA Reply Comments at 7-8; RCN Reply Comments at
    12-13; SureWest Reply Comments at 8-9.

[^376]: *See* ACA Comments at 2, 8-9, 11-13; ACA Reply Comments at 6-7;
    SureWest Reply Comments at 8.

[^377]: Moreover, as AT&T notes, Section 628(j) of the Communications
    Act provides that any provision of Section 628 that applies to a
    cable operator also applies to any common carrier or its affiliate
    that provides video programming. *See* 47 U.S.C. § 548(j); *see
    also* AT&T Reply Comments at 6 n.19.

[^378]: *See* *2002 Extension Order,* 17 FCC Rcd at 12158, ¶ 74 ("The
    program access rules, including the exclusivity prohibition, apply
    only to satellite-delivered program services in which a cable
    operator has an attributable interest.").

[^379]: *See* DIRECTV Reply Comments at 3 ("Section 628's prohibition on
    exclusivity is specific for a reason. . . . Congress never
    considered exclusivity *per se* to be anticompetitive. Congress
    found, however, that, because cable operators possess market power,
    programmers affiliated with those cable operators could harm
    emerging competition by withholding affiliated programming from
    cable's rivals.") (footnotes omitted); *see also* Broadcast Networks
    Reply Comments at 3-4 ("\[T\]he program access rules are based on
    the narrow antitrust concern that a vertically-integrated programmer
    might withhold programming in order to prevent or hinder competition
    to that programmer's MVPD operations. It is axiomatic that this
    concern has always been and remains entirely non-existent for
    non-vertically integrated programming.") (footnotes omitted).

[^380]: The one example of an exclusive programming arrangement entered
    into by a competitive MVPD is DIRECTV's exclusive deals for certain
    national sports programming with the National Football League,
    college basketball, Major League Baseball, and NASCAR. *See* ACA
    Comments at 9 n.17; RCN Comments at 17-18. Unlike in the case of
    cable operators (*see supra* ¶ 52), there is no evidence in the
    record to conclude that a competitive MVPD can make exclusivity a
    profitable strategy over the long term. Moreover, commenters have
    not provided any evidence of competitive harm resulting from their
    inability to offer this programming. Unlike in the case of
    cable-affiliated regional sports programming, we have no evidence
    that the inability to access this sports programming has impacted
    MVPD subscribership. *See* *supra* ¶ 39 (discussing impact on MVPD
    subscribership of inability to access cable-affiliated RSNs).

[^381]: Commenters cite provisions of the Communications Act other than
    Section 628(c)(2)(D) as providing the Commission with statutory
    support to apply an exclusive contract prohibition to
    non-cable-affiliated programming. *See* RCN Comments at 16-17
    (citing Sections 4(i) and 628(b) of the Communications Act);
    SureWest Comments at 9 n.17 (referring to unspecified provisions of
    the Communications Act). We found no basis to consider DBS operators
    as "cable operators" as defined in Section 602 for purposes of the
    exclusive contract prohibition in Section 628(c)(2)(D), as requested
    by RCN. *See* RCN Comments at 17 n.48. As we have concluded
    previously, the definition of a "cable system" and a "cable
    operator" in the Communications Act does not include DBS. *See* 47
    U.S.C. § 522(5) (defining a "cable operator"); *id*. § 522(7)
    (defining a "cable system"); *Definition of a Cable System*, 5 FCC
    Rcd at 7638-39, ¶¶ 6-11; *see also* DIRECTV Reply Comments at 5-6.

[^382]: *See* SureWest Comments at 7-8 (citing Section 4(i) of the
    Communications Act); Verizon Comments at 14 (same); *id*. at 14
    (citing Section 303(r) of the Communications Act); SureWest Comments
    at 8 (citing Section 601(6) of the Communications Act); RICA
    Comments at 5 (citing Section 612(g) of the Communications Act);
    *id*. at 5 (citing Section 616(a) of the Communications Act);
    SureWest Comments at 7 (citing Section 628(b) of the Communications
    Act); *see also* AT&T Comments at 9 n.24; BSPA Comments at 16-18;
    EchoStar Comments at 4. The Commission previously declined to
    address arguments regarding the Commission's statutory authority to
    address terrestrially delivered programming under Sections 4(i) and
    303(r) of the Communications Act. *See 1998 Program Access Order*,
    13 FCC Rcd at 15856, ¶ 71 n.222. The Commission has also stated that
    "given that 628 does not by its terms apply to
    terrestrially-delivered programming, it is not appropriate for the
    Commission to exercise ancillary jurisdiction to extend, in the
    context of a complaint proceeding, program access regulation to
    terrestrially-delivered programming." *RCN Telecom Services v.
    Cablevision Systems Corp.*, 16 FCC Rcd 12048, 12055, ¶ 18 (2001).
    The Commission has stated "there may be circumstances where moving
    programming from satellite to terrestrial delivery could be
    cognizable under Section 628(b) as an unfair method of competition
    or deceptive practice if it precluded competitive MVPDs from
    providing satellite cable programming." *Id*. at 12053, ¶ 15;
    *DIRECTV*, 15 FCC Rcd at 22807; *Implementation of Section 302 of
    the Telecommunications Act of 1996, Open Video Systems,* 11 FCC Rcd
    18223, 18325, ¶ 197 n.451 (1996) ("we do not foreclose a challenge
    under Section 628(b) to conduct that involves moving satellite
    delivered programming to terrestrial distribution in order to evade
    application of the program access rules and having to deal with
    competing MVPDs").

[^383]: 47 U.S.C. § 548(c)(2)(D).

[^384]: The term "satellite cable programming" means "video programming
    which is transmitted via satellite and which is primarily intended
    for direct receipt by cable operators for their retransmission to
    cable subscribers," except that such term does not include satellite
    broadcast programming. 47 U.S.C. § 548(i)(1); 47 U.S.C. § 605(d)(1);
    *see also* 47 C.F.R. § 76.1000(h). The term "satellite broadcast
    programming" means "broadcast video 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); *see also*
    C.F.R. § 76.1000(f).

[^385]: *See DIRECTV, Inc. v. Comcast Corp. et al.,*15 FCC Rcd 22802,
    22807, ¶ 12 (2000); *see also* *2002 Extension Order,* 17 FCC Rcd at
    12158, ¶ 73.

[^386]: *See* 2*002 Extension Order*, 17 FCC Rcd at 12158, ¶ 73;
    *DIRECTV, Inc.*, 15 FCC Rcd at 22807, ¶ 12; *1998 Program Access*
    *Order*, 13 FCC Rcd at 15856, ¶ 71; *see also* AT&T Comments at 9
    n.24; SureWest Comments at 7-8; SureWest Reply Comments at 6-8.

[^387]: *DIRECTV, Inc.*, 15 FCC Rcd at 22807, ¶ 12; *see* Comcast Reply
    Comments at 29-30.

[^388]: *See* 2*002 Extension Order*, 17 FCC Rcd at 12158, ¶ 73.

[^389]: *See infra* Section IV.B.

[^390]: *See* *2002 Extension Order,* 17 FCC Rcd at 12159-60, ¶ 77.

[^391]: *See id.* at 12160, ¶ 78; *see also* AT&T Reply Comments at 13
    n.50; EchoStar Reply Comments at 13 n.22.

[^392]: *See Notice*, 22 FCC Rcd at 4258, ¶ 11.

[^393]: *See* EATEL Video Comments at 5; OPASTCO/ITTA Comments at 3-5;
    SureWest Comments at 2-4.

[^394]: *See* OPASTCO/ITTA Comments at 5.

[^395]: A five-year extension was supported by a wide-range of
    competitive MVPDs and consumer groups*. See* AT&T Comments at 5;
    BSPA Comments at 4; CA2C Comments at ii-iii, 2; DIRECTV Comments at
    12; EATEL Video Comments at 5; EchoStar Comments at 10; NTCA
    Comments at 3; OPASTCO/ITTA Comments at 3-5; RICA Comments at 3;
    SureWest Comments at 2-4; Consumer Groups Reply Comments at 7.

[^396]: *See* *2002 Extension Order,* 17 FCC Rcd at 12126, ¶ 5.

[^397]: *See* 47 U.S.C. § 548(c)(4); 47 C.F.R. § 76.1002(c)(4).

[^398]: *See* NTCA Comments at 6-8; OPASTCO/ITTA Comments at 5-8.

[^399]: *See Notice*, 22 FCC Rcd at 4258, ¶ 12 ("we seek comment on any
    other issues appropriate to our inquiry in accordance with Section
    628(c)(5)").

[^400]: *See* *Notice*, 22 FCC Rcd at 4259-4260, ¶¶ 13-16.

[^401]: *See* Comcast Comments at 26-28; Broadcast Networks Reply
    Comments at 3; NCTA Reply Comments at 10; Time Warner Reply Comments
    at 5.

[^402]: *See* Comcast Comments at 26-28*.*

[^403]: *See* NCTA Comments at 9.

[^404]: *See* Time Warner Reply Comments at 2.

[^405]: *See id*. at 5.

[^406]: *Id*.

[^407]: *See* Broadcast Networks Reply Comments at 3.

[^408]: *See* EchoStar Comments at 30.

[^409]: *See* OPASTCO/ITAA Comments at 8.

[^410]: *See* NTCA Comments at 6.

[^411]: *See* EchoStar Comments at 13.

[^412]: *See id*. at 14.

[^413]: *See* AT&T Reply Comments at 2.

[^414]: *See* 47 C.F.R. §§ 76.7 and 76.1003.

[^415]: 47 C.F.R. § 76.1003(b).

[^416]: 47 C.F.R. § 76.7(b)(2)(ii); 47 C.F.R. § 76.1003(a).

[^417]: 47 C.F.R. § 76.7(c)(3); 47 C.F.R. § 76.1003(a).

[^418]: *See* EchoStar Comments at 25.

[^419]: *See id*.

[^420]: *See id*.

[^421]: *See* AT&T Comments at 30. As part of the 1996 Act, Congress
    enacted deadlines for the Commission's resolution of complaints
    alleging unreasonably discriminatory or otherwise unlawful conduct
    filed against telecommunications carriers subject to the
    requirements of the Communications Act. *See* 47 U.S.C. §§
    208(b)(1), 260(b), 271(d)(6)(B), and 275(c); *Implementation of the
    Telecommunications Act of 1996: Amendment of Rules Governing
    Procedures to be Followed When Formal Complaints are Filed Against
    Common Carriers, Report and Order*, 12 FCC Rcd 22497, 22499-04
    (1997) ("*Formal Complaint Order*"). In the *Formal Complaint
    Order*, the Commission adopted new or amended standards and
    procedures related to the processing and resolution of formal
    complaints against common carriers, including pre-filing negotiation
    requirements, pleading cycles, discovery, status conferences,
    damages procedures, prima facie claims, and burdens of proof.

[^422]: *See* NCTA Comments at 9-10.

[^423]: *See* *id*. at 9-10.

[^424]: 47 C.F.R. § 76.7(b)(2).

[^425]: *See* 47 C.F.R. § 76.1003(e).

[^426]: *See First Report and Order*, 8 FCC Rcd at 3389-90, ¶ 75.

[^427]: *See* 47 C.F. R. § 76.8.

[^428]: *See infra* ¶¶ 95, 98.

[^429]: *See* AT&T Comments at 30-32; CA2C Comments at 22-24.

[^430]: *See* USTelecom Comments at 20.

[^431]: *See id*.

[^432]: *See* RCN Comments at 20.

[^433]: *See id*.

[^434]: *See* EchoStar Comments at 27.

[^435]: *See id*. (*citing* 47 C.F.R. § 1.729).

[^436]: *See* CA2C Comments at 23.

[^437]: *See id*. (*citing* 47 C.F.R. § 76.9); BSPA Comments at 7.

[^438]: *See* CA2C Comments at 24; BSPA Comments at 7.

[^439]: *See* AT&T Comments at 30 (*citing* 47 C.F.R. § 1.70, *et
    seq*.).

[^440]: *See id.* at 30-32.

[^441]: *See* Consumer Groups Reply Comments at 8.

[^442]: *See* Comcast Reply Comments at 36; NCTA Reply Comments at 10,
    Time Warner Reply Comments at 7.

[^443]: *See* NCTA Reply Comments at 11.

[^444]: *See* Time Warner Reply Comments at 3.

[^445]: *See id*. at 4.

[^446]: *See id*. at 12.

[^447]: *See 1998 Program Access Order*, 13 FCC Rcd at 15849-50, ¶ 56.

[^448]: *See* Appendix D, § 76.1003(e).

[^449]: *1998 Biennial Review*, 14 FCC Rcd at 438, Appendix A, ¶ 9
    (modifications to § 76.1003); *see* 47 C.F.R. § 76.1003(e).

[^450]: *See* 47 C.F.R. § 76.1003(e); 47 C.F.R. § 76.7(e)(2).

[^451]: *See* 47 C.F.R. § 76.7(e), (f).

[^452]: Indeed, in such circumstances, failure to produce the subject
    documents would also be a violation of a Commission order.

[^453]: *See* 47 C.F.R. § 76.7(e), (f).

[^454]: *See* Appendix D, § 76.1003(j).

[^455]: *Id*.

[^456]: *See* 47 C.F.R. § 76.9.

[^457]: *See* Appendix D, § 76.1003(j).

[^458]: *Id.*

[^459]: *Id*.

[^460]: *Id*.

[^461]: *See, e.g.,* 47 C.F.R. § 0.457(d)(iv) (treating as presumptively
    privileged and confidential "programming contracts between
    programmers and multichannel video programming distributors"). In
    this regard, we note that in a recent program access dispute, the
    Media Bureau expeditiously granted a complainant's request for
    discovery and issued a protective order to safeguard the highly
    confidential discovery subject matter. *See* *EchoStar Satellite
    L.L.C. v. Home Box Office, Inc*., CSR 7070-P (filed Nov. 15, 2006).

[^462]: *See 1998 Program Access Order*, 13 FCC Rcd at 15865. The
    Protective Order is intended to facilitate and expedite review of
    documents containing privileged or confidential trade secrets and
    commercial or financial information. *Id*.

[^463]: *Id.* at 15865-69, ¶ 3. Confidential information is information
    submitted to the Commission which the submitting party has
    determined in good faith (i) constitutes trade secrets and
    commercial or financial information which is privileged or
    confidential within the meaning of Exemption 4 of the Freedom of
    Information Act, 5 U.S.C. § 552(b)(4); and (ii) falls within the
    terms of Commission orders designating the items for treatment as
    confidential information. *Id*. at 15865, ¶ 1(c). The Commission may
    determine that all or part of the information claimed as
    confidential information is not entitled to such treatment. *See
    also* 47 C.F.R. § 76.9 (general procedures for protecting
    confidentiality of information).

[^464]: *1998 Program Access Order*, 13 FCC Rcd at 15867, ¶ 9.

[^465]: *Id.* at 15867, ¶ 7. Before an authorized representative may
    obtain access to confidential information, he or she must execute a
    declaration which states that under penalty of perjury he or she has
    agreed to be bound by the Protective Order. *Id*. at 15866, ¶¶ 5, 6
    and at 15870. The declaration states that the reviewing party shall
    not disclose the confidential information to anyone except in
    accordance with the terms of the Protective Order and that the
    confidential information shall be used only for purposes of the
    program access proceeding. *Id*.

[^466]: *Id.* at 15867, ¶ 11.

[^467]: *See, e.g.*, *News Corporation and the DirecTV Group, Inc.,
    Transferors, and Liberty Media Corporation, Transferee, For
    Authority to Transfer Control*, Protective Order, 2007 WL 1482032
    (MB, rel. May 21, 2007).

[^468]: *Id*. The terminology we insert today concerning activities,
    associations or relationships that involve rendering advice or
    participation in business decisions that are or will be "made in
    light of similar or corresponding information about a competitor"
    has been standard language used in our merger protective orders.
    *See Worldcom, Inc. and MCI Communications Corp, Transfer of
    Control*, 13 FCC Rcd 11166, 11168 (1998). Our definition of
    "competitive decision-making" as such is consistent with federal
    court cases. *See, e.g*., *U.S. Steel Corp. v. United States*, 730
    F.2d 1465, 1468 n.3 (Fed. Cir. 1984) (noting that the "competitive
    decision-making" is a shorthand for a counsel's activities,
    association, and relationship with a client that are such as to
    involve counsel's advice and participation in any or all of the
    client's decisions \... made in light of similar or corresponding
    information about a competitor); *see also Brown Bag Software v.
    Symantec Corp*. 960 F.2d 1465, 1470 (9th Cir. 1992), *cert. denied*
    506 U.S. 869 (1992) (defining "competitive decision-making" as
    advising on decisions about pricing or design made in light of
    similar or corresponding information about a competitor). This
    terminology was more recently discussed in *Intervet, Inc. v. Merial
    Ltd*., 241 F.R.D. 55 (D.D.C. 2007) as follows: "Thus, U.S. Steel
    would preclude access to information to anyone who was positioned to
    advise the client as to business decisions that the client would
    make regarding, for example, pricing, marketing, or design issues
    when that party granted access has seen how a competitor has made
    those decisions. E.g., *Brown Bag Software*, 960 F.2d at 1471
    (counsel could not be expected to advise client without disclosing
    what he knew when he saw competitors' trade secrets as to those very
    topics); *Matsushita Elec. Indus. Co v. United States*, 929 F.2d
    1577, 1579-80 (Fed.Cir. 1991) (determination by agency forbidding
    access was arbitrary when lawyer precluded from access testified
    that he was not involved in pricing, technical design, selection of
    vendors, purchasing and marketing strategies); *Volvo Penta of the
    Americas, Inc. v. Brunswick Corp*., 187 F.R.D. 240, 242 (E.D.Va.
    1999) (competitive decision-making involves decisions "that affect
    contracts, marketing, employment, pricing, product design" and other
    decisions made in light of similar or corresponding information
    about a competitor); *Glaxo Inc. v. Genpharm Pharm., Inc*., 796
    F.Supp. 872, 876 (E.D.N.C. 1992) (improper to preclude in-house
    counsel from access to confidential information because he gave no
    advice to his client about competitive decisions such as pricing,
    scientific research, sales, or marketing)." *Id*. at 57-58.

[^469]: *See* Appendix E, Standard Protective Order and Declaration for
    Use in Section 628 Program Access Proceedings.

[^470]: *See* Appendix D, § 76.1003(k).

[^471]: *See 1998 Program Access Order*, 13 FCC Rcd at 15842-43, ¶ 41.

[^472]: *See* AT&T Comments at 27-29; CA2C Comments at 22; Verizon
    Comments at 13-14.

[^473]: *See* OPASTCO/ITTA Comments at 8.

[^474]: *See* Verizon Comments at 16.

[^475]: *See* USTelecom Comments at 21.

[^476]: *See* EchoStar Comments at 25.

[^477]: *See* CA2C Comments at 22. We note that CA2C's 120-day time
    limit beginning at the end of the pleading cycle is no shorter than
    the Commission's current time frame for resolving routine program
    access complaints.

[^478]: *See* BSPA Comments at 19; SBA Office of Advocacy Comments at 8.

[^479]: *See* CA2C Comments at 22.

[^480]: *See id*. at 21. CA2C offers no specific examples to establish
    that program access complaints often take years to resolve since
    adoption of the *1998 Program Access Order* time frames.

[^481]: *See id*. at 21.

[^482]: *See* AT&T Comments at 28.

[^483]: *See id.* at 29 (citing 47 U.S.C. § 271).

[^484]: *See* NCTA Comments at 14.

[^485]: *See* Comcast Reply Comments at 4.

[^486]: *See 1998 Program Access Order*, 13 FCC Rcd at 15842, ¶ 39.

[^487]: *See id*. at 15842, ¶ 41, n.121 (citing 47 U.S.C. §208(b)(1));
    *see also Formal Complaint Order*, 12 FCC Rcd at 22499, n.4.

[^488]: *See 1998 Program Access Order*, 13 FCC Rcd at 15842, ¶ 41.

[^489]: *See id*. at 15843, ¶ 42.

[^490]: *See* 47 C.F.R. § 76.7(b)(2)(iii).

[^491]: *See* NTCA Comments at 6; OPASTCO/ITTA Comments at 8; SBA Office
    of Advocacy Comments at 8; SureWest Comments at 10.

[^492]: *See* BSPA Comments at 7 (*citing Adelphia Order; Hughes
    Order*); ACA Comments at 10 (same); EchoStar Comments at 18 (same);
    RCN Comments at 19 (same); Consumer Groups Reply Comments at 7
    (same).

[^493]: *See* BSPA Comments at 8; RCN Comments at 19.

[^494]: *See* RCN Comments at 19.

[^495]: *See* BSPA Comments at 12-14 (citing *Improving Public Safety
    Communications in the 800 MHz Band, et al*., 19 FCC Rcd 14969,
    15070-71, 15074-75 and n.509 (2004); *Amendment of the Commission's
    Rules to Establish New Personal Communications Services*, 9 FCC Rcd
    4957, 5037 (1994); *Amendment of the Commission's Rules Regarding a
    Plan for Sharing the Costs of Microwave Relocation*, 11 FCC Rcd 8825
    (1996)).

[^496]: 5 U.S.C. § 551 *et seq*.

[^497]: *Id*. §§ 571-584.

[^498]: *See* EchoStar Comments at 20. Under subdelegation principles,
    agencies may refer matters outside the agency for fact-finding and
    the issuance of preliminary decisions, provided the decisions remain
    subject to final agency review. *See* *United States Telecom Ass\'n
    v. FCC*, 359 F.3d 554, 565-68 (DC Cir. 2004), *cert. denied*, 125
    S.Ct. 313, 316, 345 (2004). Providing for *de novo* review by the
    Commission of arbitration awards satisfies this requirement. *See
    National Park & Conservation Association v. Stanton*, 54 F. Supp. 2d
    7, 18-19 (D.D.C. 1999) (rejecting as unlawful a procedure by which
    the agency "completely shift\[ed\] its responsibility" to an outside
    council and "retain\[ed\] virtually no final authority over the
    action \-- or inaction \-- of the Council").

[^499]: *See* Comcast Comments at 28.

[^500]: *See id*.

[^501]: NCTA Comments at 12-14.

[^502]: *Id*. at 11.

[^503]: *See* NCTA Reply Comments at 12 (*citing* Comcast Comments at
    29); *Use of Alternative Dispute Resolution Procedures in Commission
    Proceedings and Proceedings in which the Commission is a Party*, 6
    FCC Rcd 5669, 5670, ¶ 12 (1991).

[^504]: *See* NCTA Reply Comments at 13.

[^505]: *See* Broadcast Networks Reply Comments at 3-4.

[^506]: *See id*. at 4.

[^507]: *See* Time Warner Reply Comments at 4.

[^508]: *See id*.

[^509]: *See* 47 C.F.R. § 76.7(g)(2). Section 572(a) of the
    Administrative Dispute Resolution Act ("ADRA") provides that "\[a\]n
    agency may use a dispute resolution proceeding for the resolution of
    an issue in controversy that relates to an administrative program,
    if the parties agree to such proceeding." 5 U.S.C. § 572(a). Section
    575(a)(1) authorizes the use of arbitration as an alternative means
    of dispute resolution "whenever all parties consent." 5 U.S.C. §
    575(a)(1).

[^510]: *See* *Adelphia Order*, 21 FCC Rcd at 8836, Appendix B, and
    8340, Appendix C.

[^511]: *See supra* ¶ 49.

[^512]: *See id*.

[^513]: *See supra* ¶ 78.

[^514]: *See id.*

[^515]: *See* SureWest Comments at 7-8 (citing Section 4(i) of the
    Communications Act); Verizon Comments at 14 (same); *id*. at 14
    (citing Section 303(r) of the Communications Act); SureWest Comments
    at 8 (citing Section 601(6) of the Communications Act); RICA
    Comments at 5 (citing Section 612(g) of the Communications Act);
    *id*. at 5 (citing Section 616(a) of the Communications Act);
    SureWest Comments at 7 (citing Section 628(b) of the Communications
    Act); *see also* AT&T Comments at 9 n.24; BSPA Comments at 16-18;
    EchoStar Comments at 4.

[^516]: *See* 47 U.S.C. § 154(i) ("The Commission may perform any and
    all acts, make such rules and regulations, and issue such orders,
    not inconsistent with this chapter, as may be necessary in the
    execution of its functions."); 47 U.S.C. § 201(b) ("The Commission
    may prescribe such rules and regulations as may be necessary in the
    public interest to carry out the provisions of this chapter."); 47
    U.S.C. § 303(r) ("The Commission from time to time, as public
    convenience, interest, or necessity requires, shall . . . (r) Make
    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 chapter . . . ."); 47 U.S.C. § 521(6)
    (stating that one of the purposes of Title VI (Cable Communications)
    of the Communications Act is to "promote competition in cable
    communications . . . ."); 47 U.S.C. § 532(g) (stating that when
    "cable systems with 36 or more activated channels are available to
    70 percent of households within the United States and are subscribed
    to by 70 percent of the households to which such systems are
    available, the Commission may promulgate any additional rules
    necessary to provide diversity of information sources"); 47 U.S.C. §
    536(a) (stating that the "Commission shall establish regulations
    governing program carriage agreements and related practices between
    cable operators or other multichannel video programming distributors
    and video programming vendors"); 47 U.S.C. § 548(b) ("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."); 47 U.S.C. § 157 nt. (stating that the Commission
    "shall encourage the deployment on a reasonable and timely basis of
    advanced telecommunications capability to all Americans . . . by
    utilizing, in a manner consistent with the public interest,
    convenience, and necessity, . . . measures that promote competition
    in the local telecommunications market, or other regulating methods
    that remove barriers to infrastructure investment").

[^517]: *See Local Franchising Report and Order*, 22 FCC Rcd at 5132-33,
    ¶ 62 ("The record here indicates that a provider's ability to offer
    video service and to deploy broadband networks are linked
    intrinsically, and the federal goals of enhanced cable competition
    and rapid broadband deployment are interrelated.") (footnote
    omitted).

[^518]: *See* 47 U.S.C. §§ 548(b); 548(c)(2)(D).

[^519]: *See* Verizon Comments at 13-14; Verizon Reply Comments at 5.

[^520]: 47 U.S.C.§ 548(b). The Commission has stated "there may be
    circumstances where moving programming from satellite to terrestrial
    delivery could be cognizable under Section 628(b) as an unfair
    method of competition or deceptive practice if it precluded
    competitive MVPDs from providing satellite cable programming." *See
    RCN Telecom Services v. Cablevision Systems Corp.*, 16 FCC Rcd
    12048, 12053, ¶ 15; *DIRECTV*, 15 FCC Rcd at 22807; *Implementation
    of Section 302 of the Telecommunications Act of 1996, Open Video
    Systems,* 11 FCC Rcd 18223, 18325, ¶ 197 n.451 (1996) ("we do not
    foreclose a challenge under Section 628(b) to conduct that involves
    moving satellite delivered programming to terrestrial distribution
    in order to evade application of the program access rules and having
    to deal with competing MVPDs").

[^521]: *See supra* ¶ 76.

[^522]: *See supra* note 377; *see also* 47 U.S.C. § 548(j).

[^523]: *See supra* n. 516.

[^524]: *See supra* ¶ 82.

[^525]: American Cable Association's Petition for Inquiry into
    Retransmission Consent Practices (filed October 1, 2002) ("*ACA 2002
    Petition*").

[^526]: *See id*. at 2, 18.

[^527]: *EchoStar Satellite L.L.C. v. Home Box Office, Inc.,* CSR
    7070-P, filed November 15, 2006, dismissed at the request of the
    parties on February 5, 2007, DA 07-2661.

[^528]: *See* OPASTCO/ITTA Comments at 5-8.

[^529]: *See* *ACA 2002 Petition* at 2 ("Due to limited capacity of
    smaller cable systems, tying arrangements restrict the ability of
    those systems to carry additional services.").

[^530]: *See* NTCA Comments at 8.

[^531]: 47 U.S.C. § 325(b)(3)(C).

[^532]: 47 U.S.C. § 325(b)(3)(C)(ii). Pursuant to the Satellite Home
    Viewer Extension and Reauthorization Act of 2004 ("SHVERA"),
    Congress extended 47 U.S.C. § 325(b)(3)(C) until 2010 and amended
    that section to impose a reciprocal good faith retransmission
    consent bargaining obligation on MVPDs. The Commission adopted rules
    implementing Section 207 of SHVERA. *See In the Matter of:
    Implementation of Section 207 of the Satellite Home Viewer Extension
    and Reauthorization Act of 2004: Reciprocal Bargaining Obligation*,
    20 FCC Rcd 10339 (2005). ("*Reciprocal Bargaining Order*").

[^533]: *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Retransmission Consent Issues*, 15 FCC Rcd 5445 (2000) ("*Good
    Faith Order*"), *recon. granted in part*, 16 FCC Rcd 15599 (2001).

[^534]: *Good Faith Order*, 15 FCC Rcd at 5457.

[^535]: *Id.* at 5462-64. First, a broadcaster may not refuse to
    negotiate with an MVPD regarding retransmission consent. Second, a
    broadcaster must appoint a negotiating representative with authority
    to bargain on retransmission consent issues. Third, a broadcaster
    must agree to meet at reasonable times and locations and cannot act
    in a manner that would unduly delay the course of negotiations.
    Fourth, a broadcaster may not put forth a single, unilateral
    proposal. Fifth, a broadcaster, in responding to an offer proposed
    by an MVPD, must provide considered reasons for rejecting any
    aspects of the MVPD's offer. Sixth, a broadcaster is prohibited from
    entering into an agreement with any party conditioned upon denying
    retransmission consent to any MVPD. Finally, a broadcaster must
    agree to execute a written retransmission consent agreement that
    sets forth the full agreement between the broadcaster and the MVPD.
    *Id.*; *see* 47 C.F.R. § 76.65(b)(1)(i)-(vii).

[^536]: *Good Faith Order*, 15 FCC Rcd at 5458; 47 C.F.R. § 76.65(b)(2).

[^537]: 47 C.F.R. § 76.65(b)(1)(iv).

[^538]: *Good Faith Order*, 15 FCC Rcd at 5463, ¶ 43.

[^539]: American Cable Association's Petition for Inquiry into
    Retransmission Consent Practices (filed October 1, 2002). This
    petition will be placed in the record of this proceeding. ACA also
    filed a "Petition for Rulemaking to Amend 47 CFR §§ 76.64,76.93 and
    76.103" on March 2, 2005, which asserted that competition and
    consumers are harmed when broadcasters use exclusivity and network
    affiliate agreements to extract "supracomepetitive prices" for
    retransmission consent from small cable companies. *See Public
    Notice*, Report No. 2696, RM-11203 (March 17, 2005).

[^540]: We note that that in its *Retransmission Consent and Exclusivity
    Rules: Report to Congress Pursuant to Section 208 of the Satellite
    Home Viewer Extension and Reauthorization Act of 2004* (September 8,
    2005) (available at http://www.fcc.gov/mb/policy/shvera.html), the
    Commission addressed the tying issue. The Commission noted "cable
    operators' widespread concern that retransmission consent
    negotiations frequently involve broadcasters tying carriage of their
    signals to numerous affiliated non-broadcast programming networks."
    *Id.* at 25. The Report noted that "since the Commission's decision
    to deny broadcasters the ability to assert dual and multicast must
    carry, broadcasters have begun using their retransmission consent
    negotiations to negotiate carriage of their digital signals, thus
    furthering the digital transition by increasing the number of
    households with access to digital signals. If broadcasters are
    limited in their ability to accept in-kind compensation, they should
    be granted full carriage rights for digital signals, including all
    free over-the-air digital multicast streams. Should Congress
    consider proposals circumscribing retransmission consent
    compensation, we encouraged review of related rules and policies to
    maintain proper balance." *Id.*

[^541]: S.Rep. No. 102-92, at 35-36 (1991), accompanying S.12, 102^nd^
    Cong. (1991).

[^542]: *Implementation of the Satellite Home View Improvement Act of
    1999; Retransmission Consent Issues, Good Faith Negotiation and
    Exclusivity*, 15 FCC Rcd 5445, 5469 (2000).

[^543]: *Id.*

[^544]: *Carriage of Digital Television Broadcast Signals; Amendments to
    Part 76 of the Commission's Rules, Implementation of the Satellite
    Home View Improvement Act of 1999*, 16 FCC Rcd 2598, 2613 (2001).

[^545]: *Hurley* *v. Irish-American Gay, Lesbian, and Bisexual Group of
    Boston, Inc.*, 515 U.S. 557, 576 (1995).

[^546]: *Id*.

[^547]: 47 U.S.C.§ 548(b).

[^548]: *First Report and Order*, 8 FCC Rcd at 3373.

[^549]: *See* NTCA Comments at 6-8; OPASTCO/ITTA Comments at 5-8.

[^550]: *See* NTCA Comments at 6-7; OPASTCO/ITTA Comments at 8.

[^551]: *See* NTCA Comments at 7 ("Some small video providers serve less
    than 300 residents within their service areas. If many small rural
    video providers were required to invest approximately \$1 to \$3
    million in a head-end, manage and maintain the network and absorb
    the programming costs, they could never expect to recover their
    investment nor provide affordable/competitive video services
    throughout their service areas.").

[^552]: *See* *id*. at 7; OPASTCO/ITTA at 8 (asking the Commission to
    establish that the use of shared headends may not serve as an excuse
    for programmers to impose inordinately high rates or unwarranted
    encryption restrictions beyond those necessary for a reasonable
    degree of protection). In response to these concerns, NCTA and
    Comcast argue that the issue of restrictions on the use of shared
    headends is not within the Commission's authority under Section 628
    and that the use of shared headends raises a security issue that is
    relevant to all programming networks, regardless of whether the
    programming network is affiliated with a cable operator. *See* NCTA
    Reply Comments at 14-15; Comcast Reply Comments at 31-32.

[^553]: *See* OPASTCO/ITTA Comments at 6; *see also* Comments of
    OPASTCO, MB Docket No. 06-189 (December 29, 2006), at 12.

[^554]: *See* OPASTCO/ITTA Comments at 6.

[^555]: *See id*.

[^556]: *See* Echostar Comments at n. 36; BSPA Comments at n. 16
    (*citing* *Hughes Order*, 19 FCC Rcd 473, 552, ¶ 174 and n.490,
    which concluded that final offer arbitration has the attractive
    "ability to induce two sides to reach their own agreement, lest they
    risk the possibility that a relatively extreme offer of the other
    side may be selected by the arbitrator" (*citing* Steven J. Brams,
    *Negotiation Games: Applying Game Theory to Negotiation and
    Arbitration*, Routledge, 2003 at 264)).

[^557]: *See* BSPA Comment at 7; Verizon Comments at 16-17; BSPA Reply
    Comments at 15.

[^558]: *See Adelphia Order,* 21 FCC Rcd at 8337, Appendix B, § B(2)(c).
    Provision of the disputed programming during the pendency of
    arbitration was not required in the case of the first time requests
    for programming where no carriage agreement had previously existed
    between the parties. *See id*., Appendix B, § B(2)(d).

[^559]: *See* BSPA Comments at 14-15; RCN Comments at 19-20; USTelecom
    Comments at 27.

[^560]: *See* BSPA Comments at 15.

[^561]: *See* ACA Comments at 8; EchoStar Comments at 30; SureWest
    Comments at 10.

[^562]: *See* ACA Comments at 8; EchoStar Comments at 30; SureWest
    Comments at 10.

[^563]: *See* NCTA Reply Comments at 14.

[^564]: *See* Time Warner Reply Comments at 19.

[^565]: *See id*.

[^566]: *See* Broadcast Networks Reply Comments at 3; Comcast Reply
    Comments at 38.

[^567]: In the *Adelphia Order*, the Commission discussed circumstances
    wherein temporary foreclosure of programming service may be
    profitable even where permanent foreclosure is not. *See Adelphia
    Order*, 21 FCC Rcd at 8257-58, ¶ 121. By temporarily foreclosing
    supply of the programming to an MVPD competitor or by threatening to
    engage in temporary foreclosure, the integrated firm may improve its
    bargaining position so as to be able to extract a higher price from
    the MVPD competitor than it could have negotiated if it were a
    non-integrated programming supplier. *See id*. The Commission
    included, as a measure to alleviate such foreclosure strategies, a
    requirement that, upon receiving timely notice of an MVPD's intent
    to arbitrate, program carriage be continued under the existing terms
    and conditions. *See id.* at Appendix B, § B(2)(c); *see also Hughes
    Order*, 19 FCC Rcd at 544-48, ¶¶ 153-162 and 633, Appendix D.

[^568]: *See, e.g*., *Virginia Petroleum Jobbers Ass'n v. FPC*, 259 F.2d
    921, 925 (D.C. Cir. 1958); *see also* *Hispanic Information and
    Telecomm. Network, Inc*., 20 FCC Rcd 5471, 5480, ¶ 26 (2005)
    (affirming Bureau's denial of request for stay on grounds applicant
    failed to establish four criteria demonstrating stay is warranted).

[^569]: *See* 47 C.F.R. § 1.1206(b), as revised.

[^570]: *See id.* § 1.1206(b)(2).

[^571]: *See Electronic Filing of Documents in Rulemaking Proceedings*,
    63 FR 24121 (1998).

[^572]: The RFA, *see* 5 U.S.C. §§ 601 -- 612, has been amended by the
    Small Business Regulatory Enforcement Fairness Act of 1996
    ("SBREFA"), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).

[^573]: 5 U.S.C. § 605(b).

[^574]: *Id*. § 601(6).

[^575]: *Id*. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register." *Id*. § 601(3).

[^576]: 15 U.S.C. § 632.

[^577]: *See* 5 U.S.C. § 603.

[^578]: *See* 5 U.S.C. § 604.

[^579]: The Paperwork Reduction Act of 1995 ("PRA"), Pub. L. No. 104-13,
    109 Stat 163 (1995) (codified in Chapter 35 of title 44 U.S.C.).

[^580]: The Small Business Paperwork Relief Act of 2002 ("SBPRA"), Pub.
    L. No. 107-198, 116 Stat 729 (2002) (codified in Chapter 35 of title
    44 U.S.C.); *see* 44 U.S.C. 3506(c)(4).

[^581]: *See* 5 U.S.C. § 553(d)(3) ("The required publication or service
    of a substantive rule shall be made not less than 30 days before its
    effective date, except \... as otherwise provided by the agency for
    good cause found and published with the rule."); *see also* 47
    C.F.R. §§ 1.103(a), 1.427(b).

    Section 76.1002(c)(6) provides that the exclusive contract
    prohibition set forth in Section 76.1002(c)(2) will expire on
    October 5, 2007. *See* 47 C.F.R. § 76.1002(c)(6). Accordingly, it is
    necessary for the five-year extension of this prohibition reflected
    in the amendment to Section 76.1002(c)(6) adopted herein to take
    effect by October 5, 2007. We thus find good cause to make the
    amendment to Section 76.1002(c)(6) effective upon publication in the
    *Federal Register.* We note further that this amendment extends an
    existing requirement and does not impose any new requirements on any
    entity. Accordingly, no entity will be harmed as a result of our
    decision to make this amendment effective upon publication in the
    *Federal Register*.

    We also find good cause to make the amendments to our procedural
    rules adopted herein, other than those that require OMB approval,
    effective upon publication in the *Federal Register*. These rules
    are (i) new Section 76.1003(i), which allows parties to a program
    access dispute to voluntarily engage in ADR; and (ii) new Section
    76.1003(k), which pertains to the Commission's authority to issue
    protective orders regarding confidential material submitted in
    program access complaint proceedings and to issue appropriate
    sanctions for violations of its protective orders. These new rules
    are essential to our goal of expeditiously resolving program access
    complaints. We find good cause to make these amendments effective
    upon publication in the *Federal Register* so that parties to all
    program access complaint proceedings, including those currently
    pending before the Commission, can benefit from these new rules.
    With respect to new Section 76.1003(i) regarding ADR, we note this
    procedure is voluntary and requires both parties to agree to engage
    in alternative dispute resolution; thus, no entity will be harmed as
    a result of our decision to make this amendment effective upon
    publication in the *Federal Register*. With respect to new Section
    76.1003(k) regarding protective orders, we note that this rule
    enhances existing safeguards provided under our form protective
    order, and will facilitate and expedite the review of privileged
    and/or confidential documents; thus, no entity will be harmed as a
    result of our decision to make this amendment effective upon
    publication in the *Federal Register*.

[^582]: The Commission will publish a document in the *Federal Register*
    announcing the effective date of the amendment to Section
    76.1003(e)(1) and new Section 76.1003(j).

[^583]: *See* Cablevision Comments, Appendix B at 24-25.

[^584]: *See Adelphia Order*, 21 FCC Rcd at 8341-50, Appendix D.

[^585]: *See* Cablevision Comments, Appendix B at 24-25.

[^586]: *See Adelphia Order*, 21 FCC Rcd at 8344, Appendix D, ¶ 14.

[^587]: *See* Cablevision Comments, Appendix B at 24-25.

[^588]: *See generally* Wooldridge, Jeffrey M. *Econometric Analysis of
    Cross Section and Panel Data* (Cambridge, MA: MIT Press) 2002 at
    50-51, 61-70.

[^589]: *See* Cablevision Comments, Appendix B at 24-25.

[^590]: *Adelphia Order*, 21 FCC Rcd at 8271-72, ¶ 151.

[^591]: *See*
    [http://www.nba.com/bobcats/news/release_cset_preview_041202.html]{.underline}

[^592]: *Adelphia Order*, 21 FCC Rcd at 8271-72, ¶ 151.

[^593]: The model in the *Adelphia Order* was based on Andrew S. Wise
    and Kiran Duwadi, *Competition between Cable Television and Direct
    Broadcast Satellite: The Importance of Switching Costs and Regional
    Sports Networks*, 1 [J. Competition L. & Econ]{.smallcaps}*.* 679
    (2005) (Wise and Duwadi (2005)), which showed a negative and
    statistically significant log of latitude coefficient.

[^594]: The source of the added terrain variables is the SRTM Global
    Digital Elevation Model provided by ESRI, Inc., which is derived
    from the NASA/NGA Shuttle Radar Topography Mission (SRTM) from the
    U.S. Geological Survey\'s EROS Data Center. The resolution is 3 arc
    seconds (90 meters).

[^595]: We eliminate observations from cable systems that do not offer
    digital programming. Two more observations are lost when adding
    variables measuring terrain roughness discussed below.

[^596]: This transformation allows the coefficients on the continuous
    variables to be interpreted as elasticities.

[^597]: More than 90% of subscribers purchase at least the first two
    tiers of services. In addition, most regional sports networks are
    carried on one of these two tiers.

[^598]: We define a multiple dwelling unit as one that contains two or
    more housing units in one building.

[^599]: Warren Publishing, *CABLE: General Information-January 2003*;
    Warren Publishing, *CABLE: General Information-July 2007*.

[^600]: CENTRISBridge. We preferred Warren as a primary data source
    because it is based on polling of, or at least an attempt to poll,
    all cable systems rather than sampling.

[^601]: Two cases: TW2007-49 Buffalo; Comcast2007-38 West Palm.

[^602]: Sixteen cases: TW2003-71 Honolulu, 161 Palm Springs, 192 Laredo;
    Comcast+AT&T2003-3 Chicago, 59 Richmond; TW2007-49 Buffalo, 58
    Dayton, 72 Honolulu, 78 Rochester, 79 Syracuse, 157 Birmingham, 187
    Laredo, 203 Zanesville; Comcast2007-11 Detroit, 18 Denver, 182
    Charlottesville.

[^603]: TW2003-31 Milwaukee, 44 Buffalo, 51 Jacksonville, 78 Omaha, 80
    Syracuse, 91 Burlington, 103 Greenville, 167 Utica, 173 Elmira, 199
    Mankato; Comcast+AT&T2003-21 Pittsburgh, 32 Cincinnati, 35
    Greenville, 39 West Palm, 50 Louisville,53 Wilkes Barre, 83
    Huntsville, 87 South Bend, 107 Tallahassee, 169 Missoula; Comcast
    w/o AT&T2003- 35 Greenville, 50 Louisville, 83 Huntsville, 107
    Tallhassee; TW2007-19 Orlando; Comcast2007-7Boston, 23 Portland, 25
    Indianapolis, 38 West Palm, 48 Louisville, 61 Richmond, 64 Ft.
    Myers, 65 Charleston, 66 Flint, 84 Huntsville, 88 South Bend, 98
    Johnstown, 148 Salisbury, 165 Hattiesburg, 181 Harrisonburg.

[^604]: Forty-one cases (six both, nine subs only, twenty-six HP only):
    Both Subs and HP missing: TW 2003-87 South Bend, TW2007-40
    Birmingham, 44 Memphis, 109 Springfield, 132 Columbus,176 Watertown.
    Subs only missing: Comcast+AT&T2003-122 Macon, 127 Yakima; Comcast
    w/o AT&T2003-122 Macon; Comcast2007-74 Portland, 77 Spokane, 106 Ft.
    Wayne, 120 Eugene, 166 Clarksburg, 185 Meridian. HP only missing:
    TW2003-20 Orlando, 21 Pittsburgh, 60 Tulsa, 162 Gainesville;
    Comcast+AT&T2003-40 Birmingham, 118 Fargo, 119 Santa Barbara, 180
    Bowling Green; Comcast w/o AT&T-17 Miami, 18 Denver, 53 Wilkes
    Barre, 59 Richmond, 111 Lansing, 119 Santa Barbara, 180 Bowling
    Green; TW2007-22 Pittsburgh, 35 Salt Lake, 38 West Palm, 110 Reno,
    184 Greenwood; Comcast2007-40 Birmingham, 42 Norfolk, 51 Providence,
    122 Obispo, 135 Monroe, 183 Bowling Green.

[^605]: Note that Formula #2 assumes that TVHH is a rough proxy for
    total HP. Based on nationwide homes passed figures, this is not an
    unreasonable assumption. *See* *infra* note 14. In DMAs where Time
    Warner or Comcast was identified as the only provider in that DMA,
    the figure is exactly equal to the number of Nielsen TVHH in that
    DMA. Where Time Warner or Comcast is a provider among two or more
    providers, we thus allocated HP according to their share of
    subscribers in that DMA.

[^606]: Six cases: Comcast+AT&T2003-122 Macon; Comcast w/o AT&T2003-17
    Miami, 53 Wilkes Barre, 59 Richmond, 111 Lansing, 122 Macon;

[^607]: Four cases: TW2003-20 Orlando, 199 Mankato; Comcast+AT&T2003-169
    Missoula; TW2007-19 Orlando.

[^608]: Seven cases: TW2003-87 South Bend, 162 Gainesville;
    Comcast+AT&T2003-118 Fargo, 127 Yakima; TW2007-25 Indianapolis, 38
    West Palm, 88 South Bend.

[^609]: Warren Publishing indicates that in 2003, Time Warner had three
    systems in the Jacksonville, Brunswick DMA. All three systems
    reported subscribers, but only two systems reported homes passed. As
    a result, we accounted for [more subscribers than homes
    passed]{.underline}. In order to resolve this inconsistency in the
    data (Problem #3 - HP\<Subs), we first applied Formula #2 to the DMA
    statistics. Application of the formula, however, also resulted in
    HP\<Subs. Subsequently, the same result was obtained after
    application of Formula #3. This was the only DMA in which the data
    could not be resolved using the corrective methodology described
    herein..

[^610]: The earliest data available are for January 2003, six months
    after the adoption of the *2002 Extension Order*.

[^611]: Data limitations made it impossible to complete the calculation
    for two DMAs.

[^612]: Data limitations made it impossible to complete the calculation
    for five DMAs.

[^613]: This is a reasonable assumption. National data from Kagan
    Research LLC indicate that more than 100 percent of "occupied homes"
    are passed by cable. *See* NCTA 2007 Industry Overview, p. 7,
    http://i.ncta.com/ncta_com/PDFs/NCTA_Annual_Report_04.24.07.pdf
    (last visited August 14, 2007). The assumption that all TVHH are
    passed by cable was also made in the uniform price increase analysis
    in the *Adelphia Order*. *See Adelphia Order*, 21 FCC Rcd at 8347,
    Appendix D ¶ 22.

[^614]: This formula is a modified version of the one used in the
    *Hughes Order*. *See Hughes Order*, 19 FCC Rcd at 643, Appendix D
    n.60.

[^615]: Warren Publishing, *CABLE: General Information-January 2003*;
    Warren Publishing, *CABLE: General Information-July 2007*.

[^616]: *See* U.S. TV Household Estimates -- Ranked by Households,
    http://www.tvb.org/nav/build_frameset.asp (follow "Research Central"
    hyperlink; then follow "Market Track" hyperlink; then follow "U.S.
    TV Households by Market") (last visited Aug. 2, 2007).

[^617]: *See* Kagan Research LLC, *Media Sports Business* at 4 (March
    30, 2007). The calculations also use the specific profile for
    Comcast SportsNet Philadelphia (AD is \$0.40 and FEE is \$1.97) from
    this source.

[^618]: Comcast, Annual Report for the Year Ended Dec. 31, 2006, at 28
    ("*Comcast 2006 Annual Report*"). Time Warner, Form 10-K for the
    Year-Ended Dec. 31, 2006, at 101 ("*Time Warner 2006 10-K*").

[^619]: *Comcast 2006 Annual Report* at 28; at 101. The cost category
    "Sales General & Administrative" is not subtracted from Revenues
    because these expenses apply to the entire corporation and cannot be
    matched with a particular service or group of subscribers.

[^620]: *Comcast 2006 Annual Report* at 29; *Time Warner 2006 10-K* at
    71, 76.

[^621]: *Comcast 2006 Annual Report* at 28; *Time Warner 2006 10-K* at
    71, 76.

[^622]: *Comcast 2006 Annual Report* at 28. *Time Warner 2006 10-K* at
    71, 76.

[^623]: *Comcast 2006 Annual Report* at 28. *Time Warner 2006 10-K* at
    71, 76. As with the upper bound calculation, the cost category
    "Sales General &Administrative" are not part of the calculation for
    the lower bound.

[^624]: *Comcast 2006 Annual Report* at 29; *Time Warner 2006 10-K* at
    71, 76.

[^625]: *See* Bear Stearns, *Comcast Corp.: Reframing the 'CAPEX Issue;'
    2Q07 Preview* (July 19, 2007), Exhibit 4 and associated notes
    ("*Bear Stearns Report*").

[^626]: The analyst report combines the data used herein with a figure
    it calls "Scalable Infrastructure CAPEX" and other data to calculate
    internal rates of return. As noted in note 9 to the report, they
    indicate that this figure is not necessarily a variable cost. They
    include it in their calculations for their purposes, but it is not
    included in the current subscriber acquisition cost calculations.

[^627]: *See Hughes Order*, 19 FCC Rcd at 635, Appendix D, ¶ 4.

[^628]: In the absence of a separate source for Time Warner's subscriber
    acquisition costs, we use the Comcast figures for Time Warner as
    well. It should also be noted that the subscriber acquisition costs
    are based on a weighted average across all (Comcast) subscribers.
    This is exactly what is needed for the upper bound profitability
    calculations, which assume that new subscribers switching to the
    VISCP's cable affiliate purchase voice, video, and data services in
    the same proportion as existing subscribers. It is not ideal for the
    lower bound calculations, but data were not available to
    disaggregate the video subscribers from the total to make a separate
    estimate of subscriber acquisition costs for video subscribers only.
    *See Bear Stearns Report.* The fact that, of the two non-video
    categories, one has a subscriber acquisition cost below the weighted
    average and one above suggests that using the weighted average is
    not unreasonable, although it may be slightly low for the lower
    bound profitability calculations.

[^629]: The data indicates that Comcast provides service to at least
    part of 97 DMAs.

[^630]: The nature of the critical value formula is such that, for
    Comcast, any market that meets a cutoff for the upper bound
    profitability level would also meet it for the lower bound
    profitability level.

[^631]: The data indicates that Time Warner provides service to at least
    part of 89 DMAs.

[^632]: Kagan Research, LLC, *Economics of Basic Cable Networks 2007*,
    at 36-40, 60-62, 80-82; Kagan Research, LLC, Media Trends 2006, at
    66-67; Kagan Research LLC, *Cable Program Investor*, Jun. 29, 2007,
    at 10.

[^633]: The RFA, *see* 5 U.S.C. §§ 601 -- 612, has been amended by the
    Small Business Regulatory Enforcement Fairness Act of 1996
    ("SBREFA"), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).

[^634]: *See* 5 U.S.C. § 603.

[^635]: *See* 5 U.S.C. § 603(a).

[^636]: *See* *id.*

[^637]: *See NPRM* ¶ 114.

[^638]: *See id.* ¶ 115-117.

[^639]: *See id.* ¶ 118.

[^640]: *See id*. ¶¶ 119-132.

[^641]: *See id*. ¶ 133.

[^642]: *See id*. ¶¶ 134-137.

[^643]: *See id*. ¶ 134.

[^644]: *See id*. ¶¶ 135-137.

[^645]: 47 U.S.C. § 548(c)(2)(D).

[^646]: Cable Television Consumer Protection and Competition Act of
    1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^647]: The term "satellite cable programming" means "video programming
    which is transmitted via satellite and which is primarily intended
    for direct receipt by cable operators for their retransmission to
    cable subscribers," except that such term does not include satellite
    broadcast programming. 47 U.S.C. § 548(i)(1); 47 U.S.C. § 605(d)(1);
    *see also* 47 C.F.R. § 76.1000(h). The term "satellite broadcast
    programming" means "broadcast video 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); *see also*
    C.F.R. § 76.1000(f).

[^648]: *See DIRECTV, Inc. v. Comcast Corp. et al.,*15 FCC Rcd 22802,
    22807, ¶ 12 (2000); *see also* *Implementation of the Cable
    Television Consumer Protection and Competition Act of 1992 --
    Development of Competition and Diversity in Video Programming
    Distribution: Section 628(c)(5) of the Communications Act: Sunset of
    Exclusive Contract Prohibition*, Report and Order, 17 FCC Rcd 12124,
    12158, ¶ 73 (2002).

[^649]: *See Applications for Consent to the Assignment and/or Transfer
    of Control of Licenses, Adelphia Communications Corporation,
    Assignors to Time Warner Cable, Inc., Assignees, et al.,* Memorandum
    Opinion and Order, 21 FCC Rcd 8203, 8271, ¶ 149 (2006) ("*Adelphia
    Order*").

[^650]: *See* 47 U.S.C. § 154(i); 47 U.S.C. § 201(b); 47 U.S.C. §
    303(r); 47 U.S.C. § 521(6); 47 U.S.C. § 532(g); 47 U.S.C. § 536(a);
    47 U.S.C. § 548(b); 47 U.S.C. § 157 nt.

[^651]: *See Order* ¶ 76.

[^652]: *See supra* note 377; *see also* 47 U.S.C. § 548(j).

[^653]: 5 U.S.C. § 603(b)(3).

[^654]: 5 U.S.C. § 601(6).

[^655]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small-business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register."

[^656]: 15 U.S.C. § 632.

[^657]: *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/ n07-n02.xls).

[^658]: U.S. Census Bureau, 2007 NAICS Definitions, "517110 Wired
    Telecommunications Carriers";
    http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.

[^659]: 13 C.F.R. § 121.201 (2002 NAICS code 517110).

[^660]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 2, Employment Size of Establishments for the
    United States: 2002 (2002 NAISC Code 517110; 2002 NAISC Code 517510;
    2002 NAISC Code 518111) (issued November 2005).

[^661]: *Id*.

[^662]: U.S. Census Bureau, 2002 NAICS Definitions, "517510 Cable and
    Other Program Distribution";
    http://www.census.gov/epcd/naics02/def/NDEF517.HTM. As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^663]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^664]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002 (NAICS code 517510) (issued November 2005).

[^665]: *Id*. An additional 61 firms had annual receipts of \$25 million
    or more.

[^666]: 47 C.F.R. § 76.901(e). The Commission determined that this size
    standard equates approximately to a size standard of \$100 million
    or less in annual revenues. *Implementation of Sections of the 1992
    Cable Act: Rate Regulation,* Sixth Report and Order and Eleventh
    Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).

[^667]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren Comm.
    News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 400,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^668]: 47 C.F.R. § 76.901(c).

[^669]: Warren Communications News, *Television & Cable Factbook 2006*,
    "U.S. Cable Systems by Subscriber Size," page F-2 (data current as
    of Oct. 2005). The data do not include 718 systems for which
    classifying data were not available.

[^670]: 47 U.S.C. § 543(m)(2); *see* 47 C.F.R. § 76.901(f) & nn. 1-3.

[^671]: *See* *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, *Twelfth Annual
    Report*, 21 FCC Rcd 2503, 2507, ¶ 10 and 2617, Table B-1 (2006)
    ("*12^th^ Annual Report*").

[^672]: 47 C.F.R. § 76.901(f); *see* Public Notice*, FCC Announces New
    Subscriber Count for the Definition of Small Cable Operator*, DA
    01‑158 (Cable Services Bureau, Jan. 24, 2001).

[^673]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren
    Commc'ns News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 654,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^674]: The Commission does receive such information on a case-by-case
    basis if a cable operator appeals a local franchise authority's
    finding that the operator does not qualify as a small cable operator
    pursuant to § 76.901(f) of the Commission's rules. *See* 47 C.F.R. §
    76.909(b).

[^675]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^676]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^677]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2538-39, ¶ 70 and
    2620, Table B-3.

[^678]: DIRECTV is the largest DBS operator and the second largest MVPD,
    serving an estimated 15.72 million subscribers nationwide as of June
    2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3.

[^679]: EchoStar, which provides service under the brand name Dish
    Network, is the second largest DBS operator and one of the four
    largest MVPDs, serving an estimated 12.27 million subscribers
    nationwide. *Id*.

[^680]: *See id*. at 2540, ¶ 73 .

[^681]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^682]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.
    Previously, the Commission reported that IMCC had 250 members; *see*
    *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming,* *Tenth Annual Report*, 19 FCC
    Rcd 1606, 1666, ¶ 90 (2004) ("*10^th^ Annual Report*").

[^683]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.

[^684]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^685]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1. HSD
    subscribership declined more than 33 percent between June 2003 and
    June 2004. *See id.*

[^686]: *Amendment of Parts 1, 21 73, 74, and 101 of the Commission's
    Rules to Facilitate the Provision of Fixed and Mobile Broadband
    Access, Educational and Other Advanced Services in the 2150-2162 and
    2500-2690 MHz Bands*, WT Docket No. 03-66, RM-10586, *Report and
    Order and Further Notice of Proposed Rulemaking*, 19 FCC Rcd 14165
    (2004).

[^687]: *See id.*

[^688]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC Code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/ n07-n02.xls).

[^689]: 47 C.F.R. § 21.961(b)(1) (2002).

[^690]: *Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, Report and
    Order*, 10 FCC Rcd 9589 (1995).

[^691]: MDS Auction No. 6 began on November 13, 1995, and closed on
    March 28, 1996 (67 bidders won 493 licenses).

[^692]: Hundreds of stations were licensed to incumbent MDS licensees
    prior to implementation of Section 309(j) of the Communications Act
    of 1934. 47 U.S.C. § 309(j). For these pre-auction licenses, the
    applicable standard is SBA's small business size standards for
    "other telecommunications" (annual receipts of \$13.5 million or
    less). *See* 13 C.F.R. § 121.201 (2007 NAICS code 517910).

[^693]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^694]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^695]: *See Local Multipoint Distribution Service*, Second Report and
    Order, 12 FCC Rcd 12545 (1997).

[^696]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC Code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^697]: The Commission has held two LMDS auctions: Auction No. 17 and
    Auction No. 23. Auction No. 17, the first LMDS auction, began on
    February 18, 1998, and closed on March 25, 1998 (104 bidders won 864
    licenses). Auction No. 23, the LMDS re-auction, began on April 27,
    1999, and closed on May 12, 1999 (40 bidders won 161 licenses).

[^698]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^699]: *Id.*

[^700]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^701]: *See* 47 U.S.C. § 573.

[^702]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^703]: *See* Current Filings for Certification of Open Video Systems,
    http://www.fcc.gov/mb/ovs/csovscer.html (last visited July 25,
    2007); Current Filings for Certification of Open Video Systems,
    http://www.fcc.gov/mb/ovs/csovsarc.html (last visited July 25,
    2007).

[^704]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1.

[^705]: OPASTCO reports that less than 8 percent of its members provide
    service under OVS certification. *See id*. at 2548-49, ¶ 88 n.336.

[^706]: *See id*. at 2549, ¶ 89. WideOpenWest is the second largest BSP
    and 16th largest MVPD, with cable systems serving about 292,500
    subscribers as of June 2005. *See id*. The third largest BSP is
    Knology, which was serving approximately 179,800 subscribers as of
    June 2005. *See id.*

[^707]: U.S. Census Bureau, 2007 NAICS Definitions, "515210 Cable and
    Other Subscription Programming";
    http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.

[^708]: 13 C.F.R. § 121.201 (NAICS code 515210).

[^709]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 515210) (issued November
    2005).

[^710]: *Id*. An additional 40 firms had annual receipts of \$25 million
    or more.

[^711]: 15 U.S.C. § 632.

[^712]: Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to
    William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business
    Act contains a definition of "small-business concern," which the RFA
    incorporates into its own definition of "small business." *See* 15
    U.S.C. § 632(a) (Small Business Act); 5 U.S.C. § 601(3) (RFA). SBA
    regulations interpret "small business concern" to include the
    concept of dominance on a national basis. *See* 13 C.F.R.
    § 121.102(b).

[^713]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^714]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (February 2007) ("Trends in Telephone Service"). This
    source uses data that are current as of October 20, 2005.

[^715]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^716]: *See* Trends in Telephone Service at Table 5.3.

[^717]: U.S. Census Bureau, 2007 NAICS Definitions, "2211 Electric Power
    Generation, Transmission and Distribution";
    http://www.census.gov/naics/2007/def/NDEF221.HTM#N2211.

[^718]: 13 C.F.R. § 121.201 (2007 NAICS codes 221111, 221112, 221113,
    221119, 221121, 221122, footnote 1).

[^719]: U S. Census Bureau, 2002 Economic Census, Subject Series:
    Utilities, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (2007 NAICS codes 221111, 221112,
    221113, 221119, 221121, 221122) (issued November 2005).

[^720]: *See* 13 C.F.R. § 121.201 (2007 NAICS Code 515120).

[^721]: U.S. Census Bureau, 2007 NAICS Definitions, "515120 Television
    Broadcasting";
    http://www.census.gov/naics/2007/def/ND515120.HTM#N515120, This
    category description provides further that "these establishments
    operate television broadcasting studios and facilities for the
    programming and transmission of programs to the public. These
    establishments also produce or transmit visual programming to
    affiliated broadcast television stations, which in turn broadcast
    the programs to the public on a predetermined schedule. Programming
    may originate in their own studios, from an affiliated network, or
    from external sources." *Id*. Separate census categories pertain to
    businesses primarily engaged in producing programming. *See* Motion
    Picture and Video Production, 2007 NAICS code 512110
    (http://www.census.gov/naics/2007/def/ND512110.HTM#N512110); Motion
    Picture and Video Distribution, 2007 NAICS Code 512120
    (http://www.census.gov/naics/2007/def/ ND512120.HTM#N512120);
    Teleproduction and Other Post-Production Services, 2007 NAICS Code
    512191 (http://www.census.gov/naics/2007/def/ND512191.HTM#N512191);
    and Other Motion Picture and Video Industries, 2007 NAICS Code
    512199 (http://www.census.gov/naics/2007/def/ ND512199.HTM#N512199).

[^722]: *See* News Release, "Broadcast Station Totals as of December 31,
    2006," 2007 WL 221575 (dated Jan. 26, 2007) ("*Broadcast Station
    Totals*"); also available at http://www.fcc.gov/mb/.

[^723]: We recognize that this total differs slightly from that
    contained in *Broadcast Station Totals*, *supra* note 81; however,
    we are using BIA's estimate for purposes of this revenue comparison.

[^724]: "\[Business concerns\] are affiliates of each other when one
    concern controls or has the power to control the other or a third
    party or parties controls or has to power to control both." 13
    C.F.R. § 121.103(a)(1).

[^725]: *See* *Broadcast Station Totals*, *supra* note 81.

[^726]: 5 U.S.C. § 603(c).

[^727]: *See* 5 U.S.C. § 603. The RFA has been amended by the *Contract
    With America Advancement Act of 1996*, Pub. L. No. 104-121, 110
    Stat. 847 (1996) ("CWAAA"). *See* 5 U.S.C. § 601 et. seq. Title II
    of the CWAAA is the *Small Business Regulatory Enforcement Fairness
    Act of 1996* ("SBREFA").

[^728]: *See* *Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992 -- Development of Competition
    and Diversity in Video Programming Distribution: Section 628(c)(5)
    of the Communications Act: Sunset of Exclusive Contract
    Prohibition*, Notice of Proposed Rulemaking, 22 FCC Rcd 4252 (2007)
    (the "*Notice*").

[^729]: *See* 5 U.S.C. § 604*.* We note that, because our action with
    respect to the exclusive contract prohibition in Section
    628(c)(2)(D) retains the status quo in this context, we could have
    certified our action under the RFA. *See generally* 5 U.S.C. § 605.

[^730]: Cable Television Consumer Protection and Competition Act of
    1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^731]: 47 U.S.C. § 548(c)(2)(D).

[^732]: 47 U.S.C. § 548(c)(5).

[^733]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992 -- Development of Competition and
    Diversity in Video Programming Distribution: Section 628(c)(5) of
    the Communications Act: Sunset of Exclusive Contract Prohibition*,
    Notice of Proposed Rulemaking, 16 FCC Rcd 19074 (2001).

[^734]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992 -- Development of Competition and
    Diversity in Video Programming Distribution: Section 628(c)(5) of
    the Communications Act: Sunset of Exclusive Contract Prohibition*,
    17 FCC Rcd 12124 (2002) ("*2002 Extension Order*"); *see also* 47
    C.F.R. § 76.1002(c)(6).

[^735]: *See 2002 Extension Order,* 17 FCC Rcd at 12161, ¶ 80.

[^736]: *See Notice*, 22 FCC Rcd 4252 (2007).

[^737]: 47 C.F.R. §§ 76.7 and 76.1003.

[^738]: *See* *Notice*, 22 FCC Rcd at 4259-4260, ¶¶ 13-16.

[^739]: *See id*.

[^740]: *See* SBA Office of Advocacy Comments at 4-7.

[^741]: *See id*. at 4.

[^742]: *See id*. at 6.

[^743]: 5 U.S.C. § 603(b)(3).

[^744]: 5 U.S.C. § 601(6).

[^745]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small-business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register."

[^746]: 15 U.S.C. § 632.

[^747]: *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/ n07-n02.xls).

[^748]: U.S. Census Bureau, 2007 NAICS Definitions, "517110 Wired
    Telecommunications Carriers";
    http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.

[^749]: 13 C.F.R. § 121.201 (2002 NAICS code 517110).

[^750]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 2, Employment Size of Establishments for the
    United States: 2002 (2002 NAISC Code 517110; 2002 NAISC Code 517510;
    2002 NAISC Code 518111) (issued November 2005).

[^751]: *Id*.

[^752]: U.S. Census Bureau, 2002 NAICS Definitions, "517510 Cable and
    Other Program Distribution";
    http://www.census.gov/epcd/naics02/def/NDEF517.HTM. As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^753]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^754]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002 (NAICS code 517510) (issued November 2005).

[^755]: *Id*. An additional 61 firms had annual receipts of \$25 million
    or more.

[^756]: 47 C.F.R. § 76.901(e). The Commission determined that this size
    standard equates approximately to a size standard of \$100 million
    or less in annual revenues. *Implementation of Sections of the 1992
    Cable Act: Rate Regulation,* Sixth Report and Order and Eleventh
    Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).

[^757]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren Comm.
    News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 400,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^758]: 47 C.F.R. § 76.901(c).

[^759]: Warren Communications News, *Television & Cable Factbook 2006*,
    "U.S. Cable Systems by Subscriber Size," page F-2 (data current as
    of Oct. 2005). The data do not include 718 systems for which
    classifying data were not available.

[^760]: 47 U.S.C. § 543(m)(2); *see* 47 C.F.R. § 76.901(f) & nn. 1-3.

[^761]: *See* *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, *Twelfth Annual
    Report*, 21 FCC Rcd 2503, 2507, ¶ 10 and 2617, Table B-1 (2006)
    ("*12^th^ Annual Report*").

[^762]: 47 C.F.R. § 76.901(f); *see* Public Notice*, FCC Announces New
    Subscriber Count for the Definition of Small Cable Operator*, DA
    01‑158 (Cable Services Bureau, Jan. 24, 2001).

[^763]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren
    Commc'ns News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 654,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^764]: The Commission does receive such information on a case-by-case
    basis if a cable operator appeals a local franchise authority's
    finding that the operator does not qualify as a small cable operator
    pursuant to § 76.901(f) of the Commission's rules. *See* 47 C.F.R. §
    76.909(b).

[^765]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^766]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^767]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2538-39, ¶ 70 and
    2620, Table B-3.

[^768]: DIRECTV is the largest DBS operator and the second largest MVPD,
    serving an estimated 15.72 million subscribers nationwide as of June
    2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3.

[^769]: EchoStar, which provides service under the brand name Dish
    Network, is the second largest DBS operator and one of the four
    largest MVPDs, serving an estimated 12.27 million subscribers
    nationwide. *Id*.

[^770]: *See id*. at 2540, ¶ 73 .

[^771]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC Code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC Code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^772]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.
    Previously, the Commission reported that IMCC had 250 members; *see*
    *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming,* *Tenth Annual Report*, 19 FCC
    Rcd 1606, 1666, ¶ 90 (2004) ("*10^th^ Annual Report*").

[^773]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.

[^774]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^775]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1. HSD
    subscribership declined more than 33 percent between June 2003 and
    June 2004. *See id.*

[^776]: *Amendment of Parts 1, 21 73, 74, and 101 of the Commission's
    Rules to Facilitate the Provision of Fixed and Mobile Broadband
    Access, Educational and Other Advanced Services in the 2150-2162 and
    2500-2690 MHz Bands*, WT Docket No. 03-66, RM-10586, *Report and
    Order and Further Notice of Proposed Rulemaking*, 19 FCC Rcd 14165
    (2004).

[^777]: *See id.*

[^778]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC Code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^779]: 47 C.F.R. § 21.961(b)(1) (2002).

[^780]: *Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, Report and
    Order*, 10 FCC Rcd 9589 (1995).

[^781]: MDS Auction No. 6 began on November 13, 1995, and closed on
    March 28, 1996 (67 bidders won 493 licenses).

[^782]: Hundreds of stations were licensed to incumbent MDS licensees
    prior to implementation of Section 309(j) of the Communications Act
    of 1934. 47 U.S.C. § 309(j). For these pre-auction licenses, the
    applicable standard is SBA's small business size standards for
    "other telecommunications" (annual receipts of \$13.5 million or
    less). *See* 13 C.F.R. § 121.201 (2007 NAICS code 517910).

[^783]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^784]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^785]: *See Local Multipoint Distribution Service*, Second Report and
    Order, 12 FCC Rcd 12545 (1997).

[^786]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC Code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC Code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^787]: The Commission has held two LMDS auctions: Auction No. 17 and
    Auction No. 23. Auction No. 17, the first LMDS auction, began on
    February 18, 1998, and closed on March 25, 1998 (104 bidders won 864
    licenses). Auction No. 23, the LMDS re-auction, began on April 27,
    1999, and closed on May 12, 1999 (40 bidders won 161 licenses).

[^788]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^789]: *Id.*

[^790]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^791]: *See* 47 U.S.C. § 573.

[^792]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    Code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC Code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^793]: *See* Current Filings for Certification of Open Video Systems,
    http://www.fcc.gov/mb/ovs/csovscer.html (last visited July 25,
    2007); Current Filings for Certification of Open Video Systems,
    http://www.fcc.gov/mb/ovs/csovsarc.html (last visited July 25,
    2007).

[^794]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1.

[^795]: OPASTCO reports that less than 8 percent of its members provide
    service under OVS certification. *See id*. at 2548-49, ¶ 88 n.336.

[^796]: *See id*. at 2549, ¶ 89. WideOpenWest is the second largest BSP
    and 16th largest MVPD, with cable systems serving about 292,500
    subscribers as of June 2005. *See id*. The third largest BSP is
    Knology, which was serving approximately 179,800 subscribers as of
    June 2005. *See id.*

[^797]: U.S. Census Bureau, 2007 NAICS Definitions, "515210 Cable and
    Other Subscription Programming";
    http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.

[^798]: 13 C.F.R. § 121.201 (NAICS code 515210).

[^799]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 515210) (issued November
    2005).

[^800]: *Id*. An additional 40 firms had annual receipts of \$25 million
    or more.

[^801]: 15 U.S.C. § 632.

[^802]: Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to
    William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business
    Act contains a definition of "small-business concern," which the RFA
    incorporates into its own definition of "small business." *See* 15
    U.S.C. § 632(a) (Small Business Act); 5 U.S.C. § 601(3) (RFA). SBA
    regulations interpret "small business concern" to include the
    concept of dominance on a national basis. *See* 13 C.F.R.
    § 121.102(b).

[^803]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^804]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (February 2007) ("Trends in Telephone Service"). This
    source uses data that are current as of October 20, 2005.

[^805]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^806]: *See* Trends in Telephone Service at Table 5.3.

[^807]: U.S. Census Bureau, 2007 NAICS Definitions, "2211 Electric Power
    Generation, Transmission and Distribution";
    http://www.census.gov/naics/2007/def/NDEF221.HTM#N2211.

[^808]: 13 C.F.R. § 121.201 (2007 NAICS codes 221111, 221112, 221113,
    221119, 221121, 221122, footnote 1).

[^809]: U S. Census Bureau, 2002 Economic Census, Subject Series:
    Utilities, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (2007 NAICS codes 221111, 221112,
    221113, 221119, 221121, 221122) (issued November 2005).

[^810]: 5 U.S.C. § 603(c).

[^811]: *See* SBA Office of Advocacy Comments at 4-7.

[^812]: *See* 5 U.S.C. § 801(a)(1)(A).

[^813]: *See* 5 U.S.C. § 604(b).

[^814]: Within the context of the pending Liberty Media/DIRECTV
    transaction, the applicants have expressed a willingness to continue
    compliance, pursuant to merger conditions in the *News/Hughes*
    *Memorandum Opinion and Order*. *See* *In the Matter of General
    Motors Corporation and Hughes Electronics Corporation, Transferors
    and The News Corporation Limited, Transferee*, Memorandum Opinion
    and Order, 19 FCC Rcd 473 (2004).