Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C.  20554

In the Matter of					)
							)
Implementation of the Cable Television 		)	CC Docket No. 07-7
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		)	MB Docket No. 07-29
	

COMMENTS OF THE 
OFFICE OF ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION, 
ON THE NOTICE OF PROPOSED RULEMAKING 
AND INITIAL REGULATORY FLEXIBILITY ANALYSIS

      The Office of Advocacy of the U. S. Small Business Administration (Advocacy) 
submits these comments to the Federal Communications Commission (FCC or Commission) 
regarding the Notice of Proposed Rulemaking (NPRM or proposed rule) in the above-
captioned proceeding.   The FCC seeks comment on a proposed rule that reviews whether the 
prohibition on exclusive programming contracts is still needed to foster competition and 
diversity in the distribution of video programming services.   Additionally, the Commission 
seeks comment on whether and how the program access complaint system should be amended.   
      Congress enacted the Cable Television Consumer Protection and Competition Act of 
1992 (Cable Act)  to foster competitive entry into the multichannel video programming 
distribution (MVPD) market.  The original drafters of the Cable Act found that vertically 
integrated suppliers had an incentive to favor their affiliated cable operators, and promulgated 
the ban on exclusive programming contracts to address this problem.   The ban on exclusive 
contracts prohibits affiliated cable companies from discriminating against nonaffiliated 
providers, in order to prevent the denial of access from reducing diversity and competition in the 
MVPD market.   The Commissions proposed rule asks whether this prohibition on exclusive 
contracts should be extended again, and also seeks comment to strengthen the current procedures 
for resolving program access disputes under Section 628. 
	Small businesses have taken an active interest in this issue since the FCC examined 
Section 628s original October 5, 2002 sunset date.   To best understand their concerns, 
Advocacy spoke with members of the National Telephone Cooperative Association (NTCA), the 
Organization for the Promotion and Advancement of Small Telecommunications Companies 
(OPASTCO), and the Coalition for Competitive Access to Content (CA2C) which represents the 
shared views of small and large telecom companies on this issue.   Advocacy is pleased to note 
that the FCC prepared an initial regulatory flexibility analysis (IRFA) for the proposed rule 
which recognizes that the sunset of the ban would negatively impact small businesses and asked 
for comment on a number of related issues surrounding the sunset of Section 628 (c)(2)(D).  
However, the IRFA lacks a complete economic analysis of the rules impact and fails to list any 
significant alternatives as required under the RFA.  To assist the FCC in its analysis, Advocacy 
solicited input from small entities, reviewed their recommendations, and has prepared these 
comments in response to the FCCs regulatory flexibility analysis.  

1.	Advocacy Background.
      Congress established the Office of Advocacy under Pub. L. 94-305 to represent the views 
of small business before Federal agencies and Congress.  Advocacy is an independent office 
within the Small Business Administration (SBA), so the views expressed by Advocacy do not 
necessarily reflect the views of the SBA or the Administration.  Section 612 of the Regulatory 
Flexibility Act (RFA) requires Advocacy to monitor agency compliance with the RFA, as 
amended by the Small Business Regulatory Enforcement Fairness Act of 1996.  
      Congress crafted the RFA to ensure that, while accomplishing their intended purposes, 
regulations did not unduly inhibit the ability of small entities to compete, innovate, or to comply 
with the regulation.   To this end, the RFA requires agencies to analyze the economic impact of 
draft regulations when there is likely to be a significant economic impact on a substantial number 
of small entities, and to consider regulatory alternatives that will achieve the agencys goal while 
minimizing the burden on small entities. 
      On August 13, 2002, President George W. Bush signed Executive Order 13272 requiring 
federal agencies to implement policies protecting small entities when writing new rules and 
regulations.   This Executive Order highlights the Presidents goal of giving small business 
owners a voice in the complex and confusing federal regulatory process by directing agencies to 
work closely with the Office of Advocacy and properly consider the impact of their regulations 
on small entities.  Executive Order 13272 also requires agencies to give every appropriate 
consideration to any comments provided by Advocacy.  Under the Executive Order, the agency 
must include, in any explanation or discussion accompanying the final rules publication in the 
Federal Register, the agencys response to any written comments submitted by Advocacy on the 
proposed rule, unless the agency certifies that the public interest is not served by doing so. 
      
2.	Allowing the Exclusive Contract Prohibition to Expire Will Have a Significant 
Impact on Small Businesses 
   For small providers of video service, access to video programming is crucial to their ability 
to operate in todays MVPD market.   Without the ability to offer the content produced in 
response to consumer demand, suppliers of multichannel video programming can not exist 
within the MVPD market.  Barriers to video content access also dilute program diversity in the 
distribution of video programming, to the detriment of consumers.   In recognition of this fact, 
Congress created program access provisions to ensure that video content owned by cable 
operators would be accessible to small providers and market innovators.   In recent years, both 
Congress and the FCC have expressed their continued belief that access to programming is a key 
component of the MVPD market.   When the FCC reviewed the sunset rule in 2002, the 
Commission decided that access to video content was essential, and extended the application of 
the ban on exclusive contracts for five more years.   Because the MVPD market has not 
changed significantly since that 2002 analysis, Congress has made further attempts to legislate a 
time extension for the ban.   Advocacy submits that based upon these findings an additional 
time extension is warranted. 
   The importance of keeping access open has also influenced the imposition of merger 
conditions dealing specifically with video programming access in recent transactions.   As the 
U.S. telecommunications market continues to converge, certain strategic mergers have been 
approved with key concessions aimed at balancing market forces and most importantly, 
protecting the interests of the American consumer.  Most recently, the acquisition of Adelphia 
Communications assets by Comcast Corporation and Time Warner, Inc. has created a stronger 
incumbent with unprecedented regional operations clusters.     With regard to cable and media 
mergers, conditions that protect access to video content have been enforced to balance the 
market.  The implementation of these conditions indicates the importance of video programming 
access in the midst of heightened market consolidation.   
   Because a number of small businesses comprise this MVPD market, and these businesses 
deliver video service to other small businesses,  the RFA requires that the FCC fully analyze the 
economic impact of this rulemaking on those businesses before allowing the ban on exclusive 
programming contracts to expire.  As an alternative to a five-year extension of this ban, 
Advocacy recommends that the FCC consider a smaller extension, such as a three-year 
extension, to allow time to collect sufficient data on the post-merger market.  Ultimately, if the 
Commission finds that the expiration of the ban is a necessary regulatory goal, the RFA would 
require that the FCC investigate significant alternatives before the conclusion of its rulemaking.      
   
3.	The FCC Did Not Prepare a Proper IRFA in this Rulemaking
   While the FCC did publish an IRFA in this rulemaking, Advocacy submits that the IRFA was 
inadequate.  A complete IRFA requires that the Commission collect data and analyze the 
economic impact of its rulemakings on small entities within the U.S. telecommunications 
market.   Congress created the FCC pursuant to the Communications Act of 1934, (as amended 
by the Telecommunications Act of 1996) and granted the Commission the authority as an 
independent agency to regulate the interstate and international communications by radio, 
television, wire, satellite and cable.   Based upon its position as the agency responsible for the 
communications infrastructure within the United States, the FCC maintains the best resources to 
collect and analyze data on how its proposed policy goals may or may not impact small entities 
that operate within its regulatory jurisdiction.  Additionally, the Commission maintains the best 
position to offer significant regulatory alternatives as required in each IRFA, to which the public 
and private sectors may then respond during the appropriate notice and comment period.  This 
process as established by the IRFA requirement is intended to enhance the rulemaking and afford 
outside comments the best channels for improving the final rule.  Based on the abovementioned 
facts, Advocacy strongly suggests that the Commission publish a new IRFA that includes the 
relevant data.  
   
4.	The Current Programming Access Complaint System Could be Amended to 
Minimize Negative Impacts on Small Businesses
   Small businesses have noted that the current video programming access complaint system 
has caused confusion and uncertainty.   The FCCs programming access dispute mechanism 
needs to address the disproportionate bargaining power among providers, the cumbersome 
discovery process, and questions regarding FCC authority concerning disputes.  The current 
program complaint system calls for negotiation among the parties.   However, this system 
leaves small entities without any real negotiating capabilities, which has rendered the overall 
process ineffective.   In situations where an agreement cannot be reached, customers have lost 
access to the channels that they receive.  
   Based upon comments made by small businesses, Advocacy believes that as an alternative to 
the current process, the imposition of binding arbitration,  may strengthen the programming 
access complaint system.   Binding arbitration creates a useful alternative to dispute resolution 
by allowing a party or a representative to bring a dispute before an impartial or neutral arbitration 
panel.   Employing a binding arbitration system could help to reduce problems associated with 
timing and expenses experienced by small entities.  Because carriage disputes maintain a certain 
level of sensitivity and may disrupt customer programming, Advocacy also recommends that the 
FCC consider establishing a new time limit to assist in the overall reform of the dispute 
mechanism.        
   The document discovery provisions of the access complaint system are also in need of repair.  
The current system fails to provide the aggrieved party with access to necessary paperwork, 
which adds difficulty to the complaint process.  Advocacy submits that the Commission should 
further consider the provisions related to the discovery process and seek further input from 
industry on how these provisions can be strengthened.
   Small businesses  have also expressed confusion over the FCCs authority in programming 
access disputes.  The fact that this issue was addressed by the Senates telecommunications 
reform package further underscores the importance of clarity on this issue.   Advocacy 
recommends that the FCC provide a clear statement with regard to what authority it maintains 
over access disputes to resolve any existing confusion.
   
5.	Conclusion.	
   Advocacy urges the FCC to consider these comments from small businesses and to consider 
the regulatory impact of the sunset of the ban on exclusive programming contracts.  Additional 
alternatives may be received through small business comments on an improved IRFA.  
Advocacy recommends that the Commission analyze the alternatives recommended above and 
other significant alternatives presented by commenters to reduce the impact on small businesses. 
   The Office of Advocacy is available to assist the Commission in its outreach to small 
business or in its consideration of the impact upon them.  For additional information or 
assistance, please contact me or Cheryl Johns of my staff at (202) 205-6949 or 
cheryl.johns@sba.gov.    
   
Respectfully submitted,
						
						/s/ ___________________________
      Thomas M. Sullivan
      					Chief Counsel for Advocacy

						/s/ ___________________________	
      Cheryl M. Johns
      Assistant Chief Counsel for Telecommunications

Office of Advocacy
U.S. Small Business Administration
409 3rd Street, S.W.
Suite 7800
Washington, DC  20416

March 26, 2007

cc: 
Chairman Kevin J. Martin
Commissioner Michael J. Copps
Commissioner Jonathan S. Adelstein
Commissioner Deborah Taylor Tate
Commissioner Robert M. McDowell
Steven D. Aitken, Acting Administrator, Office
      of Information and Regulatory Affairs

via electronic filing

Certificate of Service

I, Cheryl M. Johns, an attorney with the Office of Advocacy, U.S. Small Business 
Administration, certify that I have, on this March 26, 2007, caused to be mailed, first-class, 
postage prepaid, a copy of the foregoing Comments to the following:

							/s/  _________________________
							Cheryl M. Johns

Honorable Kevin J. Martin
Chairman
Federal Communications Commission
445 12th Street, S.W.
Room 8- B20
Washington, DC  20554

Honorable Michael J. Copps
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-B115
Washington, DC  20554

Honorable Jonathan S. Adelstein
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-A302
Washington, DC  20554

Honorable Deborah Taylor Tate
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-A204
Washington, DC  20554

Honorable Robert M. McDowell
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-C302
Washington, DC  20554

Qualex International Portals II
445 12th Street, S.W.
Room CY-B402
Washington, DC  20554

Steven D. Aitken, 
Acting Administrator
Office of Information and Regulatory 
Affairs
Office of Management and Budget
725 17th Street, N.W.
Washington, DC  20503

  See Notice of Proposed Rulemaking, CC Dkt. No. 07-7, MB Dkt. No. 07-29 (rel. February 20, 2007).
  47 U.S.C.  548 (c)(5); 47 C.F.R.  76.1002 (c)(6).
  47 U.S.C.  548 (c)(5); 47 C.F.R.  76.1002 (c)(6).
  Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992).
  House Committee on Energy and Commerce, H.R. Rep. No. 102-628 (House Report), 102d Cong., 2d Sess. 
(1992); Senate Committee on Commerce, Science and Transportation, S. Rep. No. 102-92 (Senate Report) 102d 
Cong., 1st Sess. (1991); House Committee on Energy and Commerce, H.R. Rep. No. 102-862 (Conference Report) 
102d Cong. 2nd Sess. (1992), reprinted at Cong. Rec. H. 8308 (Sept. 14, 1992).
  47 U.S.C. 548(c)(5).
  Sunset Report and Order, 17 FCC Rcd at 12161.  
  CA2C members include: AT&T, Broadband Service providers Association, DirecTV, Echostar, Embarq, 
Independent Telephone and Telecommunications Alliance (ITTA), Knology, Media Access Project (MAP), 
National Hispanic Media Coalition (NHMC), Organization for the Promotion and Advancement of Small 
Telecommunications Companies (OPASTCO), PrarieWave, RCN, SureWest, US Telecom, and WOW! Internet 
Cable and Phone. 
  The IRFA provided by the FCC listed a number of small entities according to relevant small business size 
standards, but did not explain how this rulemaking would impact them, and did not offer any steps taken to 
minimize the significant impact on these entities or list significant alternatives considered.
   Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5 U.S.C.  601-612) amended by Subtitle II of the 
Contract with America Advancement Act, Pub. L No. 104-121, 110 Stat. 857 (1996).  5 U.S.C.  612(a).
   Pub. L. 96-354, Findings and Purposes, Sec. 2 (a)(4)-(5), 126 Cong. Rec. S299 (1980).
  See generally, Office of Advocacy, U.S. Small Business Administration, A Guide for Federal Agencies: How to 
Comply with the Regulatory Flexibility Act (2003), available at http://www.sba.gov/advo/laws/rfaguide.pdf.
   Exec. Order. No. 13272 at  1, 67 Fed. Reg. 53,461 (2002).
   Id. at  3(c).
  The FCC indicates in its Notice of Proposed Rulemaking (NPRM) that these small entities may include cable and 
other program distributors, cable companies and systems, cable system operators, private cable operators, wireless 
cable systems, open video systems, cable and other subscription programming, incumbent local exchange carriers 
(LECs), competitive local exchange carriers (CLECs), and firms involved in electric power generation, transmission 
and distribution.  See Notice of Proposed Rulemaking, CC Dkt. No. 07-7, MB Dkt. No. 07-29, pgs. 12-19 (rel. 
February 20, 2007).
  Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460,  
2(a)(5 )(1992).  See also First Report and Order, 8 FCC Rcd at 3366.
  Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460, 
(1992).
  Sunset Report and Order 17 FCC Rcd at 12153 (explaining that despite the decline in cables overall market share 
according to FCC calculations, that in the absence of regulation, vertically integrated programmers [still] have the 
ability and incentive to favor affiliated cable operators over nonaffiliated cable operators and programming 
distributors using other technologies such that competition and diversity in the distribution of video programming 
would not be preserved and protectedpersists in the current marketplace.  
  Sunset Report and Order 17 FCC Rcd at 12161.   
  See, The Communications Consumers Choice, and Broadband Deployment Act of 2006, S. 2682 109th Cong. 
(2006) (extending the program access provisions for ten more years and specifically applying them to terrestrially-
delivered programming); and see, The Communications, Promotion and Enhancement Act of 2006 H.R. 5252, 109th 
Cong. (2006) (imposing restrictions on content providers where a cable operator has an attributable interest).
  See, Mergers, available at: http://www.ftc.gov/bc/compguide/mergers.htm (explaining how the FTCs concerns 
that Time Warner, Inc. could refuse to sell popular programming to competitors of cable TV lead to the agencys 
imposition of access terms on the companys vertical merger with Turner Corp.). 
  In the Matter of Applications for Consent to the Assignment and/or Transfer of Control of Licenses: Adelphia 
Communications Corporation (and subsidiaries, debtors-in-possession), Assignors to Time Warner Cable Inc. 
(subsidiaries), Assignees; Adelphia Communications Corporation (and subsidiaries, debtors-in-possession), 
Assignors and Transferors to Comcast Corporation (subsidiaries), Assignees and Transferees; Comcast 
Corporation, Transferor, to Time Warner, Inc., Transferee; Time Warner, Inc., Transferor, to Comcast 
Corporation, Transferee, 21 FCC Rcd 8203 (2006). 
  See Competitive Video Distributors, Consumer Interest Groups, Media Artists, Independent Programmers Unite 
to Form Competition, Diversity Coalition on Adelphia Transaction (CADCAT) to preserve Competitive Video 
Marketplace, available at: http://investor.rcn.com/ReleaseDetail.cfm?ReleaseID=184758 
  Advocacy estimates that these other affected small businesses may include sports bars, small entities within the 
hospitality industry such as bed and breakfasts and certain housing developments.  Advocacy recommends the 
collection of data on this to better understand the effects on these small business customers.
  Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5 U.S.C.  601-612) amended by Subtitle II of the Contract 
with America Advancement Act, Pub. L No. 104-121, 110 Stat. 857 (1996).  5 U.S.C. 603(c)
  Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5 U.S.C.  601-612) amended by Subtitle II of the Contract 
with America Advancement Act, Pub. L No. 104-121, 110 Stat. 857 (1996).  5 U.S.C. 603(b) 
  Telecommunications Act of 1996, Pub. L. No. 104-104 (codified as amended at 47 U.S.C.  157 (2000)).
  In Advocacys discussion with OPATSCO and NTCA, their representatives explained that the program access 
dispute rules fail to clarify the FCCs authority in dispute resolution.  Additionally, these rules leave small entities 
without adequate negotiating power.
  47 C.F.R.  76.1003. 
  NTCA representatives believe that the current complaint system places small entities at a disadvantage when they 
engage in the negotiation process.
  Binding arbitration operates as an alternative to courts settling disputes and utilizes an independent, third party 
body.  The arbitrators decision is final and not subject to dispute or appeal.
  OPATSCO and NTCA believe that a binding arbitration option would assist small entities by granting them some 
bargaining power.
  Language providing for arbitration in video programming disputes was also offered in an amendment to 
Congress Cope Act by Congressman Deal (R-GA).  The amendment provided that MVPDs could opt for baseball-
style arbitration following 90 days of failed retransmission.  While this amendment was not ultimately adopted, a 
similar mechanism was also included in the FCCs News-Hughes merger conditions.
  A set time limit of 120 days would help to streamline the process has gained support from small entities working 
through the CA2C Coalition.
  NTCA has noted that further clarity could be provided on this issue.
  The Communications Consumers Choice, and Broadband Deployment Act of 2006, S. 2682 109th Cong. 402 
(2006) (granting the Commission express authority under Title IV, Subtitle A to require the submission of a 
defendants carriage agreement to the Commission in discrimination proceedings).
 
 
 
 
Office of Advocacy		                                                                                     Comment
U.S. Small Business Administration		                                                                    MB Dkt. No. 07-29

9