[Federal Register Volume 62, Number 220 (Friday, November 14, 1997)]
[Proposed Rules]
[Pages 61065-61070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29513]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 95-184; MM Docket No. 92-260; FCC 97-376]


Inside Wiring

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission has adopted a Report and Order and Second 
Further Notice of Proposed Rulemaking which addresses rules and 
policies concerning cable inside wiring. The Report and Order segment 
of this decision may be found elsewhere in this issue of the Federal 
Register. The Second Further Notice of Proposed Rulemaking (``Second 
Further Notice'') segment seeks comment on proposed amendments to the 
Commission's regulations relating to exclusive service contracts, 
application of cable inside wiring rules to all multichannel video 
programming distributors (``MVPDs''), signal leakage reporting 
requirements, and simultaneous use of home run wiring. This action was 
necessary because exclusive service contracts and

[[Page 61066]]

access to home run wiring are significant competitive issues in 
multiple dwelling unit buildings (``MDUs''). In addition, this action 
was necessary in order to ensure that all MVPDs are treated equitably 
under our inside wiring rules. The intended effect of this action is to 
expand opportunities for new entrants seeking to compete in 
distributing video programming and to ensure that the Commission's 
inside wiring rules remain pro-competitive.

DATES: Comments must be submitted on or before December 23, 1997 and 
reply comments must be submitted on or before January 22, 1998.

ADDRESSES: Comments and reply comments should be sent to Office of the 
Secretary, Federal Communications Commission, 1919 M Street, NW, 
Washington, DC 20554. Comments and reply comments will be available for 
public inspection during regular business hours in the FCC Reference 
Center, Room 239, Federal Communications Commission, 1919 M Street NW, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Rick Chessen, Cable Services Bureau, 
(202) 418-7200.

SUPPLEMENTARY INFORMATION: The following is a synopsis of the Second 
Further Notice segment of the Commission's Report and Order and Second 
Further Notice of Proposed Rulemaking in CS Docket No. 95-184 and MM 
Docket No. 92-260, FCC No. 97-376, adopted October 9, 1997 and released 
October 17, 1997. The full text of this decision is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room 239), 1919 M Street, NW, Washington, DC 20554, 
and may be purchased from the Commission's copy contractor, 
International Transcription Services, Inc. (202) 857-3800 (phone), 
(202) 857-3805 (fax), 1231 20th Street, NW, Washington, DC 20036.

Synopsis

I. Introduction

    1. The Second Further Notice addresses issues raised in the Notice 
of Proposed Rulemaking in CS Docket No. 95-184, 61 FR 3657 (February 1, 
1996) (``Inside Wiring Notice''), the Order On Reconsideration and 
Further Notice of Proposed Rulemaking in MM Docket No. 92-260, 61 FR 
6131 (February 16, 1996) and 61 FR 6210 (February 16, 1996) (``Cable 
Home Wiring Further Notice''), and the Further Notice of Proposed 
Rulemaking in CS Docket No. 95-184 and MM Docket No. 92-260, 62 FR 
46453 (September 3, 1997) (``Inside Wiring Further Notice'') regarding 
potential changes in our telephone and cable inside wiring rules in 
light of the evolving telecommunications marketplace.

II. Second Further Notice of Proposed Rulemaking

A. Exclusive Service Contracts

    2. We believe that exclusive service contracts between MDU owners 
and MVPDs can be pro-competitive or anti-competitive, depending upon 
the circumstances involved. The term ``MDU owner'' (sometime referred 
to as the ``premises owner'') as used herein includes whatever entity 
owns or controls the common areas of an apartment building, condominium 
or cooperative. Some alternative providers have commented that in order 
to initiate service in an MDU, they must be able to use exclusive 
contracts to ensure their ability to recover investment costs. Other 
alternative providers have argued that the Commission should limit the 
ability of incumbent cable operators to enter into exclusive contracts 
with MDU owners.
    3. We seek comment on whether the Commission should adopt a ``cap'' 
on the length of exclusive contracts for all MVPDs that would limit the 
enforceability of exclusive contracts to the amount of time reasonably 
necessary for an MVPD to recover its specific capital costs of 
providing service to that MDU, including, but not limited to, the 
installation of inside wiring, headend equipment and other start-up 
costs. Commenters have suggested exclusivity periods such as five to 
six years, seven years and seven to ten years as reasonable. We seek 
comment on what would be a reasonable period of time for a provider to 
recoup its specific investment costs in an MDU. We seek comment on an 
approach under which a presumption that all existing and future 
exclusivity provisions would be enforceable for a maximum term of seven 
years, except for exceptional cases in which the MVPD could demonstrate 
that it has not had a reasonable opportunity to recover its specific 
investment costs. For instance, the exclusivity of a ``perpetual'' 
exclusive contract entered into in 1983 would no longer be enforceable; 
however, if the service provider completed a substantial rebuild of its 
plant in 1996, the provider may be able to show that it has not had a 
reasonable opportunity to recover its investment costs notwithstanding 
the fact that the exclusive contract was entered into more than seven 
years ago. Similarly, a provider may be able to show that it has not 
had an opportunity to recover its costs where it provided discounted 
service in the early years of an exclusive contract with the 
expectation of making its returns in later years. We inquire whether 
there should be different treatment accorded existing contracts and 
future contracts. We also seek comment on the appropriate forum for 
such a showing and whether the enforceability of an exclusivity 
provision should be extended only for the time period reasonably 
necessary for the provider to recover its costs.
    4. If a ``cap'' is adopted, we seek comment on whether service 
providers would generally be able to structure their business 
arrangements so as to recover their capital costs within that time 
limit. After a video service provider has had an opportunity to recover 
its costs under an exclusive contract on a particular property, we seek 
comment on whether we should prohibit future exclusive contracts 
between the video service provider and the property owner, unless the 
service provider can demonstrate that the exclusive contract is 
necessary to recoup a substantial new investment in the property. We 
also inquire whether MDU owners should be afforded an opportunity to 
terminate the exclusive contract and retain the inside wiring, in 
exchange for a payment to the provider compensating it for unrecovered 
investment costs. We seek to determine what circumstances allow MDU 
owners and tenants to receive the benefits of technological 
improvements most expeditiously, while at the same time enhancing 
competition among MVPDs.
    5. In the alternative, we seek comment on whether the Commission 
should only limit exclusive contracts where the MVPD involved possesses 
market power. The Supreme Court has noted: ``Exclusive dealing is an 
unreasonable restraint on trade only when a significant fraction of 
buyers or sellers are frozen out of a market by the exclusive deal.'' 
Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 45 (1984), 
citing Standard Oil v. United States, 337 U.S. 293 (1949). We seek 
comment on circumstances encompassing the video distribution market and 
whether the Commission can and should restrict or prohibit MVPDs with 
market power from entering into or enforcing exclusive service 
contracts. In particular, we seek comment on how to define ``market 
power'' for these purposes, as well as how to define the relevant 
geographic market.
    6. We are concerned about the administrative practicability of 
making market power determinations on a widespread, case-by-case basis 
and seek comment on whether we should establish any presumptions in 
this

[[Page 61067]]

regard. We seek comment on whether our decision not to preempt state 
mandatory access statutes effectively means that non-cable MVPDs cannot 
enforce exclusive agreements in those states, even where such 
agreements may be pro-competitive. We also seek comment on any other 
issues relevant to the analysis of market power and exclusive contracts 
in the context of this proceeding.
    7. In addition, we seek comment on whether the Commission can and 
should take any specific actions regarding so-called ``perpetual'' 
exclusive contracts (i.e., those running for the term of a cable 
franchise and any extensions thereof). For instance, under the market 
power approach, we seek comment on whether the Commission should adopt 
a presumption that the MVPDs involved possessed market power when such 
contracts were executed. Under the seven-year ``cap'' approach, we seek 
comment on whether ``perpetual'' exclusive contracts would simply fall 
within the general rule limiting the enforceability of exclusive 
contracts to seven years from execution unless the MVPD can demonstrate 
that it has not had a reasonable opportunity to recover its specific 
capital costs.
    8. Under one proposal, property owners that have committed to long-
term perpetual exclusive contracts would have a window of 180 days to 
take a ``fresh look'' at the marketplace to renegotiate or terminate 
those contracts without liability in order to avail themselves of a 
competitive alternative service provider. We seek comment on whether we 
can and should adopt a ``fresh look'' for ``perpetual'' exclusive 
contracts. In addition, we seek comment on several implementation 
issues: (1) whether the ``fresh look'' would apply only to 
``perpetual'' exclusive contracts and, if so, how such contracts 
reasonably can be distinguished from other long-term exclusive 
contracts; (2) the scope of the ``fresh look'' and how the ``fresh 
look'' period would be triggered to ensure a viable choice exists 
(e.g., whether the ``fresh look'' be applied on an MDU-by-MDU basis 
upon the request of a private cable operator able to serve the MDU, or 
more generally on a franchise-by-franchise basis where competitive 
choices exist in the franchise area); and (3) whether the ``fresh 
look'' would be a one-time opportunity or whether there could be 
additional ``fresh look'' windows in light of the development of new 
technology and the entry of new video service providers.
    9. If we were to adopt a ``fresh look'' for ``perpetual'' exclusive 
contracts, we seek comment on whether we should open a 180-day ``fresh 
look'' window for MDU owners upon the effective date of our rules, 
unless the ``perpetual'' exclusive contract was entered into less than 
seven years earlier, in which case the ``fresh look'' window would open 
for that MDU at the end of the seven-year period. We also seek comment 
on whether the MVPD should be able to apply to the Commission for an 
extension if the MVPD can demonstrate that it has not had a reasonable 
opportunity to recover its specific capital costs by the end of this 
seven-year period. Further, we seek comment on whether, if an MDU owner 
does not enter into a new contract during its initial ``fresh look'' 
period, a new 180-day ``fresh look'' window should open at the 
expiration of each subsequent franchise period until the MDU owner opts 
out of its ``perpetual'' exclusive contract. We seek comment on whether 
this framework would protect MDU owners who do not have a competitive 
alternative and therefore would be prejudiced by a one-time ``fresh 
look'' window, while ensuring that the MVPDs involved have a reasonable 
opportunity to recover their costs.
    10. We also seek comment on our statutory authority to adopt the 
exclusive contracts proposals discussed above. We also seek comment on 
any other constitutional, statutory or common law implications that 
these proposals raise.

B. Application of Cable Inside Wiring Rules to All MVPDs

    11. We propose to apply our cable home wiring rules for single-unit 
installations to all MVPDs in the same manner that they apply to cable 
operators. We believe that applying those rules to all MVPDs would 
promote competitive parity and facilitate the ability of a subscriber 
whose premises was initially wired by a non-cable MVPD to change 
providers. We seek comment on this proposal and on our authority to 
adopt it.
    12. We also propose to expand to all MVPDs the rule we are adopting 
herein regarding cable subscribers' rights, prior to termination of 
service, to provide and install their own cable home wiring and to 
connect additional home wiring to the wiring installed and owned by the 
cable operator. We believe that applying this rule to all MVPDs will 
promote the same consumer benefits as in the cable context: increased 
competition and consumer choice, lower prices and greater technical 
innovation. We seek comment on this proposal, and in particular on the 
Commission's authority for expanding this rule to all MVPDs.

C. Signal Leakage Reporting Requirements

    13. Section 76.615 of the Commission's signal leakage rules 
requires cable operators to file certain information with the 
Commission when operating in the aeronautical radio frequency bands. 47 
CFR 76.615. In particular, Sec. 76.615(b)(7) requires cable operators 
to file annually with the Commission the results of their signal 
leakage tests conducted pursuant to Sec. 76.611. 47 CFR 76.611 and 
76.615(b)(7). We are concerned that the reporting requirements of 
Sec. 76.615(b)(7) may impose undue burdens on small broadband service 
providers, including small cable operators. We seek comment on whether 
certain categories of broadband service providers should be exempt from 
the filing requirements of Sec. 76.615(b)(7) and, if so, what criteria 
the Commission should use in defining those providers. We would not 
propose to exempt any broadband service providers from the testing 
requirements of Sec. 76.615(b)(7), but simply the requirement to report 
the results of such tests to the Commission. For instance, we seek 
comment on whether we should exempt small broadband service providers 
from the filing requirements of Sec. 76.615(b)(7) based on an existing 
definition in the Commission's rules, a particular number of 
subscribers served, the length of the cable plant or some other 
criteria. For example, we have defined a small cable system as any 
system that serves 15,000 or fewer subscribers and a small cable 
company as one serving a total of 400,000 or fewer subscribers over all 
of its systems. Sixth Report and Order and Eleventh Order on 
Reconsideration, MM Docket Nos. 92-266 and 93-215 (Implementation of 
Sections of the Cable Television Consumer Protection and Competition 
Act of 1992: Rate Regulation), 60 FR 35854 (July 12, 1995). We seek 
comment on the risks to safety of life communications posed by such an 
exemption. We also seek comment on any other changes in this area that 
would reduce burdens, yet meet the goals of protecting against signal 
leakage.

D. Simultaneous Use of Home Run Wiring

    14. As stated above, DIRECTV suggests that the Commission should 
establish a ``virtual'' demarcation point from which an alternative 
provider could share the wiring simultaneously with the cable operator. 
Other alternative providers endorse this view, if it is technically 
possible, and CEMA states that some of its members are

[[Page 61068]]

currently developing equipment that will allow multiple uses of a 
single broadband wire. Cable operators generally oppose DIRECTV's 
suggestion that two video service providers may share a single wire, 
stating that the alternative provider would have to use different 
frequency bands to avoid interference, and, while theoretically 
possible, most systems do not have sufficient bandwidth capacity to 
carry multiple MVPDs. DIRECTV acknowledges that only service providers 
that use different parts of the spectrum technically may be able to 
share a single wire.
    15. We believe that the sharing of a single wire by multiple 
service providers deserves further exploration. We seek comment on 
DIRECTV's proposal that we require competing broadband service 
providers to share a single home run wire in MDUs. In particular, we 
seek comment on the current technical, practical and economic 
feasibility and limitations of sharing of home run wiring. We also seek 
comment on our legal authority to impose such a requirement and whether 
such a requirement would constitute an impermissible taking of private 
property under the Fifth Amendment.

III. Initial Regulatory Flexibility Act Analysis

    16. As required by section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603, (``RFA''), the Commission has prepared an Initial 
Regulatory Flexibility Analysis (``IRFA'') of the expected significant 
impact on small entities by the policies and rules proposed in this 
Second Further Notice. Written public comments are requested on the 
IRFA. These comments must be filed in accordance with the same filing 
procedures as other comments in this proceeding, but they must be have 
a separate and distinct heading designating them as responses to the 
IRFA. The Secretary shall send a copy of this Second Further Notice, 
including the IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with section 603(a) of the RFA. 
In addition, the Second Further Notice and IRFA (or summaries thereof) 
will be published in the Federal Register, pursuant to 5 U.S.C. 603(a).

Need for Action and Objectives of the Proposed Rules

    17. The Commission issues this Second Further Notice to consider 
additional rules to promote competition and enhance consumer choice. In 
particular, we seek comment on the competitive implications of 
exclusive service contracts between MDU owners and MVPDs, and whether 
we should: (1) limit exclusive contracts to a time certain; (2) adopt 
restrictions on the ability of MVPDs to enter into exclusive contracts; 
or (3) adopt a ``fresh look'' for ``perpetual'' exclusive contracts. In 
addition, we propose to expand to all MVPDs the rule regarding cable 
subscribers' rights, prior to termination of service, to provide and 
install their own cable home wiring and to connect additional home 
wiring to the wiring installed and owned by the MVPD. We also ask 
whether certain categories of broadband service providers (e.g., small 
broadband service providers, including small cable operators) should be 
exempt from the signal leakage reporting requirements in 
Sec. 76.615(b)(7). Finally, we seek comment on the current technical, 
practical, economic, and legal limitations of requiring competing 
broadband service providers to share a single home run wire in MDUs.

Legal Basis

    18. This Second Further Notice is adopted pursuant to sections 1, 
4, 224, 251, 303, 601, 623, 624, and 632 of the Communications Act of 
1934, as amended, 47 U.S.C. Secs. 151, 154, 224, 251, 303, 521, 543, 
544, and 552.

Description and Estimate of the Number of Small Entities Impacted

    19. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the proposed rules. The RFA defines the term ``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 section 3 
of the Small Business Act. Under the Small Business Act, a ``small 
business concern'' is one that: (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 rules we propose in this Second Further 
Notice will affect MVPDs and MDU owners.
    20. Small MVPDs: SBA has developed a definition of a small entity 
for cable and other pay television services, which includes all such 
companies generating $11 million or less in annual receipts. This 
definition includes cable system operators, closed circuit television 
services, direct broadcast satellite services, multipoint distribution 
systems, satellite master antenna systems and subscription television 
services. According to the Bureau of the Census, there were 1423 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. We will address each service individually to provide a 
more succinct estimate of small entities.
    21. Cable Systems: The Commission has developed its own definition 
of a small cable company for the purposes of rate regulation. Under the 
Commission's rules, a ``small cable company,'' is one serving fewer 
than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on our 
most recent information, we estimate that there were 1439 cable 
operators 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 operators. 
Consequently, we estimate that there are fewer than 1439 small entity 
cable system operators that may be affected by the decisions and rules 
proposed in this Second Further Notice.
    22. The Communications Act also contains a definition of a small 
cable system operator, which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than 1% 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 shall be 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 1450. 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.
    23. MMDS: The Commission refined the definition of ``small entity'' 
for the auction of MMDS as an entity that together with its affiliates 
has average gross annual revenues that are not more than $40 million 
for the preceding three calendar years. This definition of a small 
entity in the context of the Commission's Report and Order

[[Page 61069]]

concerning MMDS auctions has been approved by the SBA.
    24. The Commission completed its MMDS auction in March 1996 for 
authorizations in 493 basic trading areas (``BTAs''). Of 67 winning 
bidders, 61 qualified as small entities. Five bidders indicated that 
they were minority-owned and four winners indicated that they were 
women-owned businesses. MMDS is an especially competitive service, with 
approximately 1573 previously authorized and proposed MMDS facilities. 
Information available to us indicates that no MMDS facility generates 
revenue in excess of $11 million annually. We believe that there are 
approximately 1634 small MMDS providers as defined by the SBA and the 
Commission's auction rules.
    25. ITFS: There are presently 1,989 licensed educational ITFS 
stations and 97 licensed commercial ITFS stations. Educational 
institutions are included in the definition of a small business. 
However, we do not collect annual revenue data for ITFS licensees and 
are unable to ascertain how many of the 97 commercial stations would be 
categorized as small under the SBA definition. Thus, we believe that at 
least 1,989 ITFS licensees are small businesses.
    26. DBS: There are presently nine DBS licensees, some of which are 
not currently in operation. The Commission does not collect annual 
revenue data for DBS and, therefore, is unable to ascertain the number 
of small DBS licensees that could be impacted by these proposed rules. 
Although DBS service requires a great investment of capital for 
operation, we acknowledge that there are several new entrants in this 
field that may not yet have generated $11 million in annual receipts, 
and therefore may be categorized as a small business, if independently 
owned and operated.
    27. HSD: The market for HSD service is difficult to quantify. 
Indeed, the service itself bears little resemblance to other MVPDs. HSD 
owners have access to more than 265 channels of programming placed on 
C-band satellites by programmers for receipt and distribution by video 
service providers, of which 115 channels are scrambled and 
approximately 150 are unscrambled. HSD owners can watch unscrambled 
channels without paying a subscription fee. To receive scrambled 
channels, however, an HSD owner must purchase an integrated receiver-
decoder from an equipment dealer and pay a subscription fee to an HSD 
programming packager. Thus, HSD users include: (1) viewers who 
subscribe to a packaged programming service, which affords them access 
to most of the same programming provided to subscribers of other video 
service providers; (2) viewers who receive only non-subscription 
programming; and (3) viewers who receive satellite programming services 
illegally without subscribing. Because scrambled packages of 
programming are most specifically intended for retail consumers, these 
are the services most relevant to this discussion.
    28. According to the most recently available information, there are 
approximately 30 program packagers nationwide offering packages of 
scrambled programming to retail consumers. These program packagers 
provide subscriptions to approximately 2,314,900 subscribers 
nationwide. This is an average of about 77,163 subscribers per program 
packager. This is substantially smaller than the 400,000 subscribers 
used in the Commission's definition of a small MSO. Furthermore, 
because this an average, it is likely that some program packagers may 
be substantially smaller.
    29. OVS: The Commission has certified nine OVS operators. Because 
these services were introduced so recently and only one operator is 
currently offering programming to our knowledge, little financial 
information is available. Bell Atlantic (certified for operation in 
Dover) and Metropolitan Fiber Systems (``MFS,'' certified for operation 
in Boston and New York) have sufficient revenues to assure us that they 
do not qualify as small business entities. Two other operators, 
Residential Communications Network (``RCN,'' certified for operation in 
New York) and RCN/BETG (certified for operation in Boston), are MFS 
affiliates and thus also fail to qualify as small business concerns. 
However, Digital Broadcasting Open Video Systems (a general partnership 
certified for operation in southern California), Urban Communications 
Transport Corp. (a corporation certified for operation in New York and 
Westchester), and Microwave Satellite Technologies, Inc. (a corporation 
owned solely by Frank T. Matarazzo and certified for operation in New 
York) are either just beginning or have not yet started operations. 
Accordingly, we believe that three OVS licensees may qualify as small 
business concerns.
    30. SMATVs: 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.
    31. LMDS: Unlike the above pay television services, LMDS technology 
and spectrum allocation will allow licensees to provide wireless 
telephony, data, and/or video services. An LMDS provider is not limited 
in the number of potential applications that will be available for this 
service. Therefore, the definition of a small LMDS entity may be 
applicable to both cable and other pay television (SIC 4841) and/or 
radiotelephone communications companies (SIC 4812). The SBA definition 
for cable and other pay services is defined above. A small 
radiotelephone entity is one with 1500 employees or less. For the 
purposes of this proceeding, we include only an estimate of LMDS video 
service providers. The vast majority of LMDS entities providing video 
distribution could be small businesses under the SBA's definition of 
cable and pay television (SIC 4841). However, in the LMDS Second Report 
and Order, we defined a small LMDS provider as an entity that, together 
with affiliates and attributable investors, has average gross revenues 
for the three preceding calendar years of less than $40 million. We 
have not yet received approval by the SBA for this definition.
    32. There is only one company, CellularVision, that is currently 
providing LMDS video services. Although the Commission does not collect 
data on annual receipts, we assume that CellularVision is a small 
business under both the SBA definition and our proposed auction rules. 
We tentatively conclude that a majority of the potential LMDS licensees 
will be small entities, as that term is defined by the SBA.
    33. 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 $5 million or less in revenue annually. According 
to the

[[Page 61070]]

Census Bureau, there were 26,960 operators of nonresidential buildings 
generating less than $5 million in revenue that were in operation for 
at least one year at the end of 1992. Also according to the Census 
Bureau, there were 39,903 operators of apartment dwellings generating 
less than $5 million in revenue that were in operation for at least one 
year at the end of 1992. 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.

Reporting, Recordkeeping, and Other Compliance Requirements

    34. The Second Further Notice seeks comment on whether small 
broadband service providers, including small cable operators, should be 
exempt from the signal leakage reporting requirements in 
Sec. 76.615(b)(7). Such an exemption would relieve qualifying providers 
from only the relevant filing requirements, but not from the signal 
leakage testing requirements.

Significant Alternatives and Steps Taken to Minimize the Significant 
Economic Impact on a Substantial Number of Small Entities Consistent 
With the Stated Objectives

    This section analyzes the impact on small entities of the 
regulations proposed or considered in the Second Further Notice.
    35. The Second Further Notice seeks comment on several proposals 
which could minimize the economic impact on a substantial number of 
small entities. For instance, in seeking comment on what policies 
should be adopted with respect to exclusive contracts, the Commission 
raises the option of a limit on the length of exclusive contracts that 
would still permit a small MVPD to obtain exclusive contracts for the 
period of time necessary to recover its investment costs in the MDU 
building. In addition, the Commission seeks comment on whether small 
broadband service providers, including small cable operators, should be 
exempt from the signal leakage reporting requirements in 
Sec. 76.615(b)(7). The issue of whether competing providers should be 
required to share home run wiring explores the possibility of another 
means by which small MVPDs may be able to access MDUs. Commenters are 
invited to address the economic impact of these proposals on small 
entities and offer any alternatives.

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

    None.

IV. Procedural Provisions

    36. Ex parte Rules--``Permit-but-Disclose'' Proceeding. This 
proceeding will be treated as a ``permit-but-disclose'' proceeding 
subject to the ``permit-but-disclose'' requirements under 
Sec. 1.1206(b) of the rules. 47 CFR 1.1206(b), as revised. 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 two sentence description of the views and arguments 
presented is generally required. See 47 CFR 1.1206(b)(2), as revised. 
Additional rules pertaining to oral and written presentations are set 
forth in Sec. 1.1206(b). 47 CFR 1.1206(b).
    37. Filing of Comments and Reply Comments. Pursuant to applicable 
procedures set forth in Secs. 1.415 and 1.419 of the Commission's 
Rules, interested parties may file comments on or before December 23, 
1997, and reply comments on or before January 22, 1998. 47 CFR 1.415 
and 1.419. To file formally in this proceeding, you must file an 
original plus four copies of all comments, reply comments, and 
supporting comments. If you want each Commissioner to receive a 
personal copy of your comments and reply comments, you must file an 
original plus nine copies. You should send comments and reply comments 
to Office of the Secretary, Federal Communications Commission, 1919 M 
Street, NW, Washington, DC 20554. Comments and reply comments will be 
available for public inspection during regular business hours in the 
FCC Reference Center, Room 239, Federal Communications Commission, 1919 
M Street NW, Washington DC 20554.

V. Ordering Clauses

    38. It is ordered that, pursuant to sections 1, 4(i), 201-205, 214-
215, 220, 303, 623, 624 and 632 of the Communications Act of 1934, as 
amended, 47 U.S.C. Secs. 151, 154(i), 201-205, 214-215, 220, 303, 543, 
544 and 552, NOTICE IS HEREBY GIVEN of proposed amendments to the 
Commission's rules, in accordance with the proposals, discussions and 
statements of issues in the Second Further Notice of Proposed 
Rulemaking, and COMMENT IS SOUGHT regarding such proposals, discussions 
and statements of issues.
    39. It is further ordered that the Commission SHALL SEND a copy of 
this Second Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-29513 Filed 11-13-97; 8:45 am]
BILLING CODE 6712-01-P