I

103D CONGRESS

1ST SESSION H. R. 1504

To encourage the modernization of the Nation’s telecommunications infrastructure, to promote competition in the cable television industry and

to permit telephone companies to provide video programming.

IN THE HOUSE OF REPRESENTATIVES

MARCH 29, 1993

Mr. BOUCHER (for himself, Mr. OXLEY, Mr. BARTON of Texas, Mr. MCCLOSKEY, Mr. MAZZOLI, Mr. NEAL of North Carolina, Mr. HENRY, Mr. GORDON, Mr. WISE, Mr. MARTINEZ, Mr. SHAYS, Mr. PAXON, Mr. SUNDQUIST, and Mr. BOEHLERT) introduced the following bill; which was referred to the Committee on Energy and Commerce

SEPTEMBER 29, 1993

Additional sponsors: Mr. SKEEN, Mr. DORNAN, Mr. EVANS, Mr. QUILLEN,

Mr. HOUGHTON, Mr. WALSH, Mr. LAFALCE, Mr. BUNNING, Mr. SOLOMON, Mr. MACHTLEY, Mr. ENGEL, Mr. HOCHBRUECKNER, Ms. LONG,

Mrs. LOWEY, Mr. QUINN, Mr. HASTERT, Mr. MORAN, Mr. MCHUGH, Mr.

MEEHAN, Mr. LEHMAN, Mr. LEVY, Ms. MOLINARI, Mr. SERRANO, Mr.

TORKILDSEN, Mr. KING, Mr. LAZIO, Mr. BLUTE, Mr. CLINGER, Mr.

BARTLETT of Maryland, Mr. OLVER, Mr. SPRATT, Mr. TORRICELLI, Mr.

FIELDS of Texas, Mr. SCHUMER, Ms. BYRNE, Mr. ACKERMAN, Mr.

GALLEGLY, Mr. COMBEST, Mr. SAM JOHNSON of Texas, Mr. BAKER of

Louisiana, Mr. PAYNE of Virgina, Mr. DOOLEY, Mr. WYDEN, and Mr.

COOPER

A BILL

To encourage the modernization of the Nation’s telecommunications infrastructure, to promote competition

in the cable television industry and to permit telephone

companies to provide video programming.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Communications Com5 petitiveness and Infrastructure Modernization Act of

6 1993’’.

7 SEC. 2. CABLE SERVICE PROVIDED BY TELEPHONE COMPA8 NIES.

9 (a) GENERAL REQUIREMENT.— Section 613(b) of

10 the Communications Act of 1934 (47 U.S.C. 533(b)) is

11 amended to read as follows:

12 ‘‘(b)(1) Subject to the requirements of part V and

13 other provisions of this title, any common carrier subject

14 in whole or in part to title II of this Act may provide video

15 programming directly to subscribers in its telephone serv16 ice area either through its own facilities or through an

17 affiliate owned by, operated by, controlled by, or under

18 common control with the common carrier.

19 ‘‘(2) Subject to the requirements of part V and other

20 provisions of this title, any common carrier subject in

21 whole or in part to title II of this Act may provide chan22 nels of communications or pole line conduit space, or other

23 rental arrangements, to any entity which is directly or in24 directly owned by, operated by, controlled by, or under

25 common control with such common carrier, if such facili-
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1 ties or arrangements are to be used for, or in connection

2 with, the provision of video programming directly to sub3 scribers in the telephone service area to the common car4 rier.’’.

5 (b) PROVISIONS FOR REGULATION OF CABLE SERV6 ICE PROVIDED BY TELEPHONE COMPANIES.—Title VI of

7 the Communications Act of 1934 (47 U.S.C. 521 et seq.)

8 is amended by adding at the end the following new part:

9 ‘‘Part V—Cable Service Provided by Telephone

10 Companies

11 ‘‘SEC. 651. DEFINITIONS.

12 ‘‘For purposes of this part—

13 ‘‘(1) the term ‘affiliated video programming’

14 means any video programming which is (A) owned

15 or controlled by, or under common control with, a

16 common carrier, and (B) provided by the common

17 carrier or an affiliate directly to subscribers in its

18 telephone service area;

19 ‘‘(2) the term ‘control’ means—

20 ‘‘(A) an ownership interest in which an en21 tity has the right to vote more than 50 percent

22 of the outstanding common stock or other own23 ership interest; or

24 ‘‘(B) actual working control, if no single

25 entity directly or indirectly has the right to vote
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1 more than 50 percent of the outstanding com2 mon stock or other ownership interest;

3 ‘‘(3) the term ‘basic video dial tone platform’

4 has the same meaning as established by order of the

5 Commission entitled ‘Telephone Company-Cable Tel6 evision Cross-Ownership Rules, Sections 63.54–

7 63.58’, CC Docket No. 87–266, adopted July 16,

8 1992; and

9 ‘‘(4) the term ‘rural area’ means a geographic

10 area that does not include either—

11 ‘‘(A) any incorporated or unincorporated

12 place of 10,000 inhabitants or more, or any

13 part thereof; or

14 ‘‘(B) any territory, incorporated or unin15 corporated, included in an urbanized area.

16 ‘‘SEC. 652. SEPARATE VIDEO PROGRAMMING AFFILIATE.

17 ‘‘(a) IN GENERAL.—Except as provided in subsection

18 (d) of this section, a common carrier shall not provide

19 video programming directly to subscribers in its telephone

20 service area unless such video programming is provided

21 through a video programming affiliate that is separate

22 from such carrier.

23 ‘‘(b) BOOKS AND MARKETING.—A video program24 ming affiliate of a common carrier shall—
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1 ‘‘(1) maintain books, records, and accounts sep2 arate from such carrier which identify all trans3 actions with such carrier;

4 ‘‘(2) carry out directly (or through any

5 nonaffiliate or any other affiliate of such carrier) its

6 own marketing and sales, except that institutional

7 advertising carried out by such carrier shall be per8 mitted so long as each party bears its pro rata share

9 of the costs; and

10 ‘‘(3) not own real or personal property in com11 mon with such carrier.

12 ‘‘(c) BUSINESS TRANSACTIONS WITH CARRIER SUB13 JECT TO REGULATION.—Any contract, agreement, ar14 rangement, joint venture, partnership, or other manner of

15 conducting business, between a common carrier and its

16 video programming affiliate, providing for—

17 ‘‘(1) the sale, exchange, or leasing of property

18 between such affiliate and such carrier;

19 ‘‘(2) the loan of money or other extension of

20 credit between such affiliate and such carrier or be21 tween such affiliate and a third party directly or in22 directly guaranteed by such carrier;

23 ‘‘(3) the furnishing of goods between such affili24 ate and such carrier; or
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1 ‘‘(4) the transfer to or use by such affiliate for

2 its benefit of any assets of such carrier,

3 shall be pursuant to regulation prescribed by the Commis4 sion, shall be on a fully compensatory and auditable basis,

5 shall be without cost to the telephone service ratepayers

6 of the carrier, and shall be in compliance with rules estab7 lished by the Commission which will be sufficient to enable

8 the Commission to assess the compliance of any trans9 action.

10 ‘‘(d) WAIVER.—The Commission may waive any of

11 the requirements of this section upon the showing of good

12 cause, by a common carrier, video programming affiliate,

13 or any other person, if the Commission determines that

14 the public interest, convenience, and necessity will be

15 served by the waiver. The Commission shall act to approve

16 or disapprove a waiver application within 120 days after

17 the date it is filed.

18 ‘‘SEC. 653. ESTABLISHMENT OF BASIC VIDEO DIAL TONE

19 PLATFORM.

20 ‘‘Any common carrier which provides video program21 ming directly to subscribers through a video programming

22 affiliate in its telephone service area shall establish a basic

23 video dial tone platform. The Commission, together with

24 the States, shall establish regulations to prohibit a carrier

25 from discriminating in favor of its video programming af-
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1 filiate in providing access to such platform or with regard

2 to rates, terms, and conditions for access to such platform.

3 ‘‘SEC. 654. PROVISION OF AFFILIATED VIDEO PROGRAM4 MING.

5 ‘‘(a) LIMITATION.—A common carrier which provides

6 affiliated video programming directly to subscribers in its

7 telephone service area through its video programming af8 filiate shall make available such capacity as is requested

9 by unaffiliated video program providers upon reasonable

10 notice, except that the common carrier shall not be re11 quired to provide more than 75 percent of the equipped

12 capacity of its basic video dial tone platform to unaffiliated

13 video program providers.

14 ‘‘(b) EVALUATION BY COMMISSION.—The Commis15 sion shall, not later than 2 years after the date of enact16 ment of this part, evaluate the effect of subsection (a) on

17 the video programming marketplace and, on the basis of

18 that evaluation, make recommendations to Congress con19 cerning appropriate modifications, if any, to subsection

20 (a).

21 ‘‘(c) BROADCAST SIGNAL CARRIAGE EXCLUDED.—

22 The carriage of local broadcast signals pursuant to section

23 614 shall not constitute the provision of affiliated video

24 programming for purposes of subsection (a).
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1 ‘‘(d) WAIVER.—The Commission may waive or other2 wise modify the applicability of subsection (a) if it deter3 mines that video programming is not available for trans4 port by a common carrier to subscribers in its telephone

5 service area. The Commission shall act to approve or dis6 approve a waiver application within a reasonable period

7 of time.

8 ‘‘(e) TERMINATION.—Subsection (a) shall cease to be

9 effective five years after the date of enactment of this part.

10 ‘‘SEC. 655. PROHIBITION OF CROSS-SUBSIDIZATION.

11 ‘‘A common carrier shall not engage in any practice

12 that—

13 ‘‘(1) results in the inclusion in rates for tele14 phone exchange service of any operating expenses,

15 costs, depreciation charges, capital investments, or

16 other expenses associated with the provision of video

17 programming by the common carrier or its video

18 programming affiliate; and

19 ‘‘(2) is prohibited by the Commission or a

20 State.

21 ‘‘SEC. 656. PROHIBITION ON BUYOUTS.

22 ‘‘(a) GENERAL PROHIBITION.—No common carrier

23 which provides telephone service, nor any entity owned by

24 or under common ownership or control with such carrier,

25 may purchase or otherwise obtain control over any cable
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1 system which is located within its telephone service area

2 and is owned by an unaffiliated person.

3 ‘‘(b) EXCEPTIONS.—Notwithstanding subsection (a),

4 a common carrier shall not be prevented from—

5 ‘‘(1) obtaining a noncontrolling interest in such

6 a cable system through a joint venture or other

7 means; or

8 ‘‘(2) acquiring the use of that part of the trans9 mission facilities of such a cable system extending

10 from the last multi-user terminal to the premises of

11 the end user if such use is reasonably limited in

12 scope and duration.

13 ‘‘(c) WAIVER.—

14 ‘‘(1) The Commission may waive the restric15 tions in subsection (a) of this section only upon a

16 showing by a carrier that—

17 ‘‘(A) the facilities of the cable system will

18 be substantially upgraded through the deploy19 ment of modern technology, including fiber op20 tics;

21 ‘‘(B) the capacity of the cable system and

22 types of services offered will be expanded;

23 ‘‘(C) the purchase or acquisition of control

24 will otherwise be in the public interest; and
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1 ‘‘(D) the local franchising authority ap2 proves of such waiver.

3 ‘‘(2) The Commission shall act to approve or

4 disapprove a waiver application within 180 days

5 after the date it is filed.

6 ‘‘SEC. 657. PENALTIES.

7 ‘‘If the Commission finds, after notice and oppor8 tunity for a hearing, including the oral examination and

9 cross-examination of witnesses, that any common carrier

10 has knowingly and willfully violated any provision of this

11 part, the Commission shall assess such fines and penalties

12 as it deems appropriate pursuant to title V of this Act.

13 ‘‘SEC. 658. CUSTOMER PROTECTION.

14 ‘‘(a) JOINT BOARD REQUIRED.—The Commission

15 shall, within 30 days after the date of enactment of this

16 part, convene a Federal-State Joint Board under the pro17 visions of section 410(c) for the purpose of establishing

18 the practices, classifications, and regulations as may be

19 necessary to ensure proper jurisdictional separation and

20 allocation of the costs of providing broadband services, in21 cluding affiliated video programming. The Board shall

22 issue its recommendations to the Commission within 270

23 days after the date of enactment of this part.

24 ‘‘(b) COMMISSION REGULATIONS REQUIRED.—The

25 Commission, with respect to interstate switched access
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1 service, and the States, with respect to telephone exchange

2 service and intrastate interexchange service, shall, within

3 one year after the date of the enactment of this part, es4 tablish such rules and regulations as may be necessary to

5 implement section 655.

6 ‘‘(c) NO EFFECT ON CARRIER REGULATION AU7 THORITY.—Nothing in this section shall be construed to

8 limit or supersede the authority of any State or the Com9 mission with respect to the allocation of costs associated

10 with intrastate or interstate communication services.

11 ‘‘SEC. 659. RURAL AREA EXEMPTION.

12 ‘‘The provisions of sections 652, 653, 654, and 656

13 shall not apply to video programming provided in a rural

14 area by a common carrier that provides telephone ex15 change service in the same area.’’.

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