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

In the Matter of

Implementation of Section 302 of the
Telecommunications Act of 1996

Open Video Systems

       CS Docket No. 96-46

                              REPLY COMMENTS

                                             John D. Seiver
                                             T. Scott Thompson
                                             COLE, RAYWID & BRAVERMAN, L.L.P.
                                             1919 Pennsylvania Avenue, N.W.
                                             Suite 200
                                             Washington, D.C.  20006
                                             (202) 659-9750

                                             ATTORNEYS FOR

                                             American Cable Entertainment;
                                             Bresnan Communications Co., Ltd.;
                                             Greater Media, Inc.; 
                                             TeleScripps Cable Co. d/b/a North DeKalb
Cable;                                              Cable Telecommunications Association of
Georgia;                                            Cable Telecommunications Association of
                                             Maryland, Delaware and the District of
Columbia;
                                             New Jersey Cable Telecommunications
Association;                                        Ohio Cable Telecommunications
Association;
                                             South Carolina Cable Television Association;
                                             Tennessee Cable Television Association; 
                                             Texas Cable & Telecommunications Association;
                                             Wisconsin Cable Communications Association
April 11, 1996                             TABLE OF CONTENTS

                                                                    Page No.

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . .   2

  I.   THE COMMISSION MUST NOT FAVOR OVS OVER TRADITIONAL
       CABLE TELEVISION SYSTEMS. . . . . . . . . . . . . . . . . . . . .   5

  II.  THE COMMISSION MUST ADOPT RULES ENSURING THAT OPEN
       VIDEO SYSTEMS REMAIN TRULY "OPEN" AS INTENDED BY
       CONGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7

       A.      Open Video Systems Must Be Fully Open To Multichannel Video
               Programming Distributors ("MVPDs"). . . . . . . . . . . .   9

          B.   The LECs Have Already Exposed Their Intention To "Close" Their OVSs
               If The Commission's Regulations Are Not Strong Enough . .  11

               1.     LECs Must Be Prohibited From Packaging Channels. .  12

               2.     The Commission Cannot Adopt The "Good Faith Business Judgment"
                      Standard For Evaluating OVS Operators' Conduct . .  13

       C.      The Commission Must Not Allow OVS Capacity Allocation To Be
               Frozen For Years. . . . . . . . . . . . . . . . . . . . .  15

  III. THE COMMISSION MUST IMPOSE COST ALLOCATION AND RATE
       RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

  IV.  OVS OPERATORS MUST BE PROHIBITED FROM DENYING CABLE
       OPERATORS CARRIAGE ON THEIR SYSTEMS . . . . . . . . . . . . . . .  20

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24

                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION
                          Washington, D.C.  20554

In the Matter of

Implementation of Section 302 of the
Telecommunications Act of 1996

Open Video Systems

       CS Docket No. 96-46

                              REPLY COMMENTS

               Pursuant to the Notice of Proposed Rulemaking ("NPRM") released by the
Commission in the above captioned proceeding, American Cable Entertainment; Bresnan
Communications Co., Ltd.; Greater Media, Inc.; TeleScripps Cable Co. d/b/a North DeKalb
Cable; Cable Telecommunications Association of Georgia; Cable Telecommunications Association
of Maryland, Delaware and the District of Columbia; New Jersey Cable Telecommunications
Association; Ohio Cable Telecommunications Association; South Carolina Cable Television
Association; Tennessee Cable Television Association; Texas Cable & Telecommunications
Association; Wisconsin Cable Communications Association ("Commenters"), hereby submit the
following reply comments.                         INTRODUCTION AND SUMMARY
               In response to its NPRM, the Commission has received numerous comments from
parties representing varied interests within the video marketplace.  In general, the parties'
comments presented easily predicted positions of the different groups.  For example, the
broadcasters asserted that they must receive special treatment, such as special channel positions
and reduced rates.  And municipal interests asserted that they must be allowed to determine and
impose the public, educational, and governmental access requirements for open video systems
("OVSs").  It should come as no surprise, therefore, that the local exchange carriers ("LECs"),
who will likely be the first providers of OVS, chimed in with a detailed regulatory   or more
appropriately deregulatory   wish-list.

               From the time of the first suggestion of a video delivery system that would require
the LECs to provide transport capacity to unaffiliated programmers on an "open" basis, the LECs
have resisted such a scheme, attempting instead to recraft that model into an unfranchised cable
system.  In their comments in this proceeding, the LECs continue to chart that course.  In their
comments, the LECs assert that the Commission should adopt a hands-off approach, leaving the
LECs free to operate under their "good faith business judgement."  They assert that the
Commission must adopt rules that are so lenient that a cable operator faced with the prospect of
competing with such an entity would have little choice but to convert to OVS itself, lest it be put
out of business by its unregulated competitor.  The LECs' proposal is entirely unacceptable, and
in conflict with the explicit provisions of the 1996 Act.  Congress has provided explicit
instructions regarding what level of regulation, and deregulation, are to be imposed on OVS
operators.  The Commission is not free to disregard, modify, or forebear from imposing those
explicit instructions.
       
               One critical regulation that the LECs seek to have foregone or modified is the
Act's explicit requirement that OVS operators be prohibited from discriminating among video
programming providers with regard to carriage on the system.  The LECs ask the Commission
to provide them with "flexibility" to control who is allowed on the system, how much capacity
is allotted, and what channel positions are assigned.  Particularly, the LECs seek to deny capacity
to multichannel video programming distributors ("MVPDs").  The control the LECs seek,
however, is inconsistent with both the "openness" of an OVS, and the Act's prohibition on
discrimination.  Indeed, the LECs' request would ultimately transform OVS into a "closed" cable
system, but without the franchise and other regulatory burdens imposed on cable operators.  The
Commission may neither encourage nor allow OVS to be redefined as a "closed" system.  The
LECs are free to become cable operators if they wish; OVS, however, must be an entirely open
system in order to justify the differing regulatory treatment detailed in the Act.

               The LECs also seek to avoid the 1996 Act's requirement that the Commission
regulate the rates charged for carriage.  There is no factual support, however, for such
deregulation.  LEC OVS operators will have monopoly power in the market for carriage on their
open video systems.  Accordingly, the Commission cannot rely on "market" forces to ensure the
rates charged for carriage are just and reasonable.  Moreover, imposing such rate regulation is
entirely consistent with the Congressional statement that OVS operators are not to be subject to
Title II-like regulation.  The Commission has numerous non-Title II rate regulation models from
which to choose in ensuring the reasonableness of rates.

               Finally, as an extension of their quest to control the identity of programmers
granted carriage on the system, the LECs assert that they must be allowed to deny carriage to
local cable operators.  Beyond the fact that such a denial would constitute actionable
discrimination under the 1996 Act, the LECs' "policy" arguments against such carriage are
baseless.  The LECs make assorted conclusory and groundless accusations about the purported
conduct of one local cable operator, Commenter Scripps, who has sought capacity on BellSouth's
video dialtone system.  As demonstrated below, however, those accusations are unfounded and
untrue, and raise greater questions about the improper conduct of BellSouth.

               The Commission is engaged in a critical act of setting the stage for the entry of
a new video competitor.  While its time-frame is abbreviated by the 1996 Act, the Commission
must give careful thought to the short and long-term consequences of the regulations that will
govern a complex set of relationships between LECs, cable operators, and programmers.  The
Commission must not allow itself to be pressured into a hands-off approach simply for the sake
of expediency.

I.     THE COMMISSION MUST NOT FAVOR OVS OVER TRADITIONAL
       CABLE TELEVISION SYSTEMS

               In the 1996 Act, Congress provided several options for the provision of video
programming to subscribers, one of which is the new construct, OVS.  Neither the plain
language nor the legislative history of the 1996 Act, however, indicate that Congress intended to
promote the use of one delivery vehicle over the others.  Rather, the 1996 Act was meant to
provide LECs with the opportunity to choose the particular scheme that best suited the particular
markets they sought to enter.  For example, LECs, and others, might determine that a large, urban
market would be best suited to the OVS structure, or that rural areas, with their higher per-
subscriber costs for wireline facilities, would be best suited to wireless approaches, like DBS or
MMDS.  In the eyes of Congress and the 1996 Act, OVS, cable television, and wireless delivery
options are all equally acceptable methods of advancing competition.  OVS was not intended to
be a "blessed" option that all providers should be funneled toward.

               Yet, in their comments, the LECs assert that the Commission must make OVS a
regulatory favorite.  The LECs assert that the Commission should adopt an approach in
implementing the OVS sections of the 1996 Act whereby the Commission only adopts rules that
would "make open video systems an attractive alternative for cable operators."  That "litmus test"
for regulation, however, is without statutory support and is inadvisable from a policy standpoint.

               The thrust of the LECs' "litmus test" is that the Commission must implement OVS
regulations in such a deregulatory manner that it would be economically imprudent, if not
impossible, for a cable operator to continue operating under the weighty burden of Title VI and
local franchising, rather than switch to OVS.  The LECs are saying that the Commission should
favor OVS with a less burdensome and more favorable regulatory scheme.  The inevitable
outcome of which would be to create a "competitor" with whom traditional cable operators could
not compete, and thus putting those operators out of business or forcing them to join as OVS
providers.  First, as discussed above, the 1996 Act does not indicate that Congress intended for
OVS to supplant traditional cable television systems.  OVS, like wireless, is meant to be
technologically and regulatorily different from traditional cable, but still on a competitively level
playing field.  Second, Section 653 explicitly provides the extent of regulation, and deregulation,
that Congress intended to apply to OVSs.  Section 653(c), "Reduced Regulatory Burdens for
Open Video Systems," prescribes the particular level of reduced regulatory burden with which
Congress intended to "favor" OVS.  Sections 653(a) and 653(b), by contrast, prescribe the
regulations the Commission must impose.  For example, the Commission must prescribe
regulations that "ensure" that rates, terms, and conditions for carriage on an OVS are just and
reasonable and not unjustly or unreasonably discriminatory.  Such requirements do not provide
the Commission with room to adopt regulations based on whether they will be less burdensome
than those imposed on cable operators.  Moreover, as Commenters demonstrated in their initial
comments, the Commission cannot and should not forebear from enforcing the regulations
imposed by Section 653.

               The LECs' opening gambit is a cynical attempt to manipulate the Commission into
making OVS an unfranchised cable system, free from Commission oversight, and ripe for cross-
subsidization and abuse.  The Commission must reject the anticompetitive initiatives advanced
by the LECs.

II.    THE COMMISSION MUST ADOPT RULES ENSURING THAT OPEN VIDEO
       SYSTEMS REMAIN TRULY "OPEN" AS INTENDED BY CONGRESS

               While Congress chose to repeal the Commission's video dialtone rules, in adopting
the new legislative construct "open video systems," Congress clearly intended to retain the critical
"open" nature of the systems introduced by the video dialtone scheme.  Yet, in their comments,
the LECs attempt to convince the Commission that the "openness" of open video systems is a
matter for interpretation.  The LECs would have the Commission's OVS rules provide them
broad flexibility to exercise their "good faith business judgment" in determining who is allowed
on the system, what channel positions they are assigned, and what price they are charged.  The
"flexibility" the LECs seek, however, is actually an attempt to make OVS into an unfranchised,
unregulated cable system.  The proposals advanced by the LECs, and the positions they propound
on particular issues would, if adopted, destroy the "openness" of OVS, and allow the LECs to
exert the same editorial control as traditional cable operators, but without a cable operator's
regulatory burdens.  The Commission must resist this path, and ensure the "open" nature of OVS,
as required by the 1996 Act and to support its differing regulatory treatment.

               The focal point of Congress' commitment to requiring truly "open" video systems
is the prohibition on discrimination among video programming providers with regard to carriage
on an OVS system.  Unlike other anti-discrimination provisions in the Communications Act, the
prohibition on discrimination by OVS operators with regard to carriage is absolute; it contains
no "reasonabness" or "justness" modifier.  As Commenters explained in their initial comments,
this prohibition on discrimination prohibits OVS operators from exercising control over who may
obtain carriage on their systems, how many channels on the system particular parties are
allocated, and which channel positions programmers are assigned, as each of those activities
inherently would require the OVS operator to discriminate among programmers.  In their
comments, however, the LECs assert that they must have control over all of those activities.

       A.      Open Video Systems Must Be Fully Open To Multichannel
               Video Programming Distributors ("MVPDs")

               The first attack the LECs make is on the requirement that an OVS operator permit
carriage of MVPDs.  The LECs assert that "[n]either Section 653 nor the legislative history
expresses any congressional intent to ensure that open video systems bear the added costs of
accommodating multiple MVPDs.  Section 653 merely requires that multiple video programming
providers be permitted to 'select' video programming for carriage on the system."  In footnote
19, they assert that Section 653 only requires them to carry "video programming providers," not
MVPDs, which are explicitly defined by Section 602 of the Cable Act, and therefore, the LECs
assert, somehow not assured carriage.  This, they assert, along with the statement in Section
653(b)(1)(B) that Congress did not intend "to limit the number of channels that the carrier and
its affiliates may offer to provide directly to subscribers," provides OVS operators "wide latitude
to design programming packages and assign use of channels on the system."  Further, the LECs
assert these provisions provide for "sharing of editorial control over the system. . . ."

               Of course, the LECs are incorrect.  The use of the term "video programming
providers" rather than "MVPDs" does not exclude MVPDs.  MVPDs are video programming
providers.  MVPDs simply provide multiple channels of video programming.  Indeed, the LECs'
comments themselves demonstrate the fallacy of their argument.  In their comments, the LECs
point to Section 653's permission for operators to "carry on only one channel any video
programming service that is offered by more than one video programming provider" as support
for their control over the capacity of the system.  While that Section does not provide for LECs
to control the content of their systems' capacity, the provision does demonstrate that Congress
foresaw the carriage of MVPDs on OVSs.  If there were no providers of multiple channels of
programming (i.e., MVPDs), there would be no "video programming service . . . offered by more
than one video programming provider," as each video programming provider would only have
one channel.

       B.      The LECs Have Already Exposed Their Intention To "Close" Their OVSs If
               The Commission's Regulations Are Not Strong Enough

               The more troubling matter raised by the LECs' comments is their conception of
an open video system.  From their focus on the terms "video programming providers" and "select
video programming," it is clear the LECs conceive of a system that is not at all open.  Under the
LECs' interpretation, an OVS would involve the LEC OVS operator "sign[ing] up video
programming providers . . ." and then "assign[ing] programming to analog or digital channels
as they deem necessary to provide marketable, competitive programming packages."  "Video
programming providers," under the LECs conception, apparently would be entities, such as ESPN,
HBO, or broadcast networks, who would "select" the programming to be carried on their channel
(i.e., "select" to show a particular movie from 8pm to 10pm).  The LEC OVS operator would
then "share" editorial control over the system by deciding to which channel the programming
would be assigned and by bundling multiple channels together.  Such activities, however, are
precisely what traditional cable operators do.  The LECs are proposing to exercise the editorial
control of cable operators, but without the same regulatory burdens.

               The LECs' comments on specific issues further demonstrate that if the
Commission's regulations provide too much "flexibility," the LECs will simply operate their
systems like closed cable systems, but without the added regulatory burdens.

               1.     LECs Must Be Prohibited From Packaging Channels
               In their Comments, the LECs assert that OVS operators must be allowed to assign
channels to provide competitive packages of programming.  This proposal is inconsistent with
both the absolute prohibition on OVS operators discriminating among programming providers,
and the limitation on OVS operators exercising editorial control over other parties programming
that is inherent in an "open" video system.  Discrimination among programmers is inherent in the
choice of channel placement involved in such "packaging."  Moreover, selecting programmers,
and therefore programming, to appear on the system, and selecting where on the system they will
appear are the editorial activities of a cable operator.  While it would be proper for the OVS
operator's programming affiliate to engage in such "discriminating", editorial activities with
regard to its block of channels (presumable 1/3 of the system), the system would not be "open"
if the OVS operator were permitted to exercise such control over the entire compliment of
channels on the system.

               The LECs contend that they must have such control to "ensure that their systems
offer customers the services they expect."  The problem with the LECs' assertion is that they
assume customers "expect" cable service (i.e., packages and tiers of programming offered by a
single operator).  The key to the enactment of the OVS concept, however, was to promote
innovation in the provision of services.  If the LECs merely wish to continue providing
consumers what they have come to "expect," then the LECs can become cable operators.
               2.     The Commission Cannot Adopt The "Good Faith Business Judgment"
                      Standard For Evaluating OVS Operators' Conduct

               In their comments, the LECs repeatedly assert that the Commission should adopt
rules that allow the LECs to operate freely according to their "good faith business judgement." 
Such a standard for measuring the conduct of LEC OVS operators is unsupported by the statute
and would place the public interest at risk.  As demonstrated above, the 1996 Act explicitly
requires the Commission to prescribe rules regarding certain matters.  The Act does not include
in those provisions the option for the Commission to rely on the "good faith business judgement"
of OVS operators.  Indeed, with regard to carriage on the system, the Act requires that OVS
operators be prohibited from discriminating among video programming providers.  The Act's
explicit command does not leave room for OVS operators' "business judgement" as a defense to
discrimination.  

               Even if the Commission were authorized to adopt the "good faith business
judgement" standard, it should not do so, as it would impermissibly jeopardize the public interest. 
The "business judgement" rule has historically been applied in judging the actions of corporate
officers and directors.  The rule is widely recognized as extremely lenient.  Indeed, the rule
prevents courts from examining the merits of corporate directors' decisions as long as the
directors were "informed" and acted in "good faith" and with an "honest belief" that their action
is in the best interest of the corporation.  While such a lenient standard may be considered
sufficient to protect corporate shareholders, it is insufficient to satisfy the Commission's duty to
protect the public interest.  Indeed, inherent in the standard is the assumption that the person was
acting in the best interests of the corporation   not the public.

       C.      The Commission Must Not Allow OVS Capacity Allocation To
               Be Frozen For Years

               In their comments, the LECs and U S West argue that to promote stability, OVS
channel allocations must be "frozen" for a set period of time.  Both the LECs and U S West
argue that the minimum time must be at least 3 years, and preferably 5 years.  While
Commenters recognize that business certainty probably requires that programmers accessing an
OVS receive assurance that they will not be forced constantly to change their allocation or re-
apply for channels, 3 years, and certainly 5 years, is too long to freeze OVS channel allocations.

               The video programming market is highly competitive.  New programming
offerings are constantly being introduced, many of which fail.  To such a vibrant and ever-
changing market, 3 years is an eternity to wait for the opportunity to obtain carriage on an OVS. 
Yet, the LECs assert that they must be allowed to provide capacity only to programming
providers who already have contracts to provide programming over the channels, thus effectively
requiring those programmers to have multi-year affiliation contracts to obtain carriage.  But, if
the programmers and packagers on an OVS are locked into programming contracts for 3 years,
and are unable to obtain additional channels during that time, they will be unable to offer new
programming channels access to subscribers.  Such a situation would substantially harm the
programming industry.  In the cable leased access context, the Commission has acted to assist
independent programmers.  It should also do so with regard to OVS.

               Indeed, competitive equality demands that the Commission require OVS operators
to provide capacity on intervals as small as one-half hour.  As Commenters explained in their
initial comments, Congress did not explicitly impose commercial leased access requirements on
OVS operators because Congress recognized that "open" video systems would already be
available to programmers on the same terms as cable commercial leased access.  In recent orders
regarding commercial leased access, the Commission has held that in order to provide a genuine
outlet for independent programmers, cable operators must make channel capacity available on
increments of as little as one-half hour.  The Commission held that since neither the Section
imposing commercial leased access nor the legislative history indicated any reason to prevent
part-time access, the Commission could require such a requirement.  For the same reasons, the
Commission should impose the same requirement on OVS operators.  Allowing OVS operators
to impose multi-year lease minimums will serve as an impediment to the development of
independent programmers, and will essentially close OVSs.

III.   THE COMMISSION MUST IMPOSE COST ALLOCATION AND RATE RULES
               As we, and other commenters, demonstrated in initial comments, the 1996 Act
mandates that the Commission impose regulations ensuring that the rates OVS operators charge
programmers for carriage are just and reasonable, and not unjustly or unreasonably
discriminatory.  Commenters demonstrated that the Commission could not satisfy that legislative
mandate by relying on "the market" or minimum take rates by unaffiliated programmers.  In
addition, Commenters demonstrated that the 1996 Act requires the Commission to adopt cost
allocation rules to prevent cross-subsidization of OVS by regulated telephone service revenues. 
Not surprisingly, in their Comments, the LECs assert that the Commission should not impose any
rules regulating OVS carriage rates or cost allocations.  The LECs' arguments are without
support and should not be adopted.

               The LECs' first baseless argument is that because Congress expressed an intention
that OVS not be subject to Title II-like regulations, the Commission cannot "promulgate detailed
rules governing pricing."  NCTA properly addressed this argument in its initial comments. 
NCTA pointed out that the Commission has imposed a rate regulation scheme on cable operators
pursuant to Title VI, which is neither common carrier regulation nor Title II-like.  Similarly,
the Commission has previously regulated the rates cable operators charge entities seeking leased
access on a commercial basis.  The LECs' argument, therefore, is groundless.  The Commission
should not allow itself to be swayed from its statutorily mandated imposition of regulations on
the rates charged for carriage by baseless allusions to Title II.

               The LECs' second argument is that OVS operators will not possess market power,
and therefore should not be rate regulated.  Again, NCTA properly addressed this argument in
its initial comments.  As NCTA demonstrated, Section 653 of the Act requires that rates charged
by OVS operators for carriage on the system are required to be just and reasonable.  The
relevant inquiry, therefore, is not into OVS operators' market power with respect to end-user
subscribers, but rather, the Commission must evaluate OVS operators' market power with respect
to unaffiliated programmers seeking capacity on the OVS.  In that regard, OVS operators will
have market power over a bottleneck facility.  Initially, there will likely only be one OVS
operator in an area.  Accordingly, that operator will have monopoly market power over the
market for carriage on OVSs.  Moreover, OVS operators will have a strong incentive to dissuade
unaffiliated programmers from obtaining capacity, as that will leave more capacity for the OVS
operator's programmer-affiliate.  Accordingly, OVS operators will likely charge excessively high
rates, to dissuade unaffiliated programmers from seeking capacity.  And as we noted in our initial
comments, if allowed to freeze the OVS capacity for several years after the initial enrollment
period, as they propose, OVS operators could potentially monopolize the capacity on their
systems for use by their affiliates.  Or, as NCTA points out, OVS operators could impose a
price "squeeze" by charging unaffiliated programmers excessively high carriage rates, while
charging end-user subscribers of its affiliate's service low rates.

               The Commission cannot ignore its statutory mandate to "ensure" that rates charged
for carriage on an OVS are just and reasonable, and not unjustly or unreasonably discriminatory. 
And as demonstrated above and in comments filed by other parties, the market will not ensure
that such rates meet that standard.  Accordingly, the Commission must adopt rules regulating the
rates charged by OVS operators for carriage on their systems.

IV.    OVS OPERATORS MUST BE PROHIBITED FROM DENYING CABLE
       OPERATORS CARRIAGE ON THEIR SYSTEMS

               In their initial comments, Commenters demonstrated that Section 653 requires that
cable operators be allowed to obtain capacity on OVSs pursuant to the same rates, terms, and
conditions as any other video programming provider.  Other commenters similarly pointed out
that allowing cable operators to obtain capacity on OVSs would be consistent with the 1996 Act
and the public interest.  In the LECs' comments, however, they assert that OVS operators
should be allowed to deny capacity to cable operators.  The LECs assert that the Commission
should "presume conclusively that such refusals are reasonable.  Otherwise, incumbent cable
operators will be able to interfere with the successful operation of competing open video
systems."  

               The LECs' assertion is conclusory and without support, and conflicts with the
mandates of the 1996 Act.  First, a presumption of reasonableness would not insulate an OVS
operator from liability for discrimination under Section 653(b)(1)(A).  As Commenters have
repeatedly demonstrated, it is irrelevant whether an OVS operator's refusal to carry any
programmer, including a cable operator, is "reasonable."  Congress chose not to allow any
discrimination with regard to carriage.  If Congress had intended to allow "reasonable"
discrimination with regard to carriage, it would included language to that effect, as it did with
regard to other terms.  Refusing carriage to a cable operator would constitute discrimination
against a video programming provider with respect to carriage, and would therefore be a violation
of Section 653(b)(1)(A).

               Second, the allegations made by the LECs regarding the carriage of cable operators
on video dialtone systems, in particular "[t]he incumbent cable operator in BellSouth's video
dialtone trial area," are conclusory and without support.  The cable operator referred to in the
LECs' comments, TeleScripps Cable Co. d/b/a North DeKalb Cable ("Scripps"), has joined the
Commenters in submitting these reply comments, and directly addresses the unsubstantiated and
untrue accusations leveled against it.

               When BellSouth obtained Commission authority to undertake a technical and
market trial of video dialtone facilities in DeKalb County, Georgia, Scripps, the franchised cable
operator in the area, recognized an opportunity to explore new and innovative service offerings
that it did not have capacity to provide on its own system at the time.  By using the capacity
offered on an open video dialtone system, Scripps would be able to gain marketing information
regarding new services and the needs of consumers, which it could then use to plan long-term
changes in its system.  In return for its desire to explore the new technologies and services,
Scripps has become the object discriminatory treatment and unfounded accusations by BellSouth.

               In their comments, the LECs assert that Scripps' "presence as an enrolled
programmer during preparation for the trial has greatly increased the difficulty of creating and
maintaining a coalition of enrolled programmers for development of a competitive retail offering. 
Moreover, its participation has greatly complicated the provision of competitively sensitive, but
essential, information to other enrolled programmers."  These accusations are conclusory, and
actually serve to demonstrate how BellSouth has attempted to manipulate its "open" video
dialtone system into a packaged, tiered cable system.  

               The LECs do not say how or why Scripps' mere "presence as an enrolled
programmer during preparation for the trial has greatly increased the difficulty of creating and
maintaining a coalition of enrolled programmers for development of a competitive retail offering." 
Indeed, the statement exposes that BellSouth was impermissibly attempting to create "a coalition"
of programmers.  As the operator of an open video dialtone system, BellSouth is prohibited from
engaging in packaging or tiering of programming for delivery to subscribers.  The Commission
should particularly question why Scripps' lease of only 6 channels would make it difficult for
BellSouth to create a coalition of programmers.  The reason is likely that because Scripps has its
own facilities, it was not entirely dependent on BellSouth for access to consumers, as independent
programmers would be.  Accordingly, BellSouth was not able to manipulate Scripps to comply
with its wishes to create a "coalition."  The questions raised by the LECs' statement are
particularly important considering that the Commission is considering unleashing exactly such an
operation without oversight or constraint.

               The LECs similarly fail to explain how or why Scripps' "participation has greatly
complicated the provision of competitively sensitive . . . information to other enrolled
programmers," any more than any other programmer that plans to use the platform, would impact
on the distribution of competitive material.  Presumably, on an open video or video dialtone
system, intra-system competition between programmers would place all programmers on the
system in competition against each other, as well as the local cable operator.  Accordingly, the
distribution of "competitively sensitive" material to the cable operator would do no greater harm
that the material's distribution among competing programmers on the open system.  Indeed, in
the case of BellSouth's video dialtone system, the Commission must question what "competitively
sensitive" material BellSouth wished to distribute to all programmers except Scripps, and whether
such material was distributed to all but Scripps, thus discriminating against Scripps.  Under the
video dialtone requirements, BellSouth was required to charge rates for carriage pursuant to a
publicly filed tariff.  Accordingly, information regarding the pricing of BellSouth's capacity
should not be "competitively sensitive," unless BellSouth was attempting to circumvent its
obligation to utilize a tariff   which BellSouth never filed.  What other "competitively sensitive"
material could BellSouth need to distribute?  Its application showed its planned construction area,
and the actual construction schedule is easily observed.  The technological parameters of its
system would be of no particular competitive use to a cable operator, and likely would be
commonly known in technological circles. 

               The LECs' assertions regarding the problems raised by carriage of cable operators
on OVSs are without support, and indeed, raise greater issues regarding the improper and
discriminatory conduct that can easily be applied on purportedly "open" video delivery systems. 
The Commission, therefore, cannot allow OVS operators to deny carriage to cable operators
because such conduct would violate the anti-discrimination provision of Section 653(b)(1)(A). 
Moreover, in light of the potential for and likelihood of abusive and discriminatory conduct, the
Commission should adopt a rule explicitly prohibiting OVS operators from discriminating against
cable operators with respect to carriage on open video systems.

                                CONCLUSION
               Based on the foregoing and the Commenters' initial comments, the Commission
must adopt specific rules regarding the nondiscriminatory allocation of channels on open video
systems.  The Commission must adopt rules, including cost allocation and separate subsidiary
rules, ensuring that the rates, terms, and conditions for carriage on open video systems are just
and reasonable and not unjustly or unreasonably discriminatory.  The Commission must clarify
that cable operators are free to either convert their present systems into open video systems or
to provide programming over an OVS owned by a LEC.  The Commission must also adopt rules
imposing the provisions enumerated by Congress on open video systems on the same terms as
those provisions are imposed on cable operators.  The Commission is without statutory authority
to forbear from adopting or enforcing any of these provisions, and such forbearance would not
serve the public interest.

                                             Respectfully Submitted,

                                             ___________________________
                                             John D. Seiver
                                             T. Scott Thompson
                                             COLE, RAYWID & BRAVERMAN, L.L.P.
                                             1919 Pennsylvania Avenue, N.W.
                                             Suite 200
                                             Washington, D.C.  20006
                                             (202) 659-9750

                                             ATTORNEYS FOR

                                             American Cable Entertainment;
                                             Bresnan Communications Co., Ltd.;
                                             Greater Media, Inc.; 
                                             TeleScripps Cable Co. d/b/a North DeKalb
Cable;                                              Cable Telecommunications Association of
Georgia;                                            Cable Telecommunications Association of
                                             Maryland, Delaware and the District of
Columbia;
                                             New Jersey Cable Telecommunications
Association;                                        Ohio Cable Telecommunications
Association;
                                             South Carolina Cable Television Association;
                                             Tennessee Cable Television Association; 
                                             Texas Cable & Telecommunications Association;
                                             Wisconsin Cable Communications Association
April 11, 1996