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                                Before the                       Corrected
                      Federal Communications Commission
                          Washington, D.C. 20554

                                                                          
In the Matter of                     )
                                     )
                                     )
Implementation of the Cable         )
Television Consumer Protection       )       CS Docket No.  98-82
and Competition Act of 1992         )
                                     )
Implementation of Cable Act Reform Provisions         )     CS Docket No. 96-85
of the Telecommunications Act of 1996       )
                                     )
Review of the Commission's           )
Cable Attribution Rules             )


                        REPORT AND ORDER

     Adopted:  October 8, 1999          Released:  October 20, 1999

               By the Commission:       Commissioner Furchtgott-Roth concurring in part, dissenting in part and issuing a
               statement; Commissioner Tristani approving in part, dissenting in part and issuing a
               statement.

                       Table of Contents

                                                                 Paragraph
I.   Introduction                                                        1
II.  Background                                                          2
     A.   The Cable Attribution Rules                                    2
     B.   Questions Raised in the Cable Attribution Notice               7
     C.   Summary of the Decisions of this Order                        11
III. Report and Order                                                   15
     A.   The General Attribution Standard                              15
          1.   Background                                               15
          2.   Comments                                                 16
               a.   Industry Differences                                17
               b.   The Cable Operators' Control Proposal               22
          3.   Discussion                                                     33
     B.   Voting Equity Benchmark                                       40
          1.   Comments                                                 41
          2.   Discussion                                               45
     C.   Passive Institutional Investor Benchmark                      52
          1.   Background                                               52
          2.   Comments                                                 53
          3.   Discussion                                               55
               a.   The Appropriate Passive Institutional Investor Benchmark            55
               b.   Definition of Passive Institutional Investors                       56
     D.   Partnership Interests                                         57
          1.   Comments                                                 57
          2.   Discussion                                               61
     E.   Directors and Officers                                        65
          1.   Comments                                                 65
          2.   Discussion                                               66
     F.   Limited Liability Companies                                   70
          1.   Comments                                                 70
          2.   Discussion                                               71
     G.   Single Majority Shareholder Exemption and an Equity plus Debt Rule            74
          1.   Background                                               74
          2.   Comments                                                 76
          3.   Discussion                                               81
               a.   Single Majority Shareholder Exemption               81
               b.   Equity plus Debt Rule                               82
     H.   Program Access Attribution Standard                           93
          1.   Background                                               93
          2.   Comments                                                 95
          3.   Discussion                                              102
     I.   Cable Reform Issues                                          113
          1.   Effective Competition                                   113
               a.   Background                                         113
               b.   Comments                                           119
               c.   Discussion                                         126
                    i.   LEC Test                                      126
                    ii.  Competing Provider Test                       131
          2.   Cable-Telco Buy-Outs                                    134
               a.   Background                                         134
               b.   Comments                                           136
               c.   Discussion                                         137
     J.   Transition Issues                                     138
IV.  Final Regulatory Flexibility Analysis                             142
V.   Paper Work Reduction Act                                          174
VI.  Ordering Clauses                                                        176

Appendix A   Rule Changes
Appendix B   List of Commenters
Appendix C   Cable Alliances and Partnerships 


I.   Introduction

1.        This Report and Order resolves the issues presented for comment in the Notice of Proposed
Rulemaking ("Cable Attribution Notice") in this proceeding, as well as two related issues raised in the Cable
Reform Notice.  In the Cable Attribution Notice, we initiated a review of our cable attribution rules, which define
what constitutes an "attributable" or "cognizable interest" that triggers application of various Commission rules
relating to the provision of cable television services (the "substantive cable rules").  In this Report and Order, we
adopt amendments that will more accurately identify interests that confer on their holders the ability to influence or
control the operations of the held entity or create the type of economic incentives that the substantive cable rules are
intended to address.  In this regard, our amendments to the cable attribution rules mirror to a certain extent those
amendments we recently made to the broadcast attribution rules; thus, our reasoning herein largely incorporates and
reiterates the reasoning set forth in the Broadcast Attribution Report and Order. 

II.  Background

     A.   The Cable Attribution Rules

2.        A variety of statutory provisions and Commission rules govern the conduct of cable television
system operators or other entities in terms of both ownership interests that they may hold in other cable operators
or competitive firms, or in terms of their conduct when they own, are owned by, or are owned in common with a
"video programmer," a "satellite cable programming provider," or with other entities.  For each of these statutory
provisions or rules it is necessary to identify what types of ownership interests or other relationships are sufficient
that two legally separate entities should be treated as if they were commonly owned or managed or subject to
significant common influence.  The rules define that level of interest that brings the substantive statutory provision
or rule in play to be an "attributable interest."   Thus, for example, the Communications Act, Section 613(f)(1)(A),
instructs the Commission 
  
     to prescribe rules and regulations establishing reasonable limits on the number of cable subscribers a
     person is authorized to reach through cable systems owned by such person, or in which such person has
     an attributable interest. . . .
           
Section 628(b) provides that:

     It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator
     has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of
     competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly
     or to prevent any multichannel video programming distributor from providing satellite cable programming
     or satellite broadcast programming to subscribers or consumers.

The attribution rules seek to identify those corporate, financial, partnership, ownership and other business
relationships that confer on their holders a degree of ownership or other economic interest, or influence or control
over an entity engaged in the provision of communications services such that the holders should be subject to the
Commission's regulation.  

3.        Depending on the particular substantive rule and objective to be accomplished, a variety of
different attribution standards are used in the Commission's rules.  In the cable television area, there are, generally
speaking, two strains of attribution rules: the "general attribution standard" and the so-called "program access
attribution standard."  The general standard is based on, but not identical to, the broadcast attribution rules. 
Under the general attribution standard, voting stock interests of 5% or more are attributable.  For passive
institutional investors, voting stock interests of 10% or more are attributable.  Non-voting stock interests, options,
warrants and debt are not attributable.  The general attribution standard provides a "single majority shareholder"
exception to the voting stock threshold, which provides that a minority shareholder's voting interests will not be
attributed where a single shareholder owns more than 50% of the outstanding voting stock.  Partnership interests
and direct ownership interests are attributable regardless of the level of equity invested.  However, the interests of
"insulated" limited partners are not attributed.  Directors and officers are also deemed to have an attributable
interest.  The general attribution standard rules at issue in this proceeding are those that are used in conjunction
with the cable horizontal ownership limits rule and the vertical channel occupancy limits rule.  We applied the
broadcast or general attribution standard to the horizontal limits and channel occupancy limits rules because they
constitute broad structural rules designed to promote competition and diversity in the video-programming
marketplace. 

4.        The Commission adopted the program access attribution standard for cable rules that are designed
not only to promote competition and diversity, but also to deter specific discriminatory or improper conduct.  The
program access attribution standard captures more investment interests than the general attribution standard.  Under
the program access standard, the single majority shareholder and insulated limited partner exceptions do not apply. 
In addition, nonvoting stock and limited partnership equity interests of 5% or more are attributable. The program
access attribution standard rules at issue in this proceeding are used in conjunction with the following rules:
program access, carriage of an unaffiliated programmer, SMATV/cable cross-ownership prohibition, asset
transfers between a cable operator and an affiliate, rate pass-throughs for the programming services of an affiliated
programmer, leased access and open video systems.

5.        This Report and Order will also adopt final rules for the definition of the term "affiliate" for
purposes of the local exchange carrier ("LEC") portion of the "effective competition" test, and the cable-telco buy-
out provisions enacted in the Telecommunications Act of 1996.  We asked for comment on the appropriate
definition of an affiliate under these rules in the Cable Reform Notice.  However, because the Cable Attribution
Notice initiated a more general review of the cable affiliation and attribution rules, we decided to address these
two issues in this proceeding.  We incorporate the Cable Reform comments into the record of this proceeding and
rely on them in order to issue these final rules.

6.        Finally, we note that the Broadcast Attribution proceeding addressed the attribution rules that
apply to the cable/broadcast station and cable/MMDS cross-ownership prohibitions; thus we do not address those
rules in this Report and Order.

     B.   Questions Raised in the Cable Attribution Notice

7.        The Cable Attribution Notice, independently and through reference to the Broadcast Attribution
Notice, sought comment on a number of issues relating to the attribution standards, including: (1) whether to
increase the voting stock benchmark from 5 percent to 10 percent and the passive institutional investor benchmark
from 10 percent to 20 percent; (2) whether to expand the category of passive investors; (3) whether and, if so, under
what circumstances to attribute nonvoting shares; (4) whether to retain the single majority shareholder exemption
from attribution; (5) whether to revise our insulation criteria for limited partners; (6) how to treat interests in limited
liability companies ("LLCs") and other new business forms under the attribution rules; and (7) how to treat
financial relationships and multiple business interrelationships that, although not individually attributable, should
be treated as attributable interest when held in combination.

8.        In addition to the issues raised in the initial Broadcast Attribution Notice, the Broadcast
Attribution Further Notice explored additional proposals to increase the precision of the attribution rules.  First, we
invited comment on whether we should add a new equity/debt attribution rule.  Under such a rule, where an interest
holder is a program supplier or same-market media entity, we would attribute its otherwise non-attributable equity
and/or debt interests in a media entity subject to the cross-ownership rules if those aggregated interests exceed a
specified benchmark, proposed to be set at 33 percent.  Second, we invited comments on a Commission staff study
of attributable ownership interests in broadcast television stations, appended to the Broadcast Attribution Further
Notice, and on the implications of this study regarding the impact of the proposed attribution rule changes,
particularly as to the voting stock benchmarks.

9.        In addition to asking for comment on how these broadcast issues pertain to the cable industry, in
the Cable Attribution Notice we asked for comment on (1) the proposed "equity plus debt" addition to the current
cable attribution rules, and specifically those relationships in the cable context that may provide sufficient incentive
and ability for an otherwise nonattributable interest holder to exert attributable influence or control; (2) the
attribution of certain contractual or other business relationships in the cable context (including affiliations that allow
different cable entities to purchase programming, technology or equipment on common terms) that may implicate
diversity and competition concerns, irrespective of debt or equity; (3) the impact of raising the stock ownership
benchmark for active and passive investors in the cable context, particularly seeking empirical data and analysis
similar to the Commission staff study on the same subject in the broadcasting context; (4) whether to retain,
modify, or eliminate the single majority shareholder exemption; and (5) whether a transition period or
grandfathering of existing interests is appropriate if we decide to adopt more restrictive attribution rules.

10.       We also asked for comment on whether and how we should re-evaluate the application of the
program access attribution standard to certain of the rules described above, such as the program access and
program carriage rules.  Finally, we sought comment on whether and how any changes in our cable attribution rules
should affect our various definitions of "affiliate."  In particular, we sought comment on whether and how those
affiliation rules that are expressly based on our cable attribution rules should change if the underlying attribution
rules are changed. In the Cable Attribution Notice, we asked for comment on whether there were any relevant
differences between the cable and broadcasting industries that would support a cable attribution standard that would
differ from the broadcast attribution standard.  In this regard, we sought comment on any differences in, among
other things, the ownership, financing or management structures of the cable industry and the broadcast industry
that might warrant a different attribution standard. 

     C.   Summary of the Decisions of this Order

11.       In general, we conclude that the cable industry's ownership and management structures do not in
any relevant way differ from those of the broadcast industry such that the cable attribution rules should differ from
the broadcast attribution rules.  Thus, a large portion of this Report and Order will incorporate by reference the
reasoning set forth in the Broadcast Attribution Report and Order.  Where certain cable attribution rules depart
from the broadcast attribution rules, the reasons for the departure are discussed.  This Report and Order takes the
following specific actions with regard to the cable attribution rules:

               (1)  retain the 5% voting stock attribution benchmark, but raise the passive institutional investor
          voting stock benchmark to 20%;

     (2)  retain the current definition of passive institutional investor;

     (3)  apply the limited partnership insulation criteria to limited liability companies; 

               (4)  amend the insulation criteria for attribution of limited partnership interests for purposes of the
          horizontal ownership and channel occupancy limits rules;
          
               (5)  amend the waiver standard for the attribution of directors and officers for purposes of the
          horizontal ownership and channel occupancy limits rules;
          
               (6)  eliminate the single majority shareholder rule;

               (7)  adopt a 33% equity plus debt attribution rule that act as an exception to the insulated limited
          partner exception and the current exemptions from the attribution of non-voting equity and debt;
          and

               (8)  adopt certain transitional provisions relating to the application of these new rules to existing
          interests.

12.       In addition, we clarify which entities are covered by the program access attribution standard. 
Under our substantive cable rules, such as the program access rule, it is arguable that the general attribution
standard is applied to determine who or what constitutes a cable operator while the program access attribution
standard is applied to determine who or what constitutes a programming vendor or other entity covered by the rule. 
Because the program access attribution standard was intended to apply to all entities under the rules where this
standard applies, and because these substantive rules are designed to deter specific misconduct by all covered
entities, we will amend these rules in order to clarify that the program access attribution standard applies to all
entities covered by those rules.  To reflect these clarifications of the attribution rules, we will amend our rules'
various definitions of the term "affiliate" where appropriate.

13.       With regard to the Cable Reform issues, we adopt the general cable attribution standard for the
cable-telco buyout prohibition rule because that rule closely resembles the cable/SMATV cross-ownership rule,
which is designed to promote competition.  For the LEC affiliate prong of the effective competition test, we
maintain the 10% voting equity benchmark proposed in the Cable Reform Notice, but devise a new attribution rule
for the LEC test.

14.       Finally, we reject the cable operators' proposals that we discard the attribution rules in favor of
an actual control approach to identifying cognizable interests.  Such an approach would not accurately capture
potentially influential or controlling interests, and would not be workable.


III. Report and Order

     A.   The General Attribution Standard

          1.   Background

15.       In the Cable Attribution Notice, we requested comments relating to the general structure of the
attribution rules; invited parties to discuss recent developments in the cable industry, including strategic alliances,
partnerships, system swaps, mergers and acquisitions, relevant to application of these rules; and asked whether
there were any differences in the ownership, financing or management structures, industry health, typical
stockholdings, informal business arrangements, or outside financial claims of the cable industry and broadcast
industry that would warrant different cable attribution rules.  This prompted a number of parties to suggest
wholesale revisions to the traditional tools of the attribution rules.  We address these comments first.

          2.   Comments
          
16.       Cable operators generally, including NCTA, TCI,  and MediaOne, argue that the cable horizontal
ownership rules should not continue to follow the broadcast attribution rules because market conditions are different
for the cable industry, new cable transactions allegedly insulate cable multiple system operators ("MSOs") from
control over the newly created entities, and the Commission should adopt a "control" test for attribution.  In
response, alternative multichannel video programming distributors ("MVPDs") and a broadcaster argue that the
market has not changed since the attribution rules were first enacted and that a "control" approach would not
accurately capture influence and would not be workable.

               a.   Industry Differences
               
17.       TCI argues that the Commission has in the past distinguished between different industries when
it rejected a request that the broadcast attribution standard be applied to the telephone carrier/cable cross-ownership
rule "largely because these two categories of multiple ownership rules relate at least in part to different industries,
affect the interests of different parties, and have disparate underlying objectives."

18.       TCI notes that the purpose of the ownership rules is to promote competition and diversity.  TCI
contends that cable systems, unlike broadcasters, do not generally compete with each other in the same geographic
areas for subscribers, local advertising revenues or programming.  As a result, TCI argues that the analysis of
ownership concentration, competition, collusion and program diversity should be different for cable than for
broadcasting.  TCI, Comcast and NCTA argue that concerns regarding diversity are different for cable because,
unlike a broadcaster, a cable operator provides dozens of channels to satisfy consumers.  Thus, NCTA argues that
the ability of a minority interest in a cable system to significantly influence the viewing options available to a
community cannot be equated with the magnitude of influence that a minority interest exerts on a single broadcast
station that may only provide one programming option. 

19.       MediaOne argues that the operators have not discouraged the development of new cable
programming services.  By upgrading its systems from 550 MHz to 750 MHz, MediaOne states that it is adding
30 new analog channels, at least half of which will benefit unaffiliated programmers.  In addition, given the growth
of direct broadcast satellite ("DBS") services, such as DIRECTV, which offers over 175 channels of cable
programming, MediaOne states there is no longer reason for concern that operators will discourage new
programming.  To compete with DBS, MediaOne states that operators must make diligent efforts to expand their
channel capacity for new cable networks, regardless of an operator's interest in promoting affiliated programming.

20.       TCI argues that the evidence indicates that vertically integrated cable operators do not disfavor
unaffiliated programmers in terms of rates or carriage.  In addition, TCI asserts that vertical mergers benefit
consumers because a large, vertically integrated cable operator is better positioned than a stand-alone operator to
know and satisfy consumers' viewing preferences.  Moreover, investors in cable operators are interested in the
financial performance of the operator and will not, TCI asserts, tolerate actions designed to foreclose viewpoints or
opinions for ideological purposes.  Thus, widely held operators, TCI asserts, are prevented from controlling the
viewpoints of the services they carry.

21.       Disputing the cable industry's arguments regarding the purposes of the applicable cable ownership
rules, DIRECTV argues that the purpose of the various rules implicated in this proceeding is to check the
bargaining power that MSOs have regarding programmers and the emerging MVPDs. DIRECTV and Univision
argue that the MSOs have not shown that the market has changed or that their behavior has changed, especially
with regard to program access and must carry.  DIRECTV notes that Comcast has refused to sell its Philadelphia
regional sports network to DBS providers on the grounds that the program access rules do not apply to the
terrestrial delivery of vertically integrated programming.  Univision states that regulatory safeguards such as must
carry do not protect its cable network or its satellite-delivered network and that over half of its affiliated low-power
stations are not entitled to must carry rights.

               b.   The Cable Operators' Control Proposal

22.       TCI and others, focusing on the horizontal ownership rules, argue that the current attribution
standards impair the ability of cable operators to produce significant consumer benefits, realize efficiencies, and
enhance competition in telephony and high speed data.  Adelphia et al., Time Warner, NCTA, TCI, Cablevision,
MediaOne and Comcast propose various alternatives to the attribution rules where the investor would certify that
it does not exercise control over the cable system at issue. MediaOne, NCTA and TCI propose that minority
interests not be attributable if the investor certifies that it does not control the company's programming. 
Regardless of the cable operator's interest or investment in a particular system, Adelphia et al. proposes that the
Commission adopt a rule where a cable operator would be deemed to not "control" a system for horizontal
ownership attribution purposes if it could certify that it (1) cannot dictate programming decisions, (2) does not
control a majority of the governing board or committee, (3) does not prepare the operating or capital budget (but
can review the budget prepared by the managing partner), (4) does not control personnel matters, (5) cannot dictate
the use of particular technology, (6) does not have the unilateral right to acquire a controlling interest in the
venture.  Adelphia et al. argues that a cable operator's super-majority approval rights over the sale of assets,
dissolution or change of status of an entity are not indicia of control for attribution purposes.

23.       NCTA argues that unless an investor has control over a cable system, it is difficult to discern how
diversity is implicated because there is little risk that a minority investor will restrict a company's editorial control. 
TCI argues that an attribution standard based on operational control is the least restrictive and most efficient
method for the Commission to identify attributable interests.  TCI states that attempting to identify "influential"
interests in a set of rules is difficult given the alternative ways in which an interest holder's influence might be
limited by factors which the rules do not examine. TCI argues that a bright line test, such as the 5% equity interest
benchmark, does not necessarily identify interests that posed a threat to the purpose of the ownership rules and
therefore unnecessarily limits beneficial investments.  The cross-interest policy, which was adopted to identify
influential interests not specifically addressed by the attribution rules, examined potential influential interests on a
case-by-case basis.  TCI argues that this ad hoc approach is slow and expensive. TCI argues that the Commission
permits regulated entities to self-certify in a variety of other circumstances because self-certification is efficient and
less costly and does not impose an overbroad restriction or require a case-by-case determination. 

24.       RCN argues that a "control" approach would not be workable because it is vague, would require
the devotion of significant resources to a case-by-case analysis of each system, and would invite the creation of
carefully designed corporate interests that would indicate lack of control on paper but would not reflect the actual
influence that such interests would carry.  RCN observes that the practicalities of corporate decision-making are
different from structures set forth on paper.  RCN argues that a rational decision-maker will make decisions in the
best interests of its investors, whether the investors vote or not.  CU states that cable operators need little or no
direct ownership in a cable system in order to exert pressure with contractual rights.  CU states that partners who
have minimal ownership use methods to protect their interests by creating options, put-sell provisions, and rights of
refusal provisions in partnership agreements. 

25.       NCTA asserts that the Commission has endeavored to "permit arrangements [under the attribution
rules] in which a particular ownership or positional interest involves minimal risk of influence, in order to avoid
unduly restricting the means by which investment capital may be made . . . ."  Most of the cable operators argue
that the current rules interfere with the benefits of clustering their systems.  They argue that clustering benefits
subscribers by enabling cable operators to lower costs; improve current services; more efficiently deploy new,
innovative services such as internet, interactive video and telephony; develop and distribute regional programming
services; and provide centralized, more responsive customer service.

26.       AT&T, TCI, NCTA and MediaOne argue that the Commission should take into account not only
the benefits to video programming, but also the benefits that clustering and economies of scale offer for bundled
voice, data and cable services.  They argue that the Commission should consider the benefits of enabling cable
operators to compete with incumbent local exchange carriers ("ILECs") to provide these services.  Cable operators
argue that they cannot compete with ILECs without being able to form larger clusters comparable in size to the
areas served by some of the newly merged ILECs, which are not subject to subscriber limitations and are able to
enjoy the benefits of economies of scale.

27.       Adelphia et al. argue that there are numerous benefits to their alliances with TCI: (1) TCI partners
are able to create more efficient and larger regional clusters, (2) Falcon and Insight will be able to maintain a
presence in the cable market unlike other independent cable operators who have been forced to sell, (3) TCI
partners benefit from TCI's capital and technical experience, and (4) their alliances with TCI have enabled the
partners to reach a critical mass so that they are able to offer better, less expensive technology to subscribers.  As
a result of clustering and TCI's financial, technical and programming support, TCA and Bresnan argue that they
are able to rebuild their systems to provide hybrid fiber coaxial ("HFC") architecture which enables them to provide
more channel capacity, multiplexed networks, advanced pay-per-view programming, internet service and
telephony.

28.       Cablevision acquired approximately 800,000 subscribers from TCI in the New York area, which
brought Cablevision's number of subscribers to more than 2.5 million in the New York metropolitan area. 
Cablevision argues that without TCI's involvement, Cablevision would not have been able to cluster its systems and
develop an economy of scale that would have permitted it to achieve the economic benefits of clustering.  Through
clustering, Cablevision argues that it was able to successfully develop local programming because there are more
local subscribers.

29.       DIRECTV and Ameritech argue that an MSO's subscribers do not pay lower costs simply
because of the purported efficiencies of clustering.  Rather, MSOs, they reason, are able to charge lower costs
because they use their large size to obtain programming on more favorable terms than smaller companies: "Because
this advantage is not grounded in superior efficiency, it is a barrier to effective competition in the multichannel
video services industry."  TCI argues that if another cable operator cannot achieve the scale necessary to achieve
lower programming costs, it should be attributed to that cable operator's unpopularity with consumers rather than
the fact that another cable operator is able to obtain lower programming costs.

30.       RCN argues that how the MSOs will compete with LECs is irrelevant to this proceeding.  RCN
and Univision argue that TCI's stake in Cablevision and its joint ventures with Adelphia et al. will give TCI an
important voice in their business plans, harm consumers, and impede competition.  Ameritech argues that TCI's
system swaps and joint ventures have significantly increased TCI's market power by giving it access to more
subscribers.  For example, Ameritech notes that TCI's contribution of 850,000 subscribers to Cablevision now
gives TCI an attributable interest in Cablevision's 3.5 million subscribers.  Given these joint ventures coupled with
its ownership of Satellite Services, Inc. ("SSI") (a TCI subsidiary that sells to TCI partners "[m]any of the popular
networks. . . at rates which are lower than those which would otherwise be obtainable"), TCI can obtain,
Ameritech asserts, virtually any terms it wants from a cable programmer, including exclusivity and steep discounts
from even unaffiliated cable programmers.  Univision states that given TCI's investment in the joint ventures, it
is implausible that the small cable operators will ignore any "suggestions" that TCI might make.  RCN notes that
the FTC approval of the TCI/Cablevision transaction was based on an antitrust analysis, rather than the public
interest analysis that the Commission should apply under Section 613 of the Communications Act, and is therefore
irrelevant to this proceeding. 

31.       Cablevision argues that its transaction with TCI enhances competition by enabling Cablevision to
compete with Bell Atlantic, DIRECTV and RCN.  Furthermore, Cablevision argues that TCI's transactions
actually reduce TCI's market power by transferring subscribers to another company.  Time Warner argues that the
structure of TCI's joint ventures will not pose an anticompetitive risk.

32.       If the control certification proposals discussed above are not accepted or if an operator cannot
make the necessary certification, Adelphia et al. argues that as long as the operator owns 50% or less of a venture
and does not have managerial control, the operator should be attributed with only its pro rata share of the venture's
subscribers.  Likewise, Time Warner and MediaOne propose that an MSO should only be attributed with the
percentage of a corporation or a partnership's subscribers that equals the MSOs percentage equity interest in the
corporation or partnership.  For example, if an MSO holds a 25% interest in a partnership, MediaOne argues that
only 25% of the partnership's subscribers should be attributed to the MSO.

          3.   Discussion
          
33.       The cable operators focus their arguments on the attribution rules applicable to the horizontal
ownership rules.  However, the cable operators have not presented a valid basis for a radical departure from our
attribution rules framework, a framework that Congress found appropriate for the Commission to consider for the
horizontal ownership rules.  The cable operators have not shown differences in the ownership, financing or
management structures between the cable and broadcast industries that would warrant creating such a different type
of attribution standard for the cable horizontal ownership or other cable rules.

34.       Cable operators argue that the programming market has evolved so that even large MSOs have
a limited impact on programming, and the attribution rules associated with the horizontal ownership rules inhibit
cable clustering.  In addition, they argue that the cable attribution rules should be different from the broadcast
attribution rules because, unlike broadcasters, cable operators generally do not compete on the local level and the
purposes of the broadcast and cable rules are different. These arguments are more appropriately addressed to the
scope of the horizontal ownership rule itself, rather than the attribution rules.  As we recently stated in the
Broadcast Attribution Report and Order,   

     The attribution rules are designed to attribute entities that wield significant influence on core operations of
     the licensee.  It is the ownership rules that limit investment based on our core policies of diversity and
     competition.  
     
Arguments with respect to the status of the programming market, vertical integration, non-cable competitors and
cable clustering were properly raised and resolved in our companion Horizontal Ownership Third Report and
Order.  Any changes to the horizontal ownership limits should be accomplished directly through an alteration of
the limit rather than through a manipulation of what is considered to be ownership.

35.       In any event, we disagree with NCTA and TCI's argument that differences in the services that
cable operators and broadcasters provide in the local market present a basis for establishing different sets of
attribution standards for the local broadcast ownership rules and the cable horizontal ownership rules.  What is
relevant here is the market to which the rules are directed and the purposes of the rules.  The appropriate market for
an analysis of the horizontal ownership rules is the national market, not the local market.  In the horizontal
ownership limits statute, Section 613, Congress directed the Commission to set limits on the concentration of
ownership at the national level.  Congress was concerned that the anticompetitive effects of increased concentration
at the national level might reduce the availability of diverse programming content.  Thus, although the local
broadcast rules and the horizontal ownership rules address different markets, their purposes are the same: both sets
of rules are designed to promote competition within the industry and a diversity of viewpoints and programming. 
Given that the cable horizontal ownership limits and the broadcast ownership rules serve similar purposes, it is
appropriate, with certain exceptions discussed below, to use the same attribution standards for these rules.  As
discussed below, the cable operators do not persuade us that the broadcast attribution standards do not accurately
capture equity or debt interests that convey influence or control.  

36.       We also continue to believe that the cable operators' "control" proposals, which we previously
rejected in the Horizontal Ownership Second Report and Order, do not take into account the variety of ways that
an investor may exert influence or control over a company.  An individual or firm does not need actual operational
control over (or to be the management of) a company in order to exert influence and control over that company. 
As discussed below, equity, debt and partnership interests confer on their holders influence and control, regardless
of whether the holders maintain operational control of the company.  Moreover, the TCI transactions discussed in
the record of this proceeding demonstrate the control proposal's lack of credibility.  TCI's transactions include
joint ventures where it has between a third and half the members of the board, rights of first refusal and
supermajority rights or the right to veto fundamental decisions such as the sale of assets, declaration of bankruptcy,
issuance of equity interests, consolidations, mergers, and capital calls.  These rights clearly confer some degree of
control or influence by TCI over the joint ventures.  We agree with RCN and CU that, under these circumstances,
it is more likely that a reasonable entity will consider the spoken or unspoken interests of its investors.

37.       TCI's relationships with its partners demonstrates the influence that an investor can have over an
entity even if the investor does not have actual, operational control over the entity's programming.  Each of TCI's
partners may take advantage of TCI's industry alliances, even if the partner is not required by TCI to do so.  In the
case of programming, each of TCI's partners can purchase at a low price cable programming networks that TCI
has chosen to do business with.  We find it unlikely that the TCI partners would purchase the same cable networks
at a higher price from a company other than TCI's subsidiary, SSI.  We agree with Ameritech that the
programming purchases by TCI's partners from SSI extend TCI's power in the programming marketplace.  Cable
networks selected for carriage by TCI have a greater chance of being carried by the TCI partners.  Conversely,
cable networks not carried by TCI are placed at a disadvantage because they are required to compete with
discounted SSI cable networks for carriage on the TCI partners' cable systems.
 
38.       In addition, the control proposals would be unworkable and would not provide regulatory
certainty.  Under the control proposals, there are too many variables that the Commission and interested parties
would have to weigh before a determination of non-control could be made.  For example, the Commission would
be required to examine, among other things, the contracts between the parties (such as contracts between TCI's
programming distributor subsidiary SSI and the TCI affiliates), the entity's corporate documents, the prior and
current course of dealings between the parties, the structure of their board and management, and the rights and
obligations of the interested parties.  Many of these factors are subject to change over time.

39.       With regard to the proposal that an investor be apportioned a percentage of a cable system's
subscribers equal to the investor's percentage equity interest, we find no basis in the statute or in fact or theory to
support such a rule.  This proposal assumes that there is some logical basis for attributing an investor only some
proportional influence over a cable system commensurate with the investor's percentage equity interest or that
there would be some equitable reason to proceed in this manner.  Investor A's 25% equity interest in cable system
X, however, does not limit investor A's influence to 25% of cable system X's subscribers or 25% of the decision
made by the system.  Investor A's 25% equity interest enables it to exert influence or control over all aspects of
the operation of the system, including what programming the system selects for all of its subscribers

     B.   Voting Equity Benchmark

40.       We turn next to suggestions for more specific changes in the attribution rules and address first
those provisions of the rules that apply in common to both the general and program access attribution provisions. 
For both types of rules a 5% voting equity interest would be considered an attributable interest.    A number of
parties have suggested that 5% is too low a number.

          1.   Comments

41.       Bresnan, Time Warner, Chase, Mediacom and Comcast argue that the attribution standard for the
cable horizontal ownership cap should be relaxed so that cable operators will have greater access to capital in order
to upgrade their systems to true broadband service, to implement new technologies, such as digital television, and
to increase investment in new programming services.  Bresnan argues that TCI's ownership interest in it and TCI's
assistance to it will benefit subscribers who will then have access to hundreds of channels of programming at low
costs due to the cost efficiencies of Bresnan's partnership with TCI.  Chase argues that the 5% voting interest
threshold is simply too low a threshold for many institutions to invest.  Chase reasons that raising the voting
benchmark to10% will not give investors ultimate control over the company, but will recognize that investors must
have some input to reduce the risk of the investment. 

42.       Except for the horizontal ownership attribution rules that Time Warner believes should be
abolished, Time Warner argues that the Commission should raise the voting benchmark to at least 10% and could
safely raise it to 20% in order to increase the availability of capital.  NCTA argues that there has been no showing
that an investor with a 5% interest has the ability to direct a system's core functions.  NCTA notes that the
Department of Interior uses a 10% threshold for acreage limitations, the SEC uses a 10% threshold for insider
trading rules, and the Department of Transportation uses a 10% threshold for certain reporting requirements.  Time
Warner states that the Commission uses higher benchmarks for other rules such as a 20% direct and 25% indirect
equity interest held by aliens in broadcast properties and the 40% interest that small businesses or rural telephone
companies are permitted to hold for purposes of the CMRS spectrum aggregation limit.

43.       TCI challenges the voting equity benchmark bright line test on the grounds that the "size of the
financial interest [is] a highly imprecise indicator of the extent to which the financial interest conveys control." 
TCI asserts that, in order to determine an investor's control, other factors must be examined, such as the
composition of the board, who has authority over management, and the size of other minority shareholders. 
However, TCI also argues that a case by case analysis of such factors would be too costly in terms of time and
money.  TCI therefore proposes that the Commission adopt its control certification approach as a middle ground
between a bright line test and a case by case analysis.

44.       RCN argues that the program access standard should apply to the horizontal ownership rules in
order to prevent cable companies from clustering in major markets and blocking RCN from those markets. 
Comcast states that RCN's request is based on little more than a desire to achieve a competitive advantage.  Time
Warner states that the need for investment far outweighs a theoretical risk of anticompetitive influence and that
RCN's proposal runs counter to the deregulatory intent of the Telecommunications Act of 1996.  Because RCN's
clustering proposal is more appropriately addressed in the context of the substantive horizontal ownership rules, we
do not address it here.

          2.   Discussion

45.       In establishing voting equity provisions of the attribution rules, we focus on issues of control or
influence.  The attribution rules are intended to exempt from attribution ownership or positional interests that
present minimal risk of influence in order to avoid unduly restricting access to capital but to attribute those interests
that permit a significant potential for influence or control.  Based on the record of this proceeding, our parallel
review of the broadcast attribution rules, a review of similar standards by other regulatory agencies, and academic
studies relating to corporate governance, we conclude that the existing 5% voting share benchmark better takes into
account the relevant considerations than any alternative that has been proposed.  We recognize that the dynamics
of corporate life are varied and change over time.  Thus, it is understandable that a provision of this type may be
thought to be an ill fitting test of control or influence in some circumstances that might be revealed by a detailed
review of the facts of particular situations.  Such a particularized review process, however, would provide no
certainty to parties planning transactions and would not necessarily lead to enduring conclusions even as to a
particular entity.  It is necessary therefore to analyze general benchmarks in order to develop a proper standard.

46.        In earlier proceedings, we found, based on an ownership survey, that, in a widely-held corporation,
a 5% shareholder is likely to be one of the largest 2 or 3 shareholders and therefore to be in a position to command
the attention of management, and that a 5% benchmark was an appropriate threshold for attribution of interests in
a closely-held corporation based on several possible ownership scenarios.  There is a body of more recent academic
evidence that tends to confirm our earlier conclusions, demonstrating that interest holders of 5% can likely exert
considerable influence on a company's management and operational decisions.  One recent study demonstrated that
block trades involving 5 to 10 percent of a firm's voting stock resulted in a 27 percent turnover rate of the chief
executive officer of the traded firm, that a 20 to 35 percent block trade resulted in a 40 percent turnover rate of the
CEO, and that block trades over 35 percent of the voting equity resulted in a 56 percent turnover rate.  The turnover
of the CEO was tracked over a one-year period following the date of the trade.  These results, spanning an increasing
level of ownership starting at 5 percent, demonstrate a consistent relationship between ownership trades and the rate
of replacement of top management.  The results imply that investors who acquire and hold such large blocks of
voting stock can influence the choice of management of the firms in which they invest.  

47.         Another study presents evidence that 5 percent or greater stockholders vote more actively than
less-than-five percent shareholders, and they tend to vote more often against the recommendations of management
in votes over corporate anti-takeover amendments.  This study suggests that larger owners, starting at a 5 percent
level of ownership, tend to be more active in influencing management than smaller owners.  The two studies
considered together provide evidence that ownership percentages starting at 5 percent can influence management
policies.

48.        Based on these studies, we therefore disagree with TCI's argument that the voting equity
benchmark is too highly imprecise to be usable in the rules.  Moreover, the voting equity benchmark is superior to
a test requiring a case-by-case review of each and every cable transaction because it reduces regulatory costs,
provides regulatory certainty, and permits planning of financial transactions.

49.       We also disagree with commenters' arguments that the cable equity benchmark should conform to
certain 10% benchmarks adopted by other federal agencies.  Those agencies' rules serve different interests than the
Commission's ownership rules.  For example, the Department of Transportation's 10% rule is designed to identify
substantial interests, and the SEC's insider trading rule is designed to prevent intrinsically illegal or undesirable
activities.  Our rule is more analogous to the SEC's 5% ownership reporting benchmark.  Under the SEC 5%
benchmark, any person who becomes a direct or indirect owner of more than 5% of any class of stock of a company
must file a statement with the SEC. The general purpose of this reporting requirement is to ensure that investors are
alerted to potential changes in control, which is similar to the attribution rule's goal of identifying interests which
confer on their holders the potential for influence or control.

50.       The commenters in this proceeding have not shown that other Commission attribution rules have
similar purposes to the cable rules such that the attribution standards should be the same.  The 40% CMRS
spectrum rule is designed to foster ownership by certain entities that have traditionally had difficulty gaining access
to capital.  Likewise, the commenters have not show how the alien ownership limits have objectives similar to the
rules involved in this proceeding.

51.       Regarding access to capital, we note that total capital available for cable investment is projected
to double in 1999 at $ 24.160 billion from $12.326 billion in 1992.  Available capital has steadily grown from
$16,731 billion in 1996, $21.396 billion in 1997 and $22.607 billion in 1998.  In addition, in 1999, cable operators
are projected to have approximately $3.44 billion in surplus capital available.  This dramatic increase in cable
capital and capital surpluses decreases any cause for concern regarding the availability of capital.  Nevertheless, to
the extent there remain any capital concerns, as discussed below, we are raising the passive investor benchmark to
20%.

     C.   Passive Institutional Investor Benchmark

          1.   Background

52.       Our attribution rules do not attribute voting stock interests held by "passive investors" of less than
10%.  Passive investors are "investment companies, as defined by 15 U.S.C.  80a-3, insurance companies and
banks holding stock through their trust departments in trust accounts."  In the Attribution Order, we concluded that
these entities play passive roles because they lack the interest and the ability to actively participate in the firms in
which they invest, and that setting a higher investment benchmark for such investors posed little risk of influence or
control

          2.   Comments

53.       Some commenters request that the passive ownership benchmark be raised and the definition of
passive investor be expanded.  To increase capital availability, Time Warner argues that the threshold should be
raised to 20%, and TCI argues that it should be raised to 49%.  NCTA argues that the Commission should relax
the passive ownership benchmark because passive investors by definition are not involved in a system's core
functions and raising the benchmark will increase the flow of capital.  For small cable operators, NCTA argues
that passive investments should not be attributable at all in order to give them more access to capital.  

54.       Mediacom, Chase and Comcast argue that institutional investors should be treated as passive
investors. Chase argues that institutional investors invest in entities to obtain returns on their equity, not to harm
the entities and diminish their profits; therefore, Chase argues that attribution standards for ownership rules should
be distinguished from rules designed to control behavior, such as program access and program carriage.  Chase
asserts that investment companies should be permitted to control seats of the board so long as they do not control
the board and do not participate in the day-to-day operations of the entity in question.  Chase urges the
Commission to recognize that investors must have some input to reduce the risk of the investment. 

          3.   Discussion

               a.   The Appropriate Passive Institutional Investor Benchmark

55.       For the reasons set forth in the Broadcast Attribution Report and Order, we will raise the cable
passive investor benchmark to 20%.  We believe that the legal and fiduciary requirements that constrain a passive
institutional investor will ensure their passivity with respect to the management and operational affairs of a
company.  In addition, we believe that raising the benchmark is a relatively safe way to increase access to capital
while continuing to capture influential interests. We will not raise the benchmark higher than 20%.  As we stated
in the Broadcast Attribution Report and Order, we must act cautiously when relaxing the attribution rules so that
the purpose of the rules is not undermined.  Based on the record before us in the Broadcast Attribution Proceeding,
we found that voting stock held by passive investors could become decisive in proxy disputes, and passive investors
accordingly could not be considered equivalent to limited partners or non-voting shareholders.

               b.   Definition of Passive Investors

56.       We will not expand the passive investor definition to include other types of investors.  We are not
convinced that other types of investors lack the interest or the ability to participate actively in companies in which
they have invested. This is particularly true of public pension funds, many of which have apparently become
increasingly active in proxy fights and other devices to put pressure on management perceived to be under-
performing.  Furthermore, commercial and investment bank activities do not fall under the same fiduciary
restrictions, discussed above, that apply to bank trust departments.  In addition, we have not been presented with
sufficient evidence thus far to revise our earlier tentative conclusion not to include SBICs and SSBICs in the
definition of passive investors.  As we have noted, under certain circumstances, these entities are authorized to
exercise control over debtor companies for temporary periods. Furthermore, an investment advisor, acting on behalf
of its client, might exert the same level of influence or control as might the client.  Therefore, unlike the categories
currently defined as passive investors, we do not find evidence of regulatory or other safeguards ensuring that other
types of investors will remain passive.  While several commenters favored expanding the definition of the passive
institutional investor category, they did not supply persuasive evidence or analysis to support their case and, in
particular, to contradict evidence that these institutional investors can be actively involved in the companies in which
they invest.  Indeed, the record here shows that some classes of institutional investors believe they should have the
right to control seats on the board and to be actively involved.

     D.   Partnership Interests

          1.   Comments

57.        Under the Commission's current attribution rules governing partnership interests, general partners
and non-insulated limited partnership interests are attributable, regardless of the amount or percentage of equity held. 
An exception from attribution applies only to those limited partners who meet the Commission's insulation criteria
and certify that they are not materially involved in the management or operations of the partnership's media
interests.
  
58.       Time Warner argues that the attribution standards applicable to limited partnerships are overly
restrictive in that a limited partnership investment no matter how small is attributable unless it is "insulated" under
what Time Warner asserts are the Commission's overly-stringent standards.  Time Warner states that the
Commission should change its insulation criteria to make them consistent with federal and state securities
regulations which require that limited partners in "business development companies" be given the right to vote to
elect or remove their general partners.  In addition, Time Warner argues that the Commission should permit
investors to communicate with the partnership about their investments and to enter into arms-length contractual
relationships with respect to the partnership's business, as nonvoting or de minimus voting shareholders in
corporations are permitted to do, without being attributable.  Finally, Time Warner argues that a limited
partnership interest of less than 33% should not be attributable in any partnership with at least 20 limited partners
if the partnership certifies that the interest holder will not be actively involved in the partnership's media affairs.

59.       CU argues that the limited partner insulation exemption should be eliminated because, even though
"insulated," limited partners nevertheless exercise some persuasion in partnership affairs that the attribution rules
might not capture.

60.       Bresnan argues that the Commission should not eliminate its insulated limited partner exception
because it would frustrate Bresnan's ability to upgrade its systems.  In addition, Bresnan argues that the
Commission should apply its "single majority shareholder" exemption to partnerships because a minority
shareholder does not have control, Bresnan asserts, over the entity.

          2.   Discussion

61.       For the reasons set forth in the Broadcast Report and Order, we find no basis to alter our
conclusion that limited partnership interests are distinct from corporate equity voting interests and that our limited
partnership insulation criteria are necessary to identify partnership interests that confer influence or control.  As we
have previously found, partners in a limited partnership have the power, through contract, to determine their
respective rights.  As a result, the power of a limited partner to influence or control the operations of the
partnership may not be proportional to the limited partner's equity interest, because the extent of its power may be
modified by contract.  Thus, the insulation criteria are designed to identify situations within which it is safe to
presume that a limited partner will not be materially involved in the media management and operations of the
partnership.  

62.       We decline to loosen the insulation criteria to accommodate widely held limited partnerships, such
as "business development companies," that are organized under federal and state laws that require that investors
have powers to exert significant influence or control over their partnerships.  Like partnerships, these new business
entities have contractual flexibility for organizing their management, thereby giving their investors the contractual
ability to determine their rights.  More importantly, the federal and state laws that regulate business development
companies and partnerships may permit and sometimes require those entities to organize themselves in a manner
that would enable their members to exert significant influence or control over the partnership.  Thus, federal and
state laws may fail to provide sufficient assurances that a limited partner lacks the ability to be materially involved
in the partnership's media activities, which is the central purpose of the insulation criteria.  Accordingly, if an
investor in a business development company cannot meet the insulation criteria because of a federal or state law,
then the investor has the ability to significantly influence or control the company, which warrants attribution under
our rules.

63.       Nevertheless, for the horizontal ownership and channel occupancy limits rules, we agree with
Time Warner that the insulation criteria should be revised.  The horizontal ownership and channel occupancy limits
are designed to address the ability of one MSO or a group of MSOs, by virtue of their size, to impede the flow of
programming from the programmers to consumers.  An MSO may extend its ability to affect the programming
marketplace when it invests in other cable companies.  However, where the MSO is not materially involved in the
video-programming activities of a limited partnership, its investment does not extend its national programming
power and the concerns of Section 613 are not implicated.  In these circumstances where programming is not
affected, the current insulation criteria prevent investments between companies whose combination may bring
benefits to the public, such as cable broadband and telephony services and competition to the incumbent local
exchange carriers or Internet.  In order for the limited partnership to benefit from an investor's expertise in these
areas, it is necessary to craft insulation criteria that will not prevent the investor from offering its services to the
partnership so long as those services are unrelated to the partnership's video-programming activities.

64.       Therefore, we will amend the insulation criteria referenced in footnote 163 above for the horizontal
and channel occupancy limits rules to provide that a limited partnership interest shall be attributed to a limited
partner unless the partnership certifies that this limited partner is not materially involved, directly or indirectly, in
the management or operation of the video-programming-related activities of the partnership.  In order to qualify for
the insulated limited partnership exemption for purposes of these two rules, (1) the limited partner cannot act as an
employee of the partnership if his or her functions, directly or indirectly, relate to the video-programming enterprises
of the company; (2) the limited partner may not serve, in any material capacity, as an independent contractor or
agent with respect to the partnership's video-programming enterprises; (3) the limited partner may not communicate
with the licensee or general partners on matters pertaining to the day-to-day operations of its video-programming
business; (4) the rights of the limited partner to vote on the admission of additional general partners must be subject
to the power of the general partner to veto any such admissions; (5) the limited partner may not vote to remove a
general partner except where the general partner is subject to bankruptcy proceedings, is adjudicated incompetent
by a court of competent jurisdiction, or is removed for cause as determined by a neutral arbiter; (6) the limited
partner may not perform any services for the partnership materially relating to its video-programming activities,
except that a limited partner may make loans to or act as a surety for the business; and (7) the limited partner may
not become actively involved in the management or operation of the video-programming businesses of the
partnership.  Certifications pursuant to these rules should be served on the Commission as described in the notes to
these rules.  In order for the Commission to accept the certification, the certification must be accompanied by facts,
e.g. in the form of documents, affidavits or declarations, that demonstrate that the insulation criteria are satisfied.

     E.   Directors and Officers

          1.   Comments

65.       Time Warner makes three requests for clarification of the attribution rules.  First, according to
Time Warner, alleged "dicta" in Mass Media decisions suggests that the power of a shareholder to appoint a
corporate director is in itself an attributable interest.  Time Warner requests that the Commission expressly
disaffirm this type of attributable interest.  Second, Time Warner argues that the Commission's recusal standard for
the directors and officers of a parent company with regard to a subsidiary is imprecise and overbroad.  Third,
Time Warner requests that the Commission clarify that, for purposes of Section 310(b) of the Communications
Act, an alien entity may hold (1) noninsulated limited partnership interests in a broadcast licensee of up to 20% of
equity or (2) indirect noninsulated limited partnership interests in a broadcast licensee of up to 25% of equity.  Time
Warner also requests that the Commission employ the multiplier to calculate the equity held indirectly by a
noninsulated alien limited partner.

          2.   Discussion

66.       Directors and officers are deemed to have an attributable interest in the entities that they serve.  
We disagree with Time Warner regarding the parameters of the directors and officers attribution rule.  A party that
has the right to appoint a director to the board of an entity has the ability to influence the entity's conduct by virtue
of the director the party selects; thus under the directors and officers rule that party has an attributable interest in
the entity.  Likewise, if two entities share common directors or officers, or have employees that serve as directors
or officers of the other entity, the directors and officers render the entities attributable because of the influence that
directors and officers have over an entity.

67.       Time Warner argues that the recusal standard for the officers and directors of a parent company
with regard to a subsidiary is imprecise or overbroad.  As a general matter, we believe that the recusal standard is
appropriate.  In addition to the guidance provided by the rule, 47 C.F.R.  76.503(h) (officer or director's duties
must be "wholly unrelated to the broadcast licensee or cable television system subsidiary"), the Commission has
provided interpretative guidance in a series of decisions.  We have stated that parties must take steps to prevent
"the recused director from exercising authority or influence in areas that will affect" the subsidiary.  For example,
we have approved steps where the recused director is not involved in decisions or discussions regarding the
particular subsidiary, financial reports are aggregated so that the subsidiary's performance figures are not
separately displayed for the director, and reports to the director are redacted to remove information regarding the
subsidiary. 

68.       For purposes of the horizontal ownership and channel occupancy rules, we will amend the
matters for which a director or officer must recuse himself or herself in order to achieve the purpose of those rules. 
As discussed in Section III.D above, the horizontal ownership and channel occupancy rules are designed to place
limits on a cable operator's programming power.  As long as directors and officers appointed by a partial owner of
a cable operator are not involved in the video-programming activities of the partially owned cable operator, the
concerns of Section 613 that an MSO's programming power will be extended by its ownership interest are not
implicated. Permitting directors or officers who have knowledge and expertise in areas other than video
programming, such as telephony or Internet, to serve with a cable company will benefit the cable company as
technologies converge.  Therefore, to achieve these objectives for the horizontal ownership and channel occupancy
limits rules, appointed or common directors and officers, and the partnership equivalent thereof, shall not be
attributable if they do not participate in the video programming activities of either entity.  To demonstrate that the
officer or director meets the above-stated criteria, the relevant entity shall petition the Commission for a waiver as
set forth in the rule.

69.       Finally, we will not address Time Warner's request regarding alien ownership of broadcast
licensees.  The Cable Attribution Notice did not raise for comment the attribution rules applicable to those rules;
therefore, this is not the appropriate forum to address Time Warner's request.

     F.   Limited Liability Companies

          1.   Comments

70.       Chase and Mediacom request that we expand the insulated limited partner exception to include
insulated members of limited liability companies LLCs.  Mediacom argues that the insulation criteria will prevent
an LLC investor from exerting control over management.

               2.   Discussion

71.       For the reasons set forth in the Broadcast Attribution Report and Order, we will treat LLCs and
other new business forms including registered limited liability partnerships ("RLLPs") under the same attribution
rules that currently apply to limited partnerships.  The insulation criteria applied above to limited partnerships will
apply also to these new business forms.

72.       State laws grant more liberal organizational powers to LLCs and RLLPs than to limited
partnership forms.  Thus, equity holders can retain their limited liability even though they participate in the
management of the entity.  Under these circumstances, we believe that it is important to apply the insulation criteria
to assure that those equity holders that purport to be insulated from management are in fact so insulated.  In addition,
even when an LLC adopts a "corporate form" of organization, there is still sufficient discretion afforded by state law
so that the owners of the enterprise may retain some level of operational control on their own part.  The
organizational restrictions applicable to corporations do not necessarily apply to LLCs. 

73.       To reduce paperwork burdens, we will not routinely require the filing of organizational documents
for LLCs.  However, to remain consistent with our treatment of limited partnerships and insulation criteria, we will
apply the same "non-involvement" requirements for LLC members who are attempting to insulate themselves from
attribution that we require for limited partners who are attempting to insulate themselves.  We will also require LLC
members who seek not to be attributed to submit a statement that the relevant state statute authorizing LLCs permits
an LLC member to insulate itself/himself in the manner required by our criteria, since our experience shows that
state laws vary considerably with respect to the obligations and responsibilities of LLC members.  This policy will
help us to avoid any potential confidentiality concerns, referred to in the Broadcast Attribution Notice, which may
arise if we require the filing of organizational documents. 

          G.   Single Majority Shareholder Exemption and an Equity Plus Debt Rule

               1.   Background

74.       In the Notice in this proceeding and through cross-reference to the Broadcast Attribution Notice,
we asked for comment on whether adjustments should be made in the general attribution rules to eliminate the single
majority shareholder exemption.   We also asked whether there should be an exemption to the single majority
shareholder, debt and nonvoting equity exceptions in cases where a minority shareholder held a significant portion
of an entity's equity (voting and nonvoting) and debt.  We asked whether such a shareholder's interests in the entity
might give the shareholder the ability to influence or control the entity. We asked for comment on a specific
proposal for a new "equity or debt plus" ("EDP") attribution rule.  The proposed EDP rule would ascribe an
attributable interest to an investor that has an interest that exceeds 33% of the total assets (equity plus debt) of an
entity and the investor is either (1) a program supplier of the entity or (2) a same-market media entity subject to the
broadcast cross-ownership rules.  Where an investor held an EDP interest, the nonvoting equity and single majority
shareholder exceptions would not apply.

75.       We also asked whether there are relationships in the cable context that would enable an otherwise
nonattributable interest holder to exert significant influence or control that would warrant a new attribution rule
capturing that interest.  We asked whether contractual or other business relationships between cable entities (such
as affiliations that allow cable entities to purchase programming, technology or equipment on common terms)
implicated the diversity and competition concerns of the cable rules.

          2.   Comments

76.       CU states that cable operators have a monopoly and need little or no direct ownership in a cable
system in order to exert pressure with their retransmission consent and other contractual rights.  CU states that
partners who have minimal ownership use methods to protect their interests by creating options, put-sell provisions,
and rights of refusal provisions in partnership agreements.  Thus, CU supports the equity and debt test and
proposes that debt and equity be regarded together under a new attribution rule.  CU opposes relaxing the
program access standard to permit an exemption where there is a single majority shareholder because vertically
"integrated cable programmers . . . can use their assets to force business practices on supposedly dominant partners
or shareholders."

77.       TCI, Time Warner and NCTA argue that an EDP rule would not be appropriate for the cable
industry.  Noting that the EDP rule proposed in the Broadcast Attribution Further Notice is designed to capture
currently unattributable interests by a program supplier in a broadcast station or interests by a media entity in
another media entity within the same market, NCTA argues that these two types of interests are not present in the
cable context.  NCTA states that a cable operator typically does not compete with another operator within the
same market.  In addition, NCTA, Bresnan and Time Warner argue that a cable programmer is not likely to gain
an investment in a cable operator that would enable the programmer to influence the cable operator in the same
manner that a network can influence a local television station.  Time Warner argues that the investments of the
four major broadcast networks in their affiliated television stations do not prove that there is similar conduct in the
cable industry.

78.       NCTA argues that the Commission should keep the single majority shareholder exception because
minority interest holders cannot direct the core operations of the entity.  First, NCTA argues that there is no
evidence that this exception has harmed competition or diversity.  Second, NCTA argues that the exception permits
investments in smaller cable operators, which is critical for the small operators' continued financial well being.
TCI and Bresnan argue that an EDP rule would severely constrain access to capital when the cable industry needs
additional capital for its transition to digital services and where cable is facing increasing competitive pressures. 
TCI argues that an EDP rule would only serve to capture influential interests, which TCI argues should not be
attributable.  Time Warner argues that nonvoting stock should remain unattributable because as a matter of
corporate law a nonvoting shareholder cannot influence the day-to-day operations of a cable operator.  

79.       Time Warner argues the Cable Attribution Notice erroneously asked for the identification of
"financial" and "other business relationships" that might confer influence or control.  Time Warner asserts that
those interests are not traditional formulations of an attributable interest.  Time Warner states that attributing
certain "contractual or other business relationships in the cable context (including affiliations that allow different
cable entities to purchase programming, technology or equipment on common terms, analogous to JSAs and LMAs
in the broadcast context)" would raise the same types of problems that the Commission faced with the cross interest
policy.  In particular, a cable operator or programmer, Time Warner asserts, would not know whether a proposed
business relationship would fall under the rule without going through a burdensome and time-consuming process
seeking a FCC ruling.  In this regard, Time Warner argues that the cross-interest policy should be eliminated
because the interests covered by the policy are not relevant to the cable or programming rules.

80.       Time Warner and NCTA argue that current cable industry practices regarding the purchase of
programming, technology and equipment do not raise the same concerns that broadcast station agreements do.  In
addition, Time Warner argues that the Commission does not have the statutory mandate to seek comment on how
attributable interests might influence the "technology practices" of an entity.  NCTA asserts that there is no record
evidence that cable business relationships that may influence technology and equipment purchases harm the
marketplace.

          3.   Discussion

               a.   Single Majority Shareholder Exemption

81.       We will eliminate the single majority shareholder exemption from the general cable attribution
rules.  None of the parties in this proceeding provided evidence that they are using this exemption or presented
credible arguments that it should be retained.  Given our concern that a minority shareholder may be able to
exert influence over a company even where a single majority shareholder exists, and given the lack of a record in
this proceeding that the exemption should be retained, on balance we believe that it is appropriate to eliminate
the exemption from the general cable attribution rules.

               b.   Equity plus Debt Rule

82.       The "equity plus debt" proposal discussed in the Cable Attribution Notice will be incorporated
into both the general and the program access attribution rules. We will tailor the rules to address the structure of the
cable industry and to serve the particular purposes of each of the substantive cable rules at issue in this proceeding.
The rule we adopt will act as an exception to the insulated limited partner, debt and nonvoting stock exemptions as
follows: the cable equity and debt rule ("ED rule") will ascribe an attributable interest to an investor that holds an
interest that exceeds 33% of the total asset value (equity plus debt) of the applicable entity.  As a shorthand, we will
use the term "total assets" herein to refer to the total asset value of the entity. We will define equity to include all
stock, whether common or preferred and whether voting or nonvoting, and all partnership interests.  Debt includes
all liabilities, whether short-term or long-term.  Total assets, by definition, are equal to the sum of all debt plus all
equity.
  
83.       The equity/debt approach is intended to resolve our concerns, expressed in the Broadcast
Attribution Notice, that multiple nonattributable business interests could be combined to exert influence over
entities.  As we stated in the Broadcast Attribution Notice, we are concerned that our nonvoting stock, debt and
insulated limited partner exemptions can permit nonattributable investments that could carry the potential for
influence such that they implicate diversity and competition concerns and should be attributed.  In adopting the ED
rule, we affirm our conclusion in the Broadcast Attribution Report and Order that there is the potential for certain
substantial investors or creditors to exert significant influence over key decisions, which may undermine the diversity
of voices we seek to promote.  They may, through their contractual rights and their ongoing right to communicate
freely with the entity, exert as much, if not more, influence or control over some corporate decisions as voting equity
holders whose interests are attributable.  The current attribution rules are thus simply too broad with respect to
certain currently nonattributable interests.

84.       As we decided in the Broadcast Attribution Report and Order, we intend to aggregate the equity
and debt interests of an investor (including both non-voting stock in whatever form it is held and voting stock) in the
applicable entity for purposes of applying the investment threshold.  Thus, when the investor's total investment in
an entity, aggregating all debt and equity interests, exceeds 33% of all investment in the entity (the sum of all equity
plus debt), that investment would be attributable.  In aggregating the different classes of investment, equity and debt,
we intend to use total assets (debt plus voting, non-voting, and preferred stock) as a base.  We will not apply the
percentage threshold separately to debt and to equity interests because this could lead to distortions in applying the
ED rule, depending on the percentage of total assets that each class of interests comprises.  For example, were we
to apply the percentage thresholds separately, a company with only 10 percent of its capital from debt would be
attributable to a creditor providing only 3.4 percent of the company's total assets, while any equity holder providing
32 percent of the total capital would be nonattributable. 

85.       We have decided to follow our decision in the Broadcast Attribution Report and Order to adopt
a 33% investment threshold.  In the Broadcast Attribution proceeding, some commenters advocated a higher
threshold, while others advocated a lower threshold.  ABC stated that a 50% threshold, rather than 33%, more
realistically identifies the type and level of interest that conveys a realistic potential to control the core operations
of a licensee.  Paxson argued for a 25% benchmark, but only for the 4 major networks.  MAP advocated a 20
percent benchmark.  Viacom agreed with 33% in cases where the investor is contractually restricted from
influencing budget, hiring and programming decisions, but argued for a 10% benchmark when contractual
safeguards are not present. Viacom believed that an investment of even 10% of the capitalization of a station,
particularly if coupled with the ability to influence station operations, carries as much influence as a 10% voting
stake.  CBS stated that the threshold should be set no lower than 33% to avoid prohibiting relationships the
Commission has already deemed permissible.   

86.       In the Broadcast Attribution proceeding, we stated that a 50 percent threshold would be
inappropriately high.  Our goal is not merely to attribute interests with the potential to control but also those with
a realistic potential to exert significant influence.  On the other hand, we found that the suggested thresholds of 25
percent or 10 percent appeared to be too low.  In setting the threshold for attribution of these newly attributable
interests, we must be cautious not to set the limit so low as to unduly disrupt capital flow to the cable industry.  In
addition, we believe that the threshold for attribution of nonvoting interests should be substantially higher than the
attribution level for voting interests, which give the holder a ready means to influence the company.  The proposed
33% threshold seems to be an appropriate and reasonable attribution threshold.  We note that we have discretion
to exercise our judgment in setting a percentage threshold in this regard and to draw an appropriate line, a
challenging yet inevitable task for government agencies.  We have employed a 33 percent benchmark applied in the
context of the broadcast cross-interest policy, and that particular benchmark does not appear to have had a
disruptive effect.  In Cleveland Television, the Commission held that a one-third non-voting preferred stock interest
by a broadcaster in another station in the same market conferred "insufficient incidents of contingent control" to
violate the multiple ownership rules or the cross-interest policy, and that the holders, by virtue of ownership of the
non-voting preferred stock interest would not retain the means to directly or indirectly control the station.  More
recently, we have applied Cleveland Television's 33 percent threshold in Roy M. Speer, where we limited the non-
attributable equity holdings of a same-market television licensee in another local television station to 33 percent. 
We will use this threshold in applying the ED rule but note that we could adjust the threshold later, if warranted.

87.       We recognize that the attributable status of a particular investment could change, based, for
example, on a change in the firm's assets, resulting in the investor's interests dropping below the 33 percent
threshold, or vice versa.  We will require parties to maintain compliance with the attribution criteria as any such
changes occur.  Where sudden, unforeseeable changes take place, however, we will afford parties a reasonable time,
one year, to come into compliance with any ownership restrictions made applicable as a result of the change in
attributable status.

88.       We note that the broadcast EDP attribution rule has additional prongs that the cable ED rule does
not.  In order for the broadcast EDP rule to apply, an investor must not only have an interest that exceeds 33% of
the total assets of the applicable entity, but must also either (1) provide over 15% of the entity's programming or
(2) be a same-market media entity subject to the broadcast cross-ownership rules.  These additional prongs were
added to identify "those relationships that may trigger situations in which there is significant incentive and ability
for the otherwise nonattributable interest holder to exert influence over the core operations of the licensee."  We
stated these prongs reflect our "recognition that the category or nature of the interest holder is important to whether
an interest should be attributed." 

89.       In this regard, we explicitly identified two types of interest holders   the major program supplier
and the same-market media entity   that would have the incentive and the means to exert influence over the
broadcast licensee.  The 15% programming prong was designed to capture interests of major television broadcast
networks, among other substantial programmers, in local broadcast stations whereby the networks were extending
their nationwide programming reach through previously unattributable relationships.  Interests captured by the
15% programming EDP rule count toward the broadcast network's or other programmer's national ownership
limit.  The same-market entity prong was designed to capture controlling or influential interest in two media entities
within the same market that would then trigger the local cross-ownership rules, thereby implicating the
Commission's goals of promoting diversity and competition.

90.       The cable ED attribution rule implicitly identifies relationships that confer on otherwise
unattributable investors significant incentive and ability to exert influence over the core interests of the applicable
entity.  Thus, we do not find it necessary in the attribution rule to refer explicitly to the nature of the investor.  With
regard to the cable horizontal ownership limits, the competitive structure of the cable industry differs from that of
the broadcast industry.  As the cable operators in this proceeding have stated, unlike broadcasters, cable operators
generally do not compete in the same markets.  This lack of competition permits and encourages cable operators to
form combinations with one another across markets, as established in this record, in ways that the broadcast
industry does not. These combinations extend the reach of an MSO's influence and control over programming,
thereby expanding its power in the national programming marketplace and accordingly triggering the purpose of the
horizontal ownership limits.  Because cable operators do not compete in the same markets, cable subscribers are
limited to the programming selections that a single system chooses.  One MSO thus has no incentive to distinguish
itself through different programming from another MSO because they do not compete in the same market and likely
hold interests in one another across markets.  Because of this market structure, if an MSO has a significant ED
interest in a system, that interest enables the MSO to significantly influence or control a cable system's core
functions, such as programming, the heart of the horizontal ownership rule.  Thus, the ED interest by itself
implicates the concerns of the rules without the addition of an additional prong.  We also believe that the ED
attribution rule should be applied to the program access type attribution standard, for the reasons set forth in
Section H below.  

91.       Finally, with regard to the same-market media entity cross-ownership prohibition rules at issue in
this proceeding (47 C.F.R.  76.501(d) (cable/SMATV cross-ownership), 76.505 (cable-telco buy-out
prohibitions), and 76.905(b)(2) (effective competition), we will apply the broadcast EDP attribution test applied to
the broadcast/cable cross-ownership prohibition rule for the reasons set forth in the Broadcast Attribution Report
and Order because they serve the same purpose, promoting competition and diversity within a local media market.

92.       We decline at this time to examine contract language on a case-by-case basis to determine whether
the contract gives one of the parties thereto an attributable interest.  We believe that a bright-line ED test is superior
to a case-by-case analysis because it permits the planning of financial transactions and minimizes regulatory costs.
Nevertheless, we retain discretion to review cases that present unique issues where the public interest requires such
a review.  Such cases might occur, for example, when there is substantial evidence that the combined interests held
are so extensive that they raise an issue of significant influence such that the Commission's multiple ownership rules
should be implicated, notwithstanding the fact that these combined interests do not come within the parameters of the
ED rule. We do not intend for this type of review to replace the cross-interest policy that we abolished in the
Broadcast Attribution Report and Order.  We reserve the discretion to examine in the future whether contractual
relations between cable entities that enable them to purchase programming, technology or equipment on common
terms implicates the diversity and competition concerns of the cable rules.

     H.   The Program Access Attribution Standard

          1.   Background

93.       The discussion above relates to attribution criteria that are common to both the "general" and
"program access" attribution rules.  There are important areas, however, where these two sets of rules differ.  More
particularly, the rules differ in that the program access attribution rules attribute nonvoting stock interests, attribute
all partnership interests above 5%, and do not exempt what would otherwise be attributable interests because of the
presence of a single majority shareholder.

94.       We also asked for comment on whether and how we should re-evaluate the program access
attribution standard.  In particular, we sought comment on (1) whether the program access attribution standard
serves the purposes for which it was intended; (2) whether the program access standard is over- or under-inclusive;
(3) whether the program access attribution standard should be revised in relation to the broadcast attribution
standard; (4) whether these two attribution standards should be treated as completely separate and independent
formulations; and (5) whether, in view of the purposes it serves, we should require a more compelling showing
before modifying the program access standard.

          2.   Comments

95.       CU and DIRECTV argue generally that the program access rules should not be relaxed.  WCA
seeks clarification as to whether the "program access" attribution rules apply to all entities subject to the program
access rule.  WCA argues that there is currently a "gap" in the program access rules' definition of an attributable
interest.  WCA states that, although the program access rules are designed to address problems created by the
common ownership of a cable company and a satellite cable programming vendor, the rules appear to apply only
where a cable company has an attributable interest in a programming vendor and not vice versa.  Section 76.1001
of our rules covers a "cable operator, [a] satellite programming vendor in which a cable operator has an attributable
interest, [and] a satellite broadcast programming vendor."  Because this language does not specifically state that
the rule applies to an entity that holds an attributable interest in both a cable operator and a cable programmer,
WCA states that some parties have asserted that the program access rules do not apply where a cable programmer
holds an ownership interest in a cable operator.

96.       For example, Microsoft Corporation maintains a 50% equity interest in the cable programmer
MSNBC and an 11.5% non-voting stock interest in Comcast.  According to WCA, Microsoft has argued that the
program access rules' definition of attributable interest does not explicitly state that the definition applies to interests
in cable companies; thus Microsoft has argued that its interest in Comcast is not attributable and that MSNBC is
not covered by the program access rules.  Based on this argument, Microsoft has never made MSNBC available
to wireless cable operators or other alternative MVPDs.

97.       WCA argues that Microsoft's argument defies common sense.  Under Microsoft's interpretation,
it would not hold an attributable interest in Comcast even if it held a sizable minority voting stock interest in that
company.  WCA also notes that Time Warner holds its cable systems and its cable programmers in separate
subsidiaries, Time Warner Entertainment ("TWE") and Turner Broadcasting respectively.  In addition, after the
proposed AT&T and TCI merger, WCA states that AT&T will hold Liberty cable networks and the TCI systems
in separate subsidiaries.  WCA states that Time Warner and AT&T should not be able to argue that the Turner
cable networks and the Liberty cable networks are exempt from the program access rules because Time Warner's
100% ownership of TWE and AT&T's 100% ownership of the TCI systems are not attributable.  

98.       WCA requests that the Commission amend Section 76.1000(b) to make it clear that common
ownership of, or an attributable interest in, both a cable operator and a cable programmer will trigger the rules. 
WCA states that this was the intent of Congress and that the Commission has recognized that vertical integration
also occurs where a cable programmer holds an ownership interest in a cable operator.

99.       As a preliminary objection, MediaOne states that WCA should file a program access complaint
to resolve this issue.  Comcast and TCI argue that the Commission should not amend the program access rules
because Section 628 of the Communications Act, which authorized the implementation of the rules, specifically
addresses only situations where a cable operator has an attributable interest in a satellite cable programming
vendor.  Paragraphs (b) and (c)(2)(B) of Section 628 refer to a "satellite cable programming vendor[s] in which a
cable operator has an attributable interest."  Section 682(c)(2)(A) refers to a "cable operator which has an
attributable interest in a satellite cable programming vendor."  TCI and Comcast thus argue that the plain
language of Section 628 cannot be read to apply to a third party noncable entity that holds simultaneous ownership
interests in a cable operator and a satellite cable programming vendor.  Moreover, TCI argues that, even if
Section 628 could be read as WCA requests, the Commission should decline to grant WCA's request because the
potential anticompetitive effects associated with vertical concerns do not warrant stringent Commission regulation.

100.      WCA also requests that the Commission initiate a process to examine on a case-by-case basis
whether unique and substantial non-ownership relationships between a cable operator and a nonvertically integrated
cable programmer should be classified as de facto "attributable interests."  WCA states that the consolidation of
cable systems and new joint ventures between cable companies and cable programmers is further tightening the
MSOs stranglehold over cable programming.  Ameritech and WCA state that as a result, a number of nonaffiliated
cable networks such as Fox News, MSNBC, Game Show Network, Eye on People, Home & Garden Television
and TV Land act like vertically-integrated programmers and refuse to sell their products to alternative MVPDs.
WCA proposes that the Commission develop procedural and proof requirements for a case-by-case approach that
would capture these harmful relationships while preventing frivolous complaints against cable programmers.

101.      Comcast argues that the Commission should deny this request because the program access rules
already encompass non-ownership relationships that confer "actual working" control over cable operators. 
Comcast also argues that WCA has not presented any evidence that WCA has been denied video programming due
to a joint venture that is not covered by Section 76.1000(b).  TCI argues that the Commission should adopt TCI's
control "certification proposal" as a less costly approach.

          3.   Discussion

               a.   Changes to the Standard

102.      The proceeding before us raises the general question of whether the different attribution standards
employed can be justified based on the underlying purposes of the different cable rules; whether for one set of rules
it is justifiable to attribute any stock interest above the 5% level, even if it is non-voting stock, whereas other rules
do not attribute nonvoting stock or other financial interests even if they represent a very significant portion of the
total value of the entity involved.  Because different rules address different economic interests and different policy
objectives it is not illogical that different attribution criteria might be more appropriate for one set of rules than
another.  The rules derived from the broadcast attribution rules, including for example the horizontal ownership and
channel occupancy rules, were discussed in terms of promoting competition and diversity and focused on the
influence one entity was likely to have over another. When the program access attribution criteria, which are used,
for example, in the program access, program carriage rules, and for certain rate regulation purposes, were adopted
it was thought desirable to attribute more interests because these rules were designed not only to promote
competition and diversity but to deter specific discriminatory or improper conduct by specific cable operators,
programmers, or other entities.  Having reviewed the rules in question we continue to believe that the program
access attribution rules appropriately take into account the relevant considerations but that an ED rule should be
added to capture debt interests.  In addition, given the purposes of the various rules subject to this proceeding, we
find it appropriate to switch the SMATV/cable cross-ownership rule from the program access attribution standard
to the general attribution standard.

103.      As discussed above, the rules covered by the "program access" attribution standard are designed
to address specific misconduct that adversely affects competition and to focus on economic incentives to
discriminate.  These rules are triggered only where there have been allegations of specific misconduct based on a
relationship between two specific parties.  At that point, we examine the relationship between the parties, and
because specific misconduct has been alleged, the relationship warrants stricter scrutiny.  By contrast, the
ownership rules, such as the horizontal limits and cable/broadcast cross-ownership, are not designed to identify
misconduct per se, but rather are designed to act as structural safeguards against potential anticompetitive conduct. 

104.      Moreover, we note that, unlike the horizontal ownership and broadcast/cable cross-ownership
prohibition, the program access type rules are not designed to limit ownership in entities covered by those rules. 
Rather, the program access type rules simply provide that if an investor holds an interest in an entity covered by the
rules, that investor will be subject to the behavioral constraints of the program access type rules.  Thus, attributing
nonvoting equity and not permitting a single majority shareholder or insulated limited partner exemptions for these
rules in no way deters investment in entities covered by these rules.  In other words, the program access attribution
standard's broader sweep does not raise the capital and investment concerns that the general attribution standard
raises.

105.      It is appropriate to attribute nonvoting equity and to not allow the insulated limited partnership
and single majority shareholder exceptions to the "program access" type rules. By virtue of a significant nonvoting
equity interest, one party has the incentive to influence or favor the other party, and all of the "program access"
type rules are designed to prevent the harm caused by this type of influence or favoritism.  For example, the
program access rules identify investments where a cable operator has an incentive to influence a programmer to
deny access to a cable competitor and the programmer has an incentive to favor the cable operator to keep its
investor satisfied.  The program carriage rules identify situations where an investor has a financial incentive to
influence a cable operator not to carry unaffiliated programming so that the investor's interest in a favored affiliate
is not harmed.  Likewise, the leased access and open video systems rules identify situations where investors have
incentives to favor programmers in which they have investments over other programmers.  Finally, the rules
governing asset transfers between a cable operator and an affiliate and rate pass-throughs for the programming
services of an affiliated programmer target behavior favoring an investment.  Thus, for the "program access" type
rules, even if there is a single majority shareholder or the investor does own voting stock in a company, the investor
has the incentive to influence the company, and the company has the incentive to keep its investor satisfied.  

106.      Allowing a limited partnership exception here would shield from the scope of these "program
access" type rules the very kinds of relationships they are intended to address.  A cable operator cannot insulate
itself from its investment in a programmer when it is charged with denying carriage to unaffiliated programmers,
vertical foreclosure that denies program access to another cable operator, or asset transfers or rate pass-throughs
between the cable operator and the programmer.  Moreover, to be covered by most of these rules, the parties would
have had to enter into a contractual relationship, such as an affiliation agreement.  Thus, the exemption for
insulated limited partners could not apply because insulated limited partners are limited in terms of the contracts
they may enter into with the partnership and still be exempt from attribution.

107.       We also believe that it is appropriate to adopt an ED rule for the "program access" type rules. 
As discussed above, these rules are designed to identify specific misconduct between two parties, and their
attribution rules are designed to identify interests that would confer on their holder the incentive to influence or
favor the other party.  A 33% ED interest would provide such an incentive.  In addition, while the program access
type attribution rules count nonvoting equity, they do not recognize debt.  We find that the types of investors
covered by the program access rules that hold over 33% of the total assets of an entity in the form of debt and
equity would have the incentive to influence that entity.

108.      Given the different purposes of the general and program access type attribution rules, it is
appropriate to realign one of the cable rules.  The program access type rules currently apply to the SMATV/cable
cross-ownership prohibition.  However, because the SMATV/cable cross-ownership prohibition is a structural
safeguard against anticompetitive conduct, we will now apply the general attribution standard to the SMATV/cable
cross-ownership rule. 

               b.   WCA's Proposal

109.      We specifically asked for comment on whether the program access attribution standard was
under-inclusive; thus, we disagree with MediaOne that WCA's request is not within the purview of the Cable
Attribution Notice.  Although the program access rule clearly sets forth in its provisions a program access
attribution standard, we agree with WCA that it is not clear as to which entities are covered by the program access
attribution standard with respect to the program access rule.  We find that the program access attribution standard
should be applied to all entities covered by the program access rule, including cable operators.  Moreover, to the
extent there is a lack of clarity with respect to the remainder of the "program access" type rules, we clarify that the
program access attribution standard should be applied to all entities covered by the "program access" type rules.

110.      For purposes of the program access rule, the issue is what person or entity constitutes a "cable
operator" that holds an attributable interest in a programmer such that the program access rule is triggered. 
Congress defined the term "cable operator" in Section 602 of the Communication's Act as follows:

     [T]he term "cable operator" means any person or group of persons . . . who provides cable service over a
     cable system and directly or through one or more affiliates owns a significant interest in such cable system.
     . . .
          
The Commission established the attribution rules to determine what constitutes a "significant interest."  

111.      The program access attribution rules define what constitutes a "significant interest."  The purpose
of the program access rule, as well as all of the other rules covered by the program access attribution standard, is
to deter discriminatory or improper conduct.  These rules are designed to deter misconduct by all parties covered
by the applicable rules, including cable operators.  To the extent that there is any confusion regarding the definition
of cable operator for purposes of these rules, we will amend these rules to make it clear that any party with an
attributable interest in a cable operator under the program access attribution standard shall be treated as a cable
operator for purposes of these rules.  Thus, if a third party has an attributable interest in a cable operator under the
program access attribution standard, it shall be treated as a cable operator for purpose of the program access type
rules.

112.      We decline to adopt WCA's proposal that we examine on a case-by-case basis whether the
relationship between a cable operator and an unaffiliated cable programmer suggests that they are de facto
affiliated.  As noted above, we favor a bright line test in order to promote regulatory certainty.

     I.   Cable Reform Issues

          1.   Effective Competition

               a.   Background

113.      In this section, we establish rules for the definitions of affiliate for purposes of the "LEC test" and
the "competing provider test" of the effective competition rules.  Under Section 623 of the Communications Act,
a cable operator is not subject to rate regulation if it is subject to effective competition in its franchise area. 
Section 623(l) as amended by the 1992 Cable Act provides three tests for determining effective competition.  A
cable system is exempt from rate regulation if any of the following three tests is met:

          (A)  fewer than 30 percent of the households in the franchise area subscribe
          to the cable service of a cable system [the "low penetration test"];
          (B)  the franchise area is-
               (i)  served by at least two unaffiliated multichannel video
          programming distributors each of which offers comparable video programming
          to at least 50 percent of the households in the franchise area; and
               (ii) the number of households subscribing to programming
          services offered by multichannel video programming distributors other than the
          largest multichannel video programming distributor exceeds 15 percent of the
          households in the franchise area [the "competing provider test"]; or
          (C)  a multichannel video programming distributor operated by the
          franchising authority for that franchise area offers video programming to at
          least 50 percent of the households in that franchise area [the "municipal
          provider test"].

The 1996 Act adds a fourth test to Section 623(l).  Under the new test, a cable operator will be subject to effective
competition if comparable video programming is offered to subscribers within the cable operator's franchise area
by, or over the facilities of, a LEC or its affiliate. Section 623(l)(1)(D) (the "LEC test") provides that effective
competition exists when:
           
                    (D) a local exchange carrier or its affiliate (or any multichannel video
          programming distributor using the facilities of such carrier or its affiliate) offers
          video programming services directly to subscribers by any means (other than
          direct-to-home satellite services) in the franchise area of an unaffiliated cable
          operator which is providing cable service in that franchise area, but only if the
          video programming services so offered in that area are comparable to the video
          programming services provided by the unaffiliated cable operator in that area.
          
114.      In the Cable Reform Notice, seeking comment on rules to implement this statutory change, the
Commission sought comment on the definition of  "affiliate" for purposes of the LEC test.  Resolution of this issue
was then transferred to this proceeding.

115.      Although not specifically related to the effective competition test, the 1996 Act amended Title I,
Section 3 of the Communications Act by adding a definition of "affiliate:"

                    The Term "affiliate" means a person that (directly or indirectly) owns or
          controls, is owned or controlled by, or is under common ownership or control
          with another person.  For purposes of this paragraph, the term "own" means to
          own an equity interest (or the equivalent thereof) of more than 10 percent. 

In the Cable Reform Notice, we noted that this definition applies to our rules "unless the context otherwise
requires," and that the definition of "affiliate" in Title VI of the Communications Act concerning cable television
was not changed by Congress.  As noted above, Title VI provides: 

     [T]he term "affiliate," when used in relation to any person, means another person who owns or controls,
     is owned or controlled by, or is under common ownership or control with, such person.

116.      Given that Title VI does not set a percentage threshold as to ownership, we found that we have
discretion to establish an ownership threshold other than 10% for purposes of Title VI.  However, as an interim
rule, we decided that it was reasonable to adopt the 10% threshold until this rulemaking was completed.  We
decided that active or passive equity interests of 10%, or the equivalent thereof, would constitute an affiliation.  In
addition, we concluded that affiliation could be established through de facto control and that we would determine
on a "case-by-case" basis whether other interests besides equity would be "the equivalent" of an equity interest."

117.      We tentatively concluded that, although the Title I definition was not mandated for use for
purposes of Title VI, we found it reasonable to use this test for purposes of the LEC effective competition rule. 
We asked for comment on this proposal as well as whether passive ownership interests and beneficial interests
should be included.

118.      In addition, in the Cable Attribution Notice, we stated that we intended to review how and
whether any changes in our cable attribution rules should affect our various definitions of "affiliate."  In reviewing
the effective competition rules, we ascertained that the "competing provider test" does not have its own specific
definition of affiliate.  The competing provider test provides that there is effective competition in certain
circumstances where there are at least two "unaffiliated multichannel video programming distributors" in the
franchise area.  As discussed below, we will amend this rule to clarify its definition of the term "affiliate" to bring
it into alignment with our other same market cross-ownership rules.

               b.   Comments

119.      Cable operators argue that the Commission should adopt the Title I 10% threshold or a lesser
threshold for purposes of defining a LEC affiliate.  They argue that both active and passive equity interests should
be deemed attributable.  They also argue that beneficial interests, options, warrants, and convertible debentures
should be attributable as the "equivalents" of equity interests.  Time Warner argues that the Commission should
define the term "beneficial interest" in the same broad manner as the SEC in its Rule 13d-3 under the Securities and
Exchange Act of 1934.  The cable operators argue that these types of "equivalent" interests should be attributable
based on the Commission's policy of assessing ownership based on economic realities.

120.      Some parties argue that the Commission should adopt a 5% threshold for the effective competition
test.  CCTA argues that LECs are using video service businesses as a defensive strategy to keep capital out of the
hands of cable operators who seek to compete with LECs in telephony.

121.      Time Warner proposes that the Commission modify FCC Form 430 to require wireless cable
licensees to certify: (1) whether the licensee is LEC-affiliated; and (2) whether the entity offering service over the
wireless facilities is LEC-affiliated.  This certification requirement, according to Time Warner, would save public
and private resources by eliminating the need to investigate the relationships for compliance with the Commission's
rules.

122.      LECs and public interest groups argue that the Title VI definition of affiliate should continue to
govern the implementation of Title VI provisions, including the effective competition test.  BellSouth states that the
definition in Title VI is unambiguous and should be followed.  GTE argues that the application of a 10%
benchmark is arbitrary and does not comport with realities of telecommunications marketplace.  Bell Atlantic
argues that Commission should use Title VI definition because the use of specific thresholds are overly intrusive
and burdensome.  ICTA favors retaining the Title VI definition of "affiliate" in determining when effective
competition exists, and urges the Commission to exclude beneficial or passive interests in this context. 

123.      RCN contends that the application of the Title I 10% benchmark to rules arising under Title VI
would create a disparity in the regulatory treatment of cable affiliates and LEC affiliates.  Under the Title I
definition, RCN argues that the presence of any competitive MVPD in which a LEC has a passive, non-controlling
10% or greater equity investment would establish a basis for a cable operator to claim that effective competition
exists in the market.  Cable operators, on the other hand, would be unfairly advantaged because, RCN asserts, they
would be considered "affiliated" with other entities only if actual control is established under the broader Title VI
definition of "affiliate." Accordingly, RCN argues that cable operators would be entitled to deregulation while
maintaining a much higher ownership interest in a purported "unaffiliated" competing provider.

124.      USTA opposes the application of the Title I benchmark in the Title VI context.   USTA argues
that the Commission has developed expertise in applying the Title VI definition of "affiliate" in attribution cases,
and should continue to do so.  USTA contends that Congress' decision not to extend the Title I benchmark to the
definition of "affiliate" contained in Title VI means that Congress did not intend to extend a benchmark to Title VI
situations.

125.      While SBC did not take a position on whether the Commission should adopt the Title I definition,
SBC argues that the term "beneficial interests" is not commonly understood to constitute an ownership interest and
therefore should not be deemed an "equivalent interest" under the Title I definition.

               C.   Discussion

                    i.   LEC Test

126.      We reaffirm our decision in the Cable Reform Notice that, given that Congress left Title VI's
definition of affiliate unaltered, Title VI's definition continues to govern rules promulgated thereunder.  In our
discretion under Title VI, we believe it reasonable to adopt, with some modifications, the 10% threshold proposed
in the Cable Reform Notice because we believe 10% will reasonably capture active LEC participation in a MVPD
that may give the MVPD access to the resources of the LEC that Congress envisioned would be necessary to
provide effective competition to cable.

127.      Congress expected that the LECs would be robust competitors of cable operators because of their
financial and technical resources.  Congress also expected that the LECs would be effective competitors because
their presence would be ubiquitous.   Congress did not envision deregulation until competition was in place.

128.      Thus, unlike the other cable attribution rules at issue in this order, which are designed to promote
competition by ascertaining the minimum interest necessary for one entity to potentially influence another, the LEC
test is designed to promote competition where a LEC participates in the ownership and operation of a MVPD to
such an extent that the MVPD may truly enjoy the financial and technical resources of the LEC in order to compete
with cable.  Based on the distinct purpose here involved   to identify not the potential for influence but the existence
of significant involvement   we believe a higher attribution standard is in order for the LEC test.

129.      More specifically, it is appropriate to set the equity threshold higher than the standard 5%
threshold in order to serve this different purpose and to require greater LEC involvement in MVPDs before
deregulation takes place based on this test.  We set the equity threshold at 10% threshold to reflect when a LEC has
become a MVPD competitor in the relevant market.  Given our relatively limited experience with the LEC test to
date, we hesitate to set the threshold higher than 10% at this time.  Nevertheless, we reserve the option to raise the
10% threshold in the future if we determine that 10% does not accurately capture the entrance of LEC competition
in the marketplace.  The 10% threshold will apply to corporate voting stock and partnership interests.  The 10%
threshold will apply only to active LEC investors.  An MVPD competitor cannot be effectively a LEC competitor
by virtue of its affiliation with a LEC that is a passive investor only, unless the LEC has an ED interest in the
MVPD.  We believe that an ED investment, given its size, by a LEC gives an MVPD significant access to the
resources of a LEC such that it can be presumed that there is effective LEC competition.  The LEC effective
competition test presumes, without any market share or market penetration test, that the presence of a LEC
competitor or use of a LEC's facilities, given the LEC's identity, resources, and functions, has significance beyond
that of other competitors.  Consistent with this rationale we will not treat positional interests (officers and directors)
or insulated limited partnership interests as creating attributable interests that would result in a finding of LEC
effective competition because these interests would not give the MVPD access to the LEC's significant resources. 
Given that we have not adopted the Title I definition of affiliate, we need not determine what constitutes an interest
"equivalent" to an equity interest.

130.      We also decline to adopt Time Warner's proposal that we require wireless cable licensees to
certify with the Commission whether they are LEC-affiliates and whether any entity offering services over their
facilities is LEC affiliated.  In the Cable Reform Report and Order, we adopted a mechanism for cable operators
to obtain evidence from their competitors in order to establish effective competition.

                    ii.  Competing Provider Test

131.      As discussed above, in reviewing the effective competition rules, we ascertained that the
"competing provider test" does not have its own specific definition of the term "affiliate." The competing provider
test provides that there is effective competition in certain circumstances where there are at least two "unaffiliated
multichannel video programming distributors" in the franchise area.  Because the competing provider test provides
the same function as our cross-ownership prohibitions, we will apply cable/SMATV cross-ownership attribution
rules to determine whether two MVPDs serving the same market are "affiliated."

132.      Given that the competing provider test does not have its own definition, the default definition in
Part 76's definition section applies:

     When used in relation to any person, [the term affiliate means] another person who owns or controls, is
     owned or controlled by, or is under common ownership or control with, such person.

Our rules then define cognizable ownership and control interests under this rule through our attribution rules. 
However, our rules do not specify which attribution rules apply to the competing provider test.  Although, in the
Cable Attribution Notice, we initiated a review of our various definitions of "affiliate" in light of our attribution
rules, no party filed comments on the competing provider rule.

133.      We find it appropriate to apply the general attribution rules to the competing provider test because
it is designed to act as a structural safeguard in order to promote competition.  Certainly we could not find that a
cable operator faced effective competition in its franchise area if the "competing" MVPD was partially owned by
the cable operator.  The cable/SMATV cross-ownership attribution standards will capture interests that would
enable their holders to engage in anticompetitive behavior.  We will accordingly amend the competing provider rule
to clarify its attribution standard.

          2.   Cable-Telco Buy-Outs

               a.   Background

134.      Section 302 of the 1996 Act added Section 652 to the Communications Act.  Section 652 provides
in relevant part:

                    (a)  Acquisitions By Carriers.  No local exchange carrier or any affiliate of such carrier owned
          by, operated by, controlled by, or under common control with such carrier may purchase or
          otherwise acquire directly or indirectly more than a 10 percent financial interest, or any
          management interest, in any cable operator providing cable service within the local exchange
          carrier's telephone service area.
          
                    (b)  Acquisitions By Cable Operators.  No cable operator or affiliate of a cable operator that is
          owned by, operated by, controlled by, or under common ownership with such cable operator may
          purchase or otherwise acquire, directly or indirectly, more than a 10 percent financial interest, or
          any management interest, in any local exchange carrier providing telephone exchange service
          within such cable operator's franchise area.

135.      In the Cable Reform Notice, we implemented Section 652 by adopting its terms into our rules. 
We solicited comment regarding the definition of "affiliate" as that term is used in the context of the cable-telco
buy-out provision.

               b.   Comments

136.      Alliance argues that the Commission should interpret the term "affiliate" as broadly as possible
in order to protect programming choices.  BellSouth and USTA argue that the definition should capture only
controlling interests pursuant to Title VI's definition of affiliate.  Time Warner argues that the context of the cable-
telco buyout prohibitions requires the same affiliation rules as the other cable cross-ownership rules.

                    c.   Discussion

137.      We agree with Time Warner that the cable-telco buyout prohibition rules should have the same
affiliation rules as the other cable cross-ownership rules in this proceeding and therefore adopt these rules.  Both
the cable-telco buyout prohibition rules, adopted in the 1996 Act, and general rules are designed to promote
competition in the market place for telecommunications services.  We find nothing in the record to persuade us that
the cable-telco rules should be any more broad or narrow that the other general cable cross-ownership rules.


     J.   Transition Issues

138.      For the rules setting limits on ownership   the horizontal ownership rule, the cable/SMATV cross-
ownership prohibition rule, the cable-telco buyout prohibition, and the effective competition test, any interests
acquired on or after June 26, 1998, the date that the Cable Attribution Notice was issued, will be subject to the new
attribution rules adopted in this Report and Order.  We believe this cutoff date is reasonable and appropriate since
parties were on notice that the attribution rules were subject to change once the Cable Attribution Notice was
adopted, and that any interests acquired on or after that date could be subject to any rule changes.  Interests acquired
before June 26, 1998 will be subject to the rules in existence on that date.

139.      The grandfathering of interests under the ownership rules shall be permanent so long as the
interest is not transferred.  If the grandfathered interest is later assigned or transferred, the grandfathering will not
transfer to the assignee or transferee.  New owners cannot demonstrate the same equitable considerations that
prompt us to grandfather existing owners whose current interests are now unavoidably placed in violation of the
multiple ownership rules based on adoption of the new attribution rules.  For non-grandfathered ownership interests
that are now attributable, i.e., those acquired on or after June 26, 1998, and which must be divested to comply with
our ownership rules, we believe that a twelve-month period should be sufficient for parties to identify buyers.

140.      For the remaining rules at issue in this proceeding, all interests acquired at any time will be subject
to the rules adopted in this Report and Order.  These remaining rules, such as the vertical channel occupancy limits
and the program access rules, do not require that an investor divest any interests in order to comply with an
ownership limit.  Rather these rules prescribe that a cable operator behave in certain ways.  There will be no
grandfathering of interests covered by these remaining rules. 

141.      To the extent that compliance with our rules as a result of this Order poses a threat to a cable
system's Y2K preparedness, the Commission will consider, on a case by case basis, petitions for forbearance of
these rules until after the Year 2000 date rollover period.

IV.  Final Regulatory Flexibility Analysis

142.      As required by the Regulatory Flexibility Act ("FRA"), an Initial Regulatory Flexibility Analysis
(IRFA) was incorporated in the Notice of Proposed Rulemaking in CS Docket No. 98-82, FCC 98-112.  The
Commission sought written public comment on the proposals in the Notice, including comment on the IRFA.  This
Final Regulatory Flexibility Analysis ("FRFA") conforms to the RFA.

     A.   Need for, and Objectives of, this Report and Order

143.      The cable attribution rules define what constitutes a "cognizable interest" that triggers application
of various Commission rules relating to the provision of cable television services.  This Report and Order amends
the attribution rules in order to better effectuate their intended goals as well as to make them more effective.  

               B.   Summary of Significant Issues Raised by Public Comments in Response to the
          IRFA
          
144.      The cable operators argue generally that the attribution rules restrict the availability of capital. 
NCTA argues that passive investments in small cable operators should not be attributable in order to give these
operators more access to capital.  In addition, NCTA argues that the ED exception to the single majority
shareholder exception will limit investments in small cable operators.  None of the parties in this proceeding filed
comments on how other issues raised in the Notice would impact small entities.  Nevertheless, we discuss below
how we considered the impact on small entities.

               C.   Description and Estimate of the Number of Small Entities to Which the Rule Will
          Apply

145.      The RFA generally defines "small entity" as having the same meaning as the terms "small
business," "small organization," and "small governmental jurisdiction" and "the same meaning as the term 'small
business concern' under the Small Business Act unless the Commission has developed one or more definitions that
are appropriate for its activities. 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").  The Small Business Enforcement Fairness Act of 1996 (SBREFA) provision
of the RFA also applies to nonprofit organizations and to governmental organizations such as governments of cities,
counties, towns, townships, villages, school districts, or special districts with populations of less than 50,000. 
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 SBA 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."

     Local Franchising Authorities

146.      There are 85,006 governmental entities in the United States.  This number includes such entities
as states, counties, cities, utility districts and school districts.  We note that any official actions with respect to cable
systems will typically be undertaken by local franchising authorities ("LFAs"), which primarily consist of counties,
cities and towns.  Of the 85,006 governmental entities, 38,978 are counties, cities and towns.  The remainder are
primarily utility districts, school districts, and states, which typically are not LFAs.  Of the 38,978 counties, cities
and towns, 37,566 or 96%, have populations of fewer than 50,000.  Thus, approximately 37,500 "small
governmental jurisdictions" may be affected by the rules proposed in this Notice.

     Cable Services or Systems

147.      The SBA has developed a definition of small entities for cable and other pay television services
under Standard Industrial Classification 4841 (SIC 4841), which covers subscription television services, which
includes all such companies with annual gross revenues of $11 million or less.  This definition includes cable
systems operators, closed circuit television services, direct broadcast satellite services, multipoint distribution
systems, satellite master antenna systems and subscription television services.  According to the Census Bureau,
there were 1,423 such cable and other pay television services generating less than $11 million in revenue that were
in operation for at least one year at the end of 1992.

148.      The Commission has developed its own definition of a "small cable company" and "small system"
for the purposes of rate regulation.  Under the Commission's rules, a "small cable company," is one serving fewer
than 400,000 subscribers nationwide.  Based on our most recent information, we estimate that there were 1,439
cable companies that qualified as small cable companies at the end of 1995.  Since then, some of those companies
may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused
them to be combined with other cable companies.  Consequently, we estimate that there are fewer than 1,439 small
entity cable companies that may be affected by the proposal adopted in this Notice.  The Commission's rules also
define a "small system," for the purposes of cable rate regulation, as a cable system with 15,000 or fewer
subscribers.  We do not request nor do we collect information concerning cable systems serving 15,000 or fewer
subscribers and thus are unable to estimate at this time the number of small cable systems nationwide.

149.      The Communications Act also contains a definition of a "small cable operator," 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."  The Commission has determined that there are 61,700,000 subscribers in the United States. 
Therefore, we found that an operator serving fewer than 617,000 subscribers is deemed a small operator, if its
annual revenues, when combined with the total annual revenues of all of its affiliates, do not exceed $250 million
in the aggregate.  Based on available data, we find that the number of cable operators serving 617,000 subscribers
or less totals 1,450.  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. 

     Satellite Master Antennae Television ("SMATV") Operators

150.      Industry sources estimate that approximately 5200 SMATV operators were providing service as
of December 1995.  Other estimates indicate that SMATV operators serve approximately 1.05 million residential
subscribers as of September 1996.  The ten largest SMATV operators together pass 815,740 units.  If we assume
that these SMATV operators serve 50% of the units passed, the ten largest SMATV operators serve approximately
40% of the total number of SMATV subscribers.  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 SMATVs, we believe that a substantial number of  SMATV operators
qualify as small entities.

     Local Exchange Carriers ("LECs")

151.      Neither the Commission nor the SBA has developed a definition for small LECs.  The closest
applicable definition under the SBA rules is for telephone communications companies other than radiotelephone
(wireless) companies.  The most reliable source of information regarding the number of LECs nationwide is the
data that we collect annually in connection with the TRS Worksheet.  According to our most recent data, 1,410
companies reported that they were engaged in the provision of local exchange services.  We do not have
information on the number of carriers that are not independently owned and operated, nor what carriers have more
than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of LECs that
would qualify as small business concerns under SBA's definition.  Consequently, we estimate that there are fewer
than 1,347 small incumbent LECs.

     Cable Programmers

152.      The Commission has not developed a definition of small entities applicable to producers or
distributors of cable television programs. Therefore, we will utilize the SBA classifications of Motion Picture and
Video Tape Production (SIC 7812), and Theatrical Producers (Except Motion Pictures) and Miscellaneous
Theatrical Services (SIC 7922).  These SBA definitions provide that a small entity in the cable television
programming industry is an entity with $21.5 million or less in annual receipts for SIC 7812, and $5 million or less
in annual receipts for SIC 7922.  Census Bureau data indicate the following:  (a) there were 7,265 firms in the
United States classified as Motion Picture and Video Production (SIC 7812), and that 6,987 of these firms had
$16.999 million or less in annual receipts and 7,002 of these firms had $24.999 million or less in annual receipts;
and (b) there were 5,671 firms in the United States classified as Theatrical Producers and Services (SIC 7922), and
that 5627 of these firms had $4.999 million or less in annual receipts. 


               D.   Description of Projected Reporting, Recordkeeping, and Other Compliance
          Requirements
          
153.      This Report and Order permits investors in limited liability companies and registered limited
liability partnerships to insulate their interests from attribution.  In order to insulate their interests, investors must
file a certification pursuant to 47 C.F.R.  76.501(f).  Directors and officers may petition the Commission for a
waiver of attribution under 47 C.F.R.  76.501(f); 47 C.F.R.  76.503; 47 C.F.R.  76.504.  This Report and
Order sets ownership and investment thresholds in entities covered by the Commission's cable rules, Section 76,
that subject their investors to the cable rules.  See Appendix A.

               E.   Steps Taken to Minimize Significant Economic Impact on Small Entities, and
          Significant Alternatives Considered
          
154.      We find that there are no significant alternatives to the rules and policies set forth in this Report
and Order that would minimize the impact on small entities, and we note that no commenter proffered alternatives
to these rules and policies that would address the concerns of the rules.  

155.      The Report and Order retains the current 5 percent active voting stock attribution benchmark.  We
believe that our original decision to set a 5 percent benchmark to capture influential interests remains valid and will
not unduly restrict capital availability.  Further, we note cable capital expenditures have doubled in the past 7 years. 
To the extent that there are still concerns about not impeding capital flow to broadcasting, we believe that they will
be adequately addressed since the Report and Order increases the passive investor benchmark.   

156.      The Report and Order increases the voting stock benchmark from 10 percent to 20 percent for
passive investors.  We believe that increasing the passive investor benchmark to 20 percent will give cable operators
increased access to investment capital, while preserving the Commission's ability to effectively enforce its ownership
rules.  This decision takes into account the special nature of the passive investor category, in terms of the legal and
fiduciary requirements that constrain passive investors' involvement in the management and operational affairs of the
firms in which they invest.  In addition, passive investors have become an increasingly important source of
investment capital to the corporate sector. 

157.      Further, we note that the record in the Broadcast Attribution proceeding strongly supports an
increase in the passive investor benchmark and supports our belief that such an increase will help assure that the
attribution changes adopted herein will reinforce the trends in cable investment.  We believe that increasing the
passive investor benchmark is a relatively safe way to increase capital flows, without compromising the ability of
our attribution rules to capture influential interests.  The Report and Order retains the current definition of "passive
investors," which is limited to bank trust departments, insurance companies and mutual funds.

158.      The Report and Order eliminates the single majority shareholder exemption and adopts an equity
plus debt ("ED") attribution proposal, as a new rule that will function in addition to the other attribution rules. 
Under this new ED rule, where the investor's interest exceeds 33% of an entity's total asset value of the entity
(equity plus debt), the interest will be attributable.  The Report and Order refers to total asset value as "total
assets."

159.      The ED rule reflects our current judgment as to the appropriate balance between our goal of
maximizing the precision of the attribution rules by attributing all interests that are of concern, and only those
interests, and our equally significant goals of not unduly disrupting capital flow and of affording ease of
administrative processing and reasonable certainty to regulatees in planning their transactions.  The bright-line ED
test will provide more regulatory certainty than a case-by-case approach that requires review of contract language. 
Thus, the ED rule will permit planning of financial transactions, would also ease application processing, and would
minimize regulatory costs.

160.      We have no basis to conclude or reason to believe that the ED rule would unduly deter investment. 
The equity/debt proposal does not preclude investment by any entity; rather, it caps nonattributable investment levels
for entities that have the potential to influence their investments.  Additionally, to help assure that our actions today
do not unduly impede capital flow to cable, we have raised the passive investor benchmark.  As discussed above, we
believe that because of the nature of passive investors, we may raise that benchmark consistent with our goal of
maximizing the precision of the attribution rules.

161.      While some commenters argued that applying the ED rule to program suppliers would curb
investment, they do not provide empirical evidence to support this argument.  We also note that the rule does not
preclude investment, but merely provides that investments over a certain level will be deemed presumptively
attributable.

162.      Some commenters suggested that the insulated limited partnership criteria be modified to eliminate
conflicts with state law.  However, state and federal law provisions may fail to provide sufficient assurance that the
limited partner will lack the ability to significantly influence or control the partnership's media activities.

163.      We will not create exceptions for widely held limited partnerships, such as Business Development
Companies, from the current insulation criteria applicable to limited partnerships or otherwise revise those insulation
criteria.  The essential character of these new business forms for determining attributable interests is the contractual
flexibility they allow in setting up and managing the association.  Therefore, we believe that the insulation criteria are
needed for these business forms to insure the "lack of material involvement" on the part of investors.  This would
imply that in some limited number of cases, interests may not be insulated because of state laws that require investor
rights that conflict with the insulation criterion.  However, commenters have not provided sufficient evidence
concerning the number or importance of such instances that would compel the Commission to create specialized
exemptions for these specialized business forms.  Since these entities are allowed greater contractual flexibility under
state law than are limited partnerships, we believe that greater caution is warranted in dealing with these novel forms. 
Further, we have not been presented with evidence to demonstrate that the current insulation criteria are no longer
valid or effective in achieving their goals.  

164.      Nevertheless, for the horizontal ownership and channel occupancy limits rules, we will amend the
insulation criteria to provide that a limited partnership interest shall be attributed to a limited partner unless the
partnership certifies that this limited partner is not materially involved, directly or indirectly, in the management or
operation of the video-programming-related activities of the partnership.  The horizontal ownership and channel
occupancy limits are designed to address the ability of one MSO or a group of MSOs, by virtue of their size, to
impede the flow of programming from the programmers to consumers.  An MSO may extend its ability to affect
the programming marketplace when it invests in other cable companies.  However, where the MSO is not materially
involved in the video-programming activities of a limited partnership, its investment does not extend its national
programming power and the concerns of Section 613 are not implicated.  In these circumstances where
programming is not affected, the current insulation criteria prevent investments between companies whose
combination may bring benefits to the public, such as cable broadband and telephony services and competition to
the incumbent local exchange carriers or Internet.  In order for the limited partnership to benefit from an investor's
expertise in these areas, it is necessary to craft insulation criteria that will not prevent the investor from offering its
services to the partnership so long as those services are unrelated to the partnership's video-programming
activities.

165.      We disagreed with Time Warner regarding the parameters of the directors and officers attribution
rule.  A party that has the right to appoint a director to the board of an entity has the ability to influence the entity's
conduct by virtue of the director the party selects; thus under the directors and officers rule that party has an
attributable interest in the entity.  Likewise, if two entities share common directors or officers, or have employees
that serve as directors or officers of the other entity, the directors and officers render the entities attributable because
of the influence that directors and officers have over an entity.

166.      As a general matter, we believe that the recusal standard for directors and officers of a parent
company is appropriate.  In addition to the guidance provided by the rule, 47 C.F.R.  76.503(h) (officer or
director's duties must be "wholly unrelated to the broadcast licensee or cable television system subsidiary"), the
Commission has provided interpretative guidance in a series of decisions.  We have stated that parties must take
steps to prevent "the recused director from exercising authority or influence in areas that will affect" the subsidiary. 
For example, we have approved steps where the recused director is not involved in decisions or discussions
regarding the particular subsidiary, financial reports are aggregated so that the subsidiary's performance figures are
not separately displayed for the director, and reports to the director are redacted to remove information regarding
the subsidiary.

167.      For purposes of the horizontal ownership and channel occupancy rules, we will amend the matters
for which a director or officer must recuse himself or herself in order to achieve the purpose of those rules.  As
discussed in Section III.D above, the horizontal ownership and channel occupancy rules are designed to place limits
on a cable operator's programming power.  As long as directors and officers appointed by a partial owner of a
cable operator are not involved in the video-programming activities of the partially owned cable operator, the
concerns of Section 613 that an MSO's programming power will be extended by its ownership interest are not
implicated. Permitting directors or officers who have knowledge and expertise in areas other than video
programming, such as telephony or Internet, to serve with a cable company will benefit the cable company as
technologies converge.  Therefore, to achieve these objectives for the horizontal ownership and channel occupancy
limits rules, appointed or common directors and officers, and the partnership equivalent thereof, shall not be
attributable if they do not participate in the video programming activities of either entity.  To demonstrate that the
officer or director meets the above-stated criteria, the relevant entity shall petition the Commission for a waiver as
set forth in the rule.

168.      We will treat LLCs and RLLPs under the same attribution rules that currently apply to limited
partnerships.  The insulation criteria that currently apply to limited partnerships would apply without modification
to these new business forms.  Therefore, LLC or RLLP owners would be treated as attributable unless the owner
can certify their lack of direct or indirect involvement in the management and operations of the media-related
activities of the LLC or RLLP.  We will not distinguish among LLCs based on whether they adopt a more
centralized or decentralized form.  We believe that this decision is justified for the reasons discussed in the Broadcast
Attribution Notice, which were also supported in the record and fully discussed in the Broadcast Report and Order.

169.      We will not routinely require the filing of organizational documents for LLCs.  However, to remain
consistent with our treatment of limited partnerships and insulation criteria, we will require the same "non-
involvement" statement for LLC members who are attempting to insulate themselves.  We will also require LLC
members who submit the foregoing statement to submit a statement that the relevant state enabling statute
authorizing LLCs permits an LLC member to insulate itself/himself in the manner required by our criteria, since our
experience shows that state laws vary considerably with respect to the obligations and responsibilities of LLC
members.  This policy will help us to avoid any potential confidentiality concerns, referred to in the Broadcast
Attribution Notice, which may arise if we require filing of organizational documents.

170.        The Report and Order clarifies that the program access attribution standard applies to all entities
covered by the program access type rules.  The clarification will not restrict investment in entities covered by the
program access type rules.  Rather, investors in such entities will be subject to the behavioral guidelines of these
rules.  The Order also applies the general attribution standard to the cable/SMATV cross-ownership rule and
applies the program access attribution standard to the vertical channel occupancy limits.  In addition, the ED
attribution rule is added to the program access attribution standard for the same reasons that it is added to the
general attribution standard. 

171.      The Report and Order adopts the general attribution standard for the effective competition
competing provider rule and the cable-telco buy-out prohibition.  These two rules have the same purpose as the
cable/SMATV cross-ownership rules and therefore warrant the same standard.

172.      The Report and Order adopts a 10% voting equity and an ED interest attribution standard for the
LEC prong of the effective competition test.  The Order reasons that the LEC test warrants a different standard
because it serves a different purpose than the other cable rules at issue. The effective competition test is designed to
trigger when a LEC is actively involved in an MVPD. Thus, the LEC attribution standard is set higher than the
broadcast attribution standard in order to encourage LEC involvement in an MVPD and to capture when a LEC is
truly involved in the MVPD.

173.      The Report and Order adopts grandfathering and transition measures for interests that become
newly attributable pursuant to the new rules adopted. 

     Report to Congress: The Commission will send a copy of this Report and Order, including this FRFA,
in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 
801(a)(1)(A).  A copy of this Report and Order and FRFA (or summary thereof) will also be published in the
Federal Register, pursuant to 5 U.S.C.A.  604(b), and will be sent to the Chief Counsel for Advocacy of the Small
Business Administration.

V.   Paper Work Reduction Act

174.      The requirements adopted in this Report and Order have been analyzed with respect to the
Paperwork Reduction Act of 1995 (the "1995 Act") and found to impose new or modified information collection
requirements on the public.  Implementation of any new or modified information collection requirements will be
subject to approval by the Office of Management and Budget ("OMB").  The Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public to take this opportunity to comment on the
information collection requirements contained in this Report and Order, as required by the 1995 Act.  Comments
should address: (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 the respondents, including the use of automated
collection techniques or other forms of information technology.

175.      Written comments by the public on the information collection requirements are due 60 days from
date of publication of this Report and Order in the Federal Register. Comments should be submitted to Judy Boley,
Federal Communications Commission, Room 1-C804, 445 12th Street, S.W., Washington, DC  20554, or via the
Internet to jboley@fcc.gov.  For additional information on the information collection requirements, contact Judy
Boley at (202) 418-0214 or via the Internet at the above address.

VI.  Ordering Clauses

176.      Accordingly, IT IS ORDERED, pursuant to Sections 4(i), 303 and 612, 613(f)(1)(A)&(B), 616,
623, 628 and 652 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303, 532,
533(f)(1)(A)&(B), 536(a), 543, 548(b), 572 and 573, that the amendments to discussed in this Report and Order
and set forth in Attachment A ARE ADOPTED. These amendments shall become effective 70 days after
publication in the Federal Register, following OMB approval, unless a notice is published in the Federal Register
stating otherwise.

177.      IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference
Operations Division, SHALL SEND a copy of this Report and Order, including the Final Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with paragraph
603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.A.  601 et seq.    

                              FEDERAL COMMUNICATIONS COMMISSION


                              Magalie Roman Salas
                              Secretary

                                Appendix A

                               Rule Changes

Part 76 of Title 47 of the Code of Federal Regulations is amended to read 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, 303, 303a, 307, 308, 309,  312,  315,  317,  325, 
503,  521,  522,  531,  532,  533,  534,  535,  536,  537,  543,  544,  544a,  545,  548,  549,  552,  554, 556, 
558,  560,  561,  571,  572,  573.

Section 76.501 Cross-Ownership

1.   Section 76.501 is amended by revising Notes 1, 2, 5 and 6 as follows:  

Note 1: Actual working control, in whatever manner exercised, shall be deemed a cognizable interest.

Note 2: In applying the provisions of this section, ownership and other interests in an entity or entities covered by
this rule will be attributed to their holders and deemed cognizable pursuant to the following criteria:

     (a) Except as otherwise provided herein, partnership and direct ownership interests and any voting stock
interest amounting to 5% or more of the outstanding voting stock of a corporation will be cognizable;

     (b) Investment companies, as defined in 15 U.S.C. 80a-3, insurance companies and banks holding stock
through their trust departments in trust accounts will be considered to have a cognizable interest only if they hold
20% or more of the outstanding voting stock of a corporation, or if any of the officers or directors of the
corporation are representatives of the investment company, insurance company or bank concerned.  Holdings by
a bank or insurance company will be aggregated if the bank or insurance company has any right to determine
how the stock will be voted.  Holdings by investment companies will be aggregated if under common
management.

     (c) Attribution of ownership interests in an entity covered by this rule that are held indirectly by any
party through one or more intervening corporations will be determined by successive multiplication of the
ownership percentages for each link in the vertical ownership chain and application of the relevant attribution
benchmark to the resulting product, except that wherever the ownership percentage for any link in the chain
exceeds 50%, it shall not be included for purposes of this multiplication.  [For example, if A owns 10% of
company X, which owns 60% of company Y, which owns 25% of "Licensee," then X's interest in "Licensee"
would be 25% (the same as Y's interest since X's interest in Y exceeds 50%), and A's interest in "Licensee" would
be 2.5% (0.1 x 0.25).  Under the 5% attribution benchmark, X's interest in "Licensee" would be cognizable, while
A's interest would not be cognizable.]

     (d) Voting stock interests held in trust shall be attributed to any person who holds or shares the power to
vote such stock, to any person who has the sole power to sell such stock, and to any person who has the right to
revoke the trust at will or to replace the trustee at will.  If the trustee has a familial, personal or extra-trust
business relationship to the grantor or the beneficiary, the grantor or beneficiary, as appropriate, will be attributed
with the stock interests held in trust.  An otherwise qualified trust will be ineffective to insulate the grantor or
beneficiary from attribution with the trust's assets unless all voting stock interests held by the grantor or
beneficiary in the relevant entity covered by this rule are subject to said trust.

     (e) Subject to paragraph (i) of this Note, holders of non-voting stock shall not be attributed an interest in
the issuing entity.  Subject to paragraph (i) of this Note, holders of debt and instruments such as warrants,
convertible debentures, options or other non-voting interests with rights of conversion to voting interests shall not
be attributed unless and until conversion is effected.

     (f)(1) Subject to paragraph (i) of this Note, a limited partnership interest shall be attributed to a limited
partner unless that partner is not materially involved, directly or indirectly, in the management or operation of the
media-related activities of the partnership and the relevant entity so certifies.  An interest in a Limited Liability
Company ("LLC") or Registered Limited Liability Partnership ("RLLP") shall be attributed to the interest holder
unless that interest holder is not materially involved, directly or indirectly, in the management or operation of the
media-related activities of the partnership and the relevant entity so certifies.

     (2) In the case of a limited partnership, in order for an entity to make the certification set forth in
paragraph (g)(1) of this section, it must verify that the partnership agreement or certificate of limited partnership,
with respect to the particular limited partner exempt from attribution, establishes that the exempt limited partner
has no material involvement, directly or indirectly, in the management or operation of the media activities of the
partnership.  In the case of an LLC or RLLP, in order for an entity to make the certification set forth in paragraph
(g)(1) of this section, it must verify that the organizational document, with respect to the particular interest holder
exempt from attribution, establishes that the exempt interest holder has no material involvement, directly or
indirectly, in the management or operation of the media activities of the LLC or RLLP.  The criteria which would
assume adequate insulation for purposes of these certifications are described in the Memorandum Opinion and
Order in MM Docket No. 83-46, FCC 85-252 (released June 24, 1985), as modified on reconsideration in the
Memorandum Opinion and Order in MM Docket No. 83-46, FCC 86-410 (released November 28, 1986). 
Irrespective of the terms of the certificate of limited partnership or partnership agreement, or other organizational
document in the case of an LLC or RLLP, however, no such certification shall be made if the individual or entity
making the certification has actual knowledge of any material involvement of the limited partners, or other interest
holders in the case of an LLC or RLLP, in the management or operation of the media businesses of the
partnership or LLC or RLLP.

     (3) In the case of an LLC or RLLP, the entity seeking insulation shall certify, in addition, that the
relevant state statute authorizing LLCs permits an LLC member to insulate itself as required by our criteria.

     (g) Officers and directors of an entity covered by this rule are considered to have a cognizable interest in
the entity with which they are so associated.  If any such entity engages in businesses in addition to its primary
media business, it may request the Commission to waive attribution for any officer or director whose duties and
responsibilities are wholly unrelated to its primary business.  The officers and directors of a parent company of a
media entity, with an attributable interest in any such subsidiary entity, shall be deemed to have a cognizable
interest in the subsidiary unless the duties and responsibilities of the officer or director involved are wholly
unrelated to the media subsidiary, and a certification properly documenting this fact is submitted to the
Commission.  The officers and directors of a sister corporation of a media entity shall not be attributed with
ownership of that entity by virtue of such status.

     (h) Discrete ownership interests held by the same individual or entity will be aggregated in determining
whether or not an interest is cognizable under this section.  An individual or entity will be deemed to have a
cognizable investment if:
     (1) The sum of the interests held by or through "passive investors" is equal to or exceeds 20 percent; or
     (2) The sum of the interests other than those held by or through "passive investors" is equal to or exceeds
5 percent; or
     (3) The sum of the interests computed under paragraph (i)(1) of this section plus the sum of the interests
computed under paragraph (i)(2) of this section is equal to or exceeds 20 percent.

     (i) Notwithstanding paragraphs (e) and (f) of this Note, the holder of an equity or debt interest or
interests in an entity covered by this rule shall have that interest attributed if the equity (including all
stockholdings, whether voting or nonvoting, common or preferred, and partnership interests) and debt interest or
interests, in the aggregate, exceed 33 percent of the total asset value (all equity plus all debt) of that entity,
provided however that:

          (1) in applying the provisions of paragraph (i) of this note to  76.501,  76.505 and 
76.905(b)(2), the holder of an equity or debt interest or interests in a broadcast station, cable system, SMATV or
multiple video distribution provider subject to  76.501,  76.505, or  76.905(b)(2) ("interest holder") shall have
that interest attributed if the equity (including all stockholdings, whether voting or nonvoting, common or
preferred, and partnership interests) and debt interest or interests, in the aggregate, exceed 33 percent of the total
asset value (defined as the aggregate of all equity plus all debt) of that entity; and 
(i) the interest holder also holds an interest in a broadcast station, cable system,
SMATV, or multiple video distribution provider that operates in the same market, is subject to  76.501, 
76.505, or  76.905(b)(2) and is attributable without reference to this paragraph (i); or
(ii) the interest holder supplies over fifteen percent of the total weekly broadcast
programming hours of the station in which the interest is held.

          (2) For purposes of applying subparagraph (i)(1), the term "market" will be defined as it is
defined under the rule that is being applied.

Note 5: Certifications pursuant to this section and these notes shall be sent to the attention of the Cable Services
Bureau, Federal Communications Commission, 445 12th Street, N.W. Washington, D.C. 20554.

Note 6: In applying paragraph (a) of  76.501, no minority voting stock interest will be cognizable if there is a
single holder of more than 50% of the outstanding voting stock of the corporation in which the minority interest is
held, provided however, that an investor that has an interest under the terms of Note 2(i) of this section shall have
that interest attributed.

* * * * *

Section 76.503 National subscriber limits

2.   Section 76.503 is amended by adding Note 2 as follows:

     Note 1:  Attributable Interest shall be defined by reference to the criteria set forth in Notes 1-5 to 
76.501 provided however, that:

     (a) Notes 2(f) and 2(g) to  76.501 to shall not apply;

     (b)(1) Subject to Note2(i) to  76.501, a limited partnership interest shall be attributed to a limited
partner unless that partner is not materially involved, directly or indirectly, in the management or operation of the
video programming-related activities of the partnership and the relevant entity so certifies.  An interest in a
Limited Liability Company ("LLC") or Registered Limited Liability Partnership ("RLLP") shall be attributed to
the interest holder unless that interest holder is not materially involved, directly or indirectly, in the management
or operation of the video programming-related activities of the partnership and the relevant entity so certifies.

     (2) In the case of a limited partnership, in order for an entity to make the certification set forth in
paragraph (b)(1) of this section, it must verify that the partnership agreement or certificate of limited partnership,
with respect to the particular limited partner exempt from attribution, establishes that the exempt limited partner
has no material involvement, directly or indirectly, in the management or operation of the video programming
activities of the partnership.  In the case of an LLC or RLLP, in order for an entity to make the certification set
forth in paragraph (g)(1) of this section, it must verify that the organizational document, with respect to the
particular interest holder exempt from attribution, establishes that the exempt interest holder has no material
involvement, directly or indirectly, in the management or operation of the video programming activities of the
LLC or RLLP.  The criteria which would assume adequate insulation for purposes of these certifications are
described in the Report and Order, FCC No. 99-288, CS Docket No. 98-82 (released October 20, 1999).  In
order for the Commission to accept the certification, the certification must be accompanied by facts, e.g. in the
form of documents, affidavits or declarations, that demonstrate that these insulation criteria are met.  Irrespective
of the terms of the certificate of limited partnership or partnership agreement, or other organizational document in
the case of an LLC or RLLP, however, no such certification shall be made if the individual or entity making the
certification has actual knowledge of any material involvement of the limited partners, or other interest holders in
the case of an LLC or RLLP, in the management or operation of the video-programming activities of the
partnership or LLC or RLLP.

     (3) In the case of an LLC or RLLP, the entity seeking insulation shall certify, in addition, that the
relevant state statute authorizing LLCs permits an LLC member to insulate itself as required by our criteria.

     (c) Officers and directors of an entity covered by this rule are considered to have a cognizable interest in
the entity with which they are so associated.  If any such entity engages in activities other than video-
programming activities, it may request the Commission to waive attribution for any officer or director whose
duties and responsibilities are wholly unrelated to the entity's video-programming activities.  In the case of
common or appointed directors and officers, if common or appointed directors or officers have duties and
responsibilities that are wholly unrelated to video-programming activities for both entities, the relevant entity may
request the Commission to waive attribution of the director or officer.  The officers and directors of a parent
company of a video-programming business, with an attributable interest in any such subsidiary entity, shall be
deemed to have a cognizable interest in the subsidiary unless the duties and responsibilities of the officer or
director involved are wholly unrelated to the video-programming subsidiary, and a certification properly
documenting this fact is submitted to the Commission.  The officers and directors of a sister corporation of a
cable system shall not be attributed with ownership of that entity by virtue of such status.

* * * * *

Section 76.504      Limits on carriage of vertically integrated programming

3.   Section 76.504 is amended by deleting paragraph (h) and adding Note 1 as follows:

     Note 1:  Attributable Interest shall be defined by reference to the criteria set forth in Notes 1-5 to 
76.501 provided however, that:

     (a) Notes 2(f) and 2(g) to  76.501 to shall not apply;

     (b)(1) Subject to Note2(i) to  76.501, a limited partnership interest shall be attributed to a limited
partner unless that partner is not materially involved, directly or indirectly, in the management or operation of the
video programming-related activities of the partnership and the relevant entity so certifies.  An interest in a
Limited Liability Company ("LLC") or Registered Limited Liability Partnership ("RLLP") shall be attributed to
the interest holder unless that interest holder is not materially involved, directly or indirectly, in the management
or operation of the video programming-related activities of the partnership and the relevant entity so certifies.

     (2) In the case of a limited partnership, in order for an entity to make the certification set forth in
paragraph (b)(1) of this section, it must verify that the partnership agreement or certificate of limited partnership,
with respect to the particular limited partner exempt from attribution, establishes that the exempt limited partner
has no material involvement, directly or indirectly, in the management or operation of the video programming
activities of the partnership.  In the case of an LLC or RLLP, in order for an entity to make the certification set
forth in paragraph (g)(1) of this section, it must verify that the organizational document, with respect to the
particular interest holder exempt from attribution, establishes that the exempt interest holder has no material
involvement, directly or indirectly, in the management or operation of the video programming activities of the
LLC or RLLP.  The criteria which would assume adequate insulation for purposes of these certifications are
described in the Report and Order, FCC No. 99-288, CS Docket No. 98-82 (released October 20, 1999).  In
order for the Commission to accept the certification, the certification must be accompanied by facts, e.g. in the
form of documents, affidavits or declarations, that demonstrate that these insulation criteria are met.  Irrespective
of the terms of the certificate of limited partnership or partnership agreement, or other organizational document in
the case of an LLC or RLLP, however, no such certification shall be made if the individual or entity making the
certification has actual knowledge of any material involvement of the limited partners, or other interest holders in
the case of an LLC or RLLP, in the management or operation of the video-programming activities of the
partnership or LLC or RLLP.

     (3) In the case of an LLC or RLLP, the entity seeking insulation shall certify, in addition, that the
relevant state statute authorizing LLCs permits an LLC member to insulate itself as required by our criteria.

     (c) Officers and directors of an entity covered by this rule are considered to have a cognizable interest in
the entity with which they are so associated.  If any such entity engages in activities other than video-
programming activities, it may request the Commission to waive attribution for any officer or director whose
duties and responsibilities are wholly unrelated to the entity's video-programming activities.  In the case of
common or appointed directors and officers, if common or appointed directors or officers have duties and
responsibilities that are wholly unrelated to video-programming activities for both entities, the relevant entity may
request the Commission to waive attribution of the director or officer.  The officers and directors of a parent
company of a video-programming business, with an attributable interest in any such subsidiary entity, shall be
deemed to have a cognizable interest in the subsidiary unless the duties and responsibilities of the officer or
director involved are wholly unrelated to the video-programming subsidiary, and a certification properly
documenting this fact is submitted to the Commission.  The officers and directors of a sister corporation of a
cable system shall not be attributed with ownership of that entity by virtue of such status.

* * * * *

Section 76.505      Prohibition on buy outs

4.   Section 76.505 is amended by adding paragraphs (f) and (g):

      (f) For purposes of this section, entities are affiliated if either entity has an attributable interest in the
other or if a third party has an attributable interest in both entities.

     (g) Attributable interest shall be defined by reference to the criteria set forth in Notes 1-5 to  76.501.

* * * * *

               Section 76.905      Standards for identification of cable systems subject to effective competition
               
               5.   Section 76.905 is amended by adding paragraphs (h) and (i):
               
     (h) For purposes of paragraph (b)(2) of this section, entities are affiliated if either entity has an
attributable interest in the other or if a third party has an attributable interest in both entities.  Attributable
interest shall be defined by reference to the criteria set forth in Notes 1-5 to  76.501.

     (i) For purposes of paragraph (b)(4) of this section, entities are affiliated if either entity has an
attributable interest in the other or if a third party has an attributable interest in both entities.  Attributable
interest shall be defined as follows:

          (1)  A 10% partnership or voting equity interest in a corporation will be cognizable.
          (2)  Subject to paragraph (i)(3), a limited partnership interest of 10% or more shall be
attributed to a limited partner unless that partner is not materially involved, directly or indirectly, in the
management or operation of the media-related activities of the partnership and the relevant entity so certifies.  An
interest in a Limited Liability Company ("LLC") or Registered Limited Liability Partnership ("RLLP") shall be
attributed to the interest holder unless that interest holder is not materially involved, directly or indirectly, in the
management or operation of the media-related activities of the partnership and the relevant entity so certifies. 
Certifications must be made pursuant to the guidelines set forth in Note 2(f) to  76.501.
          (3)  Notwithstanding paragraph (i)(2), the holder of an equity or debt interest or interests in
an entity covered by this rule shall have that interest attributed if the equity (including all stockholdings, whether
voting or nonvoting, common or preferred, and partnership interests) and debt interest or interests, in the
aggregate, exceed 33 percent of the total asset value (all equity plus all debt) of that entity.
          (4)  Discrete ownership interests held by the same individual or entity will be aggregated in
determining whether or not an interest is cognizable under this section.  An individual or entity will be deemed to
have a cognizable investment if the sum of the interests other than those held by or through "passive investors" is
equal to or exceeds 10%.

* * * * *

Section 76.922 Rates for the basic service tier and cable programming services tiers

6.   Section 76.922 is amended by adding paragraphs (f)(6)(i) and (ii):

     (f)(6)(i) For purposes of this section, entities are affiliated if either entity has an attributable interest in
the other or if a third party has an attributable interest in both entities.

     (ii) Attributable interest shall be defined by reference to the criteria set forth in Notes 1-5 to  76.501
provided, however, that:

          (A)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (B)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

* * * * *

Section 76.924      Allocation to service cost categories

7.   Section 76.924 is amended by adding paragraphs (i)(6) and (i)(7):

     (i)(6)    For purposes of this section, entities are affiliated if either entity has an attributable interest in
the other or if a third party has an attributable interest in both entities.

     (7) Attributable interest shall be defined by reference to the criteria set forth in Notes 1-5 to  76.501
provided, however, that:

          (i)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (ii)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

* * * * *

Section 76.970      Commercial Leased Access

8.   Section 76.970 is amended by renumbering paragraphs (c) through (h) to read as paragraphs (d) through
(i), revising paragraph (b) as follows, and by adding a new paragraph (c):

     (b) In determining whether an entity is an "affiliate" for purposes of commercial leased access, entities
are affiliated if either entity has an attributable interest in the other or if a third party has an attributable interest
in both entities.

     (c) Attributable interest shall be defined by reference to the criteria set forth in Notes 1-5 to  76.501
provided, however, that:

          (1)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (2)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

* * * * *

Subpart O -- Competitive Access to Cable Programming
Section 76.1000  Definitions

9.   Section 76.1000 is amended by revising paragraph (b) as follows:

     (b)  Cognizable Interests: In applying the provisions of this subpart, ownership and other interests
in cable operators, satellite cable programming vendors or satellite broadcast programming vendors will be
attributed to their holders and subject the interest holders to the rules of this subpart. Cognizable and attributable
interests shall be defined by reference to the criteria set forth in Notes 1-5 of  76.501 provided, however, that:

          (1)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (2)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

* * * * *

Subpart Q   Regulation of Carriage Agreements
Section 76.1300  Definitions

10.  Section 76.1300 is amended by renumbering paragraphs (b) through (d) to read as paragraphs (c) to
(e), revising paragraph (a) as follows, and adding new paragraph (b):

     (b)  Affiliated.  For purposes of this subpart, entities are affiliated if either entity has an attributable
interest in the other or if a third party has an attributable interest in both entities.

     (c) Attributable Interest.  The term "attributable interest" shall be defined by reference to the criteria set
forth in Notes 1-5 to  76.501 provided, however, that:

          (1)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (2)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

* * * * *

Section 76.1401     Effective competition and local exchange carriers

11.  Section 76.1401 is deleted.   

Subpart S   Open Video Systems
Section 76.1500  Definitions

12.  Section 76.1500 is amended by renumbering paragraph (h) to read as paragraph (i), revising paragraph
(g) as follows, and adding new paragraph (h):

     (g)  Affiliated.  For purposes of this subpart, entities are affiliated if either entity has an attributable
interest in the other or if a third party has an attributable interest in both entities.

     (h) Attributable Interest.  The term "attributable interest" shall be defined by reference to the criteria set
forth in Notes 1-5 to  76.501 provided, however, that:

          (1)  The limited partner and LLC/LLP/RLLP insulation provisions of Note 2(f) shall not apply;
and

          (2)  The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or
nonvoting stock or limited partnership equity interests of five (5) percent or more.

                                Appendix B

                      Comments Filed in this Proceeding

Comments

     Adelphia Communications Corp. ("Adelphia"), Falcon Holding Group LP ("Falcon"), Insight Communications
     Co., LP ("Insight") and Lenfest Communications, Inc. ("Lenfest") (collectively "Adelphia et al.")
     Ameritech New Media, Inc. ("Ameritech")
     Bresnan Communications Co., LP ("Bresnan") and TCA Cable TV, Inc. ("TCA")
     Cablevision Systems Corp. ("Cablevision")
     Chase Capital Partners ("Chase")
     Consumers Union, Consumer Federation of America, the Center for Media Education, the Office of
     Communication, Inc. of the United Church of Christ, and the Association of Independent Video and
     Filmmakers ("CU")
     DIRECTV, Inc. ("DIRECTV")
     Mediacom LLC ("Mediacom")
     MediaOne Group, Inc. ("MediaOne")
     National Cable Television Association ("NCTA")
     RCN Telecom Services, Inc. ("RCN")
     Tele-Communications, Inc. ("TCI")
     Time Warner, Inc. ("Time Warner")
Wireless Communications Association International, Inc. ("WCA")

Reply Comments

     Adelphia Communications Corp. ("Adelphia"), Falcon Holding Group LP ("Falcon"), Insight Communications
     Co., LP ("Insight") and Lenfest Communications, Inc. ("Lenfest") (collectively "Adelphia et al.")
     Cablevision Systems Corp. ("Cablevision")
     Chase Capital Partners ("Chase")
     Comcast Cable Communications, Inc. ("Comcast")
     DIRECTV, Inc. ("DIRECTV")
     MediaOne Group, Inc. ("MediaOne")
     RCN Telecom Services, Inc. ("RCN")
     Tele-Communications, Inc. ("TCI")
     Time Warner, Inc. ("Time Warner")
     Univision Communications, Inc. ("Univision")
Wireless Communications Association International, Inc. ("WCA")

     List of Commenters in Cable Reform Proceeding, CS Docket No. 96-85

Commenters

     Alliance for Community Media, Consumer Project on Technology, and Alliance for Communications
     Democracy 
Allied Associated Partners, LP and GELD Information Systems
Bell Atlantic Corporation
BellSouth Corporation ("BellSouth")
Cable Telecommunications Association ("CATA")
Cablevision Systems Corporation ("Cablevision")
California Cable Television Association ("CCTA")
City and County of Denver, CO ("Denver")
City of Fairfield, CA ("Fairfield") 
City of Indianapolis, IN ("Indianapolis")
     Cole, Raywid, & Braverman (on behalf of Bresnan Communications Company, LP, Charter Communications,
     Inc., Daniels Communications, Inc., Halcyon Communications Partners, James Cable Partners, LP,
     Jones Intercable, Inc., Rifkin & Associates, Inc., and TCA Cable TV, Inc. ("Cole, Raywid"))
Comcast Cable Communications, Inc. ("Comcast")
Cook Jr., William A. ("William Cook")
Cox Communications, Inc. ("Cox")
C-Tec Cable Systems, Inc. and Mercom, Inc. ("C-TEC and Mercom")
Falcon Holding Group, LP ("Falcon")
     Fleischman and Walsh, LLP (on behalf of Adelphia Communications Corporation, Arizona Cable
     Telecommunications Association, Century Communications Corporation, Charter Communications,
     Inc., Insight Communications Co., State Cable TV Corp., and Suburban Cable TV Co. Inc.
     ("Fleischman"))
FrontierVision Operating Partners, LP ("FrontierVision")
Greater Metro Cable Consortium, Metro Denver, CO ("GMCC")
GTE Service Corporation ("GTE")
Independent Cable & Telecommunications Association ("ICTA")
Kramer, Monroe & Wyatt ("Kramer")
Massachusetts Cable Television Commission ("Massachusetts Cable Commission")
National Cable Television Association, Inc. ("NCTA")
National League of Cities and National Association of Telecommunications Officers and Advisors ("League of
Cities and NATOA")
National Telephone Cooperative Association ("NTCA")
New England Cable Television Association, Inc. ("NECTA")
New Jersey State Board of Public Utilities ("New Jersey Board")
New Jersey State Division of the Ratepayer Advocate ("New Jersey Ratepayer Advocate")
New York City Department of Information Technology and Telecommunications ("New York City")
New York State Department of Public Service  ("State of New York")
OpTel, Inc. ("OpTel")
People for the American Way and Media Access Project
Residential Communications Network, Inc.
SBC Communications, Inc. and Southwestern Bell Video Systems, Inc. ("SBC")
Small Cable Business Association ("SCBA")
State of California Agency ("SMATV")
Tele-Communications, Inc. ("TCI")
Time Warner Cable (Time Warner)
United States Small Business Administration ("SBA")
United States Telephone Association ("USTA")
United States Wireless Cable, Inc. and Wedgewood Communications, Inc. ("U.S. Wireless and Wedgewood")
US WEST, Inc. ("U.S. WEST")
Wireless Cable Association International, Inc. ("WCA")

Reply Commenters

Alliance for Community Media
Ameritech New Media, Inc. ("Ameritech")
Bell Atlantic Corporation
City of Atlanta, GA
City of Los Angeles, CA; National League of Cities; and National Association of Telecommunications Officers
& Advisors ("Los Angeles, League of Cities, and NATOA")
City of Austin, TX ("Austin")
City of Lake Forest, IL ("Lake Forest")
City of Naperville, IL ("Naperville")
City of Rolling Meadows, IL ("Rolling Meadows")
Cole, Raywid, & Braverman (on behalf of Bresnan Communications Company, LP, Charter Communications,
Inc., Daniels Communications, Inc., Halcyon Communications Partners, James Cable Partners, LP, Jones
Intercable, Inc., Rifkin & Associates, Inc., TCA Cable TV, Inc. ("Cole, Raywid"))
Comcast Cable Communications, Inc. ("Comcast")
Fleischman and Walsh, L.L.P (on behalf of Adelphia Communications Corporation, Arizona Cable
Telecommunications Association, Century Communications Corporation, Charter Communications, Inc., Insight
Communications Co., State Cable TV Corp., and Suburban Cable TV Co. Inc. ("Fleischman"))
General Electric Capital Corporation ("GE Capital")
Independent Cable & Telecommunications Association ("ICTA")
J.P. Morgan & Company, Brown Brothers Harriman & Co., Olympus Partners, and First Union Capital
Partners, Inc.
Massachusetts Cable Television Commission ("Massachusetts Cable Commission")
Metropolitan Area Communications Commission representing Oregon communities ("MACC")
Michigan, Illinois and Texas Communities
National Cable Television Association, Inc. ("NCTA")
New York City Department of Information Technology and Telecommunications ("New York City")
OpTel, Inc. ("OpTel")
Small Cable Business Association ("SCBA")
Tele-Communications, Inc. ("TCI")
Time Warner Cable ("Time Warner")
United States Telephone Association ("USTA")
United States Wireless Cable, Inc. and Wedgewood Communications, Inc. ("U.S. Wireless and Wedgewood")
US WEST, Inc. ("U.S. WEST")
Viacom, Inc. ("Viacom")
Village of Lincolnwood, IL ("Lincolnwood")
Wireless Cable Association International, Inc. ("WCA")

                                APPENDIX C

                     Cable Alliances and Partnerships

To assist with our analysis in this proceeding, we asked for comment on the specifics of recently concluded
cable transactions, such as cable system partnerships, joint ventures, swaps, transfers, mergers and acquisitions,
particularly those transactions announced or consummated in 1997 or thereafter.

For each transaction identified, we asked the commenters to note the percentage and nature (e.g., voting or
non-voting, limited or general partnership, insulated or non-insulated, rights of conversion) of each entity's
ownership interests; the number of officers, directors, and other key personnel appointed by each entity to a
management committee, board or other governing body; and the portion of the equity or debt financing contributed
by each entity.  In addition, we asked for comment on any authority or power held by each entity to review, veto or
otherwise influence the management or operation of the cable systems, including core areas such as budget,
personnel, programming, technology and competitive practices.

We note that, since the comments in this proceeding were filed, many of the alliances discussed below have
changed.

     i.   Comcast

     Comcast agreed to loan $735,000,000 to Prime Communications, LLC, in exchange for a 10-year note
which is convertible to a 90% equity interest in Prime once Prime rebuilds its Washington, D.C. area cable systems. 
Until the note is converted, Prime will manage and operate its systems.   Prime serves approximately 430,000
customers, which under our new ED rule will be attributable to Comcast.

     ii.  MediaOne's Partnership with Time Warner

     MediaOne holds a 25.5% limited partnership interest in a partnership with Time Warner, Time Warner
Entertainment Co., LP ("TWE").  Thus, under the Commission's attribution rules, TWE's 9.6 million subscribers
are attributed to MediaOne.  MediaOne states that adding TWE's 9.6 million subscribers to the 4.9 million
subscribers that MediaOne alone serves raises MediaOne's total number of subscribers to 14.5 million, which is
higher than Time Warner's 12 million subscribers.  MediaOne states that it cannot avail itself of the "insulated
limited partner" exception because one of the key purposes of the partnership was to combine Time Warner and
MediaOne's expertise in designing and testing Full Service Networks. MediaOne asserts that it has not exercised
any control over the selection of programming on the TWE systems.  According to MediaOne, it directly serves
only 8% of the nation's cable subscribers, but because the TWE subscribers are attributed to MediaOne under the
current rules, MediaOne cannot acquire more than another 2.6 million subscribers without violating the 30%
horizontal ownership limits.

     iii. TCI's Joint Ventures, Affiliations and Investments

     As of January 20, 1999, TCI states that, based on our current attribution rules, its cable systems pass
38,757,000 homes.  Based on 95.6 million total cable homes passed, TCI's systems pass 45% of the market.  With
the exception of its investment in Time Warner, TCI's joint ventures, affiliations and investments described below
attribute those entities' subscribers to TCI.

Adelphia et al. and Bresnan et al. state that each of TCI's affiliates has the option to purchase cable networks from
TCI's subsidiary, Satellite Services, Inc. ("SSI"), but is not required to do so.  SSI purchases the distribution rights
for cable program networks.  It provides "[m]any of the popular cable networks . . . at rates which are lower than
those which would otherwise be obtainable."  A TCI partner can selectively choose cable networks from SSI's
offerings and is free to separately contract for non-SSI services.

          a)   Time Warner

     TCI, through its subsidiary Liberty Media, holds a 10% equity interest in Time Warner.  Pursuant to a
consent decree with the Federal Trade Commission ("FTC"), Liberty Media exchanged its shares of Time Warner
common stock for a separate series of Time Warner common stock with limited voting rights.  Thus, Liberty
Media's 10% equity interest in Time Warner represents less than 1% of the voting power of Time Warner's
outstanding common stock.

          b)   Adelphia Partnership

     TCI holds a 34.4% interest and Adelphia Communications Corp. holds a 65.6% interest in Parnassos, LP. 
The partnership serves approximately 465,000 subscribers and passes approximately 700,000 homes.  Adelphia
has three members and TCI has two members on the five-member Parnassos board.  Unanimous consent of the
board is required for fundamental decisions such as the purchase/sale of assets, issuance of equity interests,
consolidation, mergers, and additional capital calls.  Adelphia manages the Parnassos partnership for a fee and
states that it has managerial control over programming choices, personnel, marketing, and rebuilds.  Parnassos
purchases programming from SSI. 

          c)   Falcon and Insight Partnerships

     TCI holds a 47% interest in Falcon Communications, LP (a partnership with Falcon Holding Group, Inc.)
and a 50% interest in Insight Communications of Indiana LLC (a partnership with Insight Communications Co.,
LP).  The Falcon partnership serves approximately 1 million subscribers, and the Insight Partnership serves
approximately 320,000 subscribers.  The Falcon partnership agreement and the Insight agreement give Falcon and
Insight, respectively, the exclusive right to manage their joint ventures with TCI, while TCI retains super majority
rights to approve fundamental decisions.  Of the six-member Falcon Communications, LP, advisory committee,
Falcon will have three members, TCI will have two members, and TCI and Falcon will jointly agree on a sixth
member.  The Insight Communications of Indiana LLCs management committee will consist of three Insight
members and two TCI members.

          d)   Lenfest Communications, Inc.

     TCI holds a 50% corporate voting equity interest in Lenfest Communications, Inc. ("LCI"). H.F. Lenfest
("Mr. Lenfest") and his three children from whom he holds proxies own and control the remaining 50% of LCI's
stock.  LCI serves approximately 1 million subscribers.  Mr. Lenfest has the right to designate a majority of the
board's directors until January 1, 2002, at which time the Lenfest family and TCI will have the right to appoint an
equal number of directors to the board.  Mr. Lenfest is LCI's president and CEO and is guaranteed these positions
until January 1, 2002.  LCI states that TCI has no management control according to an agreement with Mr.
Lenfest.  If LCI shareholders decide to sell their shares, TCI has the right of first refusal.  LCI purchases a
number of SSI channels, but has negotiated contracts with channels non-affiliated with SSI and has declined to
carry cable networks affiliated with SSI due to LCI's insufficient channel capacity.  Although LCI contracted to
use TCI's HITS digital programming service, LCI states that it was under no obligation to do so.

          e)   Peak Cablevision

     TCI holds a 66.7% interest in Peak Cablevision, LLP (a partnership with Fisher Communications, LLC). 
Peak Cablevision serves approximately 112,000 subscribers and passes approximately 179,000 homes.  Fisher will
manage the Peak partnership for a fee, the four-member board will consist of two TCI members and two Fisher
members, and all decisions will be made by a majority vote, except for major decisions, including budgets, which
require unanimous approval.  TCI provides programming to the partnership through SSI.

          f)   Intermedia Capital Partners VI LP

TCI and its president Leo Hindery have an undisclosed interest as limited partners in Intermedia Capital Partners
VI, LP.  Intermedia Capital Management VI, LLC is the general partner and manages the partnership for a fee. 
Intermedia serves approximately 425,000 subscribers and passes approximately 646,000 homes. The partnership's
advisory committee consists of three TCI members, three Intermedia members and three members from the
Blackstone Group, a limited partner.  The advisory committee and the limited partners are prohibited from taking
part in the control, management or operation of the partnership.  TCI provides programming to the partnership
through SSI. 

          g)   Cablevision

     Cablevision acquired approximately 800,000 subscribers from TCI in the New York area.  In exchange
for the subscribers, Cablevision gave TCI a 33% equity interest in Cablevision, but because TCI has class A stock,
which has 1/10 the voting power of class B stock, TCI's voting interest is 8.8%. Cablevision's chairman Charles
F. Dolan has control over 44.7% of the total voting power, and other Dolan family members hold 36.8% of the
total voting power. Cablevision argues that TCI's control is limited in three other ways.  First, for class votes, TCI
must vote its shares in direct proportion to the votes of non-TCI Class shareholders; thus Cablevision argues that
TCI has no independent voting power.  Currently there are only four class A directors out of the 15 directors
serving on the board.  Second, TCI is prohibited from joining a voting group or voting trust and from obtaining
beneficial ownership of more than an additional 10% of class A shares.  Third, while TCI is entitled to designate
up to two class B seats on the board, voting restrictions prohibit it from designating additional directors.  Because
class B stockholders have the power to appoint 75% of the board, the Dolan family has the ability to appoint a
majority of the board.  Cablevision states that TCI has no meaningful ability to exercise influence or control over
Cablevision's key decisions.  Cablevision states that the Federal Trade Commission ("FTC") found that the
TCI/Cablevision transaction was not anticompetitive after a review under the Hart-Scott-Rodino Act.  Cablevision
serves approximately 3.6 million subscribers.

          h)   Bresnan Communications Group, LP and TCA Cable Partners II

     Bresnan Communications Company, LP, and TCI are forming a new partnership, Bresnan
Communications Group, LP ("BCG"). The new partnership will serve 615,000 subscribers. Bresnan will be the
sole general partner and the managing partner with a 10% equity interest, TCI will have a 50% limited partnership
interest and Blackstone Capital Partners III Merchant Banking Fund, LP, will have a 40% limited partnership
interest.  

     TCA Cable TV, Inc. and TCI formed a partnership, TCA Cable Partners II ("TCA II"), in which TCA
holds an 80% general partnership interest, and TCI holds a 20% general partnership interest.  The partnership
serves approximately 300,000 subscribers.  A committee consisting of three TCA members and three TCI members
governs TCA II.  Management and operation decisions require a majority vote of the committee, while major
matters require unanimous approval.  Bresnan and TCA argue that, despite TCI's equity involvement, TCA and
Bresnan control the budgets, make the personnel decisions, and make programming decisions without TCI
mandating any particular carriage.  TCI states that TCA manages the day-to-day operations of the general
partnership for a fee, and that TCI provides programming to the TCA II partnership through SSI for a fee.
            Statement of Commissioner Harold W. Furchtgott-Roth, 
                  Concurring in Part and Dissenting in Part

In the Matter of Implementation of the Cable Television Consumer Protection and Competition
Act of 1992, Review of the Commission's Cable Attribution Rules, CS Docket No. 98-82.

     I respectfully dissent from the adoption of these cable attribution rules.  I agree, however, with
certain decisions regarding cable reform.  I thus dissent in part and concur in part in this Report and
Order.

General Attribution Standards

     The instant cable attribution rules are based primarily on the newly revised broadcast attribution
rules.  See supra at para. 11 (incorporating by reference the reasoning set forth in the Broadcast
Attribution Report and Order).  Those rules are, with a few exceptions, imported into the instant context.

     For the reasons that I gave in my dissent from the broadcast attribution rules, I must also dissent
from these counting standards.  See Statement of Commissioner Harold W. Furchtgott-Roth, Dissenting
in Part and Concurring in Part, In the Matter of the Commission's Regulations Governing Attribution of
Broadcast and Cable/MDS Interests, MM Docket No. 94-150; Review of the Commission's Regulations
and Policies Affecting Investment in the Broadcast Industry, MM Docket No. 92-51; Reexamination of
the Commission's Cross-Interest Policy, MM Docket No. 87-154 (rel. Aug. 6, 1999).  In short, I believe
that we should have taken these opportunities to simplify our attribution rules, instead of creating
additional layers of regulation such as the equity-debt-plus test and reaching into heretofore uncharted
areas such as pure debt instruments. 

     With particular respect to the changes in the insulation criteria for partnerships, I am sympathetic
to the concerns that motivate the Commission.  I would prefer to address policy questions in the
substantive rule on the horizontal limit, however, not in the context of the attribution rules.  I fear that the
"materially involved in programming activities" test will prove too subjective to be efficiently applied and
enforced.  

     I am also troubled by the elimination of the single majority shareholder exception.  As I made
clear in the Broadcast Attribution Order, this rule provides at least some safe harbor to regulated entities
in terms of attribution.  Against the backdrop of our vastly complicated attribution rules, this exception --
whether or not I would have created it in the first instance -- operates to provide at least one clear
instance where interests will not be attributable.  Unless we intend to start from scratch and come up with
a streamlined attribution system, I think we should retain the single majority shareholder exception.  

     In this regard, I must note, again, a yawning inconsistency between the broadcast item and this
one: while we generally adhere to the broadcast attribution framework for cable, the Commission departs
from that framework for the single majority shareholder rule in particular.  If the policy reasons animating
the rule are persuasive in broadcast, then they ought to work equally well here -- especially given that the
Commission states that the industries are not so different that different attribution rules are needed, as
noted above.  I see no rational justification for retaining this exception for broadcasters but repealing it for
cable operators, and I do not think the Order provides one.

Cable Reform Issues

     I agree with the Commission's definition of the term "affiliate" for purposes of the LEC effective
competition provision of section 623(l).  See supra  at paras. 120-125.  In particular, while the Title I
definition does not control in this context, I think it wise to exercise our discretion in light of Congress'
definition, as the Commission does.  I thus join in this decision.  I would have used the same test,
however, for purposes of both the competing provider provision of section 623(l) and the cable-telco buy-
out rule, cf. supra at paras. 126-132, and thus dissent from that decision.

           STATEMENT OF COMMISSIONER GLORIA TRISTANI,
                       DISSENTING IN PART
                                
In the Matter of Implementation of the Cable Television Consumer Protection and Competition Act
of 1992, Implementation of the Cable Act Reform Provisions of the Telecommunications Act of 1996,
and Review of the Commission's Cable Attribution Rules, CS Docket Nos. 98-82 and 96-85
                                
     
     I dissent from the majority's decision to modify the insulation criteria for limited partnerships and to
narrow the attribution standard for officers and directors.  These changes are ill-conceived, arbitrary and will prove
unworkable in practice.

     First, the majority departs from established precedent without adequate explanation.  In adopting the
broadcast attribution standard for purposes of Section 613, the Commission found:

     [T]he objectives of the broadcast attribution model are consistent with our goals in establishing ownership
     standards for subscriber limits.  In this regard, the broadcast attribution rules focus on ownership
     thresholds that enable a broadcast licensee to influence or control management or programming decisions. 
     We believe these same issues are also relevant to addressing the concerns at issue in this proceeding
     relating to the ability of cable operators to unduly influence the programming marketplace.

Just last year, the Commission reiterated these views on reconsideration.

     Thus, the Commission has repeatedly recognized that it is one entity's ability to influence or control the
management or programming decisions of another entity that implicate the concerns of Section 613.  The majority,
however, acts as if it is writing on a blank slate by ignoring the ability to influence or control a partnership's
management and focusing only on programming-related decisions.  The majority does not claim that the broadcast
criteria, affirmed by the Commission only two months ago, are wrong.  But nor does the majority attempt to
explain why our prior precedent is wrong   i.e., why the broadcast attribution criteria really do not address the
same issues regarding influence and control over management and programming decisions at issue here.  Indeed, the
majority would find any such attempt difficult, since, in enacting Section 613, Congress expressed many of the
same competition and diversity concerns that underlie our broadcast ownership rules.

     The arbitrariness of the majority's decision is further evidenced by its failure to apply its new rules across-
the-board.  As noted above, the majority does not argue for a change in the broadcast attribution rules.  Nor does
the majority change the attribution criteria that apply to our other cable rules -- including the cable/SMATV cross-
ownership ban, the cable-telco buy-out prohibition, and the competing provider prong of the effective competition
test   that apply the broadcast attribution standard.  Nor does the majority explain, if programming decisions are
the only concern under Section 613, why it restricts its decision to limited partnerships rather than applying it to all
corporate structures.  For instance, the majority does not explain why we should continue to attribute the interests
of passive institutional investors, if those investors remove themselves from programming-related activities.  If the
attribution rules are changed for purposes of limited partnerships under Section 613, logically either the same
revisions should apply to these other rules, or a good reason must be advanced why they should not.  The majority
does neither.

Finally, I fear that the majority's belief that "programming activities" can be neatly cordoned off from
other management functions is illusory.  In the real world, the ability to influence a partnership's core business
activities inevitably involves the ability to at least indirectly affect the various activities, such as programming, in
which the partnership is involved.  Until today, the Commission has always recognized this common sense
proposition.  In particular, the Commission has always recognized that the potential influence of officers and
directors is significant, and should be attributable to a broadcaster or cable operator whenever these individuals'
duties relate to the media activities of the company.  Now, however, we are putting officers and directors in the
untenable position of determining, on the fly, whether a particular budgetary or marketing decision improperly
involves them in "programming-related activities."  Worse, the public's right to the competition and diversity
benefits of Section 613 depends on them making the right decision.  The public interest should not hang by so thin
a reed.

For these reasons, I dissent from today's decision to the extent it amends our attribution rules governing
limited partnerships, officers and directors.