19448 Federal Register / Vol. 72, No. 74 / Wednesday, April 18, 2007 / Proposed Rules 

business hours in the FCC Reference 

Information Center (Room CY–A257), 

445 12th Street, SW., Washington, DC 

20554. This document may also be 

purchased from the Commission’s 

duplicating contractors, Best Copy and 

Printing, Inc., 445 12th Street, SW., 

Room CY–B402, Washington, DC 20554, 

telephone 1–800–378–3160 or 

www.BCPIWEB.com. 

This document is not subject to the 

Congressional Review Act. (The 

Commission, is, therefore, not required 

to submit a copy of this Report and 

Order to Government Accountability 

Office, pursuant to the Congressional 

Review Act, see 5 U.S.C. Section 

801(a)(1)(A) because the proposed rule 

is dismissed). 

Federal Communications Commission. 

John A. Karousos, 

Assistant Chief, Audio Division, Media 

Bureau. 

[FR Doc. E7–7289 Filed 4–17–07; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 76 

[MB Docket No. 07–51; FCC 07–32] 

Exclusive Service Contracts for 

Provision of Video Services in Multiple 

Dwelling Units and Other Real Estate 

Developments 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the 

Commission takes steps to encourage 

greater competition in the market for the 

delivery of multichannel video 

programming by soliciting comment on 

the use of exclusive contracts for the 

provision of video services to multiple 

dwelling units (‘‘MDUs’’) or other real 

estate developments. The Commission 

also seeks comment on whether the use 

of exclusive contracts in the MDU video 

provider market unreasonably impedes 

the achievement of the interrelated 

federal goals of enhanced multichannel 

video competition and accelerated 

broadband deployment and, if so, how 

the Commission should act to address 

that problem. 

DATES: Comments for this proceeding 

are due on or before June 18, 2007; reply 

comments are due on or before July 18, 

2007. 

ADDRESSES: You may submit comments, 

identified by MB Docket No. 07–51, by 

any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Federal Communications 

Commission’s Web site: http:// 

www.fcc.gov/cgb/ecfs/. Follow the 

instructions for submitting comments. 

• People with Disabilities: Contact the 

FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by e-mail: FCC504@fcc.gov 

or phone: 202–418–0530 or TTY: 202–

418–0432. 

For detailed instructions for submitting 

comments and 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, 

Holly.Saurer@fcc.gov of the Media 

Bureau, Policy Division, (202) 418–

2120. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Notice of 

Proposed Rulemaking (NPRM), FCC 07–

32, adopted on March 22, 2007, and 

released on March 27, 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 fcc504@fcc.gov 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 

requirements subject to the Paperwork 

Reduction Act of 1995, Public Law 104–

13. In addition, therefore, it does not 

contain any proposed 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). 

Summary of the NPRM of Proposed 

Rulemaking 

I. Introduction 

In this Notice of Proposed 

Rulemaking (‘‘NPRM’’), we solicit 

comment on the use of exclusive 

contracts for the provision of video 

services to multiple dwelling units 

(‘‘MDUs’’) or other real estate 

developments. Greater competition in 

the market for the delivery of 

multichannel video programming is one 

of the primary goals of Federal 

communications policy. Moreover, for 

many participants in the marketplace, 

the ability to offer video to consumers 

and the ability to deploy broadband 

networks rapidly are linked 

intrinsically. However, potential 

competitors seeking to enter the 

multichannel video programming 

distributor (‘‘MVPD’’) marketplace have 

alleged that the use of exclusive 

contracts for the provision of video 

services to MDUs or other real estate 

developments serves as a barrier to 

entry. Accordingly, this NPRM is 

designed to solicit comment on whether 

the use of exclusive contracts in the 

MDU video provider market 

unreasonably impedes the achievement 

of the interrelated federal goals of 

enhanced multichannel video 

competition and accelerated broadband 

deployment and, if so, how the 

Commission should act to address that 

problem. 

II. Background 

1. In 1997, the Commission issued an 

NPRM regarding the use of exclusive 

access arrangements in MDUs. The 

Commission stated that exclusive 

service contracts between MDU owners 

and MVPDs could be considered procompetitive or anti-competitive, 

depending upon the circumstances 

involved. Commenters who were 

effectively prohibited from providing 

service due to the existence of exclusive 

contracts argued that those contracts 

were anti-competitive. Other 

commenters argued that exclusive 

contracts were necessary to enhance 

their ability to recover investment costs. 

In the corresponding Report and Order, 

the Commission declined to take any 

action regarding exclusive agreements, 

concluding that there was insufficient 

evidence in the record to determine the 

extent of use of such exclusive 

contracts, and whether or not such 

contracts had significantly impeded 

access by competitive providers into the 

MDU market. 

2. We note that the Commission is 

considering MDU access with respect to 

other services. In the context of 


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commercial telecommunications 

services, the Commission has prohibited 

the enforcement of exclusive access 

arrangements in multiple tenant 

environments (‘‘MTEs’’). In the 

Competitive Networks Order, the 

Commission concluded that a ban on 

exclusive contracts for 

telecommunications service in 

commercial MTEs would foster 

competition in that market. Unlike 

parties in the inside wiring proceeding, 

no party in the competitive networks 

proceeding argued in support of 

exclusive contracts in the commercial 

setting. Further, in Competitive 

Networks FNPRM, the Commission 

sought comment on other issues related 

to the imposition of a nondiscriminatory 

access requirement, including possibly 

extending the Competitive Networks 

Order findings to residential MTEs. We 

intend to issue a public notice seeking 

to refresh the record in that proceeding. 

Also, in the Cox Inside Wiring 

proceeding, the Commission is 

considering issues relating to the scope 

of competitors’ right to access 

incumbent LECs’ inside wire in 

multiunit premises for purposes of 

offering competing telephone service. 

3. The Commission recently adopted 

a Report and Order (‘‘Franchising 

Reform Order’’) relating to Section 621 

of the Act. The Franchising Reform 

Order adopted several provisions to 

remedy unreasonable local government 

procedures and behavior with respect to 

the franchising process that result in 

unreasonable refusals to grant 

additional competitive franchises. The 

NPRM in that proceeding asked for 

comment on the specific rules or 

guidance that we should adopt to ensure 

that the local cable franchising process 

does not unreasonably impede 

competitive entry. Among other issues, 

commenters discussed the impediment 

presented by the use of exclusive 

contracts for the provision of video 

services to MDUs and other real estate 

developments. 

4. Specifically, SureWest 

Communications, which provides 

bundled offerings of voice, data, and 

video services, filed an ex parte 

statement asking the Commission to 

prohibit MVPDs from excuting new, or 

enforcing existing, exclusive access 

agreements with MDUs and other real 

estate developments. SureWest argues 

that exclusive agreements are used by 

incumbent providers to undercut the 

competitive market for video services 

and states that over 25% of the MDUs 

that its network passes are locked into 

exclusive agreements, which effectively 

bar SureWest from offering its services 

to residents in those MDUs. Manatee 

County, Florida submitted comments 

arguing that exclusive access 

agreements, if permitted at all, should 

be of limited duration. Manatee County 

stated that exclusive long-term contracts 

harm competition and permit 

incumbent providers to become 

complacent, imposing antiquated 

systems on their subscribers. The 

County noted that it recently adopted an 

ordinance which prohibits any of its 

franchisees from entering into exclusive 

agreements of more than five years. 

Verizon filed ex parte statements 

arguing that the Commission should 

prohibit MVPDs from entering into new, 

or enforcing existing, exclusive access 

agreements with owners of MDUs. 

Verizon stated that it had ‘‘repeatedly 

encountered exclusive access 

arrangements which have prevented it 

from providing cable services to 

significant numbers of residents.’’

Verizon provided examples of requests 

to cease and desist the marketing of its 

FiOS video service offerings (discussing 

various examples, including a cease and 

desist letter from Bright House 

Networks regarding marketing of FiOS 

in the River Chase apartment complex 

in Tampa, Florida; a letter from BDR 

Broadband, LLC regarding the provision 

of FiOS in apartment complexes in 

Plano and Carrollton, Texas; 

negotiations with Ariger Management in 

Maryland that have an exclusive 

contract with Comcast; and negotiations 

with Post Properties in Fairfax County, 

Virginia that have a perpetual contract 

with Cox). Verizon stated that some 

landlords would like to give tenants a 

greater variety of cable choices, but are 

unable to do so because of exclusive 

contracts. Further, Verizon notes that 

exclusive contracts do not provide video 

providers any incentives to upgrade 

equipment or improve services, which 

adversely impacts consumers. In 

contrast, the National Multi-Housing 

Council filed an ex parte statement 

urging the Commission to reject calls for 

regulation of exclusive access 

agreements, stating that exclusive 

contracts give competitive providers 

assurance that they will be able to 

recover the capital costs of installing 

their facilities, thereby increasing the 

prospects of competition. 

III. Discussion 

5. Potential competitive video 

providers have alleged that the use of 

exclusive contracts for MDUs or other 

real estate developments serves as a 

barrier to entry, and that these exclusive 

contracts unreasonably delay 

competitive entry. As noted in the 621 

Order, the video provider marketplace is 

currently undergoing a change, with the 

entrance of traditional phone companies 

that are primed to offer a ‘‘triple play’’

of voice, high-speed Internet access, and 

video services over their respective 

networks. Given the interrelated Federal 

goals of enhanced cable competition 

and rapid broadband deployment, we 

seek comment on a number of issues 

relating to the prevalence and use and 

effect of exclusive contracts in today’s 

marketplace. 

A. Potential Competitors’ Current 

Ability to Obtain Access to MDUs 

6. As an initial matter, we request 

comment on the current environment 

for MVPDs attempting to obtain access 

to MDUs or other real estate 

developments. To what extent do 

exclusive contracts impede the 

realization of our policy goals? How 

often have competitive entrants 

confronted exclusive access agreements, 

what are the terms of those agreements, 

and are those agreements becoming 

more prevalent? How has the 

multichannel video marketplace 

changed since adoption of our Inside 

Wiring Report and Order, and what 

effect have those changes had for 

consumers who live in MDUs or other 

real estate developments? What is the 

current status of state mandatory access 

laws and what impact do they have on 

the issues raised herein? 

7. We also ask for additional 

information on the MVPDs operating 

pursuant to such exclusive contracts. In 

the Inside Wiring Second Report and 

Order we stated that exclusive contracts 

may benefit new entrants by reducing 

investment risk. Verizon indicates, 

however, that incumbent providers are 

soliciting such exclusive contracts when 

a potential competitor is actively 

seeking a local franchise to provide 

service in the MDU’s franchise area. We 

seek comment on whether MVPDs seek 

exclusive contracts in an effort to 

frustrate competitive entry. Do 

incumbent providers use the time 

during which new entrants are 

negotiating local franchises in order to 

obtain exclusive contracts? We also seek 

comment on whether, in today’s market, 

exclusive contracts benefit new 

entrants, incumbent providers, or both. 

We also ask whether the video providers 

entering into such exclusive contracts 

would be unable to provide service to 

these MDUs or other real estate 

developments absent the protections 

afforded by exclusive contracts. 

B. The Commission’s Authority to 

Prohibit the Use of Exclusive Contracts 

8. We tentatively conclude that the 

Commission has authority to regulate 

exclusive contracts for the provision of 


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video services to MDUs or other real 

estate developments where we find that 

such contracts may impede competition 

and impair deployment of those 

services. We seek comment on this 

tentative conclusion, particularly with 

regard to our authority under, and the 

scope and applicability of, Section 

628(b) of the Communications Act of 

1934 and Section 706 of the 1996 

Telecommunications Act. We also seek 

comment on the scope and applicability 

of Section 623, Section 1, Section 4(i), 

and Section 303(r) of the 

Communications Act of 1934 to this 

issue as well as other provisions that 

may provide us with authority to 

regulate exclusive contracts. We note 

that Section 628(b) states 

[i]t 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. 

We also seek comment on how we 

should define what constitutes ‘‘unfair 

methods of competition or unfair or 

deceptive acts or practices’’ under 

Section 628(b). We note that this 

language is similar to that used in the 

Federal Trade Commission Act. 

Commenters should address the 

relevance to our interpretation of 

Section 628(b) of any interpretation of 

similar language by the FTC or Federal 

courts. 

9. In addition, Section 706 of the 1996 

Telecommunications Act, charges the 

Commission to ‘‘encourage the 

deployment of * * * advanced 

telecommunications capability to all 

Americans.’’ Given the relationship 

between a company’s ability to offer 

video programming to customers and its 

ability to invest in broadband facilities, 

does Section 706 provide the 

Commission authority to address 

competitive concerns relating to 

exclusive contracts? Moreover, the 

Commission is empowered by Section 1 

of the Act ‘‘to execute and enforce the 

provisions of this Act,’’ and by Section 

4(i) ‘‘to perform any and all acts, make 

such rules and regulations, and issue 

such orders, not inconsistent with this 

Act, as may be necessary in the 

execution of its functions.’’ We also note 

that, with respect to MDU ‘‘home run’’

wiring, the Commission concluded that 

it had authority under Title VI 

(particularly Section 623) in 

conjunction with Sections 4(i) and 

303(r) to regulate the disposition of such 

wiring upon termination of service. 

‘‘Home run’’ wiring in an MDU is the 

wiring that runs from the demarcation 

point to the point at which the MVPD’s 

wiring becomes devoted to an 

individual subscriber or individual 

loop. We invite commenters to address 

whether these provisions, or others, can 

or should serve as a basis for regulating 

exclusive contracts for the provision of 

video services to MDUs or other real 

estate developments. In addition, we ask 

parties to address the scope of the 

Commission’s authority. Does the 

Commission have authority to regulate 

only exclusive contracts entered into 

after the effective date of the regulations 

or could it declare existing exclusive 

contracts void or voidable? Does the 

Commission have authority to regulate 

exclusive contracts entered into by 

MVPDs other than cable operators? 

Finally, we seek comment on the effect, 

if any, of state mandatory access laws or 

other statutory or constitutional 

considerations on the Commission’s 

authority in this area. 

C. Whether Commission Action Is 

Needed to Ensure Competitive Video 

Access to MDUs 

10. We seek comment on the impact 

of exclusive contracts on consumer 

choice and video competition. We note 

that, in the context of 

telecommunications services, the 

Commission has prohibited the 

enforcement of exclusive access 

arrangements in commercial MDUs. 

Does the existence of exclusive 

contracts within a community reduce 

the likelihood of competitive entry in 

the community? What are the typical 

durations of existing exclusive 

contracts? Are the costs associated with 

providing service to MDUs or other real 

estate developments significantly more 

than the costs of providing service in 

other areas? Is there more risk 

associated with serving these types of 

developments? Are the marketing costs 

higher in these areas? Is customer churn 

higher? How do the prices and services 

offered under the exclusive contracts 

compare to those offered to other 

customers? Are additional payments 

made to or by the MVPD in return for 

exclusive contracts? Do existing 

exclusive contracts provide the MVPD 

with a right of first refusal when 

renegotiating the contract? To the extent 

that some exclusive contracts can be 

pro-competitive and benefit consumers, 

we seek comment on those 

circumstances. If the Commission 

determines that it would serve the 

public interest to regulate exclusive 

contracts, we seek comment on how we 

should regulate such contracts. 

11. We seek comment on whether the 

Commission should limit exclusive 

contracts only where the video provider 

at issue possesses market power. In this 

regard, we call for comment on how the 

video programming market has changed 

since the issue was last posed in the 

Inside Wiring FNPRM, and whether the 

Commission should reconsider 

restriction or prohibition of the use of 

exclusive contracts by video providers 

with market power. In particular, we 

seek comment on how to define ‘‘market 

power’’ for these purposes. We also seek 

input on any other issues relevant to the 

analysis of market power and exclusive 

contracts. Does the competitive impact 

of exclusive contracts differ depending 

on whether a competing terrestrial 

MVPD was able to provide service to the 

MDU or other real estate development at 

the time the exclusive contract was 

negotiated? 

12. We also call for comment 

regarding the existence of ‘‘perpetual’’

contracts. Perpetual contracts are 

contracts that grant the incumbent 

provider the right to maintain its wiring 

and provide service to the MDU for 

indefinite or very long periods of time, 

or for the duration of the cable franchise 

term, and any extensions thereof. 

Perpetual contracts present some of the 

same competitive issues as exclusive 

contracts, and were also discussed in 

the Inside Wiring Report and Order. Are 

perpetual contracts currently being 

executed? If so, are perpetual contracts 

anti-competitive, as they effectively bar 

any competitive entry, or are there 

instances in which the use of perpetual 

contracts does not impede our policy 

goals of enhanced cable competition 

and accelerated broadband deployment? 

Commenters should address the 

Commission’s authority to nullify or 

otherwise regulate perpetual contracts. 

13. We also solicit comment on the 

specific rules or guidance that we 

should adopt to ensure that exclusive 

contracts do not unreasonably impede 

competitive video entry. Should the 

Commission establish explicit rules to 

which contracting parties must adhere 

or specific guidelines for MVPDs? Are 

there certain practices that we should 

find unreasonable through rules or 

guidelines? If so, what are these 

practices? 

IV. Procedural Matters 

A. Initial Regulatory Flexibility Analysis 

14. As required by the Regulatory 

Flexibility Act, the Commission has 

prepared an Initial Regulatory 

Flexibility Analysis (IRFA) of the 


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possible significant economic impact on 

a substantial number of small entities of 

the proposals addressed in this Notice of 

Proposed Rulemaking. The IRFA is set 

forth in the Appendix. Written public 

comments are requested on the IRFA. 

These comments must be filed in 

accordance with the same filing 

deadlines for comments on the NPRM, 

and they should have a separate and 

distinct heading designating them as 

responses to the IRFA. 

B. Ex Parte Rules 

15. Permit-But-Disclose. This 

proceeding will be treated as a ‘‘permitbut-disclose’’ proceeding subject to the 

‘‘permit-but-disclose’’ requirements 

under section 1.1206(b) of the 

Commission’s rules. Ex parte 

presentations are permissible if 

disclosed in accordance with 

Commission rules, except during the 

Sunshine Agenda period when 

presentations, ex parte or otherwise, are 

generally prohibited. Persons making 

oral ex parte presentations are reminded 

that a memorandum summarizing a 

presentation must contain a summary of 

the substance of the presentation and 

not merely a listing of the subjects 

discussed. More than a one- or twosentence description of the views and 

arguments presented is generally 

required. Additional rules pertaining to 

oral and written presentations are set 

forth in section 1.1206(b). 

C. Filing Requirements 

16. 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 and reply comments on or 

before the dates indicated on the first 

page of this document. Comments may 

be filed using: (1) The Commission’s 

Electronic Comment Filing System 

(ECFS), (2) the Federal Government’s 

eRulemaking Portal, or (3) by filing 

paper copies. See Electronic Filing of 

Documents in Rulemaking Proceedings, 

63 FR 24121 (1998). 

• 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. 

• 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 email to ecfs@fcc.gov, and include the 

following words in the body of the 

message, ‘‘get form.’’ A sample form and 

directions will be sent in response. 

• 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. 

• The Commission’s contractor will 

receive hand-delivered or messengerdelivered 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. 

• Commercial overnight mail (other 

than U.S. Postal Service Express Mail 

and Priority Mail) must be sent to 9300 

East Hampton Drive, Capitol Heights, 

MD 20743. 

• U.S. Postal Service first-class, 

Express, and Priority mail 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 

print, electronic files, audio format), 

send an e-mail to fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202–

418–0432 (tty). 

17. Availability of Documents. 

Comments, reply comments, and ex 

parte submissions will be available for 

public inspection during regular 

business hours in the FCC Reference 

Center, Federal Communications 

Commission, 445 12th Street, SW., CY–

A257, Washington, DC 20554. These 

documents will also be available via 

ECFS. Documents will be available 

electronically in ASCII, Word 97, and/ 

or Adobe Acrobat. 

Initial Regulatory Flexibility Analysis 

18. 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 

Notice of Proposed Rulemaking 

(‘‘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 NPRM provided in 

paragraphs 17–18 of the item. The 

Commission will send a copy of the 

NPRM, including this IRFA, to the Chief 

Counsel for Advocacy of the Small 

Business Administration (‘‘SBA’’). In 

addition, the NPRM and IRFA (or 

summaries thereof) will be published in 

the Federal Register. 

Need for, and Objectives of, the 

Proposed Rules 

19. The NPRM initiates a proceeding 

to investigate the use of exclusive 

contracts for the provision of video 

services to multiple dwelling units 

(‘‘MDUs’’) and other real estate 

developments, in order to further the 

interrelated goals of enhanced cable 

competition and accelerated broadband 

deployment. Specifically, the NPRM 

solicits comment on the existence of 

exclusive contracts for the provision of 

video services to MDUs and other real 

estate developments, and whether such 

exclusive contracts are ever procompetitive, and if not, whether the 

Commission has authority to prohibit 

the use of such agreements. 

Legal Basis 

20. The NPRM asks whether the 

Commission has authority to regulate 

the use of exclusive contracts for the 

provision of video services to MDUs or 

other real estate developments. It 

specifically asks whether such authority 

can be found in Sections 1, 4(i), 303(r), 

623 and 628(b) of the Communications 

Act of 1934, as amended, and Section 

706 of the Telecommunications Act of 

1996. 

Description and Estimate of the Number 

of Small Entities to Which the Proposed 

Rules Will Apply 

21. 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 


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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’’). 

22. Small Businesses. Nationwide, 

there are a total of approximately 22.4 

million small businesses, according to 

SBA data. 

23. Small Organizations. Nationwide, 

there are approximately 1.6 million 

small organizations. 

24. Small Governmental Jurisdictions. 

The term ‘‘small governmental 

jurisdiction’’ is defined generally as 

‘‘governments of cities, towns, 

townships, villages, school districts, or 

special districts, with a population of 

less than fifty thousand.’’ Census 

Bureau data for 2002 indicate that there 

were 87,525 local governmental 

jurisdictions in the United States. We 

estimate that, of this total, 84,377 

entities were ‘‘small governmental 

jurisdictions.’’ We assume that the 

villages, school districts, and special 

districts are small, and total 48,558. For 

2002, Census Bureau data indicate that 

the total number of county, municipal, 

and township governments nationwide 

was 38,967, of which 35,819 were small. 

Thus, we estimate that most 

governmental jurisdictions are small. 

25. The Commission has determined 

that the group of small entities possibly 

directly affected by our action consists 

of small governmental entities. In 

addition the Commission voluntarily 

provides, below, descriptions of certain 

entities that may be merely indirectly 

affected by any rules that may 

ultimately result from the NPRM. 

Cable Operators 

26. Cable and Other Program 

Distribution. The Census Bureau defines 

this category as follows: ‘‘This industry 

comprises establishments primarily 

engaged as third-party distribution 

systems for broadcast programming. The 

establishments of this industry deliver 

visual, aural, or textual programming 

received from cable networks, local 

television stations, or radio networks to 

consumers via cable or direct-to-home 

satellite systems on a subscription or fee 

basis. These establishments do not 

generally originate programming 

material.’’ The SBA has developed a 

small business size standard for Cable 

and Other Program Distribution, which 

is: all such firms having $13.5 million 

or less in annual receipts. According to 

Census Bureau data for 2002, there were 

a total of 1,191 firms in this category 

that operated for the entire year. Of this 

total, 1,087 firms had annual receipts of 

under $10 million, and 43 firms had 

receipts of $10 million or more but less 

than $25 million. An additional 61 firms 

had annual receipts of $25 million or 

more. Thus, under this size standard, 

the majority of firms can be considered 

small. 

27. Cable Companies and Systems. 

The Commission has also developed its 

own small business size standards, for 

the purpose of cable rate regulation. 

Under the Commission’s rules, a ‘‘small 

cable company’’ is one serving 400,000 

or fewer subscribers, nationwide. The 

Commission determined that this size 

standard equates approximately to a size 

standard of $100 million or less in 

annual revenues. Industry data indicate 

that, of 1,076 cable operators 

nationwide, all but eleven are small 

under this size standard. In addition, 

under the Commission’s rules, a ‘‘small 

system’’ is a cable system serving 15,000 

or fewer subscribers. Industry data 

indicate that, of 7,208 systems 

nationwide, 6,139 systems have under 

10,000 subscribers, and an additional 

379 systems have 10,000–19,999 

subscribers. Thus, under this second 

size standard, most cable systems are 

small. 

28. Cable System Operators. 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 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. 

Industry data indicate that, of 1,076 

cable operators nationwide, all but ten 

are small under this size standard. We 

note that the Commission neither 

requests nor collects information on 

whether cable system operators are 

affiliated with entities whose gross 

annual revenues exceed $250 million, 

and therefore we are unable to estimate 

more accurately the number of cable 

system operators that would qualify as 

small under this size standard. The 

Commission does receive such 

information on a case-by-case basis if a 

cable operator appeals a local franchise 

authority’s finding that the operator 

does not qualify as a small cable 

operator pursuant to section 76.901(f) of 

the Commission’s rules. 

29. 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 

$13.5 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, D.C., 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 our action. 

Telecommunications Service Entities 

30. As noted above, a ‘‘small 

business’’ under the RFA is one that, 

inter alia, meets the pertinent small 

business size standard (e.g., a telephone 

communications business having 1,500 

or fewer employees), and ‘‘is not 

dominant in its field of operation.’’ The 

SBA’s Office of Advocacy contends that, 

for RFA purposes, small incumbent 

local exchange carriers are not dominant 

in their field of operation because any 

such dominance is not ‘‘national’’ in 

scope. 

31. Wired Telecommunications 

Carriers. The SBA has developed a 

small business size standard for 

wireline firms within the broad 

economic census category, ‘‘Wired 

Telecommunications Carriers.’’ Under 

this category, the SBA deems a wireline 

business to be small if it has 1,500 or 

fewer employees. Census Bureau data 

for 2002 show that there were 2,432 

firms in this category that operated for 

the entire year. Of this total, 2,395 firms 

had employment of 999 or fewer 

employees, and 37 firms had 

employment of 1,000 employees or 

more. The census data do not provide a 

more precise estimate of the number of 

firms that have employment of 1,500 or 

fewer employees; the largest category 

provided is for firms with ‘‘1000 

employees or more.’’ Thus, under this 

category and associated small business 

size standard, the majority of firms can 

be considered small. 


rmajette on PROD1PC67 with PROPOSALS
Federal Register / Vol. 72, No. 74 / Wednesday, April 18, 2007 / Proposed Rules 19453 

Dwelling Units 

32. MDU Operators. The SBA has 

developed definitions of small entities 

for operators of nonresidential 

buildings, apartment buildings, and 

dwellings other than apartment 

buildings, which include all such 

companies generating $6 million or less 

in revenue annually. According to the 

Census Bureau, there were 31,584 

operators of nonresidential buildings 

generating less than $6 million in 

revenue that were in operation for at 

least one year at the end of 1997. Also 

according to the Census Bureau, there 

were 51,275 operators of apartment 

dwellings generating less than $6 

million in revenue that were in 

operation for at least one year at the end 

of 1997. The Census Bureau provides no 

separate data regarding operators of 

dwellings other than apartment 

buildings, and we are unable at this 

time to estimate the number of such 

operators that would qualify as small 

entities. 

Description of Projected Reporting, 

Recordkeeping and Other Compliance 

Requirements 

33. We anticipate that any rules that 

result from this action would have at 

most a de minimis compliance burden 

on cable operators and 

telecommunications service entities. 

Any rules that might be adopted 

pursuant to this NPRM likely would not 

require any reporting or recordkeeping 

requirements. 

Steps Taken To Minimize Significant 

Economic Impact on Small Entities and 

Significant Alternatives Considered 

34. 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.’’

35. As discussed in the NPRM, the 

Commission has initiated this 

proceeding to ensure that use of 

exclusive contracts for the provision of 

video services to MDUs and other real 

estate developments are procompetitive. As noted above, applying 

any rules regarding the use of exclusive 

contracts in the provision of video 

services to MDUs or other real estate 

developments likely would have at most 

a de minimis impact on small 

governmental jurisdictions. We seek 

comment on the impact that any rules 

might have on such small governmental 

entities, as well as the other small 

entities described, and on what effect 

alternative rules would have on those 

entities. For instance, should a 

definition of ‘‘market power,’’ if such a 

definition is appropriate, make 

reference to small entities? We also 

invite comment on ways in which the 

Commission might impose restrictions 

on the use of exclusive contracts for the 

provision of video services while at the 

same time imposing lesser burdens on 

small entities. 

Federal Rules That May Duplicate, 

Overlap, or Conflict With the Proposed 

Rules 

36. None. 

V. Ordering Clauses 

37. Accordingly, it is ordered that, 

pursuant to Sections 1, 4(i), 303(r), 623 

and 628(b) of the Communications Act 

of 1934, as amended, and Section 706 of 

the Telecommunications Act of 1996, 47 

U.S.C. 151, 154(i), 303(r), 543, 548(b) 

and 157, this Notice of Proposed 

Rulemaking is hereby adopted. 

38. It is further ordered that the 

Consumer and Governmental Affairs 

Bureau, Reference Information Center, 

SHALL SEND a copy of this Notice of 

Proposed Rulemaking, including the 

Initial Regulatory Flexibility Analysis, 

to the Chief Counsel for Advocacy of the 

Small Business Administration. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E7–7254 Filed 4–17–07; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 660 

[Docket No. 070402075–7075–01; I.D. 

022807F] 

RIN 0648–AU73 

Fisheries Off West Coast States; 

Highly Migratory Species Fisheries 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: NMFS issues a proposed rule 

to amend vessel identification 

regulations of the Fishery Management 

Plan for U.S. West Coast Fisheries for 

Highly Migratory Species (HMS FMP). 

The current regulatory text requires all 

commercial fishing vessels and 

recreational charter vessels to display 

their official numbers on the port and 

starboard sides of the deckhouse or hull, 

and on an appropriate weather deck 

(horizontal or flat surface) so as to be 

visible from enforcement vessels and 

aircraft. The proposed rule would 

amend the regulatory text to provide an 

exemption to HMS recreational charter 

vessels in complying with the vessel 

identification requirements. The 

regulation is necessary to clarify that 

vessel identification requirements apply 

to HMS commercial fishing vessels and 

not to HMS recreational charter vessels. 

DATES: Comments must be received by 

May 18, 2007. 

ADDRESSES: You may submit comments 

on this proposed rule, I.D. 022807F, by 

any of the following methods: 

• E-mail: 0648–AU73.SWR@noaa.gov. 

Include the I.D. number in the subject 

line of the message. 

• Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Rodney R. McInnis, Regional 

Administrator, Southwest Region, 

NMFS, 501 West Ocean Blvd., Suite 

4200, Long Beach, CA 90802 4213. 

• Fax: (562) 980 4047. 

FOR FURTHER INFORMATION CONTACT: 

Craig Heberer, Sustainable Fisheries 

Division, NMFS, 760–431–9440, ext. 

303. 

SUPPLEMENTARY INFORMATION: On April 

7, 2004, NMFS published a final rule to 

implement the HMS FMP (69 FR 18444) 

that included regulatory text in 50 CFR 

660.704 requiring display of vessel 

identification markings for commercial 

fishing vessels and recreational charter 

fishing vessels that fish for HMS off or 

land HMS in the States of California, 

Oregon, and Washington. The 

identification markings are consistent in 

size, shape, and location with vessel 

identification markings required on 

commercial fishing vessels operating 

under the Pacific Fishery Management 

Council’s (Council) Groundfish Fishery 

Management Plan. The marking 

requirements at 50 CFR 660.704(b) state 

that the official number must be affixed 

to each vessel in block Arabic numerals 

at least 10 inches (25.40 cm) in height 

for vessels more than 25 ft (7.62 m) but 

equal to or less than 65 ft (19.81 m) in 


rmajette on PROD1PC67 with PROPOSALS