**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Galaxy Cable, Inc. ) File No. EB-02-TS-334

)

Operator of Cable System in: )

)

Schuyler, Nebraska )

)

Request for Waiver of Section 11.11(a) of the )

Commission's Rules )

## ORDER 

**Adopted: July 16, 2003 Released: July 18, 2003**

By the Chief, Spectrum Enforcement Division, Enforcement Bureau:

1.  In this *Order*, we grant Galaxy Cable, Inc. ("Galaxy Cable") a
    temporary, 36-month waiver of Section 11.11(a) of the Commission's
    Rules ("Rules") for the above-captioned cable television system.
    Additionally, we clarify three previous orders granting waivers of
    Section 11.11(a) to Galaxy Telecom, L.P. ("Galaxy Telecom"), Galaxy
    Cable's predecessor-in-interest.[^1] Section 11.11(a) requires cable
    systems serving fewer than 5,000 subscribers from a headend to
    either provide national level Emergency Alert System ("EAS")
    messages on all programmed channels or install EAS equipment and
    provide a video interrupt and audio alert on all programmed channels
    and EAS audio and video messages on at least one programmed channel
    by October 1, 2002.[^2]

2.  The Cable Act of 1992 added new Section 624(g) to the Communications
    Act of 1934 ("Act"), which requires that cable systems be capable of
    providing EAS alerts to their subscribers.[^3] In 1994, the
    Commission adopted rules requiring cable systems to participate in
    EAS.[^4] In 1997, the Commission amended the EAS rules to provide
    financial relief for small cable systems.[^5] The Commission
    declined to exempt small cable systems from the EAS requirements,
    concluding that such an exemption would be inconsistent with the
    statutory mandate of Section 624(g).[^6] However, the Commission
    extended the deadline for cable systems serving fewer than 10,000
    subscribers to begin complying with the EAS rules to October 1,
    2002, and provided cable systems serving fewer than 5,000
    subscribers the option of either providing national level EAS
    messages on all programmed channels or installing EAS equipment and
    providing a video interrupt and audio alert on all programmed
    channels and EAS audio and video messages on at least one programmed
    channel.[^7] In addition, the Commission stated that it would grant
    waivers of the EAS rules to small cable systems on a case-by-case
    basis upon a showing of financial hardship.[^8] The Commission
    indicated that waiver requests must contain at least the following
    information: (1) justification for the waiver, with reference to the
    particular rule sections for which a waiver is sought; (2)
    information about the financial status of the requesting entity,
    such as a balance sheet and income statement for the two previous
    years (audited, if possible); (3) the number of other entities that
    serve the requesting entity's coverage area and that have or are
    expected to install EAS equipment; and (4) the likelihood (such as
    proximity or frequency) of hazardous risks to the requesting
    entity's audience.[^9]

3.  On April 2, 2002, Galaxy Telecom filed a request for waiver of
    Section 11.11(a) of the Rules for 234 small cable systems. In its
    waiver request, Galaxy Telecom noted that it had filed for Chapter
    11 bankruptcy protection in October 2001 and that it intended to
    transfer all of its assets to Galaxy Cable as part of the
    court-ordered reorganization plan. Galaxy Telecom indicated that it
    was therefore filing the waiver request on behalf of both Galaxy
    Telecom and Galaxy Cable. In support of its waiver request, Galaxy
    Telecom submitted financial documentation indicating that compliance
    with Section 11.11(a) would impose a serious financial hardship on
    it. On June 21, 2002, the Technical and Public Safety Division of
    the Enforcement Bureau released three orders granting Galaxy Telecom
    temporary waivers of Section 11.11(a) for the 234 small cable
    systems.[^10] On July 19, 2002, Galaxy Cable filed a request for
    clarification of the *Waiver Orders*. Galaxy Cable states that
    following the issuance of the *Waiver Orders*, all of Galaxy
    Telecom's assets were transferred to Galaxy Cable pursuant to the
    court-ordered reorganization plan. Galaxy Cable notes that the
    *Waiver Orders* only reference Galaxy Telecom, not Galaxy Cable, and
    seeks clarification that the waivers granted in these orders also
    apply to Galaxy Cable. We clarify that the temporary waivers of
    Section 11.11(a) granted to Galaxy Telecom in the *Waiver Orders*
    also apply to its successor, Galaxy Cable. The failure to reference
    Galaxy Cable in the *Waiver Orders* was inadvertent.

4.  Galaxy Cable also requests clarification that the waivers granted in
    the *Waiver Orders* will continue to apply to the systems if the
    systems are sold. Galaxy Cable states that it is currently seeking
    buyers for certain of its systems and asserts that its ability to
    sell the systems at market value may be substantially impaired if
    the buyers have to bring the systems into compliance immediately.
    Galaxy Cable further asserts that the Commission has recognized the
    importance of small system relief following a system after sale of
    the system to a larger operator. In support of this assertion,
    Galaxy Cable cites a 1995 Commission order determining that a small
    cable system eligible for relief from cable rate regulation shall
    remain eligible for such relief even if the system is subsequently
    acquired by a larger cable operator.[^11]

5.  We deny Galaxy Cable's request for clarification that the temporary
    waivers granted in the *Waiver Orders* will continue to apply if the
    systems are sold. We granted the temporary waivers based on our
    review of the financial data and other information submitted by
    Galaxy Telecom, which demonstrated that the estimated cost of EAS
    equipment for the 234 small cable systems could impose a substantial
    financial hardship on it. We have no basis for determining at this
    juncture whether compliance with the EAS requirements would impose a
    similar financial hardship on any buyer or buyers if some of Galaxy
    Cable's systems are sold. Moreover, we do not believe that the
    policy of allowing small cable systems to remain eligible for relief
    from rate regulation even if they are subsequently acquired by a
    larger operator should be automatically extended to the EAS context.
    We think that there is a significant distinction between the ongoing
    regulatory burdens and costs associated with rate regulation and the
    one-time expense of installing EAS equipment. Further, the cost to
    small cable systems of complying with the EAS rules continues to
    decline. In this regard, we note that the Commission recently
    amended the EAS rules to permit cable systems serving fewer than
    5,000 subscribers to install FCC-certified decoder-only units,
    rather than both encoders and decoders, if such a device becomes
    available.[^12] On July 23, 2002, the Commission staff granted an
    equipment authorization for an EAS decoder-only unit to an equipment
    manufacturer.[^13] We anticipate that such a decoder-only system
    could result in significant cost savings to small cable
    systems.[^14] Finally, in view of the serious public safety
    objectives underlying the EAS rules, we do not think that it would
    be appropriate to automatically extend the temporary waivers granted
    to Galaxy Cable's systems to any subsequent buyer irrespective of
    its size or financial status. Rather, we will afford any such buyer
    30 days from the date the sale of any system or systems is
    consummated to request a waiver of Section 11.11(a), submitting the
    information necessary to support a financial hardship showing. Any
    buyer that does not file a waiver request will be required to come
    into compliance with the EAS rules by the end of the 30-day period.

6.  On August 26, 2002, Galaxy Cable filed a supplemental request for a
    temporary, 36-month waiver of Section 11.11(a) for its Schuyler,
    Nebraska cable system. Galaxy Cable states that in preparing the
    April 2, 2002 waiver request, it incorrectly identified the Schuyler
    system as being interconnected with its Wilber, Nebraska headend and
    therefore believed that the Schuyler system would not require a
    waiver. However, Galaxy Cable states that it is actually its Geneva,
    Nebraska cable system that is interconnected with the Wilber headend
    and therefore does not require a waiver. One of the *Waiver Orders*
    granted Galaxy Telecom's request for a 24-month waiver of Section
    11.11(a) for the Geneva, Nebraska cable system.[^15] Galaxy Cable
    notes that the Schuyler cable system has approximately 996
    subscribers. Based on price quotes from EAS equipment manufacturers,
    Galaxy Cable estimates that it would cost approximately \$10,000 to
    install EAS equipment at this system. Galaxy Cable asserts that this
    cost will impose a substantial financial hardship on it and provides
    its financial statements for 2000 and 2001 in support of this
    assertion. In addition, Galaxy Cable submits that its subscribers
    will continue to have ready access to national EAS information from
    other sources, including its cable systems. Galaxy Cable also
    asserts that its subscribers will have access to EAS information
    through over-the-air reception of broadcast television and radio
    stations.

7.  Based upon our review of the financial data and other information
    submitted by Galaxy Cable, we conclude that a temporary, 36-month
    waiver of Section 11.11(a) for the Schuyler cable system is
    warranted.[^16] In particular we find that the estimated \$10,000
    cost of EAS equipment for this small cable system could impose a
    financial hardship on Galaxy Cable. Further, we withdraw the
    temporary, 24-month waiver previously granted for the Geneva,
    Nebraska cable system.

8.  Accordingly, **IT IS ORDERED** that Galaxy Cable, Inc.'s request for
    clarification **IS GRANTED** to the extent indicated herein and
    **IS** otherwise **DENIED**.

9.  **IT IS FURTHER ORDERED** that, pursuant to Sections 0.111, 0.204(b)
    and 0.311 of the Rules,[^17] Galaxy Cable, Inc. **IS GRANTED** a
    waiver of Section 11.11(a) of the Rules until October 1, 2005 for
    the Schuyler, Nebraska cable television system.

10. **IT IS FURTHER ORDERED** that the temporary, 24-month waiver of
    Section 11.11(a) of the Rules previously granted to Galaxy Cable for
    its Geneva, Nebraska cable television system **IS WITHDRAWN**.

11. **IT IS FURTHER ORDERED** that Galaxy Cable, Inc. place a copy of
    this waiver in its system files.

12. **IT IS FURTHER ORDERED** that a copy of this *Order* shall be sent
    by Certified Mail Return Receipt Requested to counsel for Galaxy
    Cable, Inc., Christopher C. Cinnamon, Esq., Cinnamon Mueller, 307
    North Michigan Avenue, Suite 1020, Chicago, Illinois 60601.

FEDERAL COMMUNICATIONS COMMISSION

Joseph P. Casey

Chief, Spectrum Enforcement Division

> Enforcement Bureau

[^1]: *Galaxy Telecom, L.P.*, 17 FCC Rcd 11798 (Enf. Bur., Tech. & Pub.
    Safety Div., 2002); *Galaxy Telecom, L.P.*, 17 FCC Rcd 11801 (Enf.
    Bur., Tech. & Pub. Safety Div., 2002); *Galaxy Telecom, L.P.*, 17
    FCC Rcd 11805 (Enf. Bur., Tech. & Pub. Safety Div., 2002)
    (collectively, "*Waiver Orders*").

[^2]: 47 C.F.R. § 11.11(a).

[^3]: Cable Television Consumer Protection and Competition Act of 1992,
    Pub. L. No. 102-385, § 16(b), 106 Stat. 1460, 1490 (1992). Section
    624(g) provides that "each cable operator shall comply with such
    standards as the Commission shall prescribe to ensure that viewers
    of video programming on cable systems are afforded the same
    emergency information as is afforded by the emergency broadcasting
    system pursuant to Commission regulations ...." 47 U.S.C. § 544(g).

[^4]: *Amendment of Part 73, Subpart G, of the Commission's Rules
    Regarding the Emergency Broadcast System, Report and Order and
    Further Notice of Proposed Rule Making*, FO Docket Nos.
    91-171/91-301, 10 FCC Rcd 1786 (1994), *reconsideration granted in
    part, denied in part*, 10 FCC Rcd 11494 (1995).

[^5]: *Amendment of Part 73, Subpart G, of the Commission's Rules
    Regarding the Emergency Broadcast System, Second Report and Order*,
    FO Docket Nos. 91-171/91-301, 12 FCC Rcd 15503 (1997).

[^6]: *Id.* at 15512-13.

[^7]: *Id.* at 15516-15518.

[^8]: *Id.* at 15513.

[^9]: *Id.* at 15513, n. 59.

[^10]: *See Waiver Orders*, *supra* n. 1.

[^11]: *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation, Sixth
    Report and Order and Eleventh Order on Reconsideration*, 10 FCC Rcd
    7393, 7413 (1995).

[^12]: *Amendment of Part 11 of the Commission's Rules Regarding the
    Emergency Alert System*, 17 FCC Rcd 4055, 4082 (2002).

[^13]: *Public Notice*, "Notice Regarding FCC Certification of EAS
    Decoder," DA 02-2312 (Enf. Bur. released September 19, 2002).

[^14]: One estimate indicates that an EAS decoder-only system can reduce
    the cost by 64% over what a cable operator would spend for an
    encoder/decoder unit. 17 FCC Rcd at 4082.

[^15]: *Galaxy Telecom, L.P.*, 17 FCC Rcd 11801 (Enf. Bur., Tech. & Pub.
    Safety Div., 2002).

[^16]: The waiver will extend from October 1, 2002, until October 1,
    2005. We clarify that the waiver we are granting also encompasses
    the EAS testing and monitoring requirements. Galaxy Cable also
    requests that we clarify that this waiver will continue to apply to
    the Schuyler cable system if it is sold. For the reasons stated
    above, we deny this request.

[^17]: 47 C.F.R. §§ 0.111, 0.204(b) and 0.311.