**Before the**

Federal Communications Commission

Washington, D.C. 20554

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REPORT AND ORDER AND

FURTHER NOTICE OF PROPOSED RULEMAKING

**Adopted: November 27, 2007 Released: February 1, 2008**

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

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

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

Table of Contents

Heading Paragraph \#

I. INTRODUCTION 1

II\. Commercial Leased ACCESS RULES 3

A. Background 3

B. Scope of the NPRM 8

C. Discussion 10

i\. Customer Service Standards and Equitable Contract Terms 10

ii\. Response to Bona Fide Proposals for Leased Access 33

iii\. Leased Access Rates 35

a\. Maximum Rate for Leasing a Full Channel 35

b\. The Marginal Implicit Fee 38

c\. The Cable Operator's Net Revenue from a Cable Channel 43

d\. The Net Revenue of the Marginal Channel 44

e\. Determining the Maximum Allowable Leased Access Rate 47

f\. Effective Date of New Rate Regulations 50

iv\. Expedited Process 51

v\. Discovery 57

vi\. Annual Reporting of Leased Access Statistics 66

III\. Constitutional issues 71

IV\. Further Notice of Proposed Rule Making 74

V. PROCEDURAL MATTERS 76

A. Filing Requirements 76

B. Initial and Final Regulatory Flexibility Analysis 81

C. Paperwork Reduction Act Analysis 83

D. Congressional Review Act 85

VI\. ORDERING CLAUSES 87

APPENDIX A - List of Commenters

APPENDIX B - Revised Rules

APPENDIX C - Standard Protective Order and Declaration for Use in
Section 612 Proceedings

APPENDIX D - Example Calculation of the Leased Access Rate

APPENDIX E - Final Regulatory Flexibility Analysis

APPENDIX F -- Initial Regulatory Flexibility Analysis

# INTRODUCTION

1.  On June 15, 2007, the Commission released a Notice of Proposed
    Rulemaking ("NPRM") in this proceeding, seeking comment on its
    commercial leased access ("leased access")[^1] and program
    carriage[^2] complaint procedures.[^3] The Commission also sought
    comment on the implementation of arbitration procedures for
    resolving leased access and program carriage disputes.[^4]

2.  In this Report and Order, we modify the Commission's leased access
    rules. With respect to leased access, we modify the leased access
    rate formula; adopt customer service obligations that require
    minimal standards and equal treatment of leased access programmers
    with other programmers; eliminate the requirement for an independent
    accountant to review leased access rates; and require annual
    reporting of leased access statistics. We also adopt expedited time
    frames for resolution of complaints and improve the discovery
    process. Finally, we seek comment in a Further Notice of Proposed
    Rulemaking on whether we should apply our new rate methodology to
    programmers that predominantly transmit sales presentations or
    program length commercials.

# Commercial Leased ACCESS RULES

## A. Background {#a.-background .unnumbered}

3.  The commercial leased access requirements are set forth in Section
    612 of the Communications Act of 1934, as amended ("Communications
    Act").[^5] The statute and corresponding leased access rules require
    a cable operator to set aside channel capacity for commercial use by
    unaffiliated video programmers. The statutory framework for
    commercial leased access was first established by the Cable
    Communications Policy Act of 1984.[^6]

4.  Congress established leased access set-aside requirements in
    proportion to a system's total activated channel capacity. Cable
    operators with fewer than 36 channels must set aside channels for
    commercial use only if required to do so by a franchise agreement in
    effect as of the enactment of Section 612. Operators with 36 to 54
    activated channels must set aside 10 percent of those channels not
    otherwise required for use or prohibited from use by federal law or
    regulation. Operators with 55 to 100 activated channels must set
    aside 15 percent of those channels not otherwise required for use or
    prohibited from use by federal law or regulation. Cable operators
    with more than 100 activated channels must designate 15 percent of
    such channels for commercial use. Cable operators are not required
    to remove services that were being provided on July 1, 1984, in
    order to comply with the statute.[^7]

5.  In the Cable Television Consumer Protection and Competition Act of
    1992 ("1992 Cable Act"), Congress broadened Section 612's explicit
    statutory purpose to include the promotion of "competition in the
    delivery of diverse sources of video programming," in addition to
    its original aim of bringing about "the widest possible diversity of
    information sources" for cable subscribers, and required the
    Commission: (a) to "determine the maximum reasonable rates that a
    cable operator may establish . . . for commercial use of designated
    channel capacity, including the rate charged for the billing of
    rates to subscribers and for the collection of revenue from
    subscribers by the cable operator for such use;" (b) to "establish
    reasonable terms and conditions for such use, including those for
    billing and collection;" and (c) to "establish procedures for the
    expedited resolution of disputes concerning rates or carriage . .
    ."[^8] Congress also required that the Commission's rules not
    adversely affect the operation, financial condition, or market
    development of the cable system.[^9]

6.  In implementing the statutory directive to determine maximum
    reasonable rates for leased access, the Commission adopted a maximum
    rate formula for full-time carriage on programming tiers based on
    the "average implicit fee" that other programmers are implicitly
    charged for carriage to permit the operator to recover its costs and
    earn a profit.[^10] The Commission also adopted a maximum rate for a
    la carte services based on the "highest implicit fee" that other a
    la carte services implicitly pay, and a prorated rate for part-time
    programming.[^11]

7.  Cable operators may use any unused channel capacity designated for
    leased access until an unaffiliated programmer obtains use of the
    channel capacity pursuant to a written agreement.[^12] Cable
    operators may use up to 33 percent of the channel capacity
    designated for leased access for qualified minority or educational
    programming sources, whether or not the source is affiliated with
    the cable operator.[^13] In addition, cable operators may impose
    reasonable insurance requirements and must provide the minimal level
    of technical support necessary for users to present their material
    on cable systems.[^14] Cable operators may not unreasonably refuse
    to cooperate with a leased access user in order to prevent that user
    from obtaining channel capacity.[^15]

## B. Scope of the NPRM {#b.-scope-of-the-nprm .unnumbered}

8.  In the NPRM, the Commission sought comment on the current status of
    leased access programming, such as whether, which and what type of
    programmers are using leased access channels; the number of full and
    part-time leased access channels that cable operators provide and
    are used; how often cable operators turn down requests for leased
    access and why; to what extent and for what purposes do cable
    operators use the channels and does this use contribute to
    programmers' lack of use; and whether the terms in leased access
    agreements, such as insurance or termination provisions, are the
    same or similar to those terms that the cable operator has with its
    own affiliated or non-affiliated programmers. The Commission also
    sought comment on the effectiveness of leased access enforcement;
    the costs and burdens associated with the complaint or other dispute
    resolution processes, time frames for the process; whether the
    process is being fully utilized and whether cable operators are
    complying with existing requirements and time frames.[^16]

9.  The Commission sought comment on the rate formula for leased access
    channels; whether the development of digital signal processing and
    signal compression technologies require changes in the formula;[^17]
    whether changes in technology require flexibility in the delivery
    format; whether the rules should allow more flexibility in tier and
    channel location; whether leased access should apply to
    video-on-demand ("VOD") or other technologies; and whether any
    advances in technology or marketplace developments affect the leased
    access rules, such as interactive electronic programming guides and
    addressable digital set-top boxes.[^18]

## C. Discussion {#c.-discussion .unnumbered}

### Customer Service Standards and Equitable Contract Terms

10. *Background*. In this Order, we adopt uniform customer service
    standards to address the treatment of leased access programmers and
    potential leased access programmers by cable system operators. In
    response to the NPRM, we received numerous comments outlining poor
    customer service practices and the imposition of unreasonable rates,
    terms and conditions for leased access by cable system operators.
    The record shows that poor customer service standards are impeding
    independent programmers' efforts to lease cable channels on
    unaffiliated cable systems by dissuading them from pursuing their
    statutory right to designated commercial leased access
    channels.[^19] For example, Pope Broadcasting Company ("PBC") claims
    that it has experienced "unethical, illegal and discriminatory
    practices by a number of cable providers."[^20] CaribeVision
    Holdings, LLC ("CaribeVH") argues for more specific guidelines in
    the Commission's Rules, other than just references in the rules to
    "reasonable" and "expeditious" treatment.[^21] CaribeVH complains of
    poor responses to requests for leased access channel information,
    both in response time and in substance. MAP argues that cable
    systems refuse to include in electronic program guides the necessary
    information about leased access channels that would enable viewers
    to find programming that may be of interest to them.[^22] Engle
    Broadcasting ("Engle") complains that cable operators typically
    ignore its requests for information regarding rates and available
    time slots or flat out refuse to give rates claiming there was "no
    time available."[^23]

11. In response, cable operators contend that they respond to requests
    for leased access in a timely manner and that the rates, terms, and
    conditions that they offer for leased access are reasonable. NCTA
    states that leased access generally proceeds smoothly on the local
    level, with few complaints arising, because cable operators have an
    obligation to reasonably accommodate leased access users and devote
    a significant amount of time and energy to that purpose.[^24] Time
    Warner Cable, Inc. ("TWC") argues that the current rules require
    cable operators to treat leased access programmers the same as other
    commercial programmers and that reasonableness standard is often
    decided through comparison with the treatment of non-leased access
    programmers.[^25] Comcast contends that cable operators are
    responsive to requests for leased access information.[^26]

12. *Discussion*. As stated above, in order to make the leased access
    carriage process more efficient, we adopt new customer service
    standards, in addition to the existing standards. These standards
    are designed to ensure that leased access programmers are not
    discouraged from pursuing their statutory right to the designated
    commercial leased access channels, to facilitate communication of
    these rights and obligations to potential programmers, and to ensure
    a smooth process for gaining information about a cable system's
    available channels. As explained in more detail below, we require
    cable system operators to maintain a contact name, telephone number
    and e-mail address on its website, and make available by telephone,
    a designated person to respond to requests for information about
    leased access channels.[^27] We also require cable system operators
    to maintain a brief explanation of the leased access statute and
    regulations on its website.[^28] Within three business days of a
    request for information, a cable system operator shall provide the
    prospective leased access programmers with the following
    information: (1) The process for requesting leased access
    channels;[^29] (2) The geographic levels of service that are
    technically possible;[^30] (3) The number and location and time
    periods available for each leased access channel;[^31] (4) Whether
    the leased access channel is currently being occupied;[^32] (5) A
    complete schedule of the operator's statutory maximum full-time and
    part-time leased access rates;[^33] (6) A comprehensive schedule
    showing how those rates were calculated;[^34] (7) Rates associated
    with technical and studio costs;[^35] (8) Electronic programming
    guide information;[^36] (9) The available methods of programming
    delivery and the instructions, technical requirements and costs for
    each method;[^37] (10) A comprehensive sample leased access contract
    that includes uniform terms and conditions such as tier and channel
    placement, contract terms and conditions, insurance requirements,
    length of contract, termination provisions and electronic guide
    availability;[^38] and (11) Information regarding prospective launch
    dates for the leased access programming.[^39] We explain each of
    these standards in further detail below. In addition to the customer
    service standards, we adopt penalties for ensuring compliance with
    these standards.[^40] We emphasize that the leased access customer
    service standards adopted herein are "minimum" standards. We cannot
    anticipate each and every instance of interaction between cable
    operators and leased access programmers.

13. *Maintenance of Contact Information*. We require every cable system
    operator to maintain, on its website, a contact name, telephone
    number, and e-mail of an individual designated by the cable system
    operator to respond to requests for information about leased access
    channels. One of the more basic elements necessary to permit
    potential programmers reasonable access to cable systems is ready
    availability of a contact name, telephone number, and e-mail address
    of a cable system operator that the programmer can use to reach the
    appropriate person in the cable system to begin the process for
    requesting access to the system. Commenters complain about
    individuals located far from the local community. For example, RMI
    states that when a new programmer requests information about leased
    access, they are directed to a person headquartered over 130 miles
    away.[^41] CBA makes a similar complaint.[^42] NCTA, on the other
    hand, offers that leased access generally proceeds smoothly at the
    local level.[^43] While the physical location of a person designated
    as the leased access contact should not be critical in the
    relationship between the potential programmer and the cable system
    operator, the identity of that person and the ease of access to him
    are critical. Other aspects of the rules we adopt here deal with
    expeditious and full responses to leased access requests. The fact
    that the designated person is located some distance away should not
    affect the timeliness and substance of responses.

14. *Timing for Response*. We amend our Rules to require a cable system
    operator[^44] to respond to a request for information from a leased
    access programmer within three business days. The identity of a
    designated person by the cable system operator who the potential
    programmer can contact is important only if that person replies
    quickly and fully to the requests of the programmer. CaribeVH
    complains of poor responses to requests for leased access channel
    information, both in response time and in substance.[^45] Engle
    complains that the cable operators typically ignore the requests for
    information regarding rates and available time slots or flat out
    refuse to give rates claiming there was "no time available."[^46]
    Positive Media, Inc. d/b/a TV Camden ("PMI") states that when it
    tried to request leased access information from its local cable
    company, the company responded that it did not know about leased
    access.[^47] Our current Rules provide for a 15 day response by
    cable system operators to a request by a potential programmer. That
    response must include information on channel capacity available, the
    applicable rates, and a sample contract if requested. That response
    time is unnecessarily long and, as discussed below, the information
    is inadequate. Cable operators must have leased access channel
    information available in order to be able to comply with the statute
    and our Rules. It does not take 15 days to provide a copy of that
    information to a potential leased access programmer. Three business
    days to reply to a request for such information is more than
    adequate. Accordingly, we are amending the response time permitted a
    cable system operator to three business days. We are also providing
    a more detailed list of information the operator must provide upon
    request within that time period. All of the information required to
    be provided is necessary for a potential leased access programmer to
    be able to file a *bona fide* request for carriage. There is no
    reason to delay providing the leased access programmer with the
    information it needs to take the necessary steps to obtain access.

15. *Process for Requesting Leased Access Channels*. We require a cable
    system operator within three business days of a request to provide a
    prospective leased access programmer with the process for requesting
    leased access channels. One element of the information the cable
    system operator must make available to the potential programmer
    within three business days of a request is an explanation of the
    cable system operator's process for requesting leased access
    channels. In addition to delayed and inadequate responses,
    commenters complain that they have to deal with a process and
    procedures that are difficult to understand and seem to exist only
    to provide resistance. For example, PMI states that when it tried to
    request leased access information from its local cable company, the
    company responded that it could provide no information about leased
    access.[^48] PMI had to file a petition for relief with the
    Commission to get rates and channel availability. According to PMI,
    although the Commission requests the local programmer and the cable
    company to "negotiate" the terms and conditions of any contract for
    lease access, its experience with the contract negotiation process
    was that any request by PMI was kept out of the contract and every
    requirement the cable system made was included. PMI was forced to
    argue each point, backed with Commission precedent, to support its
    requests, and the cable system's actions had the effect of delaying
    and discouraging access to the leased access channels.[^49]
    Accordingly, we are requiring that the cable system operator include
    an explanation of the operator's process and procedures for
    requesting leased access channels.

16. *Geographic Levels of Service that Are Technically Possible.* We
    require a cable system operator within three business days of a
    request to provide a prospective leased access programmer with the
    geographic levels of service that are technically possible.
    Commenters complain that cable system operators make available only
    limited levels of service.[^50] Typically, the service offered is
    defined by the size of the headend.[^51] CaribeVH points out that
    with the consolidation of headends, the headend approach is no
    longer efficient for a leased access programmer to obtain a channel
    serving the local needs of residents in discrete communities.[^52]
    As a result, "leased access programmers are . . . forced to purchase
    much larger areas at a much higher cost even if their programming is
    not relevant to the larger consolidated base."[^53] CaribeVH asks
    the Commission to provide for leased access to local communities, as
    opposed to large consolidated cable systems.[^54] MAP, on the other
    hand, asserts that the Commission should require cable operators to
    make rates available on a headend, regional, and national basis with
    price sheets available in public files and on request.[^55] We will
    not require, at this time, the operator to allow the leased access
    programmer to serve discrete communities smaller than the area
    served by a headend if they are not doing the same with other
    programmers. We acknowledge that with the consolidation of headends,
    programmers may be forced to purchase larger areas at higher costs
    than they would prefer. We will monitor developments in this area,
    and may revisit this issue if circumstances warrant. However, we
    will require cable system operators to clearly set out in their
    responses to programmers what geographic and subscriber levels of
    service they offer.

17. *Number, Location, and Time Periods Available for Each Leased Access
    Channel*. We require a cable system operator within three business
    days of a request to provide a prospective leased access programmer
    with the number, location, and time periods available for each
    leased access channel. One of the more common complaints raised by
    commenters was the difficulty they faced in determining just what
    channels were available, where they were located, and what time
    periods they were available.[^56] Our current Rules provide, simply,
    that operators explain how much of the operator's leased access
    capacity is available.[^57] CaribVH asks that cable operators be
    required to provide, in addition, subscriber totals by headend, on
    each of the different tiers; specific channels availabilities, and a
    channel lineup; and information to verify leased access rates.[^58]
    MAP asserts that programmers should have the ability to select the
    tier of their choice and to be secure in their channel
    placement.[^59] Shop NBC believes that the Commission should make
    clear that certain cable operator practices are *per se*
    unreasonable, such as locating leased access programmers in channel
    positions with poor transmission quality or in a collective "cable
    Siberia," where they cannot easily be located by subscribers.[^60]
    iNFO also requests better channel placement for leased access
    programmers and points out that its leased access application was
    denied by Comcast because the market requested could not be
    segregated from a larger market.[^61] iNFO states that as a result
    of a settlement, and almost thirty months and \$28,000 of legal
    expenses, iNFO eventually gained the rights to a leased access
    channel.[^62] It notes that it was placed where there are no
    channels close to it.[^63] Our current leased access channel
    placement standards provide that programmers be given access to
    tiers that have subscriber penetration of more than 50 percent.[^64]
    We will not change that requirement, but we will expand on the
    current requirement relating to capacity in Section 76.970(i) to
    require cable system operators to provide, in their replies to
    requests from programmers, the specific number and location and time
    periods available for each leased access channel. This greater
    degree of certainty should assist programmers in their evaluations.

18. *Explanation of Currently Available and Occupied Leased Access
    Channels.* We require a cable system operator within three business
    days of a request to provide a prospective leased access programmer
    with an explanation of currently available and occupied leased
    access channels. Several commenters complain that cable operators
    give delayed, false, or misleading information as to leased access
    capacity and availability.[^65] NCTA states that it may be difficult
    to specify which channel is available for use at the time of the
    request because that information may not be readily available if the
    lessee is requesting that an operator open up a new channel for
    leasing.[^66] We disagree with NCTA's assertion. Section 612 of the
    Communications Act imposes specific requirements on cable operators
    with regard to leased access.[^67] It is inherent in these
    obligations to be able to provide timely and accurate information to
    prospective leased access programmers. Within three business days of
    a request by a current or potential leased access programmer, a
    cable operator shall provide information documenting: (1) the number
    of channels that the cable operator is required to designate for
    commercial leased access use pursuant to Section 612(b)(1); (2) the
    current availability of those channels for leased access programming
    on a full- or part-time basis; (3) the tier on which each leased
    access channel is located; (4) the number of customers subscribing
    to each tier containing leased access channels; (5) whether those
    channels are currently programmed with non-leased access
    programming; and (6) how quickly leased access channel capacity can
    be made available to the prospective leased access programmer. We
    believe this information is vital to enable leased access
    programmers to make an informed decision regarding whether to pursue
    leased access negotiations with a cable operator. Provision of this
    information will also benefit cable operators by timely informing
    leased access programmers of current leased access timing and
    availability, and thereby eliminating leased access requests that
    cannot be accommodated by existing leased access availability.

19. *Schedule and Calculation of Leased Access Rates.* We require a
    cable system operator within three business days of a request to
    provide a prospective leased access programmer with a schedule and
    calculation of its leased access rates. Numerous commenters complain
    that cable operators failed to provide timely information on leased
    access rates or on how such rates are calculated.[^68] MAP asserts
    that the Commission should require cable operators to make rates
    available on a head-end, regional, and national basis with price
    sheets available in public files and on request.[^69] NCTA points
    out that operators are required to maintain sufficient supporting
    documentation to justify their rates, including information that
    shows the calculations of the implicit fees, and this information
    must be available for demonstration to the Commission.[^70] As with
    information regarding available and occupied leased access channels,
    we believe Section 612 imposes on cable operators the obligation to
    provide a timely and accurate explanation of its leased access rates
    to prospective leased access programmers. Indeed, as conceded by
    NCTA, this obligation is not new.[^71] Rather, we merely amend the
    time required for providing this information to prospective leased
    access programmers. Accordingly, within three business days of a
    request by a current or potential leased access programmer, a cable
    operator shall provide information documenting the schedule of all
    leased access rates (full- and part-time) available on the cable
    system. Cable operators must attach to this schedule a separate
    calculation detailing how each rate was derived pursuant to the
    revised rate formula adopted herein.[^72] This information will
    assist leased access programmers in determining whether leased
    access capacity on a given cable system is economically feasible. In
    addition, the rate calculations will further assist leased access
    programmers in determining whether particular cable operators are
    complying with their leased access obligations.

20. *Explanation of Any Rates Associated with Technical or Studio
    Costs*. Included in the customer standards we are adopting today is
    a requirement that a cable operator provide a prospective leased
    access programmer, within three business days of a request, with a
    list of fees for providing technical support or studio assistance to
    the leased access programmer along with an explanation of such fees
    and how they were calculated. We note that our Rules require leased
    access providers to reimburse cable operators "for the *reasonable*
    cost of any technical support the operators actually provide."[^73]
    Further, our rate calculation includes technical costs common to all
    programmers so that cable operators may not impose a separate charge
    for technical support they already provide to non-leased access
    programmers.[^74] Commenters note incidents they assert constitute
    cable operator overcharging, such as imposing a technical fee of
    \$51.49 to insert a tape into a machine.[^75] Although we do not
    have all of the facts before us regarding this specific allegation,
    a substantial charge for a minor task is the type of conduct we
    would find unreasonable. iNFO states that, although it only reached
    one market zone, it was required to buy modulators for four other
    zones and that the iNFO channel had a signal quality significantly
    inferior to other channels.[^76] At this time, we will not prescribe
    an hourly rate for technical support, but instead will monitor the
    effectiveness of the new customer standards that require that cable
    operators list up front any technical fees along with an explanation
    of the fee calculation. If leased access programmers have continued
    problems with high technical or studio cost, we will consider
    implementing a more specific solution.

21. *Programming Guide Information.* We require a cable system operator
    within three business days of a request to provide a prospective
    leased access programmer with all relevant information for obtaining
    carriage on the program guide(s) provided on the operator's system.
    Moreover, we expressly require that, if a cable operator does not
    charge non-leased access programmers for carriage of their program
    information on a programming guide, the cable operator cannot charge
    leased access programmers for such service. MAP states that viewers
    cannot identify whether programming designated "paid programming" on
    a channel guide is local or ethnic programming or an
    infomercial.[^77] CaribeVH argues for a requirement that cable
    operators list leased access programming in their printed cable
    guides and on the electronic guides on the system.[^78] NCTA argues
    that cable operators must be able to differentiate between the
    program services that they have chosen and leased access channels in
    the program guide and that it is impossible to include part-time
    leased access programming in program guides.[^79] Comcast states
    that, like other MVPDs, it relies upon third parties to provide the
    data content for its electronic program guides and data generally
    needs to be supplied to these "metadata aggregators" on a timetable
    that is not consistent with leased access arrangements.[^80] Because
    of the dynamic nature of leased access programming, we believe that
    it would be impracticable to impose a requirement on cable operators
    to include all leased access listings in their programming guides.
    However, we believe that, in situations where time permits and the
    leased access programming information is submitted as reasonably
    required by the cable operators, cable operators must ensure that
    leased access programming information is incorporated in its program
    guide to the same extent that it does so for non-leased access
    programmers. In order to accomplish this, cable operators are
    required to provide potential leased access programmers with all
    relevant information for obtaining carriage on the program guide(s)
    provided on the operator's system.[^81] This information shall
    include the requirements necessary for a leased access programmer to
    have its programming included in the programming guide(s) that serve
    the tier of service on which the leased access provider contracts
    for carriage. At a minimum, the cable operator must provide: (1) the
    format in which leased access programming information must be
    provided to the cable operator for inclusion in the appropriate
    programming guide; (2) the content requirements for such
    information; (3) the time by which such programming information must
    be received for inclusion in the programming guide; and (4) the
    additional cost, if any, related to carriage of the leased access
    programmer's information on the programming guide. We expressly
    require that, if a cable operator does not charge non-leased access
    programmers for carriage of their program information on a
    programming guide, the cable operator cannot charge leased access
    programmers for such service.

22. *Methods of Programming Delivery.* We require a cable system
    operator within three business days of a request to provide a
    prospective leased access programmer with available information
    regarding all acceptable, standard methods for delivering leased
    access programming to the cable operator. MAP argues that, although
    cable systems are now capable of a wide variety of delivery systems
    that would allow leased access programmers an opportunity to
    narrowly tailor their coverage to niche audiences, cable operators
    refuse to allow leased access programmers with access to these
    technologies.[^82] MAP asserts that the additional fees charged by
    cable operators for services such as tape insertion correspond to no
    discernible economic variable and should be prohibited.[^83] CBA
    complains of the insistence by cable operators on prohibitively
    expensive delivery methods and insistence on payment for equipment
    that the leased access provider does not need, as well as
    prohibitive technical fees.[^84] With regard to cable operators
    restricting programming delivery technology, NCTA argues that the
    Commission's has already determined that operators "do not have any
    responsibility for assisting in the delivery of programming from a
    programmers' studio or production facility to the headend or input
    point of the cable system."[^85] Comcast replies that the leased
    access programmers' request that the Commission allow them to
    deliver their programming to cable operators by any means they
    choose, including "tape, DVD, \[I\]nternet, coax, fiber, an
    unlicensed frequency wireless microwave, IPTV, or any current or new
    technology," is unrealistic, and would increase cable operators'
    technical costs.[^86]

23. Because of the variable circumstances experienced by each cable
    system, we cannot establish a list of acceptable, standard delivery
    methods for leased access programming applicable to all cable
    systems. However, we believe that it incumbent upon a cable operator
    to provide prospective leased access programmers with sufficient
    information to be able to gauge the relative difficulty and expense
    of delivering its programming for carriage by the cable operator. A
    cable operator must make available information to leased access
    programmers regarding all acceptable, standard methods for
    delivering leased access programming to the cable operator. For each
    method of acceptable, standard delivery, the cable operator shall
    provide detailed instructions for the timing of delivery, the place
    of delivery, the cable operator employee(s) responsible for
    receiving delivery of leased access programming, all technical
    requirements and obligations imposed on the leased access
    programmer, and the total cost involved with each acceptable,
    standard delivery method that will be assessed by the cable
    operator. We clarify, however, that cable operators must give
    reasonable consideration to any delivery method suggested by a
    leased access programmer. A leased access programmer that is denied
    the opportunity to deliver its programming via a reasonable method
    may file a complaint with the Commission. In such complaint
    proceeding, the burden of proof shall be on the cable operator to
    demonstrate that its denial was reasonable given the unique
    circumstances of its cable system.

24. *Comprehensive Sample Leased Access Carriage Contract.* We require a
    cable system operator within three business days of a request to
    provide a prospective leased access programmer with a comprehensive
    sample leased access carriage contract. We also require a cable
    system operator in its leased access carriage contract to apply the
    same uniform standards, terms, and conditions to leased access
    programmers as it applies to its other programmers. MAP states that
    the Commission should require cable operators to include leased
    access contracts in their public files and to provide annual reports
    on the use of leased access.[^87] PMI supports a standard leased
    access downloadable form to eliminate useless delay tactics used by
    cable systems.[^88] CaribeVH urges the Commission to set specific
    requirements such as a one-year minimum contract length for a leased
    access programmer seeking a 24/7 channel for an extended
    period.[^89] NCTA states that most cable operators typically have
    standard form contracts that they make available to leased access
    users within the prescribed 15 day time frame or sooner and delays
    are due to lessees' proposed changes.[^90] Comcast states that there
    is no basis for the Commission to adopt a standardized leased access
    contract.[^91]

25. We agree with the commenters that propose that cable operators be
    required to supply a sample leased access agreement to prospective
    leased access programmers. NCTA admits that most cable operators
    already maintain such contracts and share them with prospective
    leased access programmers. We do not intend by this requirement to
    infringe the freedom of contract of either party and expressly
    clarify that neither the cable operator nor the prospective leased
    access programmer need abide by any of the terms and conditions set
    forth in the sample contract. Instead, we believe that the provision
    of such agreements by cable operators serve to inform leased access
    programmers of terms and conditions that are generally acceptable to
    the cable operator and will be a useful first step in the initiation
    of leased access negotiations. Accordingly, within three business
    days of a request by a current or potential leased access
    programmer, a cable operator shall provide a copy of a sample leased
    access carriage contract setting forth what the cable operator
    considers to be the standard terms and conditions for a leased
    access carriage agreement.

26. As discussed below, we also require cable system operators to apply
    the same uniform standards, terms, and conditions to leased access
    programmers as it applies to its other programmers. Leased access
    programmers complain of leased access contract terms and conditions
    that are unfair, unreasonable, onerous, and overly burdensome or
    discriminatory.[^92] Specific unreasonable terms and conditions
    complained about include unfair promotion and marketing
    practices;[^93] system-by-system leasing requirements;[^94]
    insurance and security deposits;[^95] discriminatory treatment in
    comparison with other commercial programmers;[^96] unfair treatment
    of LPTV broadcasters;[^97] tier and channel placement issues;[^98]
    VOD platform issues;[^99] exclusion from electronic program
    guides;[^100] excessive technical and other fees;[^101] and
    inflexible delivery systems.[^102] Commenters ask that we address
    certain contract issues that arise in negotiations. Rather than
    dictate specific reasonable terms and conditions, we require that
    cable system operators apply the same uniform standards, terms, and
    conditions to leased access programmers as it applies to its other
    programmers.

27. The Commission has stated in the past that the reasonableness of
    specific terms and conditions will be determined on a case-by-case
    basis, but set broad guidelines for tier placement and a general
    standard of reasonableness for contract terms and conditions.[^103]
    Although we conclude that each complaint regarding unreasonable
    terms and conditions will continue to be reviewed on a case-by-case
    basis, we set out herein additional guidelines that will help to
    narrow the range of reasonable practices, terms, and conditions. For
    example, numerous parties complain about a requirement to carry
    insurance indemnifying the cable system operator. The Commission has
    held that requiring a leased access programmer to obtain reasonable
    liability insurance coverage does not constitute a violation of the
    leased access regulations.[^104] Although the Commission has not
    adopted specific conditions or limits regarding the amount of
    coverage or the type of insurance policy that operators may require,
    the Commission does require that insurance requirements be
    reasonable in relation to the objective of the requirement.[^105]
    The Commission also placed on cable operators the burden of proof in
    establishing reasonableness.[^106] The Commission stated that
    reasonable insurance requirements are based on the operator's
    practices with respect to insurance requirements imposed on
    non-leased access programmers, the likelihood that the nature of the
    leased access programming will pose a liability risk for the
    operator, previous instances of litigation arising from the leased
    access programming, and any other relevant factors.[^107] In a
    recent case, the Media Bureau found that the cable system provided
    no evidence establishing the reasonableness of its insurance
    requirement, such as whether the insurance was required of
    non-leased access programmers, whether the cable system operator had
    incurred litigation costs in the context for which it need
    indemnification, or even that the likelihood that the programming at
    issue would pose a liability risk.[^108]

28. We will continue to address complaints about specific contract terms
    and conditions on a case-by-case basis. We emphasize that in all
    cases, the Commission will evaluate any complaints pursuant to a
    reasonableness standard. We also clarify that a cable system
    operator may not continue to include terms and conditions in new
    contracts that previously have been held to be unreasonable by the
    Commission. Not only are our orders binding on the affected parties
    to a leased access complaint, but unless and until an order is
    stayed or reversed by the Commission, a cable system operator is
    under an obligation to follow the Commission's Rules and precedent
    in setting its practices, terms, and conditions.

29. Because we do not think that every potential leased access
    programmer should be required to file a complaint to determine if
    every term in its contract is reasonable, we will require the cable
    operator to provide, along with its standard leased access contract,
    an explanation and justification, including a cost breakdown, for
    any terms and conditions that require the payment or deposit of
    funds. This includes insurance and deposit requirements, any fees
    for handling or delivery, and any other technical or equipment fees,
    such as tape insertion fees. This will allow the leased access
    programmer to determine whether the cost is reasonable and expedite
    any review by the Commission. For example, we note that RMI contends
    that one cable operator charges leased access programmers a fee of
    \$51.49 each time a tape is inserted into a playback deck.[^109] We
    believe that requiring a cable operator to provide an explanation
    and justification for such a fee will encourage cable operators to
    impose only reasonable fees or, at least, facilitate the filing of a
    leased access complaint demonstrating that such a fee is
    unreasonable.

30. With regard to non-monetary terms and conditions, such as channel
    and tier placement, targeted programming, access to electronic
    program guides, VOD, etc., we similarly require the cable operator
    to provide, along with its standard leased access contract, an
    explanation and justification of its policy. For example, with
    regard to the geographic scope of carriage, if a leased access
    programmer requests to have its programming targeted to a finite
    group of subscribers based on community location, unless the
    operator agrees to the request, it must not provide such limited
    carriage to other programmers or channels. To the extent the cable
    operator denies the request for limited carriage, the cable operator
    must provide an explanation as to why it is technically infeasible
    to provide such carriage. If limited carriage is technically
    feasible, the cable operator must provide a fee and cost breakdown
    for such carriage for comparison with similar coverage provided for
    non-leased access programmers.

31. Similarly, with regard to tier placement and channel location, we
    require the cable operator to provide, along with its standard
    leased access contract, an explanation and justification of its
    policy regarding placement of a leased access programmer on a
    particular channel as well as an explanation and justification for
    the cable operator's policy for relocating leased access channels.
    To the extent a request for a particular channel is denied, the
    cable operator must provide a detailed explanation and justification
    for its decision.

32. *Launch Date*. We require a cable system operator within three
    business days of a request to provide a prospective leased access
    programmer with information regarding prospective launch dates for
    the leased access programmer. Moreover, we require cable operators
    to launch leased access programmers within a reasonable amount of
    time. We consider 35-60 days after the negotiation is finalized to
    be a reasonable amount of time for launch of a programmer, unless
    the parties come to a different agreement. We note that this time
    frame affords cable operators sufficient time to satisfy the
    requirement, if applicable, to provide subscribers with 30-days
    written notice in advance of any changes in programming services or
    channel positions.[^110] While CaribeVH urges the Commission to
    adopt a requirement that a cable operator launch a leased access
    programmer within 10-60 days after the programmer requests leased
    access information, we find that this would be unnecessarily
    disruptive for cable operators because not all leased access
    programmers that request information agree to the terms for
    carriage.[^111] Requiring the cable operator to launch the leased
    access programmer within 35-60 days after negotiations are finalized
    mitigates this concern.

### Response to Bona Fide Proposals for Leased Access

33. We adopt Rules to ensure that cable system operators respond to
    proposals for leased access in a timely manner and do not
    unreasonably delay negotiations for leased access. As leased access
    programmers explain, some cable operators have demonstrated an
    unwillingness to respond to a proposal for leased access or to
    negotiate with a leased access programmer in a timely manner,
    thereby impeding access to leased access channel capacity.[^112] To
    address this concern, after the cable system operator provides the
    information requested above, in order to be considered for carriage
    on a leased access channel, we require a leased access programmer to
    submit a proposal for carriage by submitting a written proposal that
    includes the following information: (1) The desired length of a
    contract term; (2) The tier, channel and time slot desired; (3) The
    anticipated commencement date for carriage; (4) The nature of the
    programming; (5) The geographic and subscriber level of service
    requested; and (6) Proposed changes to the sample contract.[^113]
    The cable system operator must respond to the proposal by accepting
    the proposed terms or offering alternative terms within 10
    days.[^114] This same response deadline will apply until an
    agreement is reached or negotiations fail.

34. Failure to provide the requested information will result in the
    issuance of a notice of apparent liability ("NAL") including a
    forfeiture in the amount of \$500.00 per day.[^115] A potential
    leased access programmer need not file a formal leased access
    complaint pursuant to Section 76.975 of the Commission's Rules in
    order to bring a violation of our customer service standards to our
    attention.[^116] Rather, the programmer may notify the Commission
    either orally or in writing, and where necessary the Commission will
    submit a Letter of Inquiry ("LOI") to the cable operator to obtain
    additional information. A cable system which is found to have failed
    to respond on time with the required information will be issued an
    NAL. The same process and forfeiture amount will apply for the
    failure to timely respond to a proposal as for the failure to comply
    with an information request. We rely on our general enforcement
    authority under Section 503 of the Communications Act to impose
    forfeitures in appropriate cases.[^117]

### Leased Access Rates

#### Maximum Rate for Leasing a Full Channel

35. *Background.* The Commission's current Rules calculate leased access
    rates for all tiers that have subscriber penetration of more than 50
    percent. Upon request, cable operators generally must place leased
    access programmers on such a tier.[^118] To determine the average
    implicit fee for a full-time channel on a tier with a subscriber
    penetration over 50 percent, an operator first calculates the total
    amount it receives in subscriber revenue per month for the
    programming on all such tiers, and then subtracts the total amount
    it pays in programming costs per month for such tiers (the "implicit
    fee calculation"). A weighting scheme that accounts for differences
    in the number of subscribers and channels on all such tier(s) is
    used to determine how much of the total will be recovered from a
    particular tier.[^119] To calculate the average implicit fee per
    channel, the implicit fee for the tier is divided by the number of
    channels on the tier. The final result is the rate per month that
    the operator may charge the leased access programmer for a full-time
    channel on that tier. Where the leased access programmer agrees to
    carriage on a tier with less than 50 percent penetration, the
    average implicit fee is determined using subscriber revenues and
    programming costs for only that tier. The implicit fee for full-time
    channel placement as an a la carte service is based upon the revenue
    received by the cable operator for non-leased access a la carte
    channels on its system.

36. In this Order we modify the method for determining the leased access
    rate for full-time carriage on a tier. We harmonize the rate
    methodology for carriage on tiers with more than 50% subscriber
    penetration and carriage on tiers with lower levels of penetration
    by calculating the leased access rate based upon the characteristics
    of the tier on which the leased access programming will be placed.
    Cable operators will calculate a leased access rate for each cable
    system on a tier-by-tier basis which will adequately compensate the
    operator for the net revenue that is lost when a leased access
    programmer displaces an existing program channel on the cable
    system. In addition, the Order sets a maximum allowable leased
    access rate of \$0.10 per subscriber per month to ensure that leased
    access remains a viable outlet for programmers. At this time we
    leave the method for calculating rates for a la carte carriage
    unchanged.

37. As an initial matter, we conclude that we will not apply this new
    rate methodology to programmers that predominantly transmit sales
    presentations or program length commercials.  These programmers
    often "pay" for carriage \-- either directly or through some form of
    revenue sharing with the cable operator. In our previous Order, we
    set the leased access rate for a la carte programmers at the
    "highest implicit fee" partly out of a concern that lower
    rates would simply lead these programmers to migrate to leased
    access if it were less expensive than what they are currently
    "paying" for carriage.  Such a migration would not add to the
    diversity of voices and would potentially financially harm the cable
    system. Similarly, we do not wish to set the leased access rates at
    a point at which programmers that predominantly transmit sales
    presentations or program length commercials simply migrate to leased
    access because it is less expensive than their current commercial
    arrangements. We will seek comment in the Further Notice of Proposed
    Rulemaking on whether leased access is affordable at current rates
    to programmers that predominantly transmit sales presentations or
    program length commercials and whether reduced rates would simply
    cause migration of existing services to leased access.

#### The Marginal Implicit Fee

38. The purposes of Section 612 are "to promote competition in the
    delivery of diverse sources of video programming and to assure that
    the widest possible diversity of information sources are made
    available to the public from cable systems in a manner consistent
    with growth and development of cable systems."[^120] Because Section
    612 also requires that the price, terms and conditions for leased
    access be "at least sufficient to assure that such use will not
    adversely affect the operation, financial condition or market
    development of the cable system,"[^121] the Commission is faced with
    balancing the interests of leased access programmers with those of
    cable operators. We believe that our method provides a cable
    operator with a leased access rate that will allow the operator to
    replace an existing channel from its cable system with a leased
    access channel without experiencing a loss in net revenue.[^122] In
    addition, since we are required to balance the revenue requirement
    of cable operators and that of leased access programmers, we will
    assume that the cable operator will elect to replace a channel which
    does not generate a significant amount of the total net revenue of
    the system. We refer to this channel as the marginal channel and use
    the marginal implicit fee to determine leased access rates. Our
    method was intended to promote the goals of competition and
    diversity of programming sources while doing so in a manner
    consistent with growth and development of cable systems.[^123]

39. Based on the wide variance between the actual use of leased access
    and the goals stated in the law, it appears that the current
    "average implicit fee" formula for tiered leased access channels
    yields fees that are higher than the statute mandates, resulting in
    an underutilization of leased access channels. According to the
    Commission's most recent annual cable price survey, cable systems on
    average carry only 0.7 leased access channels.[^124] Shop NBC
    asserts that due to the "average implicit fee" rate formula leased
    access remains unaffordable to large and small independent
    programmers alike.[^125] WBGN contends that the rate formula has
    contributed to the failure of the leased access system.[^126]
    Because our Rules are not achieving their intended purpose, we are
    revisiting decisions made in the *Second Report and Order*
    establishing the maximum leased access rates in order to make the
    leased access channels a more viable outlet for programming.[^127]
    Throughout its implementation of Section 612, the Commission has
    recognized that the Rules adopted would need refinement as specifics
    regarding how the leased access rules were functioning became
    available.[^128]

40. In the NPRM, we sought comment on the current rate formula and how
    any proposed changes would better serve Congress's statutory
    objectives.[^129] Some commenters suggest that the Commission depart
    from the implicit fee approach.[^130] Some commenters propose a
    universal flat rate per subscriber per month.[^131] We agree that
    such an approach offers some appealing aspects in terms of ease of
    administration and consistency of leased access charges across cable
    operators. As the Commission expressed in the *Second Report and
    Order*, however, "the fundamental limitation with a flat rate
    approach is selecting a rate that is appropriate for all cable
    systems."[^132] Due to the variances in channel line-ups and tier
    prices of cable systems, in most instances, a flat rate would either
    over- or undercompensate cable operators. As discussed below,
    however, we will set a cap on the maximum rate that cable operators
    may charge in order to prevent the construction of tiers in a manner
    that makes leased access rates excessively high.

41. We agree with Shop NBC's assertion that the average implicit fee
    overcompensates cable operators because it reflects the *average*
    value of a channel to the cable operator instead of the value of the
    channel replaced.[^133] We will make adjustments to the rate
    calculations that should lower prices by using the marginal implicit
    fee rather than the average. The result is intended to promote the
    goals of leased access by providing more affordable opportunities
    for programmers without creating an artificially low rate.

42. The legislative history provides that the leased access provisions
    are "aimed at assuring that cable channels are available to enable
    program suppliers to furnish programming when the cable operator may
    elect not to provide that service as part of the program offerings
    he makes available to subscribers"[^134] To promote this legislative
    purpose the Commission should set the leased access rates as low as
    possible consistent with the requirement to avoid any negative
    financial impact on the cable operator. One may assume that the
    cable operator, faced with a requirement to free up a channel for
    leased access, would have its own incentives to elect to replace one
    of the channels with the lowest implicit fee. But even if this is
    not the case, the discussion above suggests that the Commission
    should set its rules to encourage such a result. This dictates, at
    least in principle, the use of the lowest implicit fee, which we
    refer to as the "marginal implicit fee." And it supports the
    conclusion that the current "average implicit fee" criterion for
    tiered channels is higher than warranted by the statute and may be
    impeding, rather than promoting, the goals of competition and
    diversity of programming sources. These rules provide cable
    operators a higher return for lost channel capacity than the value
    the cable operator would have received if the channel was not used
    for leased access programming.[^135] We will adopt a method which
    eliminates this excess recovery. This method remains faithful to the
    statutory requirements while more appropriately balancing the
    interests of cable operators and leased access programmers.

#### The Cable Operator's Net Revenue from a Cable Channel 

43. Cable channels are sold in bundles of channels known as tiers. It is
    therefore not possible to directly observe the revenue per
    subscriber a cable operator earns from carrying an individual
    channel included in a tier. We therefore approximate the revenue
    earned by those channels on the tier. To do so we assume that the
    revenue generated by each channel is directly proportional to the
    per subscriber affiliation fee paid by the cable operator to the
    programmer. The first step in the calculation is to determine this
    factor of proportionality which we refer to as the mark-up. To do
    so, the cable operator will take the total subscriber revenue for
    the programming tier at issue and divide by the total of the
    affiliation fees that the cable operator pays to the programmers for
    the channels on that tier.[^136] This calculation will generate the
    mark-up of channels that are sold on the tier. The gross revenue per
    subscriber due to carriage of a specific channel on the tier is then
    simply the per subscriber affiliation fee paid to the programmer for
    the specific channel multiplied by the mark-up.[^137] The net
    revenue per subscriber earned by the cable operator from the channel
    is the difference between the gross revenue per subscriber and the
    per subscriber affiliation fee paid by the cable operator. This
    value represents the implicit fee for the channel.

#### The Net Revenue of the Marginal Channel

44. The net revenue per subscriber is the reduction in profit a cable
    operator would experience if it did not carry the channel in
    question. In our previous method for calculating leased access rates
    the calculation was based the average net revenue of all channels
    carried by the cable operator. In our new method, we base the leased
    access rate on the net revenue of the least profitable channels
    voluntarily carried by the cable operators on the tier where the
    leased access programming will be carried. We do so because this
    represents an approximation of the minimum net revenue a network
    must generate in order for the cable operator to consider carrying
    it on the tier. As mentioned, we examine the net revenue of channels
    that are voluntarily carried by the cable operator. From this
    calculation we exclude channels whose carriage is mandated by
    statute, regulation, or franchise agreement. These mandated channels
    consist of broadcast stations that are subject to the must-carry
    rules as well as public, educational, and governmental ("PEG")
    channels that are carried pursuant to a franchise agreement. In
    addition, broadcaster's multi-cast channels are also excluded from
    the marginal channels. Our goal is to base the leased access rate on
    the net revenue of channels which are subject to free market
    negotiations over the carriage decision and affiliation fee. It is
    the net revenue of these types of channels which provides an
    indication of the net revenue that would be forgone when a cable
    operator devotes channel capacity to a leased access programmer
    since the cable operator would be unable to displace a broadcast
    station or PEG channel.

45. We identify the least profitable, or marginal, channels using the
    fraction of activated channels that a cable operator is statutorily
    required to make available for commercial leased access. The leased
    access rate is the mean value of net revenue earned by the lowest
    earning channels on the tier, up to the designated leased access
    fraction of qualifying channels on the tier. For example, in the
    case of a cable system with 100 activated channels and 40 channels
    on the expanded basic tier, the mean value of the net revenue of the
    6 channels with the lowest net revenue will be the leased access
    rate for carriage on the expanded basic tier. We use the mean rather
    than the minimum value because use of the minimum would
    undercompensate the cable operator if more than one leased access
    channel was carried because, presumably, all channels other than the
    minimum earn higher net revenues. Use of the mean ensures that if
    the cable operator carries the statutory maximum number of leased
    access channels by displacing the lowest earning channels on its
    system, the cable operator will be fully compensated for lost
    revenue.

46. Appendix D of this Order presents an example of the calculation of
    the leased access rates for a hypothetical cable system.

#### Determining the Maximum Allowable Leased Access Rate

47. We recognize that our tier-based calculation method may lead to
    inequitable results in situations when a tier carries only a few
    non-mandated programming networks in combination with a large amount
    of mandated programming. This may create incentives among cable
    operators to design programming tiers that are unaffordable for
    leased access programmers. Such an outcome would contravene our
    statutory directive. Therefore we institute a maximum allowable rate
    based upon industry-wide cable operator programming costs and
    revenues. This will ensure that leased access programmers can reach
    consumers in all areas of the country. We will permit cable
    operators to seek a waiver of the maximum allowable rate to ensure
    no unreasonable financial burden is put on any cable operator. The
    maximum allowable leased access rate will apply to carriage on any
    tier in which the operator-specific leased access rate for the tier
    exceeds the maximum allowable rate.

48. We take several approaches to calculating this maximum rate. For
    example, we calculate the maximum rate utilizing a methodology based
    on per-subscriber affiliation fees that compensates systems that
    must vacate a channel in order to provide capacity to a commercial
    leased access programmer. We also calculate the maximum allowable
    leased access rate using a method that follows the one used to
    calculate the system-specific rates. In both cases, maximum rates
    for each of the analog and digital tiers are no greater than \$0.10
    per subscriber per month.[^138] Therefore, the maximum leased access
    rate will not exceed \$0.10 per subscriber per month for any cable
    system.

49. Cable operators may petition the Commission to exceed the maximum
    allowable leased access rates. A petition for relief must present
    specific facts justifying the system's specific leased access rate
    and provide an alternative rate which equitably balances the revenue
    requirements of the cable operator with the public interest goals of
    the leased access statute. Our presumption is that the mean value of
    the net revenue of the marginal networks, including those currently
    earning no license fee, provides the most reasonable approximation
    of the revenue which is forgone when a cable operator carries leased
    access programming.

#### Effective Date of New Rate Regulations

50. We recognize that the industry should receive an appropriate amount
    of time to review and to take steps to comply with the new rate
    regulations set forth above. Section 76.970(j)(3), which contains
    new or modified information collection requirements that have not
    been approved by the Office of Management and Budget ("OMB"), is
    effective upon OMB approval. Section 76.970 is effective 90 days
    after date of publication in the Federal Register or upon OMB
    approval of § 76.970(j)(3), whichever is later. Thus, at a minimum,
    the new rate regulations will not become effective until 90 days
    after publication in the Federal Register. After OMB approval is
    received, the Commission will publish a document in the Federal
    Register announcing the effective date of the rules requiring OMB
    approval and those whose effective date was delayed pending OMB
    approval of other rules.

### Expedited Process

51. As explained below, we do not change the current pleading cycle for
    leased access complaints set forth in Section 76.975 of the
    Commission's Rules, which requires the complaint to be filed with
    the Commission within 60 days of any alleged violation and the cable
    operator to submit a response within 30 days from the date of the
    complaint.[^139] The Media Bureau will resolve all leased access
    complaints within 90 days of the close of the pleading cycle,
    obtaining additional discovery from the parties as necessary to
    quickly resolve complaints. Finally, we eliminate the requirement
    that a complainant alleging that a leased access rate is
    unreasonable must first receive a determination of the cable
    operator's maximum permitted rate from an independent
    accountant.[^140]

52. *Background*. Leased access programmers argue that the current
    complaint process prevents leased access from becoming a genuine
    outlet for programmers as Congress intended.[^141] They argue that
    leased access complaints can take years to resolve even when they
    present no new issues of law.[^142] They argue further that
    Commission staff has demonstrated a lack of interest in enforcing
    existing leased access rules.[^143] MAP urges the Commission to
    adopt a "shot clock" whereby the Commission must act within 90 days
    or the complaint will be deemed granted.[^144] Leased access
    programmers also urge the Commission to eliminate the independent
    accountant requirement for resolving leased access rate
    disputes.[^145] They argue that the requirement is costly and
    results in delays in resolving leased access rate disputes.[^146]

53. Cable operators argue that the current complaint process is working
    as intended by encouraging negotiation over litigation.[^147] Cable
    operators claim that very few leased access complaints have been
    filed with the Commission and that the number of complaints has
    decreased in recent years.[^148] TWC argues that the decrease in
    leased access disputes is also attributable to a well-understood
    body of precedent that provides clear guidance regarding the leased
    access rules.[^149] TWC asks the Commission to revise the pleading
    cycle for leased access complaints by reducing from 30 days to 20
    days the time in which a cable operator must respond to a leased
    access complaint, but to calculate the deadline from the date the
    Media Bureau issues a public notice announcing the complaint has
    been filed rather than from the date the complaint was filed.[^150]
    TWC argues that such a change will serve the public interest by: (i)
    allowing other parties to participate in the complaint process; (ii)
    integrating the leased access pleading cycle with the generally
    applicable complaint pleading cycle in Section 76.7; and (iii)
    avoiding the need for cable operators to respond to informal
    correspondence filed by leased access programmers with the
    Commission that may not warrant treatment as a complaint.[^151]
    Cable operators also urge the Commission to retain the independent
    accountant requirement for resolving leased access rate disputes,
    arguing that it provides a low cost, streamlined process for
    obtaining an independent review of rate calculations that protects
    the highly confidential proprietary data used in calculating these
    rates.[^152]

54. *Discussion*. We retain our existing pleading cycle for resolution
    of leased access complaints set forth in Section 76.975 of the
    Commission's Rules, which requires the complaint to be filed with
    the Commission within 60 days of any alleged violation[^153] and the
    cable operator to submit a response within 30 days from the date of
    the complaint.[^154] We find that our current pleading cycle is not
    too lengthy, as it is imperative that we receive all the necessary
    information to resolve the dispute. Although we retain the existing
    time limits on filing of complaints, we add an exception that the
    time limit on filing complaints will be suspended if the complainant
    files a notice with the Commission prior to the expiration of the
    filing period, stating that it seeks an extension of the filing
    deadline in order to pursue active negotiations with the cable
    operator.[^155] The cable operator must agree to the extension.

55. The Media Bureau will resolve all leased access complaints within 90
    days of the close of the pleading cycle, obtaining additional
    discovery from the parties as necessary to quickly resolve
    complaints.[^156] We believe that this expedited process will help
    to resolve leased access disputes quickly and efficiently and create
    a body of precedent to encourage private negotiations and the
    settlement of disputes. If the Media Bureau concludes that the
    complainant is entitled to access a leased access channel, the Media
    Bureau's resolution of the complaint will include a launch date for
    the programming.

56. *Elimination of Independent Accountant Requirement*. We eliminate
    the requirement for a complainant alleging that a leased access rate
    is unreasonable to first obtain a determination of the cable
    operator's maximum permitted rate from an independent accountant
    prior to filing a petition for relief with the Commission.[^157]
    While the Commission adopted the independent accountant requirement
    as a means to "streamline" the leased access complaint
    process,[^158] the record reflects that this requirement has not
    worked as intended. CaribeVH notes that it took seven months for it
    to resolve a leased access rate dispute at a cost of over \$50,000
    for the accountant and thousands of dollars more in legal
    fees.[^159] Similarly, PBC argues that the process of securing
    accountants is not financially feasible for most leased access
    programmers.[^160] We conclude that the expense, delay, and
    uncertainty for leased access programmers resulting from the
    requirement to obtain a determination from an independent accountant
    are not what the Commission envisioned in attempting to "streamline"
    the leased access complaint process.[^161] Furthermore, we believe
    the new rate methodology we have adopted, along with the requirement
    to provide rate information and an explanation of how rates were
    calculated, will result in a simpler and transparent process for
    leased access rates. We also believe the expedited complaint process
    and expanded discovery we adopt herein provide leased access
    programmers with a more efficient process for challenging the
    commercial leased access rates charged by cable operators. While
    cable operators argue that the use of an independent accountant is
    important to protect commercially sensitive financial information,
    the Protective Order we adopt below will sufficiently safeguard such
    information.

### Discovery

57. As discussed below, we adopt expanded discovery rules for leased
    access complaints to improve the quality and efficiency of the
    Commission's resolution of these complaints. We amend our discovery
    rules pertaining to leased access complaints to require respondents
    to attach to their answers copies of any documents that they rely on
    in their defense;[^162] find that in the context of a complaint
    proceeding, it would be unreasonable for a respondent not to produce
    all the documents either requested by the complainant or ordered by
    the Commission, provided that such documents are in its control and
    relevant to the dispute,[^163] subject to the protection of
    confidential material.[^164] We emphasize that the Commission will
    use its authority to issue default orders granting a complaint if a
    respondent fails to comply with reasonable discovery requests.[^165]
    The respondent shall have the opportunity to object to any request
    for documents.[^166] Such request shall be heard, and determination
    made, by the Commission.[^167] The respondent need not produce the
    disputed discovery material until the Commission has ruled on the
    discovery request.[^168] Any party who fails to timely provide
    discovery requested by the opposing party to which it has not raised
    an objection may be deemed in default and an order may be entered in
    accordance with the allegations contained in the complaint, or the
    complaint may be dismissed with prejudice.[^169]

58. The Commission's procedures for resolving leased access complaints,
    including discovery, have tracked closely the procedures for
    resolving program access complaints. The Commission recently made
    significant amendments to the program access discovery procedures
    and we find that there is good cause to make similar amendments to
    our leased access procedures because they will have the same
    beneficial effects in this context and will further the statutory
    directive that the Commission "establish procedures for the
    expedited resolution of disputes concerning rates or
    carriage."[^170] As a result of our action herein, the discovery
    process for leased access and program access complaints will be
    consistent.

59. Cable operators argue that the existing complaint process is working
    as intended and that no changes to the process, including the
    discovery rules, are required.[^171] Leased access programmers,
    however, argue that they should be afforded the right to seek
    discovery on how a cable operator has calculated its leased access
    rates.[^172] Under the current rules, a leased access complainant is
    entitled, either as part of its complaint or through a motion filed
    after the respondent's answer is submitted, to request that
    Commission staff order discovery of any evidence necessary to prove
    its case.[^173] Respondents are also free to request discovery. We
    believe that expanded discovery will improve the quality and
    efficiency of the Commission's resolution of leased access
    complaints. Accordingly, we find that it would be unreasonable for a
    respondent not to produce all the documents either requested by the
    complainant or ordered by the Commission,[^174] provided that such
    documents are in its control and relevant to the dispute. In
    reaching this finding, we agree that evidence detailing how the
    cable operator calculated its leased access rate, as well as the
    availability of certain contracts for carriage of leased access
    programming, subject to confidential treatment, are essential for
    determining whether the cable operator has violated the Commission's
    leased access rules. The Commission's Rules allow the Commission
    staff to order production of any documents necessary to the
    resolution of a leased access complaint.[^175] The subject discovery
    may require the production of confidential material, including
    evidence detailing how the cable operator calculated its leased
    access rate as well as carriage contracts, subject to our
    confidentiality rules. While we retain this process for the
    Commission to order the production of documents and other discovery,
    we will also allow parties to a leased access complaint to serve
    requests for discovery directly on opposing parties.[^176]

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

61. We reiterate that respondents to leased access complaints must
    produce in a timely manner the contracts and other documentation
    that are necessary to resolve the complaint, subject to confidential
    treatment.[^177] In order to prevent abuse, the Commission will
    strictly enforce its default rules against respondents who do not
    answer complaints thoroughly or do not respond in a timely manner to
    permissible discovery requests with the necessary documentation
    attached.[^178] Respondents that do not respond in a timely manner
    to all discovery ordered by the Commission will risk penalties,
    including having the complaint against them granted by
    default.[^179] Likewise, a complainant that fails to respond
    promptly to a Commission order regarding discovery will risk having
    its complaint dismissed with prejudice.[^180] Finally, a party that
    fails to respond promptly to a request for discovery to which it has
    not raised a proper objection will be subject to these sanctions as
    well.[^181]

62. We understand that this approach requires the submission of
    confidential and extremely competitively-sensitive
    information.[^182] Accordingly, in order to appropriately safeguard
    this confidential information we believe it is necessary to utilize
    the protective order adopted for use in our program access
    proceedings ("Protective Order"), which we attach hereto as Appendix
    C.[^183] The Protective Order sets out the methodology for producing
    and protecting pleading or discovery material that is deemed by the
    submitting party to contain confidential information.[^184] The
    Protective Order states that, once the authorized representative of
    the reviewing party has signed the appropriate declaration, the
    submitting party *shall* provide a copy of the confidential
    information to authorized representatives upon request. Authorized
    representatives of reviewing parties are limited to counsel and
    their associated attorneys, paralegals, clerical staff and other
    employees, to the extent reasonably necessary to render professional
    services; specified persons, including employees of the reviewing
    parties, requested by counsel to furnish technical or other expert
    advice or service, or otherwise engaged to prepare material for the
    express purpose of formulating filings in the leased access
    proceeding, other than persons in a position to use the confidential
    information for competitive commercial or business purposes; and any
    person designated by the Commission in the public interest, upon
    such terms as the Commission may deem proper.[^185] Confidential
    information shall not be used for competitive business purposes, and
    shall not be used or disclosed except in accordance with the
    Protective Order.

63. To ensure that confidential information is not improperly used for
    competitive business purposes, the Protective Order reflects that
    any personnel, including in-house counsel, involved in competitive
    decision-making are prohibited from accessing the confidential
    information. The Protective Order prohibits access to confidential
    information by specified persons that are in a position to use the
    information for competitive commercial or business purposes and any
    counsel, or other persons, including in-house counsel, that are
    involved in competitive decision-making are prohibited from access
    to confidential material. We define competitive decision-making to
    include any activities, association, or relationship with any
    person, including the complainant, client, or any authorized
    representative, that involves rendering advice or participation in
    *any* or all of said person's business decisions that are or will be
    made in light of similar or corresponding information about a
    competitor.[^186]

64. The Protective Order states that any personnel, including in-house
    counsel, (i) that are involved in competitive decision-making, (ii)
    are in a position to use the confidential information for
    competitive commercial or business purposes, or (iii) whose
    activities, association, or relationship with the complainant,
    client, or any authorized representative involve rendering advice or
    participation in any or all of said person's business decisions that
    are or will be made in light of similar or corresponding information
    about a competitor, are prohibited from accessing the confidential
    information.[^187]

65. A Protective Order constitutes both an Order of the Commission and
    an agreement between the party executing the declaration and the
    submitting party. The Commission has full authority to fashion
    appropriate sanctions for violations of its protective orders,
    including but not limited to suspension or disbarment of attorneys
    from practice before the Commission, forfeitures, cease and desist
    orders, and denial of further access to confidential information in
    Commission proceedings. We intend to vigorously enforce any
    transgressions of the provisions of our protective orders. [^188]

### Annual Reporting of Leased Access Statistics

66. We adopt an annual reporting requirement for cable operators to
    submit information pertaining to leased access rates, usage, channel
    placement, and complaints, among other leased access matters.[^189]
    In the NPRM, we sought comment on various questions regarding the
    status of commercial leased access, such as the extent to which
    programmers are making use of commercial leased access channels,
    whether cable operators have denied requests for commercial leased
    access, whether cable operators use commercial leased access
    channels for their own purposes, and the effectiveness of the
    complaint process.[^190] As discussed throughout this Order,
    commercial leased access programmers state the difficulties they
    have experienced under the current leased access regime.[^191] These
    claims are supported by the Commission data indicating limited use
    of commercial leased access.[^192]

67. We did not receive a large number of comments containing
    industry-wide data regarding use of leased access. Comcast claims
    that thousands of programmers have used commercial leased access
    channels since 1997, and hundreds of programmers use commercial
    leased access channels on Comcast's systems today.[^193] TWC
    estimates that approximately ninety percent of leased access
    programming is produced locally.[^194] TWC estimates further that
    two-thirds of commercial leased access programming is religious,
    foreign language, or community programming with the remainder
    consisting of infomercials.[^195] NCTA states that it is unaware of
    any source that contains statistics about usage of commercial leased
    access, but notes that the Commission in the *2006 Video Competition
    Report* concluded that the typical cable system carries commercial
    leased access programming on less than one channel.[^196] As
    described below, to ensure that we have sufficient up-to-date
    information on the status of leased access programming in the
    future, we adopt an annual reporting requirement for cable
    operators.

68. *Discussion*. We adopt an annual reporting requirement for cable
    operators pertaining to leased access rates, usage, channel
    placement, and complaints, among other leased access matters.[^197]
    We find that gathering up-to-date information and statistics on an
    annual basis pertaining to leased access is critical to our efforts
    to track trends in commercial leased access rates and usage as well
    as to monitor any efforts by cable operators to impede use of
    commercial leased access channels. This information will allow us to
    determine whether further modifications to the commercial leased
    access rules we adopt herein are needed based on a more concrete
    factual setting. The Annual Report will require each cable system to
    provide the following information:[^198]

-   List the number of commercial leased access channels provided by the
    cable system.

-   List the channel number and tier applicable to each commercial
    leased access channel.

-   Provide the rates the cable system charges for full-time and
    part-time leased access on each leased access channel.

-   Provide the calculated maximum commercial leased access rate and
    actual rates.

-   List programmers using each commercial leased access channel and
    state whether each programmer is using the channel on a full-time or
    part-time basis.

-   List number of requests received for information pertaining to
    commercial leased access and the number of *bona fide* proposals
    received for commercial leased access.

-   Describe whether you have denied any requests for commercial leased
    access and, if so, explain the basis for the denial.

-   Describe whether a complaint has been filed against the cable system
    with the Commission or with a Federal district court regarding a
    commercial leased access dispute.

-   Describe whether any entity has sought arbitration with the cable
    system regarding a commercial leased access dispute.

-   Describe the extent to which and for what purposes the cable system
    uses commercial leased access channels for its own purposes.

-   Describe the extent to which the cable system impose different
    rates, terms, or conditions on commercial leased access programmers
    (such as with respect to security deposits, insurance, or
    termination provisions). Explain any differences.

-   List and describe any instances of the cable system requiring an
    existing programmer to move to another channel or tier.

69. Each cable system must submit this report with the Commission by
    April 30^th^ of each year. The report will request information for
    the preceding year.[^199] We anticipate that any burdens associated
    with this annual reporting requirement will be limited, as the
    information requested should be readily available to cable
    operators.

70. We provide leased access programmers and other interested parties
    with an opportunity to file comments on a voluntary basis with the
    Commission responding to the cable operators' annual leased access
    reports.[^200] These comments should be filed by May 15^th^ of each
    year. We invite commercial leased access programmers to provide
    information such as the following in these comments:

-   List the number of commercial leased access channels leased on each
    cable system. Indicate the channel number and tier applicable to
    each commercial leased access channel.

-   Describe whether a cable operator has denied any request for
    commercial leased access and, if so, explain the basis for the
    denial.

-   Describe whether cable operators have responded to requests for
    information pertaining to leased access within three business days,
    as required by the Commission's rules.[^201]

-   Describe whether the programmer has filed any complaints with the
    Commission or a Federal district court against a cable operator
    regarding a commercial leased access dispute.

-   Describe whether the programmer has sought arbitration with a cable
    operator regarding a commercial leased access dispute.

-   Describe any difficulties the programmer has faced in trying to
    obtain access to a commercial leased access channel.

# Constitutional issues

71. The revisions to the leased access rules we adopt herein withstand
    constitutional scrutiny.[^202] While the leased access provision of
    the 1992 Cable Act has survived a facial First Amendment
    challenge,[^203] Time Warner argues that changes in marketplace
    conditions call into question the validity of that decision.[^204]
    Time Warner argues that, to the extent the goal of the leased access
    is to promote diversity of speech, the rules are content-based and
    thus subject to strict scrutiny, which requires a "compelling"
    government interest and "narrow tailoring."[^205] Moreover, Time
    Warner argues that whatever justification existed for the leased
    access provisions at the time they were adopted no longer exists
    today.[^206] In response, MAP argues that because the courts have
    already upheld the leased access provision of the 1992 Cable Act as
    withstanding intermediate scrutiny, any revisions to the regulation
    of leased access rates is subject to only rational basis
    scrutiny.[^207]

72. The D.C. Circuit had already decided that the leased access
    provision of the 1992 Cable Act is not content-based.[^208] The
    leased access provision does not favor or disfavor speech on the
    basis of the ideas contained therein; rather, it regulates speech
    based on affiliation with a cable operator.[^209] The court held in
    *Time Warner* that the provisions of the Cable Act that regulate
    speech based on affiliation with a cable operator are subject to
    intermediate scrutiny and are constitutional if the government's
    interest is important or substantial and the means chosen to promote
    that interest do not burden substantially more speech than necessary
    to achieve the aim.[^210] The *Time Warner* court found that there
    is a substantial government interest in promoting diversity and
    competition in the video programming marketplace.[^211] Despite Time
    Warner's claim to the contrary, we find that this substantial
    government interest remains today. While MVPDs note the Commission's
    statement in *Program Access Order* that the percentage of all
    programming networks that are affiliated with cable operators has
    decreased since 1992,[^212] the Commission went on to state that
    this decrease was not sufficient to conclude that restrictions on
    cable-affiliated programming should be lifted because competition
    and diversity in the video distribution market has not yet reached
    the level which Congress intended in passing the 1992 Cable
    Act.[^213] While MVPDs argue that there are more outlets today for
    independent programmers, such as the Internet,[^214] they fail to
    demonstrate that these alternative outlets can be considered
    sufficient to conclude that Congress's goals of promoting
    competition and diversity in passing the leased access provisions of
    the 1992 Cable Act have been achieved. The rules we adopt today
    simply implement the statutory requirements enacted by Congress.

73. We also reject Time Warner's claim that the leased access rules
    deprive cable operators of the value of their property (*i.e*.,
    channel capacity) without just compensation in violation of the
    Fifth Amendment.[^215] The Fifth Amendment "takings" clause requires
    "just compensation" for a government "taking" of private
    property.[^216] Moreover, the leased access provision of the 1992
    Cable Act, as well as our rules implementing that provision, provide
    just compensation to cable operators for use of their channel
    capacity. While Time Warner argues further that there must be an
    "essential nexus" between the taking and a legitimate state interest
    as well as a "rough proportionality" between the taking and the
    magnitude of the government objective,[^217] we conclude that leased
    access rules satisfy these requirements. As the D.C. Circuit
    previously held, there is a substantial government interest in
    promoting competition and diversity in the video programming
    marketplace, and the provisions of the 1992 Cable Act regulating
    cable-affiliated programming are narrowly tailored to achieve those
    goals.[^218] Thus, there is no "taking" within the meaning of the
    Fifth Amendment.

# Further Notice of Proposed Rule Making

74. As noted, for the time being, we have decided not to apply new rate
    methodology and the maximum allowable leased access rate to
    programmers that predominantly transmit sales presentations or
    program length commercials. These direct sales programmers often
    \"pay\" for carriage \-- either directly or through some form of
    revenue sharing with the cable operator.

75. Similarly, we are concerned about setting the leased access rates at
    a point at which programmers that predominantly transmit sales
    presentations or program length commercials simply migrate to leased
    access because it is less expensive than their current commercial
    arrangements. Accordingly, we seek comment regarding the use of
    leased access by programmers that predominantly transmit sales
    presentations and program length commercials. Specifically, is
    leased access affordable to these programmers at current rates? Will
    applying the modified rate formula discussed previously in this
    *Report and Order* cause migration of existing services to leased
    access? What would be the effect of such a migration? Is a separate
    category for direct sales programmers appropriate? We note that in
    our initial adoption of the leased access rules to implement the
    1992 Cable Act, the rates were established for three programming
    categories; programming for which a per-event or per channel charge
    is made, programming in which more than fifty per cent of the
    capacity is used to sell products directly to customers, and all
    other programming.[^219] These programming categories were intended
    to reflect the different economies faced by the different types of
    programmers.

# PROCEDURAL MATTERS

## A. Filing Requirements  {#a.-filing-requirements .unnumbered}

76. *Ex Parte Rules*. The *Further Notice of Proposed Rulemaking*
    ("*FNPRM*") in this proceeding will be treated as
    "permit-but-disclose" subject to the "permit-but-disclose"
    requirements under Section 1.1206(b) of the Commission's
    Rules.[^220] *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.[^221] Additional rules pertaining to oral and
    written presentations are set forth in Section 1.1206(b).

77. *Comments and Reply Comments*. Pursuant to Sections 1.415 and 1.419
    of the Commission's Rules,[^222] interested parties may file
    comments and reply comments on or before the dates indicated on the
    first page of this document. Comments may be filed using: (1) the
    Commission's Electronic Comment Filing System (ECFS), (2) the
    Federal Government's eRulemaking Portal, or (3) by filing paper
    copies.[^223]

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

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

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

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

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

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

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

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

80. *Information*. For additional information on this proceeding,
    contact Katie Costello, <Katie.Costello@fcc.gov> of the Media
    Bureau, Policy Division, (202) 418-2120.

## B. Initial and Final Regulatory Flexibility Analysis {#b.-initial-and-final-regulatory-flexibility-analysis .unnumbered}

81. *Initial Regulatory Flexibility Analysis ("IRFA")*. The Regulatory
    Flexibility Act of 1980, as amended ("RFA"),[^224] requires that a
    regulatory flexibility analysis be prepared for notice and comment
    rule making proceedings, unless the agency certifies that "the rule
    will not, if promulgated, have a significant economic impact on a
    substantial number of small entities."[^225] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^226] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^227] 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).[^228] As required by the RFA,[^229] the Commission has
    prepared an Initial Regulatory Flexibility Analysis ("IRFA") of the
    possible significant economic impact on a substantial number of
    small entities of the proposals addressed in the *FNPRM*. The IRFA
    is set forth in Appendix F.

82. *Final Regulatory Flexibility Analysis ("FRFA")*. As required by the
    RFA,[^230] the Commission has prepared an FRFA relating to the
    *Report and Order*. The FRFA is set forth in Appendix E.

## C. Paperwork Reduction Act Analysis {#c.-paperwork-reduction-act-analysis .unnumbered}

83. *Initial Paperwork Reduction Act* *Analysis*. The *FNPRM* has been
    analyzed with respect to the Paperwork Reduction Act of 1995
    ("PRA"),[^231] and contains no proposed new or modified information
    collection requirements. 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.[^232]

84. *Final Paperwork Reduction Act* *Analysis*. The *Report and Order*
    contains both new and modified information collection requirements
    subject to the PRA. It will be submitted to the OMB for review under
    Section 3507(d) of the PRA. OMB, the general public, and other
    Federal agencies are invited to comment on the new information
    collection requirements contained in this proceeding. Comments
    should address the following: (a) whether the proposed collection of
    information is necessary for the proper performance of the functions
    of the Commission, including whether the information shall have
    practical utility; (b) the accuracy of the Commission's burden
    estimates; (c) ways to enhance the quality, utility, and clarity of
    the information collected; and (d) ways to minimize the burden of
    the collection of information on respondents, including the use of
    automated collection techniques or other forms of information
    technology. In addition, we note that pursuant to the Small Business
    Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C.
    3506(c)(4), we previously sought specific comment on how the
    Commission might "further reduce the information collection burden
    for small business concerns with fewer than 25 employees." In this
    present document, we have assessed the potential effects of the
    various policy changes with regard to information collection burdens
    on small business concerns, and we find that these requirements will
    benefit many companies with fewer than 25 employees by facilitating
    the use of leased access channels and by promoting the fair and
    expeditious resolution of leased access complaints. In addition, we
    have described impacts that might affect small businesses, which
    includes most businesses with fewer than 25 employees, in the FRFA
    in Appendix E, *infra*.

## D. Congressional Review Act {#d.-congressional-review-act .unnumbered}

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

86. [Effective Date]{.underline}. Sections 76.975(h)(1), (2) and (3)
    and (i) are effective 30 days after date of publication in the
    Federal Register. Sections 76.970(j)(3), 76.972(a), (b), (c), (d),
    (e), and (g); 76.975(d), (e), (g) and (h)(4); and 76.978, which
    contain new or modified information collection requirements that
    have not been approved by the Office of Management and Budget
    ("OMB"), are effective upon OMB approval. Section 76.970 is
    effective 90 days after date of publication in the Federal Register
    or upon OMB approval of § 76.970(j)(3), whichever is later. The
    effective date of Sections 76.972(f) and 76.975 (b), (c) and (f),
    which do not require OMB approval, is delayed until OMB approval of
    the aforementioned rule sections. After OMB approval is received,
    the Commission will publish a document in the Federal Register
    announcing the effective date of the rules requiring OMB approval
    and those whose effective date was delayed pending OMB approval of
    other rules.

# ORDERING CLAUSES

87. Accordingly, **IT IS ORDERED**, pursuant to the authority found in
    Sections 4(i), 303, and 612 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 154(i), 303, and 532, this *Report and Order
    and Further Notice of Proposed Rulemaking* **IS ADOPTED**.

88. **IT IS ORDERED** that, pursuant to the authority found in Sections
    4(i), 303, and 612 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 154(i), 303, and 532, the Commission's Rules **ARE HEREBY
    AMENDED** as set forth in Appendix B.

89. **IT IS FURTHER ORDERED** that, Sections 76.975(h)(1),(2) and (3)
    and (i) are effective 30 days after date of publication in the
    Federal Register. Sections 76.970(j)(3), 76.972(a), (b), (c), (d),
    (e), and (g); 76.975(d), (e), (g) and (h)(4); and 76.978, which
    contain new or modified information collection requirements that
    have not been approved by the Office of Management and Budget
    ("OMB"), are effective upon OMB approval. Section 76.970 is
    effective 90 days after date of publication in the Federal Register
    or upon OMB approval of § 76.970(j)(3), whichever is later. The
    effective date of Sections 76.972(f) and 76.975(b), (c) and (f) is
    delayed until OMB approval of the aforementioned rule sections.
    After OMB approval is received, the Commission will publish a
    document in the Federal Register announcing the effective date of
    the rules requiring OMB approval and those whose effective date was
    delayed pending OMB approval of other rules.

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

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

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

**APPENDIX A**

**List of Commenters**

**Comments filed in MB Docket No. 07-42**

Black Television News Channel

Bruno Goodworth Network, Inc

CaribeVision Holdings LLC

Charles Stogner

Combonate Media Group

Comcast Corporation

Community Broadcasters Association

Duane J. Polich

Engle Broadcasting

Ideal Living Media

iNFO Channel Group

Media Access Project

National Cable & Telecommunications Association

NFL Enterprises LLC

Pope Broadcasting Company, Inc

Positive Media, Inc d/b/a TV Camden

Reynolds Media Inc

SHOP NBC

StogMedia

The America Channel

Time Warner Cable Inc.

**Reply Comments filed in MB Docket No. 07-42**

Black Television News Channel

CaribeVision Holdings LLC

Combonate Media Group

Comcast Corporation

Crown Media Holdings, Inc/The Hallmark Channel

Engle Broadcasting

HDNet

HTV Corporation

Leased Access Programmers Association

Media Access Project

National Cable & Telecommunications Association

NFL Enterprises LLC

Pope Broadcasting Company, Inc

Positive Media, Inc d/b/a TV Camden

Reynolds Media Inc.

Time Warner Cable Inc.

Verizon

WealthTV

**APPENDIX B**

**Revised Rules**

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

Part 76 --- MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

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

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

2\. Amend section 76.970 to revise paragraph (d), revise the first
sentence of paragraph (e), revise paragraph (i) and add new paragraph
(j) to read as follows:

**§ 76.970 Commercial leased access rates**.

\* \* \* \* \*

\(d\) The maximum commercial leased access rate that a cable operator
may charge to programmers that predominantly transmit sales
presentations or program length commercials for full-time channel
placement on a tier exceeding a subscriber penetration of 50 percent is
the average implicit fee for full-time channel placement on all such
tier(s).

\(e\) The average implicit fee identified in paragraph (d) of this
section for a full-time channel on a tier with a subscriber penetration
over 50 percent shall be calculated by first calculating the total
amount the operator receives in subscriber revenue per month for the
programming on all such tier(s), and then subtracting the total amount
it pays in programming costs per month for such tier(s) (the \"total
implicit fee calculation\").

\* \* \*

\* \* \* \* \*

\(i\) The maximum commercial leased access rate that a cable operator
may charge for full-time channel placement, except to programmers that
predominantly transmit sales presentations or program length
commercials, is the lower of the marginal implicit fee for a full-time
channel placement on the tier where the leased access programming will
be placed or \$0.10 per subscriber per month.

\(j\) (1) (i)The marginal implicit fee identified in paragraph (i) of
this section for a full-time channel shall be calculated by first
determining the mark-up of the tier where the leased access programming
will be placed. The mark-up is calculated by determining the total
amount the operator receives in subscriber revenue per month for the
tier, and dividing by the total amount it pays in affiliation fees for
the channels located on the tier. The resulting figure is the mark-up.
In cases where the cost and channels of one tier are implicitly
incorporated into a larger tier, the larger tier price is equal to the
larger tier price minus the smaller tier price and the channels on the
larger tier are those that are not available on the smaller tier. (ii)
The monthly gross subscriber revenue per channel is obtained by
multiplying the monthly per subscriber affiliation fee for each channel
by the mark-up for the tier. The net subscriber revenue per channel per
month for each channel is the difference between the monthly gross
subscriber revenue per channel and the monthly per subscriber
affiliation fee paid for that channel by the cable operator. This value
represents the implicit fee for the individual channel. (iii) To
determine the marginal channels on the tier for systems with 55 or more
activated channels, multiply the number of non-mandated channels on the
tier by 0.15 and round to the nearest number. To determine the marginal
channels on the tier for systems with 54 or less activated channels,
multiply the number of non-mandated channels on the tier by 0.10 and
round to the nearest number. That is the number of marginal channels.
Next identify the channels with the lowest implicit fee until that
number is reached. These are the marginal channels. (iv) Finally,
calculate the marginal implicit fee by taking the mean of the implicit
fees of the marginal channels by summing the implicit fees of the
marginal channels and dividing by the number of marginal channels. The
result is the marginal implicit fee.

\(2\) The affiliation fees for channels used in determining the marginal
implicit fee are the contractual license fee or retransmission consent
fee representing the compensation per subscriber per month paid to the
programmer for the right to carry the programming. It excludes fees for
services other than the provision of channel capacity, such as
marketing, and excludes revenues. The affiliation fees for channels used
in determining the marginal implicit fee shall reflect the prevailing
affiliation fees offered in the marketplace to third parties. If a
prevailing affiliation fee does not exist, the affiliation fee for that
programming shall be priced at the programmer\'s cost or the fair market
value, whichever is lower. The marginal implicit fee calculation shall
be based on affiliation fees in contracts in effect in the previous
calendar year. The implicit fee for a contracted service may not include
fees, stated or implied, for services other than the provision of
channel capacity (e.g., billing and collection, marketing, or studio
services).

\(3\) Operators shall maintain, for Commission inspection, sufficient
supporting documentation to justify the scheduled rates, including
supporting contracts, calculations of the implicit fees, and
justifications for all adjustments.

\(4\) Cable operators are permitted to negotiate rates below the maximum
permitted rates.

3\. Add new section 76.972 to read as follows:

**§ 76.972 Customer service standards**.

\(a\) (1) A cable system operator shall maintain a contact name,
telephone number and e-mail address on its website and available by
telephone of a designated person to respond to requests for information
about leased access channels.

\(2\) A cable system operator shall maintain a brief explanation of the
leased access statute and regulations on its website.

\(b\) Cable system operators shall provide prospective leased access
programmers with the following information within three business days of
the date on which a request for leased access information is made:

\(1\) The cable system operator's process for requesting leased access
channels;

\(2\) The geographic and subscriber levels of service that are
technically possible;

\(3\) The number and location and time periods available for each leased
access channel;

\(4\) Whether the leased access channel is currently being occupied;

\(5\) A complete schedule of the operator's statutory maximum full-time
and part-time leased access rates;

\(6\) A comprehensive schedule showing how those rates were calculated;

\(7\) Rates associated with technical and studio costs;

\(8\) Whether inclusion in an electronic programming guide is available;

\(9\) The available methods of programming delivery and the
instructions, technical requirements and costs for each method;

\(10\) A comprehensive sample leased access contract that includes
uniform terms and conditions such as tier and channel placement,
contract terms and conditions, insurance requirements, length of
contract, termination provisions and electronic guide availability; and

\(11\) Information regarding prospective launch dates for the leased
access programmer.

\(c\) A *bona fide* proposal, as used in this section, is defined as a
proposal from a potential leased access programmer that includes the
following information:

\(1\) The desired length of a contract term;

\(2\) The tier, channel and time slot desired;

\(3\) The anticipated commencement date for carriage;

\(4\) The nature of the programming;

\(5\) The geographic and subscriber level of service requested; and

\(6\) Proposed changes to the sample contract.

\(d\) All requests for leased access must be made in writing and must
specify the date on which the request was sent to the operator.

\(e\) A cable system operator must respond to a *bona fide* proposal
within 10 days after receipt.

\(f\) A cable system operator will be subject to a forfeiture for each
day it fails to comply with Sections 76.972(a) or 76.972(e).

\(g\) (1) Operators of systems subject to small system relief shall
provide the information required in paragraph (b) of this section within
30 calendar days of a *bona fide* request from a prospective leased
access programmer. For these purposes, systems subject to small system
relief are systems that either:

\(i\) Qualify as small systems under § 76.901(c) and are owned by a
small cable company as defined under § 76.901(e); or

\(ii\) Have been granted special relief.

\(2\) *Bona fide* requests, as used in this section, are defined as
requests from potential leased access programmers that have provided the
following information:

\(i\) The desired length of a contract term;

\(ii\) The time slot desired;

\(iii\) The anticipated commencement date for carriage; and

\(iv\) The nature of the programming.

4\. Section 76.975 is amended to revise paragraphs (b) through (h) and
to redesignate old paragraph (h) as new paragraph (i) to read as
follows:

**§ 76.975 Commercial leased access dispute resolution.**

\* \* \*

\(b\) Any person aggrieved by the failure or refusal of a cable operator
to make commercial channel capacity available or to charge rates for
such capacity in accordance with the provisions of Title VI of the
Communications Act, or our implementing regulations, §§ 76.970, 76.971,
and 76.972 may file a petition for relief with the Commission.

\(c\) A petition must contain a concise statement of the facts
constituting a violation of the statute or the Commission's Rules, the
specific statute(s) or rule(s) violated, and certify that the petition
was served on the cable operator.

\(d\) The petition must be filed within 60 days of the alleged
violation. The time limit on filing complaints will be suspended if the
complainant files a notice with the Commission prior to the expiration
of the filing period, stating that it seeks an extension of the filing
deadline in order to pursue active negotiations with the cable operator,
and the cable operator agrees to the extension.

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

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

\(g\) The cable operator or other respondent will have 30 days from the
filing of the petition to file a response. To the extent that a cable
operator expressly references and relies upon a document or documents in
asserting a defense or responding to a material allegation, such
document or documents shall be included as part of the response. If a
leased access rate is disputed, the response must show that the rate
charged is not higher than the maximum permitted rate for such leased
access, and must be supported by the affidavit of a responsible company
official. If, after a response is submitted, the staff finds a *prima
facie* violation of our rules, the staff may require a respondent to
produce additional information, or specify other procedures necessary
for resolution of the proceeding.\
\
(h)(1) The Media Bureau will resolve a leased access complaint within 90
days of the close of the pleading cycle.

\(2\) The Media Bureau, after consideration of the pleadings, may grant
the relief requested, in whole or in part, including, but not limited to
ordering refunds, injunctive measures, or forfeitures pursuant 47 U.S.C.
503, denying the petition, or issuing a ruling on the petition or
dispute.\
\
(3) To be afforded relief, the petitioner must show by clear and
convincing evidence that the cable operator has violated the
Commission's leased access provisions in 47 U.S.C. 532 or §§ 76.970,
76.971, or 76.972, or otherwise acted unreasonably or in bad faith in
failing or refusing to make capacity available or to charge lawful rates
for such capacity to an unaffiliated leased access programmer.\
\
(4) As part of the remedy phase of the leased access complaint process,
the Media Bureau will have discretion to request that the parties file
their best and final offer for the prices, terms, or conditions in
dispute. The Commission will have the discretion to adopt one of the
proposals or choose to fashion its own remedy.

5\. Section 76.978 is added to read as follows:

**§ 76.978 Leased Access Annual Reporting Requirement**

\(a\) Each cable system shall submit a Leased Access Annual Report with
the Commission on a calendar year basis, no later than April 30^th^
following the close of each calendar year, which provides the following
information for the calendar year:

\(1\) The number of commercial leased access channels provided by the
cable system.

\(2\) The channel number and tier applicable to each commercial leased
access channel.

\(3\) The rates the cable system charges for full-time and part-time
leased access on each leased access channel.

\(4\) The cable system's calculated maximum commercial leased access
rate and actual rates.

\(5\) The programmers using each commercial leased access channel and
whether each programmer is using the channel on a full-time or part-time
basis.

\(6\) The number of requests received for information pertaining to
commercial leased access and the number of bona fide proposals received
for commercial leased access.

\(7\) Whether the cable system has denied any requests for commercial
leased access and, if so, with an explanation of the basis for the
denial.

\(8\) Whether a complaint has been filed against the cable system with
the Commission or a Federal district court regarding a commercial leased
access dispute.

\(9\) Whether any entity has sought arbitration with the cable system
regarding a commercial leased access dispute.

\(10\) The extent to which and for what purposes the cable system uses
commercial leased access channels for its own purposes.

\(11\) The extent to which the cable system impose different rates,
terms, or conditions on commercial leased access programmers (such as
with respect to security deposits, insurance, or termination provisions)
with an explanation of any differences.

\(12\) A list and description of any instances of the cable system
requiring an existing programmer to move to another channel or tier.

\(b\) Leased access programmers and other interested parties may file
comments with the Commission in response to the Leased Access Annual
Reports by May 15th.

**APPENDIX C**

**Standard Protective Order and Declaration for Use in Section 612
Commercial Leased Access Proceedings**

**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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

PROTECTIVE ORDER

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

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92. Definitions.

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

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

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

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

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

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

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

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

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

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

97. [Disclosure]{.underline}. Counsel to a Reviewing Party or such other
    person designated pursuant to Paragraph 5 may disclose Confidential
    Information to other Authorized Representatives to whom disclosure
    is permitted under the terms of paragraph 8 of this Protective Order
    only after advising such Authorized Representatives of the terms and
    obligations of the Order. In addition, before Authorized
    Representatives may obtain access to Confidential Information, each
    Authorized Representative must execute the attached Declaration.

98. Authorized Representatives shall be limited to:

a\. Subject to Paragraph 8.d, counsel for the Reviewing Parties to this
proceeding, including in-house counsel, actively engaged in the conduct
of this proceeding and their associated attorneys, paralegals, clerical
staff and other employees, to the extent reasonably necessary to render
professional services in this proceeding;

b\. Subject to Paragraph 8.d, specified persons, including employees of
the Reviewing Parties, requested by counsel to furnish technical or
other expert advice or service, or otherwise engaged to prepare material
for the express purpose of formulating filings in this proceeding; and

c\. Subject to Paragraph 8.d., any person designated by the Commission
in the public interest, upon such terms as the Commission may deem
proper; except that,

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

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

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

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

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

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

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

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

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

d\. The confidential portion(s) of the pleading, to the extent they are
required to be served, shall be served upon the Secretary of the
Commission, the Submitting Party, and those Reviewing Parties that have
signed the attached Declaration. Such confidential portions shall be
served under seal, and shall not be placed in the Commission\'s Public
File unless the Commission directs otherwise (with notice to the
Submitting Party and an opportunity to comment on such proposed
disclosure). A Submitting Party or a Reviewing Party filing a pleading
containing Confidential Information shall also file a redacted copy of
the pleading containing no Confidential Information, which copy shall be
placed in the Commission\'s public files. A Submitting Party or a
Reviewing Party may provide courtesy copies of pleadings containing
Confidential Information to Commission staff so long as the notations
required by this Paragraph 13 are not removed.

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

105. [Termination of Proceeding]{.underline}. Within two weeks after
     final resolution of this proceeding (which includes any
     administrative or judicial appeals), Authorized Representatives of
     Reviewing Parties shall, at the direction of the Submitting Party,
     destroy or return to the Submitting Party all Confidential
     Information as well as all copies and derivative materials made,
     and shall certify in a writing served on the Commission and the
     Submitting Party that no material whatsoever derived from such
     Confidential Information has been retained by any person having
     access thereto, except that counsel to a Reviewing Party may retain
     two copies of pleadings submitted on behalf of the Reviewing Party.
     Any confidential information contained in any copies of pleadings
     retained by counsel to a Reviewing Party or in materials that have
     been destroyed pursuant to this paragraph shall be protected from
     disclosure or use indefinitely in accordance with paragraphs 10 and
     12 of this Protective Order unless such Confidential Information is
     released from the restrictions of this Order either through
     agreement of the parties, or pursuant to the order of the
     Commission or a court having jurisdiction.

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

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

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

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

Attachment A to Section 612 Protective Order

DECLARATION

In the Matter of )

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

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

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

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

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

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

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

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

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

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

**APPENDIX D**

**Example Calculation of the Leased Access Rate**

**I. Example of the Marginal Implicit Fee Calculation**

The following table illustrates the channel line-up of a tier with
greater than 50% subscriber penetration. The tier consists of 26
channels. We will assume that 100 subscribers purchase this tier and
that they all pay the retail price of \$18.95.

+-------------------+----------------------------+--------------------+
| **Programming**   | **Affiliation Fee Paid by  | **Implicit Fee**   |
|                   | Cable Operator to the      |                    |
|                   | Programmer**               | **(net revenue)**  |
|                   |                            |                    |
|                   | **(monthly amount per      |                    |
|                   | subscriber )**             |                    |
+-------------------+----------------------------+--------------------+
| Broadcast Station | \$ 0.00                    | \$ 0.000           |
| 1                 |                            |                    |
+-------------------+----------------------------+--------------------+
| Broadcast Station | \$ 0.05                    | \$ 0.082           |
| 2                 |                            |                    |
+-------------------+----------------------------+--------------------+
| Broadcast Station | \$ 0.00                    | \$ 0.000           |
| 3                 |                            |                    |
+-------------------+----------------------------+--------------------+
| PEG 1             | \$ 0.00                    | \$ 0.000           |
+-------------------+----------------------------+--------------------+
| Leased Access 1   | \$ 0.00                    | \$ 0.000           |
+-------------------+----------------------------+--------------------+
| Cable Network 1   | \$ 0.12                    | \$ 0.196           |
+-------------------+----------------------------+--------------------+
| Cable Network 2   | \$ 0.34                    | \$ 0.556           |
+-------------------+----------------------------+--------------------+
| Cable Network 3   | \$ 0.05                    | \$ 0.082           |
+-------------------+----------------------------+--------------------+
| Cable Network 4   | \$ 0.07                    | \$ 0.114           |
+-------------------+----------------------------+--------------------+
| Cable Network 5   | \$ 0.01                    | \$ 0.016           |
+-------------------+----------------------------+--------------------+
| Cable Network 6   | \$ 0.04                    | \$ 0.065           |
+-------------------+----------------------------+--------------------+
| Cable Network 7   | \$ 0.05                    | \$ 0.082           |
+-------------------+----------------------------+--------------------+
| Cable Network 8   | \$ 0.27                    | \$ 0.442           |
+-------------------+----------------------------+--------------------+
| Cable Network 9   | \$ 0.00                    | \$ 0.000           |
+-------------------+----------------------------+--------------------+
| Cable Network 10  | \$ 0.10                    | \$ 0.164           |
+-------------------+----------------------------+--------------------+
| Cable Network 11  | \$ 0.48                    | \$ 0.785           |
+-------------------+----------------------------+--------------------+
| Cable Network 12  | \$ 2.19                    | \$ 3.582           |
+-------------------+----------------------------+--------------------+
| Cable Network 13  | \$ 1.10                    | \$ 1.799           |
+-------------------+----------------------------+--------------------+
| Cable Network 14  | \$ 0.57                    | \$ 0.932           |
+-------------------+----------------------------+--------------------+
| Cable Network 15  | \$ 0.15                    | \$ 0.245           |
+-------------------+----------------------------+--------------------+
| Cable Network 16  | \$ 0.41                    | \$ 0.671           |
+-------------------+----------------------------+--------------------+
| Cable Network 17  | \$ 0.19                    | \$ 0.311           |
+-------------------+----------------------------+--------------------+
| Cable Network 18  | \$ 0.06                    | \$ 0.098           |
+-------------------+----------------------------+--------------------+
| Cable Network 19  | \$ 0.21                    | \$ 0.343           |
+-------------------+----------------------------+--------------------+
| Cable Network 20  | \$ 0.11                    | \$ 0.180           |
+-------------------+----------------------------+--------------------+
| Cable Network 21  | \$ 0.62                    | \$ 1.014           |
+-------------------+----------------------------+--------------------+

**Step 1: Determine Monthly per-subscriber Affiliation Fees for each
Channel on the Tier**

The preceding table presents the monthly per-subscriber affiliation fee
paid by the cable operator to the programmer. These values are those
contractually agreed to and paid by the cable operator. As illustrated,
this hypothetical cable operator carries three broadcast stations. Two
of the broadcast stations do not receive a monthly per-subscriber
payment from the cable operator, while "Broadcast Station 2" receives
\$0.05 per month per subscriber from the cable operator. In addition,
"Cable Network 8" and "Cable Network 9" are sold by the programmer on a
bundled basis in a contract which does not specify individual
affiliation fees for each network, but instead specifies a rate of
\$0.27 for carriage of both networks. "Cable Network 8" is the higher
rated of the two networks and therefore the affiliation fee is allocated
to it and the affiliate fee for "Cable Network 9" is set equal to zero.

**Step 2: Determine the Mark-up of the Tier**

The mark-up is equal to the total subscriber revenue for the programming
tier (100 x \$18.95 = \$1,895), divided by the total of the affiliation
fees the cable operator pays to the programmers for the channels on the
tier (100 x \$7.19 = \$719). In the example the mark-up is equal to
2.636.

**Step 3: Determine the Implicit Fee of each Channel on the Tier**

The implicit fee, or net revenue, is equal to the gross revenue from the
channel less the affiliation fee of the channel. The gross revenue is
obtained by multiplying the affiliation fee by the mark-up of the tier.

**Step 4: Determine the Number of Marginal Channels on the Tier**

The number of marginal channels is equal to 15% of the non-mandated
channels on the tier. In this case, the tier contains 5 mandated
channels: "Broadcast Station 1," "Broadcast Station 2," "Broadcast
Station 3," "PEG 1," and "Leased Access 1." Therefore there are 21
non-mandated channels on the tier. The number of marginal channels is
0.15 x 21 = 3.15. The result should be rounded to the nearest positive
integer. This tier has three marginal channels.

**Step 5: Determine the Marginal Channels**

The marginal channels are the three non-mandated channels with the
lowest implicit fee. In this example, those channels are: "Cable Network
5," "Cable Network 6," and "Cable Network 9."

**Step 6: Calculate the Marginal Implicit Fee**

The marginal implicit fee is the mean of the implicit fees of the three
marginal channels. The marginal implicit fee is (0.000 + 0.016 +
0.065)/3 = 0.027. The monthly rate for a leased access programmer on
this tier is \$0.027 per subscriber.

**II. Alternative Methods for Calculating the Maximum Allowable Leased
Access Rate**

1.  We use several methods to examine aggregate information on the cable
    industry and develop a maximum allowable leased access rate. All of
    our methods begin with the construction of hypothetical analog and
    digital tiers based upon the 194 most widely distributed
    networks.[^233] We base the sizes of the hypothetical analog and
    digital tiers on data collected via the FCC's Cable Price Survey.
    The survey indicates that the average analog tier contains 54.9
    non-mandated channels and the most highly subscribed digital tier
    contains 33.7 additional channels.[^234] The most widely distributed
    networks were ranked according to their subscribers. They are then
    weighted according to the number of subscribers that they reach
    relative to the most widely distributed network, The Discovery
    Channel, which received a weight of 1. Lesser distributed networks
    receive weights that are equivalent to the fraction of subscribers
    they have relative to the most widely distributed network.

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110. The hypothetical analog tier consists of the channels with the
     highest subscribers, whose weights sum to 54.9. This hypothetical
     analog tier consists of 67 program networks. These 67 networks
     reach the same number of subscribers as that which would be reached
     if 55 networks each reached 100% of cable subscribers. Construction
     of the hypothetical digital tier is complicated by the fact that 12
     of the 194 most widely distributed networks do not currently
     receive any license fees. We therefore proceed on two fronts. We
     construct a digital tier which includes these "no-fee" networks
     which we refer to as the "inclusive digital tier" as well as an
     "exclusive digital tier" which excludes networks with no license
     fees from the hypothetical digital tier. An additional complication
     is that our information on affiliation fees and distribution of
     cable networks is not sufficiently broad to get a sufficient number
     of networks whose weights sum to 33.7, the number of channels on
     the average digital tier. Therefore both the inclusive and
     exclusive digital tiers will contain all of the networks not
     included in our hypothetical analog tier. The inclusive digital
     tier consists of 127 networks with a total weight of 17. The
     exclusive digital tier contains 115 networks with a weight of 15.1.

111. We examine two approaches to calculating the marginal implicit fees
     of the hypothetical analog and digital tiers. The first approach,
     which we refer to as the net revenue approach, follows the method
     used to calculate the operator-specific rates. The average mark-up
     of cable operators is determined. This value is used to determine
     net revenue of each network on the tier by multiplying it against
     the affiliation fee to obtain gross revenue and subtracting off the
     programming cost to obtain net revenue. The marginal implicit fee
     is calculated as the mean or median net revenue of the least
     profitable 15% of channels on the tier. The other approach, which
     we call the per-subscriber fee approach, calculates the marginal
     implicit fee as the mean or median affiliation fee of the least
     costly 15% of channels on the hypothetical tier. Because the
     mark-up of each channel on a tier is the same, ranking networks by
     net revenue or per-subscriber fees leads to the same ordering of
     the networks. Therefore, the identities of the channels used to
     calculate the marginal implicit fee under either approach are the
     same for a given hypothetical tier.

A. The Marginal Implicit Fee under the Net Revenue Approach

112. As discussed, the net revenue approach mirrors the system-specific
     method adopted in this order. The mark-up of programming costs by
     cable operators is determined by dividing video revenues by
     programming costs.[^235] The mark-up in the cable industry is 2.76.
     This mark-up is then applied to the per-subscriber affiliation fees
     of the networks in the hypothetical tiers in order to determine the
     gross revenue per subscriber that each of those networks generates
     for the cable industry. Subtracting the per subscriber affiliation
     fee from the gross revenue per subscriber yields the net revenue
     per subscriber. The next step in the calculation is to determine
     the marginal channels, which is based upon the number of channels
     that the average cable operator must set aside for leased access.
     The marginal networks for the maximum allowable rate on an analog
     tier will be the 15% of 54.9 or 8.2 networks. The marginal channels
     are those channels, with the lowest net revenues amongst the 67,
     whose weights sum to 8.2 (the number of marginal channels on our
     hypothetical analog tier). The weighted mean of the net revenue of
     those 13 networks is equal to \$0.091 per subscriber per month and
     the weighted median is equal to \$0.094 per subscriber per month.

113. Calculation of the maximum rate for the hypothetical digital tiers
     is similar. The tier consists of those networks that were not
     included in the hypothetical analog tier with the greatest numbers
     of subscribers, whose weights sum to 33.7.[^236] The marginal
     channels are those channels, with the lowest net revenues whose
     weights sum to 5.1 (15% of the number of channels on our
     hypothetical digital tier). The weighted mean net revenue of those
     networks is \$0.056 per subscriber per month and the weighted
     median is \$0.070 per subscriber per month for the exclusive
     digital tier. The weighted mean net revenue for the inclusive
     digital tier is \$0.026 per subscriber per month and the weighted
     median is \$0.035 per subscriber per month.

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B.  The Marginal Implicit Fee under the Per-Subscriber Fee Approach

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114. The per-subscriber fee method is based upon the costs incurred by a
     cable system when it must vacate a channel in order to provide
     capacity to a commercial leased access programmer. If a cable
     system that receives a request for LA carriage has no vacant
     channels available, then the system will need to incur certain
     costs in order to make the required capacity available to the LA
     programmer. Specifically, it is unlikely that the commercial
     contracts that the cable operator has with program channels permit
     unilateral costless cancellation by the cable operator. Even
     without detailed information on these contracts, it is reasonable
     to assume that the cable operator would need to provide some
     compensation to the "bumped" channel in order to induce it to
     vacate the system. One reasonable candidate for this is the fee
     that the cable operator was collecting from each consumer and
     paying to the bumped channel (the "per-subscriber fee"). If we
     assume that the marginal channel is earning negligible advertising
     revenues, then that channel would be made whole if it continued to
     receive the per-subscriber fee that the cable operator had been
     paying. We use this as an alternative method of examining the costs
     that leased access programming may impose on cable operators.

115. To calculate the marginal implicit fee under the per-subscriber fee
     approach, rather than calculating the weighted means and medians of
     the net revenue of the bottom 15% of networks in a tier, the
     weighted means and medians of the affiliation fees are calculated.
     As discussed, because a constant mark-up is applied to affiliation
     fees when calculating net revenue, networks with the lowest net
     revenue are also the networks with the lowest affiliation fees.
     Therefore the marginal implicit cost using the per-subscriber fee
     method is based on exactly the same networks as used to calculate
     the marginal implicit fee with the net revenue method. The weighted
     mean of the per-subscriber fee of the marginal networks on the
     hypothetical analog tier is equal to \$0.051 per subscriber per
     month and the weighted median is equal to \$0.053 per subscriber
     per month. The weighted mean of the per-subscriber fee of the
     marginal networks on the hypothetical inclusive digital tier is
     equal to \$0.015 per subscriber per month and the weighted median
     is equal to \$0.020 per subscriber per month. The weighted mean of
     the programming cost of the marginal networks on the hypothetical
     exclusive digital tier is equal to \$0.032 per subscriber per month
     and the weighted median is equal to \$0.040 per subscriber per
     month.

     **APPENDIX E**

**Final Regulatory Flexibility Analysis**

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    ("RFA"),[^237] an Initial Regulatory Flexibility Analysis ("IRFA")
    was incorporated in the *Notice of Proposed Rulemaking* ("*Notice*")
    in MB Docket No. 07-42.[^238] The Commission sought written public
    comment on the proposals in the *Notice of Proposed Rulemaking*,
    including comment on the IRFA. This present Final Regulatory
    Flexibility Analysis ("FRFA") conforms to the RFA.[^239]

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

2.  The commercial leased access requirements set forth in Section 612
    of the Communications Act of 1934 require a cable operator to set
    aside channel capacity for commercial use by video programmers
    unaffiliated with the cable operator.[^240] The purposes of Section
    612 are "to promote competition in the delivery of diverse sources
    of video programming and to assure that the widest possible
    diversity of information sources are made available to the public
    from cable systems in a manner consistent with growth and
    development of cable systems."[^241]

3.  In the *Order*, the Commission concludes that its rules governing
    commercial leased access have impeded the use of leased access
    channels by programmers, including smaller entities, thereby
    undermining the goals of Section 612. The *Order* adopts several
    rules to address this concern. Regarding commercial leased access
    rates, the Commission concludes that its current formula for
    calculating leased access rates yields fees charged by cable
    operators that are higher than the statute mandates, resulting in an
    underutilization of leased access channels.[^242] To address this
    concern, the *Order* modifies the Commission's formula used to
    calculate commercial leased access rates, which will result in
    making these channels a more viable outlet for leased access
    programming.[^243] The *Order* also provides that the maximum leased
    access rate will not exceed \$0.10 per subscriber per month for any
    cable system.[^244] Cable operators may petition the Commission to
    exceed the maximum allowable leased access rates.[^245] A petition
    for relief must present specific facts justifying the system's
    specific leased access rate and provide an alternative rate which
    equitably balances the revenue requirements of the cable operator
    with the public interest goals of the leased access statute.[^246]
    The *Order* does not apply the new rate methodology or the maximum
    allowable leased access rate of \$0.10 per subscriber to programmers
    that predominantly transmit sales presentations or program length
    commercials.[^247]

4.  To address poor customer service practices of cable system operators
    with regard to potential leased access programmers, the *Order*
    requires a cable system operator to meet uniform customer service
    standards; to maintain a contact name, telephone number, and e-mail
    address on its website; to make available by telephone a designated
    person to respond to requests for information about leased access
    channels; and to maintain a brief explanation of the leased access
    statute and regulations on its website.[^248] In response to
    concerns raised by commercial leased access programmers that
    contract terms and conditions imposed by cable operators are often
    unfair, unreasonable, onerous, and overly burdensome, the *Order*
    requires cable operators to apply the same uniform standards, terms,
    and conditions for all of its leased access programmers as it
    applies to its other programmers.[^249] The *Order* also specifies
    the information that a leased access programmer must provide to a
    cable system operator in order to be considered for carriage, and
    requires the cable system operator to respond to the proposal by
    accepting the proposed terms or offering alternative terms within 10
    days.[^250]

5.  Regarding leased access complaint procedures, the *Order* adopts an
    expedited process which requires the Media Bureau to resolve leased
    access complaints within 90 days of the close of the pleading cycle
    and eliminates the requirement for a leased access complainant
    alleging that a rate is unreasonable to first obtain a determination
    of the cable operator's maximum permitted rate from an independent
    accountant.[^251] The *Order* revises rules to provide that, as part
    of the remedy phase of a leased access complaint process, the Media
    Bureau will have the discretion to request that the parties file
    their best and final offer for the prices, terms, or conditions in
    dispute, and the Media Bureau will have the discretion to adopt one
    of the best and final offers or to choose to fashion its own
    remedy.[^252] The *Order* also amends the Commission's discovery
    rules pertaining to leased access complaints by requiring
    respondents to attach to their answers copies of any documents that
    they rely on in their defense; finding that in the context of a
    complaint proceeding, it would be unreasonable for a respondent not
    to produce all the documents either requested by the complainant or
    ordered by the Commission, provided that such documents are in its
    control and relevant to the dispute, subject to the protection of
    confidential material; and emphasizing that the Commission will use
    its authority to issue default orders granting a complaint if a
    respondent fails to comply with its discovery requests.[^253]

6.  Moreover, in order to ensure that the Commission has sufficient
    up-to-date information on the status of leased access programming in
    the future, the *Order* adopts a reporting requirement for cable
    operators that requires cable operators to file annual reports on
    leased access rates, channel usage, and complaints, among other
    matters pertaining to leased access.[^254] Leased access programmers
    will have an opportunity to file comments with the Commission in
    response to these reports.[^255]

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

7.  There were no comments filed specifically in response to the IRFA.

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

8.  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.[^256] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^257] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^258] 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").[^259]

9.  *Wired Telecommunications Carriers*. The 2007 North American
    Industry Classification System ("NAICS") defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include the
    following three classifications which were listed separately in the
    2002 NAICS: Wired Telecommunications Carriers (2002 NAICS code
    517110), Cable and Other Program Distribution (2002 NAICS code
    517510), and Internet Service Providers (2002 NAISC code
    518111).[^260] The 2007 NAISC defines this category as follows:
    "This industry comprises establishments primarily engaged in
    operating and/or providing access to transmission facilities and
    infrastructure that they own and/or lease for the transmission of
    voice, data, text, sound, and video using wired telecommunications
    networks. Transmission facilities may be based on a single
    technology or a combination of technologies. Establishments in this
    industry use the wired telecommunications network facilities that
    they operate to provide a variety of services, such as wired
    telephony services, including VoIP services; wired (cable) audio and
    video programming distribution; and wired broadband Internet
    services. By exception, establishments providing satellite
    television distribution services using facilities and infrastructure
    that they operate are included in this industry."[^261] The SBA has
    developed a small business size standard for Wired
    Telecommunications Carriers, which is all firms having 1,500
    employees or less.[^262] According to Census Bureau data for 2002,
    there were a total of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC code 517110) that operated for the
    entire year; 6,021 firms in the Cable and Other Program Distribution
    category (2002 NAISC code 517510) that operated for the entire year;
    and 3,408 firms in the Internet Service Providers category (2002
    NAISC code 518111) that operated for the entire year.[^263] Of these
    totals, 25,374 of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC code 517110) had less than 100
    employees; 5,496 of 6,021 firms in the Cable and Other Program
    Distribution category (2002 NAISC code 517510) had less than 100
    employees; and 3,303 of the 3,408 firms in the Internet Service
    Providers category (2002 NAISC code 518111) had less than 100
    employees.[^264] Thus, under this size standard, the majority of
    firms can be considered small.

10. *Cable and Other Program Distribution.* The 2002 NAICS defines this
    category as follows: "This industry comprises establishments
    primarily engaged as third-party distribution systems for broadcast
    programming. The establishments of this industry deliver visual,
    aural, or textual programming received from cable networks, local
    television stations, or radio networks to consumers via cable or
    direct-to-home satellite systems on a subscription or fee basis.
    These establishments do not generally originate programming
    material."[^265] This category includes, among others, cable
    operators, direct broadcast satellite ("DBS") services, home
    satellite dish ("HSD") services, satellite master antenna television
    ("SMATV") systems, and open video systems ("OVS"). The SBA has
    developed a small business size standard for Cable and Other Program
    Distribution, which is all such firms having \$13.5 million or less
    in annual receipts.[^266] According to Census Bureau data for 2002,
    there were a total of 1,191 firms in this category that operated for
    the entire year.[^267] Of this total, 1,087 firms had annual
    receipts of under \$10 million, and 43 firms had receipts of \$10
    million or more but less than \$25 million.[^268] Thus, under this
    size standard, the majority of firms can be considered small.

11. *Cable System Operators (Rate Regulation Standard).* The Commission
    has also developed its own small business size standards for the
    purpose of cable rate regulation. Under the Commission's rules, a
    "small cable company" is one serving 400,000 or fewer subscribers
    nationwide.[^269] As of 2006, 7,916 cable operators qualify as small
    cable companies under this standard.[^270] In addition, under the
    Commission's rules, a "small system" is a cable system serving
    15,000 or fewer subscribers.[^271] Industry data indicate that 6,139
    systems have under 10,000 subscribers, and an additional 379 systems
    have 10,000-19,999 subscribers.[^272] Thus, under this standard,
    most cable systems are small.

12. *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."[^273] There are approximately 65.4 million
    cable subscribers in the United States today.[^274] Accordingly, an
    operator serving fewer than 654,000 subscribers shall be deemed a
    small operator, if its annual revenues, when combined with the total
    annual revenues of all its affiliates, do not exceed \$250 million
    in the aggregate.[^275] Based on available data, we find that the
    number of cable operators serving 654,000 subscribers or less totals
    approximately 7,916.[^276] We note that the Commission neither
    requests nor collects information on whether cable system operators
    are affiliated with entities whose gross annual revenues exceed
    \$250 million.[^277] Although it seems certain that some of these
    cable system operators are affiliated with entities whose gross
    annual revenues exceed \$250,000,000, we are unable at this time to
    estimate with greater precision the number of cable system operators
    that would qualify as small cable operators under the definition in
    the Communications Act.

13. *Direct Broadcast Satellite ("DBS") Service.* DBS service is a
    nationally distributed subscription service that delivers video and
    audio programming via satellite to a small parabolic "dish" antenna
    at the subscriber's location. Because DBS provides subscription
    services, DBS falls within the SBA-recognized definition of Cable
    and Other Program Distribution.[^278] This definition provides that
    a small entity is one with \$13.5 million or less in annual
    receipts.[^279] Currently, three operators provide DBS service,
    which requires a great investment of capital for operation: DIRECTV,
    EchoStar (marketed as the DISH Network), and Dominion Video
    Satellite, Inc. ("Dominion") (marketed as Sky Angel).[^280] All
    three currently offer subscription services. Two of these three DBS
    operators, DIRECTV[^281] and EchoStar Communications Corporation
    ("EchoStar"),[^282] report annual revenues that are in excess of the
    threshold for a small business. The third DBS operator, Dominion's
    Sky Angel service, serves fewer than one million subscribers and
    provides 20 family and religion-oriented channels.[^283] Dominion
    does not report its annual revenues. The Commission does not know of
    any source which provides this information and, thus, we have no way
    of confirming whether Dominion qualifies as a small business.
    Because DBS service requires significant capital, we believe it is
    unlikely that a small entity as defined by the SBA would have the
    financial wherewithal to become a DBS licensee. Nevertheless, given
    the absence of specific data on this point, we recognize the
    possibility that there are entrants in this field that may not yet
    have generated \$13.5 million in annual receipts, and therefore may
    be categorized as a small business, if independently owned and
    operated.

14. *Private Cable Operators (PCOs) also known as Satellite Master
    Antenna Television (SMATV) Systems*. PCOs, also known as SMATV
    systems or private communication operators, are video distribution
    facilities that use closed transmission paths without using any
    public right-of-way. PCOs acquire video programming and distribute
    it via terrestrial wiring in urban and suburban multiple dwelling
    units such as apartments and condominiums, and commercial multiple
    tenant units such as hotels and office buildings. The SBA definition
    of small entities for Cable and Other Program Distribution Services
    includes PCOs and, thus, small entities are defined as all such
    companies generating \$13.5 million or less in annual
    receipts.[^284] Currently, there are approximately 150 members in
    the Independent Multi-Family Communications Council (IMCC), the
    trade association that represents PCOs.[^285] Individual PCOs often
    serve approximately 3,000-4,000 subscribers, but the larger
    operations serve as many as 15,000-55,000 subscribers. In total,
    PCOs currently serve approximately one million subscribers.[^286]
    Because these operators are not rate regulated, they are not
    required to file financial data with the Commission. Furthermore, we
    are not aware of any privately published financial information
    regarding these operators. Based on the estimated number of
    operators and the estimated number of units served by the largest
    ten PCOs, we believe that a substantial number of PCO may qualify as
    small entities.

15. *Home Satellite Dish ("HSD") Service.* Because HSD provides
    subscription services, HSD falls within the SBA-recognized
    definition of Cable and Other Program Distribution, which includes
    all such companies generating \$13.5 million or less in revenue
    annually.[^287] HSD or the large dish segment of the satellite
    industry is the original satellite-to-home service offered to
    consumers, and involves the home reception of signals transmitted by
    satellites operating generally in the C-band frequency. Unlike DBS,
    which uses small dishes, HSD antennas are between four and eight
    feet in diameter and can receive a wide range of unscrambled (free)
    programming and scrambled programming purchased from program
    packagers that are licensed to facilitate subscribers' receipt of
    video programming. There are approximately 30 satellites operating
    in the C-band, which carry over 500 channels of programming
    combined; approximately 350 channels are available free of charge
    and 150 are scrambled and require a subscription. HSD is difficult
    to quantify in terms of annual revenue. HSD owners have access to
    program channels placed on C-band satellites by programmers for
    receipt and distribution by MVPDs. Commission data shows that,
    between June 2004 and June 2005, HSD subscribership fell from
    335,766 subscribers to 206,358 subscribers, a decline of more than
    38 percent.[^288] The Commission has no information regarding the
    annual revenue of the four C-Band distributors.

16. *Broadband Radio Service and Educational Broadband Service*.
    Broadband Radio Service comprises Multichannel Multipoint
    Distribution Service (MMDS) systems and Multipoint Distribution
    Service (MDS).[^289] MMDS systems, often referred to as "wireless
    cable," transmit video programming to subscribers using the
    microwave frequencies of MDS and Educational Broadband Service (EBS)
    (formerly known as Instructional Television Fixed Service
    (ITFS)).[^290] We estimate that the number of wireless cable
    subscribers is approximately 100,000, as of March 2005. The SBA
    definition of small entities for Cable and Other Program
    Distribution, which includes such companies generating \$13.5
    million in annual receipts, appears applicable to MDS and
    ITFS.[^291]

17. The Commission has also defined small MDS (now BRS) entities in the
    context of Commission license auctions. For purposes of the 1996 MDS
    auction, the Commission defined a small business as an entity that
    had annual average gross revenues of less than \$40 million in the
    previous three calendar years.[^292] This definition of a small
    entity in the context of MDS auctions has been approved by the
    SBA.[^293] In the MDS auction, 67 bidders won 493 licenses.[^294] Of
    the 67 auction winners, 61 claimed status as a small business. At
    this time, the Commission estimates that of the 61 small business
    MDS auction winners, 48 remain small business licensees. In addition
    to the 48 small businesses that hold BTA authorizations, there are
    approximately 392 incumbent MDS licensees that have gross revenues
    that are not more than \$40 million and are thus considered small
    entities.[^295] MDS licensees and wireless cable operators that did
    not receive their licenses as a result of the MDS auction fall under
    the SBA small business size standard for Cable and Other Program
    Distribution, which includes all such entities that do not generate
    revenue in excess of \$13.5 million annually.[^296] Information
    available to us indicates that there are approximately 850 of these
    licensees and operators that do not generate revenue in excess of
    \$13.5 million annually. Therefore, we estimate that there are
    approximately 850 small entity MDS (or BRS) providers, as defined by
    the SBA and the Commission's auction rules.

18. Educational institutions are included in this analysis as small
    entities; however, the Commission has not created a specific small
    business size standard for ITFS (now EBS).[^297] We estimate that
    there are currently 2,032 ITFS (or EBS) licensees, and all but 100
    of the licenses are held by educational institutions. Thus, we
    estimate that at least 1,932 ITFS licensees are small entities.

19. *Local Multipoint Distribution Service.* Local Multipoint
    Distribution Service (LMDS) is a fixed broadband point-to-multipoint
    microwave service that provides for two-way video
    telecommunications.[^298] The SBA definition of small entities for
    Cable and Other Program Distribution, which includes such companies
    generating \$13.5 million in annual receipts, appears applicable to
    LMDS.[^299] The Commission has also defined small LMDS entities in
    the context of Commission license auctions. In the 1998 and 1999
    LMDS auctions,[^300] the Commission defined a small business as an
    entity that had annual average gross revenues of less than \$40
    million in the previous three calendar years.[^301] Moreover, the
    Commission added an additional classification for a "very small
    business," which was defined as an entity that had annual average
    gross revenues of less than \$15 million in the previous three
    calendar years.[^302] These definitions of "small business" and
    "very small business" in the context of the LMDS auctions have been
    approved by the SBA.[^303] In the first LMDS auction, 104 bidders
    won 864 licenses. Of the 104 auction winners, 93 claimed status as
    small or very small businesses. In the LMDS re-auction, 40 bidders
    won 161 licenses. Based on this information, we believe that the
    number of small LMDS licenses will include the 93 winning bidders in
    the first auction and the 40 winning bidders in the re-auction, for
    a total of 133 small entity LMDS providers as defined by the SBA and
    the Commission's auction rules.

20. *Open Video Systems ("OVS").* The OVS framework provides
    opportunities for the distribution of video programming other than
    through cable systems. Because OVS operators provide subscription
    services,[^304] OVS falls within the SBA-recognized definition of
    Cable and Other Program Distribution Services, which provides that a
    small entity is one with \$ 13.5 million or less in annual
    receipts.[^305] The Commission has approved approximately 120 OVS
    certifications with some OVS operators now providing service.[^306]
    Broadband service providers (BSPs) are currently the only
    significant holders of OVS certifications or local OVS franchises,
    even though OVS is one of four statutorily-recognized options for
    local exchange carriers (LECs) to offer video programming services.
    As of June 2005, BSPs served approximately 1.4 million subscribers,
    representing 1.49 percent of all MVPD households.[^307] Among BSPs,
    however, those operating under the OVS framework are in the
    minority.[^308] As of June 2005, RCN Corporation is the largest BSP
    and 14th largest MVPD, serving approximately 371,000
    subscribers.[^309] RCN received approval to operate OVS systems in
    New York City, Boston, Washington, D.C. and other areas. The
    Commission does not have financial information regarding the
    entities authorized to provide OVS, some of which may not yet be
    operational. We thus believe that at least some of the OVS operators
    may qualify as small entities.

21. *Cable and Other Subscription Programming.* The Census Bureau
    defines this category as follows: "This industry comprises
    establishments primarily engaged in operating studios and facilities
    for the broadcasting of programs on a subscription or fee basis . .
    . . These establishments produce programming in their own facilities
    or acquire programming from external sources. The programming
    material is usually delivered to a third party, such as cable
    systems or direct-to-home satellite systems, for transmission to
    viewers."[^310] The SBA has developed a small business size standard
    for firms within this category, which is all firms with \$13.5
    million or less in annual receipts.[^311] According to Census Bureau
    data for 2002, there were 270 firms in this category that operated
    for the entire year.[^312] Of this total, 217 firms had annual
    receipts of under \$10 million and 13 firms had annual receipts of
    \$10 million to \$24,999,999.[^313] Thus, under this category and
    associated small business size standard, the majority of firms can
    be considered small.

22. *Motion Picture and Video Production*. The Census Bureau defines
    this category as follows: "This industry comprises establishments
    primarily engaged in producing, or producing and distributing motion
    pictures, videos, television programs, or television
    commercials."[^314] The SBA has developed a small business size
    standard for firms within this category, which is all firms with
    \$27 million or less in annual receipts.[^315] According to Census
    Bureau data for 2002, there were 7,772 firms in this category that
    operated for the entire year.[^316] Of this total, 7,685 firms had
    annual receipts of under \$24,999,999 and 45 firms had annual
    receipts of between \$25,000,000 and \$49,999,999.[^317] Thus, under
    this category and associated small business size standard, the
    majority of firms can be considered small. Each of these NAICS
    categories is very broad and includes firms that may be engaged in
    various industries, including cable programming. Specific figures
    are not available regarding how many of these firms exclusively
    produce and/or distribute programming for cable television or how
    many are independently owned and operated.

23. *Motion Picture and Video Distribution*. The Census Bureau defines
    this category as follows: "This industry comprises establishments
    primarily engaged in acquiring distribution rights and distributing
    film and video productions to motion picture theaters, television
    networks and stations, and exhibitors."[^318] The SBA has developed
    a small business size standard for firms within this category, which
    is all firms with \$27 million or less in annual receipts.[^319]
    According to Census Bureau data for 2002, there were 377 firms in
    this category that operated for the entire year.[^320] Of this
    total, 365 firms had annual receipts of under \$24,999,999 and 7
    firms had annual receipts of between \$25,000,000 and
    \$49,999,999.[^321] Thus, under this category and associated small
    business size standard, the majority of firms can be considered
    small. Each of these NAICS categories is very broad and includes
    firms that may be engaged in various industries, including cable
    programming. Specific figures are not available regarding how many
    of these firms exclusively produce and/or distribute programming for
    cable television or how many are independently owned and operated.

24. *Small Incumbent Local Exchange Carriers*. We have included small
    incumbent local exchange carriers in this present RFA analysis. A
    "small business" under the RFA is one that, *inter alia*, meets the
    pertinent small business size standard (*e.g.*, a telephone
    communications business having 1,500 or fewer employees), and "is
    not dominant in its field of operation."[^322] 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.[^323] We have
    therefore included small incumbent local exchange carriers in this
    RFA, although we emphasize that this RFA action has no effect on
    Commission analyses and determinations in other, non-RFA contexts.

25. *Incumbent Local Exchange Carriers ("LECs")*. Neither the Commission
    nor the SBA has developed a small business size standard
    specifically for incumbent local exchange services. The appropriate
    size standard under SBA rules is for the category Wired
    Telecommunications Carriers. Under that size standard, such a
    business is small if it has 1,500 or fewer employees.[^324]
    According to Commission data,[^325] 1,307 carriers have reported
    that they are engaged in the provision of incumbent local exchange
    services. Of these 1,307 carriers, an estimated 1,019 have 1,500 or
    fewer employees and 288 have more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    incumbent local exchange service are small businesses.

26. *Competitive Local Exchange Carriers, Competitive Access Providers
    (CAPs), Shared-Tenant Service Providers," and "Other Local Service
    Providers."* Neither the Commission nor the SBA has developed a
    small business size standard specifically for these service
    providers. The appropriate size standard under SBA rules is for the
    category Wired Telecommunications Carriers. Under that size
    standard, such a business is small if it has 1,500 or fewer
    employees.[^326] According to Commission data,[^327] 859 carriers
    have reported that they are engaged in the provision of either
    competitive access provider services or competitive local exchange
    carrier services. Of these 859 carriers, an estimated 741 have 1,500
    or fewer employees and 118 have more than 1,500 employees. In
    addition, 16 carriers have reported that they are "Shared-Tenant
    Service Providers," and all 16 are estimated to have 1,500 or fewer
    employees. In addition, 44 carriers have reported that they are
    "Other Local Service Providers." Of the 44, an estimated 43 have
    1,500 or fewer employees and one has more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    competitive local exchange service, competitive access providers,
    "Shared-Tenant Service Providers," and "Other Local Service
    Providers" are small entities.

27. *Electric Power Generation, Transmission and Distribution*. The
    Census Bureau defines this category as follows: "This industry group
    comprises establishments primarily engaged in generating,
    transmitting, and/or distributing electric power. Establishments in
    this industry group may perform one or more of the following
    activities: (1) operate generation facilities that produce electric
    energy; (2) operate transmission systems that convey the electricity
    from the generation facility to the distribution system; and (3)
    operate distribution systems that convey electric power received
    from the generation facility or the transmission system to the final
    consumer."[^328] The SBA has developed a small business size
    standard for firms in this category: "A firm is small if, including
    its affiliates, it is primarily engaged in the generation,
    transmission, and/or distribution of electric energy for sale and
    its total electric output for the preceding fiscal year did not
    exceed 4 million megawatt hours."[^329] According to Census Bureau
    data for 2002, there were 1,644 firms in this category that operated
    for the entire year.[^330] Census data do not track electric output
    and we have not determined how many of these firms fit the SBA size
    standard for small, with no more than 4 million megawatt hours of
    electric output. Consequently, we estimate that 1,644 or fewer firms
    may be considered small under the SBA small business size standard.

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

28. The rules adopted in the *Report and Order* will impose additional
    reporting, recordkeeping, and other compliance requirements on cable
    system operators and leased access programmers. The *Order* requires
    a respondent in a leased access complaint proceeding that expressly
    relies upon a document in asserting a defense to include the
    document as part of its answer.[^331] The *Order* finds that in the
    context of a leased access complaint proceeding, it would be
    unreasonable for a respondent not to produce all the documents
    either requested by the complainant or ordered by the Commission,
    provided that such documents are in its control and relevant to the
    dispute.[^332] The *Order* requires the parties to a leased access
    complaint proceeding to enter into a Protective Order to protect
    pleading or discovery material that is deemed by the submitting
    party to contain confidential information.[^333] The *Order*
    requires cable system operators to submit annual reports on leased
    access rates, channel usage, and complaints.[^334] The *Order*
    requires cable system operators to provide prospective leased access
    programmers with certain information within three business days of
    the date on which a request for leased access information is
    made.[^335] A longer period for small systems to respond has been
    retained. The *Order* requires cable system operators to meet
    uniform customer service standards with respect to their dealings
    with leased access programmers and to apply uniform contract terms
    and conditions to all leased access programmers as applied to other
    programmers.[^336] The *Order* requires cable systems to maintain a
    contact name, telephone number, and e-mail address on their website
    and to make available by telephone a designated person to respond to
    requests for information about leased access channels.[^337] The
    *Order* requires a cable system operator to maintain a brief
    explanation of the leased access statute and regulations on its
    website.[^338] The *Order* specifies the information that a leased
    access programmer must provide to a cable system operator in order
    to be considered for carriage and requires the cable system operator
    to respond to the proposal by accepting the proposed terms or
    offering alternative terms within 10 days.[^339]

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

29. The RFA requires an agency to describe any significant alternatives
    that it has considered in proposing regulatory approaches, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^340] The *Notice* invited comment on issues
    that had the potential to have significant economic impact on some
    small entities.[^341]

30. As discussed in Section A, the decision to modify the leased access
    rules will facilitate the goals of Section 612 of the Communications
    Act "to promote competition in the delivery of diverse sources of
    video programming and to assure that the widest possible diversity
    of information sources are made available to the public from cable
    systems in a manner consistent with growth and development of cable
    systems."[^342] The decision confers benefits upon the variety of
    leased access programmers, most of which are smaller entities. Thus,
    the decision to modify the leased access rules benefits smaller
    entities as well as larger entities. The alternative of retaining
    the current leased access rules would hinder achieving the goals of
    competition and diversity as envisioned by Congress. Moreover, the
    alternative of requiring only certain cable operators to comply with
    these new rules, such as only large cable operators, would similarly
    impede achieving the goals of competition and diversity as
    envisioned by Congress. However, a longer period for small systems
    to respond to certain requests for information has been retained.

> **F. Report to Congress**

31. The Commission will send a copy of the *Report and Order*, including
    this FRFA, in a report to be sent to Congress and the Government
    Accountability Office pursuant to the Congressional Review
    Act.[^343] In addition, the Commission will send a copy of the
    *Report and Order*, including this FRFA, to the Chief Counsel for
    Advocacy of the SBA. A copy of the *Report and Order* and FRFA (or
    summaries thereof) will also be published in the Federal
    Register.[^344]

    **APPENDIX F**

**Initial Regulatory Flexibility Analysis**

#  {#section .unnumbered}

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (the "RFA")[^345] the Commission has prepared this Initial
    Regulatory Flexibility Analysis ("IRFA") of the possible significant
    economic impact on small entities by the policies and rules proposed
    in the *Further Notice of Proposed Rulemaking* ("*FNPRM*").[^346]
    Written public comments are requested on this IRFA. Comments must be
    identified as responses to the IRFA and must be filed by the
    deadlines for comments provided on the first page of the document.
    The Commission will send a copy of the *FNPRM*, including this IRFA,
    to the Chief Counsel for Advocacy of the Small Business
    Administration ("SBA").[^347] In addition, the *FNPRM* and IRFA (or
    summaries thereof) will be published in the *Federal
    Register*.[^348]

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

2.  *Overview*. The commercial leased access requirements set forth in
    Section 612 of the Communications Act of 1934 require a cable
    operator to set aside channel capacity for commercial use by video
    programmers unaffiliated with the cable operator.[^349] The purposes
    of Section 612 are "to promote competition in the delivery of
    diverse sources of video programming and to assure that the widest
    possible diversity of information sources are made available to the
    public from cable systems in a manner consistent with growth and
    development of cable systems."[^350]

3.  In the *Report and Order* in MB Docket No. 07-42, the Commission
    modified its formula used to calculate commercial leased access
    rates, which will result in making leased access channels a more
    viable outlet for leased access programming. The *Order* also
    provides that the maximum leased access rate will not exceed \$0.10
    per subscriber per month for any cable system. The *Order*, however,
    did not apply the modified rate formula or the maximum allowable
    leased access rate to programmers that predominantly transmit sales
    presentations or program length commercials. These direct sales
    programmers often "pay" for carriage \-- either directly or through
    some form of revenue sharing with the cable operator.[^351]

4.  In the *FNPRM*, the Commission notes its concern about setting the
    leased access rates at a point at which programmers that
    predominantly transmit sales presentations or program length
    commercials simply migrate to leased access because it is less
    expensive than their current commercial arrangements.[^352]
    Accordingly, the *FNPRM* considers whether leased access at current
    rates is affordable to programmers that predominantly transmit sales
    presentations and program length commercials.[^353] The *FNPRM*
    considers whether applying the modified leased access rate formula
    to programmers that predominantly transmit sales presentations or
    program length commercials will cause migration of these services to
    leased access.[^354] If these services do migrate to leased access,
    the *FNPRM* considers the effect of such a migration.[^355] The
    *FNPRM* also considers whether a separate category for direct sales
    programmers is appropriate.[^356]

5.  In the *FNPRM*, the Commission seeks comment on the foregoing
    issues. In particular, the *FNPRM* invites comment on issues that
    may impact small entities, including cable operators and leased
    access programmers.

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

6.  The authority for the action proposed in the rulemaking is contained
    in Section 4(i), 303, and 612 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 154(i), 303, and 532.

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

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32. 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.[^357] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^358] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^359] 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").[^360]

33. *Wired Telecommunications Carriers*. The 2007 North American
    Industry Classification System ("NAICS") defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include the
    following three classifications which were listed separately in the
    2002 NAICS: Wired Telecommunications Carriers (2002 NAICS code
    517110), Cable and Other Program Distribution (2002 NAISC code
    517510), and Internet Service Providers (2002 NAISC code
    518111).[^361] The 2007 NAISC defines this category as follows:
    "This industry comprises establishments primarily engaged in
    operating and/or providing access to transmission facilities and
    infrastructure that they own and/or lease for the transmission of
    voice, data, text, sound, and video using wired telecommunications
    networks. Transmission facilities may be based on a single
    technology or a combination of technologies. Establishments in this
    industry use the wired telecommunications network facilities that
    they operate to provide a variety of services, such as wired
    telephony services, including VoIP services; wired (cable) audio and
    video programming distribution; and wired broadband Internet
    services. By exception, establishments providing satellite
    television distribution services using facilities and infrastructure
    that they operate are included in this industry."[^362] The SBA has
    developed a small business size standard for Wired
    Telecommunications Carriers, which is all firms having 1,500
    employees or less.[^363] According to Census Bureau data for 2002,
    there were a total of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC code 517110) that operated for the
    entire year; 6,021 firms in the Cable and Other Program Distribution
    category (2002 NAISC code 517510) that operated for the entire year;
    and 3,408 firms in the Internet Service Providers category (2002
    NAISC code 518111) that operated for the entire year.[^364] Of these
    totals, 25,374 of 27,148 firms in the Wired Telecommunications
    Carriers category (2002 NAISC code 517110) had less than 100
    employees; 5,496 of 6,021 firms in the Cable and Other Program
    Distribution category (2002 NAISC code 517510) had less than 100
    employees; and 3,303 of the 3,408 firms in the Internet Service
    Providers category (2002 NAISC code 518111) had less than 100
    employees.[^365] Thus, under this size standard, the majority of
    firms can be considered small.

34. *Cable and Other Program Distribution.* The 2002 NAICS defines this
    category as follows: "This industry comprises establishments
    primarily engaged as third-party distribution systems for broadcast
    programming. The establishments of this industry deliver visual,
    aural, or textual programming received from cable networks, local
    television stations, or radio networks to consumers via cable or
    direct-to-home satellite systems on a subscription or fee basis.
    These establishments do not generally originate programming
    material."[^366] This category includes, among others, cable
    operators, direct broadcast satellite ("DBS") services, home
    satellite dish ("HSD") services, satellite master antenna television
    ("SMATV") systems, and open video systems ("OVS"). The SBA has
    developed a small business size standard for Cable and Other Program
    Distribution, which is all such firms having \$13.5 million or less
    in annual receipts.[^367] According to Census Bureau data for 2002,
    there were a total of 1,191 firms in this category that operated for
    the entire year.[^368] Of this total, 1,087 firms had annual
    receipts of under \$10 million, and 43 firms had receipts of \$10
    million or more but less than \$25 million.[^369] Thus, under this
    size standard, the majority of firms can be considered small.

35. *Cable System Operators (Rate Regulation Standard).* The Commission
    has also developed its own small business size standards for the
    purpose of cable rate regulation. Under the Commission's rules, a
    "small cable company" is one serving 400,000 or fewer subscribers
    nationwide.[^370] As of 2006, 7,916 cable operators qualify as small
    cable companies under this standard.[^371] In addition, under the
    Commission's rules, a "small system" is a cable system serving
    15,000 or fewer subscribers.[^372] Industry data indicate that 6,139
    systems have under 10,000 subscribers, and an additional 379 systems
    have 10,000-19,999 subscribers.[^373] Thus, under this standard,
    most cable systems are small.

36. *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."[^374] There are approximately 65.4 million
    cable subscribers in the United States today.[^375] Accordingly, an
    operator serving fewer than 654,000 subscribers shall be deemed a
    small operator, if its annual revenues, when combined with the total
    annual revenues of all its affiliates, do not exceed \$250 million
    in the aggregate.[^376] Based on available data, we find that the
    number of cable operators serving 654,000 subscribers or less totals
    approximately 7,916.[^377] We note that the Commission neither
    requests nor collects information on whether cable system operators
    are affiliated with entities whose gross annual revenues exceed
    \$250 million.[^378] Although it seems certain that some of these
    cable system operators are affiliated with entities whose gross
    annual revenues exceed \$250,000,000, we are unable at this time to
    estimate with greater precision the number of cable system operators
    that would qualify as small cable operators under the definition in
    the Communications Act.

37. *Direct Broadcast Satellite ("DBS") Service.* DBS service is a
    nationally distributed subscription service that delivers video and
    audio programming via satellite to a small parabolic "dish" antenna
    at the subscriber's location. Because DBS provides subscription
    services, DBS falls within the SBA-recognized definition of Cable
    and Other Program Distribution.[^379] This definition provides that
    a small entity is one with \$13.5 million or less in annual
    receipts.[^380] Currently, three operators provide DBS service,
    which requires a great investment of capital for operation: DIRECTV,
    EchoStar (marketed as the DISH Network), and Dominion Video
    Satellite, Inc. ("Dominion") (marketed as Sky Angel).[^381] All
    three currently offer subscription services. Two of these three DBS
    operators, DIRECTV[^382] and EchoStar Communications Corporation
    ("EchoStar"),[^383] report annual revenues that are in excess of the
    threshold for a small business. The third DBS operator, Dominion's
    Sky Angel service, serves fewer than one million subscribers and
    provides 20 family and religion-oriented channels.[^384] Dominion
    does not report its annual revenues. The Commission does not know of
    any source which provides this information and, thus, we have no way
    of confirming whether Dominion qualifies as a small business.
    Because DBS service requires significant capital, we believe it is
    unlikely that a small entity as defined by the SBA would have the
    financial wherewithal to become a DBS licensee. Nevertheless, given
    the absence of specific data on this point, we recognize the
    possibility that there are entrants in this field that may not yet
    have generated \$13.5 million in annual receipts, and therefore may
    be categorized as a small business, if independently owned and
    operated.

38. *Private Cable Operators (PCOs) also known as Satellite Master
    Antenna Television (SMATV) Systems*. PCOs, also known as SMATV
    systems or private communication operators, are video distribution
    facilities that use closed transmission paths without using any
    public right-of-way. PCOs acquire video programming and distribute
    it via terrestrial wiring in urban and suburban multiple dwelling
    units such as apartments and condominiums, and commercial multiple
    tenant units such as hotels and office buildings. The SBA definition
    of small entities for Cable and Other Program Distribution Services
    includes PCOs and, thus, small entities are defined as all such
    companies generating \$13.5 million or less in annual
    receipts.[^385] Currently, there are approximately 150 members in
    the Independent Multi-Family Communications Council (IMCC), the
    trade association that represents PCOs.[^386] Individual PCOs often
    serve approximately 3,000-4,000 subscribers, but the larger
    operations serve as many as 15,000-55,000 subscribers. In total,
    PCOs currently serve approximately one million subscribers.[^387]
    Because these operators are not rate regulated, they are not
    required to file financial data with the Commission. Furthermore, we
    are not aware of any privately published financial information
    regarding these operators. Based on the estimated number of
    operators and the estimated number of units served by the largest
    ten PCOs, we believe that a substantial number of PCO may qualify as
    small entities.

39. *Home Satellite Dish ("HSD") Service.* Because HSD provides
    subscription services, HSD falls within the SBA-recognized
    definition of Cable and Other Program Distribution, which includes
    all such companies generating \$13.5 million or less in revenue
    annually.[^388] HSD or the large dish segment of the satellite
    industry is the original satellite-to-home service offered to
    consumers, and involves the home reception of signals transmitted by
    satellites operating generally in the C-band frequency. Unlike DBS,
    which uses small dishes, HSD antennas are between four and eight
    feet in diameter and can receive a wide range of unscrambled (free)
    programming and scrambled programming purchased from program
    packagers that are licensed to facilitate subscribers' receipt of
    video programming. There are approximately 30 satellites operating
    in the C-band, which carry over 500 channels of programming
    combined; approximately 350 channels are available free of charge
    and 150 are scrambled and require a subscription. HSD is difficult
    to quantify in terms of annual revenue. HSD owners have access to
    program channels placed on C-band satellites by programmers for
    receipt and distribution by MVPDs. Commission data shows that,
    between June 2004 and June 2005, HSD subscribership fell from
    335,766 subscribers to 206,358 subscribers, a decline of more than
    38 percent.[^389] The Commission has no information regarding the
    annual revenue of the four C-Band distributors.

40. *Broadband Radio Service and Educational Broadband Service*.
    Broadband Radio Service comprises Multichannel Multipoint
    Distribution Service (MMDS) systems and Multipoint Distribution
    Service (MDS).[^390] MMDS systems, often referred to as "wireless
    cable," transmit video programming to subscribers using the
    microwave frequencies of MDS and Educational Broadband Service (EBS)
    (formerly known as Instructional Television Fixed Service
    (ITFS)).[^391] We estimate that the number of wireless cable
    subscribers is approximately 100,000, as of March 2005. The SBA
    definition of small entities for Cable and Other Program
    Distribution, which includes such companies generating \$13.5
    million in annual receipts, appears applicable to MDS and
    ITFS.[^392]

41. The Commission has also defined small MDS (now BRS) entities in the
    context of Commission license auctions. For purposes of the 1996 MDS
    auction, the Commission defined a small business as an entity that
    had annual average gross revenues of less than \$40 million in the
    previous three calendar years.[^393] This definition of a small
    entity in the context of MDS auctions has been approved by the
    SBA.[^394] In the MDS auction, 67 bidders won 493 licenses.[^395] Of
    the 67 auction winners, 61 claimed status as a small business. At
    this time, the Commission estimates that of the 61 small business
    MDS auction winners, 48 remain small business licensees. In addition
    to the 48 small businesses that hold BTA authorizations, there are
    approximately 392 incumbent MDS licensees that have gross revenues
    that are not more than \$40 million and are thus considered small
    entities.[^396] MDS licensees and wireless cable operators that did
    not receive their licenses as a result of the MDS auction fall under
    the SBA small business size standard for Cable and Other Program
    Distribution, which includes all such entities that do not generate
    revenue in excess of \$13.5 million annually.[^397] Information
    available to us indicates that there are approximately 850 of these
    licensees and operators that do not generate revenue in excess of
    \$13.5 million annually. Therefore, we estimate that there are
    approximately 850 small entity MDS (or BRS) providers, as defined by
    the SBA and the Commission's auction rules.

42. Educational institutions are included in this analysis as small
    entities; however, the Commission has not created a specific small
    business size standard for ITFS (now EBS).[^398] We estimate that
    there are currently 2,032 ITFS (or EBS) licensees, and all but 100
    of the licenses are held by educational institutions. Thus, we
    estimate that at least 1,932 ITFS licensees are small entities.

43. *Local Multipoint Distribution Service.* Local Multipoint
    Distribution Service (LMDS) is a fixed broadband point-to-multipoint
    microwave service that provides for two-way video
    telecommunications.[^399] The SBA definition of small entities for
    Cable and Other Program Distribution, which includes such companies
    generating \$13.5 million in annual receipts, appears applicable to
    LMDS.[^400] The Commission has also defined small LMDS entities in
    the context of Commission license auctions. In the 1998 and 1999
    LMDS auctions,[^401] the Commission defined a small business as an
    entity that had annual average gross revenues of less than \$40
    million in the previous three calendar years.[^402] Moreover, the
    Commission added an additional classification for a "very small
    business," which was defined as an entity that had annual average
    gross revenues of less than \$15 million in the previous three
    calendar years.[^403] These definitions of "small business" and
    "very small business" in the context of the LMDS auctions have been
    approved by the SBA.[^404] In the first LMDS auction, 104 bidders
    won 864 licenses. Of the 104 auction winners, 93 claimed status as
    small or very small businesses. In the LMDS re-auction, 40 bidders
    won 161 licenses. Based on this information, we believe that the
    number of small LMDS licenses will include the 93 winning bidders in
    the first auction and the 40 winning bidders in the re-auction, for
    a total of 133 small entity LMDS providers as defined by the SBA and
    the Commission's auction rules.

44. *Open Video Systems ("OVS").* The OVS framework provides
    opportunities for the distribution of video programming other than
    through cable systems. Because OVS operators provide subscription
    services,[^405] OVS falls within the SBA-recognized definition of
    Cable and Other Program Distribution Services, which provides that a
    small entity is one with \$ 13.5 million or less in annual
    receipts.[^406] The Commission has approved approximately 120 OVS
    certifications with some OVS operators now providing service.[^407]
    Broadband service providers (BSPs) are currently the only
    significant holders of OVS certifications or local OVS franchises,
    even though OVS is one of four statutorily-recognized options for
    local exchange carriers (LECs) to offer video programming services.
    As of June 2005, BSPs served approximately 1.4 million subscribers,
    representing 1.49 percent of all MVPD households.[^408] Among BSPs,
    however, those operating under the OVS framework are in the
    minority.[^409] As of June 2005, RCN Corporation is the largest BSP
    and 14th largest MVPD, serving approximately 371,000
    subscribers.[^410] RCN received approval to operate OVS systems in
    New York City, Boston, Washington, D.C. and other areas. The
    Commission does not have financial information regarding the
    entities authorized to provide OVS, some of which may not yet be
    operational. We thus believe that at least some of the OVS operators
    may qualify as small entities.

45. *Cable and Other Subscription Programming.* The Census Bureau
    defines this category as follows: "This industry comprises
    establishments primarily engaged in operating studios and facilities
    for the broadcasting of programs on a subscription or fee basis . .
    . . These establishments produce programming in their own facilities
    or acquire programming from external sources. The programming
    material is usually delivered to a third party, such as cable
    systems or direct-to-home satellite systems, for transmission to
    viewers."[^411] The SBA has developed a small business size standard
    for firms within this category, which is all firms with \$13.5
    million or less in annual receipts.[^412] According to Census Bureau
    data for 2002, there were 270 firms in this category that operated
    for the entire year.[^413] Of this total, 217 firms had annual
    receipts of under \$10 million and 13 firms had annual receipts of
    \$10 million to \$24,999,999.[^414] Thus, under this category and
    associated small business size standard, the majority of firms can
    be considered small.

46. *Motion Picture and Video Production*. The Census Bureau defines
    this category as follows: "This industry comprises establishments
    primarily engaged in producing, or producing and distributing motion
    pictures, videos, television programs, or television
    commercials."[^415] The SBA has developed a small business size
    standard for firms within this category, which is all firms with
    \$27 million or less in annual receipts.[^416] According to Census
    Bureau data for 2002, there were 7,772 firms in this category that
    operated for the entire year.[^417] Of this total, 7,685 firms had
    annual receipts of under \$24,999,999 and 45 firms had annual
    receipts of between \$25,000,000 and \$49,999,999.[^418] Thus, under
    this category and associated small business size standard, the
    majority of firms can be considered small. Each of these NAICS
    categories is very broad and includes firms that may be engaged in
    various industries, including cable programming. Specific figures
    are not available regarding how many of these firms exclusively
    produce and/or distribute programming for cable television or how
    many are independently owned and operated.

47. *Motion Picture and Video Distribution*. The Census Bureau defines
    this category as follows: "This industry comprises establishments
    primarily engaged in acquiring distribution rights and distributing
    film and video productions to motion picture theaters, television
    networks and stations, and exhibitors."[^419] The SBA has developed
    a small business size standard for firms within this category, which
    is all firms with \$27 million or less in annual receipts.[^420]
    According to Census Bureau data for 2002, there were 377 firms in
    this category that operated for the entire year.[^421] Of this
    total, 365 firms had annual receipts of under \$24,999,999 and 7
    firms had annual receipts of between \$25,000,000 and
    \$49,999,999.[^422] Thus, under this category and associated small
    business size standard, the majority of firms can be considered
    small. Each of these NAICS categories is very broad and includes
    firms that may be engaged in various industries, including cable
    programming. Specific figures are not available regarding how many
    of these firms exclusively produce and/or distribute programming for
    cable television or how many are independently owned and operated.

48. *Small Incumbent Local Exchange Carriers*. We have included small
    incumbent local exchange carriers in this present RFA analysis. A
    "small business" under the RFA is one that, *inter alia*, meets the
    pertinent small business size standard (*e.g.*, a telephone
    communications business having 1,500 or fewer employees), and "is
    not dominant in its field of operation."[^423] 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.[^424] We have
    therefore included small incumbent local exchange carriers in this
    RFA, although we emphasize that this RFA action has no effect on
    Commission analyses and determinations in other, non-RFA contexts.

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.[^425]
    According to Commission data,[^426] 1,307 carriers have reported
    that they are engaged in the provision of incumbent local exchange
    services. Of these 1,307 carriers, an estimated 1,019 have 1,500 or
    fewer employees and 288 have more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    incumbent local exchange service are small businesses.

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.[^427] According to Commission data,[^428] 859 carriers
    have reported that they are engaged in the provision of either
    competitive access provider services or competitive local exchange
    carrier services. Of these 859 carriers, an estimated 741 have 1,500
    or fewer employees and 118 have more than 1,500 employees. In
    addition, 16 carriers have reported that they are "Shared-Tenant
    Service Providers," and all 16 are estimated to have 1,500 or fewer
    employees. In addition, 44 carriers have reported that they are
    "Other Local Service Providers." Of the 44, an estimated 43 have
    1,500 or fewer employees and one has more than 1,500 employees.
    Consequently, the Commission estimates that most providers of
    competitive local exchange service, competitive access providers,
    "Shared-Tenant Service Providers," and "Other Local Service
    Providers" are small entities.

51. *Electric Power Generation, Transmission and Distribution*. The
    Census Bureau defines this category as follows: "This industry group
    comprises establishments primarily engaged in generating,
    transmitting, and/or distributing electric power. Establishments in
    this industry group may perform one or more of the following
    activities: (1) operate generation facilities that produce electric
    energy; (2) operate transmission systems that convey the electricity
    from the generation facility to the distribution system; and (3)
    operate distribution systems that convey electric power received
    from the generation facility or the transmission system to the final
    consumer."[^429] The SBA has developed a small business size
    standard for firms in this category: "A firm is small if, including
    its affiliates, it is primarily engaged in the generation,
    transmission, and/or distribution of electric energy for sale and
    its total electric output for the preceding fiscal year did not
    exceed 4 million megawatt hours."[^430] According to Census Bureau
    data for 2002, there were 1,644 firms in this category that operated
    for the entire year.[^431] Census data do not track electric output
    and we have not determined how many of these firms fit the SBA size
    standard for small, with no more than 4 million megawatt hours of
    electric output. Consequently, we estimate that 1,644 or fewer firms
    may be considered small under the SBA small business size standard.

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

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

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

53. The RFA requires an agency to describe any significant alternatives
    that it has considered in proposing regulatory approaches, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^432]

54. In response to the *FNPRM*, the Commission may choose to continue to
    apply its current leased access rates to programmers that
    predominantly transmit sales presentations or program length
    commercials; it may choose to apply the modified rate formula and
    the maximum allowable leased access rate of \$0.10 per subscriber
    per month to these programmers; or it may adopt an alternative
    approach. We invite comment on the options the Commission is
    considering, or alternatives thereto as referenced above, and on any
    other alternatives commenters may wish to propose for the purpose of
    minimizing any significant economic impact on smaller entities.

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

55. None.

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

*Re: Leased Commercial Access; Development of Competition and Diversity
in Video Programming Distribution and Carriage* (*MB Docket No. 07-42)*

The item we adopt today significantly reforms the Commission's leased
access rules. I believe it is important for the Commission to foster the
development of independent channels, including those owned by minorities
and women. By adopting an expedited complaint process and a more
rationale method for determining leased access rates, we take steps to
make it easier for independent programmers to reach local audiences.

Section 612 of the Communications Act requires the Commission to promote
"competition in the delivery of diverse sources of video programming."
Unfortunately, however, our existing leased access rules were simply not
achieving their intended purpose. For example, the Commission's most
recent cable price survey found that cable systems on average carry only
.7 leased access channels. The record suggests that the leased access
regime has been extremely underutilized because of artificially high
rates. Our order, therefore, is designed to increase the use of leased
access channels and thereby enhance the diversity of programming.

I believe that the actions we take today will go a long way to
accomplishing the twin goals of competition and diversity articulated in
section 612 of the Act. I look forward to continuing to work with my
colleagues to adopt other policies that are designed to ensure that
independent voices are heard.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**APPROVING IN PART, CONCURRING IN PART**

Re: *In the Matter of Leased Commercial Access, Development of
Competition and Diversity in Video Programming Distribution and Carriage
(MB Docket No. 07-42)*

* *

The express statutory purpose of leased access is to give independent
programmers an opportunity to obtain cable carriage at reasonable rates
in order to promote competition and "the widest possible diversity of
information sources." Thus, Congress intended leased access to
contribute to the diversity of voices that is so central to the proper
functioning of our media and, ultimately, to our democracy itself.

Unfortunately, those purposes have rarely been realized. In our most
recent annual cable price survey, the Commission found that cable
systems on average carry only 0.7 leased access channels. This Order
tries to remove several obstacles that may be hindering the use of
leased access capacity, including clarifying the information that cable
operators must be prepared to provide in response to inquiries, and the
time in which it must be provided.

Another obstacle cited by independent programmers is excessive rates.
The Order adopts a new methodology that will lower the rates and make
them more affordable. One important caveat is that we do not yet extend
the lower rate to programmers that carry primarily sales presentations
and program length commercials. These programmers often \"pay\" for
carriage \-- either directly or through some form of revenue sharing
with the cable operator. Lowering the rates for these programmers could
cause them to simply migrate to leased access from elsewhere on the
cable system because it is less expensive than their current commercial
arrangements. Migrating from one part of the cable platform to another
would not increase programming diversity. I thank my colleagues for
their willingness to examine this issue in a Further Notice.

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

I thank the Bureau for their work on this complex subject, and hope that
the rules we adopt will help at long last to turn leased access into a
viable and diverse outlet for independent programming.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: Leased Commercial Access, and Development of Competition and
Diversity in Video Programming Distribution and Carriage (MB Docket No.
07-42)*

I am pleased to support this item which deals with the Commission's
commercial leased access rules.

When I requested that we launch this proceeding to reform the current
leased access regime, I did so for two reasons.  First, I had heard that
many small and independent creators of local and diverse programming
could not gain access to and carriage on their local cable systems.  And
second, while Congress explicitly required the Commission to ensure that
leased access opportunities remain available and viable, our rules and
practices over the years have made leased access unnecessarily
burdensome and, in some instances, prohibitively expensive for many
independent programmers.

I am, therefore, pleased that the instant *Order* addresses these
problems. As the initiator of this proceeding, I would like to thank my
colleagues for supporting this thoughtful item. I particularly would
like to thank Chairman Martin for heeding my request and following
through on our agreement in the *Adelphia* transaction to bring this
proceeding to a final order. Given that the Commission's experience with
managing leasing arrangements in media is limited to commercial cable
leased access, the rules we consider and implement here today should set
the baseline standard for any other media leasing arrangement
contemplated by the Commission.

Today's *Order* makes remarkable improvements to our commercial cable
leased access rules. We first adopt uniform customer service standards
to remedy the lack of a consistent and fair treatment of actual and
interested leased access programmers. We then reduce the potential
expense and burden on a programmer associated with filing a complaint
with the Commission about an alleged violation. To ensure that we better
monitor leased access practices and the effects of our rules, we adopt
an annual reporting requirement for cable operators and we invite leased
access programmers to comment on the information provided by cable
operators.

As the underlying record shows, the inconsistent and unpredictable
treatment of leased access programmers has impeded their ability to
lease cable channels. Considering that many part-time leased programmers
are small, community-based operations, the difficulty to obtain basic
information about leased access opportunities can create an unnecessary
barrier of entry. I believe that the Commission must take appropriate
steps to facilitate the entry of new and diverse programmers in a manner
that has been specifically authorized by Congress.

Leased access programmers should be able to request and then obtain
information about rates, terms and conditions in a timely manner. Today,
we reaffirm that cable operators have an obligation to reasonably
accommodate these requests. Accordingly, we conclude that within three
business days of an initial inquiry, a cable operator must provide the
prospective leased access programmer with information about, for
example, the leased access process and procedures for that specific
cable system, the availability of time and leased access channels, the
attendant schedule and calculation of rates, and the acceptable methods
of delivering leased access programming to the cable operator.

Providing this information to prospective leased programmers does not
impose an undue burden on cable operators. In fact, I believe that the
service standards we adopt today should simplify the entire leasing
process, as all leased access inquires will be treated in a predictable
and timely manner. The new and clear standards will set the expectations
of prospective and current leased access programmers, and cable
operators. Moreover, the information that programmers receive after
their initial inquiry should empower them with sufficient information to
determine whether commercial leasing is an opportunity worth pursuing.

In addition to new consumer service standards, I believe this *Order*
improves the complaint process in certain important respects. As I said
in the underlying Notice of Proposed Rule Making, "there will always be
good faith disputes between cable operators and programmers, \[but\] the
Commission does not have mechanisms in place to ensure prompt resolution
of complaints. It should not take the Media Bureau nearly two years to
respond to a programmer's leased access complaint.[^433]" Hence,
pursuant to this *Order*, we will codify a rule that requires the Media
Bureau to resolve all leased access complaints within 90 days of the
close of the pleading cycle, which requires the respondent to reply to a
complaint within 30 days. Also, we reduce the expense of filing a
complaint by eliminating the requirement for a complainant to obtain a
determination of the cable operator's maximum permitted rate from an
independent accountant before filing a complaint alleging a rate
violation. Finally, the expanded discovery rules we adopt in this
*Order* will enable leased access programmers to support complaints of
alleged rule violations or unfair treatment.

While I am pleased with the outcome of this Order, I would have
preferred that we first solicited meaningful public comment and review
on the new rate methodology adopted here. To be frank, the methodology
was invented by staff out of whole cloth without sufficient public
input, independent review or any transparency. I received much of the
details only late last week, right before the Thanksgiving holiday and
right after Sunshine closed. As with any new pricing formula, its
reliability and accuracy are directly correlated to the extent to which
it has undergone rigorous examination and independent review. To my
knowledge, neither has occurred in this case. Indeed, good government
cautions us to seek comment before adopting a new, industry price
regulation. All stakeholders have a right to see and comment on the
specific formula on which we intend to rely. To be sure, I actually like
the outcome -- a maximum leased access rate of 10 cents per subscriber
per month for any cable system. But as an expert governmental agency, it
is incumbent upon us to provide regulatees with a process that is fair
and open, and inspires confidence in the American people and the courts.

I am, however, satisfied that we do not apply this new rate methodology
on programmers that predominately transmit sales presentations or
program length commercials, but rather seek comment on these issues. It
is also appropriate that we provide a 90 day delay in the effective date
of the new formula so that all parties can have opportunity to inform us
of any concerns or file petitions for reconsideration. This remedies the
deficient notice sufficiently for me to support the item.

I am thankful to my fellow Commissioners and Chairman Martin for
ensuring that this item was finalized within a reasonable period of
time. I also want to thank the commenters for offering real solutions to
this process and providing insight needed to ascertain the breadth of
this item and the intricacies of how the process should work. I am
hopeful that this *Order* today will help us reach both Congress' and
our goal in having more diverse cable programming.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

*Re: Leased Commercial Access; Development of Competition and Diversity
in Video Programming Distribution and Carriage*

Allowing programmers to lease time on cable channels is yet another way
the FCC encourages program diversity and the dissemination of a variety
of viewpoints. It also allows local programmers to have access to
cable's audience for the promotion of products and services, as well as
airing of local community events. We appreciate the cooperation of cable
operators in making these channels available.

In light of the concerns that have been raised with regard to the prices
charged by cable for the use of these channels, I believe we should seek
comment on whether our maximum allowable rate should be changed from the
average implicit fee to the marginal implicit fee. Just as we did in
1996, when we initially lowered the maximum allowable rate for carriage,
we should ask that interested parties analyze the advantages and
disadvantages of this new rate formula. We should also seek input on
whether lowering the maximum allowable rate will increase the number of
leased access programmers on cable's systems.

Because we fail to seek comment on these important changes, I
respectfully dissent.

**DISSENTING STATEMENT OF**

**COMMISSIONER ROBERT M. MCDOWELL**

*Re: Leased Commercial Access: Development of Competition and Diversity
in Video Programming Distribution and Carriage (MB Docket No. 07-42)*

Rather few programmers have sought carriage on cable systems through
leased access, which was designed by Congress in 1984 to bring about
diversity of information sources. By all accounts, there are two primary
reasons that leased access has not been more successful. First, leased
access may not be economically viable for the vast majority of
programmers. Outside of leased access, cable operators generally pay
programmers per-subscriber fees for the programming they choose to
carry. Those programmers rely on these fees, as well as advertising
revenues, to generate enough revenue to develop programming for a
full-time channel. Leased access programmers, however, must pay cable
operators for access to channels. Therefore, the economics of leasing
result in limited use by traditional, full-time programmers. The record
indicates that generally, part-time programmers producing home shopping
content, infomercials, adult content and, ironically, certain types of
religious programs are attracted to this business model because they
have other means of generating revenue from their viewers. Leased access
channels are also used full-time by low-power broadcast stations, which
transmit their programming over-the-air but do not have must-carry
rights for cable carriage.

Secondly, outside of the leased access regime, the marketplace has
generated an incredible amount of programming diversity as more
programmers have created compelling content from all different genres of
entertainment, news, sports and culture and gained cable carriage
through negotiated deals. Competition has transformed the amount and
content of program offerings available to cable subscribers to a degree
not envisioned in 1984.

Against this backdrop, the majority today attempts to transform leased
access into something that economic reality has shown it cannot be: a
viable business model for independent and niche programmers to obtain
distribution for their channels. The majority lowers leased access rates
dramatically, in contravention of both the law and prior Commission
findings. Congress mandated that any leased access rate we establish
must be "at least sufficient to assure that such use will not adversely
affect the operation, financial condition, or market development of the
cable system." Congress also required that cable systems set aside
public, educational and governmental access channels for free to the
users. Congress, however, did not intend that cable operators subsidize
commercial leased access users.

Moreover, the Commission developed the current "average implicit fee"
methodology in 1997 after extensive review of the economic studies and
policy discussions submitted at that time. The record in this
proceeding, and our consideration of it, do not come close to reaching
that level of careful analysis. The least we could have done was to seek
comment on any changes to the current rate formula. This Order even
fails to do that. The result of this radical change in rates, as many
independent programmers have stated in the record, will be the opposite
of what is intended. The result will be a loss in the diversity of
programming as cable operators are forced to drop lesser-rated channels
in favor of a flood of leased access requests seeking distribution
distorted below cost and market rates.

Perhaps to ameliorate this result, the majority concludes that the new
rate methodology will not apply to programmers that predominantly
transmit sales presentations, or program-length commercials, and seeks
additional public comment on related issues. This too is extremely
problematic. I cannot fathom how distinguishing programmers based on the
content they deliver can be constitutional. Perhaps the courts will
guide us.

The majority goes on to: adopt "customer service standards," expedite
our process for adjudicating complaints, expand discovery, and require
reporting of statistics -- all additional regulations aimed at propping
up a regulatory regime that is past its prime. I sympathize with
programmers, particularly Class A television stations, who struggle for
distribution. I also am concerned about programmers "getting the
run-around" or being otherwise dissuaded from leasing cable channels. I
strongly encourage cable operators to make their leased access rates and
terms available to programmers who request information as expeditiously
and transparently as possible. The rules set forth in this Order,
however, go far beyond what is needed.

Accordingly, I respectfully dissent to this Report and Order.

[^1]: 47 C.F.R. §§ 76.970 through 76.977.

[^2]: 47 C.F.R. §§ 76.1300 through 76.1302.

[^3]: *Leased Commercial Access; Development of Competition and
    Diversity in Video Programming Distribution and Carriage,* Notice of
    Proposed Rule Making, MB Docket No. 07-42, 22 FCC Rcd 11222 (rel.
    Jun. 15, 2007) ("*NPRM*"). A summary of the *NPRM* was published in
    the Federal Register on July 18, 2007. *See* 72 FR 39370 (Jul. 18,
    2007). Comment and reply comment deadlines were extended to
    September 11, 2007 and October 12, 2007, respectively. *See Order
    Granting Extension of Time for Filing Comments and Reply Comments*,
    DA 07-3736 (rel. Aug. 24, 2007).

[^4]: The Commission will address program carriage issues in a separate
    order. In the *NPRM*, the Commission consolidated issues concerning
    the Commission's programming diversity rules that were raised in the
    context of the *Adelphia Order,* the 2005 Video Competition
    proceeding, informal complaints from the Leased Access Programmers'
    Association and The America Channel, and through the Commission's
    formal complaint process. *See Applications for Consent to the
    Assignment and/or Transfer of Control of Licenses, Adelphia
    Communications Corporation, Assignors to Time Warner Cable, Inc., et
    al*., Memorandum Opinion and Order, MB Docket No. 05-192, 21 FCC Rcd
    8203 (2006) ("*Adelphia Order*") and *Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming, Twelfth Annual Report*, MB Docket No. 05-255, 21 FCC
    Rcd 2503, 2507 ¶ 12, 2512-2515 ¶¶ 31-36 (2006) ("*Twelfth Annual
    Report*"). Approximately 70 leased access petitions have been filed
    since our 1997 rule changes. The majority of leased access
    complaints allege that the cable company has refused to provide rate
    information or is charging excessive rates and has refused to carry
    programming. Other issues concern insurance requirements and
    technical support. Most recently, the Commission discussed
    establishing an expedited process for program carriage complaints in
    lieu of the program carriage arbitration condition contained in the
    *Adelphia Order. See Comcast Corporation, Petition for Declaratory
    Ruling that The America Channel is not a Regional Sports Network*,
    File No. CSR-7108, FCC 07-172 (rel. Sept. 25, 2007) ("*TAC Order*");
    *see also Adelphia Order*, 21 FCC Rcd 8203, 8287 at ¶ 190.

[^5]: The Commission adopted leased access rules in its *Report and
    Order and Further Notice of Proposed Rule Making*, 8 FCC Rcd 5631
    (1993) ("*Rate Order*"); *Order on Reconsideration of the First
    Report and Order and Further Notice of Rulemaking*, 11 FCC Rcd 16933
    (1996) ("*Reconsideration Order*"); and *Second Report and Order and
    Second Order on Reconsideration of the First Report and Order*, 12
    FCC Rcd 5267 (1997) ("*Second Report and Order*").

[^6]: Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98
    Stat. 2779 (1984), 47 U.S.C. § 521 *et seq*.

[^7]: Communications Act §§ 612(a), 612(b)(1) (codified at 47 U.S.C. §§
    532(a), 532(b)(1)).

[^8]: Communications Act § 612(c)(4)(A )(i), (ii), (iii) (codified at 47
    U.S.C. §§ 532(c)(4)(A)(i), (ii), (iii)).

[^9]: 47 U.S.C. § 532(c)(1).

[^10]: *Second Report and Order*, 12 FCC Rcd 5267, 5283 (1997).

[^11]: *See* 47 C.F.R. §§ 76.970 - 76.977. Section 612 is codified at 47
    U.S.C § 532. The Commission's rate rules were upheld by the D.C.
    Circuit Court of Appeals. *See ValueVision, Inc. v. FCC*, 149 F.3d
    1204 (D.C. Cir. 1998).

[^12]: 47 U.S.C. § 532(b)(4).

[^13]: 47 C.F.R. § 76.977.

[^14]: 47 C.F.R. § 76.971(d); 47 C.F.R. § 76.971(c).

[^15]: 47 C.F.R. § 76.971(c).

[^16]: *NPRM*, 22 FCC Rcd 11222, ¶¶ 7-11.

[^17]: In calculating a system's capacity for purposes of 47 U.S.C. §
    532 (b), "activated channels" includes all commercial and
    noncommercial broadcast, public, educational, governmental, and
    leased access channels carried. *See* *Implementation of Sections 11
    and 13 of the Cable Television Consumer Protection and Competition
    Act of 1992, Horizontal and Vertical Ownership Limits,
    Cross-Ownership Limitations, and Anti-trafficking Provisions*, 8 FCC
    Rcd 8565, 8588-89 ¶ 54 (1993). The Commission has also defined the
    term "activated channel" in the digital must carry context. *See
    Carriage of Digital Television Broadcast Signals, Amendments to Part
    76 of the Commission Rules, Implementation of the Satellite Home
    Viewer Improvement Act of 1999, Local Broadcast Signal Carriage
    Issues, Application of Network Non-Duplication, Syndicated
    Exclusivity and Sports Blackout Rules to Satellite Retransmission of
    Broadcast Signals*, 16 FCC Rcd 2598, 2614-16 ¶¶ 39-41 (2001);
    *Second Report and Order and First Order on Reconsideration*, 20 FCC
    Rcd 4516 (2005). Channel capacity can be calculated by taking the
    total usable activated channel capacity of the system in megahertz
    and dividing it by three. One third of this capacity is the limit on
    the amount of system spectrum that a cable operator must make
    available for commercial broadcast signal carriage purposes.

[^18]: *NPRM*, 22 FCC Rcd 11222, ¶¶ 7-11.

[^19]: Community Broadcasters Association, *et al*. *ex parte* letter
    dated November 16, 2007; CaribeVH Comments at 2, *et seq*.; Engle
    Comments at 3; iNFO Comments at 1, *et seq*.; LAPA Comments at 3,
    *et seq*.; MAP Comments at 2; PMI Comments at 2; PBC Comments at 1;
    RMI Comments at 3; Shop NBC Comments at 6.

[^20]: *See* PBC Comments at 1.

[^21]: *See* CaribeVH Comments at 2.

[^22]: *See* MAP Comments at 11-12.

[^23]: *See* Engle Comments at 4.

[^24]: *See* NCTA Comments at 8-9.

[^25]: *See* TWC Comments at 10; *see, e.g.,* *United Multimedia
    Productions, Inc. and Hamptons Video Guide, Inc. v. CSC
    Acquisition-New York, Inc*., Memorandum Order and Opinion, 16 FCC
    Rcd 5234, ¶ 9 (CSB 2001); *Second Report and Order*, 12 FCC Rcd
    5267, ¶¶ 112-115.

[^26]: *See* Comcast Reply Comments at 9.

[^27]: *See* Appendix B (adopting 47 C.F.R. § 76.972(a)(1)).

[^28]: *See* Appendix B (adopting 47 C.F.R. § 76.972(a)(2)).

[^29]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(1)).

[^30]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(2)).

[^31]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(3)).

[^32]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(4)).

[^33]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(5)).

[^34]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(6)).

[^35]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(7)).

[^36]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(8)).

[^37]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(9)).

[^38]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(10)).

[^39]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)(11)).

[^40]: *See* Appendix B (adopting 47 C.F.R. § 76.972(f)).

[^41]: RMI Comments at 3.

[^42]: CBA Comments at 3.

[^43]: NCTA Comments at 8.

[^44]: We retain the 30-day response period currently provided in
    Section 76.970(i)(2) of the Commission's Rules for cable systems
    that have been granted small system special relief. *See* Appendix B
    (adopting 47 C.F.R. § 76.972(g)). In the *Second Report and Order*,
    we adopted this longer response period to minimize burdens on small
    systems while still ensuring that potential leased access
    programmers receive the required information in a timely fashion.
    *See Second Report and Order*, 12 FCC Rcd 5267, 5331 at ¶ 130. For
    these purposes, systems subject to small system relief are systems
    that either: (i) Qualify as small systems under § 76.901(c) and are
    owned by a small cable company as defined under § 76.901(e); or (ii)
    Have been granted special relief. These rules remain unchanged here.

[^45]: *See* CaribeVH Comments at 2.

[^46]: *See* Engle Comments at 4.

[^47]: *See* PMI Comments at 2.

[^48]: *Id*.

[^49]: *Id* at 3.

[^50]: CaribeVH Comments at 12.

[^51]: NCTA Reply Comments at 15 (citing *Roberts v. Houston Division of
    Time Warner Entertainment Co*., 11 FCC Rcd. 5999, 6005-6007 (CSB
    1996)).

[^52]: CaribeVH Comments at 12.

[^53]: *Id*. at 12-13.

[^54]: *See* *id*. at 13.

[^55]: *See* MAP Comments at 13, 15.

[^56]: *See* CaribeVH Comments at 3.

[^57]: 47 C.F.R. § 76.970(i)(1)(i).

[^58]: CaribeVH Comments at 3.

[^59]: MAP Comments at 15.

[^60]: Shop NBC Comments at 16.

[^61]: *See* iNFO Comments at 1, 2.

[^62]: *See id*. at 2.

[^63]: *See id*.

[^64]: 47 C.F.R. § 76.971(a)(1).

[^65]: *See* PBC Comments at 1; CaribeVH Comments at 2; Engle Comments
    at 4; PMI Comments at 2.

[^66]: NCTA Comments at 12.

[^67]: 47 U.S.C. § 532.

[^68]: *See* CaribeVH Comments at 2-3; Engle Comments at 4; PMI Reply
    Comments at 2; iNFO Comments at 1.

[^69]: MAP Comments at 13, 15.

[^70]: NCTA Reply Comments at 9.

[^71]: *See id*.

[^72]: *See infra* ¶¶ 35-49 (discussing the revised leased access rate
    calculation).

[^73]: 47 C.F.R. § 76.971(c) (emphasis added).

[^74]: *Second Report and Order*, 12 FCC Rcd at 5324, ¶ 114.

[^75]: *See* RMI Comments at 4.

[^76]: *See id*.

[^77]: MAP Comments at 12; *see* iNFO Comments at 2.

[^78]: CaribeVH Comments at 10.

[^79]: NCTA Comments at 14.

[^80]: Comcast Comments at 16.

[^81]: We acknowledge that there are various programming guides and
    services. For example, on many analog tiers of service cable
    operators provide a dedicated programming guide channel in which
    current and upcoming programming choices are provided through a
    continuous on-screen scroll. In addition, on most digital tiers of
    service, subscribers have available an electronic programming guide
    which provides extensive program information, search capability and
    channel navigation functions. The rules we adopt today apply to all
    programming guides however provided to the subscriber, including
    printed formats.

[^82]: *See generally* MAP Comments at 11.

[^83]: MAP Reply Comments at ii; *see* RMI Comments at 4. For example,
    RMI contends that one cable operator requires each program to have
    its own playback deck, and although programmers are not required to
    lease the deck, they are required to pay a technical fee of \$51.49
    each time a tape is inserted into the machine in addition to the
    maximum applicable air time rates for that time slot. RMI was told
    that this fee is "used to reimburse for staff, equipment usage, and
    studio costs." According to RMI's estimated calculations, at that
    rate, it only takes five tape insertions before the equipment
    investment is completely paid in full. RMI Comments at 4. According
    to iNFO, one operator required nearly one year of lease payments to
    secure the lease, and that it was required to buy approximately
    \$25,000 worth of equipment for signal modulation before its channel
    could be cable-cast. iNFO Comments at 2.

[^84]: CBA Comments at 3-4.

[^85]: *See* NCTA Comments at 15-16 (citing *Engle Broadcasting v.
    Comcast of Southern N.J*., 16 FCC Rcd. 17650, 17653 (2001)).

[^86]: Comcast Comments at 18.

[^87]: MAP Comments at 13.

[^88]: PMI Comments at 4.

[^89]: CaribeVH Comments at 6.

[^90]: NCTA Comments at 11.

[^91]: Comcast Comments at 19.

[^92]: CaribeVH Comments at 4; Engle Comments at 4; iNFO Comments at 2;
    LAPA Comments at 3; MAP Comments at 16; PMI Comments at 3; PBC
    Comments at 1; RMI Comments at 3, *et seq*.; Shop NBC Comments at 2.

[^93]: *See* CaribeVH Comments at 9-10.

[^94]: *See* CaribeVH Comments at 14; Combonate Comments at 1-4; LAPA
    Comments at 5; MAP Comments at 15; Combonate Reply Comments at 4.

[^95]: *See* CaribeVH Comments at 8-9; CBA Comments at 4 n.8; Engle
    Comments at 4; HTV Comments at 3; LAPA Comments at 3; PBC Comments
    at 1; RMI Comments at 11-12; PBC Reply Comments at 2.

[^96]: *See* LAPA Comments at 9; PBC Comments at 1.

[^97]: *See* CBA Comments at 3-5; RMI Comments at 4-14; RMI Reply
    Comments at 2.

[^98]: *See* CaribeVH Comments at 7-8; LAPA Comments at 5; ShopNBC
    Comments at 16-17.

[^99]: *See* MAP Comments at 11.

[^100]: *See* CaribeVH Comments at 10; iNFO Comments at 2; MAP Comments
    at 11-12.

[^101]: *See* MAP Comments at 2; RMI Comments at 4-6; RMI Reply Comments
    at 2.

[^102]: *See* CBA Comments at 3; RMI Comments at 6-10; RMI Reply
    Comments at 2.

[^103]: *Rate Order*, 8 FCC Rcd at 5936; *Second Report and Order*, 12
    FCC Rcd at 5309.

[^104]: *See Campbell v. TW Cable -- St. Augustine*, CSR 5234-L (CSB
    1998).

[^105]: *See Second Report and Order*, 12 FCC Rcd at 5323

[^106]: *Id*.

[^107]: *See id*.

[^108]: *See United Productions v. Mediacom Communications Corporation*,
    CSR 6336-L, Order, 22 FCC Rcd 1224 (MB 2007).

[^109]: *See* RMI Comments at 4.

[^110]: *See* 47 C.F.R. §§ 76.1603(b), (c); *see also* NCTA Reply
    Comments at 12 (noting that cable operators must have sufficient
    time to provide franchising authorities and customers of changes in
    channel line-ups).

[^111]: CaribeVH argues for time limits for launch dates, such as no
    later than thirty-five (35) days after the execution of a contract
    in the event there is a thirty (30) day customer notice requirement,
    and in other cases ten (10) days and no later than sixty (60) days
    from a bona fide request for information by the leased access
    programmer. *See* CaribeVH Comments at 12. *But see* NCTA Reply
    Comments at 12 n.37 (noting that not all potential leased access
    programmers that request information eventually agree to the terms
    for carriage, thereby making a launch date within 60 days of a
    request for information disruptive for cable operators).

[^112]: *See* CaribeVH Comments at 2; Engle Comments at 4; iNFO Comments
    at 1; PMI Comments at 2; PBC Comments at 1.

[^113]: *See* Appendix B (adopting 47 C.F.R. § 76.972(c)).

[^114]: *See* Appendix B (adopting 47 C.F.R. § 76.972(e)).

[^115]: Although the Commission's forfeiture guidelines establish a
    baseline forfeiture of \$7,500.00 per day for violation of the
    leased access rules, we find at this time that a \$500.00 per day
    penalty should be adequate to encourage prompt compliance with the
    customer services obligations. *See* 47 C.F.R. § 1.80.

[^116]: *See* 47 C.F.R. § 76.975.

[^117]: *See* 47 U.S.C. § 503.

[^118]: 47 C.F.R. § 76.971(a)(1).

[^119]: 47 C.F.R. § 76.971(e).

[^120]: Communications Act § 612(a), 47 U.S.C. § 532(a).

[^121]: Communications Act § 612(c)(1), 47 U.S.C. § 532(c)(1).

[^122]: While we do not believe that our method for determining leased
    access rates will result in cable operators experiencing any loss in
    net revenue, the relevant statutory provision does not require such
    a finding. As explained above, Section 612(c)(1) provides that the
    "prices, terms and conditions" of use must be "at least sufficient
    to assure that such use will not adversely affect the operation,
    financial condition, or market development of the cable system." We
    interpret this provision to restrict "prices, terms, and conditions"
    of leased access use that materially affect the financial health of
    a cable system. We do not interpret the provision to require that
    cable operators experience no loss in revenue whatsoever as a result
    of leased access use. Thus, even if we were to conclude that our
    method for determining leased access rates would have some impact on
    cable operators' revenue, we would still adopt this method because
    we are confident that any impact on operators' revenue would not be
    of sufficient magnitude to materially affect the financial health of
    cable systems.

[^123]: *Second Report and Order*, 12 FCC Rcd at 5272, ¶ 8.

[^124]: Report on Cable Industry Prices, *Implementation of Section 3 of
    the Cable Television Consumer Protection and Competition Act of
    1992: Statistical Report on Average Rates for Basic Service, Cable
    Programming Service, and Equipment*, 21 FCC Rcd 15087 at. ¶ 9 (2006)
    ("2006 Cable Industry Prices Report")

[^125]: Shop NBC at 4. *See also* Ex parte presentation of Community
    Broadcasters Association at 2 (Jul. 20, 2007) (claiming the average
    implicit fee places leased access beyond the reach of most parties).

[^126]: WBGN at 2.

[^127]: *See* S. Rep. No. 102-92 at 79 (1991) ("it is vital that the FCC
    use its authority to ensure that these channels are a genuine outlet
    for programmers")

[^128]: *First Report and Order*, 8 FCC Rcd at 5936, ¶ 491. *See also*
    *Second Report and Order*, 12 FCC Rcd at 5282, ¶ 31 ("We will,
    however, continue to monitor the availability of leased access
    channels and may revisit this issue if it appears that the average
    implicit fee formula no longer reflects a reasonable rate").

[^129]: *NPRM,* 22 FCC Rcd 11222, ¶ 8.

[^130]: *See e.g*., MAP Comments at 13 (proposing actual cost method).

[^131]: Shop NBC Comments at 9, MAP Comments at 13, Engle Broadcasting
    at 2.

[^132]: *Second Report and Order*, 12 FCC Rcd at 5294, ¶ 53.

[^133]: Shop NBC Comments at 5.

[^134]: H.R. 98-934 at 47. *See also* Second Report and Order, 12 FCC
    Rcd at 5273, ¶ 10.

[^135]: The "average implicit fee" is calculated based on the average
    value of all of the channels in a tier instead of the value of the
    channels most likely to be replaced.

[^136]: For the purposes of defining the price of a tier and the
    channels on the tier we adopt the incremental approach in cases
    where the cost and channels of one tier are implicitly incorporated
    into larger tiers. For example, when the expanded basic tier
    incorporates the basic tier, the expanded basic tier price is the
    retail price of the expanded basic tier less the retail price of the
    basic tier and the channels on the expanded basic tier are those
    that are not available on the basic tier. A similar adjustment is
    required of other tiers which are not sold on an incremental basis.

[^137]: It is our understanding that some programming contracts specify
    a single rate for a group, or bundle, of channels. In these cases,
    for the purposes of determining the per subscriber affiliation fee
    for one of the bundled channels, the fee in the contract shall be
    allocated in its entirety to the highest rated network in the
    bundle.

[^138]: The methods are detailed in Appendix D.

[^139]: *See* Appendix B (adopting 47 C.F.R. §§ 76.975(d), (g)).

[^140]: 47 C.F.R. § 76.975(b).

[^141]: *See* MAP Comments at 4; *see also* CBA Comments at 4; PBC
    Comments at 2; LAPA Reply Comments at 4; PBC Reply Comments at 1.

[^142]: *See* CBA Comments at 4; MAP Comments at 3; Engle Reply Comments
    at 2.

[^143]: *See* MAP Comments at 3; PBC Reply Comments at 1.

[^144]: *See* MAP Comments at 17-18.

[^145]: *See* CaribeVH Comments at 11; PBC Comments at 3.

[^146]: *See* CaribeVH Comments at 11; PBC Comments at 3.

[^147]: *See* TWC Comments at 22-23; Comcast Reply Comments at 20; NCTA
    Reply Comments at 9; Verizon Reply Comments at 9-10.

[^148]: *See* Comcast Comments at 15, 35; Comcast Reply Comments at 20.

[^149]: *See* TWC Comments at 22-23.

[^150]: *See* TWC Comments at 25.

[^151]: *See* TWC Comments at 25.

[^152]: *See* Comcast Reply Comments at 21; NCTA Reply Comments at 10.

[^153]: *See* Appendix B (adopting 47 C.F.R. § 76.975(d)).

[^154]: *See* Appendix B (adopting 47 C.F.R. § 76.975(g)).

[^155]: *See* Appendix B (adopting 47 C.F.R. § 76.975(d)).

[^156]: *See* Appendix B (adopting 47 C.F.R. § 76.975(h)). As part of
    the remedy phase of the leased access complaint process, the Media
    Bureau will have discretion to request that the parties file their
    best and final offer proposals for the prices, terms, or conditions
    in dispute. The Commission will have the discretion to adopt one of
    the proposals or choose to fashion its own remedy. *See* Appendix B
    (adopting 47 C.F.R. § 76.975(h)(4)).

[^157]: 47 C.F.R. § 76.975(b).

[^158]: *See* *Second Report and Order*, 12 FCC Rcd at 5319, ¶ 103.

[^159]: *See* CaribeVH Comments at 11.

[^160]: *See* PBC Comments at 3; *see also* CaribeVision Comments at 11
    ("Unfortunately, most leased access programmers lack the money and
    time to engage in this process and are therefore left at the mercy
    of the cable operator.").

[^161]: *See* *Second Report and Order*, 12 FCC Rcd at 5319, ¶ 103.

[^162]: *See* Appendix B (adopting 47 C.F.R. § 76.975(g)).

[^163]: *See* Appendix B (adopting 47 C.F.R. § 76.975(e)).

[^164]: *See* Appendix B (adopting 47 C.F.R. § 76.975(f)).

[^165]: *See* Appendix B (adopting 47 C.F.R. § 76.975(e)).

[^166]: *See* Appendix B (adopting 47 C.F.R. § 76.975(e)).

[^167]: *See id.*

[^168]: *See id*.

[^169]: *See id*.

[^170]: *See* *Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992;*

    *Development of Competition and Diversity in Video Programming
    Distribution: Section 628(c)(5) of the Communications Act: Sunset of
    Exclusive Contract Prohibition, Report and Order*, 22 FCC Rcd 17791,
    17851-56, ¶¶ 95-100 (2007) ("*Program Access Order*"); *see also* 47
    U.S.C. § 532(c)(4)(A)(iii).

[^171]: *See* TWC Comments at 22-23; Comcast Reply Comments at 20; NCTA
    Reply Comments at 9; Verizon Reply Comments at 9-10.

[^172]: *See* MAP Comments at 17.

[^173]: *See* 47 C.F.R. §§ 76.7(e), (f).

[^174]: Indeed, in such circumstances, failure to produce the subject
    documents would also be a violation of a Commission Order.

[^175]: *See* 47 C.F.R. §§ 76.7(e), (f).

[^176]: *See* Appendix B (adopting 47 C.F.R. § 76.975(e)).

[^177]: *See* 47 C.F.R. § 76.9.

[^178]: *See* Appendix B (adopting 47 C.F.R. § 76.975(e)).

[^179]: *Id.*

[^180]: *Id*.

[^181]: *Id*.

[^182]: *See, e.g.,* 47 C.F.R. § 0.457(d)(iv) (treating as presumptively
    privileged and confidential "programming contracts between
    programmers and multichannel video programming distributors"). In
    this regard, we note that in a recent program access dispute, the
    Media Bureau expeditiously granted a complainant's request for
    discovery and issued a protective order to safeguard the highly
    confidential discovery subject matter. *See* *EchoStar Satellite
    L.L.C. v. Home Box Office, Inc*., CSR 7070-P (filed Nov. 15, 2006).

[^183]: *See* Appendix B (adopting 47 C.F.R. § 76.975(f)); *see also*
    Appendix C; *Program Access Order,* 22 FCC Rcd at 17894-99, Appendix
    E.

[^184]: Confidential information is information submitted to the
    Commission which the submitting party has determined in good faith:
    (i) constitutes trade secrets and commercial or financial
    information which is privileged or confidential within the meaning
    of Exemption 4 of the Freedom of Information Act, 5 U.S.C. §
    552(b)(4); and (ii) falls within the terms of Commission Orders
    designating the items for treatment as confidential information.
    *See Program Access Order*, 22 FCC Rcd at 17856, ¶ 100 n.463. The
    Commission may determine that all or part of the information claimed
    as confidential information is not entitled to such treatment. *See*
    47 C.F.R. § 76.9 (general procedures for protecting confidentiality
    of information).

[^185]: Before an authorized representative may obtain access to
    confidential information, he or she must execute a declaration which
    states that under penalty of perjury he or she has agreed to be
    bound by the Protective Order. The declaration states that the
    reviewing party shall not disclose the confidential information to
    anyone except in accordance with the terms of the Protective Order
    and that the confidential information shall be used only for
    purposes of the leased access proceeding. *See* Appendix C.

[^186]: Our definition of "competitive decision-making" as such is
    consistent with federal court cases. *See, e.g*., *U.S. Steel Corp.
    v. United States*, 730 F.2d 1465, 1468 n.3 (Fed. Cir. 1984) (noting
    that the "competitive decision-making" is a shorthand for a
    counsel's activities, association, and relationship with a client
    that are such as to involve counsel's advice and participation in
    any or all of the client's decisions \... made in light of similar
    or corresponding information about a competitor); *see also Brown
    Bag Software v. Symantec Corp*. 960 F.2d 1465, 1470 (9th Cir. 1992),
    *cert. denied* 506 U.S. 869 (1992) (defining "competitive
    decision-making" as advising on decisions about pricing or design
    made in light of similar or corresponding information about a
    competitor). This terminology was more recently discussed in
    *Intervet, Inc. v. Merial Ltd*., 241 F.R.D. 55 (D.D.C. 2007) as
    follows: "Thus, U.S. Steel would preclude access to information to
    anyone who was positioned to advise the client as to business
    decisions that the client would make regarding, for example,
    pricing, marketing, or design issues when that party granted access
    has seen how a competitor has made those decisions. *E.g.,* *Brown
    Bag Software*, 960 F.2d at 1471 (counsel could not be expected to
    advise client without disclosing what he knew when he saw
    competitors' trade secrets as to those very topics); *Matsushita
    Elec. Indus. Co v. United States*, 929 F.2d 1577, 1579-80 (Fed.Cir.
    1991) (determination by agency forbidding access was arbitrary when
    lawyer precluded from access testified that he was not involved in
    pricing, technical design, selection of vendors, purchasing and
    marketing strategies); *Volvo Penta of the Americas, Inc. v.
    Brunswick Corp*., 187 F.R.D. 240, 242 (E.D.Va. 1999) (competitive
    decision-making involves decisions "that affect contracts,
    marketing, employment, pricing, product design" and other decisions
    made in light of similar or corresponding information about a
    competitor); *Glaxo Inc. v. Genpharm Pharm., Inc*., 796 F.Supp. 872,
    876 (E.D.N.C. 1992) (improper to preclude in-house counsel from
    access to confidential information because he gave no advice to his
    client about competitive decisions such as pricing, scientific
    research, sales, or marketing)." *Id*. at 57-58.

[^187]: *See* Appendix C*, Standard Protective Order and Declaration for
    Use in Section 612 Commercial Leased Access Proceedings.*

[^188]: *See* Appendix B (adopting 47 C.F.R. § 76.975(f)).

[^189]: *See* Appendix B (adopting 47 C.F.R. § 76.978(a)).

[^190]: *See* *NPRM*, 22 FCC Rcd 11222, ¶ 7. In his Separate Statement,
    Commissioner Adelstein asked commenters to provide information
    regarding the rates charged for leased access, whether they are
    reasonable, how rate variances are justified, the rate formulas
    effect on anticompetitive practices, its effect on diversity,
    whether the current rate structure acts as a deterrent, and whether
    the current methodology is appropriate for digital cable, VOD, and
    IPTV services. *See* Separate Statement of Commissioner Jonathan S.
    Adelstein, MB Docket No. 07-42 (Jun. 15, 2007).

[^191]: *See* CaribeVision Holdings Comments at 2-3, 5; CBA Comments at
    1; Combonate Media Group Comments at 2; LSPA Comments at 6; PBC
    Comments at 1; Reynolds Media Comments at 2-3; Shop NBC Comments at
    3-4; Reynolds Media Reply Comments at 1-2.

[^192]: *See* *2006 Video Competition Report*, 21 FCC Rcd 15087 (2006).

[^193]: *See* Comcast Comments at 6.

[^194]: *See* TWC Comments at 14-15.

[^195]: *See id*. Comcast reports that approximately half of the leased
    access time on its systems is used for infomercials or home
    shopping. *See* Comcast Reply Comments at 4.

[^196]: *See* NCTA Comments at 3 n.5 (citing *2006 Video Competition
    Report*, 21 FCC Rcd 15087 (2006)).

[^197]: *See* Appendix B (adopting 47 C.F.R. § 76.978(a)).

[^198]: Section 623(k) of the Communications Act requires the Commission
    to publish annually a statistical report on average rates for basic
    cable service, cable programming service, and equipment. To
    implement this requirement, the Media Bureau directs certain
    randomly selected cable operators to respond to a Cable Price Survey
    Questionnaire. *See Implementation of Section 3 of the Cable
    Television Consumer Protection and Competition Act of 1992,* Order,
    21 FCC Rcd 1375 (MB 2006). We note that some of the questions listed
    in the leased access annual report may be similar to those appearing
    on the Cable Price Survey Questionnaire. We believe that requiring
    all cable systems to respond to questions pertaining to leased
    access is critical to ensure we have comprehensive data on leased
    access usage and trends.

[^199]: For example, the report due on April 30, 2008, will pertain to
    information for the period from January 1, 2007 through December 31,
    2007.

[^200]: *See* Appendix B (adopting 47 C.F.R. § 76.978(b)).

[^201]: *See* Appendix B (adopting 47 C.F.R. § 76.972(b)).

[^202]: We also reject Comcast's argument that the *NPRM* failed to
    provide the specificity required under the Administrative Procedure
    Act ("APA") and that the Commission must issue another notice before
    adopting final rules. *See* Comcast Comments at 14 n.34; Comcast
    Reply Comments at 39-41. Section 553(b) and (c) of the APA requires
    agencies to give public notice of a proposed rule making that
    includes "either the terms or substance of the proposed rule or a
    description of the subjects and issues involved" and to give
    interested parties an opportunity to submit comments on the
    proposal. *See* 5 U.S.C. §§ 553(b), (c). The notice "need not
    specify every precise proposal which \[the agency\] may ultimately
    adopt as a rule"; it need only "be sufficient to fairly apprise
    interested parties of the issues involved." *See Nuvio Corp. v.
    FCC*, 473 F.3d 302, 310 (D.C. Cir. 2006) (internal quotations
    omitted). In particular, the APA's notice requirements are satisfied
    where the final rule is a "logical outgrowth" of the actions
    proposed. *See* *Public Service Commission of the District of
    Columbia v. FCC*, 906 F.2d 713, 717 (D.C. Cir. 1990). The questions
    raised in the *NPRM*, as well as the concerns mentioned in the
    *Adelphia Order* which resulted in the *NPRM*, regarding the
    adequacy of the current leased access regimes, including the
    complaint process, were sufficient to put interested parties on
    notice that the Commission was considering how to revise the leased
    access rules to effectuate the intent of Congress. *See NPRM,* 22
    FCC Rcd 11222, ¶ 1 (*citing Adelphia Order*, 21 FCC Rcd 8203, 8277,
    ¶ 165; 8367 (Statement of Commissioner Copps); 8371 (Statement of
    Commissioner Adelstein)); *see also Adelphia Order*, 21 FCC Rcd at
    ¶¶ 99, 109, 114, 165, 190-91, 298. Because parties could have
    anticipated that the rules ultimately adopted herein were possible,
    it is a "logical outgrowth" of the original proposal, and adequate
    notice was provided under the APA. *See* *Northeast Maryland Waste
    Disposal Authority v. EPA*, 358 F.3d 936, 951 (D.C. Cir. 2004)
    (discussing APA notice requirements and the "logical outgrowth"
    test).

[^203]: *See* *Time Warner Entertainment Co., L.P. v. FCC*, 93 F.3d 957
    (D.C. Cir. 1996) ("*Time Warner*").

[^204]: *See* Time Warner Comments at 11.

[^205]: *See* Time Warner Comments at 12.

[^206]: *See* Time Warner Comments at 11-12; *see also* Comcast Comments
    at 6-12; Comcast Reply Comments at 2-6.

[^207]: *See* MAP Reply Comments at 3 (*citing Valuevision*, 149 F.3d
    1204).

[^208]: *See Time Warner*, 93 F.3d at 969.

[^209]: *See id*.

[^210]: *See id*.

[^211]: *See id*. (stating that after *Turner,* "promoting the
    widespread dissemination of information from a multiplicity of
    sources" and "promoting fair competition in the market for
    television programming" must be treated as important governmental
    objectives unrelated to the suppression of speech (quoting *Turner
    Broad. Sys., Inc. v. FCC*, 512 U.S. 622 (1994))).

[^212]: *See* Time Warner Reply Comments at 2 (citing *Program Access
    Order*, 22 FCC Rcd 17791, 17838, ¶ 66); *see also* Verizon Reply
    Comments at 3.

[^213]: *See* *Program Access Order*, 22 FCC Rcd 17791, 17810, ¶ 29, and
    17837-38, ¶ 65.

[^214]: *See* Comcast Comments at 10-12; Time Warner Comments at 10.

[^215]: *See* Time Warner Comments at 13 n.51.

[^216]: *See* *U.S. v. Riverside Bayview Homes*, 474 U.S. 121, 128
    (1985) (the Fifth Amendment does not prohibit takings, only
    uncompensated ones).

[^217]: *See* Time Warner Comments at 13 n.51 (*citing Dolan v. City of
    Tigard*, 512 U.S. 374, 386 (1994)).

[^218]: *See Time Warner Entertainment Co. L.P.,* 93 F.3d at 969-71,
    978-79.

[^219]: *Rate Order*, 8 FCC Rcd at 5949.

[^220]: *See* 47 C.F.R. § 1.1206(b), as revised.

[^221]: *See id.* § 1.1206(b)(2).

[^222]: 47 C.F.R. §§ 1.415, 1.419.

[^223]: *See Electronic Filing of Documents in Rulemaking Proceedings*,
    63 FR 24121 (1998).

[^224]: 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).

[^225]: 5 U.S.C. § 605(b).

[^226]: *Id*. § 601(6).

[^227]: *Id*. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register." *Id*. § 601(3).

[^228]: 15 U.S.C. § 632.

[^229]: *See* 5 U.S.C. § 603.

[^230]: *See* 5 U.S.C. § 604.

[^231]: The Paperwork Reduction Act of 1995 ("PRA"), Pub. L. No. 104-13,
    109 Stat 163 (1995) (codified in Chapter 35 of title 44 U.S.C.).

[^232]: The Small Business Paperwork Relief Act of 2002 ("SBPRA"), Pub.
    L. No. 107-198, 116 Stat 729 (2002) (codified in Chapter 35 of title
    44 U.S.C.); *see* 44 U.S.C. § 3506(c)(4).

[^233]: We obtain the number of subscribers to the most widely
    distributed programming networks from SNL Kagan, *Economics of Basic
    Cable Networks, 13th Ed.* (at 36-40) and SNL Kagan, *Media Trends,
    2007 Edition* (at 58). Affiliation fees for these networks are from
    SNL Kagan, *Economics of Basic Cable Networks, 13th Edition* (at
    60-62); SNL Kagan, *Media Trends, 2007 Edition* (at 59); and SNL
    Kagan, *Cable Program Investor*, October 18, 2007 (at 2-3).

[^234]: *Report on Cable Industry Prices*, Table 4, 21 FCC Rcd 15087
    (released December 27, 2006).

[^235]: We base this calculation on the average of the programming cost
    as a percentage of revenue for three large cable operators in 2005.
    The inverse of this number is equal to the mark-up. SNL Kagan,
    *Cable TV Investor: Deals and Finance*, January 31, 2007 at 6.

[^236]: Our information on per subscriber affiliation fees and
    distribution of cable networks is not sufficiently broad to get a
    sufficient number of networks whose weights sum to 33.7. This occurs
    because there is a substantial population of networks with very
    limited distribution. However, in our existing data, we noted that
    there are a number of networks with license fees that are
    effectively zero. It is likely that the lesser networks that we have
    been unable to include have a similar paucity of license revenues.
    Failure to include these additional networks makes the marginal
    implicit fee for digital tiers slightly higher than it otherwise
    would be.

[^237]: *See* 5 U.S.C. § 603. The RFA has been amended by the *Contract
    With America Advancement Act of 1996*, Pub. L. No. 104-121, 110
    Stat. 847 (1996) ("CWAAA"). *See* 5 U.S.C. § 601 et. seq. Title II
    of the CWAAA is the *Small Business Regulatory Enforcement Fairness
    Act of 1996* ("SBREFA").

[^238]: *See* *Leased Commercial Access; Development of Competition and
    Diversity in Video Programming Distribution and Carriage,* Notice of
    Proposed Rule Making, MB Docket No. 07-42, FCC 07-18 (rel. June 15,
    2007) (the "*NPRM*").

[^239]: *See* 5 U.S.C. § 604*.*

[^240]: *See* 47 U.S.C. § 532.

[^241]: *See* 47 U.S.C. § 532(a).

[^242]: *See Order* at ¶¶ 35-42.

[^243]: *See id.* at ¶¶ 43-46.

[^244]: *See id.* at ¶ 47-49.

[^245]: *See id.* at ¶ 49.

[^246]: *See id.*

[^247]: *See id*. at ¶ 37.

[^248]: *See id.* at ¶¶ 12-13.

[^249]: *See id.* at ¶¶ 27-31.

[^250]: *See id.* at ¶¶ 12, 14-32.

[^251]: *See id.* at ¶¶ 51-56.

[^252]: *See id.* at n.156.

[^253]: *See id.* at ¶¶ 57-65.

[^254]: *See id.* at ¶¶ 66-70.

[^255]: *See id.* at ¶ 70.

[^256]: 5 U.S.C. § 603(b)(3).

[^257]: 5 U.S.C. § 601(6).

[^258]: 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."

[^259]: 15 U.S.C. § 632.

[^260]: *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S." (available at
    <http://www.census.gov/naics/2007/> n07-n02.xls).

[^261]: U.S. Census Bureau, 2007 NAICS Definitions, "517110 Wired
    Telecommunications Carriers";
    http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.

[^262]: 13 C.F.R. § 121.201 (2002 NAICS code 517110).

[^263]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 2, Employment Size of Establishments for the
    United States: 2002 (2002 NAISC code 517110; 2002 NAISC code 517510;
    2002 NAISC code 518111) (issued November 2005).

[^264]: *Id*.

[^265]: U.S. Census Bureau, 2002 NAICS Definitions, "517510 Cable and
    Other Program Distribution";
    <http://www.census.gov/epcd/naics02/def/NDEF517.HTM>. As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^266]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^267]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002 (NAICS code 517510) (issued November 2005).

[^268]: *Id*. An additional 61 firms had annual receipts of \$25 million
    or more.

[^269]: 47 C.F.R. § 76.901(e). The Commission determined that this size
    standard equates approximately to a size standard of \$100 million
    or less in annual revenues. *Implementation of Sections of the 1992
    Cable Act: Rate Regulation,* Sixth Report and Order and Eleventh
    Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).

[^270]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren Comm.
    News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 400,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^271]: 47 C.F.R. § 76.901(c).

[^272]: Warren Communications News, *Television & Cable Factbook 2006*,
    "U.S. Cable Systems by Subscriber Size," page F-2 (data current as
    of Oct. 2005). The data do not include 718 systems for which
    classifying data were not available.

[^273]: 47 U.S.C. § 543(m)(2); *see* 47 C.F.R. § 76.901(f) & nn. 1-3.

[^274]: *See* *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, *Twelfth Annual
    Report*, 21 FCC Rcd 2503, 2507, ¶ 10 and 2617, Table B-1 (2006)
    ("*12^th^ Annual Report*").

[^275]: 47 C.F.R. § 76.901(f); *see* Public Notice*, FCC Announces New
    Subscriber Count for the Definition of Small Cable Operator*, DA
    01‑158 (Cable Services Bureau, Jan. 24, 2001).

[^276]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren
    Commc'ns News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 654,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^277]: 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).

[^278]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^279]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^280]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2538-39, ¶ 70 and
    2620, Table B-3.

[^281]: DIRECTV is the largest DBS operator and the second largest MVPD,
    serving an estimated 15.72 million subscribers nationwide as of June
    2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3.

[^282]: EchoStar, which provides service under the brand name Dish
    Network, is the second largest DBS operator and one of the four
    largest MVPDs, serving an estimated 12.27 million subscribers
    nationwide. *Id*.

[^283]: *See id*. at 2540, ¶ 73 .

[^284]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^285]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.
    Previously, the Commission reported that IMCC had 250 members; *see*
    *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming,* *Tenth Annual Report*, 19 FCC
    Rcd 1606, 1666, ¶ 90 (2004) ("*10^th^ Annual Report*").

[^286]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.

[^287]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^288]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1. HSD
    subscribership declined more than 33 percent between June 2003 and
    June 2004. *See id.*

[^289]: *Amendment of Parts 1, 21 73, 74, and 101 of the Commission's
    Rules to Facilitate the Provision of Fixed and Mobile Broadband
    Access, Educational and Other Advanced Services in the 2150-2162 and
    2500-2690 MHz Bands*, WT Docket No. 03-66, RM-10586, *Report and
    Order and Further Notice of Proposed Rulemaking*, 19 FCC Rcd 14165
    (2004).

[^290]: *See id.*

[^291]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^292]: 47 C.F.R. § 21.961(b)(1) (2002).

[^293]: *Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, Report and
    Order*, 10 FCC Rcd 9589 (1995).

[^294]: MDS Auction No. 6 began on November 13, 1995, and closed on
    March 28, 1996 (67 bidders won 493 licenses).

[^295]: Hundreds of stations were licensed to incumbent MDS licensees
    prior to implementation of Section 309(j) of the Communications Act
    of 1934. 47 U.S.C. § 309(j). For these pre-auction licenses, the
    applicable standard is SBA's small business size standards for
    "other telecommunications" (annual receipts of \$13.5 million or
    less). *See* 13 C.F.R. § 121.201 (2007 NAICS code 517910).

[^296]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^297]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^298]: *See Local Multipoint Distribution Service*, Second Report and
    Order, 12 FCC Rcd 12545 (1997).

[^299]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^300]: The Commission has held two LMDS auctions: Auction No. 17 and
    Auction No. 23. Auction No. 17, the first LMDS auction, began on
    February 18, 1998, and closed on March 25, 1998 (104 bidders won 864
    licenses). Auction No. 23, the LMDS re-auction, began on April 27,
    1999, and closed on May 12, 1999 (40 bidders won 161 licenses).

[^301]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^302]: *Id.*

[^303]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^304]: *See* 47 U.S.C. § 573.

[^305]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^306]: *See* Current Filings for Certification of Open Video Systems,
    <http://www.fcc.gov/mb/ovs/csovscer.html> (last visited July 25,
    2007); Current Filings for Certification of Open Video Systems,
    <http://www.fcc.gov/mb/ovs/csovsarc.html> (last visited July 25,
    2007).

[^307]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1.

[^308]: OPASTCO reports that less than 8 percent of its members provide
    service under OVS certification. *See id*. at 2548-49, ¶ 88 n.336.

[^309]: *See id*. at 2549, ¶ 89. WideOpenWest is the second largest BSP
    and 16th largest MVPD, with cable systems serving about 292,500
    subscribers as of June 2005. *See id*. The third largest BSP is
    Knology, which was serving approximately 179,800 subscribers as of
    June 2005. *See id.*

[^310]: U.S. Census Bureau, 2007 NAICS Definitions, "515210 Cable and
    Other Subscription Programming";
    http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.

[^311]: 13 C.F.R. § 121.201 (NAICS code 515210).

[^312]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 515210) (issued November
    2005).

[^313]: *Id*. An additional 40 firms had annual receipts of \$25 million
    or more.

[^314]: *S**ee* U.S. Census Bureau, 2007 NAICS Definitions, "51211
    Motion Picture and Video Production";
    <http://www.census.gov/naics/2007/>def/NDEF512.HTM#N51211.

[^315]: 13 C.F.R. § 121.201 (NAICS code 51211).

[^316]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 51211) (issued November
    2005).

[^317]: *Id*.

[^318]: *See* U.S. Census Bureau, 2007 NAICS Definitions, "51212 Motion
    Picture and Video Distribution";
    http://www.census.gov/naics/2007/def/NDEF512.HTM#N51212.

[^319]: 13 C.F.R. § 121.201 (NAICS code 51212).

[^320]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 51212) (issued November
    2005).

[^321]: *Id*.

[^322]: 15 U.S.C. § 632.

[^323]: 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).

[^324]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^325]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (February 2007) ("Trends in Telephone Service"). This
    source uses data that are current as of October 20, 2005.

[^326]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^327]: *See* Trends in Telephone Service at Table 5.3.

[^328]: U.S. Census Bureau, 2007 NAICS Definitions, "2211 Electric Power
    Generation, Transmission and Distribution";
    http://www.census.gov/naics/2007/def/NDEF221.HTM#N2211.

[^329]: 13 C.F.R. § 121.201 (2007 NAICS codes 221111, 221112, 221113,
    221119, 221121, 221122, footnote 1).

[^330]: U S. Census Bureau, 2002 Economic Census, Subject Series:
    Utilities, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (2007 NAICS codes 221111, 221112,
    221113, 221119, 221121, 221122) (issued November 2005).

[^331]: *See Order* at ¶ 57.

[^332]: *See id.* at ¶ 57.

[^333]: *See id.* at ¶¶ 62-65.

[^334]: *See id.* at ¶¶ 66-70.

[^335]: *See id.* at ¶¶ 14-32.

[^336]: *See id.* at ¶¶ 26-31.

[^337]: *See id.* at ¶ 13.

[^338]: *See id.* at ¶ 12.

[^339]: *See id.* at ¶¶ 33-34.

[^340]: 5 U.S.C. § 603(c).

[^341]: *See* *NPRM*, 22 FCC Rcd 11222, ¶ 27 and Appendix A.

[^342]: *See* 47 U.S.C. § 532(a).

[^343]: *See* 5 U.S.C. § 801(a)(1)(A).

[^344]: *See* 5 U.S.C. § 604(b).

[^345]: 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).

[^346]: *See* 5 U.S.C. § 603.

[^347]: *See* 5 U.S.C. § 603(a).

[^348]: *See* *id.*

[^349]: *See* 47 U.S.C. § 532.

[^350]: *See* 47 U.S.C. § 532(a).

[^351]: *See FNPRM* at ¶ 74.

[^352]: *See id*. at ¶ 75.

[^353]: *See id*.

[^354]: *See id*.

[^355]: *See id*.

[^356]: *See id*.

[^357]: 5 U.S.C. § 603(b)(3).

[^358]: 5 U.S.C. § 601(6).

[^359]: 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."

[^360]: 15 U.S.C. § 632.

[^361]: *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S." (available at
    <http://www.census.gov/naics/2007/> n07-n02.xls).

[^362]: U.S. Census Bureau, 2007 NAICS Definitions, "517110 Wired
    Telecommunications Carriers";
    http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.

[^363]: 13 C.F.R. § 121.201 (2002 NAICS code 517110).

[^364]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 2, Employment Size of Establishments for the
    United States: 2002 (2002 NAISC code 517110; 2002 NAISC code 517510;
    2002 NAISC code 518111) (issued November 2005).

[^365]: *Id*.

[^366]: U.S. Census Bureau, 2002 NAICS Definitions, "517510 Cable and
    Other Program Distribution";
    <http://www.census.gov/epcd/naics02/def/NDEF517.HTM>. As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^367]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^368]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002 (NAICS code 517510) (issued November 2005).

[^369]: *Id*. An additional 61 firms had annual receipts of \$25 million
    or more.

[^370]: 47 C.F.R. § 76.901(e). The Commission determined that this size
    standard equates approximately to a size standard of \$100 million
    or less in annual revenues. *Implementation of Sections of the 1992
    Cable Act: Rate Regulation,* Sixth Report and Order and Eleventh
    Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).

[^371]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren Comm.
    News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 400,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^372]: 47 C.F.R. § 76.901(c).

[^373]: Warren Communications News, *Television & Cable Factbook 2006*,
    "U.S. Cable Systems by Subscriber Size," page F-2 (data current as
    of Oct. 2005). The data do not include 718 systems for which
    classifying data were not available.

[^374]: 47 U.S.C. § 543(m)(2); *see* 47 C.F.R. § 76.901(f) & nn. 1-3.

[^375]: *See* *Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, *Twelfth Annual
    Report*, 21 FCC Rcd 2503, 2507, ¶ 10 and 2617, Table B-1 (2006)
    ("*12^th^ Annual Report*").

[^376]: 47 C.F.R. § 76.901(f); *see* Public Notice*, FCC Announces New
    Subscriber Count for the Definition of Small Cable Operator*, DA
    01‑158 (Cable Services Bureau, Jan. 24, 2001).

[^377]: 74 [Television and Cable Factbook]{.smallcaps} F-2 (Warren
    Commc'ns News eds., 2006); Top 25 MSOs -- NCTA.com, *available at*
    http://www.ncta.com/ContentView.aspx?contentId=73 (last visited
    September 6, 2007). We arrived at 7,916 cable operators qualifying
    as small cable companies by subtracting the ten cable companies with
    over 654,000 subscribers found on the NCTA website from the 7,926
    total number of cable operators found in the Television and Cable
    Factbook.

[^378]: 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).

[^379]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^380]: 13 C.F.R. § 121.201 (2002 NAICS code 517510).

[^381]: *See* *12^th^ Annual Report*, 21 FCC Rcd at 2538-39, ¶ 70 and
    2620, Table B-3.

[^382]: DIRECTV is the largest DBS operator and the second largest MVPD,
    serving an estimated 15.72 million subscribers nationwide as of June
    2005. *See* *12^th^ Annual Report*, 21 FCC Rcd at 2620, Table B-3.

[^383]: EchoStar, which provides service under the brand name Dish
    Network, is the second largest DBS operator and one of the four
    largest MVPDs, serving an estimated 12.27 million subscribers
    nationwide. *Id*.

[^384]: *See id*. at 2540, ¶ 73 .

[^385]: 13 C.F.R. § 121.201 (2002 NAICS code 517510). As discussed
    above, the 2007 NAICS defines "Wired Telecommunications Carriers"
    (2007 NAISC code 517110) to include, among others, Cable and Other
    Program Distribution (2002 NAISC code 517510). *See* "2007 NAICS
    U.S. Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^386]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.
    Previously, the Commission reported that IMCC had 250 members; *see*
    *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming,* *Tenth Annual Report*, 19 FCC
    Rcd 1606, 1666, ¶ 90 (2004) ("*10^th^ Annual Report*").

[^387]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2564-65, ¶ 130.

[^388]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^389]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1. HSD
    subscribership declined more than 33 percent between June 2003 and
    June 2004. *See id.*

[^390]: *Amendment of Parts 1, 21 73, 74, and 101 of the Commission's
    Rules to Facilitate the Provision of Fixed and Mobile Broadband
    Access, Educational and Other Advanced Services in the 2150-2162 and
    2500-2690 MHz Bands*, WT Docket No. 03-66, RM-10586, *Report and
    Order and Further Notice of Proposed Rulemaking*, 19 FCC Rcd 14165
    (2004).

[^391]: *See id.*

[^392]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^393]: 47 C.F.R. § 21.961(b)(1) (2002).

[^394]: *Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, Report and
    Order*, 10 FCC Rcd 9589 (1995).

[^395]: MDS Auction No. 6 began on November 13, 1995, and closed on
    March 28, 1996 (67 bidders won 493 licenses).

[^396]: Hundreds of stations were licensed to incumbent MDS licensees
    prior to implementation of Section 309(j) of the Communications Act
    of 1934. 47 U.S.C. § 309(j). For these pre-auction licenses, the
    applicable standard is SBA's small business size standards for
    "other telecommunications" (annual receipts of \$13.5 million or
    less). *See* 13 C.F.R. § 121.201 (2007 NAICS code 517910).

[^397]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^398]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^399]: *See Local Multipoint Distribution Service*, Second Report and
    Order, 12 FCC Rcd 12545 (1997).

[^400]: As discussed above, the 2007 NAICS defines "Wired
    Telecommunications Carriers" (2007 NAISC code 517110) to include,
    among others, Cable and Other Program Distribution (2002 NAISC code
    517510). *See* "2007 NAICS U.S. Matched to 2002 NAICS U.S."
    (available at http://www.census.gov/naics/2007/n07-n02.xls).

[^401]: The Commission has held two LMDS auctions: Auction No. 17 and
    Auction No. 23. Auction No. 17, the first LMDS auction, began on
    February 18, 1998, and closed on March 25, 1998 (104 bidders won 864
    licenses). Auction No. 23, the LMDS re-auction, began on April 27,
    1999, and closed on May 12, 1999 (40 bidders won 161 licenses).

[^402]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^403]: *Id.*

[^404]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^405]: *See* 47 U.S.C. § 573.

[^406]: 13 C.F.R. § 121.201 (NAICS code 517510). As discussed above, the
    2007 NAICS defines "Wired Telecommunications Carriers" (2007 NAISC
    code 517110) to include, among others, Cable and Other Program
    Distribution (2002 NAISC code 517510). *See* "2007 NAICS U.S.
    Matched to 2002 NAICS U.S." (available at
    http://www.census.gov/naics/2007/n07-n02.xls).

[^407]: *See* Current Filings for Certification of Open Video Systems,
    <http://www.fcc.gov/mb/ovs/csovscer.html> (last visited July 25,
    2007); Current Filings for Certification of Open Video Systems,
    <http://www.fcc.gov/mb/ovs/csovsarc.html> (last visited July 25,
    2007).

[^408]: *See 12^th^ Annual Report*, 21 FCC Rcd at 2617, Table B-1.

[^409]: OPASTCO reports that less than 8 percent of its members provide
    service under OVS certification. *See id*. at 2548-49, ¶ 88 n.336.

[^410]: *See id*. at 2549, ¶ 89. WideOpenWest is the second largest BSP
    and 16th largest MVPD, with cable systems serving about 292,500
    subscribers as of June 2005. *See id*. The third largest BSP is
    Knology, which was serving approximately 179,800 subscribers as of
    June 2005. *See id.*

[^411]: U.S. Census Bureau, 2007 NAICS Definitions, "515210 Cable and
    Other Subscription Programming";
    http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.

[^412]: 13 C.F.R. § 121.201 (NAICS code 515210).

[^413]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 515210) (issued November
    2005).

[^414]: *Id*. An additional 40 firms had annual receipts of \$25 million
    or more.

[^415]: *See* U.S. Census Bureau, 2007 NAICS Definitions, "51211 Motion
    Picture and Video Production";
    <http://www.census.gov/naics/2007/>def/NDEF512.HTM#N51211.

[^416]: 13 C.F.R. § 121.201 (NAICS code 51211).

[^417]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 51211) (issued November
    2005).

[^418]: *Id*.

[^419]: *See* U.S. Census Bureau, 2007 NAICS Definitions, "51212 Motion
    Picture and Video Distribution";
    http://www.census.gov/naics/2007/def/NDEF512.HTM#N51212.

[^420]: 13 C.F.R. § 121.201 (NAICS code 51212).

[^421]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (NAICS code 51212) (issued November
    2005).

[^422]: *Id*.

[^423]: 15 U.S.C. § 632.

[^424]: 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).

[^425]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^426]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (February 2007) ("Trends in Telephone Service"). This
    source uses data that are current as of October 20, 2005.

[^427]: 13 C.F.R. § 121.201 (2007 NAICS code 517110).

[^428]: *See* Trends in Telephone Service at Table 5.3.

[^429]: U.S. Census Bureau, 2007 NAICS Definitions, "2211 Electric Power
    Generation, Transmission and Distribution";
    http://www.census.gov/naics/2007/def/NDEF221.HTM#N2211.

[^430]: 13 C.F.R. § 121.201 (2007 NAICS codes 221111, 221112, 221113,
    221119, 221121, 221122, footnote 1).

[^431]: U S. Census Bureau, 2002 Economic Census, Subject Series:
    Utilities, Establishment and Firm Size (Including Legal Form of
    Organization): 2002, Table 4 (2007 NAICS codes 221111, 221112,
    221113, 221119, 221121, 221122) (issued November 2005).

[^432]: 5 U.S.C. § 603(c).

[^433]: *See United Production v. Mediacom Communications Corp.*,
    *Order*, Media Bureau, CSR 6336-L (adopted January 26, 2007, DA
    07-273). The Petition for Commercial Leased Access was filed on
    February 25, 2005.