**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | MB Docket No. 05-311         |
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| Implementation of Section        | ** |                              |
| 621(a)(1) of the Cable           |    |                              |
| Communications Policy Act of     | *  |                              |
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| Television Consumer Protection   | ** |                              |
| and Competition Act of 1992      |    |                              |
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**NOTICE OF PROPOSED RULEMAKING**

**Adopted: November 3, 2005 Released: November 18, 2005**

**Comment Date: \[60 days after publication in the Federal Register\]**

**Reply Comment Date: \[90 days after publication in the Federal
Register\]**

By the Commission: Chairman Martin, and Commissioners Abernathy, Copps
and Adelstein issuing separate statements.

# introduction

1.  In this Notice of Proposed Rulemaking ("NPRM" or "Notice"), we
    solicit comment on how we should implement Section 621(a)(1) of the
    Communications Act of 1934, as amended (the "Communications Act" or
    the "Act"). Section 621(a)(1) states in relevant part that "a
    franchising authority ... may not unreasonably refuse to award an
    additional competitive franchise."[^1] While the Commission has
    found that, "\[t\]oday, almost all consumers have the choice between
    over-the-air broadcast television, a cable service, and at least two
    DBS providers,"[^2] greater competition in the market for the
    delivery of multichannel video programming is one of the primary
    goals of federal communications policy.[^3] Increased competition
    can be expected to lead to lower prices and more choices for
    consumers and, as marketplace competition disciplines competitors'
    behavior, all competing cable service providers could require less
    federal regulation. Moreover, for all competitors in the
    marketplace, the abilities to offer video to consumers and to deploy
    broadband networks rapidly are linked intrinsically.[^4] However,
    potential competitors seeking to enter the multichannel video
    programming distributor ("MVPD") marketplace have alleged that in
    many areas the current operation of the local franchising process
    serves as a barrier to entry. Accordingly, this *Notice* is designed
    to solicit comment on implementation of Section 621(a)(1)'s
    directive that LFAs not unreasonably refuse to award competitive
    franchises, and whether the franchising process unreasonably impedes
    the achievement of the interrelated federal goals of enhanced cable
    competition and accelerated broadband deployment and, if so, how the
    Commission should act to address that problem.

# background

2.  The Communications Act provides new entrants four options for entry
    into the MVPD market.[^5] They can provide video programming to
    subscribers via radio communication,[^6] a cable system[^7] or an
    open video system,[^8] or they can provide transmission of video
    programming on a common carrier basis.[^9] Any new entrant opting to
    offer "cable service"[^10] as a "cable operator"[^11] becomes
    subject to the requirements of Title VI. Section 621 of Title VI
    sets forth general cable franchise requirements. Subsection (b)(1)
    of Section 621 prohibits a cable operator from providing cable
    service in a particular area without first obtaining a cable
    franchise,[^12] and Subsection (a)(1) grants to local franchising
    authorities ("LFAs") the authority to award such franchises.[^13]
    Other provisions of Section 621 provide that, in awarding a
    franchise, an LFA "shall assure that access to cable service is not
    denied to any group of potential residential cable subscribers
    because of the income of the residents of the local area in which
    such group resides;"[^14] "shall allow \[a\] cable system a
    reasonable period of time to become capable of providing cable
    service to all households in the franchise area;"[^15] and "may
    require adequate assurance that the cable operator will provide
    adequate public, educational and governmental access channel
    capacity, facilities, or financial support."[^16]

3.  The initial purpose of Section 621(a)(1), which was added to the
    Communications Act by the Cable Communications Policy Act of 1984
    (the "1984 Cable Act"),[^17] was to both affirm and delineate the
    role of local franchising authorities ("LFAs") in the franchising
    process.[^18] A few years later, however, the Commission prepared a
    report to Congress on the cable industry pursuant to the
    requirements of the 1984 Cable Act.[^19] In that Report, the
    Commission concluded that in order "\[t\]o encourage more robust
    competition in the local video marketplace, the Congress should ...
    forbid local franchising authorities from unreasonably denying a
    franchise to potential competitors who are ready and able to provide
    service."[^20]

4.  In response,[^21] Congress revised Section 621(a)(1) through the
    Cable Television Consumer Protection and Competition Act of 1992
    (the "1992 Cable Act")[^22] to read as follows: "A franchising
    authority may award, in accordance with the provisions of this
    title, 1 or more franchises within its jurisdiction; except that a
    franchising authority may not grant an exclusive franchise *and may
    not unreasonably refuse to award an additional competitive
    franchise*."[^23] As the legislative history makes plain, the
    purpose of this abridgement of local government authority was to
    promote greater cable competition:

> Based on the evidence in the record taken as a whole, it is clear that
> there are benefits from competition between two cable systems. Thus,
> the Committee believes that local franchising authorities should be
> encouraged to award second franchises. Accordingly, \[the 1992 Cable
> Act,\] as reported, prohibits local franchising authorities from
> unreasonably refusing to grant second franchises.[^24]

Section 621(a)(1), as revised, established a clear, federal-level
limitation on the authority of LFAs in the franchising process.[^25] In
that regard, Congress provided that "\[a\]ny applicant whose application
for a second franchise has been denied by a final decision of the
franchising authority may appeal such final decision pursuant to the
provisions of section 635...."[^26] Section 635, in turn, states that
"\[a\]ny cable operator adversely affected by any final determination
made by a franchising authority under section 621(a)(1) ... may commence
an action within 120 days after receiving notice of such determination"
in federal court or a state court of general jurisdiction.[^27]

5.  As potential new entrants seek to enter the MVPD marketplace, there
    have been indications that in many areas the current operation of
    the local franchising process is serving as an unreasonable barrier
    to entry.[^28] For example, Verizon recently filed comments in the
    Commission's annual investigation into the state of video
    competition arguing that "\[t\]he single biggest obstacle to
    widespread competition in the video services market is the
    requirement that a provider obtain an individually negotiated local
    franchise in each area where it intends to provide service."[^29] In
    its comments, Verizon contends that the local franchising process
    impedes cable competition in the following ways: (1) it "forces a
    new entrant to telegraph its deployment plans to the incumbent video
    competitor," thereby "allow\[ing\] the incumbent not only to take
    steps to prolong the franchise process and delay the onset of
    competition, but also to entrench its position in the market before
    the new entrant has the opportunity to compete;"[^30] (2) it "simply
    takes too long," as a result of "factors such as inertia, arcane or
    lengthy application procedures, bureaucracy or, in some cases,
    inattentiveness or unresponsiveness at the LFA level;"[^31] (3) it
    triggers so-called "level playing field" laws, "which require the
    new entrant to build-out and serve an entire franchise area on an
    expedited basis or to match all of the concessions previously
    provided by the incumbent in order for it to gain its original
    monopoly position in the local area, despite the vastly different
    competitive situation facing the new entrant;"[^32] and (4) it
    involves "outrageous demands by some LFAs," which "are in no way
    related to video services or to the rationales for requiring
    franchises."[^33]

6.  The efficient operation of the local franchising process is
    especially significant with respect to potential new entrants with
    existing facilities, for a number of reasons. First, because they
    seek to provide video programming to large portions of the country,
    they contend that the sheer number of franchises they first must
    obtain serves as a competitive roadblock. Verizon, for example, has
    stated that it would have to negotiate with more than 10,000
    municipalities in order to offer service throughout its current
    service area.[^34] Second, because the existing service areas of
    potential new entrants with existing facilities do not always
    coincide perfectly with those covered by incumbent cable operators'
    franchises, they argue that build-out requirements demanded by LFAs
    create disincentives for them to enter the marketplace.[^35] We note
    that SBC has told investors that Project Lightspeed, an "initiative
    to expand its fiber-optics network deeper into neighborhoods to
    deliver SBC U-verse^SM^ TV, voice and high-speed Internet access
    services,"[^36] will be deployed to approximately ninety percent of
    its "high-value," seventy percent of its "medium-value," and less
    than five percent of its "low-value" customers.[^37]

7.  According to the National Association of Telecommunications Officers
    and Advisors, the National League of Cities, the United States
    Conference of Mayors, and the National Association of Counties,
    local governments "want and welcome real communications competition
    in video, telephone and broadband services,"[^38] and they "support
    a technology-neutral approach that promotes broadband deployment and
    competitive service offerings."[^39] While acknowledging that
    consumers "demand real competition to increase their options and
    improve the quality of services,"[^40] local governments argue that
    franchising "need not be a complex or time-consuming process."[^41]
    They argue that the current framework "\[s\]afeguards \[a\]gainst
    \[a\]buse and \[p\]rotects \[c\]ompetition."[^42] Furthermore, local
    governments maintain that local franchisors take their fiduciary
    responsibilities seriously and strive to "manage and facilitate in
    an orderly and timely fashion the use of \[local\] property."[^43]

8.  Anecdotal evidence suggests that new entrants have been able to
    obtain cable franchises. In that regard, we note that SNET[^44] and
    Ameritech[^45] both obtained cable franchises before being acquired
    by SBC. Bellsouth[^46] and Qwest[^47] have obtained franchises, as
    have many cable overbuilders -- RCN has acquired over 100.[^48]
    Verizon has stated that it "has obtained nine local cable franchises
    for FiOS TV from various local franchising authorities ("LFAs") in
    California, Florida, Virginia, and Texas"[^49] and "is negotiating
    franchises with more than 200 municipalities."[^50] According to a
    survey of 161 National Telecommunications Cooperative Association
    ("NTCA") members, "\[f\]orty-two percent of survey respondents offer
    video service to their customers. Ninety-four percent of those offer
    video under a cable franchise, while six percent offer video as an
    Open Video System (OVS)...."[^51]

9.  In addition, there have been recent efforts at the state level to
    facilitate entry by competitive cable providers. For example,
    legislation was passed in Texas in September 2005 enabling new
    entrants in the video programming distribution marketplace to
    provide service pursuant to state-issued certificates of franchising
    authority.[^52] Upon the submission of a completed affidavit by an
    applicant, Texas regulators now are required to issue a certificate
    of franchising authority within seventeen business days.[^53]
    Similar bills have been introduced in Virginia and New Jersey
    although they are yet to be enacted.[^54]

10. With this *Notice*, we seek to determine whether, in awarding
    franchises, LFAs are carrying out legitimate policy objectives
    allowed by the Act or are hindering the federal communications
    policy objectives of increased competition in the delivery of video
    programming and accelerated broadband deployment and, if that is the
    case, whether and how we can remedy the problem.[^55]

# discussion

11. Potential competitive cable providers have alleged that the local
    franchising process serves as a barrier to entry, and that State and
    local franchise requirements serve to unreasonably delay competitive
    entry. Given the interrelated federal goals of enhanced cable
    competition and rapid broadband deployment, below we seek comment on
    a number of issues relating to the cable franchising process
    generally, and, in particular, the process by which competitive
    cable franchises are awarded.

## Potential Competitors' Current Ability to Obtain Franchises

12. We request comment on the current environment in which would-be new
    entrants attempt to obtain competitive cable franchises. How many
    franchising authorities are there nationally?[^56] How many
    franchises are needed to reach 60 or 80 percent of cable
    subscribers?[^57] In how many of these franchise areas do new
    entrants provide or intend to provide competitive video services?
    Are cable systems generally equivalent to franchise areas? To what
    extent does the regulatory process involved in obtaining franchises
    -- particularly multiple franchises covering broad territories, such
    as those today served by facilities-based providers of telephone
    and/or broadband services -- impede the realization of our policy
    goals? Are potential competitors obtaining from LFAs the authority
    needed to offer video programming to consumers in a timely manner?
    What is the impact of state-wide franchise authority on the ability
    of the competitive provider to access the market? Is there evidence
    that such state-wide franchises are causing delay? What impact has
    state-level legislative or regulatory activity had on the
    franchising process? Are competitors taking advantage of new
    opportunities provided by state legislatures and regulators? How
    many competitive franchises have been awarded to date? How many
    competitive franchises have potential new entrants requested to
    date? How much time, on average, has elapsed between the date of
    application and the date of grant, and during that time period, how
    much time, on average, was spent in active negotiations? How many
    applications have been denied?

13. How many negotiations currently are ongoing? Are the terms being
    proffered consistent with the requirements of Title VI? How has the
    cable marketplace changed since the passage of the 1992 Cable Act,
    and what effect have those changes had on the process of obtaining a
    competitive cable franchise? Are current procedures or requirements
    appropriate for any cable operator, including existing cable
    operators? What problems have cable incumbents encountered with
    LFAs? Should cable service requirements vary greatly from
    jurisdiction to jurisdiction? Are certain cable service requirements
    no longer needed in light of competition in the MVPD marketplace? To
    what extent are LFAs demanding concessions that are not relevant to
    providing cable services?[^58] Commenters arguing that such abuses
    are occurring are asked to provide specific examples of such
    demands. Parties should submit empirical data on the extent to which
    LFAs unreasonably refuse to award competitive franchises. We seek
    record evidence of both concrete examples and broader information
    that demonstrate the extent to which any problems exist.

14. We also ask commenters to address the impact that state laws have on
    the ability of new entrants to obtain competitive franchises. Some
    parties state that so-called "level-playing-field" statutes,[^59]
    which typically impose upon new entrants terms and conditions that
    are neither "more favorable" nor "less burdensome" that those to
    which existing franchises are subject,[^60] create unreasonable
    regulatory barriers to entry. Others state that they create
    comparability among all providers.[^61] We seek comment on these
    issues. We also seek comment on the impact of state laws
    establishing a multi-step franchising process.[^62] Do such laws
    create unreasonable delays in the franchising process?

## The Commission's Authority to Adopt Rules Implementing Section 621(a)(1)

15. We tentatively conclude that the Commission has authority to
    implement Section 621(a)(1)'s directive that LFAs not unreasonably
    refuse to award competitive franchises. As an initial matter, the
    Commission is charged by Congress with the administration of Title
    VI, which, as courts have held, necessarily includes the authority
    to interpret and implement Section 621.[^63] Moreover, we believe
    that the 1992 Cable Act's revisions to Section 621(a)(1) indicate
    that Congress considered the goal of greater cable competition to be
    sufficiently important to justify the Commission's adoption of
    rules. Under the Supremacy Clause,[^64] the enforcement of a state
    law or regulation may be preempted by federal law when it stands as
    an obstacle to the accomplishment and execution of the full purposes
    and objectives of Congress.[^65] The Supreme Court has held that
    federal regulations properly adopted in accordance with an agency's
    statutory authorization have no less preemptive effect than federal
    statutes and, applying this principle, the Court has approved the
    preemptive authority that the Commission has asserted over the
    regulation of cable television systems.[^66] In addition, Section
    636(c) of the Act states that "any provision of law of any State,
    political subdivision, or agency thereof, or franchising authority
    or any provision of any franchise granted by such authority, which
    is inconsistent with \[the Communications\] Act shall be deemed to
    be preempted and superseded."[^67] Thus, we tentatively conclude
    that, pursuant to the authority granted under Sections 621(a) and
    636(c) of the Act, and under the Supremacy Clause, the Commission
    may deem to be preempted and superceded any law or regulation of a
    State or LFA that causes an unreasonable refusal to award a
    competitive franchise in contravention of section 621(a). At the
    same time, however, we recognize that Section 636(a) states that
    "\[n\]othing in this title shall be construed to affect any
    authority of any State, political subdivision, or agency thereof, or
    franchising authority, regarding matters of public health, safety,
    and welfare, to the extent consistent with the express provisions of
    this title."[^68] Finally, we note that the Commission is empowered
    by Section 1 of the Act "to execute and enforce the provisions of
    this Act"[^69] and by Section 4(i) "to perform any and all acts,
    make such rules and regulations, and issue such orders, not
    inconsistent with this Act, as may be necessary in the execution of
    its functions."[^70] We seek input from commenters on our tentative
    conclusion that the Commission is authorized to implement Section
    621(a)(1) as amended. We also seek comment on the manner in which
    the Commission should proceed. Do we have the authority to adopt
    rules or are we limited to providing guidance?

16. The first sentence of Section 621(a)(1) states that a franchising
    authority may award "1 or more franchises" and may not unreasonably
    refuse to award "an additional competitive franchise."[^71] We
    tentatively conclude that Section 621(a)(1) empowers the Commission
    to ensure that the local franchising process does not unreasonably
    interfere with the ability of any potential new entrant to provide
    video programming to consumers. We seek comment on this tentative
    conclusion.

17. Section 621(a)(1) states in relevant part that "\[a\]ny applicant
    whose application for a second franchise has been denied by a final
    decision of the franchising authority may appeal such final decision
    pursuant to the provisions of section 635 for failure to comply with
    this subsection."[^72] Section 635, in turn, sets forth the specific
    procedures for such judicial proceedings.[^73] Apart from those
    remedies available to aggrieved cable operators under Section 635,
    we tentatively conclude that Section 621(a)(1) authorizes the
    Commission to take actions, consistent with Section 636(a), to
    ensure that the local franchising process does not undermine the
    well-established policy goal of increased MVPD competition and, in
    particular, greater cable competition within a given franchise
    territory.[^74] We seek comment on this tentative conclusion as
    well. How might the Commission best assure that the local
    franchising process is not inhibiting the ability of incumbent cable
    operators to invest in broadband services?

18. Finally, we seek comment on possible sources of Commission
    authority, other than Section 621(a)(1), to address problems caused
    by the local franchising process. For example, given the
    relationship between the ability to offer video programming and the
    willingness to invest in broadband facilities identified above,
    could the Commission take action to address franchise-related
    concerns pursuant to Section 706?

## Steps the Commission Should Take to Ensure that the Local Franchising Process Does Not Unreasonably Interfere with Competitive Cable Entry and Rapid Broadband Deployment

19. We seek comment on how we should define what constitutes an
    unreasonable refusal to award an additional competitive franchise
    under Section 621(a)(1). While that section refers to the
    "unreasonable refus\[al\] to *award* an additional competitive
    franchise,"[^75] we tentatively conclude that Section 621(a)(1)
    prohibits not only the ultimate refusal to award a competitive
    franchise, but also the establishment of procedures and other
    requirements that have the effect of unreasonably interfering with
    the ability of a would-be competitor to obtain a competitive
    franchise, either by (1) creating unreasonable delays in the
    process, or (2) imposing unreasonable regulatory roadblocks, such
    that they effectively constitute a *de facto* "unreasonable refusal
    to award an additional competitive franchise" within the meaning of
    Section 621(a)(1). We tentatively find that this interpretation is
    consistent with the language in the statute and appropriate because
    it allows us to capture more appropriately the range of behavior
    that would constitute an "unreasonable refusal to award an
    additional competitive franchise."[^76] We seek comment on this
    tentative conclusion.

20. Further, we tentatively conclude that it is not unreasonable for an
    LFA, in awarding a franchise, to "assure that access to cable
    service is not denied to any group of potential residential cable
    subscribers because of the income of the residents of the local area
    in which such group resides;"[^77] "allow \[a\] cable system a
    reasonable period of time to become capable of providing cable
    service to all households in the franchise area;"[^78] and "require
    adequate assurance that the cable operator will provide adequate
    public, educational and governmental access channel capacity,
    facilities, or financial support."[^79] These powers and limitations
    on franchising authorities promote important public policy goals.

21. We solicit comment on what, if any, specific rules, guidance or best
    practices we should adopt to ensure that the local cable franchising
    process does not unreasonably impede competitive cable entry. What
    would the appropriate remedy or remedies be for violations of such
    rules, guidance or best practices? Should the Commission establish
    specific rules to which LFAs must adhere or specific guidelines for
    LFAs? For example, should the Commission address maximum timeframes
    for considering an application for a competitive franchise?[^80] Are
    there certain practices that we should find unreasonable through
    rules or guidelines? If so, what are these practices?

22. In addition, we note that it is not clear how the primary
    justification for a cable franchise -- *i.e.*, the locality's need
    to regulate and receive compensation for the use of public rights of
    way -- applies to entities that already have franchises that
    authorize their use of those rights of way. Does Section 621(a)(1)
    provide the Commission with the authority to establish different --
    specifically, higher -- standards for "reasonableness" with respect
    to such entities? In that context, we seek comment on whether
    Section 621(a)(1) permits the imposition of greater restrictions on
    the authority of LFAs with respect to those entities (*e.g.*,
    facilities-based providers of telephone and/or broadband services)
    that already have permission to access public rights of way.

23. We also seek comment on whether build-out requirements are creating
    unreasonable barriers to entry for facilities-based providers of
    telephone and/or broadband services. It is our understanding that
    the areas served by such entities frequently do not coincide
    perfectly with the areas under the jurisdiction of the relevant
    LFAs. We also note that Section 621(a)(4)(A) states that, "\[i\]n
    awarding a franchise, the franchising authority shall allow the
    applicant's cable system a reasonable period of time to become
    capable of providing cable service to all households in the
    franchise area."[^81] (For purposes of this discussion, we
    distinguish between (1) requirements that may function as barriers
    to competitive entry for providers of telephone and/or broadband
    services with existing facilities, and (2) prohibitions against
    discriminatory deployment of cable services based upon economic
    considerations.[^82]) We seek comment on the FCC's authority in this
    area. Given the language of Section 621(a)(4)(A), does the
    Commission have authority under Section 621(a)(1) to direct LFAs to
    allow such new entrants a specific, minimum amount of time to expand
    their networks beyond their current footprints? If so, and in light
    of the fact that a new entrant generally faces competition from at
    least one incumbent cable operator and two direct broadcast
    satellite ("DBS") providers, what would constitute a reasonable
    amount of time to do so?

24. Finally, Section 602 of the Act defines "franchising authority" as
    "any governmental entity empowered by Federal, State, or local law
    to grant a franchise."[^83] In some cases it may be the state
    itself, rather than the LFA, that has taken steps which unreasonably
    interfere with new entrants' ability to obtain a competitive
    franchise. We ask commenters to address whether it may be
    appropriate for us to preempt such state-level legislation to the
    extent that we find it serves as an unreasonable barrier to the
    grant of competitive franchises.[^84]

# procedural matters

## Initial Regulatory Flexibility Analysis

25. With respect to this *Notice*, an Initial Regulatory Flexibility
    Analysis ("IRFA"), *see generally* 5 U.S.C. § 603, is contained in
    the attached Appendix. Comments must be identified as responses to
    the IRFA and must be filed by the deadlines for comments on the NPRM
    specified *infra*. The Commission will send a copy of the *Notice*,
    including the IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration.[^85]

## Initial Paperwork Reduction Act of 1995 Analysis

26. This document does not contain proposed information collection(s)
    subject to the Paperwork Reduction Act of 1995 (PRA), Public Law
    104-13. In addition, therefore, it does not contain any new or
    modified "information collection burden for small business concerns
    with fewer than 25 employees," pursuant to the Small Business
    Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C.
    3506(c)(4).

## Ex Parte Rules

27. *Permit-But-Disclose.* This proceeding will be treated as a
    "permit-but-disclose" proceeding subject to the
    "permit-but-disclose" requirements under section 1.1206(b) of the
    Commission's rules.[^86] *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.[^87] Additional rules
    pertaining to oral and written presentations are set forth in
    section 1.1206(b).

## Filing Requirements

28. *Comments and Replies*. Pursuant to Sections 1.415 and 1.419 of the
    Commission's rules,[^88] interested parties may file 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.[^89]

29. *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](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.

30. *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.

-   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 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 should
    be addressed to 445 12th Street, SW, Washington DC 20554.

31. *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. These documents will also be available via
    ECFS. Documents will be available electronically in ASCII, Word 97,
    and/or Adobe Acrobat.

32. *Accessibility Information.* To request information in accessible
    formats (computer diskettes, large print, audio recording, and
    Braille), send an e-mail to <fcc504@fcc.gov> or call the FCC's
    Consumer and Governmental Affairs Bureau at (202) 418-0530
    (voice), (202) 418-0432 (TTY). This document can also be downloaded
    in Word and Portable Document Format (PDF) at:
    [http://www.fcc.gov](http://www.fcc.gov/).

33. *Additional Information*. For additional information on this
    proceeding, contact John Norton, <John.Norton@fcc.gov>, or Andrew
    Long, <Andrew.Long@fcc.gov>, of the Media Bureau, Policy
    Division, (202) 418-2120.

# ordering clauses

34. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4(i),
    621(a)(1), and 636(c) of the Communications Act of 1934, as amended,
    47 U.S.C. §§ 151, 154(i), 541(a)(1), and 556(c), this Notice of
    Proposed Rulemaking is hereby ADOPTED.

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

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

APPENDIX

Initial Regulatory Flexibility Analysis

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (the "RFA"),[^90] the Commission has prepared this Initial
    Regulatory Flexibility Analysis ("IRFA") of the possible significant
    economic impact of the policies and rules proposed in this *Notice*
    on a substantial number of small entities.[^91] 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 on the *Notice* provided in paragraph 28 of the item. The
    Commission will send a copy of the *Notice*, including this IRFA, to
    the Chief Counsel for Advocacy of the Small Business Administration
    ("SBA").[^92] In addition, the *Notice* and IRFA (or summaries
    thereof) will be published in the Federal Register.[^93]

## Need for, and Objectives of, the Proposed Rules

36. The *Notice* initiates a process to implement Section 621(a)(1) of
    the Communications Act of 1934, as amended, in order to further the
    interrelated goals of enhanced cable competition and accelerated
    broadband deployment. Specifically, the *Notice* solicits comment on
    how to best ensure that local franchising authorities ("LFAs"),
    which are the governmental entities responsible for regulating cable
    providers at the local level,[^94] do not "unreasonably refuse to
    award ... additional competitive franchise\[s\]."[^95] The *Notice*
    also seeks comment on the specific approach the Commission should
    take in order to implement Section 621(a)(1). Specifically, it asks
    whether the Commission should establish (1) specific guidelines
    and/or model terms for competitive cable franchises, or (2) general
    principles that are designed to provide LFAs with the guidance
    necessary to ensure that competitive franchises are awarded in a
    timely fashion.

## Legal Basis

37. The *Notice* tentatively concludes that the Commission has authority
    to implement Section 621(a)(1)'s mandate that LFAs do not
    "unreasonably refuse to award ... additional competitive
    franchises." In that regard, the *Notice* finds that Section 636(c)
    makes plain that "any provision of law of any State, political
    subdivision, or agency thereof, or franchising authority or any
    provision of any franchise granted by such authority, which is
    inconsistent with this Act shall be deemed to be preempted and
    superceded."[^96] Finally, the item notes that the Commission is
    empowered by Section 1 of the Communications Act "to execute and
    enforce \[its\] provisions"[^97] and by Section 4(i) "to perform any
    and all acts, make such rules and regulations, and issue such
    orders, not inconsistent with this Act, as may be necessary in the
    execution of its functions."[^98] The *Notice* is adopted pursuant
    to Sections 1, 4(i), 621(a)(1), and 636(c) of the Communications Act
    of 1934, as amended.[^99]

## Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply

38. 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.[^100] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^101] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^102] 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").[^103]

39. *Small Businesses*. Nationwide, there are a total of approximately
    22.4 million small businesses, according to SBA data.[^104]

40. *Small Organizations*. Nationwide, there are approximately 1.6
    million small organizations.[^105]

41. The Commission has determined that the group of small entities
    possibly directly affected by the proposed rules herein, if adopted,
    consists of small governmental entities (which, in some cases, may
    be represented in the local franchising process by not-for-profit
    enterprises). A description of these entities is provided below. In
    addition the Commission voluntarily provides descriptions of a
    number of entities that may be merely indirectly affected by any
    rules that result from the *Notice*.

### Small Governmental Jurisdictions

42. The term "small governmental jurisdiction" is defined as
    "governments of cities, towns, townships, villages, school
    districts, or special districts, with a population of less than
    fifty thousand."[^106] As of 1997, there were approximately 87,453
    governmental jurisdictions in the United States.[^107] This number
    includes 39,044 county governments, municipalities, and townships,
    of which 37,546 (approximately 96.2 percent) have populations of
    fewer than 50,000, and of which 1,498 have populations of 50,000 or
    more. Thus, we estimate the number of small governmental
    jurisdictions overall to be 84,098 or fewer.

### Miscellaneous Entities

43. The entities described in this section are affected merely
    indirectly by our current action, and therefore are not formally a
    part of this RFA analysis. We have included them, however, to
    broaden the record in this proceeding and to alert them to our
    tentative conclusions.

#### Cable Operators

44. The "Cable and Other Program Distribution" census category includes
    cable systems operators, closed circuit television services, direct
    broadcast satellite services, multipoint distribution systems,
    satellite master antenna systems, and subscription television
    services. The SBA has developed small business size standard for
    this census category, which includes all such companies generating
    \$12.5 million or less in revenue annually.[^108] According to
    Census Bureau data for 1997, there were a total of 1,311 firms in
    this category, total, that had operated for the entire year.[^109]
    Of this total, 1,180 firms had annual receipts of under \$10 million
    and an additional 52 firms had receipts of \$10 million or more but
    less than \$25 million. Consequently, the Commission estimates that
    the majority of providers in this service category are small
    businesses that may be affected by the rules and policies adopted
    herein.

45. *Cable System Operators (Rate Regulation Standard)*. The Commission
    has developed its own small-business-size standard for cable system
    operators, for purposes of rate regulation. Under the Commission\'s
    rules, a "small cable company" is one serving fewer than 400,000
    subscribers nationwide.[^110] The most recent estimates indicate
    that there were 1,439 cable operators who qualified as small cable
    system operators at the end of 1995.[^111] Since then, some of those
    companies may have grown to serve over 400,000 subscribers, and
    others may have been involved in transactions that caused them to be
    combined with other cable operators. Consequently, the Commission
    estimates that there are now fewer than 1,439 small entity cable
    system operators that may be affected by the rules and policies
    adopted herein.

46. *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."[^112] The Commission has determined that
    there are 67,700,000 subscribers in the United States.[^113]
    Therefore, an operator serving fewer than 677,000 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.[^114] Based on available data, the
    Commission estimates that the number of cable operators serving
    677,000 subscribers or fewer, totals 1,450.[^115] The Commission
    neither requests nor collects information on whether cable system
    operators are affiliated with entities whose gross annual revenues
    exceed \$250 million,[^116] and therefore is unable, at this time,
    to estimate more accurately the number of cable system operators
    that would qualify as small cable operators under the size standard
    contained in the Communications Act of 1934.

47. *Open Video Services*. Open Video Service ("OVS") systems provide
    subscription services.[^117] As noted above, the SBA has created a
    small business size standard for Cable and Other Program
    Distribution.[^118] This standard provides that a small entity is
    one with \$12.5 million or less in annual receipts. The Commission
    has certified approximately 25 OVS operators to serve 75 areas, and
    some of these are currently providing service.[^119] Affiliates of
    Residential Communications Network, Inc. (RCN) received approval to
    operate OVS systems in New York City, Boston, Washington, D.C., and
    other areas. RCN has sufficient revenues to assure that they do not
    qualify as a small business entity. Little financial information is
    available for the other entities that are authorized to provide OVS
    and are not yet operational. Given that some entities authorized to
    provide OVS service have not yet begun to generate revenues, the
    Commission concludes that up to 24 OVS operators (those remaining)
    might qualify as small businesses that may be affected by the rules
    and policies adopted herein.

#### Telecommunications Service Entities

48. As noted above, 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."[^120] 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.[^121]

49. *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.[^122]
    According to Commission data,[^123] 1,303 carriers have reported
    that they are engaged in the provision of incumbent local exchange
    services. Of these 1,303 carriers, an estimated 1,020 have 1,500 or
    fewer employees and 283 have more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    incumbent local exchange service are small businesses that may be
    affected by our action. In addition, limited preliminary census data
    for 2002 indicate that the total number of wired communications
    carriers increased approximately 34 percent from 1997 to 2002.[^124]

50. *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.[^125] According to Commission data,[^126] 769 carriers
    have reported that they are engaged in the provision of either
    competitive access provider services or competitive local exchange
    carrier services. Of these 769 carriers, an estimated 676 have 1,500
    or fewer employees and 93 have more than 1,500 employees. In
    addition, 12 carriers have reported that they are "Shared-Tenant
    Service Providers," and all 12 are estimated to have 1,500 or fewer
    employees. In addition, 39 carriers have reported that they are
    "Other Local Service Providers." Of the 39, an estimated 38 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 that may be affected by our action. In
    addition, limited preliminary census data for 2002 indicate that the
    total number of wired communications carriers increased
    approximately 34 percent from 1997 to 2002.[^127]

## Description of Projected Reporting, Recordkeeping and Other Compliance Requirements

51. We anticipate that any rules implementing Section 621(a)(1) that
    result from this action would have at most a *de minimis* impact on
    small governmental jurisdictions (*e.g.*, one-time proceedings to
    amend existing procedures regarding the method of granting
    competitive franchises). LFAs today must review and decide upon
    competitive cable franchise applications, and will continue to
    perform that role upon the conclusion of this proceeding; any rules
    that might be adopted pursuant to this *Notice* likely would require
    at most only modifications to that process.

## Steps Taken to Minimize Significant Economic Impact on Small Entities and Significant Alternatives Considered

52. The RFA requires an agency to describe any significant, specifically
    small business, alternatives that it has considered in reaching its
    proposed approach, 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 and reporting
    requirements under the rule for such 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 such small
    entities."[^128]

53. As discussed in the *Notice*, Section 621(a)(1) states that LFAs
    must not unreasonably refuse to award competitive franchises.[^129]
    Should the Commission conclude ultimately that the procedures by
    which LFAs currently award competitive franchises conflict with the
    mandate of Section 621(a)(1), it may adopt rules designed to ensure
    that the local franchising process does not create unreasonable
    barriers to competitive entry. Such rules may consist of specific
    guidelines (*e.g.*, maximum timeframes for considering a competitive
    franchise application) or general principles designed to provide
    LFAs with the guidance necessary to conform their behavior to the
    directive of Section 621(a)(1). As noted above, these rules likely
    would have at most a *de minimis* impact on small governmental
    jurisdictions. Even if that were not the case, however, the
    interrelated, high-priority federal communications policy goals of
    enhanced cable competition and accelerated broadband deployment
    would necessitate the establishment of specific guidelines and/or
    general principles for LFAs with respect to the process by which
    they grant competitive cable franchises. The alternative (*i.e.*,
    continuing to allow LFAs to follow procedures that do not ensure
    that competitive cable franchises are not unreasonably refused)
    would be unacceptable, as it would be flatly inconsistent with
    Section 621(a)(1). We seek comment on the impact that such rules
    might have on small entities, and on what effect alternative rules
    would have on those entities. We also invite comment on ways in
    which the Commission might implement Section 621(a)(1) while at the
    same time impose lesser burdens on small entities.

## Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

54. None.

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

*Re: 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*, MB Docket No. 05-311

Telephone companies and other facilities-based new entrants to the
multichannel video programming distribution (MVPD) market have the
potential to provide strong competition to incumbent cable operators.
These new entrants are making significant investments in the
infrastructure that enables them to offer video service along with
telephone and broadband services to consumers. We are hearing from some
providers that local authorities may be making the process of getting
franchises unreasonably difficult. New video entrants, regardless of the
technology they employ, should be encouraged -- not impeded from entry.

In passing the 1992 Cable Act, Congress recognized that competition
between multiple cable systems would be beneficial. Indeed, Congress
specifically encouraged local franchising authorities (LFAs) to award
competitive franchises. Congress recognized that it is important to have
multiple competitors in the video market.

Congress also recognized that LFAs had played, and would continue to
play, an important role in the cable franchising process. However,
Congress restricted their authority in this area in order to promote
cable competition. Specifically, Section 621 of the statute prohibits
LFAs from granting exclusive franchises and from unreasonably refusing
to award additional competitive franchises.

It is the Commission's responsibility to remove unreasonable roadblocks
to competition. Through the proceeding we commence today, we seek to
ensure that local authorities are not thwarting competition by
unreasonably refusing to award additional competitive franchises. This
Notice of Proposed Rulemaking is a critical first step. I look forward
to working with my colleagues to conclude the rulemaking process.

**STATEMENT OF**

**COMMISSIONER KATHLEEN Q. ABERNATHY**

*Re: 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,* MB Docket No. 05-311

With the issuance of this *Notice* we begin the process of answering a
complex question: when, if ever, do cable franchising requirements
become unreasonable barriers to entry by competing cable service
providers, and how should "unreasonable" barriers be defined and dealt
with?

This question is complex for several reasons. First, as the *Notice*
points out, local franchising authorities clearly have authority over
many of the operational aspects of local cable service: granting or
denying franchises, imposing buildout requirements, and requiring
specific access channel facilities and support. Nevertheless, this
authority is not absolute: it is limited by the explicit provision of
Section 621(a)(1) of the Communications Act, which states that they may
not unreasonably refuse to grant a franchise to a competing cable
service provider.

Determining what constitutes an "unreasonable" requirement in real-life
terms will require a particularly careful study of the legal predicates
and the factual record. We need to correctly interpret not only the
provisions of the Communications Act, but also the holdings of federal
preemption case law. Taken together, these laws require that we
accurately separate franchising obligations that are costly and
time-consuming from those that are so burdensome and irrelevant that
they constitute *de facto* entry barriers. This is an exacting standard,
and meeting it will demand that we have a full and fair factual record.
I believe the *Notice* we are adopting today will help us compile that
record.

And if we can successfully identify and remedy franchising requirements
that are precluding competitive entry, we will have accomplished much.
Increasing cable competition will help consumers by lowering cable rates
and giving consumers more choices and better service. Fully functioning
markets invariably do a better job of maximizing consumer welfare than
regulators can ever hope to achieve. That is why the added discipline of
marketplace competition helps the FCC move in the direction of less
federal regulation.

We can move away from economic regulations designed for a monopoly
environment and focus our sights more narrowly on regulations designed
to respond to social policy concerns that are not addressed by market
forces.

Increasing competition and less burdensome regulatory oversight will
also help broadband network deployment by all providers. And there is no
doubt that cheaper, faster, and more accessible advanced broadband
services will further our individual and national welfare.

Both new entrants and incumbent cable providers will benefit from the
elimination of terms and conditions found to be unreasonable. Both will
be freed to reallocate their resources to more productive uses.

A vigorously competitive market is a marvelous thing, and ensuring that
the benefits of competition and new technology flow to cable consumers
is one of the best actions the Commission can take. I am happy to
support this *Notice* because it will help us do that.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

Re: *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,* MB Docket No. 05-311

There is no doubt in my mind that more competition in the delivery of
video services would bring significant benefits to consumers.  When
people have more options, they reap big rewards---better services,
higher technology and, critically, lower prices.  This is precisely why
Congress laid out the goal of promoting competition so clearly in the
Communications Act.

Cable and telephone companies are beginning to compete to offer
consumers the much-heralded triple play---bundles of telephone, video
and Internet services.  Cable companies have already jumped into the
voice service market, and telephone companies are entering the video
fray.  This crossover is exciting, and it means that old industry
boundaries are eroding, giving way to a new and hopefully more
consumer-friendly future.

The Communications Act provided a process for entry into the video
services marketplace under which cable operators must secure
franchises.  This process recognizes the important role that franchising
authorities play---ensuring public health, safety and welfare;
preventing economic red-lining; managing public rights-of-way; and
ensuring access for public, educational and governmental channels.

This system has generally worked for consumers, incumbent cable
operators and municipalities.  It also appears to be working in numerous
communities for new entrants.  It is important that it works for new
entrants if we are going to be able to reap the rewards that competition
brings to consumers.  In the current environment, it may be that some
changes are called for, and certainly we have an ongoing obligation to
consider ways to improve the process.  That is why we initiate this
proceeding today.  If we find hard record evidence of problems that need
to be repaired, and can be repaired within the parameters of the
existing law, then the Commission must consider taking those steps.  I
would also note that there is Congressional interest in looking more
broadly at how the statute itself is accommodating new marketplace
developments.

What this Commission decides about the specific issues before it will be
significantly influenced by the record this notice elicits, and that is
why we seek a full record and why I emphasize the importance of
widespread participation in the proceeding.  Until we obtain a full
record, I do not believe the results of this proceeding are
foreordained.  At the end of the day, I am hopeful we can develop a
thoughtful and balanced approach, one recognizing that local input and
diversity are values we are always charged to nurture even as we meet
our responsibilities to encourage consumer-friendly competition by
promoting more choices in the video services market.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: 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,* MB Docket No. 05-311

I support the issues raised in today's item because Congress clearly
sought to promote competitive cable offerings and to facilitate the
approval of competitive cable franchises in the Cable Act of 1992.[^130]
While it remains far from clear whether Congress specifically intended
any role for the Commission in preempting and superseding the practices
of local governments in the local franchising process, the questions we
raise in today's NPRM will give us a better record to determine whether
we do indeed have such authority, and, if so, a clearer sense of its
possible limits.

It is a goal of Congress, this Commission, and me personally to promote
video competition and broadband deployment. Consumers will benefit if
they are given more choices of video providers in a world where cable
and satellite form a duopoly that some have argued has constrained price
competition and alternative voices. In my long effort to constrain media
consolidation, I have called for more diversity in the distribution and
production of video content. Nothing we have seen in recent years offers
more hope for consumers to gain new choices than the serious entry of
our largest telephone companies into the video marketplace. It is a
long-awaited and welcome development that this Commission needs to
encourage with all of the tools available to us. We should help new
entrants in every reasonable way we can to enter and succeed in
providing more consumer choice in video services.

Competition in the video marketplace is not only critical as a means to
constrain prices, which in itself is a worthy goal after year upon year
of price hikes. It is critical to the future of our democracy itself
that our citizens have access to as many forms of video content as
possible so they can make up their own minds about the issues of the day
and not remain subject to a tiny number of gatekeepers who can decide
what deserves airing based on their own financial or ideological
interests.

Broadband competition and an open Internet are also critical components
of what the Supreme Court called the "uninhibited marketplace of
ideas."[^131] The award of competitive cable franchises will encourage
broadband deployment by new entrants, such as telephone companies, by
granting them a new revenue source that helps justify investment in new
high capacity fiber networks. So the award of new franchises will
improve access not only to innovative new cable services but also to
more robust broadband networks. Both of these promote the open exchange
of video content, ideas, and indeed all communications. So the decision
to enter the video marketplace by some of the largest telephone
companies heralds an historic opportunity to improve our communications
networks.

The larger question that hangs over this proceeding, though, is whether
the local franchising process truly is a hindrance to the deployment of
alternative video networks, as some new entrants assert. It is clear
that most, if not nearly all, local authorities welcome competition in
their communities. Even if for some reason they wanted to resist, it
will prove very difficult for local officials to try to prevent services
from reaching their citizens who thirst for new choices. As the CEO of
one major new entrant recently noted, "Any place it's come to a vote, we
win."[^132]

What I hear from local officials is that they really want to ensure that
these new advanced video services are deployed in a fashion that serves
all of their communities, in a manner that maximizes the benefits for
everyone. This is a vital role, not an anti-competitive one. Most
importantly, it is a role granted to them by Congress. The franchising
process and the role of local governments are products of specific
policy decisions made by Congress. For example, Congress specifically
allocated to local franchise authorities (LFAs) the authority to ensure
that all households are served; to seek public, educational, and
governmental (PEG) channel capacity; and to recover PEG capital
costs.[^133]

The Commission needs to tread with caution and care before it asserts
any authority to interpose itself with LFAs to the extent Congress
specifically delegated power to local officials. We are going out on
limb already by creating a "de facto" refusal theory and tentatively
concluding that the Commission has the ability to determine whether an
LFA is "unreasonably refus\[ing\] to award a competitive franchise." I
eagerly await a vigorous debate in the record, a public hearing, and, if
necessary, a Commission report, before agreeing to make that tentative
conclusion final.

I would not have been willing to support this NPRM if we had not also
made clear that we will consider it reasonable for local officials to
carry out their basic responsibilities as Congress intended.
Specifically, we tentatively conclude that it is "not unreasonable" for
an LFA to carry out its statutory mandate to prevent economic redlining,
to establish reasonable build-out requirements to "all households in the
franchise area," and to "provide adequate public, educational and
governmental access channel capacity, facilities or financial support."
We should not and indeed cannot usurp for ourselves the authority
granted by Congress to local governments. This tentative conclusion
makes clear we respect the powers specifically enumerated by Congress
for the LFAs.

I am also pleased that we acknowledge the deference the courts have
granted to LFAs in making determinations pursuant to the powers granted
under Section 621. We ask important questions about how much deference
this imputes to the Commission to grant to LFAs in the exercise of their
authority. My opinion is that to the extent they are operating in a
manner to carry out the responsibilities Congress intended, they deserve
substantial deference, and the courts have clearly afforded them such
deference.

We can learn more about the LFA process by examining the record we
generate. We have heard allegations by some new entrants that LFAs have
made demands completely unrelated to what Congress intended. If such
"shakedowns" are occurring, and particularly if they are creating
unreasonable refusals to award franchises, the Commission is fully
justified to explore ways to promote Congressional goals. That should be
the focus of our efforts, not a larger undertaking to undermine the
entire franchising process, as new entrants have urged upon us. Even if
the Commission were to agree from a policy perspective that the
franchising process is cumbersome and unwieldy, as competitors argue
passionately, those arguments are better made before Congress, not the
Commission. The franchising process and local powers are spelled out
clearly in statute, and only Congress can provide such relief.

Still, we can play an important role in combating abuse, to the extent
it is occurring, and by encouraging best practices. The good news is
that both the LFAs and the Commission share the goals of promoting
vigorous competition. If all parties would simply apply themselves to
working through the process, rather than seeking to subvert it through
federal or state regulatory or legislative efforts, they would make
greater progress in getting franchises awarded, as many competitors
already have done. I support this NPRM because it provides an
opportunity to get beyond the rhetoric to the facts of what is actually
happening in local communities.

Finally, I am especially pleased we have agreed to hold a hearing to
explore these issues directly with the parties involved. That forum
should provide an excellent opportunity to explore best practices, get
to the bottom of what is really happening and encourage progress under
the framework that Congress has established.

[^1]: 47 U.S.C. § 541(a)(1).

[^2]: *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming*, 20 FCC Rcd 2755, 2757 (2005).

[^3]: *See* 47 U.S.C. § 521(6) (stating that one of the purposes of
    Title VI is "to promote competition in cable communications").

[^4]: The construction of modern telecommunications facilities requires
    substantial capital investment, and such networks, once completed,
    are capable of providing not only voice and data, but video as well.
    As a consequence, the ability to offer video offers the promise of
    an additional revenue stream from which deployment costs can be
    recovered.

[^5]: *See* 47 U.S.C. § 571(a).

[^6]: *See* 47 U.S.C. § 571(a)(1).

[^7]: *See* 47 U.S.C. § 571(a)(3)(A).

[^8]: *See* 47 U.S.C. § 571(a)(3)(B).

[^9]: *See* 47 U.S.C. § 571(a)(2).

[^10]: 47 U.S.C. § 542(6) (defining "cable service" as "(A) the one-way
    transmission to subscribers of (i) video programming, or (ii) other
    programming service, and (B) subscriber interaction, if any, which
    is required for the selection or use of such video programming or
    other programming service").

[^11]: 47 U.S.C. § 542(5) (defining "cable operator" as "any person or
    group of persons (A) who provides cable service over a cable system
    and directly or through one or more affiliates owns a significant
    interest in a cable system, or (B) who otherwise controls or is
    responsible for, through any arrangement, the management and
    operation of such a cable system").

[^12]: 47 U.S.C. § 541(b)(1) ("Except to the extent provided in
    paragraph (2) and subsection (f), a cable operator may not provide
    cable service without a franchise.").

[^13]: 47 U.S.C. § 541(a)(1) (stating that "\[a\] franchising authority
    may award, in accordance with the provisions of this title, 1 or
    more franchises within its jurisdiction").

[^14]: 47 U.S.C. § 541(a)(3).

[^15]: 47 U.S.C. § 541(a)(4)(A).

[^16]: 47 U.S.C. § 541(a)(4)(B).

[^17]: Cable Communications Policy Act of 1984, Pub. L No. 98-549, 98
    Stat. 2779.

[^18]: *See*, *e.g.*, H.R. [Rep. No]{.smallcaps}. 98-934, at 59 (1984)
    ("Subsection 621(a) grants a franchising authority the authority to
    award one or more franchises within its jurisdiction. This grant of
    authority to a franchising authority to award a franchise
    establishes the basis for state and local regulation of cable
    systems."); *see also id*. ("This provision grants to the
    franchising authority the discretion to determine the number of
    cable operators to be authorized to provide service in a particular
    geographic area."); *id*. at 19 ("Primarily, cable television has
    been regulated at the local government level through the franchise
    process.... \[The 1984 Cable Act\] establishes a national policy
    that clarifies the current system of local, state and federal
    regulation of cable television. This policy continues reliance on
    the local franchising process as the primary means of cable
    television regulation, while defining and limiting the authority
    that a franchising authority may exercise through the franchise
    process. The bill establishes franchise procedures and standards to
    encourage the growth and development of cable systems, and assure
    that cable systems are responsive to the needs and interests of the
    local communities they service. Municipal authority to franchise and
    regulate cable television systems has been under an increasing
    number of challenges on three fronts: in the courts, at the Federal
    Communications Commission, and at the state public utility
    commissions. \[This legislation\] will preserve the critical role of
    municipal governments in the franchise process, while providing
    appropriate deregulation in certain respects to the provision of
    cable service."); *id*. at 24 ("It is the Committee's intent that
    the franchise process take place at the local level where city
    officials have the best understanding of local communications needs
    and can require cable operators to tailor the cable system to meet
    those needs. However, if that process is to further the purposes of
    this legislation, the provisions of these franchises, and the
    authority of the municipal governments to enforce these provisions,
    must be based on certain important uniform federal standards that
    are not continually altered by Federal, state and local
    regulation.").

[^19]: *See generally Competition, Rate Deregulation and the
    Commission's Policies Relating to the Provision of Cable Television
    Service*, 5 FCC Rcd 4962 (1990) ("Report").

[^20]: *Id*. at 4974; s*ee also id*. at 5012 ("This Commission is
    convinced that the most effective method of promoting the interests
    of viewers or consumers is through the free play of competitive
    market forces."). The Report also recommended that Congress
    "prohibit franchising rules whose intent or effect is to create
    unreasonable barriers to the entry of potential competing
    multichannel video providers," "limit local franchising requirements
    to appropriate governmental interests (*e.g.*, public health and
    safety, repair and good condition of public rights-of-way, and the
    posting of an appropriate construction bond)," and "permit
    competitors to enter a market pursuant to an initial, time-limited
    suspension of any 'universal service' obligation." *Id*. at 4974.

[^21]: *See* H.R. [Rep. No]{.smallcaps}. 102-628, at 47 (1992) ("The
    Commission recommended that Congress, in order to encourage more
    robust competition in the local video marketplace, prevent local
    franchising authorities from unreasonably denying a franchise to
    potential competitors who are ready and able to provide service.").
    The Commission has recognized that its recommendations to Congress
    were implemented through the language added to Section 621(a)(1):
    "Congress incorporated the Commission's recommendations in the 1992
    Cable Act by amending § 621(a)(1) of the Communications Act ...."
    *Implementation of Section 19 of the Cable Television Consumer
    Protection and Competition Act of 1992 (Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming)*, 9 FCC Rcd 7442, 7469 (1994).

[^22]: Cable Television Consumer Protection and Competition Act of 1992,
    Pub. L. No. 102-385, 106 Stat. 1460.

[^23]: 47 U.S.C. § 541(a)(1) (emphasis added). In the House version of
    the 1992 Cable Act, the provision that eventually became Section 621
    included specific examples of reasonable grounds to deny additional
    franchises: "For purposes of this paragraph, refusal to award a
    franchise shall not be unreasonable if, for example, such refusal is
    on the ground (A) of technical infeasibility; (B) of inadequate
    assurance that the cable operator will provide adequate public,
    educational and governmental access channel capacity, facilities, or
    financial support; (C) of inadequate assurance that the cable
    operator will, within a reasonable period of time, provide universal
    service throughout the entire franchise area under the jurisdiction
    of the franchising authority; (D) that such award would interfere
    with the right of the franchising authority to deny renewal; or
    (E) of inadequate assurance that the cable operator has the
    financial, technical, or legal qualifications to provide cable
    service." H.R. REP. No. 102-628, at 9 (1992). This version of the
    amended Section 621 ultimately was not adopted.

[^24]: S. [Rep. No.]{.smallcaps} 102-92, at 47 (1991).

[^25]: *Cf*. *City of Dallas, Texas v. FCC*, 165 F.3d 341, 347 (holding
    that Section 653(c)(1)(C)'s directive that the federal franchise
    requirement found in Section 621(b)(1) does not apply to open video
    systems did not constitute the "clear statement" required by the
    Supreme Court to expressly preempt the traditional authority of LFAs
    to impose franchise requirements).

[^26]: 47 U.S.C. § 541(a)(1).

[^27]: 47 U.S.C. § 555(a). *See also* *Charter Communications, Inc. v.
    County of Santa Cruz*, 304 F.3d 927, 931, 935 (2002) (noting that,
    "\[w\]hen reviewing disputes emerging from this franchise agreement,
    a court must determine whether the County could have deemed it
    reasonable to deny consent" and stating that "even if we thought the
    County had acted unreasonably, our view would be deferential not
    only because precedent so commands, but also because methods exist
    to promote self-correction in the future: citizens can vote out
    their local representatives and cable operators can refuse to enter
    into franchise agreements with notoriously difficult LFAs"); *Board
    of County Comm'rs v. Umbehr*, 518 U.S. 668, 678 (1996) (noting the
    government's "interest in being free from intensive judicial
    supervision of its daily management functions" and finding
    "\[d\]eference is therefore due to the government's reasonable
    assessment of its interests").

[^28]: *See*, *e.g.*, Comments of the Broadcast Service Providers
    Assoc., MB Docket No. 05-255 at 19 (filed Sept. 19, 2005) (arguing
    that build-out requirements are "inherently anticompetitive"
    because, in most instances, "the incumbent has had decades to build,
    upgrade and expand its network with limited or no competition");
    Comments of Consumers for Cable Choice, Inc., MB Docket No. 05-255
    at 3 (filed Sept. 19, 2005) (observing that, to compete nationally,
    new entrants must negotiate agreements with 33,000 LFAs); Comments
    of Alcatel, MB Docket No. 05-255 at 9 (filed Sept. 19, 2005)
    (reasoning that because each LFA adheres to its own processes and
    timelines, securing agreements from several LFAs "could delay
    competitive wireline video service entry for years"); Comments of
    BellSouth Corp., et. al., MB Docket No. 05-255 at 3 (filed Sept. 19,
    2005) (stating that, on average, it takes eleven months to finalize
    a franchise agreement and that in some cases it has taken three
    years to conclude negotiations); *id*. at 6 (arguing that the
    franchising process is "costly, time-consuming, and susceptible to
    abuse by a variety of parties, but especially by incumbent cable
    operators which have every incentive to use all measures to delay or
    burden new entrants through regulatory gamesmanship").

[^29]: Comments of Verizon, MB Docket No. 05-255 at 6 (filed Sept. 19,
    2005).

[^30]: *Id*. at 7-8.

[^31]: *Id*. at 8-9.

[^32]: *Id*. at 9-12.

[^33]: *Id*. at 12-14.

[^34]: David Ranii, *Options abound for phone TV*, [The News &
    Observer]{.smallcaps}, Jul. 28, 2005, available at
    <http://www.newsobserver.com/business/technology/story/2633725p-9070222c.html>
    (visited Sept. 15, 2005) (stating that "if Verizon offered TV
    service in every market it now offers phone service, \[the
    alternative to federal or state legislation\] would be to negotiate
    with more than 10,000 municipalities").

[^35]: *See*, *e.g.*, Linda Haugsted, *Franchise War in Texas*,
    [Multichannel News]{.smallcaps}, May 2, 2005 (noting that, although
    Verizon has negotiated successfully a cable franchise with the city
    of Keller, Texas, "it will not build out all of Keller: It only has
    telephone plant in 80% of the community. SBC serves the rest of the
    locality").

[^36]: News Release, *SBC CIO Confirms Project Lightspeed Timing,
    Milestones at Analyst Conference*, Nov. 3, 2005, available at
    <http://www.sbc.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=21874>
    (visited Nov. 9, 2005).

[^37]: *See* Leslie Cauley, *Cable, phone companies duke it out for
    customers*, [USA Today]{.smallcaps}, May 22, 2005, available at
    <http://www.usatoday.com/money/media/2005-05-22-telco-tv-cover-usat_x.htm>
    (visited Nov. 9, 2005) ("During a slide show for analysts, SBC said
    it planned to focus almost exclusively on affluent neighborhoods.
    SBC broke out its deployment plans by customer spending levels: It
    boasted that Lightspeed would be available to 90% of its
    'high-value' customers -- those who spend \$160 to \$200 a month on
    telecom and entertainment services -- and 70% of its 'medium-value'
    customers, who spend \$110 to \$160 a month. SBC noted that less
    than 5% of Lightspeed\'s deployment would be in 'low-value'
    neighborhoods -- places where people spend less than \$110 a
    month.").

[^38]: Testimony of Kenneth Fellman, Mayor, Arvada, California, on
    behalf of the National Association of Telecommunications Officers
    and Advisors, the National League of Cities, the United States
    Conference of Mayors, and the National Association of Counties,
    before the U.S. House of Representatives Committee on Energy and
    Commerce, Apr. 27, 2005, at 3, available at
    http://energycommerce.house.gov/108/Hearings/\
    04272005hearing1488/Fellman.pdf (visited Nov. 15, 2005).

[^39]: *Id*.

[^40]: *Id*. at 12.

[^41]: *Id*. at 13.

[^42]: *Id*. at 16.

[^43]: *Id*. at 11.

[^44]: *See* *Applications for Consent to the Transfer of Control of
    Licenses and Section 214 Authorizations from Southern New England
    Telecommunications Corporation, Transferor, To SBC Communications,
    Inc., Transferee*, 13 FCC Rcd 21292, 21294 (1998) (noting that a
    subsidiary of SNET at the time was providing cable service
    throughout the state of Connecticut "pursuant to a statewide
    franchise that was granted in September 1996") (citation omitted).

[^45]: *See In re Applications of Ameritech Corp., Transferor, and SBC
    Communications Inc., Transferee, For Consent to Transfer Control of
    Corporations Holding Commission Licenses and Lines Pursuant to
    Sections 214 and 310(d) of the Communications Act and Parts 5, 22,
    24, 25, 63, 90, 95 and 101 of the Commission\'s Rules*, 14 FCC Rcd
    14712, 14720 (1999) (describing how Ameritech's "cable television
    subsidiary, Ameritech New Media, Inc., provides competitive cable
    service to more than 200,000 consumers in over 75 communities in the
    Chicago, Cleveland, Columbus, and Detroit metropolitan areas")
    (citation omitted).

[^46]: *See* Comments of BellSouth Corporation, MB Docket No. 05-255 at
    1-2 (filed Sept. 19, 2005) ("BellSouth currently holds 20 franchises
    to provide cable 'overbuild' service in local markets throughout its
    telephone service area, representing approximately 1.4 million
    potential cable households.").

[^47]: Comments of Qwest Communications International Inc., MB Docket
    No. 05-255 at 2-3 (filed Sept. 19, 2005) (describing how, "\[u\]ntil
    recently, Qwest has been focusing its efforts on obtaining either
    geographically limited 'pocket' franchises to serve newly
    constructed communities or 'market' franchises where Qwest obtains a
    city-wide agreement with the ability to overbuild the incumbent
    operator at its own pace" and noting that "Qwest already is in the
    process of obtaining CATV franchises in a number of ... communities
    throughout the western United States").

[^48]: *See* *New competitors still drawn to U.S. business telecom
    field*, [Telephony]{.smallcaps}, Oct. 24, 2005, available at
    <http://lw.pennnet.com/news/display_news_story.cfm?Section=WIREN&Category=&NewsID=126977>
    (visited Nov. 7, 2005) ("RCN operates a total of 130 video
    franchises in its market areas, which include the metropolitan areas
    of Boston, Chicago, Los Angeles, San Francisco and Washington, along
    with New York/New Jersey and eastern Pennsylvania.").

[^49]: Comments of Verizon, MB Docket No. 05-255 at 5 (filed Sept. 19,
    2005).

[^50]: News Release, *Verizon Seeks Franchise to Bring Fairfax County
    Residents Choice for Their Cable TV Service*, July 28, 2005,
    available at
    <http://newscenter.verizon.com/proactive/newsroom/release.vtml?id=92782>
    (visited Nov. 9, 2005).

[^51]: *NTCA Broadband/Internet Availability Survey Report*, Sept. 2005,
    available at
    <http://www.ntca.org/content_documents/2005NTCABroadbandSurveyReport.pdf>
    (visited Nov. 9, 2005). NCTA represents more than 560 small and
    rural telephone cooperatives and commercial companies. *See
    generally*
    <http://www.ntca.org/ka/ka-3.cfm?content_item_id=60&folder_id=44>
    (visited Nov. 9, 2005).

[^52]: *See* [Tex. Util. Code Ann]{.smallcaps}. § 66.003 (West 2005).

[^53]: *See* [Tex. Util. Code Ann]{.smallcaps}. § 66.003(b) (West 2005).

[^54]: *See Bells Get Another Shot With Texas Bill*, CBS News, July 24,
    2005, available at
    <http://www.cbsnews.com/stories/2005/07/24/ap/business/mainD8BI1TF82.shtml?CMP=OTC-RSSFeed&source=RSS&attr=Business-APDigital_D8BI1TF82>
    (visited Nov. 2, 2005).

[^55]: We note that the Commission previously has neither adopted rules
    implementing this specific provision of Section 621 nor had the
    opportunity to interpret its impact on the local franchising
    process.

[^56]: We note that the Television & Cable Factbook indicates that,
    excluding wireless cable systems, there are 8,409 operating cable
    systems in the United States. [Television & Cable
    Factbook]{.smallcaps} 2005 at F-13.

[^57]: According to the Television & Cable Factbook, 301 cable systems
    serve 60 percent of total cable subscribers; while 706 cable systems
    serve approximately 80 percent of total cable subscribers. *Id*. at
    F-2.

[^58]: *See*, *e.g.*, Comments of Verizon, MB Docket No. 05-255 at 12
    (filed Sept. 19, 2005) (arguing that "\[m\]any local franchising
    authorities unfortunately view the franchising process as an
    opportunity to garner from a potential new video entrant concessions
    that are in no way related to video services or to the rationales
    for requiring franchises").

[^59]: *See* [Conn. Gen. Stat]{.smallcaps}. § 16-331(f) ("Each
    certificate of public convenience and necessity for a franchise
    issued pursuant to this section shall be nonexclusive, and each such
    certificate issued for a franchise in any area of the state where an
    existing franchise is currently operating shall not contain more
    favorable terms or conditions than those imposed on the existing
    franchise."). We note that LFAs themselves sometimes incorporate
    "level-playing field" provisions into their cable ordinances or the
    franchises they award.

[^60]: In *The Fallacy of Regulatory Symmetry: An Economic Analysis of
    the "Level Playing Field" in Cable TV Franchising Statutes*, Thomas
    W. Hazlett and George S. Ford characterize level-playing-field
    statutes as "mandat\[ing\] that municipal governments not license a
    second cable TV operator in their community without imposing
    franchise requirements as 'burdensome' as those levied on the first
    entrant, and typically require formal public hearings to determine
    the impact of new rivalry." 3 [Business and Politics]{.smallcaps}
    21, 22 (2001). According to Hazlett and Ford, as of 2001 at least 11
    states had passed such laws. *Id*. at 27.

[^61]: *See*, *e.g.*, Position Paper of the California Cable and
    Telecommunications Association opposing California Assembly Bill
    903, available at
    http://www.senate.ca.gov/ftp/SEN/COMMITTEE/STANDING/ENERGY/\_home/\
    03-15-05mangers.htm (visited Nov. 9, 2005) (stating that
    California's "Legislature passed the level playing field statute to
    insure regulatory neutrality as video competition evolved").

[^62]: *See* [Mass. Regs. Code]{.smallcaps} tit. 207, § 3.03
    (establishing a number of steps in the franchising process, each
    providing the LFA between seven and 90 days to act).

[^63]: *See City of Chicago v. FCC*, 199 F.3d 424 (7^th^ Cir. 1999)
    (rejecting the townships' argument that the Commission was not
    granted regulatory authority over Section 621, the statute setting
    out general franchise requirements, and finding the FCC is charged
    by Congress with the administration of the Cable Act which includes
    the authority to interpret section 621 and to determine what systems
    are exempt from franchising requirements).

[^64]: U.S. Const., Art. VI, cl.2.

[^65]: *Capital Cities Cable, Inc. v. Crisp*, 467 U.S. 691, 698-99
    (1984).

[^66]: *See id.* at 700, 708.

[^67]: 47 U.S.C. § 556(c).

[^68]: 47 U.S.C. § 556(a).

[^69]: 47 U.S.C. § 151.

[^70]: 47 U.S.C. § 154(i).

[^71]: 47 U.S.C. § 541(a)(1).

[^72]: 47 U.S.C. § 541(a)(1).

[^73]: *See* 47 U.S.C. § 555 ("(a) Any cable operator adversely affected
    by any final determination made by a franchising authority under
    section 621(a)(1) ... may commence an action within 120 days after
    receiving notice of such determination, which may be brought in
    (1) the district court of the United States for any judicial
    district in which the cable system is located; or (2) in any State
    court of general jurisdiction having jurisdiction over the parties.
    (b) The court may award any appropriate relief consistent with the
    provisions of \[Section 621(a)(1)\] and with the provisions of
    subsection (a).").

[^74]: *See* ¶ 14, *infra*, for a discussion of the range of state and
    local government actions Section 621(a)(1) authorizes the Commission
    to address.

[^75]: 47 U.S.C. § 541(a)(1) (emphasis added).

[^76]: 47 U.S.C. § 541(a)(1). The Commission in the past has emphasized
    that the purpose of Section 621(a)(1) is broader than simply
    providing would-be entrants with a civil remedy upon the ultimate
    denial of a request for a competitive franchise. *See*
    *Implementation of Section 19 of the Cable Television Consumer
    Protection and Competition Act of 1992 (Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming)*, 9 FCC Rcd 7442, 7469 n.127 (1994) (noting that "\[a\]
    concern has been raised that the provision of Section 621 that
    allows an appeal only from a *final* decision of denial by a
    franchising authority potentially could be used by a franchising
    authority to delay or preclude a potential entrant from availing
    itself of the remedies of the Act" and soliciting comment regarding
    whether "any such alleged frustration of the purpose of Section 621"
    has occurred).

[^77]: 47 U.S.C. § 541(a)(3).

[^78]: 47 U.S.C. § 541(a)(4)(A).

[^79]: 47 U.S.C. § 541(a)(4)(B).

[^80]: We note that Section 617 of the Communications Act limits the
    time in which an LFA may consider a request for approval of the sale
    or transfer of a cable franchise to 120 days. 47 U.S.C. § 537. If
    the LFA does not rule upon the request within that window, "such
    request shall be deemed granted unless the requesting party and the
    franchising authority agree to an extension of time." *Id*.

[^81]: 47 U.S.C. § 541(a)(4)(A).

[^82]: *Cf*. 47 U.S.C. § 541(a)(3) ("In awarding a franchise or
    franchises, a franchising authority shall assure that access to
    cable service is not denied to any group of potential residential
    cable subscribers because of the income of the residents of the
    local area in which such group resides.").

[^83]: 47 U.S.C. § 522(10).

[^84]: In this regard, we note that at least one court has found that
    Section 621(a)(1) preempts inconsistent local requirements. *See
    Qwest Broadband Services, Inc. v. City of Boulder*, 151 F. Supp. 2d.
    1236, 1243 (D. Colo. 2001) (holding that a franchise provision in
    the Boulder, Colorado charter requiring voters to approve any cable
    franchise was preempted by Section 621(a)(1) because it conflicted
    directly with that provision's mandate that the "franchising
    authority" be responsible for granting the franchise).

[^85]: *See* 5 U.S.C. § 603(a). In addition, *the* *Notice* and the IRFA
    (or summaries thereof) will be published in the Federal Register.

[^86]: *See* 47 C.F.R. § 1.1206(b); *see also* 47 C.F.R. §§ 1.1202,
    1.1203.

[^87]: *See* 47 C.F.R. § 1.1206(b)(2).

[^88]: *See* *id*. §§ 1.415, 1419.

[^89]: *See* *Electronic Filing of Documents in Rulemaking Proceedings*,
    13 FCC Rcd 11322 (1998).

[^90]: 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).

[^91]: *See* 5 U.S.C. § 603. Although we are conducting an IRFA at this
    stage in the process, it is foreseeable that ultimately we will
    certify this action pursuant to the RFA, 5 U.S.C. § 605(b), because
    we anticipate at this time that any rules adopted pursuant to this
    *Notice* will have no significant economic impact on a substantial
    number of small entities.

[^92]: *See* 5 U.S.C. § 603(a).

[^93]: *See* 5 U.S.C. § 603(a).

[^94]: The Communications Act defines "franchising authority" as "any
    governmental entity empowered by Federal, State, or local law to
    grant a franchise." 47 U.S.C. § 522(10).

[^95]: 47 U.S.C. § 541(a)(1).

[^96]: 47 U.S.C. § 556(c).

[^97]: 47 U.S.C. § 151.

[^98]: 47 U.S.C. § 154(i).

[^99]: 47 U.S.C. §§ 151, 154(i), 541(a)(1), and 556(c).

[^100]: 5 U.S.C. § 603(b)(3).

[^101]: 5 U.S.C. § 601(6).

[^102]: 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."

[^103]: 15 U.S.C. § 632.

[^104]: *See* SBA, Programs and Services, SBA Pamphlet No. CO-0028, at
    page 40 (July 2002).

[^105]: Independent Sector, The New Nonprofit Almanac & Desk Reference
    (2002).

[^106]: 5 U.S.C. § 601(5).

[^107]: U.S. Census Bureau, Statistical Abstract of the United States:
    2000, Section 9, pages 299-300, Tables 490 and 492.

[^108]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 513220 (changed to 517510 in October 2002).

[^109]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 4, NAICS code 513220 (issued October 2000).

[^110]: 47 C.F.R. § 76.901(e). The Commission developed this definition
    based on its determination that a small cable system operator is one
    with annual revenues of \$100 million or less. *See Implementation
    of Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and
    Order and Eleventh Order on Reconsideration*, 10 FCC Rcd 7393
    (1995).

[^111]: Paul Kagan Associates, Inc., Cable TV Investor, February 29,
    1996 (based on figures for December 30, 1995).

[^112]: 47 U.S.C. § 543(m)(2).

[^113]: *See* FCC Announces New Subscriber Count for the Definition of
    Small Cable Operator, Public Notice DA 01-158 (2001).

[^114]: 47 C.F.R. § 76.901(f).

[^115]: *See* FCC Announces New Subscriber Count for the Definition of
    Small Cable Operators, Public Notice, DA 01-0158 (2001).

[^116]: 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).

[^117]: *See* 47 U.S.C. § 573.

[^118]: 13 C.F.R. § 121.201, NAICS code 513220 (changed to 517510 in
    October 2002).

[^119]: *See* http://www.fcc.gov/mb/ovs/csovscer.html (visited October
    11, 2005), http://www.fcc.gov/mb/ovs/\
    csovsarc.html (visited October 11, 2005).

[^120]: 15 U.S.C. § 632.

[^121]: 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).

[^122]: 13 C.F.R. § 121.201, NAICS code 517110 (changed from 513310 in
    Oct. 2002).

[^123]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (June 2005) ("Trends in Telephone Service"). This source
    uses data that are current as of October 1, 2004.

[^124]: *See* U.S. Census Bureau, 2002 Economic Census, Industry Series:
    "Information," Table 2, Comparative Statistics for the United States
    (1997 NAICS Basis): 2002 and 1997, NAICS code 513310 (issued Nov.
    2004). The preliminary data indicate that the total number of
    "establishments" increased from 20,815 to 27, 891. In this context,
    the number of establishments is a less helpful indicator of small
    business prevalence than is the number of "firms," because the
    latter number takes into account the concept of common ownership or
    control. The more helpful 2002 census data on firms, including
    employment and receipts numbers, will be issued in late 2005.

[^125]: 13 C.F.R. § 121.201, NAICS code 517110 (changed from 513310 in
    Oct. 2002).

[^126]: "Trends in Telephone Service" at Table 5.3.

[^127]: *See supra* note 35.

[^128]: 5 U.S.C. §§ 603(c)(1)-(4).

[^129]: 47 U.S.C. § 541(a)(1) ("A franchising authority ... may not
    unreasonably refuse to award an additional competitive franchise.").

[^130]: Cable Television Consumer Protection and Competition Act of
    1992, Pub. L. No. 102-385, 106 Stat. 1460. *See* 47 U.S.C. § 521(6)
    (stating that one of the purposes of Title VI is "to promote
    competition in cable communications").

[^131]: *Red Lion Broadcasting v. FCC*, 395 U.S. 367, 390 (1969).

[^132]: Dionne Searcey, *As Verizon Enters Cable Business, It Faces
    Local Static Telecom Giant Gets Demands As It Negotiates TV Deals*,
    Wall St. J., Oct. 28, 2005, at A1.

[^133]: *See* 47 U.S.C. §§ 541(a)(2), (3) and (4).