[Federal Register Volume 72, Number 54 (Wednesday, March 21, 2007)]
[Proposed Rules]
[Pages 13230-13233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5118]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 05-311; FCC 06-180]


Implementation of Section 621(a)(1) of the Cable Communications 
Policy Act of 1984 as Amended by the Cable Television Consumer 
Protection and Competition Act of 1992

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on its proposal 
to apply the findings in Implementation of Section 621(a)(1) of the 
Cable Communications Policy Act of 1984 as amended by the Cable 
Television Consumer Protection and Competition Act of 1992, MB Docket 
No. 05-311, FCC 06-180, Report & Order, (``Order'') to cable operators 
that have existing franchise agreements as they negotiate renewal of 
those agreements with LFAs. The Commission also seeks comment on the 
tentative conclusion that it cannot preempt State or local customer 
service laws that exceed the Commission's standards, nor can it prevent 
LFAs and cable operators from agreeing to more stringent standards.

DATES: Comments for this proceeding are due on or before April 20, 
2007; reply comments are due on or before May 7, 2007.

ADDRESSES: You may submit comments, identified by MB Docket No. 05-311, 
by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
    <bullet> People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: <a href="/cdn-cgi/l/email-protection#24626767111410644247470a434b52"><span class="__cf_email__" data-cfemail="71373232444145311712125f161e07">[email protected]</span></a> or phone: 202-418-
0530 or TTY: 202-418-0432.
    For additional information on the rulemaking process, see the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Holly Saurer, <a href="/cdn-cgi/l/email-protection#90d8fffcfce9bec3f1e5e2f5e2d0f6f3f3bef7ffe6"><span class="__cf_email__" data-cfemail="afe7c0c3c3d681fccedaddcaddefc9cccc81c8c0d9">[email protected]</span></a> or Brendan 
Murray, <a href="/cdn-cgi/l/email-protection#034171666d67626d2d4e767171627a436560602d646c75"><span class="__cf_email__" data-cfemail="0a48786f646e6b6424477f78786b734a6c6969246d657c">[email protected]</span></a> of the Media Bureau, Policy Division, 
(202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM), FCC 06-180, adopted on 
December 20, 2006, and released on March 5, 2007. The full text of this 
document is available for public inspection and copying during regular 
business hours in the FCC Reference Center, Federal Communications 
Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These 
documents will also be available via ECFS (http://www.fcc.gov/cgb/ecfs/
). (Documents will be available electronically in ASCII, Word 97, and/
or Adobe Acrobat.) The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request this document in accessible formats 
(computer diskettes, large print, audio recording, and Braille), send 
an e-mail to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="e4828787d1d4d0a4828787ca838b92">[email protected]</a> or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Initial Paperwork Reduction Act of 1995 Analysis

    This document does not contain proposed information collection(s) 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
    In this present document, we have assessed the effects of the 
application filing requirements used to calculate the time frame in 
which a local franchising authority shall make a decision, and find 
that those requirements will benefit companies with fewer than 25 
employees by providing such companies with specific application 
requirements of a reasonable length. We anticipate this specificity 
will streamline this process for companies with fewer than 25 
employees, and that these requirements will not burden those companies.

Summary of the Notice of Proposed Rulemaking

    1. As discussed above, this proceeding is limited to competitive 
applicants under Section 621(a)(1). Yet, some of the decisions in this 
Order also appear germane to existing franchisees. We asked in the 
Local Franchising NPRM whether current procedures and requirements were 
appropriate for any cable operator, including existing operators. NCTA 
argues that if the Commission establishes franchising relief for new 
entrants, we should do the same for incumbent cable operators because 
imposing similar franchising requirements on new entrants and incumbent 
cable operators promotes competition. Somewhat analogously, the BSPA 
argues that any new franchise regulatory relief should extend to all 
current competitive operators and new entrants equally; otherwise, the 
inequities would effectively penalize existing competitive franchisees 
simply because they were the first to risk competition with the 
incumbent cable operator. The record does not indicate any opposition 
by new entrants to the idea that any relief afforded them also be 
afforded to incumbent cable operators. Some incumbent cable operators 
discussed the potential impact of Commission action under Section 621 
on incumbent cable operators. For example, Charter argues that granting

[[Page 13231]]

competitive cable providers entry free from local franchise 
requirements would affect Charter's ability to satisfy its existing 
obligations; funds that Charter might use to respond to competition by 
investing in new facilities and services would instead be tied up in 
franchise obligations not imposed on Charter's competitors, which would 
undermine the company's investment and render its franchise obligations 
commercially impracticable. AT&T argues that competition will not harm 
incumbent cable operators: Cable has handled the competition that DBS 
presents, and analysts predict that the new wave of competition will 
not put them out of business.
    2. We tentatively conclude that the findings in this Order should 
apply to cable operators that have existing franchise agreements as 
they negotiate renewal of those agreements with LFAs. We note that 
Section 611(a) states ``A franchising authority may establish 
requirements in a franchise with respect to the designation or use of 
channel capacity for public, educational, or governmental use'' and 
Section 622(a) provides ``any cable operator may be required under the 
terms of any franchise to pay a franchise fee.'' These statutory 
provisions do not distinguish between incumbents and new entrants or 
franchises issued to incumbents versus franchises issued to new 
entrants. We seek comment on our tentative conclusion. We also seek 
comment on our authority to implement this finding. We also seek 
comment on what effect, if any, the findings in this Order have on most 
favored nation clauses that may be included in existing franchises. The 
Commission will conclude this rulemaking and release an order no later 
than six months after release of this Order.
    3. In the Local Franchising NPRM, we also sought comment on whether 
customer service requirements should vary greatly from jurisdiction to 
jurisdiction. In response, AT&T urges us to adopt rules to prevent LFAs 
from imposing various data collection and related requirements in 
exchange for a franchise. AT&T claims that LFAs have imposed 
obligations that franchisees collect, track, and report customer 
service performance data for individual franchise areas. AT&T states 
that it operates its call centers and systems on a region-wide basis, 
and that it is not currently possible or economically feasible for AT&T 
to comply with the various local customer service requirements on a 
franchise by franchise basis. AT&T also asks us to affirm that LFAs may 
not, absent the franchise applicant's consent, impose any local service 
quality standards that go beyond the requirements of duly enacted laws 
and ordinances. Verizon indicates that some localities have conditioned 
the grant of a franchise upon the submission of Verizon's data services 
to local customer service regulation.
    4. NATOA opposes AT&T's request for relief from local customer 
service standards, and argues that the Act and the Commission's rules 
explicitly provide for local customer service regulation. Specifically, 
NATOA asserts that Section 632(d)(2) of the Cable Act allows for the 
establishment and enforcement of local customer service laws that go 
beyond the federal standards. Other parties assert that customer 
service regulation is necessary to ensure that consumers have 
regulatory relief.
    5. Section 632(d)(2) states that:

    22. [n]othing in this Section shall be construed to preclude a 
franchising authority and a cable operator from agreeing to customer 
service requirements that exceed the standards established by the 
Commission * * * Nothing in this Title shall be construed to prevent 
the establishment and enforcement of any municipal law or 
regulation, or any State law, concerning customer service that 
imposes customer service requirements that exceed the standards set 
by the Commission under this section, or that addresses matters not 
addressed by the standards set by the Commission under this section.
    23. Given this explicit statutory language, we tentatively 
conclude that we cannot preempt state or local customer service laws 
that exceed the Commission's standards, nor can we prevent LFAs and 
cable operators from agreeing to more stringent standards. We seek 
comment on this tentative conclusion.

I. Procedural Matters

    6. Ex Parte Rules. This is a permit-but-disclose notice and comment 
rulemaking proceeding. Ex Parte presentations are permitted, except 
during the Sunshine Agenda period, provided that they are disclosed as 
provided in the Commission's rules. See generally 47 CFR 1.1202, 
1.1203, and 1.1206(a).
    7. Comment Information. Pursuant to sections 1.415 and 1.419 of the 
Commission's rules, 47 CFR 1.415, 1.419, interested parties may file 
comments on or before 30 days after this Further NPRM of Proposed 
Rulemaking is published in the Federal Register, and reply comments on 
or before 45 days of publication. Comments may be filed using: (1) The 
Commission's Electronic Comment Filing System (ECFS), (2) the Federal 
Government's eRulemaking Portal, or (3) by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
    <bullet> Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
    <bullet> For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to <a href="/cdn-cgi/l/email-protection#6500060316250306064b020a13"><span class="__cf_email__" data-cfemail="f297919481b2949191dc959d84">[email protected]</span></a>, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although we continue to experience delays in receiving U.S. 
Postal Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    <bullet> The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    <bullet> Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    <bullet> U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large

[[Page 13232]]

print, electronic files, audio format), send an e-mail to 
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="f5939696c0c5c1b5939696db929a83">[email protected]</a> or call the Consumer & Governmental Affairs Bureau at 
202-418-0530 (voice), 202-418-0432 (tty).
    8. Initial Paperwork Reduction Act Analysis. This Further NPRM of 
Proposed Rulemaking does not contain proposed information collection(s) 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
    9. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act, the Commission has prepared an Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities of the 
proposals addressed in this Further NPRM of Proposed Rulemaking. The 
IRFA is set forth in Appendix C. Written public comments are requested 
on the IRFA. These comments must be filed in accordance with the same 
filing deadlines for comments on the Second Further NPRM, and they 
should have a separate and distinct heading designating them as 
responses to the IRFA.
    10. Additional Information. For additional information on this 
proceeding, please contact Holly Saurer, Media Bureau at (202) 418-
2120, or Brendan Murray, Policy Division, Media Bureau at (202) 418-
2120.

Initial Regulatory Flexibility Analysis

    11. As required by the Regulatory Flexibility Act of 1980, as 
amended (the ``RFA''), the Commission has prepared this Initial 
Regulatory Flexibility Analysis (``IRFA'') of the possible significant 
economic impact of the policies and rules proposed in the Further NPRM 
of Proposed Rulemaking (``Further NPRM'') on a substantial number of 
small entities. Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the Further NPRM provided in paragraph 
145 of the item. The Commission will send a copy of the Further NPRM, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (``SBA''). In addition, the Further NPRM and 
IRFA (or summaries thereof) will be published in the Federal Register.

Need for, and Objectives of, the Proposed Rules

    12. The Further NPRM continues a process to implement Section 
621(a)(1) of the Communications Act of 1934, as amended, in order to 
further the interrelated goals of enhanced cable competition and 
accelerated broadband deployment as discussed in the Report and Order 
(``Order''). Specifically, the Further NPRM solicits comment on whether 
the Commission should apply the rules and guidelines adopted in the 
Order to cable operators that have existing franchise agreements, and 
if so, whether the Commission has authority to do so. The Further NPRM 
also seeks comment on whether the Commission can preempt state or local 
customer service laws that exceed Commission standards.

Legal Basis

    13. The Further NPRM tentatively concludes that the Commission has 
authority to apply the findings in the Order to cable operators with 
existing franchise agreements. In that regard, the Further NPRM finds 
that neither Section 611(a) nor Section 622(a) distinguishes between 
incumbents and new entrants or franchises issued to incumbents and 
franchises issued to new entrants.

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

    14. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. 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'').
    15. Small Businesses. Nationwide, there are a total of 
approximately 22.4 million small businesses, according to SBA data.
    16. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.
    17. The Commission has determined that the group of small entities 
possibly directly affected by the proposed rules herein, if adopted, 
consists of small governmental entities. A description of these 
entities is provided below. In addition the Commission voluntarily 
provides descriptions of a number of entities that may be merely 
indirectly affected by any rules that result from the Further NPRM.

Small Governmental Jurisdictions

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

Miscellaneous Entities

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

Cable Operators

    20. The ``Cable and Other Program Distribution'' census category 
includes cable systems operators, closed circuit television services, 
direct broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television services. 
The SBA has developed small business size standard for this census 
category, which includes all such companies generating $13.0 million or 
less in revenue annually. According to Census Bureau data for 1997, 
there were a total of 1,311 firms in this category, total, that had 
operated for the entire year. Of this total, 1,180 firms had annual 
receipts of under $10 million and an additional 52 firms had receipts 
of $10 million or more but less than $25 million. Consequently, the 
Commission estimates that the majority of providers in this service 
category are small businesses that may be affected by the rules and 
policies adopted herein.
    21. Cable System Operators (Rate Regulation Standard). The 
Commission has developed its own small-business-size standard for cable 
system operators, for purposes of rate regulation. Under the 
Commission's rules, a ``small cable company'' is one serving fewer than 
400,000 subscribers nationwide. The

[[Page 13233]]

most recent estimates indicate that there were 1,439 cable operators 
who qualified as small cable system operators 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 operators. Consequently, 
the Commission estimates that there are now fewer than 1,439 small 
entity cable system operators that may be affected by the rules and 
policies adopted herein.
    22. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' The Commission has determined that 
there are 67,700,000 subscribers in the United States. Therefore, an 
operator serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate. Based on available data, the Commission estimates that the 
number of cable operators serving 677,000 subscribers or fewer, totals 
1,450. The Commission neither requests nor collects information on 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250 million, and therefore is unable, at this 
time, to estimate more accurately the number of cable system operators 
that would qualify as small cable operators under the size standard 
contained in the Communications Act of 1934.
    23. Open Video Services. Open Video Service (``OVS'') systems 
provide subscription services. As noted above, the SBA has created a 
small business size standard for Cable and Other Program Distribution. 
This standard provides that a small entity is one with $13.0 million or 
less in annual receipts. The Commission has certified approximately 25 
OVS operators to serve 75 areas, and some of these are currently 
providing service. Affiliates of Residential Communications Network, 
Inc. (RCN) received approval to operate OVS systems in New York City, 
Boston, Washington, DC, and other areas. RCN has sufficient revenues to 
assure that they do not qualify as a small business entity. Little 
financial information is available for the other entities that are 
authorized to provide OVS and are not yet operational. Given that some 
entities authorized to provide OVS service have not yet begun to 
generate revenues, the Commission concludes that up to 24 OVS operators 
(those remaining) might qualify as small businesses that may be 
affected by the rules and policies adopted herein.

Description of Projected Reporting, Recordkeeping and Other Compliance 
Requirements

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

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

    25. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    26. As discussed in the Further NPRM, Sections 611(a) and 622(a) do 
not distinguish between new entrants and cable operators with existing 
franchises. As discussed in the Order, the Commission has the authority 
to implement the mandate of Section 621(a)(1) to ensure that LFAs do 
not unreasonably refuse to award competitive franchises to new 
entrants, and adopts rules designed to ensure that the local 
franchising process does not create unreasonable barriers to 
competitive entry for new entrants. Such rules consist of specific 
guidelines (e.g., maximum timeframes for considering a competitive 
franchise application) and general principles regarding franchise fees 
designed to provide LFAs with the guidance necessary to conform their 
behavior to the directive of Section 621(a)(1). As noted above, 
applying these rules regarding the franchising process to cable 
operators with existing franchises likely would have at most a de 
minimis impact on small governmental jurisdictions. Even if that were 
not the case, however, we believe that the interest of fairness to 
those cable operators would outweigh any impact on small entities. The 
alternative (i.e., continuing to allow LFAs to follow procedures that 
are unreasonable) would be unacceptable, as it would be inconsistent 
with the Communications Act. We seek comment on the impact that such 
rules might have on small entities, and on what effect alternative 
rules would have on those entities. We also invite comment on ways in 
which the Commission might implement the tentative conclusions while at 
the same time imposing lesser burdens on small entities.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    27. None.

Report to Congress

    28. The Commission will send a copy of the FNPRM, including this 
IRFA, in a report to be sent to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996. In addition, the 
Commission will send a copy of the FNPRM, including the IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the FNPRM and IRFA (or summaries thereof) will also be published in 
the Federal Register.

II. Ordering Clauses

    29. It is ordered that, pursuant to the authority contained in 
Sections 1, 2, 4(i), 303, 303r, 403 and 405 of the Communications Act 
of 1934, 47 U.S.C 151, 152, 154(i), 303, 303(r), 403, this Further 
Notice of Proposed Rulemaking is adopted.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E7-5118 Filed 3-20-07; 8:45 am]
BILLING CODE 6712-01-P


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